If you like keeping track of a company's income and expenses but also want to hold a position with significant responsibility and authority, management accounting could be the job for you. This article will teach you about the profession of management accounting, from a management accountant's job responsibilities, skill set and formal educational requirements to the professional designations that can help you get ahead, as well as the career ladder for a management accounting job.

Job Description
Management accountants work for public companies, private businesses and government agencies. They may also be called cost accountants, managerial accountants, industrial accountants, private accountants or corporate accountants, but all perform similar functions within a company. Indeed, preparing data for use within a company is one of the features that distinguishes a management accountant's job from other types of accounting jobs, such as public accounting.

Instead, you'll be recording and crunching numbers for internal review to help companies budget and perform better. In conjunction with other managers in the company, you may help the company choose and manage its investments. Management accountants are risk managers, budgeters, planners, strategists and decision makers. They do the work that helps the company's owner, manager or board of directors make decisions.

As a management accountant, you'll likely supervise lower-level accountants who handle a company's basic accounting tasks, such as recording income and expenses, tracking tax liabilities and using these data to prepare income statements, cash flow statements and balance sheets, but in a smaller firm, you might perform these tasks yourself. A management accountant will analyze these basic data and make forecasts, budgets, performance measurements and plans, then present them to senior management to assist in its operational decision making.

A management accountant may also identify trends and opportunities for improvement, analyze and manage risk, arrange the funding and financing of operations and monitor and enforce compliance. They might also create and maintain a company's financial system and supervise its bookkeepers and data processors. Further, management accountants may have an area of expertise, such as taxes or budgeting.

Skill Set
The most fundamental skills you need in order to be a management accountant are an aptitude for and interest in numbers, math, business and production processes, and helping to manage a business, says Steve Kuchen, executive vice president and CFO of PacificHealth Laboratories.

Management accountants need a solid foundation in hard accounting skills, including knowledge of basic accounting, generally accepted accounting principles (GAAP) and basic tax principles, says William F. Knese, vice president of finance and administration and CFO of Angus-Palm, a Worthington Industries company. "Management accountants expand this base of skills to include knowledge of cost accounting and, my favorite, finance tools such as discounted cash flow," he says. "Since management accountants function inside a business, they need a good grounding in economics and the softer skills such as communication and presentation skills, writing, persuasion and interpersonal relations skills," he adds.

You also need to be able to see your organization's big picture, says Ben Mulling, CFO of TENTE Casters, Inc. "Management accounting is all about helping your users and the company make the best decision possible given the information available to them," he says. "This includes making decisions such as capital investment, operational structuring and foundational risk assessments."

Finally, you'll need leadership and management skills. You need to be persuasive and convincing, and be educated in both human capital management and financial capital management, according to Lon Searle, CFO of YESCO Franchising LLC. "Presentation, education technology and information technology skills are also critical. Less critical but also important is a knowledge of social media, marketing and sales," he says.

Formal Education
All four of the management accountants interviewed said that the minimum requirement to becoming a management accountant is a bachelor's degree. Knese says a good undergraduate education is important for developing critical thinking skills. Mulling adds that while the typical management accountant will possess a bachelor's degree in accounting or finance, your degree doesn't have to be in one of these subjects to obtain a Certified Management Accountant certification.

Knese's undergraduate degree is in English; he acquired the educational background to become a management accountant when he completed coursework in economics, business, accounting and finance as part of an MBA program. Searle says that prospective management accountants should expand their studies beyond those of a traditional financial accountant.

Professional Designations
There are two major professional designations for management accountants; obtaining one of these designations may help you to command a higher salary.

The first is the Certified Management Accountant (CMA) designation, offered by the Institute of Management Accountants (IMA). You can earn this designation if you complete a bachelor's degree, pass the two-part CMA exam and acquire two continuous years of professional experience in management accounting or financial management.

The second is the Chartered Global Management Accountant designation, offered by the American Institute of CPAs in conjunction with the London-based Chartered Institute of Management Accountants. The credential has only been offered since the beginning of 2012. At its inception, the CGMA program offered the credential based on experience alone; starting in 2015, there will also be an exam requirement.

