Comparative Analysis of Accounting Roles & Ethical Dilemma

This report provides a comprehensive analysis of the roles of management and financial accountants, highlighting their similarities and differences, the information they provide, and the users who rely on that information. It also addresses an ethical dilemma faced by a cadet accountant and applies the Langenderfer and Rockness model to resolve it. Additionally, the report discusses suitable business structures for various scenarios, including partnership, company, and sole trader forms, with reference to Charles Sturt University. The report concludes by recommending the role of financial accountant for Madeline, considering the legal and regulatory requirements associated with financial accounting.

Running Head: Role of Management Accountant
TYPES OF ACCOUNTANTS

Role of Management Accountant 1
Question 1
Executive summary:
Accounting is said to be the language of any business as it helps in providing necessary
information relating to the significant aspects of the business to the mangers and other parties
that are associated with the business organisation. Management accounting and financial
accounting are the two major categories of accounting. Both the types of accounting
functions are performed by the accountants at the respective areas. The roles of management
and financial accountant have been discussed in this report.
Accountants plays important role in the organisational growth and success. Management
accountants provides information that carters the need of managers to undertake several
managerial activities to formulate the strategies and policies for the business and financial
accountants provides the information relating to the financial aspects of the business.
Financial accountants helps in delivering the information about the financial performance
and situation of the company to the stakeholders of the business. Therefore, financial
accounting generally deals with quantitative data of the organisation and primarily provides
the monetary information to the intended users i.e. the stakeholders of the organisation. The
internal stakeholders like employees and other operational managers needs the financial
information to understand the performance of the company in which they are employed so as
to achieve the goals and objectives of the business. The external stakeholders like investors,
shareholders etc. uses the financial information to take sound economic decisions. Whereas,
the management accountant deals with quantitative and qualitative data. Hence, management
accountant provides monetary as well as non-monetary information to the management of the
business organisation (Sunarni, 2013).

Role of Management Accountant 2
. The main users of the information provided by the management accountants are the top,
middle and lower level managers. As top managers uses such information to formulate
various plans, budgets, strategies to achieve the organisational growth and success and
middle and line level managers uses managerial information to carry out the necessary
business activities.
Similarities between the role of management and financial accountant:
 Both the roles requires an accountant to hold the accounting education expertise to as
to serve the basic purpose of accounting, i.e. provision of necessary information to the
needed parities of the business by collecting, analysing and processing the relevant
data and thereby reporting the processed information through various management
and financial reports.
 Both management as well as financial accountant provides the accounting information
to the users so as to support their decision making process regarding several business
aspects. Therefore, both the accountants holds an important position in the
organisational structure of the entity.
Differences in the roles of management accountant and financial accountants:
 The management accountant generally performs their roles and functions to fulfil the
information needs of internal parties of the organisation such as top and lower level
managers. Whereas, the financial accountants performs their functions to fulfil the
information requirements of mainly the external parties associated with the entity
such as creditors, investors, suppliers, business community or the regulatory bodies.
 The financial accountants have to prepare a single report to be delivered to the various
stakeholders of the organisation. However, management accounts have to prepare

Role of Management Accountant 3
different reports to provide the relevant information to the different divisions or
departments or levels of business management.
Conclusion:
From the above examination of roles of management and financial accountants, it can be
concluded that financial accountant has major role than the management accountant as
financial accounting is done in order to comply with the legal and regulatory requirements.
To prepare financial reports is compulsory for the companies but preparation of management
reports in not legally required in any framework. Therefore Madeline must accept the role of
financial accountant.
Question 2
Ethical dilemma is the situation when a person has to opt for one option at the cost of
ignoring other, where both the options are correct in the moral sense but both are conflicting.
In the present case, the cadet accountant has been asked by the manager to prepare the
financial statements before leaving for the study leaves. The preparation of such financial
statements is found to be complicated by the accountant as he do not have sufficient
experience but since it is the instruction from his supervisor, the accountant need to work on
that. However, if the accountant tries to complete the work within the limited available time
he is afraid of poor quality of the work.
From the above facts, it can be identified that the cadet accountant is facing the situation
called ethical dilemma. Langenderfer and Rockness model suggests a systematic approach to
resolve the ethical dilemma that arises in the decision making. Therefore, the said model can
be applied in the current case. This model sets out 5 steps to solve the matters involving
ethical dilemma. They are:

Role of Management Accountant 4
 Determination of facts:
Firstly, the accountant is required to identify what are the opinion conflicts and also the facts
like who and what will be impacted if the choice of a particular decision is made.
 Identify stakeholders and the ethical issue:
It must be taken into consideration the interests of the stakeholders associated with this
particular case of ethical dilemma. The consideration must be stretched beyond the
accounting issues to the stakeholder’s interests.
 Specifying the alternatives:
He must then develop the list of all the possible courses of actions that can be undertaken in
the given situation. Accountant must determine whether the courses of actions are legally
correct, fair, beneficial etc.
 Comparing the possible alternatives and assessing their consequences:
It involves assessing all the possible alternative range of actions and their consequences that
may affect the stakeholder’s interests.
 Making the final decision:
This is the final step and involves the selection of best alternative action that is capable of
balancing the action’s consequences against the accountant’s primary values by eliminating
the unethical options ((Langenderfer & Rockness, 2006).
.

Role of Management Accountant 5
Question 3
A)
In the first case, since Mick and Bill are good friends and are intended to combine their
individual businesses of tyre manufacturing, they can opt for partnership form of business
structure. The basic features of partnership form of business structure are as follows:
The income and losses of the business along with the control over the business will be shared
among the partners.
Partnership firm does not have any tax obligations on the overall profits earned by it.
However, the individual partners will have to pay tax on their respective profit shares.
The partnership firm has its own TFN to file its annual returns.
B)
Since the finance lectures who are planning to come together to form a business of provision
of financial advice but are concerned about the legal liabilities of their business, they must
opt for the company form of business structure rather than going for partnership firm. As in
case of company the liabilities of the owners gets limited whereas in case of partnership firm
the liabilities of the partners is unlimited. Features of company form are as below:
Company is a separate legal entity.
It must get GST registration if its turnover is $75000 or higher.
It is compulsorily required to file the annual tax returns.
It owns the control over the money earned by the business and the individual owners of the
company doesn’t possess any control over that.
C)

Role of Management Accountant 6
Audrey must opt for Sole trader form of business structure .Since, Audrey is working in a full
time job and does not want her job to be affected while engaging herself for the other local
clothing businesses. With sole trading as the business structure she will be the sole owner and
manager of her business and will be able to control her business independently. Features of
this business form are:
Taxes to be paid in the same manner as are paid by individuals.
Solely responsible for any legal implication of the business.
GST registration if its turnover is $75000 or higher.
D)
In this case Tom has a family of 6 members with his wife and four children. Since the
business is being run from long years but the business is finding difficultly to expand the
operations due to sole trade form of business structure. Therefore, it can opt for company
form of business structure to gain new clients for its business.
The company should get listed on the Australian stock exchange to widen its customer base.

Role of Management Accountant 7
References:
Langenderfer, H. Q., & Rockness, J. W. (2006). Integrating ethics into the accounting
curriculum. Accounting Ethics: Theories of Accounting Ethics and their
Dissemination, 2(1), 346.
Sunarni, C. W. (2013). Management accounting practices and the role of management
accountant: Evidence from manufacturing companies throughout Yogyakarta,
Indonesia. Review of Integrative Business and Economics Research, 2(2), 616.

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