Management accounting and financial accounting have different goals. A management accountant collects data and conducts research to provide managers of a company with financial information so they can make budget decisions. A financial accountant collects data to create reports for groups outside the company, such as federal regulators and investors. Both types of accounting include some common topics.
Accounting Information System
Accounting information system knowledge is important for both types of accountants. The management accountant needs to use an accounting information system to present data to managers, while the financial accountant uses the system to audit financial information to make sure it is correct. Many companies no longer use paper records to monitor financial transactions, so both types of accountants need to understand how an accounting information system operates.
Information must be relevant and timely. The management accountant needs to make sure that the information that managers receive is useful when making budgetary decisions, and it arrives early enough for the managers to use it to create a budget. The financial accountant needs to make sure that a reasonably knowledgeable investor or a government regulator has sufficient information to make a decision, and that the financial report is available on time according to federal law.
Information must allow the user to make a comparison between different firms. The management accountant focuses on benchmarks, so the managers know how well a company's internal processes function compared to its competitors. A financial accountant needs to create a report that allows the user to make a comparison with a report from a different company, since a financial report should include data that allows an investor to decide which company is best to invest in to receive the greatest return.
Internal controls are necessary in both types of accounting. The management accountant helps managers design and implement internal controls, ensuring that the company does not have money or assets stolen. A financial accountant checks internal controls during an audit, making sure that the internal controls are effective and that the company is following its established cash management guidelines.
Training and Certification
Both types of accounting often require the accountant to undergo formal training at a university. An undergraduate accounting program may not require a student to specialize in either management or financial accounting, and frequently includes courses from both areas. Both management and financial accountants commonly hold the Certified Professional Accountant, or CPA, designation, which requires the applicant to take undergraduate business and accounting courses, but does not require specialization in management or financial accounting.