Mulling, Kuchen, Knese and Searle are all CMAs. Searle is also a Certified Public Accountant (CPA), while Mulling is also a CPA and Certified Information Technology Professional (CITP). Kuchen is a CMA only, but says it is a very good idea to be a CPA as well as a Certified Internal Auditor (CIA) or Certified Treasury Professional (CTP). Knese is also a CPA and a Certified Financial Manager (CFM). "Each of these required passing a standard rigorous examination and meeting experience requirements. I value each of these credentials," he says.

Career Ladder
Management accountants often begin their careers as staff accountants to learn the fundamentals of accounting and how a business functions, Kuchen says. Searle notes that they may also start out as analysts. From these roles, they may advance to become senior accountants or senior analysts, then to accounting supervisors, to controllers, to chief financial officers. However, Mulling says, the career ladder can go in many different directions depending on your individual goals. He says management accounting usually starts with obtaining a bachelor's degree and then working toward a CMA certification.

Mulling says management accountants often make their mark at companies as vital decision-makers and have opportunities to advance in many different areas. He says the best way to advance is by volunteering to work on various projects and decision-making tasks in your company to increase your knowledge of the company and your role in its success. He also recommends getting involved in your profession at the local or global level. He says the Institute of Management Accountants provides that opportunity and also helps professionals create a network for career opportunities, skill enhancement and decision support. Kuchen adds that devising new systems, business processes and analyses that save the company money and help it run more efficiently, along with showing an interest in and aptitude for cost accounting, will help you advance.

Knese's career provides an example of one of the many possible professional paths for management accountants. He started out as a public accountant and earned the CPA credential, then advanced to management accounting and earned the CMA credential. Finally, when he became CFO, he earned the CFM credential. "I worked in financial statement preparation, product costing and profitability, corporate treasury and finance, mergers and acquisitions, risk management and benefit plans. I have worked for both public and private companies, and I wanted to learn as much about the business and accounting world as I could," he says.

Knese says he differentiated himself and advanced in his career through certification and continuing professional education. "A career is advanced through demonstrated competency and through visibility," he says. "Visibility comes from the good work you do that is noticed by leaders and influencers. Careers are advanced because people ask for the chance to show what they know and what they can do."

Searle says lower-level accountants and analysts can advance by demonstrating analytic, leadership and financial skills. "Playing a key role in operational decisions and special projects is how management accountants set themselves apart from the traditional financial accountant," he says.

Depending on the type of company, management accountants need to demonstrate expertise in different areas, according to Searle. "In a manufacturing environment, the management accountant needs to demonstrate abilities in lean manufacturing and/or Six Sigma to progress quickly. In a technical field, the professional might need to take on duties in developing systems or managing technical education projects," he says.

Searle adds that management accountants are often called upon to monitor marketing efforts or act as analysts on special projects. These experiences can prepare them for additional management responsibilities either in finance or general management.

The Bottom Line
"A person who can solve problems, think creatively and persuade others will have a promising career in management accounting," Searle says. If you want to take your number crunching job to a higher level, management accounting might be a good fit.

Related Articles
  1. Professionals

    5 Of The Best Schools For Accounting

    Here are some of the schools that ranked highly in The U.S. News & World Report and Bloomberg Businessweek rankings for accounting programs.
  2. Personal Finance

    A Look At Accounting Careers

    More than just crunching numbers, this career blends detective work with trouble shooting.
  3. Professionals

    Introduction To Accounting Information Systems

    Check out the six main parts of this indispensible business asset.
  4. Professionals

    A Guide To Careers In Accounting Information Systems

    We provide an overview of the types of AIS jobs available, and the education and training requirements to enter this field.
  5. Options & Futures

    Uncovering A Career In Forensic Accounting

    Does a job as a financial sleuth sound interesting to you? Dig in to learn more.
  6. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  7. Professionals

    Credit Risk Analyst: Job Description and Average Salary

    Learn what credit risk analysts do every day and how much money they make on average, and identify the skills and education needed for this career.
  8. Professionals

    4 Must Watch Films and Documentaries for Accountants

    Learn how these must-watch movies for accountants teach about the importance of ethics in a world driven by greed and financial power.
  9. Active Trading

    An Introduction To Depreciation

    Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line.
  10. Economics

    The Difference Between Finance And Economics

    Finance and economics are often taught as separate subjects, but they are interrelated disciplines that influence one another in many ways.
  1. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  2. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  3. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  4. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  5. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  6. What can working capital be used for?

    Working capital is used to cover all of a company's short-term expenses, including inventory, payments on short-term debt ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center