Management accounting's role in supporting organizational decision making

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Purpose of Management Accounting

An organization is typically a system consisting of many departments that work as a system. The overall performance of an organization is based on the individual contributions made by the varied departments therein. One of such departments is the accountants and accounting management department. The purpose of management accountant is to support decision making by collecting, processing, and communicating information that helps management plan, control, and evaluate business processes and company strategies. These types of roles and responsibilities have not been accorded to the self-directed accountant in most cases. This is because many of these responsibilities have been left to individual people in the company.

Many organizations do not have a typical docket of management accounting. Instead, this docket has many individuals who are accorded the same roles. Financial reporting is an important docket within an organization. This role is executed at the beginning of the accounting cycle. It is concerned with recording the financial transactions as soon as they occur. The financial health within an organization is exemplified through this role. Management executives use this report while making decisions (Chapman et al., 2009. Informed decisions are made when considerations are made to the financial reports offered by this docket. In addition, external stakeholders make use of the financial reports given within the accounting cycle when they are deciding on whether to invest their money in the company.

Budgets are crucial in any organization. Several individuals within an organization can be assigned this role of creating and maintaining budgetary terms that drive an organization. With budget, companies are able to select business operations that are probable of profits. Management accountants are concerned with developing budgets of every department within an organization, and later assemble to develop a one universal budget for the company. Non-accountant individuals like logistics managers can do budgets from departments as logistics operations department. The roles of the accountant in such a case are to give a report of what has transpired within the department as concerns the budget. Management accountant is responsible for developing budgets and tracking expenses that seem to work without relevance to the budget.

Forecasting is a crucial activity that must be done by every company in the world. This role involves determination of the sales amounts within a business. Production operations are related directly to the amount of sales made within an organization. Management accountants conduct business operations in order to cage the position of the company as regards the business cycle in place. Forecasting is mainly concerned with reviewing the performance of the current competitors in the market, and relishing the future performance of the company with regard to the presence of these competitors. Improvement of the products and services are vital to the future performance of the organization.

The company's internal control is another role that is done by the management accountants. The function of internal controls is to protect on cash, integrity, and stability of fixed assets within an organization. Most companies have internal control systems, which are not run by the management accountants. They have their own management details that are selected according to the experience and skills needed by the department. Moreover, management accountants are concerned with managing support to the company. This is done through management of the decisions that are supposed to protect the interests of the company. Management of risks falls under this category of management accountant responsibilities. Individual accounting and non-accounting managers perform these roles (Needles et al., 2010