Efforts stepped up to develop management accounting practices

Dana Energy has in the recent years stepped up efforts to develop management accounting practices in a bid to prepare integrated reports covering all segments of E&P, Oilfield Services and Energy Trading.

Management accounting aims to prepare accurate and timely financial and statistical information required by managers to make short-term decisions in line with their long-term strategies and goals.

The main difference between management accounting and financial accounting is that the former does not necessarily need to meet the latter’s standards. So the management accountants have an open hand to prepare more functional reports required for the internal use rather than external use, namely the Tax Office, Audit Organization, etc.

According to the Institute of Management Accountants (IMA), management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy. So management accountants gather the data, categorize them and prepare analytical reports required by managers to make more realistic decisions. These reports are as clear and concise as possible. Designed flash report is as a periodic snapshot of key financial data. This is a one-page report that helps managements assess the key performance indicators of companies in all segments.

We have also designed a new format and prepared the consolidated financial statements based on that, which have been among our major services for external use.

Another key duty of our department is to prepare and update an annual budget plan for the company. Management accounting approaches a company's financial situation in an operational way, giving information in a manner that supports managers in planning and control procedures. So we not only prepare the budge but also in quarterly reports that compare the actual performance versus approved budget we review the variances, analyze them and present to relevant managers in planned meetings, for any required actions. We also revise the budget in planned periods, if necessary.

In the budgeting process, we have participated in all phases includes preparing the budgeting policies and procedures, defining the budget assumptions, designing the budget shuttle, preparing plan and budget of upcoming year, preparing consolidated budget, obtaining approvals, issuing budget booklet, and loading the approved budget into the financial software.

In this regard, we have continuous improvement in budget files & formats, and the notable point is the unique format that used for the all company's activities including contracting activities, rendered services, commercial activities, etc.

Given Iran’s tough economic situation in the recent past, Dana Energy has made advantage of strong management accounting skills in driving value and managing risks.

Mahdi Kasraei,
Head of Management Accounting