Management accounting A management accounting system produces information that is used within an organization, by managers and employees A financial accounting system produces Financial accounting information that is used by parties external to the organization, such as shareholders, bank and creditors. Management accounting helps management to record, plan and control activities and aids the decision making process. Financial accounting provides a record of the performance of an organization over a defined period and the state of affairs at the end of that period. There are no legal requirements for an organization to use management accounting. Limited companies must, by law prepare financial accounts. Management accounting can focus on specific areas of an organisation’s activities. Information may aid a decision making rather than be an end product of a decision. Financial accounting concentrates on the organization as a whole, aggregating revenues and costs from different operation. Financial accounts are an end themselves. Management accounting information may be monetary or alternatively non monetary. Most financial accounting information is of a monetary nature. Management accounting provides both an historical record of the immediate past and a future planning tool Financial accounting presents an essentially historical picture of past operation. No time span for producing financial Financial statements Financial statements are required to be produced for the period of 12 months. No strict rules govern the way in which management accounting operates. The management accounts and information are prepared in a format that is of use to managers Financial accounting must operate within a framework determined by law and IASs. In principle the financial accounts of different organizations can be easily compared. Management accounting has no specified format. There are no specific statements which should be produced. Financial accounts are supposed to be produced in accordance with a specified format by IAS or law.