Management Accounting Systems: Principles, Techniques & Solutions

This report delves into the principles of management accounting and its crucial role in integrating management accounting systems within organizations, using Eastern Engineering Co. Ltd as a case study. It discusses various techniques and methods for management accounting reporting, including margin analysis, capital budgeting, inventory valuation, and trend analysis. The report also examines the advantages and disadvantages of budgetary tools like Float, Scoro, Mint, Plan Guru, and QuickBooks Online. Furthermore, it compares how Iceland Manufacturing Ltd and Anglo American Plc adapt management systems to respond to financial challenges, highlighting the importance of financial reporting, ERP systems, and innovative accounting software. The study concludes that effective management accounting practices are essential for organizational sustainability and financial performance.

Unit 5 Assessment

TABLE OF CONTENT
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
Principles of management accounting and its importance to integrate management accounting systems
within organization..................................................................................................................................3
Different techniques and methods used for management accounting reporting.......................................4
Advantages and disadvantages of the budgetary tools.............................................................................5
Comparison of two organization which adapting management systems to respond to financial problems
.................................................................................................................................................................6
CONCLUSION...........................................................................................................................................8
REFERENCES............................................................................................................................................8

INTRODUCTION
Management accounting is all above refers to company’s financial and account
management department prepares business reports which helps to provide idea that organization
or business has financial capability to expand new goals (Gunarathne and et.al., 2021). Eastern
Engineering Co. Ltd is medium size enterprise which provides services in manufacturing
process. Its senior management decides to develop clear plan and defines functions of
management accounts department. This study will discuss principle of management accounting,
importance of integrate management accounting, techniques and methods of management
accounting reporting with budgetary tools pros and corns explanation and many more.
MAIN BODY
Principles of management accounting and its importance to integrate management accounting
systems within organization
Management accounting is beneficial for evaluation and identification of financial performance
analysis of company or organization. It’s essential for every business sustainability because its
summarize and calculate profit, loss, position and many more aspects of company and from the
uses of this approach company manage can easily manage goods and services with great manner.
Designing and Compiling: This principle of management accounting clearly represent financial
report, records, accounting information, cash flow, profit and loss and many more aspects which
is beneficial for organization to make new strategic plan for company benefits
(Aghamohammadi, Darabi and Najafi-Moghadam, 2021). Examples like seller when this
company sell manufacturer product or distribute and deliver products and services they do have
duty to maintain financial record, quantity or goods or other essential terms for long term idea.
Management by Exception: It helps to determine budget which spends on manufacturing
process, cost evaluation which makes proper ideas for which department not perfectly managed
their work activities. And with the application of budgetary control approach and standard cost
techniques manage financial flow of company with sustainable manner.
Accounting for Inflation: Determination of financial performance of organization is important
term. Profit and loss is all above depends on product selling process. In terms of profit can

continuously managed then its easier to evaluate that this company has sustainable position.
Example is that the Eastern Engineering Co. Ltd not deliver their goods services into market and
attracts audience attraction then it clearly represent into financial report that company
performance is stable or not for evaluation of profit identification.
Utilization of Resources: This term is all above refers to utilization of resources with best
manner. Company when prefer to develop sustainability within business practices, its important
term to manage and perfectly uses individual resources because wastage of resources badly
affects on financial stability of organization (Dziuba, 2021).
Importance to integrate management accounting systems within organization
Managerial accounting helps to provides clear ideas and information to operational manager with
specified manner to manage financial health of company for short term and long term decision-
making. It gives idea to operational manager for they can involves new practices within business
practices or not and also helps to provide information for new investment in right direction. So
financial management helps to build higher efficiency in business activities, because they do
have clear idea and information of company position on the basis of financial flow.
Examples company operational manger decide to implement new plan and process within
manufacturing process so it require new machinery so for the involvement of new resources can
be only decide by when accounting or financial manager provide budget idea (Quesado and
Silva, 2021). From the idea of this term its very clear that having appropriate management
accounting is the best tools for business growth and expansion of new accessories development.
Different techniques and methods used for management accounting reporting
Management accounting reporting evaluates from the different methods of techniques
which are useful for managing goods and services with effective manner. It helps to build higher
effectiveness in business activities which makes higher efficiency in performing tasks with great
manner. So different techniques and methods utilization for management accounting reporting
are as follows,
Margin analysis

