With time, the number of competitors has gone up significantly and the degree of competitions among these competitors has also increased. Formulation and execution of proper strategies has become the primary…
Such information provides the policy makers with the necessary guidelines for framing the strategies for the company. Financial and accounting department is the most important department as they are the watch dogs of the financial conditions of a company. The formulation of strategy also includes under its fold aspects like financial goal and a financial performance analysis. The financial performance of a company is disclosed by its finance departments. The contemporary business environment of an organisation influences the management accounting system. Choosing a proper management accounting system is therefore imperative for every organisation.
Unlike the traditional financial accounting system, management accounting system is a more contemporary method of managing accounts and it discloses the relevant information to the stakeholders of the company. The financial accounting system is meant to provide information to the external parties of an organisation like shareholder, creditors, employees, customers and government, though these sections of people do not take part in the decision making process. The managerial accounting is useful for the internal group of people like the management team, CEO and policy makers as these people ‘plan and control’ a company (Clarke, p.10). The information derived from the management accounting system is more valid, accurate, subjective and judgemental than financial accounting system. Management, in its essence is endowed to look after four primary aspects which include strategic management, planning decision making, management control and financial reporting. The management accounting information plays a very important role in regards to all these functions. Its roles pertaining to management functions are discussed below.
Strategic management: Before drafting a competitive strategy, a company has to take into account its financial position. If a company wants to position itself in field of cost ...
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Budgeting is a way of considering resource constraints to formulate plans for development. They are prepared for a long term of about 5 years in future with annual revisions. But, to analyze the benefits of such procedures to any firm, it is very important to understand about the environment in which the firms perform their businesses.
Management accounting is considered to be useful when it properly displays an external image and a futuristic picture for an organisation. Strategic Management Accounting on the other hand can be distinguished from other management accounting activities through its extensive external orientation; this extensive external orientation includes focus towards customers, competitors, suppliers and all other stakeholders that get affected by the organisation’s normal course of business.
In above connection, strategic management accounting presents numerous benefits in organization decision making. Some of its benefits include; helps in analysis of variances, monitoring and control, financial reporting, controlling cost among other benefits (Codjia, 2013).
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The two types of financial management differs in the sense that financial management can only provide the company a glimpse of where it is standing right now in terms of financial soundness. While strategic management enables a company to go beyond the boundaries of the normal financial management.
The project report then looks at the aims and objectives of establishing a management accounting system and the characteristics of information flow at the strategic level. It also analyse the effectiveness of SMA system in the provision of information to assist the senior management team in the achievement of the corporate objectives at Highline.
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Top Building Construction Ltd is well established company in the construction industry mainly focusing on building large industrial buildings, as well as offering maintenance services. This company has vast experience of more than 30 years, currently the
trategic management accounting which leads to evaluate an organization’s interaction between its product market and capital market, analyze the internal architecture of the company and its cost considerations so that it can be evaluated whether it is required to bring any
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