Management accounting and cost analysis

The engineer responsible for setting up or managing a production unit is primarily concerned with the scientific and technical aspects of the technologies implemented, but also with their economic and financial aspects. The necessary investments will only be financed if sufficient profitability and acceptable operating conditions in terms of cost can be anticipated. The stakes are high: for example, production costs that are too high may justify the closure of a site or its relocation.

It is therefore advisable to pay the necessary attention to the economic and financial performance evaluation system and, in particular, to the accounting system, which is generally the main source of information in this field. The latter is usually made up of two sub-systems, which may be more or less independent, operating in parallel, or, on the contrary, integrated around a single database, but whose purposes are quite distinct.

The financial accounting system, often referred to as "general accounting", considers the company as a whole and aims to provide a synthetic picture of the financial situation of the legal entity in question (the "X company", for example), notably through the balance sheet and income statement. These summary documents are mainly intended for external agents: shareholders, bankers and tax authorities. In the case of large companies, we generally have a group structure, and the financial statements of the various subsidiaries are aggregated to provide "consolidated" accounts at the level of the parent company.

In contrast to financial accounting, management accounting, often also referred to as "industrial accounting" or "cost accounting", is primarily intended for internal users with specific responsibilities (plant managers, sales directors, logistics managers, etc.), with a view to performance analysis, management improvement and decision-making. It is essentially based on the notion of cost.