A career in managerial accounting offers many possibilities for advancement and variety. For example, Hiren Shah, a senior consultant at the famed Ernst & Young professional services firm, climbed the ladder from an economic and financial background into managerial accounting consulting. His proficiency in managerial accounting made him a prime candidate for a position focusing on the decision-making aspects of finance, according to “Real Life Stories from Management Accountants” on TotalProfessions.com.
“Consulting is a project-based career and therefore I have many different roles within different projects,” explains Shah. “For example, I was part of a team that designed the operating model for a charity and then a few months later I was part of a cost reduction team at a global energy company. What I enjoy the most is the variety of people I meet.”
For Shah, consulting on managerial accounting projects requires a thorough knowledge of project management skills and costing analysis, a solid foundation in general business skills, and an ability to navigate through various group accounts within a business.
Advanced education provides the training necessary to develop those traits and skills. MBA students interested in management accounting careers should have a solid understanding of accounting practices and principles as well as experience in other business-related fields. An online MBA degree with a concentration in finance can put graduates on a path for increasingly responsible accounting positions, up to and including chief financial officer (CFO) for a large corporation.
What Does Management Accounting Involve?
Managerial accountants are valuable assets in modern corporate culture. Their duties can include performing budget and financial analyses, monitoring costs, conducting audits, directing financial processes, and assisting company executives with a range of financial decisions, according to “An Overview of Management Accounting” on Accounting.com.
Because many of these duties apply to both professions, management accounting is often confused with financial accounting. But Accounting.com explains the difference between the two: “Managerial accounting primarily involves completing tasks and producing reports that inform company leadership about financial decisions related to general company operations. Financial accounting’s central focus is informing external groups–—such as banks, boards of directors, stockholders, and tax agencies–—about the company’s financial status.”
Those who pursue a career in managerial accounting will be expected to exercise sound judgment, make reasonable assumptions, and use justifiable data. “Future outcomes hold a great deal of uncertainty and the management accountants will need to make estimates of the various factors that could impact business decisions,” according to AccountingEDU.org’s “Managerial Accounting” section.
“Senior executives rely on management accountants to gather all the relevant information needed to make fully informed decisions so as to create some degree of certainty in the otherwise uncertain world of economics. Without management accountants, senior executives would be gambling on the future. Their decisions would be based on instinct rather than justifiable data.”
To assist with this decision making, AccountingEDU.org points out that the most common goal of management accountants is cost-benefit analysis. Completing a thorough cost-benefit analysis is no small task.
If, for example, a company builds up a surplus of cash over several years, that company’s leadership has to decide what to do with the excess funds. Managerial accountants prepare detailed cost-benefit analyses of every option at the company’s disposal, including acquisition of a competitor and investment into expansion. The accountants’ efforts provide decision makers with solid data on which to base their ultimate decision.
Beyond cost-benefit analyses, managerial accountants assist with many other aspects of a business. According to AccountingTools.com’s “The Functions of Managerial Accounting,” management accountants are also frequently responsible for:
- Margin analysis: Determining the amount of profit or cash flow generated by a business in specific departments or product lines, stores, or regions.
- Break-even analysis: Calculating the point at which a business will break even, which can be very helpful to decision makers attempting to determine price points for products or services.
- Constraint analysis: Determining where bottlenecks are and how they affect the company’s ability to earn a profit.
- Target costing: Accumulating the costs of new designs, comparing them to target cost levels, and reporting the findings to company decision makers.
- Inventory valuation: Determining the expenses of an inventory and allocating overhead costs to it.
- Trend analysis: Looking for unusual variances from long-term patterns by reviewing trend lines of various costs.
- Transaction analysis: Looking deeper into a trend analysis to examine individual transactions and any other underlying data to determine the cause of a variance.
- Capital budgeting analysis: Examining proposals related to the acquisition of fixed assets to determine whether the items are needed and, if so, the most appropriate way to finance them.
Managerial Accounting Education and Salary Information
Financial or accounting employees and those who hold a bachelor’s degree in business can further their career path to management accounting by obtaining a master’s degree in business administration, accounting, finance, or a related field.
Professionals seeking a master’s degree in business as a gateway to management accounting should make sure that their school’s curriculum covers the following disciplines: financial and managerial accounting, managerial economics, advanced accounting, auditing, financial statement analysis, and data analysis, according to Study.com’s “Career Information for a Degree in Managerial Accounting.”
Once that training is complete, a career in management accounting is possible. While the average salary for a management accountant varies and is not reported by the Bureau of Labor Statistics, managerial accountants can also work in positions more closely related to budget analysis and auditing, which have a median salary of $71,590 and $67,190, respectively. However, according to AccountingEDU.org, the Institute of Management Accountants reports that annual compensation for certified managerial accountants (CMAs) averaged $125,734 in 2013, including bonuses.
About WSU’s Online Master of Business Administration Program
For those interested in the training necessary for a career in managerial accounting, Washington State University’s Carson College of Business offers one of the top-ranked MBA programs in the nation. WSU delivers online MBA courses designed to equip students with the tactics, knowledge, skills, and strategies utilized by today’s most high-profile business leaders.
The program offers several online MBA degree concentrations—marketing, finance, hospitality business management, international business, and a general MBA. For more information, visit WSU’s online MBA website.
Managerial Accounting Case Studies – TotalProfessions.com
An Overview of Management Accounting – Accounting.com
Managerial Accounting – AccountingEDU.org
The Functions of Managerial Accounting – AccountingTools.com
Career Information – Study.com