Definition of Management Accounting

Management needs detailed information on different aspects to arrive at meaningful decisions. Financial accounting provides some information but these are not adequate. Management accounting removes these limitations of financial accounting. 

What is Cost Drivers

Cost driver - any factor whose change causes a change in the total cost of a related cost object; more simply, any factor that causes costs.

We assume a causal relation exists between the use of the cost driver and the incurrence of the cost.

Functions of Management Accounting

Functions of Management Accounting include followings:

• Provides data
• Modifies Data
• Analysis and interpretation of data
• Use of Qualitative Information also
• To help in Planning
• To help in Organising
• To help in Motivation
• To help in Co-ordination
• Communication
• To help in Control
• To help in Decision Making

Objectives of Management Accounting

• Providing managers with information for decision making and planning.
• Assisting managers in directing and controlling operational activities.
• Assisting managers in motivating employees toward the organization’s goals.
• Measuring the performance of subunits, managers, and other employees within the organization.

The Fact in Accounting Career

In open economic era, business enterprises are growing in size and complexity faces high competition. The demand of accountants is increasing day by day to provide accounting information for making accurate and effective decision within short period. Now-a-day accounting is used in business enterprise as well as in socioeconomic development.

International Accounting Standards (IAS)

International Accounting Standards has developed a set of standards for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial item.  From 1973 to 2000, international accounting standards (IAS) were issued by the Board of the International Accounting Standards Committee (IASC). IAS has developed 39 principles for stating how particular types of transactions and other events should be reflected in financial statements. In 2001, IASC was replaced by International Accounting Standards Board (IASB) and is now responsible to issue the international financial reporting standards (IFRS).

IAS 1    Presentation of Financial Statements

IAS 2    Inventories

IAS 7    Cash Flow Statements

IAS 8    Accounting Policies, Changes in Accounting Estimates and Errors

IAS 10    Events After the Balance Sheet Date

IAS 11    Construction Contracts

IAS 12    Income Taxes

IAS 16    Property, Plant and Equipment

IAS 17    Leases

IAS 18    Revenue

IAS 19    Employee Benefits

IAS 20    Accounting for Government Grants and Disclosure of Government Assistance

IAS 21    The Effects of Changes in Foreign Exchange Rates

IAS 23    Borrowing Costs

IAS 24    Related Party Disclosures

IAS 26    Accounting and Reporting by Retirement Benefit Plans

IAS 27    Consolidated and Separate Financial Statements

IAS 28    Investments in Associates

IAS 29    Financial Reporting in Hyperinflationary Economies

IAS 31    Interests in Joint Ventures

IAS 32    Financial Instruments: Presentation

IAS 33    Earnings per Share

IAS 34    Interim Financial Reporting

IAS 36    Impairment of Assets

IAS 37    Provisions, Contingent Liabilities and Contingent Assets

IAS 38    Intangible Assets

IAS 39    Financial Instruments: Recognition and Measurement

IAS 40    Investment Property

IAS 41    Agriculture

International Federation of Accountants (IFAC)

IFAC stand for International Federation of Accountants which is a global organization for the accountancy professional. The International Federation of Accountants was founded on October 7, 1977 in Munich, Germany at the 11th World Congress of Accountants. The organziation’s headquarters have been based in New York City since its founding. Sixty-three professional accountancy bodies from 51 countries were signatories of IFAC’s first Constitution Beginning with 63 members in 1977; IFAC’s membership has grown over the past 30 years to now include 157 members and associates in 123 countries and jurisdictions, worldwide. IFAC members and associates, which are primarily national professional accountancy bodies, represent 2.5 million accountants employed in public practice, industry and commerce, government, and academia. Through its independent standard-setting boards, IFAC develops international standards on ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to support professional accountants in business, small and medium practices, and developing nations. In addition, IFAC issues policy positions on topics of public interest and comment letters on matters relevant to the profession.

South Asian Federation of Accountants (SAFA)

South Asian Federation of Accountants (SAFA) was formed in the year 1984 to serve the accountancy profession in the South Asian Region and uphold its eminence in the world of accountancy. SAFA is an Apex Body of the South Asian Association of Regional Co-operation (SAARC) and a Regional Grouping of International Federation of Accountants (IFAC). SAFA represents over 170000 accountants having membership of the national chartered accountancy and cost and management accountancy institutions in the South Asian countries namely Bangladesh, India, Nepal, Pakistan and Sri Lanka. SAFA came into existence at the initiative of the accounting professional bodies in the South Asian Region, which has a bong of culture and homogeneity of professional environment.

The Chartered Institute of Management Accountants (CIMA)

The Chartered Institute of Management Accountants (CIMA) is a United Kingdom based professional body offering training and qualification in management accountancy and related subjects, focused on accounting for business; together with ongoing support for members.

CIMA is one of a number of professional associations for accountants in the UK and Republic of Ireland. Its particular emphasis is on developing the management accounting profession within the UK and worldwide. CIMA is the largest management accounting body in the world. CIMA was founded in 1919 as “The Institute of Cost and Works Accountants” (ICWA). It specialized in the development of accounting techniques for use in the internal control of manufacturing, service and public sector operations. It developed a position as the leading professional body in the areas of product costing, budgeting, management accounting, investment appraisal and business decision making.

In October 1944 the Institute of Cost and Works Accountants organisation in Ireland was formed. The institute changed its name from ICWA to the Institute of Cost and Management Accountants (ICMA) in 1972 and subsequently to the Chartered Institute of Management Accountants (CIMA) in 1986, after the granting of a Royal Charter. A global Accounting qualification based in the UK, which is particularly active in Commonwealth countries. Its membership has grown from 15,000 in 1970 to 79,757 members and 92,909 students in 2009. It has played a role in founding fraternal professional bodies such as the Institute of Cost and Management Accountants of Pakistan, The Institute of Cost and Management Accountants of Bangladesh Institute of Cost and Works Accountants of India and the Institute of Management Accountants (USA).

The Institute of Cost and Works Accountants of India (ICWAI)

The Institute of Cost and Works Accountants of India (ICWAI) is a statutory Professional body established on May 28,1959 under the Cost and Works Accountants Act, 1959 (Act No.23rd of 1959) enacted by the Parliament of India to regulate the profession of Cost and Management Accountancy in India over the years, the ICWAI has emerged as a leading professional institute in India and the second largest management accounting body in the world with focus on knowledge, training and research in the field of Management Accounting and Financial and Cost Management. The ICWAI syllabus, research, publications, training, MDP are renowned for exhaustive breadth and depth of knowledge. The ICWAI is recognized by the Government of India as a-Scientific and Industrial Research Organization (SIRO).

The ICWAI is committed
•    To develop the Cost and Management Accountancy profession.
•    To develop the body of members and properly equip them for functions.
•    To ensure sound professional ethics.
•    To keep abreast the latest developments in Management Accountancy, Cost and Financial Management.

The ICWAI is a Founder Member of International Federation Of Accountants(IFAC), Confederation of Asian and Pacific Accountants(CAPA), South Asian Federation of accountants (SAFA).    

The Graduate/Associate/Fellow members of the ICWAI are the professional Cost and Management Accountants of India. The headquarters of ICWAI is situated in Kolkata, and operates through four regional, councils (Kolkata, Chennai, Delhi and Mumbai), 94 chapters in India and 6 chapters abroad.