Management Accounting Report: Roles, Ethics, and Structures

This report provides a comprehensive overview of management accounting, beginning with an executive summary that highlights the importance of financial information in business. It then delves into the distinct roles of financial and management accountants, detailing the information each provides and their respective uses within an organization. The report compares and contrasts these roles, emphasizing their similarities and differences. Following this, the report addresses an ethical dilemma, applying the Langenderfer and Rockness model to analyze the situation and recommend a course of action. Finally, it examines different business structures, including company, partnership, and sole trader, offering recommendations for specific scenarios. The report concludes with a list of references, supporting the information provided throughout the analysis.

Management Accounting

Table of Contents
Table of Contents..................................................................................................................................1
Question 1.............................................................................................................................................2
Executive Summary...........................................................................................................................2
Overview of both roles......................................................................................................................2
Information provided by financial accountant and management accountant......................................2
Similarities and differences...............................................................................................................3
Conclusion.........................................................................................................................................4
References.............................................................................................................................................7
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Question 1
Executive Summary
The financial information is considered to be very much important for carrying out the
business process in the right direction. The main aim of the report is to examine the role and
information provided by the financial accountant and management accountant. Carrier wants
to hire financial or management accountant in order to decrease costs and prepare an effective
budget for her organization.
Overview of both roles
Financial accountants carry out significant services for the non-commercial and commercial
firms in order to ensure that they are complying with legal regulations and requirements and
financially sound. They are responsible for preparing the financial statements on the basis of
the financial information. They maintain financial records, inventory processing, program
administration and tax reporting (Holton, 2012).
Management accountants play a significant role in carrying out significant tasks for ensuring
that the organization does not face any financial problems. They manage all the financial
matters for driving the overall growth of the organization. They design the format of cost
control and financial reports that assists in making decisions.
Information provided by financial accountant and management accountant
The financial accountant prepares the financial statements of the organization which provides
an overview of the financial performance during a specific time period. The owner of the
organization examines the financial statements to assess how the business is performing. The
owner is able to determine and evaluate the debt, profitability and efficiency of the
organization. The managers need financial information to plan, evaluate, monitor and execute
business decisions. The employees are also interested to know the performance of the
organization because it imposes an impact on their income and job security (Needles &
Powers, 2012). The investors examine the financial statements to understand business
performance and making an investment decision on the basis of that. The lenders and
suppliers need information to assess the creditworthiness of the organization. The
government also need accounting information for protecting the interest of different
stakeholders.
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The management accountant examines the budgeting process and takes actions for improving
the financial performance of the organization. The managers and employees are able to make
decisions on the basis of the information provided by the management accountants. The sales
managers use the information to determine the impact of different pricing decision, creates a
sales budget and examine business opportunities (Horngren, 2016). The production managers
use material reports, variance reports and labour reports produced by management
accountant. The employees are able to improve their performance because they get
significant information from the management accountant. The senior management is to able
to make future decisions with the assistance of the information.
Similarities and differences
The differences between the role of financial accountant and management are as follows:
 The financial accountant keeps records of financial information of the organization.
The management accountant records and reports both non-financial and financial
information of the organization (Pandey, 2015).
 The information provided by the financial accountant is used by both external parties
and internal parties of the organization. The information provided by the management
accountant is used by only internal parties.
 The financial accountant publishes reports publicly for the users and management
accountant produce reports which are very confidential.
 The financial accountant produces information for a specific time period and
management accountant can produce information in half-yearly, quarterly or annually.
The similarities between the role of financial accountant and management are as follows:
 Both are the parties of the financial information system.
 Financial events are taken into account by both of them.
 Both are concerned with cash flows, liabilities, assets, expenses and revenues
(Sharma, 2010).
 Both determines and measures the costs for different department and accounting
periods.
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Conclusion
Management accountant should be hired for decreasing the cost and preparing an effective
budget. Management accountant mainly produces information which is associated with the
internal business process and also assists in making decisions. The management accountant
can assist to decrease cost and prepare an appropriate budget for Carrie.
Question 2
The ethical dilemma of Nathaniel can be addressed with the help of Langenderfer and
