Borovska K. S., Bondarenko N. M., Mudrenko A. A.
Oles Honchar Dnipropetrovsk National University
ROLE OF MANAGEMENT ACCOUNTING IN AN ENTERPRISE MANAGEMENT SYSTEM
There is a need to manage enterprise activities effectively in a changeable environment of the economic activity.
Enterprise management provides the coordination and regulation of its activities to achieve strategic goals. In a decision making process managers at various levels need target information that should be useful to perform their functions. Management begins with information (development of plans) on the basis of which performance is assessed (accounting and monitoring of key performance indicators), reserves and unused capacity are revealed (data analysis), decisions are made and effectiveness of decisions is evaluated.
Modern management accounting, using internal and external information, fulfils various business functions. It analyzes activities including both current and long-term goals, develops methods for obtaining and collecting relevant information.
Managerial accounting aims to generate information for management decisions made by internal users. It is not regulated in accordance with generally accepted principles and it is organized by an enterprise on its own. Most data on management accounting is a trade secret because they reflect the strategy and tactics of a company in a competitive environment.
In general managerial accounting is kept at an enterprise according to structural components, projects and product mix. It allows conducting analysis of economic activity, dividing costs on direct and overhead, identifying and eliminating those costs that are not justified, and creating the most effective wage system, which stimulates employees’ activity.
Managerial accounting provides preparation and analysis of accounting information to help the management guide planning and control of an enterprise activity, as it provides information about the cost formation, provides data on the deviation of actual performance from predicted values in an expeditious way.
Management accounting plays an important role in solving forward-looking tasks: the profitability of new products, the expected revenue from the planned economic measures, the effectiveness of new investment evaluation, decision making under the use of limited resources and decisions such as «buy or produce» etc.
Managerial accounting does not reflect passively business processes that occur in a company but actively affects them, controls the legality, feasibility and effectiveness of capacity utilization.
However, the active implementation of management accounting in Ukraine primarily is prevented by inappropriate top management attitude. This is largely due to the perception of management accounting as a part of the accounting information for external financial analysis.
Furthermore, managers of Ukrainian companies, as a rule are familiar with general theoretical principles of management accounting and cannot imagine how to apply them in practice. The role of management accounting to ensure a proper use of the enterprise resources and determinate the responsibility of each manager is clearly understood. But the expected revenue from a particular economic action, forecasting profitability of new products, the financial performance of a firm in the future and financial assessment of development options for an enterprise, as the main tasks of management accounting are not widely used.
Thus, management accounting can be defined as an integrated internal information system, the main task of which is providing information for managers of businesses about costs and performance of both an entire organization and its business units, which is designed to make operational, tactical and strategic management decisions. It is a part of the management process and provides important information to:
- define strategy and plan future operations of a company;
- control its current activities;
- optimize the use of resources;
- assess performance;
- reduce subjectivity in decision making process.