Page 266 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 14: Management Reporting and MIS

Notes

Notes Attributes of Information

Accuracy Must be true and correct and must accurately describe the item or event.
Timeliness Available when it is needed and without excessive delay.
Relevance Pertains to the situation at hand. Information relevant at one time may not be relevant
at another if it does not add to the knowledge needed by a decision maker.
Completeness Provides the user with all details needed to understand a solution. Complete
information (that is certainty) is rarely available.
Frequency Prepared or presented to users often enough to be up-to-date.
Time horizon Oriented toward past, present or future activities and events.
Scope Broad or narrow in coverage of an area of interest.
Origin May originate from sources within the organization or from external sources.
Form of Tables of numbers or graphic displays of information are the most common written
presentation or printed forms. May also include verbal presentation.

14.2.2 Information Needs of Managers

All managers require information to perform their managerial functions (mainly, planning and
controlling) and make effective decisions. The information that managers require will vary,
depending on the nature of the work they do and the tasks they seek to accomplish. Information
needs also vary by levels in the organizational hierarchy (Table 14.1). For instance, top level
managers need far less detail (as a general rule) than lower level managers. Since top-level
managers have to take a broad perspective of the organisation and its mission, they only need
information that helps them develop or enhance the perspectives.

Information that originates within an organisation is referred to as internal information. This
type of information is essential for managing day-to-day operations. Some examples of internal
information are:
1. Daily receipts and expenditures
2. Quantity of an item in hand or in inventory
3. Cost and selling price of the item
4. Salespeople’s quotas

Table 14.1: Information needs by Level of Organisation

Characteristic Top Management Middle Management Operating
Management
Planning focus Heavy Moderate Minimum
Control focus Moderate Heavy Heavy
Time frame Long-term Short-term Day to Day
Nature of activity Unstructured Moderately structured Highly structured
Level of complexity Many open variables, Better defi ned Straightforward
complex variables
Result of activity Mission, Goals, Action Plans End products and
Objectives services

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