An accountant's primary goal is to maintain a company's financial records. Due to the broad range of a business's financial responsibilities, many companies hire several types of accountants. Two main types of accountants include financial and managerial accountants. Financial accountants perform accounting tasks that benefit external users, while managerial accountants perform accounting tasks that benefit internal managers. Understanding the key differences in job duties of financial and managerial accountants can help you make a decision on which path you'd like to take in an accounting career.
Duties of a Financial Accountant
Financial accountants prepare records eventually reviewed by people outside of the organization. Financial statements commonly prepared by financial accountants include income statements, balance sheets and cash flow statements. In many companies, financial accountants oversee financial transactions made by other employees within the accounting department. For example, a financial accountant may review all transactions made by staff working in the accounts payable and accounts receivable departments. Other job duties may include inspecting account books for accuracy, reviewing accounting systems to determine efficiency and suggesting ways to reduce expenses and increase revenue.
Duties of a Managerial Accountant
Managerial accountants incorporate a variety of accounting, finance and management techniques to provide financial information concerning the company to its managers. According to the Chartered Institute of Management Accountants, some of the duties of a managerial accountant include creating budgets, monitoring spending, measuring the financial performance of projects and service lines and performing internal audits. The information managerial accountants compile is used by an organization’s management team for internal decision making.
Financial accountants commonly produce financial reports used by creditors and investors. Financial statements are typically created at a specific time and cover a specific period of time, such as a fiscal year. Financial statements contain historical financial data. The reports managerial accountants create are typically forward looking and can be created at any time. Managers often use these reports for forecasting purposes. Departmental and organizational budgets and sales forecasting reports are some common reports managerial accountants produce.
While performing their job duties, financial accountants must adhere to the generally accepted accounting principles developed by the Financial Accounting Standards Board. A publicly-traded company’s financial accounting information is available to the general public. In comparison, managerial accountants operate under more flexible guidelines. They are not required to adhere to the rules of GAAP. Companies are not required to implement specific managerial accounting techniques, although many organizations choose to develop managerial accounting procedures.
Education, Certifications and Skills
Financial and managerial accountants typically possess at least a bachelor's degree in accounting, although some employers prefer hiring candidates with a master's degree in accounting. As required by law, a financial accountant who files reports with the SEC must be a Certified Public Accountant, which requires passing the four-part Uniform CPA Exam. Career certifications are voluntary for managerial accountants. The most common certification is the Certified Management Accountant designation awarded by the Institute of Management Accountants. Important skills needed by both accountants include math, analytical and organizational skills. Financial accountants need a thorough understanding of financial statements, while managerial accountants should understand budgets and job costs.