What Is Managerial Accounting? A Career Guide

If you’re just beginning your accounting career, you may not know where to start. The endless opportunities within the industry are exciting, but can feel a little overwhelming without guidance. Let's look at one area of specialization: managerial accounting. Find out what is managerial accounting, how it differs from financial accounting, why or why not it may be a great choice for you, career opportunities in the field, and how you can be successful as a managerial accountant. 

Summary

Managerial accounting is an internally focused profession where specialists analyze financial data to guide an organization's strategic decision-making, offering high earning potential and significant influence.

What Is Managerial Accounting?

Managerial accounting is the process of gathering, measuring, analyzing, interpreting, and communicating financial data for the internal decision-makers of an organization. 

Managerial accountants create detailed reports to help business leaders make informed, financially savvy choices for the good and growth of the organization. They play a vital role in internal financial decisions and goal-setting, performing important tasks such as:

Planning & Budgeting 

This is about looking ahead and setting financial targets. A managerial accountant uses historical data and trends to estimate how much an organization will earn, spend, and its resource allocation. This includes tasks such as: 

• Preparing sales, production, and expense budgets
• Forecasting revenues and costs
• Creating financial plans for future periods
   

Cost Analysis & Cost Control 

Managerial questions break down costs to inform how much it costs to make a product or provide a service, and pinpoint areas of spending inefficiencies. This includes tasks such as: 

• Analyzing production or operational costs
• Identifying wastes and inefficiences
• Comparing actual costs vs budget
   

Financial Analysis & Reporting 

Unlike financial or public accountants, who create external reports for governing bodies and stakeholders, managerial accountants create custom internal reports that help turn the data into insights and action plans. This includes tasks such as: 

• Preparing internal financial reports
• Analyzing performance metrics (KPIs)
• Interpreting financial data for managers
• Creating budget reports, cost reports, and profitability analyses  
   

Decision Support & Strategic Advising 

This is the most strategic part of managerial accounting, where advanced professionals help business leaders answer key questions to guide the financial growth and well-being of the organization. This includes tasks such as:

• Providing recommendations to management
• Evaluating investment opportunities
• Performing cost-benefit analysis 
   

Performance Measurement & Evaluation 

Managerial accountants evaluate how well an organization performs, comparing the plan vs what is actually happening. This includes tasks such as: 

• Tracking actual vs budget performance
• Measuring KPIs (profit margins and efficiency)
• Conducting variance analyses 
   

Internal Control & Risk Management 

Managerial accountants help protect their organizations by preventing fraud and errors, ensuring proper financial procedures, and identifying risks in costs, the market, or operations. This includes tasks such as: 

• Monitoring financial systems and processes
• Ensuring compliance with policies
• Assessing financial risks 
   

Cross-Functional Collaboration 

Managerial accountants work act as business partners, helping other teams throughout the organization to understand the ins and outs of budgets, costs, and the financial impact of decisions. This includes tasks such as: 

• Working with other departments (marketing, operations, HR)
• Communicating financial insights to non-finance teams 

Managerial Accounting Skills 

To work in managerial accounting, you must bolster certain skillsets, in addition to the fundamental accounting knowledge required. It’s important to be especially strong in: 

• Leadership Skills
  • As a managerial accountant, especially at the advanced level, you're not just crunching numbers; you're a partner with the organization's leadership. Upper-level professionals will often lead finance teams, mentor junior staff, and influence strategic direction.  
     
• Communication Skills
  • Financial data is only useful if other teams can understand and act upon it. As a managerial accountant, your job includes translating complex financial concept into clear language, tailoring your communication style based on your audience, and providing the end-to-end story that places your analyses in context and suggests next steps. 
     
• Excel Spreadsheets
  • Excel is most often the primary tool for financial analysis and reporting, and your Excel accounting skills need to go well beyond the basics. Efficient use of the tool allows you to efficiency handle large sets of data, create accurate financial modeling, and even automate repetitive calculations. 
     
• Tech Skills
  • Managerial accounting is a tech-driven profession. You must be adaptable to learn new software and programs, and even incorporate organizationally approved AI for accountants, which will help you automate processes, integrate data across systems, and improve efficiency and accuracy in your work. 

Financial Accounting vs Managerial Accounting 

While both financial and managerial accounting rely on similar analytical and mathematical skills surrounding finances and their use, there are major differences in the purpose and scope of these two professions. 

