Duncan
WILLIAMSON

Introduction to Management Accounting

More Complex Definition of Management Accounting

A more complex definition of management accounting expands on the simple definition and says it is:

The provision of information required by management for planning, organising and control for such goals as:

• recording, analysing and reporting on the actual costs and inputs of products, services and processes
• evaluating stocks of raw materials, work in progress and finished goods
• working with other functions, establish standards of performance
• working with other functions, establish cost, revenue and quantity budgets
• evaluating alternative opportunities

Even more complex definitions of management accounting include corporate planning, controllership and both internal and external audit function duties. These definitions might also include the treasurer's function in their definition of management accounting.

This definition attempts to concentrate on that part of management accounting that is concerned with the accumulation of product and service costs, the preparation of statements relating to materials, labour and overheads; standard costs, budgeting and management accounting for decision making. Consequently, we will not be concerned too much with controllership, audit and the treasurer's function. We will need to discuss corporate planning to some extent as we look at standard costs and budgeting.

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Duncan Williamson
3 March 2003