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LCRC :MS 02_MANAGEMENT ACCOUNTING AND BASIC CONCEPTS BATCH MAY 2020
Calamba Review Center - Laguna (LCRC)
2F MMCO Building, 8000 Lakeview Ph3 Angela Street, Halang, Calamba City Laguna, Philippines
Tel No. (02) 330-8617, (049) 523-6031; (02) 330-6057
CPA REVIEW (May 2020 Batch)
MAS Karim Abitago, CPA

MS02 – MANAGEMENT ACCOUNTING AND BASIC CONCEPTS

TOPIC OUTLINE
Management & Its
Functions
Basic
Concepts
Management
Accounting

Financial Accouting vs.

Management Accounting

Management Line vs. Staff

Functions
Accounting
Controller vs.
Treasurer Competence

Standards for
Integrity
Ethical
Conduct for
Management
Confidentiality
Accountants

Objectivity

LECTURE NOTES
BASIC CONCEPTS
Management Definition
Management is the process of planning, organizing and controlling tasks to achieve or meet the goals of
organization.
Functions of Management
(a) Planning – involves setting of goals and objectives of the firm, whether short-term or long-term,
evaluation and choosing of best alternatives in meeting the goals.
(b) Organizing / Directing – these are known as tackling activities. It is a function through which management
instructs, guides, and inspires the employees by communicating with them.
(c) Controlling – involves evaluation of actual performance whether it conforms to the planned results.
(d) Decision Making – involves determination of predictive information for making important business
decisions. NOTE: Decision making is inherent in all management functions.
Management Accounting Definition
A.K.A Managerial Accounting and Internal Accounting
It is the process of identification, measurement, accumulation, analysis, preparation, interpretation and
communication of information that assists in fulfilling organizational objectives.
FINANCIAL ACCOUNTING VS. MANAGEMENT ACCOUNTING
Areas of Comparison Financial Accounting Management Accounting
(1) Users of Information Internal & External (Primarily) Internal (Exclusively)
(2) Restrictive Guidelines PFRS / PAS / GAAP None
(3) Type of Information Monetary Monetary & Non-monetary
(4) Emphasis of Report Reliability (Precision) Relevance (Timeliness)
(5) Information Source Internal Data Internal & External Data
(6) Focus of Analysis Business as a Whole Various Segments
(7) Frequency of Reporting Periodic Whenever needed
(8) Time Orientation Historical Projected (Primarily) & Historical

LINE VS. STAFF FUNCTIONS

Line Authority
Managers with line authority are those people in the organization who are directly responsible for achieving
organizational goals. Line authority is represented by the standard chain of command starting with the board of

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LCRC :MS 02_MANAGEMENT ACCOUNTING AND BASIC CONCEPTS BATCH MAY 2020
directors and extending down activities of the organization that are carried out. Managers with line authority
exercises downward authority or the authority to give command.
Staff Authority
Staff authority belongs to those individuals or groups in an organization who provide services and advice to line
mangers. The concept of staff includes all elements of the organization that are not classified as line. Advisory
staffs have been used by decision makers from emperors and kings to dictators and parliaments over the course
of recorded history. Persons with staff authority exercise an upward or lateral authority.
CONTROLLER VS. TREASURER
Controllership is the practice of the established science of control which is the process by which management
assures itself that the resources are procured and utilized according to plans in order to achieve the company’s
objectives.
Treasurership is concerned with the acquisition, financing and management of assets of a business concern to
maximize the wealth of the firm for its owners.
NOTE: Generally, the above functions should NOT be combined on the same person.

Controller’s Functions Treasurer’s Function

Reporting and Interpreting Data Provision of Capital
Tax Administration Investor Relations
Government Reporting Short-term Financing
Management Audit Banking and Custody of Funds
Internal Audit Credit and Collections
Government Reporting Investments and Insurance
Economic Appraisal
Protection of Assets
STANDARDS FOR ETHICAL CONDUCT FOR MANAGEMENT ACCOUNTANTS
Practitioners of management accounting have an obligation to the organization they serve, their profession, the
public and themselves to maintain the highest standard of ethical conduct. In recognition of this obligation, the
Institute of Management Accountants has promulgated the following standards:
I. COMPETENCE
1. Maintain an appropriate level of professional leadership and expertise by enhancing knowledge and
skills.
2. Perform professional duties in accordance with relevant laws, regulations, and technical standards.
3. Provide decision support information and recommendations that are accurate, clear, concise, and
timely. Recognize and help manage risk.
II. CONFIDENTIALITY
1. Keep information confidential except when disclosure is authorized or legally required.
2. Inform all relevant parties regarding appropriate use of confidential information. Monitor to ensure
compliance.
3. Refrain from using confidential information for unethical or illegal advantage.
III. INTEGRITY
1. Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
apparent conflicts of interest. Advise all parties of any potential conflicts of interest.
2. Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
3. Abstain from engaging in or supporting any activity that might discredit the profession.
4. Contribute to a positive ethical culture and place integrity of the profession above personal interests.
IV. CREDIBILITY
1. Communicate information fairly and objectively.
2. Provide all relevant information that could reasonably be expected to influence an intended user’s
understanding of the reports, analyses, or recommendations.
3. Report any delays or deficiencies in information, timeliness, processing, or internal controls in
conformance with organization policy and/or applicable law.
4. Communicate professional limitations or other constraints that would preclude responsible judgment
or successful performance of an activity.

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