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Friday, March 06, 2009

Cost & Management Accountants - Nature of Work, Employment Avenues

In the current competitiveness of global markets Cost and Management Accountants have assumed an important role. Cost and Management accountancy has been intimately interwoven into the fabric of management services. The professional expertise of the cost and management accountant aids in stabilising budget and standards, evaluating operating efficiency and effectiveness of production and service managements, formulating the profit planning programme, guiding the managerial decisions and identifying accountability for cost and profit variance. The World Trade Organisation’s policies and regulations regarding global trade necessitates cost structuring.


Multi product ventures has made it essential for operating managers to know the exact cost of each product, for pricing and also for monitoring, planning, controlling group performances of man machine combinations. This is needed to ensure that the expenditure per unit of products or services are the best minimum. While financial accounting aims at ‘accounting for’ the money, cost accounting provides a system for effective utilization of money. The cost accounting system provides the management with an effective system of appraisal and evaluation of investments and alternatives in monetary terms. World over cost accountants are known as management accountants.

Cost accountancy may also be used in unconventional areas of audit such as energy audit, management audit, environment audit etc.

Nature of Work

A Management Accountant collects, organises, collates and analyses information from all parts of the organisation, including all the financial departments. In large organisations, this information may be based on computer based systems designed to maintain detailed and up-to-date records. This makes regular critical analyses of past and present financial performance with projections for the future possible.

Cost and management accountants provide accurate assessments and hence influence decisions. Cost auditing is useful as it provides an evaluative data of a company’s past performance, current product profile offering suggestions for suitable product pricing.

Management accountants monitor all costs involved in making a product or providing a service, from raw materials and labour cost to transport, administrative costs, overheads on buildings, etc. They analyse sales trends. By monitoring performance and efficiency, they can spot and report on problems, provide figures on which to base future pricing policies, and suggest ways of economizing by analysing costs and implications of different production methods.

Budget control

Making regular cost reports for a factory, working out why one set of costs have suddenly risen and what to do about it - is another typical area of responsibility.

This enables companies to develop a competitive edge in their quality of products, customer service, brand image and the like. The ultimate advantage is in maximisation of profits and production which means increased returns to share holders and more funds for investment.

Cost and Management Accountants also act as

-- Executors, administrators, appraisers, valuers, secretarial consultant

-- Tax consultants

-- Advisors in company matters, mergers, acquisitions

-- As key persons in the preparation of feasibility studies, strategic planning of projects at the client’s premises.

Work Environment

Cost and Management Accountancy like other accountancy jobs is a desk job. The work conditions are typical of accountants profession. The job demands concentration and analytical thinking skills and hence can be quite demanding. Coordination with other professionals requires good communication skill and the ability to work with a group.

Personal Characteristics

Analytical and judgemental skills are the most important requirements . Since CMAs apply their knowledge for assessing different kinds of situations and suggesting the right kind of cost prescriptions, an objective outlook is very necessary. Strong awareness of global economic environment is mandatory.

Employment Avenues

Increase in awareness about contributions cost accountants can make to attain business objectives has accentuated the demand for cost accountants in all sectors of the economy. The topmost positions companies can offer to experienced professionals are that of a Managing director, Finance Director, Financial Controller, Chief Accountant, Cost Controller, Marketing Manager, Chief Internal Auditor.

Cost consultancy and teaching offer good work options. Graduates with ICWAI qualification can register for an M. Phil or Ph D programme in commerce. Cost and management accountants work in the All India cadre known as Indian Cost Accounts Service (ICAS).


This Article is taken from Mrs. Kum Kum Tandon's book After 10+2 And Beyond - Humanities & Commerce chapter No. 7 titled Finance and Accounts

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