"If you can’t measure it, you can’t manage it"

First of all, how does managerial accounting differ from financial accounting?
The two main differences are these. Financial accounting provides information for external stakeholders like the authorities, the competition, suppliers and customers, and it is also standardized and legally regulated in order to maintain transparency and comparability. Managerial accounting, on the other hand, provides information for the decision-makers, mainly for operational and top managers, inside the company, and is flexible and tailored to the needs of the decision-maker in question and business logic of the company.. It draws on the same data as financial accounting, but it yields exactly the kind of information needed to make a decision. Furthermore, in financial accounting we usually speak about the past and present historical information, while management accounting is pretty much oriented toward the future as well, just think of the support of future decisions or the preparation of budgets.

What kinds of decision are underwritten by the statements created through managerial accounting?
Well, all sort of decisions. Should we continue with the product? How should it be priced? Should we change the machinery? Which directors should get a bonus based on their achievements? The key idea is that managerial accounting has the means to break down the costs and revenues in various ways. So, we can tell how profitable a particular product is, how profitable it was to market it to a particular customer segment or in a geographical region, or how profitable a division of a company was, whether the leader of a particular division met the targets. Or, to give a more general picture, practically every company operates according to a budget. Managerial accounting helps to adapt the budget to the company’s business model. This, in turn, can be used to devise a structure for budgeting. Sound budgeting secures the efficient allocation of resources and also the implementation of the budget, because it specifies the financial and non-financial targets the particular divisions have to meet. In addition, managerial accounting can tell us how successfully the budget was implemented and whether the targets set by the budget were achieved by comparing the actual data with the ones in the budget. The results can then be used to assess the performance of the various divisions and managers. This is essentially what is needed for data-driven decision-making. As Peter Drucker, professor of management, once said: „If you can’t measure it, you can’t manage it.”

Can you tell us a few words about how the classes are conducted?
First of all, we start from scratch, with introducing the basic concepts in accounting. So if you haven’t studied accounting before, that’s no problem. Second, every theoretical idea is amply illustrated with real-world examples, so that students will learn to apply them to real problems. After all, your boss will not ask you for definitions. Third, we’ll have plenty of group work. We’ll pose problems and the groups will work out the solutions and receive feedback.

Finally, you already taught this course at last year’s summer university with your colleague, Judit Fortvingler. How was it?
I can tell on behalf of both of us that we really enjoyed it. The participants were fairly diverse. We had many international students coming from various countries and having different backgrounds. In addition to business students we had engineers, computer scientists and even a humanities student. So the group was really colorful, and that was very inspiring. So we are very much looking forward to this year’s course.