Question

Summarize why it is important to know and understand the role of the Financial Accountant and the Managerial Accountant? How do these roles differ? In what aspects are these roles similar?

Answer 1

The role of financial and management accountants is vital in an organisation. They act as gatekeepers for the finance functions and help in delivery the strategic objectives of the firm. Both the roles are main pillars of finance function and it helps in leading the finance function within the organization structure. The financial function is mainly concerned with financial reporting of the firm and management accounting is concerned with delivery business results like working capital, profit margin, return on investment, etc

These roles differ in following ways

· The reporting structure- Financial accounting is mainly reporting to external stakeholders like shareholders, bakers, analysts, etc. Management accounting is mainly concerned with reporting to internal stakeholders like general manger finance, vice president finance, etc

· The Financial reporting has certain formats to be followed but management reporting as such as no formats and it is more of need driven

· The financial accountants are bound by rules and regulations issued by external bodies like accounting bodies, laws, etc but management accountants are not bound by any such rules and regulations in reporting

· Financial reporting is strictly in line with the timeline as per the requirement but management reporting is as per need of management only

The role is similar in following ways

· Both financial and management accountants rely on the accounting system of the firm to generate the data needed for reporting

· Both financial and management accountants are business partnering roles in the sense they help the other functions hand in hand

· Both the functions co-exist within finance function and helps in delivering the finance agenda of the business.