Management Accounts vs Statutory Accounts: 7 Key Differences
Understanding When and Why to Use Each Financial Report
While statutory accounts are legally required for all limited companies, management accounts provide operational insights that drive 87% of business decisions according to recent surveys.
1. Purpose & Legal Requirement
Statutory Accounts
- Mandatory for all registered companies
- Filed with Companies House and HMRC
- Used for compliance and tax calculations
- Required for shareholders and public disclosure
Management Accounts
- Optional internal documents
- Used for business decision-making
- Not shared with regulators
- Tailored to management’s specific needs
A retail chain uses monthly management accounts to track store performance, while their annual statutory accounts fulfill legal reporting requirements.
2. Frequency & Timeliness
Statutory Accounts
- Annual reporting (9 months after year-end)
- Fixed reporting periods
- Historical focus
Management Accounts
- Monthly/quarterly (sometimes weekly)
- Flexible reporting periods
- Forward-looking with forecasts
3. Content & Detail Level
| Element | Statutory Accounts | Management Accounts |
|---|---|---|
| Profit & Loss | Standard format required by law | Customized to business segments |
| Balance Sheet | Full balance sheet with notes | May show partial or department-level |
| Cash Flow | Required statement | Detailed cash flow forecasts |
| KPIs | Limited financial ratios | Detailed operational metrics |
4. Accounting Standards
- Statutory: Must comply with FRS 102 or IFRS
- Management: No standard requirements
A manufacturer includes depreciation differently in statutory accounts (using HMRC-approved rates) versus management accounts (using actual equipment wear rates).
5. Audience
- Statutory: Shareholders, regulators, creditors
- Management: Directors, department heads, investors
6. Audit Requirements
- Statutory: May require external audit
- Management: No audit, internal review only
7. Cost & Preparation
- Statutory: Higher cost, often prepared by accountants
- Management: Lower cost, often prepared in-house
Best Practice: Use management accounts monthly to spot trends, and ensure statutory accounts are prepared by professionals to avoid compliance risks.
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