accounting, there are two distinct types, financial management and accounting. Management Accounting, which seeks to meet the needs of managers and financial accounting, which seeks to meet the accounting needs of each of the other users. And reflect the differences between these two types of accountability for different user groups dealt with. Briefly, the main differences are as follows:
- nature of the reports. Financial accounting reports tend to be general purposes. This means they contain financial information that will be useful for a wide range of users and decisions rather than being tailored to meet the needs of a particular group or set of decisions. Management accounting reports, on the other hand, are often a particular purpose. They are designed with a particular decision, either in mind or a particular manager.
- level of detail. Availability of financial reports for users with an overview of the performance and attitude of work for a while. As a result, the information and details assembly often wasted. Management accounting reports, however, often provide managers with detail to assist them in making certain executive decision.
- Regulations. Financial reports, for many companies, is subject to accounting rules that are trying to ensure that they are produced with standard content in a standard format. Law and accounting rule makers to impose such regulations. Since the management accounting reports are for internal use only, there are no regulations from external sources on the form and content of reports. They can be designed to meet the needs of certain managers.
- The reporting period. For most companies, it is produced by the financial accounting reports on an annual basis, although many large companies produce half-yearly reports and a few of them produced quarterly. It can produce management accounting reports as often as is required by managers. In many companies, and served with some of the managers reporting on a monthly basis, weekly or even daily basis, allowing them to check the progress often. In addition, reports will be prepared for special purposes when needed (for example, to evaluate a proposal to buy a piece of machinery).
- time horizon. The reports reflect the financial position and performance of the business over the past period. In essence, looking back. Management accounting reports, on the other hand, often information relating to future performance, as well as past performance progress. It is simplistic, however, indicate that the accounting and financial reports did not include expectations about the future. Sometimes, the companies expected to release the information to other users in an attempt to raise capital or to fight unwanted takeover.
- range and quality of information. Financial accounting reports focus on the information that can be measured in terms of monetary value. Management accounting also produce these reports, but also more likely to produce reports containing the nature of non-financial information, such as measures of physical quantities of stock (shares) and outputs. Establish financial accounting increased emphasis on the use of objective, verifiable evidence when reporting. You may use accounting reports and management information that is less objective and verifiable, but provides managers the information they need.
We can see from this that management accounting is less restrictive than the financial accounting. The drawing on a variety of sources and use of information that has varying degrees of reliability. The only true test to be applied when assessing the value of the information produced for managers is whether or not it improves the quality of the decisions taken.
distinction between the two regions reflects, to some extent, the differences in access to financial information. Managers have more control over the format and content of the information they receive. Other users have to rely on what managers are prepared to offer or what the state must provide for the regulation of financial reports. Although the scope of the accounting and financial reporting has increased with the passage of time, it has concerns about the loss of competitive advantage and ignorance about the reliability of the data user expectations of companies to resist providing other users with detailed and wide-ranging information that is available to managers.
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