Historically, the generally accepted accounting principles (GAAP) have had a financial accounting approach, with considerable input from the Institute of Certified Public Accountants. Isn’t it time for management accountants to have input? After all, there are more than 65,000 accounting and finance members in 120 countries in the Institute of Management Accountants (IMA).
Management accountants typically serve a company’s management, assisting them in planning and controlling. They help with strategic planning and budgeting, as well as product costing and assigning optimum value to the company’s operations.
Managerial accountants have recently drafted an exposure draft to create some guiding principles for managerial costing (the process of measuring and assigning value to a company’s operations). The key principle of the framework is that companies use a costing model that puts a greater focus on cause-and-effect relationships, not just on financial reporting. This puts more emphasis on forward-thinking and how decisions made regarding costing will affect all areas of the organization.
Larry White, chair of the IMA’s Managerial Costing Conceptual Framework Task Force, says the draft is a complement to GAAP, not an alternative. “Management accounting is about what goes on inside the organization and making the purely economic decisions that are necessary for sustainable long-term growth and profitability,”
The IMA is looking for comments on its draft by August 31, 2012. You can read the exposure draft and provide comments at http://www.imanet.org/resources_and_publications/ExposureDraft.aspx