The financial activities that we perform are for the board, consumers and suppliers, financial institutes and government institutes, which are mostly external groups of organisations.
Management Accounting
A higher load of information for filtering is being processed in this sector. The management accounting sector deals with both our financial details and non-financial information to help our managers to undertake appropriate course of action in our business activities to achieve our targets, leading to further development. When the information is determined, it is then interpreted, applied and presented to our management at all levels so it can be of value to our objectives. We are acquiring all the information to help managers form a strategy for the following:
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Planning activities of the organisation.
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Making decisions about the plans made on the organisation.
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Controlling the decisions taken about the organisation to attain our highest possible targets.
Financial Accounting and Management Accounting Sector
There are lots of differences between our financial accounting sector and the management sector. I will try to emphasis the differences that are present in the two sectors in our accounting department. All these sectors are presently in my sole control in this department. The following table illustrates such differences:
Table 1: Difference between Financial Accounting & Management Accounting.
Simply because of the vast number of differences I have mentioned it signifies the importance of splitting them into two sectors within the department. Hence it revitalizes my proposal of having a management accountant to assist in the accounting department. The addition of such a role will help us to improve operations and planning, and enlighten the managers on how to improve their strategies. Projecting to the future and good budgeting is therefore more accurate.
Management Accountant Duties
Introducing this new role will mean the management accountant will take up new and existing roles to help improve the information corresponded to the board and managers of Smart Toys Enterprises. The duties that come will such a role will include those illustrated in the model below:
Model 1: Management Accountant Duties
Relevance
The role will require the use of a wide variety of financial and statistical procedures to relay information and statements to the managers. The management accountant will be expected to determine what and why information is required, deciding the best possible way in which to relate the information to the managers with potential value. Having such a role introduced will also mean new changes in the accounts department in the type of data collected and the way it is resourced. All these are new information that Smart Toys are able to resource since our vast expansion also accumulating a higher volume of both financial and management accounting statistics. Thus the department is also expanding.
Qualification and Experience Required
From my experience at Smart Toys Enterprises Ltd I know that its success is based on its employees having good and relevant qualifications in there choice of skill. The company is relatively new so recruiting an experienced management accountant will be gladly welcomed. The minimum qualifications required are:
- Pass in 5 ‘0’ level exams including English and mathematics.
- Degree in Business or related study
- Chartered Institute of Management Accounting (CIMA) certificates
- Association of Certified Chartered Accountants (ACCA) certificate
I strongly believe that recruiting a candidate with such qualifications will be the right choice towards easing the pressure the accounting department is facing. It is said that for a company to progress it must have an accurate accounting department to collate financial statistic. The Experience required;
- Four years work experience, administration department in any organisation.
- Two years work experience, accounting department in business enterprise.
- One year work experience, production department in a computer games business enterprise.
The Importance of Management Accounting to Smart Toys™
- Management accounting allows the company to add up costs for inventory valuation and profit measurements by accounting for its labour and materials and costing them respectively, with accounting for all the purchases by the production department including accounting for completed jobs and product sales.
- The accounting sector is vital for accumulating information for decision making, these includes acquiring important costs and income. Function based costing of the relative department.
- Information involved in planning, control and performance measurement is also accumulated by the management accountant.
- Management accounting uses cost benefit approaches to improve decision making in Smart Toys™, using technical means in differentiating costs for their relative uses.
Advantages and Disadvantages
Having a management accounting sector comes with its disadvantages as well as it vast advantages. Here is a list of few:
Table 2: Advantages and Disadvantages of the Management Accounting Sector
Contribution of Management Account
Management accounting contributes to a wide range of activities in an organisation. Below is a theme indicating such:
- Firstly it helps to analyse competition and put a position on the state of the organisation in respect to competition.
- Management accounting helps Smart Toys™ to analyse the business transaction for good communication between departments leading to quicker actions to regulate and enhance the organisation.
- This sector is involved with every department in the enterprise to ensure that there is unity in the business transactions that take place.
- It helps in the generating of capital, from financial institutions which have access to the management accounting statements.
- The management accounting sector contributes to the way the employees are rewarded depending on there level of output.
- Another importance is the role it plays in minimising risks taking by the board and managers in different departments.
- The statements produced can help in generating motivation for the workers when they see what there effort exerted are producing for the enterprise.
- Relationship between departments is encouraged by the way management accounting links the organisation as one entity going in the same direction.
Overview on the Proposal
This proposal has been carefully considered before being put forward for recommendation. The enterprise is constantly expanding and acquiring more customers creating a base for change in a variety of ways to meet up with the rate of change. Production is increasing as well as our employees. A proposal of this nature has been in the making for a while.
Conclusion
Management accounting is one of the most important departments in Smart Toys Enterprises Ltd as I have indicated above. It is important that accounting as a whole can be performed in the best possible manner to benefit the organisation, being performed accurately and with the correct methods. This sector helps in the planning, controlling and decision making by the managers to reach the maximum potential of the organisation as a whole. Financial accounting and management accounting are core to regulating Smart Toys™, having respective roles to manage each sector will greatly benefit the organisation to achieve its objectives. Accurate information in the required time about relevant activities increases the options managers are left with giving them a chance of making the rational decision.
Recommendation
It is highly recommended that Smart Toys™ employs a management accountant to assist in the accounting department to take up the management accounting tasks. In light of these it is also vital that additional duties are taken up by this role, which will improve the financial statements that are identified, measured and communicated by the accounting department. The new sector and role is an effect from expanding considering that production and sales have increased by 40%. This in turn has increased the pressure placed on the accounting department leading inaccuracy and being timed out. Recruiting a management accountant will ease pressure on my department and benefit the organisation as a whole. Eventually weighing up the marginal cost and benefit of having a management accountant leaves the rational choice of recruiting one now.
References
Bendrey M, Hussey R and West C (2003). Essential of Management Accounting in Business, London: Continuum.
Drury C (1987). Cost and Management Accounting, 5ed, London: Thompson.
Dyson J R (1991). Accounting for Non-Accounting Students, Pitman
Horngren C T, Foster G and Datar S M (1987). Cost Accounting, 10ed, London: Prentice-Hall Intenational
