Management accounting principles

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Management accounting principles (MAP) were developed to serve the core needs of internal management to improve decision support objectives, internal business processes, resource application, customer value, and capacity utilization needed to achieve corporate goals in an optimal manner. Another term often used for management accounting principles for these purposes is managerial costing principles. The two management accounting principles are:

1. Principle of Causality (i.e., the need for cause and effect insights) and,
2. Principle of Analogy (i.e., the application of causal insights by management in their activities).

These two principles serve the management accounting community and its customers – the management of businesses. The above principles are incorporated into the Managerial Costing Conceptual Framework (MCCF) along with concepts and constraints to help govern the management accounting practice. The framework ends decades of confusion^[1] surrounding management accounting approaches, tools and techniques and their capabilities.

The framework of principles, concepts, and constraints will drive the classification of management accounting practices in the profession to "enable a better understanding both inside the profession and outside, of the compromises that result from inappropriate principles".^[2] Without foundational principles, managers and accounting professionals have no consistent footing on which to challenge or evaluate new theories of methods for managerial costing.^[3]

Some management accounting methods are designed primarily to serve and comply with financial accountancy guidelines. The importance of having distinct and separate principles exclusively for Management Accounting has received support and acknowledgement after almost a century of work on the topic. The idea that separate management accounting principles exist for managerial decision support distinct from financial reporting needs is now recognized by professional accounting bodies such as the International Federation of Accountants Professional Accountants In Business Committee and the Institute of Management Accountants Managerial Costing Conceptual Framework (MCCF) Task Force.