MAC 302 – MANAGEMENT REPORTING
2nd Semester, AY 2024 – 2025
BS Management Accounting
Module I
MANAGEMENT ACCOUNTING ENVIRONMENT
Learning Objectives
1. Expound on the importance of management accounting in relation to management processes.
2. Explain the evolutionary developments in management accounting.
3. Understand the powers, duties, and responsibilities of a ‘ controller.
4. Discuss the basic functions of controllership: Illustrate the planning and controlling cycle. Summarize the basic
principles of internal controls.
5. Describe the basic functions of treasurership. Differentiate financial accounting from management accounting.
6. Apply the basic ethical considerations governing the practice of management accounting. Understand the
directions and compelling dynamism in management accounting.
MANAGEMENT SERVICES (MS) refers to that practice of professional accountant concerned with providing advice and
technical assistance to help management improve the use of resources in achieving organizational goals.
Management Accounting defined as:
a. As a process of identification, measurement, accumulation, analysis, preparation, interpretation, and
communication of information (both financial and operating) used by management to plan, evaluate and control
within an organization and to assure use of and accountability of its resources.
b. The process of identification, measurement, accumulation, analysis, preparation, interpretation, and
communication of information used by management to plan, evaluate and control within an organization and to
assure use of and accountability of its resources. Management accounting also comprises the preparation of
financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax
authorities.
c. Management accounting is a profession that involves partnering in management decision making, devising
planning and performance management systems, and providing expertise in financial reporting and control to
assist management in the formulation and implementation of an organization’s strategy.
Areas of MS Practice
Operational Advice – counselling management in its analysis, planning, organizing, operating and controlling
functions.
Special Studies – Conducting social studies, proposing plans and programs and providing guidance and
technical assistance in their implementation.
Organizational Analysis – renewing and suggesting improvement of policies, procedures, systems, methods, and
organizational relationships.
Innovations- introducing new approached, methods, techniques, and concepts to management.
Management accounting as practice extend to three areas:
a. Strategic Management – advancing the role of the management accountant as a strategic partner in the
organization.
b. Performance Management – developing the practice of business decision-making and managing the
performance of the organization.
c. Risk Management – contributing to frameworks and practices for identifying, measuring, managing and
reporting risks to the achievement of the objectives of the organization.
A management accountant applies his or her knowledge and skill in the preparation and presentation of financial and
other decision-oriented information in such a way as to assist management in the formulation of polices and in the
planning and control of the operation of the undertaking.
The management accounting concepts are based on the qualitative criteria of accountability, controllability, reliability,
interdependence, and relevance. The system used to gather, process and present data to provide specific and useful
quantitative information to management is management accounting.
The organizational head of the management accounting group is called the Management Accountant or
traditionally called Controller (or Comptroller). The business of accounting is information. And the business of
management accounting is to provide information to management on a timely, detailed and flexible manner.
Reference: Management Services (2021 Edition )by: Franklin T. Agamata
NEGERON-OBELO,CPA,MPA P a g e |1
MAC 302 – MANAGEMENT REPORTING
2nd Semester, AY 2024 – 2025
BS Management Accounting
BASIC MODEL IN MANAGING BUSINESS ORGANIZATIONS
Controllership
It covers both the intelligent and behavioral aspects of management. Managers make decisions in all levels of managerial
authority and areas of managerial functions.
Functions of Controllership
Planning and Controlling Protection of Assets
Reporting Economic Appraisal
Evaluation Tax Administration
Government relations and reporting
MANAGEMENT FUNCTIONS
Reference: Management Services (2021 Edition )by: Franklin T. Agamata
NEGERON-OBELO,CPA,MPA P a g e |2
MAC 302 – MANAGEMENT REPORTING
2nd Semester, AY 2024 – 2025
BS Management Accounting
Decision Hierarchy
Planning and Controlling Cycle
Internal Control and Controllership
Internal control is one of the major elements of controllership. They are the predefined values and skills of the
organization. It comprises the plan of the organization and all its coordinate methods and measures to protect the assets,
check the accuracy and reliability of accounting data, promote operational efficiency, and encourage adherence to
prescribed managerial policies.
Internal Control Components and Purposes
Structure (plan of the organization) – Protection of assets, and accuracy and reliability of accounting data
Policies (methods and measures) – Operation efficiency, and adherence to policies
General Controls
General controls are organizational controls. These are developed during the formulation of the organizational design and
re meant to prevent or reduce errors, inefficiencies, irregularities, and illegal acts. In designing organizational structures,
transactional responsibilities must be segregated.
Application Controls
Controls that relates to the details of forms, rules, regulations, standards, schedules, reports, accountabilities,
commitments, and other operating policies to complement. Application controls are operating controls.
The internal controls of an organization are designed within the constraining criterion of cost/benefit relationship. If the
costs of implementing an ideal internal control system exceed the benefits that are expected from it, the idealism in the
internal control principles is compromised.
Reference: Management Services (2021 Edition )by: Franklin T. Agamata
NEGERON-OBELO,CPA,MPA P a g e |3
MAC 302 – MANAGEMENT REPORTING
2nd Semester, AY 2024 – 2025
BS Management Accounting
The Eleven (11) Cardinal Principles of Internal Controls
The Five (5) Elements of Transactional Responsibilities
Treasurership
Controllership and treasurership constitute corporate finance. Controllership deals with records, systems, and processes to
attain the objectives of internal controls and good managing while Treasurership deals with the management of wealth of
the organizations. It includes mastering the sources of funds and the exercise of prudence in using organizational
resources. The three basic source of funds – financing, operating and investing.
