Management accounting is the branch of accounting that provides financial and operational information to managers within an organization to help them plan, make decisions and control performance. It is another name for managerial accounting, which covers its tools and techniques in detail. Unlike financial accounting, which produces standardized reports for outside investors and lenders, management accounting is designed around the needs of internal users and is not governed by GAAP or IFRS.
How the term is used
Management accounting is the usual term in the United Kingdom and many Commonwealth countries, and in the names of professional bodies such as the Chartered Institute of Management Accountants (CIMA). In the United States, managerial accounting is more common in university courses, while the Institute of Management Accountants awards the Certified Management Accountant credential. The subject matter is the same.
Typical management accounting work includes preparing a budget and forecasts, analyzing variances between actual and planned results, calculating product and service costs through cost accounting, analyzing pricing and make-or-buy decisions, evaluating capital investments and designing performance measures for departments and managers. Reports are produced as often as managers need them, sometimes daily, and may include nonfinancial data such as customer satisfaction or production yields. The contrast with financial accounting lies in audience, rules and timing rather than in the underlying data, which usually comes from the same accounting system.