management accounting

The role of management accounting is seldom varies between public sector and private sector as this system are used to facilitate organisations in planning, controlling and making decision. The purposes of its usage might show a slight difference due to the different objectives that have been sets by public and private. Disregard these minor differences, public and private sectors using the management accounting in order to obtain forward looking information that will facilitate their management process. All organisations, whether private or public, need information to plan and control their operations and to assist managers in their decision- making (Cooper, Funnell, Lee 2012, p. 160). However, there is some differences in budgeting processes, which are likely to be undertaken differently in the public sector. The budgeting process from management accounting system shows a fairly significant disparity between these sectors. This report discusses the purpose of using management accounting by both sectors. In order to give clarification on how these two sectors different in management accounting, this report will discuss the budgeting process by public sector. Apart from that, the reasons of different approach and process applied by public sector will also be discussed.

Discussion

Management accounting system provides forward looking information that will allow management to be better equipped in their plan and control functions. This information facilitates management in achieving their objectives, formulate organisation policy, manage the day-to-day operation efficiently and most important is helping them in financial planning. The information on which strategies to implement and which activities to pursue will help organisat...

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...budgeting process. It is different with financial accounting as it provides organisation with non-financial information that will help public and private sector managing their organisations and achieve objectives. This system also provides forward looking information in facilitating organisations in planning, budgeting and controlling process. However, in conducting management accounting, public sector and private sector undergo different budgeting process. Government procedure and political objectives are the factors that lead public sector apply a different approach in the budgeting process. As public sector is always under public and society scrutiny, the government need to show the transparent budgeting process. Private sector does not require to be transparent in managing its arganosation as public does not pay close attention as they observe private sector.