Managerial Accounting

Managerial Accounting

This essay will discuss the differences between managerial accounting and financial accounting in an organization. It will also cover the responsibilities of managerial accounting in dealing with the security and financial integrity within an organization. And in the conclusion, I will submit my opinion regarding the expanding role of managerial accountants in organizations.

Managerial Accountants vs. Financial Accountants

Financial Accountants

Financial accountants develop financial reports based primarily upon historic data that can be accessed by internal and external users. Such reports are balance sheets, the income statement, statement of owner’s equity and statement of cash flow. The external users that will want to view these reports are as follows: possible investors, banks and credit unions that may loan money, and the U.S Government for audit purposes. The financial accountant has to follow the Generally Accepted Accounting Principles (GAAP), which is the standard framework of guidelines of financial accounting used in the United States.

Managerial Accountants

Managerial accountants help the decision makers of the organization make decisions based off of reports that are future orientated. Although their reports are derived from historical data, they use statistical methods to forecast future values. Confidential managerial reports are produced for the top management of companies for decision making purposes, and are only for the organization’s internal use.

“Management accounting is intended to satisfy the various needs of a large group of decision-makers inside the business, and does not follow GAAP,” like the financial accountant. “However, multinational companies prefer