Apercon

Cost and Management Accounting

Competently delivered management accounting allows you to react quickly into changes in the current financial and economic activity of the company, and time management decisions to maximize profits, the effective use of funds and to improve the financial condition of the company, without management accounting is impossible to implement the budgeting process (planning) in the company.

The main purpose of Cost and Management accounting is to increase company profits.Thus it solves the following main problems:

  • provides a company management with information about what is the consolidated results of the business, which consists of an unlimited number of legal entities and structural units;
  • shows the results of the individual areas (it can be  line of activities, product groups or other elements, depending on specifics of business), no matter how these areas are distributed between legal entities, which are part of business;
  • shows results also for the structural units, which can be department, shop or legal entity;
  • controls over costs through their account on the types and cost centers;
  • collects statistics on income and expenditure of the company in a certain area and identifies general trends;
  • carries out planning and monitors the budget as a separate cost centers and business as a whole, including a set of legal entities;
  • keeps management accounting with individual counterparties, settlement between own legal entities.

From here the important conclusion follows: For effective conducting Cost and Management Accounting which would be able to solve all these problems, it is necessary:

  • involvement of the highly qualified specialists having the corresponding experience and combining it with knowledge of a financial analysis, financial accounting, system of the taxation, the international principles of financial accounting, informatics;
  • deep involvement top management of the company in process of accounting and in process of its statement; management should provide interaction of various services for provision of the relevant information in the center of management  accounting;
  • providing specialists with all necessary information, in particular the most confidential, as with incomplete information management accounting is meaningless;
  • development of specific techniques for each company, including management accounting parameters (direction, revenue centers, cost centers), accounting policies, reporting formats, procedures for obtaining information;
  • availability of computer programs, specially launched or adapted for these purposes.

The process of creating Cost and Management Accounting at the company usually takes place in three stages:

Statement – development of accounting policy, including a cost accounting technique, determination of the centers of the income and cost centers, creation of the main forms of financial reports.

Implementation — differentiation of responsibility for input of accounting information, as a rule, between the staff of Financial department, Accounting department and a Warehouse, and also their instructing.

Automation — creation Database Management System (DBMS) which allows to aggregate entered information, and to create necessary financial reports based on it.