Is management accounting in the public sector different to mangement accounting for the private sector - Essay Example

“In the last few years the question has arisen as to how far the business-oriented concepts of management accounting and control could be employed for non-profit organisations (especially in the field of public management). In the public sector, sparse or deficit budgets and pressing demands for effective, efficient and transparent means of achieving results provide the background for the discussion. However, due to the special characteristics of non-profit organisations, it is clear that the concepts used in private business need some modifications”.

(Meyer, 2003) However, when it comes to management accounting in public sector as well as private sector, there seems to be a marked difference between the two approaches. Managerial accounting within private sector may be driven by objectives which may not be similar to the objectives which management of public sector organization may be pursuing. Thus it is possible that the management accounting in public sector may be different from the management accounting in private sector organizations.

There can be different reasons for that as both the kind of organizational structures tend to have basic differences in their overall purposes. A private organization may be more interested in generating value for its shareholders thus effectively remain profit oriented with major aim of earning profit whereas public organizations may have different purposes and aims therefore the managerial accounting processes adopted in both the organizational styles and structures. This essay will discuss whether the management accounting practices in public sector organizations is different from the management accounting practices being adopted by the private sector organization.

Before discussing the role of management accounting in private as well as public sector, it is very important that we must attempt to define what management accounting is. Management accounting has been defined as follows: “The