The article Management Accounting Practices and the Role of Management Accountants by Christina Wiwik Sunarni explores management accounting practices and the roles of management accountants in organizations. Management accounting is the provision of financial and non-financial decisions making information to managers. In the article, Christina Wiwik Sunarni management-oriented accounting or accounting in relation to management accounting (Sunarni, 2013). Among other functions, management accounting explains the financial status of the organization. In return, financial managers advised on the viability of the project that the business is undertaking.
In the article Management Accounting Practices and the Role of Management Accountants, the author further argues that budgeting is the most important managerial tool in management accounting practices for both medium and big-scale companies (Sunarni, 2013). Budgeting is very essential in any business set up. A budget is an estimate of likely income and expenditures of an organization for a given period. Budgets are usually prepared at the beginning of a financial year as per the organization’s calendar.
It clearly shows possible sources of incomes and spending of the money received. The author further states that budgets are important since they are a spending plan (Sunarni, 2013). Operating a budget or a spending plan makes individuals or organizations not to run on debts in view of the fact that it stipulates how money received is spent. A budget helps organizations to work within their financial set goals and plans.
In the article, Christina Wiwik states that management accounting is an important part of the management process in a company, where it provides crucial information to the business (Sunarni, 2013). Managers, through advice and information from management accounting, are able to perform their functions with ease.
Management accounting focuses on internal process rather than handling external problems such as dealing with the competition, generating customer value and creating competitive advantage. Management accounting gives information and advice based on decision-making. Management accountants collect information and give their findings that are supposed to be used within the organization.
In addition, Christina Wiwik argues in the article that the focus of management accountants is enhancing the organization’s performance and profitability (Sunarni, 2013). For an organization to perform well by implementing decisions from management accounting there must be operative communication between the managers and the end users. Poor communication between involved parties is one of the problems that hinder service delivery. Information given to managerial accountants should be precise, concise and communicated in a simple language understood easily by the managers. When users put this into consideration, managerial accountants are able to give effective positive results. This also leads to quality satisfaction, which should be the provider’s priority.
In conclusion, the article is well written and complete. Management accounting furnishes the management with ideas on how to run the business. Management accounting gives the financial position of the business at a certain given time. Budgets are the most vital management accounting task because any errors in budget cost the organization much. Managers need to budget well for available resources that organizations have in order to reduce wastage or misuse.
Communication, being one of the importances of management accounting, assists managers to make informed decisions that benefit the organization. Equipping managers with correct information eventually lead to quality work. Quality, consequently, is also important in management accounting. If management accountants seek to satisfy users and there is a common understanding of services, then the next step is evaluating service quality. User quality satisfaction needs to be the provider’s priority.
Reference
Sunarni, C. (2013). Management Accounting Practices and the Role of Management Accountant: Evidence from Companies throughout Yogyakart. Indonesia: Atma Jaya Yogyakatara.