What is Management Accounting?
Accounting remains a crucial part of any successful business venture in fields ranging from education to healthcare, technology to hospitality and more.
"Accounting is the language of business," said Ann McLaughlin, associate dean of business degree programs at Southern New Hampshire University (SNHU). According to McLaughlin, accountants identify, record and communicate business transactions and other relevant data — they convey important financial information.
Management accounting, she said, is a specialized type of accounting — a dialect within the language of business.
Management accountants are unique in the world of accounting because they typically hold in-house positions. That means management accountants work for an organization, agency or business directly rather than working for an accounting firm that serves various outside clients.
What Do Management Accountants Do?
Financial accountants may come to mind when you think about accounting, but management accountants have different objectives. Instead of preparing reports for external stakeholders, management accountants provide relevant financial information for an organization’s internal management — its employees, managers and executives — to inform decision-making and improve performance.
Unlike financial accountants, management accountants are focused on making future projections for a business or organization. They analyze and explain the "why" behind reporting the numbers.
Management accountants are strategic partners. They work to ensure future success by identifying ways to create value for their organization and its products or services. They do so by using numbers, data and research to help leadership minimize risk and maximize profit on behalf of the business.
Management accounting skills include functions of controllership or cost management, governmental and nonprofit accounting, international accounting, accounting in decision-making and analysis and business law and ethics. McLaughlin said some common roles for management accountants include:
- Cost accounting
- Internal auditing
“Management accounting is an essential function of any business or organization,” said McLaughlin. “It is the area of accounting that helps management make better decisions related to business performance using accounting data.”
Where Do Management Accountants Work?
Even accounting firms hire management accountants for their internal needs, but that’s far from your only option when looking for a position as a management accountant. As a management accountant, you could work in the private or public sector — and in almost any industry.
Management accountants can be found in:
- Private Corporations – From mom-and-pop shops to multinational corporations, businesses and industries of all sizes need strategic partners capable of marrying financial know-how with business savvy. These individuals hold positions up and down the corporate ladder, including auditors, tax managers, controllers and chief financial officers.
- Government – Management accountants play a key role in improving the efficiency of federal, state and local governments and agencies. Their ability to evaluate performance, finances and compliance can help streamline the use and distribution of resources.
- Nonprofits – Not-for-profit organizations face special financial situations, including strict budgets, special tax designations and the need to fundraise. As a result, nonprofits can especially benefit from the knowledge, expertise and skills of an accounting professional with broader business or management competencies.
- Education – Management accountants who work directly for schools or school districts are sometimes called school accountants. Some accountants also work as educators, teaching the next generation of accountants. If you've considered a career or job in accounting education, a master’s degree is generally required for teaching at the high school or university level.
Management accounting is everywhere. It might even be hard to think of a place of work that wouldn’t benefit from a management accountant’s expertise and skills.
Still, certain industries have more opportunities than others. “Most of the job opportunities are in the private sector, which promotes entry-level accounting staff,” McLaughlin said. These positions can be a great start to your career in management accounting.
How Can You Become a Management Accountant?
Although financial accounting can be a springboard to management accounting, education can also supplement a financial accounting background. A majority of employers require candidates for accountant or auditor positions to have a bachelor’s degree in accounting or a related field, according to the U.S. Bureau of Labor Statistics (BLS).
With the right combination of credentials and experience, you’ll be in a position to contribute positively to the strategic, tactical and operating decisions of your organization whether you work in the for-profit, nonprofit or government sectors.
Is CMA Certification Worth It?
Job candidates with professional designations, such as Certified Public Accountant (CPA) or Certified Management Accountant (CMA), have specialized employment prospects, according to the BLS, and those with a master’s degree in accounting may also have an advantage.
The CMA professional certification can give you a competitive edge by demonstrating your mastery of the critical accounting and finance management skills needed in today’s global business landscape. These skills include financial planning, analysis and professional ethics.
With the rising demand for accounting professionals, special credentials such as a master’s in management accounting and CMA certification can help your resume stand out to supervisors and hiring managers.
To qualify for the certification, you'll need at least a bachelor's degree and two years of experience in accounting. You'll also need to pass a two-part exam, hold a membership with the Institute of Management Accountants (IMA) and adhere to ethical standards. If you're interested in pursuing CMA certification, McLaughlin recommended visiting IMA online to learn more.
Should You Get a Master’s in Accounting?
If you have some business acumen coupled with a head for numbers, a master’s in management accounting is a great option for expanding your career potential. A master's in management accounting can also equip you with the academic qualifications to become a CMA, a unique advantage among most online accounting programs.
An advanced degree builds your expertise, strengthens and expands your leadership skills and lets you realize your personal and professional goals. In addition to mastering the latest accounting strategies, tactics and rules, graduates from a master's in accounting with a concentration in management accounting program can develop and apply accounting practices based on broader business competencies in order to drive their organizations forward.
A master’s in accounting with a concentration in management accounting prepares you to pursue advanced positions within many kinds of organizations. This is true whether you’re working for a company, the government or a nonprofit, locally, nationally or internationally.
What are the Advantages of Studying Management Accounting?
Stricter laws and regulations (notably in the financial sector) are expected to increase the demand for accounting services as organizations work to comply with applicable governing rules. In late 2021, Forbes noted that 2022 would be the "Year of the Management Accountant'' due to expected growth in the field. And according to IMA, almost 75% of financial professionals today are management accountants.
Whether you’re a new or seasoned accounting professional, a master’s in management accounting can help you make the most of growing employment opportunities.
"Management accounting may be a good specialization for students because it requires general accounting and knowledge of financial management," said McLaughlin. An advanced degree in accounting can help you build your knowledge and become a competitive candidate in the field of management accounting.
Enjoy the Financial Benefits
If studying or working in the accounting field appeals to you, then you probably know about the importance of a good return on investment. IMA reported CMA certified professionals earn 58% more than their non-certified peers.
According to the BLS, the median salary for all accountants and auditors was $77,250 in 2021. Meanwhile, the average total compensation for CMA-certified management accountants was $138,993 that year (IMA PDF Source).
Having a graduate degree can also translate into a salary bump or give you leverage in the salary negotiating process by demonstrating your expert knowledge.
Discover more about SNHU's master's in accounting. Find out what courses you'll take, skills you'll learn and how to request information about the program.
Sofia Tokar is a freelance copywriter and editor in higher education. Follow her on Twitter @stokar or connect on LinkedIn.
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About Southern New Hampshire University
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