accounting administration

 Management accounting is the accounting that is concerned with following up the special financial reports in the company, which are related to decision-making, planning and control of operational processes,and management accounting is defined as the activity used in preparing the financial statements in order to provide the necessary support for the company.  for administrative decisions. Another definition of management accounting is the financial report related to the factors affecting decision-making, administrative planning and operations control;  As management accounting is concerned with focusing on control and planning in order to achieve the company's own goals.

 The birth of management accounting

 The concept of managerial accounting appeared for the first time in 1950, during the formation of a team in the name of management accounting through the Anglo-American Council, and the mission of the team was to visit a group of industrial facilities located in the United States;  In order to formulate a report on the nature of work in it, then the report was published under the title (Management Accounting), and it contained a definition of the concept of this type of accounting by explaining accounting information in a way that helps management to prepare special policies in the daily operations of establishments.

 According to the International Federation of Accountants (IFAC), the emergence and development of management accounting depends on the following basic stages:

 The stage of financial control and cost determination before 1950 AD: It is the stage in which the characteristics of management accounting did not appear, but the companies’ interest was linked to determining the cost, which later led to the emergence of cost accounting, which is one of the most important foundations of management accounting, as it appeared in this stage of scientific management that  She was interested in using scientific methods in management, which contributed to the introduction of the idea of ​​managerial accounting.

 The stage of administrative control and planning (1950 AD - 1965 AD): It is the stage in which the term managerial accounting appeared and became one of the administrative tools;  The task of the management accountant relied on providing information with the aim of applying administrative planning, and providing assistance to management in making decisions and preparing the appropriate plan to achieve goals using many methods, such as financial control and decision analysis.

 The stage of assistance in reducing waste of resources (1965 - 1985): the stage associated with the interest of management accounting in following up on investment and special decisions in financing;  It was concerned with following up on external relations, which contributed to the development of the methods used in managerial accounting within most of the company’s functions, beginning with control and planning, and then formulating investment decisions, leading to the preparation of budgets. Management accounting also relied on the use of quantitative analysis;  By using modern technology to reduce costs and improve quality.

 The stage of effective use of resources (1985 - 1995): the stage that concerned itself with the search for advanced scientific methods in order to determine costs and build value based on the effective use of available resources and modern technology in order to confront developments in the economy.

 The stage of the technological revolution (after 1995 AD): It is the stage in which technology spread in all economic fields, such as commerce and industry, and this resulted in the emergence of large investments that were imposed on managerial accounting that adopt a management philosophy consistent with these developments, which led to the emergence of modern tools, such as  Target costs and management based on activities.

 Objectives of managerial accounting

 Management accounting seeks to achieve a set of goals, namely: 

 Providing appropriate assistance to managers in establishments by providing them with the appropriate tools to apply the accounting and financial evaluation, which contributes to the follow-up of the administrative performance in detail and overall at the same time.

 Implementation of a deep foundation in data analysis, according to the application of appropriate methodologies based on the integration of management and accounting tools.

 Contribute to building a future outlook towards profitable performance and private financial achievement in the institution;  In order to issue appropriate recommendations to achieve harmony between the systems of the administrative process and the special requirements of the future plan.

 Studying the potential risks that affect the vitality and continuity of the business, and then developing the necessary models to overcome any potential financial or administrative damages;  Either now or in the future.

 Participation in the development of financial budgets: because administrative accounting budgets cover all financial activities in the institution, and are characterized by being realistic;  Any of them can be implemented depending on the capabilities of the institution, and these budgets allow the possibility of adjusting them in line with changes in the circumstances affecting the state of the institution.

 Fundamentals of management accounting

 Management accounting is based on a set of foundations, namely: 

 Accounting bases: They are the bases that are represented by a set of accounting systems, and used by management accounting to prove economic activities through records and documents, and then classify them in order to identify specific facts related to the main and subsidiary activities of the economic unit in order to work on the implementation of the economic unit over them.

 Administrative foundations: They are the foundations on which managerial accounting cannot achieve success without their presence. These foundations are divided into the following:

 The organizational structure: It is the structure that guarantees the role of managerial accounting in assisting management in implementing oversight and planning on project functions, while ensuring a balance between the organizational structure and the volume of special activities in the economic unit, with the organization of responsibility centers;  Whether within departments, departments or production lines.

 Sound administrative system: It is the system on which administrative accounting depends, and is concerned with administrative organization and the effective participation of human elements in the application of administrative processes such as planning, organization, and control.

 Statistical foundations: are the foundations that rely on the integration of statistics and management accounting;  Because this accounting has become the main assistant to statistics, and any work unit depends on the presence of necessary quantitative data that helps in the application of administrative processes.