This technique is one of the most effective and essential because it clearly represents
company position with evaluation of profit optimization. Utilization of this approaches helps to
evaluates and identify breakeven point which makes more clarity in context of evaluation of
profit and loss position of company. And it’s mainly defined and understands with the graphical
representation. Eastern Engineering Co. Ltd industry identifies their performance and manages
their activities with the uses of breakeven evaluation.
Capital budgeting
Management accounting and capital flow within business can be effectively identified
with the help and utilization of capital budgeting methods. Its useful for provide information
with perfect and effective decision-making for which necessary changes can possible within
specific fund on the basis of capital expenditure evaluation. Eastern Engineering Co. Ltd is
manufacturing industry, company has major requirement to identify capital budgeting evaluation
for identification of net present value and internal rate of return because it helps to provide idea
that this product and services perform their tasks with well manner or not.
Inventory valuation and product costing
This term is all above refers to defines as analysis and evaluation of actual cost of which uses in
product manufacturing. From the calculation process this term clearly defines overheads charges
on products and services which useful for product cost management (Oyewo, 2021). Eastern
Engineering Co. Ltd manufacturing process when takes higher cost its important term to evaluate
actual cost which requires for the product selling cost determination. Thus, management
accounting helps to determines cost which makes better understanding in product costing
development.
Trend analysis and forecasting
It mainly divided into two terms within organization activity is mainly defines as primary
activity for identification of recent cost evaluation of product and services. Proper and effective
reorganization of cost of products makes higher effective understanding for products and
services because having proper of new goods and services is the best approach which develops
clarity and consistency in cost evaluation.

So from the application and proper utilization of techniques and methods of management
accounting reporting makes more clarity and consistency in business structure which develop
higher effectiveness in business structure. And it raises overall business performance with great
manner because financial management provides clear information to seniors, authority who takes
decision on the basis of profit and loss identification. Evaluation of breakeven point, capital
budgeting, net profit values and many more techniques are beneficial for business sustainability.
Advantages and disadvantages of the budgetary tools
Budgetary tools is all above refers to define as strategic approach convert into implementation of
planning process. It helps to provides idea for company budget so organization seniors,
management team prepare new plan on the basis of requirement. Budgetary tools have various
advantages and disadvantages. Utilization of budgetary tools effectively manages performance
and progress of business, helps to manage cash flow with ore efficient manner and many more.
Budgetary tools include Float, Scoro, Mint, Plan guru, QuickBooks online and many more. Thus,
advantaged and disadvantages of the budgetary tools are as follows,
Advantages Disadvantages
 Its helps to provide clear ideas for new
target development and strategies
development with sustainable manner.
 Float is cash flow forecasting solution
for managing and giving ideas for how
much cost will spend on specific
products which makes better
understanding for how much fund
expand into products and services
(Gunarathne, Lee and Hitigala
Kaluarachchilage, 2021).
 Its ease of use and easily customizable,
 It’s very difficult approach to create
budgeting and its takes higher time as
well and mainly when organization
members have lack of knowledge in
utilization of budgetary tools software.
 Float software for cash follows
evaluation is little bit expensive and at
the same time it’s confusing as well.
Utilization of this approach requires
financial aspects and proper knowledge
of application of this software.
 Mint budgetary tool software has lack

financial summarize with sustainable
manner. And it’s very effective
software which mainly refers to free to
use software.
 Plan guru budgetary tool is one of the
most appropriate methods which
mainly uses by almost organization
who decide to manage their financial
activities with the helps to this tool.
Major features and quality of this tool
is strong budgeting and forecasting
features and evaluates breakeven
analysis which makes more clarity in
financial position and company
position evaluation. It’s extremely
useful for small budget decision-
making process.
of bill pay feature and lack of investing
feature so it’s not properly provide
ideas for where to evaluates answers.
Its only working in windows PC but its
download in any computer which is little
complex activity and its price higher rather
then many other competitive budgetary tools
(Ascani, Ciccola and Chiucchi, 2021).
So from the evaluation of multiple budgetary tools advantages and disadvantages makes better
understanding and gives clarity that individual tool has some specific prose and corn. So
company has duty to involve tools on the basis of their requirement and members have proper
idea for using digital tools. This term is one of the bets techniques for utilization of appropriate
budgetary tool.
Comparison of two organization which adapting management systems to respond to financial
problems
Organization mainly uses management accounting applications, resources for resolution of
financial issues and manages performance with effective manner. Resolutions of financial issues

