Definitions and meanings:
A chartered account is a professional accountant who studies and acquires experience in specialized fields of business to perform complex business engagements that are usually mandatory by a country’s law. Performing audits of public and private limited companies is an example of such engagements. Chartered accountants are normally members of an accountancy body and an audit firm.
A management accountant is a corporate personal who is responsible for making decisions about the effective management of a business. This role includes tasks like budgeting, forecasting, planning, reviewing and interpreting data for the use of internal management at various levels.
Difference between chartered accountant and management accountant:
The difference between chartered accountant and management accountant is explained by the following points:
1. Key roles:
Management accountants assume management responsibilities in businesses. These accountants’ advice and/or make decisions related to various functions of a business including investment appraisals, business financing, working capital management etc. Middle tier management accountants are mostly engaged in such business decisions that have implications upon the profit generating status of a company like budgeting and financial interpretations etc. This data is also used for the preparation of financial statements.
Chartered accountants study more technical facets of a business such as audit, accounting, finance etc. These accountants play key roles to maintain the stature of industry of a country or jurisdiction. These accountants perform tasks like external audit, tax liability management, due diligence reports preparations etc. Large public listed companies are expected to hire many external non-executive directors that become part of board committees like audit, nomination and remuneration committee, under best corporate governance practices.
2. Educational requirements:
Management accountants are normally graduates or master’s degrees’ holders. These managers require arbitrary knowledge and skills that can be applied for efficacious running of businesses. Such skills include report writing, developing communication and dissemination systems, formulating customized solutions for businesses etc.
Chartered accountants require specialist knowledge and expertise. Every country has its own chartered accountancy body which regulates chartered accountants of that country and is responsible for providing and updating knowledge about standards used for external audit and other mandatory engagements required for that country. The main standards that accountants learn are International Financial Reporting Standards (IFRSs) or Generally Accepted Accounting Principles (GAAPs).
3. Experience requirements:
Management accountants do not need special knowledge but they need to be aware of broader understanding of businesses and their systems therefore there are no specific experience requirements for these accountants. The expected experience for a management accountant depends upon the job description of the role they want to work in. Chartered accountants need to complete specific experience requirements. If an accountant only completes relevant knowledge requirements (passes all papers of the relevant accountancy body), he or she is recognized as a certified account only, but after completing relevant experience requirements as well, he or she will be recognized as a chartered accountant.
Management accountants are mostly employed by businesses, industries or companies. This is because these organizations are most likely to make management decisions that are related to day-to-day running and growth of a business. Chartered accountants are mostly hired by firms. These are partnerships amongst chartered accountants that provide different engagement services to businesses including outsourcing engagement for internal audit, management roles, compliance reports, tax etc. The main role of big firms in a country is to provide independent external audit services and as an audit opinion can only be signed off by a chartered accountant firms specifically hire and train chartered accountants for this engagement of external audit which is mandatory by law for public listed companies in almost every country.
5. Fiduciary duty:
All the chartered accountants around the globe share a common fiduciary duty towards their clients and public at large. This is because these accountants have such specialist knowledge that other people related to an organization cannot understand especially shareholders, potential investors, customers and suppliers etc. This is the reason, chartered accountants are expected to perform for greater good of the society and only present fair and truthful information available in their best knowledge. However, management accountants do not share a universal sense of duty for rightfulness rather they are responsible only for the betterment and well being of the business they are attached to. Nonetheless, management accountants are expected by shareholders and other stakeholders to work with integrity and honesty.
6. Continued professional development:
Chartered accountants go through CPD programs in order to maintain memberships of their relevant accountancy body. These programs make sure that these accountants are continuously updating their knowledge and bridging their competence gaps. Management accountant are mostly graduates and are not required to complete any CPD requirement post degree, rather their employers are responsible for conducting training programs for them.
Management accountant vs chartered accountant – tabular comparison
A tabular comparison of management accountant and chartered accountant is give below:
|Are responsible for key decision-making roles at every level of organization.||Are expected to carry technical business engagements that normal accountants cannot perform or are not eligible to perform.|
|Normally obtain education from a college or university.||Are attached to an accountancy body and complete its exam requirements.|
|Are expected to have experience relevant to their role.||Have to gain a minimum level of relevant experience to become complete chartered accountants.|
|Are mostly employed by businesses or companies.||Are mostly employed by firms.|
|Have a duty to perform in the best interest of their individual businesses.||Share a greater sense of fiduciary duty toward all stakeholders.|
|Continued professional development|
|Are not required to take CPD programs to maintain their status.||Are required to take CPD programs as required by their relevant accountancy body.|
Chartered accountants and management accountants both play a key role in order to make businesses sustainable in a country especially large listed companies. The economies of countries depend upon the better performance of their industrial base and therefore every accountant is expected to apply their best knowledge and expertise as a professional. Countries have both legislations and principles to regulate and guide accountants. If an accountant fails to perform their respective role, their accountability depends upon the nature of error or fraud they conducted.