CONCEPTS,

manager to render his professional and technical

expertise to help define problems and recommend
solutions.
PRACTICES AND  An advisor is to provide professional advice
and technical assistance to managers.
STANDARDS  It covers consultancy, technical analysis, and
professional services outside of the
traditional auditing and taxation services.
THE FOUNDATION OF o Not governed by specific standards
MANAGEMENT SERVICES and processes because clients have
their natural and unique way of
Management services being different from each other.
 The practice of professional accountant  A professional must introduce himself as a
concerned with providing advice and CPA or chartered accountant (CA) and not as
technical assistance to help management a tax expert, financial auditing expert, or
improve the use of resources in achieving etc.
organizational goals
 ADVISOR/CONSULTANT – the CPA MANAGERIAL
that practices MAS work ACCOUNTING
The manager as the advisory client Management
 Management group is entrusted with o Involves the attainment of certain goals by
organizational resources to make more
judiciously utilizing its capabilities and
wealth.
resources.
 Management is different from governance.
 Governance (BOD) sets strategic Two basic management functions which affect the
goals and policies of the company. activities of accountants:
 Management structure, develops
1. Planning – involves setting of both
operating standards and systems,
immediate and long-range goals for the
and executes plans to deliver
organization
strategic goals.
2. Controlling – the manager sees to it that
 Manager exercises his decision-making
operations are carried out in the best
power.
possible way
 There is a tremendous intellectual
o Involves checking the performance
challenge.
of activities against the plan or
 Manager needs assistance of other experts
standards set.
in running the business affairs.
o In some cases, actual performance
 Outsource expert services of an
of activities is compared, not with
independent CPA or other
plans, but with past performance,
professionals
with the objective of improving
The CPA as advisor or consultant further such past performance.

The practice of management advisory services

arises when an independent CPA is contracted by a
The very essence of management involves making o In external reports, cost data are
decisions by choosing from available alternative shown in aggregate, like cost of
courses of action. sales, selling costs, etc.

Management Accounting THE CONTROLLER:

Accounting can be divided into financial accounting
and managerial accounting.
CHIEF MANAGEMENT
ACCOUNTANT
Financial Accounting
 Mainly responsible for the accounting
 Refers to reports that are primarily prepared
aspects of management planning and
for external users, such as investors,
control.
creditors, and government regulatory and
 Performs two basic, interrelated roles:
taxing agencies.
o Accumulation and reporting of
 Some reports provided by these reports, like
accounting information to all levels
net income, earnings per share and financial
of management
ratios are all of interest to managers.
o Directing management’s attention to
Managerial Accounting problems and assisting them in
solving such problems
 Refers to reports design to meet the needs
of internal users, particularly the managers. Controllership
 Aims to fill the information needs of  The function of business management
managers with respect to specific problems, which combines the responsibility for
decisions or situations, to enable them to accounting reporting, measurement,
make informed judgments and sound auditing, taxes, operating controls and other
decisions to achieve the goals of the related areas
organization.
Functions of the Controller
If the accountant want to help management, he
should possess the required know-how regarding 1. Planning for control – to establish,
the concepts, procedures, methods, and techniques coordinate and administer an adequate plan
under managerial accounting. for the control of operations.
2. Reporting and interpreting – to compare
The Cost Accounting Data Base performance with operating plans and
Cost Accounting standards and to report and interpret the
results of operations to all levels of
 Refers to the process of determining the management and to owners of the
cost of some particular product or activity business.
 Cost accounting data are used for both 3. Evaluating and consulting – to consult with
internal and external accounting reports all segments of management responsible for
o Production costs of specific policy or action concerning any phase of the
products, or detailed cost operation of the business as it relates to the
information in performing specific attainment of objectives and the
activities are shown in internal effectiveness of policies, organizational
reports. structures and procedures.
 4. Tax administration – to establish and managers, he exerts some force of influence
administer tax policies and procedures over such managers in making logical
5. Government reporting – to supervise or decisions toward the attainment of the
coordinate the preparation of reports to objectives of the organization.
government agencies
6. Protection of assets – to assure protection His place in the organization
for the assets of business through internal  The controller’s stature and duties vary form
control, internal auditing and assuring company to company, depending on the size
proper insurance coverage of such companies, and the complexity of
7. Economic appraisal – to continuously their organizational structure.
appraise economic and social forces and
government influences and to interpret
their effect upon the business.

THE CONTROLLER’S ROLE AND

PLACE IN THE ORGANIZATION
His role in management control
 Responsible for designing and operating a
system, through which control information
is collected and reported.
 Responsible for analyzing figures, for
pointing out their significance and for
making recommendations so that
management may be guided in coming up
with sound decisions.
DISTINCTIONS BETWEEN
He exercises staff authority
CONTROLLER AND TREASURER
Two types of operational functions:
 Line functions – are those which have direct
responsibility for accomplishing the
objectives of the organization
 Staff functions – elements of the
organization that help the line to work most
effectively in accomplishing the primary
objectives of such organization
Controller exercises control or line authority over
his own department only.
 However, the controller does not control
operations for he exercises staff authority.
 He “does” some controlling, since by
reporting and interpreting relevant data,
and by giving recommendations to line