A Review on Integrating Financial and Management Accounting as Foundations of Financial Management
DOI:
https://doi.org/10.54536/r56e0z55Keywords:
Accountability System, Digitalization, Governance, Organizational Performance, Risk ManagementAbstract
Accounting is the building block of good corporate governance, effective operations, and appropriate strategic decision-making. This review of literature, assesses the group formations of financial management, through the synthesis of current literature on the three interrelated themes of the concepts, organizational functions, and integration pathways of the financial and management accounting. Financial accounting (FA) is intended to help the stakeholders obtain consistent and reliable data through transparency, standardization, and accountability to external audiences. In another approach, management accounting (MA) gives internal information on which it guides strategies to be taken, control, and planning by concentrating on relevancy, timeliness, and flexibility. The literature indicates a high level of correlation between the potential utility of MA and the past consistency of FA. The regulatory aspect, the strength of the institutions, and the technological development all contribute to ensuring that integration is an attractive target and an insurmountable challenge at the same time. Risk reporting is one of the crucial elements in balancing the attention of FA on compliance and the decision-support facilities of MA. Governance, risk management, and improvements in competitiveness have been realized through an enhancement of the FA–MA interface; however, further quantitative and cross-sectoral research is required because empirical evidence on this matter remains insufficient.
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