Corporate or Managerial Accounting

Corporate or Managerial Accounting

Managers related establishments are numerous, such as the professional order of COSO (Committee of Sponsoring Organizations of the Treadway Commission). Many students enroll in commerce majors to become managers. Being a manager not only confers prestige, but is also a more lucrative career prospect. Thus, managerial accounting is usually most associated with the professional field of CMAs (Certified Management Accountants), who work within such systems as flow-n-flow-out, the balanced score card and just-in time inventory. Lately, a transformation has been underway in Canada, aiming at bringing all three certifications, CA, CGA and CMA under one roof, or the professional order of CPA.

Becoming a management accountant takes a lot of thought and preparation. Image: Megan Jorgensen (Elena)

Just as marketing studies have their goals, so has management, and accounting techniques can help companies keep better track of materials they use or items they produce. Indeed, it is almost impossible to imagine a successful business without any accountants to keep track of inventory, profits, expenses and so on. However, while most business goals centre on making profits, accountants and bookkeepers must work within established rules such as the GAAP (Generally Established Accounting Principles) or other regulations depending on geographical location and jurisdiction.

To illustrate, like most professions, management accountants have their own professional organization: the Institute of Management Accountants (CIMA). According to a work published in the journal, the balanced scored card approach may have more benefit s than just those benefits traditionally described in school. Also, like foreshadowed above, corporations often utilize systems such as just-in-time inventory, ERP (enterprise resource planning) and the balanced score card. Thus, according to the CIMA (2010) the balanced score card is one way management accountants bring value to business firms.

A chief or senior management accountant may become a Controller or Comptroller (British spelling). Image: Megan Jorgensen (Elena)

Further, the Harvard Business Review (HBR) is notorious for publishing articles outlining theories that later become classics of managerial concepts. For instance, Porter (2008) talks about market forces acting on commercial success or how customers, suppliers and competitors should be taking these into consideration when shaping one’s business strategy. All in all, the notorious publication has a wide array of articles outlining business strategy and other useful information for entrepreneurs and business owners. While it is unlikely to make an unsuccessful business work simply by reading about strategy, keeping informed and remaining in the know represent good habits to have as contributing to eventually post significant business profits.

Frigo & Anderson (2011) react to the financial crisis surrounding the events of subprime mortgages and subsequent bank collapses that started taking place somewhere around 2008. The authors do so by looking at risk management. Enterprise risk management (ERM) is a significant area for business to look at in attempting to achieve commercial success. The issue has gradually gained international recognition, with the International Organization for Standardization (ISO) issuing a set directives on how the process(es) should be carried out. In addition, credit rating agencies such as Standard & Poor’s and Moody’s have demonstrated interest in a firm’s ERM system. As one knows from introductory economics courses risk loving individuals significantly differ in their investing strategies from risk avoidant, or even risk-neutral individuals. Investment strategies greatly depend on the risk tolerance of the investor.

Accounting is present in many areas of life, including saving to buy a house. Image: Megan Jorgensen (Elena)

Just like parcours (a popular topic, consisting of a potentially dangerous sport of running across buildings, depicted in cartoons such as American Dad episode Stanny Boy and Frantastic and mystery and thriller television series) in music lyrics and cinematography, management and business studies is a popular subject in movies. For example, in the controversial movies Friends With Benefits, featuring Justin Timberlake (singer) and Mila Cunis (That 70s Show with Ashton Kutcher) he is a successful Website manager, while she’s a savvy headhunter. Management studies can be quite elaborate and specialized. For example, managing resources in ecology (e.g. Bestelmeyer, 2011). Thus, the purpose of the present business essay was to outline some of the major theories in managerial accounting today.