Skills and Abilities of Managerial Accountants

Managerial accountants have a wide and varied series of skills and abilities that they bring to an organization. With their abilities, they are able to help managers make the decisions that they need to make within the company to help the company remain competitive and dominant on the local and world markets.

The following is a list of all the tasks and services that managerial accountants provide. These tasks can vary in complexity and some managerial accountants will be more skilled due to experience levels:

Variance Analysis involves looking at the difference between budgeted amounts and the actual amounts sold or incurred.
Rate and Volume Analysis involves looking at the rate and volume of goods or services being put through the company.
Business Metrics Development involves looking at the measurements used to gauge a component of the performance of the company.
Price Modeling involves looking at the various elements relating to the price including competition, geographic, and consumer segment differences to determine the optimal price for the service or the product.
Product Profitability involves looking at the overall profitability related to the product.
Geographic versus Industry or Client Segment Reporting involves analyzing the area of the company versus the industry and consumer segment of which it is a part.
Sales Management Scorecards involves analyzing the effectiveness of the sales force.
Cost Analysis involves analyzing the various elements that make up the cost of the product or service.
Cost Benefit Analysis involves analyzing the cost of the product and the benefit of the cost towards the profits.
Cost-Volume-Profit Analysis involves looking at the point where the total revenues are equal to the total costs so the company at that point experiences no income or loss.
Life cycle cost analysis involves looking at the total process of the product or service, from production line to going out to the consumer.
Client Profitability Analysis involves analyzing the customer probability which can be used for customer valuation. This is easily calculated as the difference between revenue and cost, including costs like marketing costs, sales costs, and product costs.
Capital Budgeting involves the planning process to determine whether or not long term investments are worth pursuing.
Buy versus Lease Analysis is based on a comparison between the net present values of buying with the net present value of leasing.
Strategic Planning is the process of defining a company's strategy or direction by making decisions to allocate specific resources to support a company's strategy.
Sales and Financial Forecasting involves forecasting future sales and the future financial position of the company by using a variety of tools.
Annual Budgeting is helping to create the future budget for the company that is based on the company's current strategy.
Cost Allocation determines where costs are best allocated for the company to achieve its management goals.
Resource Allocation and Utilization involves determining the best allocation of resources for a company to achieve their future goals.

Qualifications of Management Accountants

Many management accountants improve upon their skills by achieving certain qualifications related to the field of accounting:

CMA. The Certified Management Accountant designation is awarded around the world to individuals who have achieved peer based criteria of professional competency in management accounting.
CPA. The Certified Public Accountant designation means a United States accountant has passed the Uniform Certified Public Accountant Examination and met state requirements to be a CPA. The UCPA exam tests on four different accounting topics:
1. Auditing and Attestation.
2. Financial Accounting and Reporting.
3. Regulation.
4. Business Environment and Concepts.

The UCPA exam is developed and maintained by the American Institute of Certified Public Accountants and administrated through the National Association of State Boards of Accountancy

Elsewhere in the world, there are other qualifications for accountants and by extension, managerial accountants:

CIMA. Chartered Institute of Management Accountants (United Kingdom).
ICMA. Institute of Certified Management Accountants (Australia).
ACCA. Chartered Certified Accountant (United Kingdom).
CA. Chartered Accountant (British Commonwealth).
CPA. Certified Public Accountant (Australia).

The Company's Need for Managerial Accounting

Here, we will address why a company needs managerial accountants. A firm understanding of managerial accounting requires an understanding of why companies need this service and why they are willing to pay for something that is neither mandatory nor required for financial auditing with investors and shareholders.

Planning

Managers need to select a course of action and determine how they are going to implement that course of action. The first way that they will do this is by looking at the options available to them and determining which of the options is going to be best for the company and which will do the best job to further the goals of the company. When doing this, managers need to balance the demands that are being made on the company with the resources that are available in the company. A company may feel that there is a need for a larger building, but without the resources for that, it is a non issue.

Managers need the information from managerial accountants so that they can look at the information provided to determine what is the best planned course of action for the company. With the information provided to them by managerial accountants, managers can also begin to look at creating budgets that express the plans of the company and its managements in quantitative terms.

