Management accounting involves preparing and providing timely financial and statistical information to business managers so that they can make day-to-day and short-term managerial decisions.

 

Management accounting reports often include details of the company’s available cash, recent generation of sales revenues, the current state of the organization’s accounts payable and receivable, and more.

 

Procedures:

Step 1: Set-Up & Review the Chart of Accounts (COA)

The COA module allows you to create your own customised P&L and Balance Sheet reports.

 

Step 2: Ensure all sales & purchase invoices/credit notes are posted for the period

The management accounts are only as accurate as the information that is entered into the system. Before the accounts are run for the period all invoices and credit notes need to be posted for the period.

You should also prepare trade creditors reconciliations to the supplier statements to ensure all transactions are posted.

 

Step 3:  Reconcile All Bank Accounts

All lodgements and payments must be entered into the software before the accounts are produced. You must also reconcile the bank statements at the end of the period.

 

Step 4: Post Journals

The following key journals must be posted to ensure the accuracy of the management information:

Wage Journals – Gross wages need to be represented in the P&L. This normally involves moving the net wage payments and PAYE/PRSI/USC charge from the balance sheet to the P&L.

Stock Journals – A closing stock amount is needed at the end of the period under review. You must post the opening and closing stock journals to the P&L and Balance Sheet.

Prepayments – You must consider if there are any invoices/payments posted to the P&L in the period that relate to a period greater than the accounts being produced e.g. insurance invoice for the year posted in Q1, you should pre-pay 3 quarters of this amount to the balance sheet if you are running a P&L for Q1.

Accruals – Are you missing any expenses for the period that needs to be included? e.g. rent not paid yet.

 

Step 5: Producing the Management Accounts

You are now ready to run your management accounts. Based on the report templates you have set-up in the COA at Step1 you will be able to run these accounts from the ‘Financials’ module e.g. when you click on Profit & Loss you will be able to choose the period you want and select the COA template from a drop-down menu.

The management accounts pack for the company directors should contain the following key reports:

• Profit & Loss Account
• Balance Sheet
• Aged Debtors Report
• Aged Creditors Report