1.Management accounting is concerned with the provision and use of accounting information to managers within organizations, to assist management making decisions and managerial control functions. Unlike financial accountancy information (which, for the most part, is public information), management accounting information is used within an organization and is usually confidential. Contemporary managerial accounting systems are focusing more on the activities that occur at all levels of the organization.http://www.investordictionary.com/definition/management+accounting.aspx
2.Paragraph 28 of IMAPS 1 states: “Management Accounting refers to that part of the management process which is focused on organization resource use. Thus, it refers to managerial processes and technologies that are focused on adding value to organizations by attaining the effective use of resources in dynamic and competitive contexts.”
3.According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is “the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non management groups such as shareholders, creditors, regulatory agencies and tax authorities” (CIMA Official Terminology).
Public Accounting is not defined anywhere specifically but normally understood as certification of financial statements after conducting audit of accounts maintained by the enterprise or otherwise.
Let us go through these definition one after the other:
1.provision and use of accounting information -Book-keeping and financial statements and Cost information.
2.to(for) managers within organizations.-Internal consumption
3. assist management making decisions -MBE-management by exception(exceptional data extract for decision)
4.managerial control functions-Assisting in controls(establishment and management)-Vital information.
5. Unlike financial accountancy information – Not for public view.
6.focusing more on the activities that occur at all levels of the organization.
The crux of this definition is that the information as vital as intended is not available for public view.This is a very conservative view in todays global competitive scenario.
II—-1. management process which is focused on organization resource use.
2.focused on adding value to organizations by attaining the effective use of resources.
3.in dynamic and competitive contexts.”
III—–1.the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management
2.to plan, evaluate and control within an entity .
3.and to assure appropriate use of and accountability for its resources.
4.Management accounting also comprises the preparation of financial reports for non management groups such as shareholders, creditors, regulatory agencies and tax authorities”
From all the above we find the Definition of management accountant is a comprehensive one emanating from Industrial Cost accountant in the world war period to exemplifying a diversified role of Accounting,Strategy and Management in the economic sphere.He is a good planner,record keeper, report generator,strategy formulator,and a decision support expert.
Over and above he is a good auditor ,who else could be a competitor to verifying a comprehensive work formulated by a management accountant working inside the organisation than a management accountant himself.
As CIMA rightly points out that management accounting is an all encompassing sphere including preparation of financial reports(CI MA members are recognised as Reporting Accountant in UK and EU,Though they often downplay this capability).
Management Accountant works inside the organisation as an individual gaining expertise from bottom to Top and in the course of gaining experience he becomes a key person for various stake holder,Share holder,Creditor,Regulatory agencies,tax department et al.
As Auditing is a corollary or a consequential act of verification of books and is often referred to as Public accounting the person who maintains the books inside the organisation and the person who verifies the records should have equal skill requirements and hence it is the dual role capacity exhibited by the same person when in a particular role position.
So if a management accountant is an all encompassing Accountant for the management then his position is more carved as a public accountant addressing the needs of the stakeholders.
ICAI/ICWAI act do not specify the role of Auditor in the Act ,they define a Cost accountant and Chartered accountant.Similarly the qualification of a statutory auditor is no different from that of member of ICAI(financial audit)/ICWAI(cost audit).Thus it is amply clear that Public accounting area is not intended to be seen in exclusivity by the GOI.
Worldwide for instance in Australia the Auditor is qualified for registration with the ASIC if he is a member of Three Professional bodies .In the UK the RQB recognises Auditor from among CCAB member bodies,CIMA though not a RQB(they have voluntarily abstained)they act as reporting accountant for audit exempted companies.In canada the state governments recognise members of three institutes for public accounting.Public accountant in USA is defined as -CPA. An individual who has received state certification to practice accounting. The CPA is licensed to render an Audit Opinion on the fairness of a company’s financial statements. The licensing of CPAs protects the public from incompetent individuals performing substandard accounting work.
Canada has been a classic example where the state started recognising, thus long considered as internal accountants,as experts in public accounting and bestowing them with the responsibility of conducting statutory audit.The fact that financial statements have started adapting to the requirements of management by incorporating minute details in schedules and in the form of ratios,Fund flow analysis, abridged Project reports,Cost benefit product and service details vindicates the stand of the management accountants who have thus far been contributing to the primacy of the management to come out in the open and attest the work of the fellow colleagues.Stakeholders need more and more information and that legislative compulsions -demand them too and in that context and in the context of globalisation of business and transperant business deals ,it augurs well for an expert in management accountancy to attest the financial statements.
With all the above i feel no reason , except political dispensation, as to why a management accountant should not be allowed to attest financial statements.
Blog posted by RV