What Do Management Accountants Do?
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 teaches 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.
- 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 an 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, but experience also helps.
- Management accountants can get a special designation as certified management accountants and as chartered global management accountants.
Understanding What Management Accountants Do
Management accountants work for public companies, private businesses, and government agencies. These professionals may also be called cost accountants, managerial accountants, industrial accountants, private accountants, or corporate accountants. 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.
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 company managers. 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.
Management accountants often supervise lower-level accountants who handle basic accounting tasks, such as recording income and expenses, tracking tax liabilities. This information is used to prepare income statements, cash flow statements, and balance sheets, In smaller firms, you may end up performing these tasks yourself. A management accountant performs analysis to forecast, budget, and measure performance and plans, then presents them to senior management to assist in 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, according to Steve Kuchen, executive vice president and chief financial officer (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, according to 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," Knese 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."
You also need to be able to see your organization's big picture, says Ben Mulling, CFO of TENTE Casters. "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 say that the minimum requirement for becoming a management accountant is a bachelor's degree. Knese says a good undergraduate education is important to develop the critical thinking skills you need in the field.
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 a Master of Business Administration (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 a 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 certified financial manager (CFM).
"Each of these required passing a standard rigorous examination and meeting experience requirements. I value each of these credentials," Knese 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 they may also start out as analysts. They may advance to become senior accountants or senior analysts, then to accounting supervisors to controllers, and to CFOs.
According to Mulling, the career ladder can go in many different directions depending on your individual goals. In fact, he says management accountants often make their mark at companies as vital decision-makers. He says the best way to advance is by volunteering to work on various projects and decision-making tasks to increase your knowledge of the company and your role in its success.
Mulling also recommends getting involved in your profession at the local or global level. For instance, the 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 possible paths for management accountants. He started as a public accountant and earned the CPA credential, then advanced to management accounting before earning the CMA credential. 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 CMAs globally is 63% higher than that of non-CMAs. The group's 2020 survey noted accountants with the CMA designation received a base salary of $105,000 in the Americas.
Although the Bureau of Labor Statistics (BLS) does not differentiate between different accountants, it does report salary expectations for accountants—along with auditors—in general. The BLS reported the median annual salary for accountants and auditors in 2020 at $73,560 or $35.37per hour. The industry reported more than 1.436 million jobs, with the potential to grow 4% annually through 2029.
The median annual salary for accountants and auditors in 2019, according to the Bureau of Labor Statistics.
What Is the Most Important Role of Management Accounting?
Management accountants work in both the public and private sectors. They prepare data—recording and crunching numbers—that their companies use for budgeting and planning purposes. They are also responsible for managing risk, planning, strategizing, and decision making. Other duties include supervising lower-level staff, identifying trends and opportunities for improvement.
What Is an Example of Managerial Accounting?
Managerial accounting involves the use of information that relates to the sales revenue and costs of a company. One part of managerial accounting is cost accounting, which focuses on a firm's complete production costs. This is done by analyzing all of the corporation's fixed costs along with all of its variable costs.
What Types of Accountants Make the Most Money?
You can command a higher salary if you have certain designations to complement your accounting experience and education. For instance, you can earn much more money with the certified management accountant (CMA) or the chartered global management accountant designation. The CMA is granted by the Institute of Management Accountants to accountants with an undergraduate degree and two years of experience, as long as they pass the two-part CMA exam.
You can become a chartered global management accountant through the American Institute of CPAs and the London-based Chartered Institute of Management Accountants by passing an exam.
What Are the Five Major Types of Accounting?
The five major types of accounting are cost accounting, managerial accounting, industrial accounting, private accounting, and corporate accounting.
Is Management Accounting a Good Career?
Management accounting is definitely a good career if you enjoy math and generally have an aptitude for working with numbers. It's also a great option if you love supervising, doing analysis, working with financial statements, making decisions, solving problems, and if you work well with others. This means that you'll need good communication and presentation skills. In order to become a management accountant, you'll need at least an undergraduate degree. Professional designations, like the CMA and the chartered global management accountant designation, and experience can help you command a higher salary and put you higher up on the career ladder.
The Bottom Line
If you want to take your number-crunching job to a higher level, management accounting might be a good fit for you. Remember, you'll need at least an undergraduate degree and may need to start as a CPA or staff accountant. After a few years in the industry, you'll be able to earn a designation that can help you work your way up the corporate ladder and command a higher salary.
"A person who can solve problems, think creatively, and persuade others will have a promising career in management accounting," Searle says.