"The process of identification, measurement, accumulation, preparation, interpretation, and communication of financial information used by managers to plan, evaluate, and control within the organization and to assure appropriate use of and accountabiltiy for its resources."
Whereas, the IMA currently defines Management Accounting as:
"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 organizational strategy."
Identify one significant component of the definition that changed. What was, in your opinion, the proximate cause of the change? How does your identified change impact the shareholders of the firm, the management of the firm or other stakeholders of the firm? Is the change for the better or the worse? Why?
This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.IMA’s definition of managerial accounting has evolved over the past three decades. While the organization considered managerial accounting to be a process in 1982, its current definition emphasizes that managerial accounting is a profession. Other components of the definition such as planning, control and reporting remain intact. IMA has not overhauled its definition of management accounting, but the change from process to profession at the beginning of the definition is very significant. It signifies that the way organizations perceive managerial accounting has changed. Changing the word process to profession in IMA’s definition of management accounting was influenced by the changing business environment, impacts various stakeholders and is a change for the better.
One of the significant components of the IMA’s definition of ‘management accounting’ that has changed is the shift from viewing it as a “process” to viewing it as a “profession”. IMA’s current definition of the term management accounting states that it is a profession, whereas the historical definition stated that it was a process. This is a major shift, and it has propelled management accounting to a level of importance that it did not occupy in the past. Management accounting was overshadowed by cost accounting in the past as personnel used the debit/credit system to prepare management accounting reports (Wickramasinghe & Alawattage, 2012)....