IMA proposes best practices for managerial costing
The Institute of Management Accountants and its Managerial Costing Task Force released an exposure draft Monday examining managerial costing practices and how managers should decide which practices are the best ones for their organizations.
The Statement on Management Accounting exposure draft, Developing an Effective Managerial Costing System for Your Organization, suggests a six-step process that management accountants can use to design and implement an effective managerial costing system at their organization, while applying IMA’s Conceptual Framework for Managerial Costing.
The six-step process includes:
• Doing a quick assessment of the current costing system’s effectiveness;
• Analyzing the organization’s strategy and business environment;
• Considering managerial cost modeling concepts;
• Evaluating the current managerial costing practices;
• Designing the appropriate level of costing system complexity for the organization;
• Implementing the new system across the organization.
“The business environment is constantly changing but managerial costing practices are generally consistent. The cost information used to support critical management decisions continues to be based on financial accounting numbers that fail to consider the complexities of the business operations,” said IMA vice president of research and policy Raef Lawson in a statement. “This exposure draft provides a methodology for organizations to develop a costing system that corresponds with management purposes.”
The IMA is asking for comments and suggestions about any additions or changes to the process and the content of the draft document. The exposure draft can be found on the IMA’s website here. Comments should be emailed to firstname.lastname@example.org by Nov. 30, 2018.