Accounting and finance - Essay Example

Contents Introduction 3 Role of a Management Accountant 3 Role of Financial Accountant 4 Conclusion 4 References 6 Introduction Management and financial accountants play an important role in the effective business management of an organization. This paper discusses in detail the role management and financial accountants play in the process.Role of a Management AccountantManagement accountants are seen as internal business advisors or business consultants (Bamber et al., 2008). The main role of management accountants is to assist the management in decision making by making sense of the financial information of the organization.

Management accountants are required to provide information to the decision makes of the organization which will help them in making better and informed decisions; increase their job effectiveness and improve organizational performance (Needles et al., 2010).Management accountants play a role in all stages of a decision making process which involves planning, performing, evaluating and communicating. Their expertise in financial reporting will allow them assist in decision making process. Any business decision has to be based on sound financial knowledge and this is where management accountants are vital.

The various areas of business that management accountants play a role are: designing of business strategy, resource usage, internal control, corporate governance, safeguard tangible/intangible assets, decision making, planning and controlling activities, value enhancement, performance improvement, etc (Collier et al., 2006).The role of the management accountants is limited to only serve the internal decision makes of an organization. The focus of management accountants is forward thinking. Management accountants use the financial information and design models that predict the future financial projections.

Role of Financial AccountantFinancial accountants also play an equally important role in effective business management. The role of financial accountants is to assist all stakeholders of an organization by preparing financial statements which summarises and indicates the financial health of the organization. Financial accountants are required to prepare financial statements that assist not only internal but also external decision makers such as shareholders, owners, lenders, banks, suppliers, etc (Loughran, 2011).

Unlike management accountants, financial accountants are not seen as business consultants or advisors. The role of the financial accountants is to make the financial information of an organization available in a user friendly way to the stakeholders. Financial accountants are required to look analyse the past performance of an organization and prepare financial statements that throw light on the current financial health of the company (Needles, 2010).The role of a financial accountants ends once the financial statement is prepared.

Financial accountants are not involved in another process such as planning or implementation. The role of the financial accountants is strictly defined and they are required to accounting principles while carrying out their responsibilities. The focus of financial accountants is on historical and current financial data. Financial accountants have to be highly objective and accountable at their work.ConclusionThis paper has successfully discussed the roles of financial and management accountants in effective business management.

ReferencesBamber, L.S., Braun, K.W. & Harrison, W.T. (2008). Managerial Accounting. NJ: Prentice Hall.Collier, P.M., Berry, A.J., & Burke, G.T. (2006). Risk and Management Accounting: Best Practice Guidelines for Enterprise-wide Internal Control Procedures. MA: Elsevier.Loughran, M. (2011). Financial Accounting for Dummies. NJ: Wiley Publishing.Needles, B.E., Powers, M. & Crosson, S.V. (2010). Financial and Managerial Accounting. OH: Cengage Learning.