- Published: October 31, 2021
- Updated: October 31, 2021
- University / College: Western University
- Language: English
- Downloads: 28
Managerial and financial accountants perform the accounting functions in the organization. Accounting entails the allocation, management, reporting and disbursement of funds and finances within the organization. In modern management the role of accounting cannot be ignored. Accountants play a fundamental role that in the end determines the efficiency and successful operations of the organization. The paper shall examine the roles and functions of managerial and financial accountants.
Managerial accountants are in-charge of budgeting, forecasting, allocation and regulation of finances within the organization. In that context, managerial accountants see to it that organizational finances are well distributed and allocated inline with the requirements. Managerial accountants also handle the overall financial pursuits of the organization. Within their scope in the management of financial pursuits, they seek for loans and other funding sources, advice board of directors and other decision making organs within the organization on the investment options and alternatives, formulate budgets and proposals for organizational operations and handles purchases and orders for the organization. Managerial accountants hence need to be seen as the financial advisors and financial policy formulators of the firm. They access more information and need to be fully equipped in regard to executing their managerial functions.
On the other hand, financial accountants perform more of recording and reporting roles. In that context, financial accountants are charged with the maintenance of accounting records that represent the operations of an organization in monetary terms. In other words, financial accountants implement the financial decisions and recommendations as postulated by the managerial accountants and sanctioned by the decision making organs of the organizations. In addition, financial accountants summarize accounting records into statements that are reported for consumption by the financiers and other financial report consumers. In reporting, financial accountants are guided by accounting principles which are in tandem with the general accounting principles and practise. Therefore, it is the postulation of this paper that financial accounting and managerial accounting differ in terms of functions executed. While managerial accounting is concerned with forecasting, budgeting, allocation and overall management of finances; financial accounting is limited to recording, analysis and reporting of information for consumption by the financial report consumers. Over and above that it needs to be appreciated that managerial and financial accounting reports overlap and that their execution can be performed by any personnel within the accounting department. The difference depends of the level of specialization necessitated by the organizational requirements.
Managerial and financial accountants would consequently have different and unique functions and responsibilities in the orientation of employees. Foremost, both of them would be charged with the orientation of employees with the general accounting and financial policies of the organization. In that context, the onus is upon them to orient employees on organizational practises and policies such as the invoice system used, the reimbursement system, the interaction of accounting, financial and other departments of the organization and the levels of access the employee is allowed as far as matters finance are concerned. Over and above the common orientation responsibilities, the financial accountant would then be charged with orienting employees on the recording and reporting financial principles and conceptual framework. In addition, he needs to orient employees on the disclosure and reporting requirements that would be needed from employees in operation and execution of organizational duties. This includes to what extent the organization would allow for employees to perform duties of a financial nature on its behalf, the reimbursement systems, the voucher systems and other accounting documentation. On the other hand, the managerial accountant would orient the employees on the financial policies at the organizational level, the budgeting process and financial allocation mechanisms and the need to comply with budgets and organizational financial policies.
Financial and managerial accountants produce different accounting reports. The managerial accountants reports are in most cases for internal consumption and do not follow a particular standards. The structure and contents are also technical and intended for an expert audience. Some of the reports they produce include the proposed and final budgets, internal managerial financial reports, the financial business plans and scenario and investment analysis reports. On the other hand, financial accounting reports are intended for a wider consumption. It is often intended for consumption by laymen and consequently need to be in plain and simple understandable language. In addition, the need to compare and contrast creates the uniform standards required. Some of the accounting reports they generate include the statement of changes in equity, statement of financial position and the income statement for the financial year.
In conclusion, accounting is concerned with the financial management and regulation. Managerial accounting entails accounting at the policy and decision making level while financial accounting entails recording and reporting. The overall functions of these professions are to enable the smooth financial management of organizations. In addition, the need for standards and principles creates the need for professionalism in the management of finances hence accountants.
Banks, Erik. Finance: The Basics. New York: Routledge, 2010.
Dlabay, Les R and James L Burrow. Business Finance. New York: Cengage Learning, 2007.
Gieger, Dale R and D Thomas. “Practical Issues in Managerial Cost Accounting.” California State University Business Journal (2009): 1-13.