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Management accountants can use different costs and different information for different
purposes, because their discipline is not required to adhere to generally accepted
accounting principles when providing information for managers’ internal
use. In the United States, financial accounting standards are established by the Financial
Accounting Standards Board (FASB), a private-sector body. No similar board
exists to define universal management accounting standards. However, a publicsector
board called the Cost Accounting Standards Board (CASB) was established
in 1970 by the U.S. Congress to promulgate uniform cost accounting standards for
defense contractors and federal agencies.
The CASB produced 20 cost accounting standards (of which one has been
withdrawn) from its inception until it was terminated in 1980. The CASB was recreated
in 1988 as an independent board of the Office of Federal Procurement Policy.
The board’s objectives are to

• Increase the degree of uniformity in cost accounting practices among government
contractors in like circumstances;
• Establish consistency in cost accounting practices in like circumstances by each
individual contractor over time; and
• Require contractors to disclose their cost accounting practices in writing.3
Although CASB standards do not constitute a comprehensive set of rules, compliance
is required for companies bidding on or pricing cost-related contracts for the federal
government.
An organization important to the practice of management and cost accounting
is the Institute of Management Accountants, or the IMA. The IMA is a voluntary
membership organization of accountants, finance specialists, academics, and others.
It sponsors two major certification programs: Certified Management Accountant
(CMA) and Certified in Financial Management (CFM). The IMA also issues directives
on the practice of management and cost accounting called Statements on
Management Accounting, or SMAs. The SMAs, unlike the pronouncements of the
CASB, are not legally binding standards, but they undergo a rigorous developmental
and exposure process that ensures their wide support.
An organization similar to the IMA is the Society of Management Accountants
of Canada, which also issues guidelines on the practice of management accounting.
These Management Accounting Guidelines (MAGs), like the SMAs, are not requirements
for organizational accounting, but are merely suggestions.
Although the IMA, Cost Accounting Standards Board, and Society of Management
Accountants of Canada have been instrumental in standards development,
much of the body of knowledge and practice in management accounting has been
provided by industry practice and economic and finance theory. Thus, no “official”
agency publishes generic management accounting standards for all companies, but
there is wide acceptance of (and, therefore, authority for) the methods presented
in the text. The development of cost and management accounting standards and
Chapter 1 Introduction to Cost and Management Accounting in a Global Business Environment 7
3 Robert B. Hubbard, “Return of the Cost Accounting Standards Board,” Management Accounting (October 1990), p. 56.
practices indicates that management accountants are interested and involved in professional
recognition. Another indication of this movement is the adoption of ethics
codes by both the IMA and the various provincial societies in Canada.