Cost Accountancy is a specialized domain of accountancy that deals with a company’s overall profitability by analyzing business processes and the costs involved. This career requirement is to measure the efficiency of a company’s operations. Since it is an analytical job, it would be best suited for candidates who have strong mathematical skills. Besides that, they should also be able to manage many tasks at once since most Cost Accountants are tasked to oversee multiple departments and provide managerial assistance.
Follow this blog where we break down the ways that you can take to become a Cost Accountant. Here we will discuss all the important information related to the field of cost accountancy. Also, we will cover the qualifications and certifications that one can take in order to start a career.
What is Cost Accountancy
The Cost Accountant is responsible for the production of financial reports, including monthly and quarterly billing statements, contract analysis, and compilation of year-end results. They will be responsible for analysis of delinquent accounts, establishing and updating cost allocations and benchmarks, analyzing and implementing changes in the accounting process and reporting systems to support business requirements, as well as performing any ad-hoc analyses required by management.
A cost accountant advises clients on the cost of one or more business functions, then allocates the costs to them. This can be a part of a financial audit performed prior to an investment in a business, or just to determine the total costs of running a business. A cost accountant can review everything from direct expenses such as raw materials and salaries, indirect operating expenses like rent and utilities used across several departments, and depreciation costs for capital investments like equipment.
Roles and Responsibilities
The responsibilities of a cost accountant are to perform quantitative analyses to determine the cost of manufacturing or producing goods or products and to help management control costs. A job as a cost accountant may be either on the production or management side of an organization.
A cost accountant studies and documents actual cost figures for future reference and comparison. This helps give a better understanding of the production costs in manufacturing in order to achieve accurate pricing. A cost accountant may be a member of the finance department, general accounting department, or manufacturing department. Find out more about this profession.
Skills play a major role in defining how well a candidate does in a particular field. Let us now talk about the skills required to be a cost accountant.
Skills required for Cost Accountancy
The Cost Accountant plays a critical role in the development of a client’s financial strategy. It is a role that requires both soft skills and knowledge related to accountancy. These are a few skills that one must work on in order to become a good Cost Accountant.
In-depth Knowledge of Accountancy
First and foremost, knowledge of accountancy is a fundamental and must-have skill for cost accountancy. You can work on other skills later, but mastering this skill is an invariable aspect of this profession. The job role will mostly revolve around this core skill, with other skills adding more value.
Following are the areas you need to master –
- Firstly, the Matching principle
- Secondly, the Principle of conservatism
- Thirdly, Cost (direct costs, indirect costs, fixed costs, variable costs, inventoriable costs)
- Then, the Contribution margin
- Also, Relevant range
- Further, Break Even point formula
- Cost accounting analysis
- Activity-based costing (ABC)
- Gross margin and contribution margin
- Furthermore, Asset management
- Then, Business awareness
- Lastly, Accounting processes
Analytical Skills
Analytical skills are another very core part of this job. The cost accountant has to prepare and analyze financial reports. With a good analysis, the accountant can assist the client in making accurate financial decisions. Also, it can help in avoiding mistakes that can cause financial losses to the client. Hence, a cost accountant must possess excellent analytical skills.
Here are a few areas that you need to strengthen to develop good analytical skills –
- Firstly, Successful evaluation of likely business ventures, investments, contracts, etc.
- Secondly, Finding and including suitable cost drivers
- Thirdly, Add value to the budget development process
- Then, improve decision making
- And finally, ensure accuracy and avoid any possibilities of mismatching
Technical Proficiency
Nowadays, some levels of computer-based skills are required in just about all the jobs. Cost Accountancy is also one of those professions where you will be working mostly on a laptop or a computer. Hence, it is essential to know about a few skills that you have to implement while making reports.
Here is a list of Software that you’d be using while working as a cost accountant –
- Firstly, Quickbooks
- Secondly, Enterprise 21 ERP software
- Thirdly, KPMG Spark
- Then, Zoho Books
- Also, Wave Financial
- Further, MS. Excel
- And finally, Oracle
Collaboration and Communication
Collaboration and communication are two critical components to a strong business. Whether it’s for some company you’re working with or a client, one is simply looking to revamp these elements, it’ll be well worth the time. Depending on the size of the workforce of a particular organization, you will have to work with several other professionals. These can be stakeholders, risk managers, vendors, and other associates. Hence, it is essential to be able to understand and express thoughts, figures, and ideas among various professionals working as a team.
Here are a few points that you can keep in mind while working on communication skills –
- Finely explain the company’s products or services to clients and stakeholders
- Build more beneficial relationships with clients, which can be helpful in molding better cost savings deals
- Write detailed reports and make professional presentations
- Helpful in negotiating
Different ways to get into Cost Accountancy
Now that we have discussed so many aspects of this profession, we can now focus on the path one needs to follow in order to become a Cost Accountant. Let us talk about the education and training, and certifications required to have a successful career in this field.
Degree or Diploma
To start off, you should have a bachelor’s degree focusing on Accountants or mathematics. This can help in opening up opportunities for entry-level jobs. Further, you can pursue a master’s course in business administration (MBA) while accountancy being a focused subject. These educational qualifications will help in laying a solid foundation for the advanced steps. Also, by these courses, you will have a fair idea about terminology and a deep understanding of principles and methods of cost accountancy. You will a deep understanding of theoretical and applied information related to financial principles such as business organization, financial analysis, principles of economics, money, and banking, business law, and information technology.
