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Management (or cost) accounting 
is a management information system which analyses data to 
provide information as a basis for managerial action. The concern of a management accountant is to 
present accounting information in the form most helpful to management. 
2.2 The application of information 
Financial reporting
is not an optional extra. The published accounts are an important source of 
communication with outsiders. Reported levels of profit determine the return that investors can receive. 
They also indirectly affect the company's cost of capital by affecting the share price.
The 
management accountant
is even nearer the policy-making and management process. This is 
because the management accountant is not primarily interested in reporting to interested parties external 
to the organisation. After all, the requirements of external users of accounts may be different to those 
involved in managing and running the business in several respects.

Aggregation of information 

Level of detail 

Classification 
of 
data 

The period covered 
Internally, accountants therefore provide information for 
planning and controlling 
the business.

Competitors' 
performance 

Product 
profitability 

Cost/profit centre performance 

Sensitivity 
analysis 

Desirability of investments 

Alternative 
options 

Past cost information 
The accountant provides information essential for the current management and decision-making of the 
business. If line decisions are assessed in accounting terms, even in part, then the accountant will be 
involved in them. Accountants assess the future financial consequences of certain decisions. 
2.2.1 Control and stewardship 
The accountant's staff authority is generally expressed in procedures and rules. For example, staff have 
formal expenditure limits. In many respects, money and funds are a business's lifeblood, and monitoring 
their flow is a necessary precaution. If the flow of funds dries up, a business can fail very easily.