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BUS 630 week 6 Final Paper part 1 and 2 Due to varying business characteristics, the managerial acco

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BUS 630 week 6 Final Paper
Due to varying business characteristics, the managerial accounting techniques applied in each business may
differ. For example, a business in the start-up phase may rely heavily upon budgeting and capital investment
techniques; whereas, a business in the mature/maintaining phase may rely heavily upon cost management and
quality control. Ultimately, the techniques used by management should assist the business in achieving its short-
term and long-term goals through effective decision-making.
For your Final Paper, you will analyze the role of managerial accounting in two parts. Part I will provide a general
overview of managerial accounting. Part II will provide examples of how managerial accounting theories and
principles are applied in the business world. You may find it helpful to reflect upon your own professional
experiences for examples.
Part 1
Key role of strategic management accountant in an organization
Strategic management accountant plays vital role in an organization and helps it to
grow and sustain itself in the industry. When a company is growing at a fast pace it needs
management accountant to help in sustaining the growth by taking effective strategic
decisions. Advent of technology and introduction of new management tools has made it more
important for an organization to hire management account. Integration of information
technology and management accounting tools has become a useful weapon for an
organization to sustain its growth. (Brewer)
Steps in strategic management accounting
There are various steps involved in strategic management accounting such as
formulating strategies, communicating strategies throughout the company, developing and
carrying out tactics to implement the strategies, developing and implementing controls.
(Brewer)

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Tools of management accounting
Various tools which a management accountant can use to help the organization in
taking better decisions are budgetary controls, Variance analysis, Inventory management
system, working capital management system etc. (Brewer)
Budgetary control helps organization to determine standards for various areas of
operations and this in turn helps an organization to achieve budgeted results. Variance
analysis is extension of budgetary control, in variance analysis management accountant
compares actual results with budgeted results and the difference is termed as favourable or
unfavourable. Favourable variances are sign of good performance whereas unfavourable
variances are sign of bad performance. After computing variances the reason for same shall
be analyzed and rectified. (Brewer)
Role of management accountant in strategy formulation and execution
Management accountant assess both internal as well as external factors to build
strategies. Internal factors includes strengths and weakness, external factors include
opportunities and threats. Management accountant analysis both internal factors i.e. strengths
and weakness of the organization and external factors such as opportunities and threats.
Strategies can be formulated in the following manner, (Brewer)
a) Using strength and opportunity to develop new methods to use strengths of organization.
b) Using strength and threats to develop new methods to use strengths to defend from threats.
c) Using weakness and opportunities to eliminate weakness to activate new opportunities.
d) Using weakness and threat to avoid that external threat intensify weakness.
Strategic management accountant evaluate all above listed financial as well non-
financial parameters and will frame the strategy accordingly.
Communicating the strategies throughout the company, once a strategy is drafted then
the next step for its successful implementation is its speedy and accurate communication
throughout the company. If a policy is not communicated throughout the company then it is

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going to be of no use, no matter how perfectly a strategy is drafted if it is not communicated
properly then it is of no use for the company. (Brewer)
Developing and carrying out tactics to implement the strategies, once a strategy is
formulated and is successfully communicated to every concerned person the next step is to
implement the strategies in the planned manner. During the implementation of a strategy
strategic management accountant should closely monitor each and every activity in order to
make sure that everything goes according to plan and if any deviation occurs then same
should be rectified as soon as possible. (Brewer)
Developing and implementing controls, when strategies are executed then to check its
accuracy and effectiveness actual results needs to compare with the planned results and the
difference should be reported to the directors with the reasons for occurrence of such
deviation. The effectiveness of any strategy is based on the favorable outcomes it produces
and to determine whether result produced by a strategy is positive or negative we have to
compare it with the predetermined results; management accountant uses various tools to
compare the data and then finding the reason for the differences. (Brewer)
Major ethical issues in managerial accounting
Ethics and management accounting have a strong relationship between them; ethics
plays a vital role in successful implementation of management accounting. In absence of
ethics budgeting is vulnerable to various kinds of frauds and misappropriations. (Sims, R. R)
Variance analysis is the biggest reason why ethics are important in budgeting, in
absence of ethics variance analysis can be misused for the benefit of a particular department
or manager. In most of the organizations departments or managers of the departments gets
rewarded to produce favourable variance. If a manager or department is unable to produce the

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