What Are the Duties of a Certified Managerial Accountant?
Managerial accountants are responsible for a wide variety of accounting tasks. They provide accounting data, analysis and reports that assist managers and executives with their business decision making processes. The managerial accountant conducts ratio analysis, cost accounting, variance analysis, budget forecasts, trend analysis and process efficiency information. This data is inward focused and is not used in external financial reporting. This accounting data is rarely seen or made available outside of the company management.
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Management Reporting
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Managers and executives must make many difficult business decisions daily. They make decisions, such as increasing production, decreasing production, discontinuing operations, expanding operations, making or buying a consumable item for manufacturing and may others. Managerial accountants provide the decision matrix data in terms of company accounting and financial markers. This data is analyzed and used to compute a solution to management's problem.
Budget Preparation and Analysis
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The managerial accountant is responsible for the budgeting process. The budget is built around the previous years operations, revenue trends and expense trends. The revenues and sales volumes, of previous years, are analyzed and trend data is calculated. This data tells the accountant the average growth or decline in sales revenues and the average increase or decrease in expenses over the previous years. Projections are made as to the future expenses and revenues based on these past trends. This data is used to build the next year's budget. This process in analytical in nature and requires a firm grasp of the accounting data available.
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Cost Accounting and Variance Analysis
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Much of the data used by management to make better decisions is obtained through the use of cost accounting and variance analysis. Cost accounting is the method of accounting where the costs incurred in carrying out an activity or procedure is collected, classified and recorded. This data is used to determine where possible weak points are in the process. If costs are too high the cost accounting will help locate the problem. A solution can them be drafted to fix the problem. Variance analysis is the testing of actual costs vs. the budgeted costs to determine of a disparity has occurred. The difference between the actual vs. the budgeted costs are the variances. A negative variance means that you are over budget where a positive variance means that the process is under budget.
Ratio Analysis
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Ratio analysis is used to determine and demonstrate a company's position in reference to its revenues and expenses. The acid test ratio determines a companies short term ability to pay its debt. Another ratio is used to determine the company's ability to cover its long term debts. This is called solvency and liquidity analysis. This ratio analysis, when conducted and recorded over long periods of time, can generate a clear picture of the company's overall direction.
Administrative Duties
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The managerial accountant must maintain the company's financial data within its managerial accounting system. He must perform and provide daily reconciliation reports to management and investigate any unusual figures or expenditures. The managerial accountant is responsible for briefing and communication all of the required and relevant data to the end user, in this case the management team.
Salary and Outlook
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The average managerial accountant salary is $70,000 per year, according to Indeed.com. However, managerial accountants in a leadership role often earn in excess of $100,000 per year. The Bureau of Labor Statistics says, "Accountants and auditors held about 1.3 million jobs in 2006. They worked throughout private industry and government, but 21 percent of wage and salary accountants worked for accounting, tax preparation, bookkeeping and payroll services firms. Approximately 10 percent of accountants or auditors was self-employed."
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