Question

Please assist to explain the differences between a financial accountant and a management accountant
Thanks you so much.

Answer 1

The management accountant provides information to people within an organization for internal decision making, whereas, the financial accountant provides information to the people outside the organization; mainly to the stockholders (owners) of the organization.

The financial accountant has historical outlook and seeks to record transactions of the past and then summarize and present them in the form of financial statements like the income statement, balance sheet and statement of cash flows. In contrast the management accountant is forward looking, in that in addition to analyzing the past date, he also provides projections into the future.

Financial accountant has obligations towards the various stakeholders of the firm, whereas the management accountant has obligations only to the management of the firm.

While the financial accountant has to observe the accounting standards like GAAP, IFRS, etc, the management accountant has no such strings attached, even though he is bound by the internal procedures, if any, regarding his work.

Management accountant makes use of non-accounting data also in his analysis, whereas the financial accountant uses only accounting information.

The financial accountant is liable for legal action against him in case of fraudulent/wrong reporting. The management accountant, however, will be liable to the management for such cases.

The financial accountant's work is subject to audit by qualified auditors under law, whereas the management accountants work is not so audited.