Certifications and Training
Other than the degrees, you will need a recognized certification in cost accountancy. This will earn you validation for your skills and abilities and make you more employable. Since this is a job that deals with the finances of an organization, we know there will be a lot at stake. Hence, it is important to win the trust of the client. Certification is the best way of doing this. Also, while you work hard for it, you will learn a lot of things related to this field which will eventually help you grow better as an accountant.
A certification course plays an important role in one’s professional career. Earning a certification is not just simply completing a course; it proves your knowledge and expertise to professional clients in a particular field. Moreover, it acts as a stepping stone towards achieving greater heights in one’s career. A certification program imparts the latest methodologies and tools which are essential in delivering quality work. Ultimately, getting certified adds immense value to your resume and increases client trust.
Get ready to move to Higher Positions
It is obvious that everyone wishes to move ahead on whatever path they are walking. After working for a few years, cost accountants earn a fair bit of knowledge and experience about finances. This opens up the opportunities of moving up to Higher positions like Accounting Manager, Budget Director, Chief Cost Accountant, or Internal Auditing Manager. You can also become a Chief Financial Officer, Treasurer, or Presidents of corporations.
Out of these ways, getting a certification is a part that needs a bit of guidance for anyone starting new in this domain. So let us go through the details of well-recognized certification that will help you in starting your career as a Cost Accountant.
Certificate in Cost Accountancy
The Certificate in Cost Accountancy is an ideal qualification for those who wish to pursue a career in cost accounting. This qualification is suitable for professionals within any organization, including those who do not already have a background in accounting. The course provides a solid foundation of cost data collection and analysis, along with a strong grounding in the tools and techniques used to support strategic decision-making within organizations.
The Certificate in Cost Accountancy is a professional qualification that has been developed to provide students with a comprehensive grounding in the principles of cost and management accounting. It is primarily aimed at students who wish to develop their careers within the industry but who have limited commercial or econometric skills. The course will enhance your knowledge and proficiency in core accountancy subjects including management accounting, financial accounting, cost analysis, costing, budgeting, and performance management.
Things you’ll learn through this course –
- Firstly, Cost and Management Accounting
- Secondly, Material Cost
- Thirdly, Labour Cost
- Fourthly, Direct Expenses and Overheads
- Then, Activity Based Costing
- Also, Cost records
- Further, Costing systems
- Marginal Costing
- Standard Costing
- Furthermore, Budget, Budgeting and Budgetary Control
- Then, Cost Accounting Records and Cost Audit
- And lastly, Analysis and Interpretation of Financial Statements
Test Details of Certificate in Cost Accountancy
- Duration: 60 minutes
- No. of questions: 50
- Maximum marks: 50, Passing marks: 25 (50%).
- There is NO negative marking in this module.
- Online exam.
Benefits of Certification
- Firstly, Government Certification
- Secondly, Certification valid for life
- Thirdly, Lifelong e-learning access
- Then, Free Practice Tests
- Also, Get tagged as ‘Vskills Certified’ On Monsterindia.com
- And Lastly, Get tagged as ‘Vskills Certified’ On Shine.com
Cost Accountancy Online Tutorials
Vskills’ Online Tutorials is part of the Vskills Mobile Learning Management System – a cloud-based solution that offers enterprises, government & academic institutions extensive offline and online training to build knowledge management. These tutorials are developed by experts in the field. They provide extensive guidance on study resources and various other ways of learning about the course requirements of certifications provided by Vskills.
Cost Accountancy Practice Test
Taking practice tests is the most ideal method of realizing how well you are getting along in each subject. This will help you in discovering which subjects you should work harder on before the tests. These papers are made by putting together questions that are similar to the ones asked in the exams. Subsequently, you will gain experience with each practice test. Every one of these endeavors joined will assist you in facing the test with certainty and passing it without any problem. To know better about the exam, you can try a free practice test here!
Market Demands of Cost Accountant
With globalization, all the organizations and companies are in need of professionals like Cost Accountants. It is because they have specialized knowledge on strategizing business and creating value. A cost accountant is a multi-faceted asset for an organization as it helps in several areas of decision-making and analysis.
The importance of a Cost Accountant in the business has been realized by entrepreneurs worldwide. A few years back, there was no much information and resources available for beginners. But things are changed now, several institutes and various training programs have come up to train the students as well as to provide an advanced degree in Business Management and Accountancy.
The job market is always changing and it is important to keep up with new skills. In the field of accounting a Cost accountant is someone who might specialize in different areas of Accounting and Accounting Research. Skills like strong math skills as well as communication skills can add good value to an organization. Also, a cost accountant will help you establish new systems or improve your current systems for reducing costs. Thus, a cost accounting professional is high in demand.
Expert’s Corner
To conclude this blog, we can say that cost accountancy is a professional domain that plays a vital role in businesses. And hence, it posses a very promising prospect for the candidates who strengthen themselves with the skills and experience. You have to possess the educational qualifications first. Then, you can take the steps towards this domain. This will include earning a certification. Further, you can go for internships for practical experience. Step by step, you can tick all the checkboxes and it will lead you to the path of success.
