What is it Management Accounting?

Management Accounting is producing, interpreting and reporting internal reports to be used by internal users for the decision making of a business. In other words, management accounting is producing reports for management's eyes only. External users (anyone outside the business) should not be able to get their hands on these reports.

Internal users include (but not exclusive) to the following:

• Managers,

• Owners

• Employees

  
  

Management reports of a business is not intended for public disclosure. Management Accountants are employees or contractors of a business who work to produce internal accounting reports on a regular basis as required by the business.

What are the types of internal reports?

Example Internal Report on the Sales of iPods Worldwide.

Credit: MySchizoBuddy, CC BY-SA 3.0 <https://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons

Management accountants can produce a variety of internal reports such as:

• Sales budgets

• Capital expenditure budgets

• Variance analysis

• Cost volume profit (CVP) analysis

• Break-even calculation

What are the rules around internal reports?

Internal reports are informal and are not required to be produced under any strict rules or guidelines. Although, most charted accountants are recommended to follow framework rules when producing internal reports anyway.

Internal reports are not required to be audited (checked) by an independent party.