Accounting management looks at internal accounting data to provide insight into company operations and future trends. It can be used to help guide strategic and tactical decision-making. Accounting procedures are created by accounting managers to maintain a systematic way to account for the flow of resources and assets throughout an organization.
Accounting management became popular in the late 1980s as new and innovative tools were being introduced to accounting professionals and business managers. These tools often took the form of software or business applications. The distinction between the traditional and new practices of management accounting can be best illustrated by looking at cost-control techniques.
Accounting management, also known as management accounting, is used for strategic management, performance management and risk management. It is often used to provide a uniform system of management for an organization and is greatly influenced by the management information system chosen by the organization. In addition to management, this information is used by treasury, auditing, marketing, pricing, sales and logistics functions. Users of accounting management find it helps to formulate informed strategies, plan business activities, support financial report preparation, safeguard assets and provide a foundation for budgetary targets.
Variance analysis is the most popular form of cost control. Before the Internet, cost control was a tedious process that took a considerable amount of time and effort. However, as business systems improved, so did the ability to create customized accounting templates that helped to automate the process.
Information gleaned from accounting management is designed to be used by internal management and is usually made confidential instead of publicly reported. Account-management documents tend to be forward-looking and computed with the needs of key management in mind instead of a particular accounting standard such as GAAP.
Management accounting today takes on a dual-reporting relationship. Accounting managers are responsible for managing business teams and reporting forecasting data to senior managers. For instance, accounting data for business management may improve client profitability analysis and operations research, whereas executive management is more interested in metric comparison and goal achievement. Creating a separation between the preparation of internal reports and the more traditional roles that consist of risk and regulatory reporting can greatly improve the degree of productivity within organizational decision-making. This is especially important for organizations that count on information to drive business decisions, such as banks, telecommunications, publishing houses and IT.
Accounting procedures are used as a way to enforce accounting management. They help organizations to identify, control, use and maintain the status of capital equipment as well as the flow of resources. Accounting procedures should tell the analyst how to purchase an asset (including the capitalization criteria and proper account numbers for the acquisition), distinguish between regular capital assets and computer-related software and follow the proper approval process for equipment usage. They should also provide a threshold for purchases with defined ranges for signature authority. If your organization used a purchasing card (P-card), you should also supply instructions on which items can be purchased using the card.