Financial Accounting and Management Accounting
Distinction of management accounting from financial accounting relates to their orientation, emphasis, demographics of
customers being served and body of knowledge applied.
Reference: Management Services (2021 Edition )by: Franklin T. Agamata
NEGERON-OBELO,CPA,MPA P a g e |4
MAC 302 – MANAGEMENT REPORTING
2nd Semester, AY 2024 – 2025
BS Management Accounting
STANDARDS FOR ETHICAL CONDUCT FOR PRACTITIONERS OF MANAGEMENT ‘ACCOUNTING AND FINANCIAL
MANAGEMENT
Competence
Practitioners of management accounting and financial management have a responsibility to:
Maintain an appropriate level of professional competence by ongoing development of their knowledge and skills.
Perform their professional duties in accordance. with relevant laws, regulations, and technical standards.
Prepare complete and clear reports and recommendations after appropriate, analysis of relevant and reliable
information.
Confidentiality
Practitioners of management accounting and financial management have a responsibility to:
Refrain from disclosing confidential information acquired in the course of their work, except when authorized, and
legally obligated to do so.
Inform subordinates as appropriate regarding the confidentiality of information acquired in the course of their
work and monitor their activities to assure the maintenance of that confidentiality.
Refrain from using or appearing to use confidential information acquired in the course of their work for unethical
or illegal ‘advantage either personally or through third parties.
Integrity
Practitioners of management accounting and financial management have a responsibility to:
Avoid actual or apparent conflict of interests and advise all appropriate parties of any potential conflict.
Refrain from engaging in any activity that would prejudice their ability to carry out their duties ethically.
Refuse any gift, favor, or hospitality that would influence or would appear to influence their actions.
Refrain from actively or passively subverting the attainment of the organizatior’s legitimate and ethical objectives.
Recognize and communicate professional limitations or other constraints that would prejudice responsible
judgment or successful performance of an activity.
Communicate unfavorable as well as favorable information and professional judgment or opinion.
Refrain from engaging in or supporting any activity that would discredit the profession.
Objectivity
Practitioners of management accounting and financial management have a responsibility to:
Communicate information fairly and objectively.
Disclose fully all relevant information that could reasonably be expected to influence an intended user's
understanding of the reports, comments, and recommendations presented.
----- END ----
Reference: Management Services (2021 Edition )by: Franklin T. Agamata
NEGERON-OBELO,CPA,MPA P a g e |5
MAC 302 – MANAGEMENT REPORTING
2nd Semester, AY 2024 – 2025
BS Management Accounting
MULTIPLE CHOICES
1. Management Accounting is
a. Governed by Generally Accepted Accounting Principles
b. Draws from other disciplines other than accounting
c. Geared primarily to the past rather than the future
d. Places more emphasis on precision of data compared with financial accounting which does not place more
emphasis on accuracy of information.
2. A firm’s statement of broad objectives or mission statement should accomplish all of the following except:
a. Outlining strategies for technological development, market expansion, and product differentiation.
b. Defining the purpose of the company.
c. Providing an overall guide to those in high-level, decision-making positions.
d. Stating the moral and ethical principles that guide the actions of the firm.
3. Which of the following statements does not describe corporate strategy?
a. The overall scope and direction of a corporation and the way in which its various business operations work
together to achieve particular goals.
b. It defines the purposes, directions, and ways of achieving the corporate goals.
c. It is the direction an organization takes with the objective of achieving business success in the long term.
d. It comprises the midsight, mindset, techniques, rules, processes, and procedures in attaining the goals of an
organization.
4. Management accounting is an integral part of the management process, provides essential information for the
following objectives: except"
a. Maintaining the current level of’ resource utilization as well as internal and external communication
b. Measuring and evaluating performance.
c. Planning strategies and controlling current activities of the organizations
d. Enhancing objectivity in decision-making.
5. The chief management accountant called “controller” traditionally performs these functions except:
a. The establishment and implementation of the financial planning process.
b. Financial and management reporting and interpretation.
c. Protection of company’s resources and economic conditions.
d. Preparation of proposals for product promotions.
6. Which of the following is a controller's responsibility?
a. Tax planning and accounting.
b. Custodian of funds.
c. In-charge of credit and collection.
d. Arranging short-term loans and financing.
7. The following characteristics refer to financial accounting except:
a. Provides information to external users.
b. Emphasizes on objective data.
c. Has no externally imposed standard.
d. Generates general-purpose financial statements.
8. Which of the following is not a function of a treasurer?
a. Signs checks.
b. Keeps cash and financial instruments.
c. Analyze financial statements.
d. Presents financial statements to stakeholders.
9. Sherlock is a management accountant who has discovered that his company is violating environmental
regulations. If his immediate superior is involved, his appropriate action is to
a. Do nothing because he has a duty of loyalty to the organization
b. Consult the audit committee
c. Present the matter to the next higher managerial-level.
d. Confront his immediate superior.
Reference: Management Services (2021 Edition )by: Franklin T. Agamata
NEGERON-OBELO,CPA,MPA P a g e |6
MAC 302 – MANAGEMENT REPORTING
2nd Semester, AY 2024 – 2025
BS Management Accounting
10. In accordance with Statements on Management Accounting Number 1C (SMA 1C) (revised), Standards of Ethical
Conduct for Practitioners of Management Accounting and Financial Management, a management accountant
who fails to perform professional duties in accordance with relevant standards is acting contrary to which one of
the following standards?
a. Competency
b. Integrity
c. Confidentiality
d. Objectivity
Reference: Management Services (2021 Edition )by: Franklin T. Agamata
NEGERON-OBELO,CPA,MPA P a g e |7
