The management accounting system is also termed as managerial or cost accounting that analyses the business operations and costs to prepare records, internal financial reports and also account to aid the managerial people's decision making process to achieve business goals. In these terms, it can be defined as the act of making sense of costing and financial data and translate it into useful information for the use of management and organization.
Andre et al. (2016, p.150) has defined accounting management as the presentation of accounting the available information, that in terms assist the management to create policies for day to day operation in an organization. The associated cost accounting and financial accounting phenomenon help the organization to formulate the policies, control, planning and decision-making process in the organization.
There is four basic functions of management accounting system are listed below.
Though this function, formulation of long term and short term plans and proper actions in this regard will be taken. In the budget, the financial planning has been done showing that the resources are used and acquired over a specified period of time interval (Anelli and Puglisi, 2015, p. 409). Management accounting is helpful in this case for planning activity as it provides information to the decision making process. This technique also helps in estimating alternative actions to be taken for achieving the desired financial goals.
Organising is a process of assigning responsibility to the worker and establishing the organizational framework in the organization. This in term helps in achieving the business objectives and goals (Avenali et al. 2017, p. 130). Management accounting system helps the managerial people to organize necessary information by providing reports.
Control is a process of evaluating, measuring, monitoring and correcting the actual results of business plans. Management accounting system helps in producing control reports and performance reports and this highlights the variance between the actual performance and expected performance.
4. Decision making:
Management accounting system contains valuable information of various courses of actions and predicts the results required to achieve business goals.
This technique helps the Tata Motors to formally structure the decision problems and to place alternative consequences. Management accounting system also provides production report, sales report by the managers of Tata Motors through taking suitable actions about the production position (Cooper et al. 2017, p.995). Using this technique the managers of Tata motors will be able to decide whether to eliminate or add the product line and the production report. In Tata Motors the accounting management system helps the managers to identify more profitable products as well developed data for it (jaguar.in, 2018). Accounting management system helps to prepare budgeted financial statements.
Integration of management accounting reports and the management accounting system within the organization process deliveries the desired success for the targeted organization. The management accounting reports help the organisation to identify a social and environmental trend which impacts the ability of the companies to create value over the time period. Sustainable business challenges can be linked to the company's strategy, performance outlook and business model through this integration.
Andre, S.M., Lam, M. and O'Donnell, M., (2016). Budgetary Slack: Exploring the Effect of Different Types, Directions, and Repeated Attempts of Influence Tactics on Padding a Budget. Academy of Accounting and Financial Studies Journal, 20(3), p.147.
Anelli, M. and Puglisi, R., 2015. The Actual Cost of a “Forced Switch” of Psychiatric Patients to a New Therapy: a Markov Chain–Monte Carlo Simulation. Value in Health, 18(7), p.A409.
Avenali, A., Boitani, A., Catalano, G., D’Alfonso, T. and Matteucci, G., 2017. Assessing standard costs in local public bus transport: A hybrid cost model. Transport Policy. p.120-130
Cooper, D.J., Ezzamel, M., and Qu, S.Q., (2017). Popularizing a management accounting idea: The case of the balanced scorecard. Contemporary Accounting Research, 34(2), pp.991-1025.
Flannery, M.J., 2016. Stabilizing large financial institutions with contingent capital certificates. Quarterly Journal of Finance, 6(02), p.165-200.
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Fürst, C., Opdam, P., Inostroza, L. and Luque, S., 2014. Evaluating the role of ecosystem services in participatory land use planning: proposing a balanced score card. Landscape ecology, 29(8), pp.1435-1446.
Hackett, J. and Hand, L.S., International Business Machines Corp, 2016. Routing service requests based on lowest actual cost within a federated virtual service cloud. U.S. Patent 9,330,368.
Hill, P.G., Allan, R.P., Chiu, J.C., Bodas-Salcedo, A. and Knippertz, P., (2018). Quantifying the contribution of different cloud types to the radiation budget in southern West Africa. Journal of Climate, (2018). 97, pp.76-92.
jaguar.in (2018) EXPLORE JAGUAR Available at: https://www.jaguar.in/index.html [Accessed on 23rd April 2018].
MITCHELL, F. and NØRREKLIT, H., 2017. Introduction. In A Philosophy of Management Accounting (pp. 15-34). Routledge.pp. 140-190
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