Friday, 7 September 2012

The Differences Between Financial Accounting And Management Accounting

By Jackie, Researcher
Topic: Types of Accounting (Terminology & Concepts)

The objectives of this research are to find out what are the major differences between financial accounting and management accounting. 

Management Accounting sometimes is also known as 'Managerial Accounting'.

     First and foremost, management accounting is concerned with the provision of information to people within the organization or ‘internal parties’ (i.e. managers inside the organization) to help them to make better decisions and improve the efficiency and effectiveness of existing operations, whereas financial accounting is concerned with the provision of information to ‘external parties’ outside the organization (e.g. shareholders, creditors, tax authorities, regulators, potential investors, and etc). Thus, management accounting could be called ‘internal reporting’ and financial accounting could be called ‘external reporting’.

       Secondly, there is a statutory requirement for public limited companies to produce annual financial accounts regardless of whether or not management regards this information as useful. It must be done as it is ‘mandatory’. Management accounting, by contrast, is entirely optional and information should be produced only if it is considered that benefits from the use of the information by management exceed the cost of collecting it. Thus, it is not ‘mandatory’. A company is completely free to do as much or as little as it wishes.

        Thirdly, financial accounting reports describe the whole of the business whereas management accounting focuses on small parts of the organization such as the cost and profitability of products, services, customers and activities. In addition, management accounting information measures the economic performance of decentralized operating units, such as parts, segments, divisions or departments.

      Besides, financial accounting statements must be prepared to conform with the legal requirements and the generally accepted accounting principles established by the regulatory bodies such as the Financial Accounting Standards Board (FASB) in the USA, the Accounting Standards Board (ASB) in the UK and the International Accounting Standards Board (IASB) to ensure the uniformity and consistency that is required for external financial statements are achieved so that the inter-company and historical comparisons are possible. Thus, financial accounting data should be objective and verifiable. In contrast, management accountants are not required to adhere to generally accepted accounting principles when providing managerial information for internal purposes. Instead, the focus is on the serving management’s needs and providing information that is useful to managers relating to their decision-making, planning and control functions.

     Furthermore, financial accounting reports what has happened in the past in an organization, whereas management accounting is concerned with future information as well as past information. Decisions are concerned with future events and management therefore requires details of expected future costs and revenues. In other words, financial accounting is past-oriented (eg. Reports on 2010 performance were prepared in 2011) and management accounting is future-oriented (eg. Budget for 2011 was prepared in 2010).

      In addition, a detailed set of financial accounts is published annually and less detailed accounts are published semi-annually. Management requires information quickly if it is to act on it. Consequently, management accounting reports on various activities may be prepared at daily, weekly or monthly intervals.


Additional readings, related links and references:

Differences between financial and managerial accounting

The Differences between Financial Accounting & Management Accounting

Financial and Managerial Accounting Information

Financial Accounting Vs Managerial Accounting (Cute cartoon illustration)

Dennis Ensing, CA of WiseMentorCapital, discusses the differences between financial and managerial accounting. Visit for more resources to help turn your ideas into reality.

Saturday, 1 September 2012

Job Interview Tips, Preparation And Advice

By Jackie, Researcher
Topic: Employment skills (Interview)

The objectives of this research are to highlight what and how a fresh graduate should prepares for a job interview. This preparation is basically divided into three stages: before the interview, during the interview, and after the interview. Hopefully, the tips below will increase a job seeker’s confident and aid them to excel better in an interview session.

Ideally, making all the right moves at the interview is crucial to leave a positive and lasting impression on potential employers. Besides, securing a job interview means you are now having the chance to show a potential employer why you are the best candidate for the job. However, the interview itself could be a daunting experience for the underprepared. Here are some tips and guides on how to maintain your composure and impress your prospective employers.

Before the interview

When you get call for the interview, make sure you obtain the correct date and time of your appointment, as well as the exact location (including building, floor and room). It is also good to know the name of your interviewer and his or her designation.

