When you think of earning a Master of Business Administration degree, you likely think of building leadership, business and managerial skills. Most people do not think of taking an accounting class as part of their online MBA program. However, knowledge of management accounting is crucial to success in business management.
What Is Management Accounting?
According to the Institute of Management Accountants’ Statements on Management Accounting, “Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy.” While this is quite a robust definition, we can break it down into smaller, more digestible pieces.
The first piece of management accounting involves partnering in management decision-making. While many believe that CEOs, CFOs, and other higher-ups are solely responsible for making a company’s decisions, few are aware that management accountants know the financial details of a company’s individual departments intimately and have valuable information to contribute. This means advising key decision-makers about the business’s finances.
Next, management accountants are responsible for creating planning and performance management systems to promote the stability and growth of the business. Management accountants understand an organization’s finances and are, therefore, the most informed members of the management team to extract key information from accounting data. This data aids in assessing the current state of the business and in identifying areas with room for improvement. Measures for improvement may involve cutting unnecessary expenses, restructuring departments, investing in personnel training, replacing outdated equipment, and improving productivity and efficiency.
Finally, management accountants specialize in producing clear and useful financial reports for forecasting financial trends, strategizing business tactics, and controlling unexpected or unwanted events. Only by understanding the health of a business’s finances can management make appropriate decisions for its future.
What Is the Value of Management Accounting to Managers and Leaders?
Think of management accountants as the internal medicine doctors of a business. When a business is chugging along at a normal pace, its individual parts — the employees — may not be aware of a problem. However, the financial side of a business is like the immune system. It is constantly working, taking in nutrients and trading valuable resources for expenses to facilitate the whole organization’s well-being.
A management accountant takes a close look at the internal workings of the organization’s immune system — its finances — to make sure everything is working properly. Detected early, problems are easy to diagnose, triage, treat and eradicate. Without a management accountant, out-of-control expenses — like internal health problems — could run rampant and destroy the business from the inside out. Management accounting, therefore, can save the life of a business and can even help it grow.
Why Is Accounting Part of USI’s Online MBA program?
The University of Southern Indiana (USI) is committed to providing you with the tools you will need to succeed in your online MBA program and in business management, including understanding the intricacies of management accounting. As management accounting is the life force driving your business operations, it is crucial that as your business’s leader, you understand this delicate yet powerful organism. That is why the online MBA program at USI includes ACCT 601 Seminar in Management Accounting, which teaches you how to master management accounting to optimize your planning, management, and operations evaluation skills.
Becoming an effective business leader requires a well-rounded repertoire of skills. While you may excel in technology optimization, employee management, and strategic planning, USI wants to ensure you are the master of your business’s finances, too. Management accounting is a valuable asset that can save a business and possibly even propel it to the Fortune 500 list. Let the online MBA program at USI show you how.
Learn about the USI online MBA program.