Directing and Motivating

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Managers are not only in charge of planning the company's future, but they are also required to oversee the day-to-day activities of the employees in an effort to keep the entire organization moving smoothly into the future. To do this, managers will assign tasks to employees, answer questions, solve problems, settle disputes, and make many small decisions that in turn will go on to affect customers and other employees.

Daily reports from managerial accountants, which can include daily employee activity logs and sales reports, will help managers make those important decisions. The more information they have, especially on a daily basis, about the processes and employee sales, the better qualified the managers will be to make the decisions that will benefit the company the most. In this way, managerial accountants help the managers direct the flow and progress of the company going into the future.

Controlling

Managers need to ensure that a plan is going to work. To ensure that everything is moving forward, the managers rely a great deal on feedback as a key to effective control. Feedback can come in the form of many financial reports provided by managerial accountants, including budgeted versus actual results in a performance report. With a performance report provided by a managerial accountant, the manager can see what operations are not working as they should be, and what parts of the company require special attention to help the entire company reach the goals it has set for itself.

Ethical Standards of Managerial Accountants

While managerial accountants do not have an organization overseeing them per se, and are not required to have oversight by a company, it is important for managerial accountants to maintain the highest level of ethical conduct in everything they do with the companies they work for.

As a result, the Institute of Management Accountants has created a series of ethical guidelines for managerial accountants. It is important to adhere to these standards for the progress of management accounting to move forward.

Competence

Managerial accountants have a responsibility to:

1. Maintain a level of professional competence by continually evolving and developing their knowledge and skills to excel in the field of managerial accounting.

2. Perform their duties in accordance with laws, regulations, and standards put forth not only by the companies they work for, but by other financial organizations that accountants are members of.

3. Prepare detailed reports that are clear with complete analysis of all the information that can be deemed relevant and reliable.

Confidentiality

Managerial accountants have a responsibility to:

Never disclose any confidential information that they have learned or acquired over the course of their work. The only exceptions are when they are legally obligated to do so because of illegal accounting activities at the company with which they are employed.
Inform those who work under them about the confidentiality of the information acquired, and monitor those who work under them to ensure the adherence of the confidentiality.
Never use or appear to use information that is confidential while employed with a company for the reason to gain an unethical and illegal advantage personally or through someone else.

Integrity

Managerial accountants have a responsibility to:

Avoid conflicts of interest and advise other parties of any potential conflict before it arises.
Not engage in an activity that would not allow them to fulfill their duties ethically with the company.
Deny any gift, favor, or hospitality that would influence, or would have the potential to influence their decisions or actions.
Never take part in an activity that would subvert the organization's objectives as long as those objectives are both legitimate and ethical.
Allow themselves to be hired for a job for which they are not qualified. This means that if there are professional limitations that would cause the inability to achieve a successful performance of an activity, the accountant must deny the position.
Give out unfavorable or favorable information to others relating to the company and its financial situation.
Never take part in any activity that would discredit the profession through the actions of the managerial accountant.

Objectivity

Managerial accountants have a responsibility to:

1. Communicate information in a fair and objective manner.

2. Disclose all information that could be expected to influence someone's understanding of the reports and recommendations presented by the managerial accountant.

Resolution of Conflicts

While there are these guidelines for managerial accountants to follow, problems can arise from unethical behavior. When there is a significant ethical issue, managerial accountants should look at the policies of the company they work for to determine the resolution of the conflict. If those policies do not help in the resolution of the conflict, then the managerial accountant should take the following actions:

Talk with their superior about the problems, unless the superior is involved in the conflict. If they are, then the problem should be presented to their superior. If no solution is achieved when the problem is presented to the superior, then the problem should also be taken to their superior.
If the managerial accountant's superior is the Chief Executive Officer, the review authority can acceptably be the audit committee, executive committee, board of directors, and board of trustees, or the owners of the company. Managerial accountants should only contact the level above their superior only with the superior's knowledge. However, this does not apply if the superior to the managerial accountant is involved.
Clarify and look at any ethical issues through a confidential discussion with an advisor who can give a better course of action to the managerial accountant.
The managerial accountant should contact their attorney to determine the legal rights concerning the ethical conflict that has arisen.
If all levels of internal review have not found a resolution to the ethical conflict, then there may be no other option than for the managerial accountant to resign from the company while submitting an informative memorandum to the appropriate company representative. Depending on the type of conflict that has arisen, the managerial accountant may have to notify other parties, especially if illegal activities have been conducted within the company.