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Unit 11: Information System and Reporting to Management

Self Assessment Notes

Fill in the blanks:
1. The …………………… of the information between two or more parties through reports is
known as reporting.

2. Information that originates within an organisation is referred to as ……………………
information.
3. Only an …………………… information system can provide managers with both internal
and external information that is timely and accurate.

11.2 Concept of Management Reporting

Report is the essence of the management information system. Report is a statement containing
facts and if they contain accounting information and data they are called accounting reports. So,
report may be known as process of providing accounting information to those who needs to
make decisions. Report may be for the past, present and for the future developments. In this unit
you will study about the objectives of reporting, need of reporting at different managerial
levels, types and modes of reporting and essentials of a successful reporting.
Reporting can be defined as communication of statements with related information between the
two parties. The process of providing information to the management is known as management
reporting. These reports are provided to the various levels of management on regular basis to
keep the management abreast about the effectiveness of their respective responsibility. Reporting
is an important function of the management accountant as the efficient and smooth working of
the business depends upon the good reporting. The effectiveness of reporting to management to
a large extent depends upon the form and timing of its presentation.

Did u know? The process of reporting to management is concerned with proper selection
of financial and operating data, arranging information in a proper form, analysing and
interpreting the data and then reporting it to the management through an appropriate
method.

11.2.1 Objectives of Reporting

Main objectives of reporting can be divided under the following heads:
 Accounting reports consist of financial statistics: Management cannot analyse all significant
facts regarding its business especially in case of large scale production where the business
operations are more complex in nature. Accounting reports help to get full information
about the entire operative activity of the firm.

 Providing accounting information: Accounting reports consist of financial statistics.
Management may not analyse all significant facts regarding its business operations
especially in case of large scale production where the business operations are more complex
in nature. Accounting reports help to get full information about its entire operative activity
of the firm. Thus important objective of the reporting is to provide accounting information
to operating and top level management in accurate form in understandable brief manner.

 To take right decision: To help the management in taking the right decisions with suitable
statements provided by the management accountant.

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