Managerial Accounting
MANAGEMENT ADIVSORY SERVICES
Management Advisory Services (MAS) involve providing professional consulting services to help organizations optimize their
capabilities and resources to achieve strategic objectives. These services aim to enhance decision-making, improve
operational efficiency, and support long-term sustainability.
Three Objectives of Management Accounting
1. Cost Information – Provide accurate cost data for products, services, and other areas of interest to
management.
2. Planning, Control, and Continuous Improvement – Assist in setting goals, monitoring progress, and
ensuring efficient operations.
3. Decision-Making Support – Supply relevant financial and non-financial information for strategic
decision-making.
How Managerial Accounting Adds Value
1. Provides Critical Information – Supplies managers with data on product costs, budgets, and cash
flows for effective decision-making.
2. Supports Operational Control – Helps in directing and controlling business activities to align with
strategic goals.
3. Enhances Motivation – Encourages managers to achieve targets by tracking performance and
identifying deviations.
4. Measures Performance – Evaluates overall organizational performance as well as the performance of
individual divisions, departments, and managers.
5. Improves Competitive Position – Assesses internal efficiency, customer satisfaction, innovation, and
financial health in a rapidly changing business environment.
Basic Management Functions and Concepts
a. Planning – Establishes strategy, selects actions, and determines implementation.
o Set short- and long-term objectives.
o Identify necessary resources and tactics.
o Choose the best alternative to meet objectives.
b. Directing & Motivating – Mobilizes people to execute plans and manage operations.
o Implement the plan.
o Motivate others to achieve results.
c. Controlling – Ensures plans are executed and adjusted as needed.
o Compare actual performance with standards.
o Monitor progress toward goals.
o Take corrective actions for deviations.
o Adjust future plans if necessary.
Management by Objectives (MBO)
Supervisors and subordinates set goals and performance criteria together. Progress is evaluated at set periods.
Management by Exception (MBE)
Focuses on addressing significant deviations from expectations rather than routine matters.
Financial Accounting vs Managerial Accounting
Financial Accounting Management Accounting
User of Information Primarily for external users Exclusively for internal users
Source of Internal data Internal data and external sources
Information
Purpose of Financial reporting and compliance Management decision-making
Information
Guiding Principles Accounting standards (e.g., PFRS) Management wants and needs
Type of Information Mostly financial or monetary in Financial and non-financial
nature
Time Orientation Mainly historical Future-oriented using past, present
data
Emphasis of Reports Reliable – precision, verifiability Relevance – timeliness, materiality
Amount of Details Aggregated and simplified Detailed and extensive
Focus of Business as a whole Mainly on business segments
Information
MANAGEMENT ADIVSORY SERVICES
Management Advisory Services (MAS) involve providing professional consulting services to help organizations optimize their
capabilities and resources to achieve strategic objectives. These services aim to enhance decision-making, improve
operational efficiency, and support long-term sustainability.
Three Objectives of Management Accounting
1. Cost Information – Provide accurate cost data for products, services, and other areas of interest to
management.
2. Planning, Control, and Continuous Improvement – Assist in setting goals, monitoring progress, and
ensuring efficient operations.
3. Decision-Making Support – Supply relevant financial and non-financial information for strategic
decision-making.
How Managerial Accounting Adds Value
1. Provides Critical Information – Supplies managers with data on product costs, budgets, and cash
flows for effective decision-making.
2. Supports Operational Control – Helps in directing and controlling business activities to align with
strategic goals.
3. Enhances Motivation – Encourages managers to achieve targets by tracking performance and
identifying deviations.
4. Measures Performance – Evaluates overall organizational performance as well as the performance of
individual divisions, departments, and managers.
5. Improves Competitive Position – Assesses internal efficiency, customer satisfaction, innovation, and
financial health in a rapidly changing business environment.
Basic Management Functions and Concepts
a. Planning – Establishes strategy, selects actions, and determines implementation.
o Set short- and long-term objectives.
o Identify necessary resources and tactics.
o Choose the best alternative to meet objectives.
b. Directing & Motivating – Mobilizes people to execute plans and manage operations.
o Implement the plan.
o Motivate others to achieve results.
c. Controlling – Ensures plans are executed and adjusted as needed.
o Compare actual performance with standards.
o Monitor progress toward goals.
o Take corrective actions for deviations.
o Adjust future plans if necessary.
Management by Objectives (MBO)
Supervisors and subordinates set goals and performance criteria together. Progress is evaluated at set periods.
Management by Exception (MBE)
Focuses on addressing significant deviations from expectations rather than routine matters.
Financial Accounting vs Managerial Accounting
Financial Accounting Management Accounting
User of Information Primarily for external users Exclusively for internal users
Source of Internal data Internal data and external sources
Information
Purpose of Financial reporting and compliance Management decision-making
Information
Guiding Principles Accounting standards (e.g., PFRS) Management wants and needs
Type of Information Mostly financial or monetary in Financial and non-financial
nature
Time Orientation Mainly historical Future-oriented using past, present
data
Emphasis of Reports Reliable – precision, verifiability Relevance – timeliness, materiality
Amount of Details Aggregated and simplified Detailed and extensive
Focus of Business as a whole Mainly on business segments
Information
