The primary purpose of managerial accounting is to provide superior information to those running a company so that they can make better decisions and more successfully compete for customers, suppliers, employees, and so forth. In short, good managerial accounting is a competitive tool. Because a managerial accounting system is (or can be) a competitive tool, the practice of managerial accounting involves innovation, experimentation, diversity, success, and failure as businesses tinker with their managerial accounting systems to create superior information for decision making. Certainly there are “best practices” in managerial accounting; you will learn about them in this course. But remember that a good business is always re-examining its internal information system to see whether the system can be coaxed into providing better, timelier data. Since the first days of the Industrial Revolution, business owners and managers have generally adopted the best accounting ideas available from other companies and then created their own new accounting system to provide a competitive edge. In fact, a company often regards a good managerial accounting system as a valuable company secret—and rarely discloses its details to the public. In contrast, financial accounting has effectively developed around the world to provide a common reporting platform to the public. The purpose of financial accounting, as defined by generally accepted accounting principles (GAAP), is to satisfy the needs of outside investors, creditors, and regulators for fair and consistent reports of financial position and operations. Accordingly, all companies are required to apply the same general financial accounting rules so that outsiders can compare financial reports coming from many different companies. These financial accounting rules are established internationally by the International Accounting Standards Board (IASB) and in the United States by the Financial Accounting Standards Board (FASB). In contrast to the rules and regulations surrounding financial accounting, no government regulator or auditor is going to insist that a company implement a good managerial accounting system; the choice of how to collect and use information within a company is part of a company’s competitive strategy. Remember, the only reason a company does managerial accounting is to satisfy a competitive need.