Managerial accountants manage the costs of the daily operations of a company. They work with all levels of management to make decisions that impact the company's profitability. They are involved in all phases of the management process, as the chart below shows.
| Planning | Managerial accountants work with management to identify goals and develop strategies to reach those goals. Using the historical data in the financial statements, the managerial accountant calculates possible scenarios and identifies the efficiencies needed to meet those projections. This is done by setting budgets for the required resources. |
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| Decision-making | As managers make decisions, they are reliant upon managerial accountants to provide explanations for changes in profits and to indicate how the company can manage those changes. |
| Directing | Managerial accountants assist in the creation of guidelines and processes that ensure efficiency of operation. |
| Controlling | Managerial accountants gather data and compare the results with the projections to identify problems and calculate variances from budgets. |
| Improving | The identification of the variances from the budgeted scenarios provides feedback that is used to improve the company processes. |
The table below provides information related to the difference between financial accounting and managerial accounting. Financial accounting focuses on the information provided to external users, such as investors and creditors, while managerial accounting focuses on information provided to internal users, such as company management.
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| Financial accounting | Managerial accounting |
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| Textbook chapters | Chapters 1–13 | Chapter 14 to the end of the book |
| Primary users | External users, including investors, creditors, and government agencies | Internal users, including the company's managers and other employees |
| Purpose of information | To help creditors and investors make credit and investment decisions | To help managers and employees plan and make decisions |
| Focus on time | Focus is on past performance | Focus is on the future |
| Rules and restrictions | Required to follow generally accepted accounting principles (GAAP) | Not required to follow GAAP |
| Scope of information | Providing information on the whole company on a monthly, quarterly, or annual basis | Detailed reports prepared as needed |
Managerial accountants play a vital role in the decision-making process. Managerial accounting information is used in almost every decision, including product pricing, marketing, distribution, setting and analyzing budgets, and measuring performance. Managerial accountants help management make informed decisions, be more efficient at their jobs, and improve the overall performance of the company.