Doing some "homework" before actually going to the interview like researching the company and understand what are the company objectives,  short-term and long-term goals will definitely help a candidate in his or her interview session later. 

Research the company
Find out as much as you can about the company in terms of products or services, market position, competitors and challenges so that you can speak knowledgeably during the interview. Find out also if the company has been in the news recently and if it runs any community projects. If you are unfamiliar with the location, do a trial run to avoid getting lost on the actual day. It will also help you gauge how long it takes to get there.

Research the position
Research the daily activities or tasks of the job on offer so that you know what you are really getting yourself into. Then try to match your own qualifications, experience and personal traits to those activities or tasks. It is also a good idea to think of questions to ask the employers to reiterate your interest.

Role-play rehearse
As silly as you may feel, rehearsing an interview with a friend or family member can help to overcome a bad case of the nerves. While rehearsing, think of difficult questions you may get asked and prepared suitable responses. If you are still in university, check with the career placement centre to find out if they conduct mock interview training. Career counselors are more than happy to help students practice interview skills.

On the interview day

Make sure you have all the necessary documents with you before you leave home. This includes all degree certificates and letters of references (and their photocopies), passport-size photos, and a portfolio of your previous work or projects (if any). Also don’t forget to bring at least two copies of your resume.

Sometimes an interview session might be a little bit "uneasy" for a candidate, especially  when there are more than one interviewers in the interview session. It could be quite "uncomfortable" when people staring right in your eyes and hear carefully what are you going to say. Anyway, constant practice can overcome this problem.

Dress to impress
Statistics by recruitment specialists Sarina Russo Group indicate that more than 90% of the impact we make comes from how we dress, walk and talk, and not from what we actually say. Dress appropriately for the job you are applying for. Jobs in banking and financial services sector usually require formal wear. Here are some ground rules to dress for interviews:

  1. Solid, muted colours such as black, white, dark blue, brown, grey are generally accepted.
  2. Business attire: long pants, shirt, tie and jacket for men; long pants or skirt (at least knee-length), blouse and jacket for women.
  3. Clothes should be clean and neatly ironed. Jewellery and accessories should be minimal and not flashy. 
  4. Shoes should be formal-looking yet comfortable to wear, and also well polished. Flip-flops and sneakers are a definitely no-no, along with extremely high heels. 
  5. Hair should be neatly combed and styled. Avoid dying hair in shocking colours. Men should preferably be cleanly shaved but if they have a moustache or beard, it should be neatly trimmed and groomed.

Punctuality matters
You should never be late for an interview. If you are running late, call the interviewer before the schedule time to let him or her know. Try to get there at least 15 minutes ahead of the appointment to freshen up and mentally prepare. Arriving early also helps if you need to fill up any forms.

Courtesy and composure
You are being assessed the minutes you walk into the interview room. Remember to be courteous at all times. Introduce yourself to all the interviewers, shaking their hands gently yet firmly. Your posture and body language are equally important in making a good first impression, along with regular eye contact. Always wait until the interviewer finishes asking a question before responding. Listen attentively and look for opportunities to point out how your capabilities match the employer’s requirements.

After the interview

Remember to shake hand after interview. It symbolizes 'respect'.

Don’t forget to shake the interviewers’ hands and thank them for their time once the session is over. It is also a good idea to send a thank-you note or email to reiterate your interest in the job. You may follow up with a phone call a week later if you have not heard from them, but avoid flooding them with calls or emails or you will be perceived as pushy or desperate.

All in all, getting to the interview stage of the recruitment process is akin to having one foot in the door to the hiring company. Make sure you go fully prepared, put your best foot forward and do your best.

Funny interview cartoon

Additional readings, related links and references:

Job interview tips and advices

Interview attire: How to dress for an interview

Top 10 interview tips

Success in personal interview: Top 20 interview questions and answers

Tips on what to do during an interview for a job