within business practices can be effectively manage by utilization and application of appropriate
tools of management accounting and company management their financial problems which are
as follows,
Iceland Manufacturing Ltd Anglo American Plc
 It provides different range of food
services with innovative manner. It
offers frozen foods into market includes
with vegetarian, special diet and many
more.
 Company faces multiple challenges in
financial aspects because of unexpected
events like Covid-19. So it decides to
engage proper financial reporting plan
with the helps to management
accounting tools and techniques.
 This organization organize their
financial reporting system on monthly
performance evaluation with the help of
financial assistant which has duty to
create weekly report then financial
manager evaluates and creates data and
evaluation business performance.
 Resolution and management of
financial aspects management of this
company mainly manages by utilization
and application of ERP system where
they clearly evaluates sales, production
performance, budgetary control with
breakeven point evaluation, capital
 This company mainly situated in UK
but it provides their goods and services
into multiple countries. Major products
and services which manufacturer by
this company is metal and mining.
 Weak share price and slow operational
process influence their business
performance which impacts on
sustainability of its financial activities.
Idea and information of this challenges
which faces by organization its
important term to develop higher
consistency in business activities with
sustainable manner.
 Company has good and reputed
position in market from long term
because it maintains their quality of
goods and services with proper manner.
It has multiple financial department for
managing its manufacturing,
operational, selling and many more cost
management because it manufacturer
goods from land so machinery
management is biggest complex issue
within this type of industries (Oyewo,

budgeting process and many more.
Thus, from the utilization of this
process makes sustainability in its
management system with proper
financial reporting includes with audit
report expansion by financial or
accounting management experts.
2021).
 It manages their financial problem with
operation and application of innovative
accounting software’s and produces
high quality portfolio which clearly
shows quality and consistency within
delivery of goods and services with
experts decisions on the basis of fund
flow and cash forecasting tools
application with software’s utilization
process.
CONCLUSION
It has been summarized from the above reflective study that management accounting
within business practices ahs power to develops higher sustainability within organization
practices with great manner. It has been evaluated from the study that proper and effective
techniques, methods of management accounting useful for provides information for company’s
financial performance which is very useful or beneficial or long term business sustainability.
Also its been clearly identified from the above study that utilization of budgetary tools and
knowledge of this tool or its software’s has power to provide proper ideas and information for
managing goods and services with great manner. Also from the examples makes better
understanding of managing accounting system and different approach of two organization and
their financial problems management techniques or systems.

REFERENCES
Book and journal
Aghamohammadi, M., Darabi, R. and Najafi-Moghadam, A., 2021. Structural Equation
Modeling to Investigate the Impact of Information Quality Indicators on Financial Reporting
Quality Risk with Emphasis on the Mediating Role of Risk Management: Evidence from Tehran
Stock Exchange. International Journal of Finance & Managerial Accounting. 6(23). pp.151-167.
Ascani, I., Ciccola, R. and Chiucchi, M. S., 2021. A structured literature review about the
role of management accountants in sustainability accounting and reporting. Sustainability. 13(4).
p.2357.
Dziuba, T., 2021. Information model for improving accounting and analytical support for
economic potential management. Scientific Horizons. 24(2). pp.108-119.
Gunarathne, A. N., Lee, K. H. and Hitigala Kaluarachchilage, P. K., 2021. Institutional
pressures, environmental management strategy, and organizational performance: The role of
environmental management accounting. Business Strategy and the Environment. 30(2). pp.825-
839.
Gunarathne, N., and et.al., 2021. Uncovering corporate disclosure for a circular economy:
An analysis of sustainability and integrated reporting by Sri Lankan companies. Sustainable
Production and Consumption. 27. pp.787-801.
Oyewo, B. M., 2021. Outcomes of interaction between organizational characteristics and
management accounting practice on corporate sustainability: the global management accounting
principles (GMAP) approach. Journal of Sustainable Finance & Investment. 11(4). pp.351-385.
Oyewo, B., 2021. Do innovation attributes really drive the diffusion of management
accounting innovations? Examination of factors determining usage intensity of strategic
management accounting. Journal of Applied Accounting Research.
Quesado, P. and Silva, R., 2021. Activity-based costing (ABC) and its implication for
open innovation. Journal of Open Innovation: Technology, Market, and Complexity. 7(1). p.41.