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

    Top Investment Banks In The Energy Industry

    Many global Investment banks are highly involved in the energy industry, but there are also some smaller banks and boutiques that are strong players.
  7. Professionals

    Career Advice: Financial Planner Vs. Wealth Manager

    Understand the differences between a career in financial planning and wealth management, and identify which is better for you based on your goals and talents.
  8. Professionals

    Career Advice: Accountant Vs. Financial Planner

    Identify the key differences between a career in accounting and financial planning, and learn how your personality dictates which is the better choice for you.
  9. Economics

    Calculating Days Working Capital

    A company’s days working capital ratio shows how many days it takes to convert working capital into revenue.
  10. Professionals

    10 Must Watch Documentaries For Finance Professionals

    Find out about some of the best documentaries that finance professionals can watch to gain a better understanding of their industry.
  1. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  2. Do prepayments provide working capital?

    Prepayments, or prepaid expenses, are typically included in the current assets on a company's balance sheet, as they represent ... Read Full Answer >>
  3. Does working capital include salaries?

    A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, ... Read Full Answer >>
  4. Do financial advisors have to find their own clients?

    Nearly all financial advisors, particularly when new to the field, have to find their own clients. An employer may provide ... Read Full Answer >>
  5. Do financial advisors get drug tested?

    Financial advisors are not drug tested by any federal or state regulatory body. This means you may receive your Series 6, ... Read Full Answer >>
  6. Is a financial advisor required to have a degree?

    Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!