Managerial Accounting Pillars

• Internal focus
• Short-term goals
• Data presented according to specific needs of internal leaders
• Analyzes individual issues to solve bottlenecks
• Concerned with informing decisions
• Frequent reporting needs
   

Financial Accounting Pillars

• External focus
• Long-term goals
• Must strictly adhere to GAAP standards²
• ^{Looks at company as a whole to generate profit}
• ^{Concerned with managing and recording transactions}
• Quarterly or annual reporting³ 

Pros and Cons of Working in Managerial Accounting 

Pros of Managerial Accounting: 

1. Salary 

Managerial accountants earn a great living, averaging about $95,659 annually across the US⁴. This number varies by location and seniority; however, with the national salary nationwide at just $59,428 per year⁵, you can expect a competitive pay rate even in an entry-level position.  

2. Career opportunities and growth 

Organizations nationwide are relying more heavily on managerial accountants to inform their financial decision-making. If you decide to pursue a career in managerial accounting, you can expect a great employment outlook, with numerous opportunities for career advancement as you gain more skills and experience. 

3. See results of your work 

It feels good to see the payoffs of a job well done. Since managerial accounting focuses on solving immediate problems and helping increase efficiency, you can enjoy watching your hard work be implemented and the benefits that brings to your organization. 

4. Influence in major decisions 

The leaders of your organization will rely heavily on your advice. Your reporting will play a major role in the financial decisions they take, and you will get to be involved in exciting company improvements. 

5. Not restrained to GAAP 

Because managerial accounting is intended for internal use only, you don’t have to follow GAAP standards and regulations. In this sense, it’s thought to be easier than financial accounting, allowing you more freedom to develop reports that are tailored to specifically (and only) what your organization needs. 

Cons of Managerial Accounting: 

1. Long hours 

Managerial accountants have a lot of work to get done. They may be tasked to provide insight into a situation where every moment unsolved is extremely costly. They must put in long hours to provide reporting as quickly as possible, while also making sure that all data has been included and analyzed for the most accurate results. 

2. High pressure 

There is a lot at stake when you work in managerial accounting. Company leaders look to you to inform their financial decision-making. With hundreds of thousands of dollars at stake in each of your reports, any mistake on your part could result in big losses⁶. 

3. Challenges in data

Working as a managerial accountant can be difficult, especially if you enter a company that doesn’t have organized or accurate data. You must be focused and knowledgeable so you can jump into messy data that needs to be untangled before you can investigate or analyze it further. However, if those puzzles motivate and excite you, you may welcome the challenge and never feel bored on the job. 

4. Employee discontentment 

Because solving bottlenecks often means restructuring, your advice may be met with negativity from others in the organization. Change is uncomfortable, and your efforts to streamline and create efficiency might also make waves in team dynamics. The good news, however, is that the organization’s leaders will be the ones to front most of the pushback, so you will likely be shielded from feeling those effects.⁷ 

Careers in Managerial Accounting 

Managerial accounting offers many specializations and job opportunities. As we mentioned, the job market is ripe for managerial accountants (and accountants, in general), which means that you have more possibilities to pick an area that truly interests you. 

Managerial Accounting Jobs 

Job titles for those in managerial accounting may vary greatly. As you advance in your career, you may gain more leadership positions in similar style roles (i.e., financial analyst vs. senior financial analyst vs. financial analyst director). 

These are just some of the career opportunities that await managerial accountants:

Chief Financial Officer (CFO)

• Executive leader overseeing all things finance within an organization
• Average salary: $261,533⁸
   

^Controller

• ^{Senior leader managing all internal accounting operations and financial reporting}
• Average salary: $119,497⁹
   

^{Financial Analyst}

• ^{Study market trends, forecasts, budgets, and data to help inform best spending and asset management}
• ^{Average salary:} $88,111¹⁰

Internal Auditor

• Review financial data and create reports to determine compliance with both internal and legal procedures¹¹ 
   
• Average salary: $76,185¹² (with a higher average CIA salary for Certified Internal Auditors)

Management Accountant 

• Record and analyze financial data, report findings, and suggest actions to improve spending and asset allocation¹³
• Average salary: $105,943¹⁴ (with a higher average CMA salary for Certified Management Accountants)
   

^{Cost Accountant} 

• ^{Use cost accounting techniques to evaluate and increase efficiency of a company's spending}

• Average salary: $71,914¹⁵

   

Certifications to Boost Your Managerial Accounting Career

Earning advanced certifications and trainings will help you open more opportunities and further your career. For those interested in managerial accounting, a Certified Management Accountant (CMA) certification is invaluable, as the most globally recognized certification for managerial accountants. Becoming a CMA will give you both higher knowledge and more esteem to work in this field. 

Earning a CMA certification requires studying for and passing the CMA Exam, a 2-part test covering Financial Planning, Performance, and Analytics (part one) and Strategic Financial Management (part two). It may seem like a strenuous process, but Becker offers CMA Exam review that guarantees you will pass. 

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