The role of managerial accounting in strategic decision-making

¶ … CEO of Company X

While it is understandable that our company does not wish to incur the additional expense of yet another salary onto the payroll, sometimes it is necessary to spend money to save money. Adding a managerial accountant to the accounting department is essential to ensure that Company X remains competitive in the future. In the information age, knowledge is power, and a managerial accountant is able to provide all-important knowledge to the key decision-makers at our company, enabling Company X to remain nimble and efficient when constructing long and short-term strategies.

The objectives and characteristics of an internal accounting system

The types of accounting information that are required for an external audit are different from those used internally. Managerial accounting can provide managers with useful information for planning and control decisions. They can also provide valuable data to other actors with whom the company deals with: "For example, in order to meet a production schedule, a producer may design an accounting information system for suppliers detailing its production plans. The producer shares this information with its supplier companies so that they can help the producer meet its objectives. Thus, although the creator and distributor of the accounting information is an internal decision maker, the recipient of the information is, in this case, an external decision maker" (Williams et al. 2008). Managerial accountants always tailor the presentation of the data to the intended recipient.

Internal accounting ensures that accurate and recent data is available for the company's "long-range plans, research and development results, and capital budget details" as well as for making short-range decisions using general data about payroll and expenses (William et al. 2008). It can also be used to motivate individual employees and departments at the company. "When the accounting system compares the plan or budget to the actual outcomes for a period, it creates a signal about the performance of the employee responsible for that part of the budget. In many enterprises management creates a reward system linked to performance as measured by the accounting system" (Williams et al. 2008).

Ethics

Of course, there may be some worries that such valuable internal information may fall into the 'wrong hands.' Because sensitive information can have such a critical impact upon the organization, confidentiality is essential for the managerial accountant. Additionally, some internal information might be valuable for a competitor, and until management decides that it is acceptable to disclose it to the public, the managerial accountant must ensure that the data is only entrusted to the persons for which it is intended.

In conclusion, adding a managerial accountant to the department will prove to be an asset for all current employees and managers. The additional data will make work flow more easily, as well as enhance efficiency and accountability.