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, touching on everything from a management accountant's job responsibilities, skill set, and formal educational requirements right down to the professional designations that can help you get ahead. We'll also discuss the career ladder for a management accounting job.
- Management accountants work for public companies, private businesses, and government agencies.
- Their duties include recording and crunching numbers, helping to choose and manage company investments, risk management, budgeting, planning, strategizing, and decision making.
- Management accountants need aptitude for and interest in numbers, math, business and production processes, along with accounting skills, knowledge in GAAP, and leadership skills.
- The minimum requirement is a bachelor's degree and management accountants can get special designation as a certified management accountant and as a chartered global management accountant.
Management accountants work for public companies, private businesses, and government agencies. They are also called cost accountants, managerial accountants, industrial accountants, private accountants, or corporate accountants, but they all perform similar functions within a company. Preparing data for use within a company is one of the features that distinguishes a management accountant 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. You may help the company choose and manage its investments along with other managers in the company. 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, In a smaller firm, though, you might end up performing 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. Management accountants may also have an area of expertise, such as taxes or budgeting.
The most fundamental skills you need to be successful as 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, former vice president of finance and administration and CFO of Angus-Palm. "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, former 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.
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 possesses 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 (CMA) certification.
The minimum requirement to becoming a management accountant is generally a bachelor's degree.
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 prospective management accountants should expand their studies beyond those of a traditional financial accountant.
There are two major professional designations for management accountants. Obtaining one of these designations may help you 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. As of 2015, there is also 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.
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 (CFOs). 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 (IMA) 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. He 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.
Just like any other position, the salary of a management accountant depends on several factors including experience, specialties, education and designations, and the company for which you work. According to the IMA, the compensation for certified management accountants globally is 55% higher than that of non-CMAs. The group's 2019 survey noted accountants with the CMA designation received $17,933 more each year in the United States than those without it.
Although the U.S. Bureau of Labor Statistics does not differentiate between the different kind of accountants, it does report salary expectations for accountants—along with auditors—in general. The BLS reported the average annual salary for accountants and auditors in 2018 at $70,500 or $33.89 per hour. The number of jobs available in these fields as of that year were 1,424,000. The agency also noted that the industry was expected to grow by 6% between the 10-year period of 2018 to 2028.
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.