Rockness model.
Step 1: Determine the Facts
Nathaniel stuck in an ethical dilemma where it seems difficult for him to decide whether he
should go for the online assessment or not. Suzanne has not completed the exercise to
become a Certified Financial Planner which makes Nathaniel think twice before proceeding
for the assessment. He is not sure whether Suzanne has enough skills to provide financial
planning advice. On the other hand, if he does not show his interest for the assessment then
also he could be in trouble, he got this job as a favour from his wife's parents and might lose
it.
Step 2: Identify Stakeholder and Ethical Issues
Johns and Co. is an accounting practice firm and they have decided to provide a financial
planning service. But for that Suzanne has to become a Certified Financial Planner in order to
provide this service. If Nathaniel goes for the assessment and clears it then still it might
possible that Suzanne won't be able to provide financial planning service properly which may
affect the business (Geulincx, Beckett, Ruler, Uhlmann & Wilson, 2006). She does not have
any knowledge about it as she did not find time to complete the training exercise. At the same
time if Nathaniel refuses for the assessment then the firm may lose the chance to spread the
business. It also seems unethical to Nathaniel for giving an assessment on behalf of Suzanne.
Step 3: Specify the Alternatives
It is unethical and against the low, for Nathaniel to proceed for the assessment on behalf of
Suzanne. Nathaniel should advise Suzanne to take time and go through the training exercise
and complete the assessment by her own. Because she is the one who is going to play the role
of financial adviser and must be aware of the responsibilities of it (Thompson, 2006).
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Step 4: Compare Alternatives and Assess the Consequences
The alternative way may make Nathaniel lose his job and will increase the time for Johns and
Co. to start providing the service of financial planning. But in the long run, they won't face
any problem; Suzanne will become a professional financial advisor which will help to
increase the revenue for the firm.
Step 5: Make Your Decision
Nathaniel should go for the alternative option as it is the best option though it may make him
lose his job he will feel confident and comfortable by following the ethical way. If someone
or his wife came to know about his decision; he won't feel shame as he has followed the
ethical way (Thomson, Adams, Sartori & Baranski, 2005). He will be able to answer
confidently of all the questions that might be asked to him.
Questing 3
A.
Justine and Robert can select company structure for starting the new business. A company is
considered to be a separate legal entity. It means the company has the legal rights to carry out
processes and can incur debts, be sued and sue. The owner of the company can limit their
personal liabilities and they would not be liable for the company debts. Justine and Robert
can escape from the burden of debt if the business fails (Booker, 2010). A company is
considered to be a complex business structure consisting of higher administrative and set up
costs. The business will be owned by the shareholders and controlled by the directors.
Justine and Robert can also form the organization in partnership. The sole trader and trust
business structure is not applicable to this case.
B.
Ravinda can select partnership business structure for carrying out its works. The partnership
consists of two or more individual who carries out a business together. It is considered to be a
separate entity because the partners are liable personally for the debts of the business. The
partners would have shared management and control over the business. The income tax is not
paid by the partnership on the income earned (Dlabay & Scott, 2011). The partners are liable
to pay tax on the partnership income share which would be received by them. It would be
helpful for Ravinda to minimise the tax payments wherever possible. The partnership
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business structure can assist to decrease tax payments which cannot be done through sole
trader, company and trust structure.
C.
Bronte should select a sole trader business structure for carrying out its business. Bronte will
be responsible legally for all the aspects of the business. It consists of debts, losses and profits
which cannot be shared with anyone. It is relatively inexpensive and simplest business
structure. The sole trader can make all the decisions regarding operating the business and also
employing people. The owner would have full control over the assets and liable for the debts.
Bronte will be able to carry out the business whenever she gets back (Griffin, Ebert, Starke,
Dracopoulos & Lang, 2014). The partnership, company and trust business structure is not
applicable to this case.
D.
Niv and Tony can select partnership business structure for carrying out their business
operations. The structure is relatively easy to follow and not so expensive to set up. Both the
partners would be liable for the debts of the business. Both the partners can share their roles,
responsibilities and control over the business. Niv and Tony can split all their proceeds under
this business structure. The legal rules and regulations need to be followed by the partners.
Any partner can sign on the matters of the business. The works can be distributed as per the
partnership terms and agreement (Smart, Megginson & Gitman, 2007).The partnership
business structure can allow to distribute the powers which is not possible in sole trader,
company and trust business structure.
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References
Booker, M. (2010). The business. 8th ed. London: MaxCrime.
Dlabay, L. & Scott, J. (2011). International business. 5th ed. Mason, OH: South-Western
Cengage Learning.
Geulincx, A., Beckett, S., Ruler, J., Uhlmann, A. & Wilson, M. (2006). Ethics. 2nd ed.
Leiden: Brill.
Griffin, R., Ebert, R., Starke, F., Dracopoulos, G. & Lang, M. (2014). Business. 3rd ed.
Toronto: Pearson Canada.
Holton, R. (2012). Global finance. 12th ed. London: Routledge.
Horngren, C. (2016). Management Accounting. 6th ed. Melbourne: P.Ed Custom Books.
Needles, B. & Powers, M. (2012). Financial accounting. 4th ed. Mason, OH: South-Western
Cengage Learning.
Pandey, I. (2015). Financial management. 10th ed. New Delhi: Vikas Publishing House PVT
LTD.
Sharma, N. (2010). Business Finance. 5th ed. New Delhi: Global Media Publications.
Smart, S., Megginson, W. & Gitman, L. (2007). Corporate finance. 3rd ed. Mason, OH:
Thomson/South-Western.
Thompson, M. (2006). Ethics. 2nd ed. London: Hodder.
Thomson, M., Adams, B., Sartori, J. & Baranski, J. (2005). Moral and ethical decision
making. 7th ed. Toronto, Ont.: Defence Research and Development Canada.
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