Page 264 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 14: Management Reporting and MIS

be undertaken and current activities may be controlled and necessary corrective action may also Notes
be taken in time, if needed. Some general principles are followed for making the reporting system
effective. These principles are discussed below:
1. Proper Flow of Information: A good reporting system should have a proper fl ow of
information. The information should flow from the proper place to the right levels of

management. The information should be sent in the right form and at proper time so that it
helps in planning and coordination. The frequency of reports will depend upon the nature
of report, the types of data required for preparing the information and cost involved in

preparing such reports. The flow of reports should be such that it does not cause delay in
taking decisions. The reports should flow at regular intervals so that international needs of

different managerial levels are met at a proper time.
!

Caution Flow of information is a continuous activity and effects all levels of the organisation
information may flow upward, downward or sideways within an organization. Orders,

instructions, plans, etc. may flow from top to bottom. Reports grievances, suggestions, etc.

may flow from bottom to top. Notifications, letters, settlements, complaints may fl ow from

outside. Information also flows sideways, from one manager to another at the same level

through meetings discussions, etc.
2. Proper Timing: Since reports are used as a controlling device they should be presented at the
earliest or immediately after the happenings of an event. The time required for preparation
of reports should be reduced to the minimum; for routine reports the period should be
known and strictly adhered to. It will be a waste of time and effort to prepare information
that is too late to be of any use. The absence of information when needed will either mean
wrong decisions or ferment of decisions on matters that may be urgent in nature.

Figure 14.1: Flow of Information and Reports

Top management
*Reports flow from bottom to top
Government
Middle management
Union
*Information may flow
upward, downward or
sideways
Lower management
Customer and public
(Flow of information andreports)

3. Accurate Information: The information should be as accurate as possible. However, the
degree of accuracy may differ in different reports. Sometimes, part information may be
supplied as a guide for future policy making, so the degree of accuracy may be less. The
supply of exact figures may involve a problem of understanding. Approximate fi gures

are more understandable than accurate figures given up to paisa. Accuracy should also

not involve excessive cost of preparation nor it should be achieved at the sacrifi ce of

promptness of presentation. It will be better to have approximate figures at a proper time
than delayed information prepared accurately.

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