7

CHAPTER

MANAGEMENT REPORTING
CHAPTER OBJECTIES
Meaning and definition of report.
Objects or purpose of report.
Management reporting.
Method of reporting.
Kinds of reports.
Levels of management and reporting.
General principles of a good reporting system.

INTRODUCTION
environment which is more difficult
The business at present operates under anThe growth of size of business has
and complex as compared to earlier times. management. There are
necessitated the delegation of authority at various levels of
communication. The decision-making has
problems of control, co-ordination and
ramifications for the business and
become adifficult task. The decisions have widerManagement needs full information
lead to its closure.
a wrong decision may then costs and optimise returns.
before taking any decisions. Good decisions can minimise
management in undertak
Management Information System (MIS) can be helpful to the
ing managerial functionssmoothly and effectively. It is an approach of providing timely,
organisation which helps
adequate and accurate informnation to the right person in the
information system is a planned and
him in taking right decisions. So, managemnent within an organisation for the
organised approach to the transferring of intelligence
into useful quantums of
organisation of management. The intormation 1s turnished
system is of two types :
knowledge in the form of reports. Managerment intormation
System. This system is meant for meeting the
1. Management Operating information sunnied
information needs of lower and middle level managements. The
of the business. The figures about finance, Iaw
generally relates to operations concerned persons Ha
materials. labour, production, sales, etc ; are supplied to the
make necessary chan
operational information is required tosee the pace of work and use of electronic devi
quick and regular. The
if needed. The supply of information isdata.
analysing
S made for processing and
is designed to supplv intorm
2. Management Reporting System. This systeminformation
decesion-taking. The is presented
tion to top level management for
7.2 Management Reporting
which enables the management to take quick decisisions. Sometimes, Comparative
information is presented to see the present performance in relation to past one. The
purpose of this information is to present before management the real position of the
enterprise. The supply of this information is slow because information irom various
sOurces is first compiled. Decision-making requires full information about all
important areas of the enterprise.
MEANING AND DEFINITION OF REPORT
The word Report' is derived from the Latin word 'portare' which means to carry'.
So 'Report' is a document which carries the information. The word Report consists
of two parts, viZ., RE+PORT. The meaning of the word RE is 'again' or back and
PORT means tocarry'. Combining these two words It meanstocarry the information
again. It must be ciear that reports are always written for any event which has already
Occured. So report is a written document which carries the information again.
Dictionary meaning of the word report is to convey' or to transmit as having been
said. ln fact, a report is a communication from someone who has the information to
Some one whovants to use that information. Report is always planned for use.
"A written statement based on a collection of facts, events and opinions and
usually expressesa summarised and interpretative value of this information, It
may deal with past accomplishments, present conditions or probable future
developments".Terry talks about report as a written communication prepared on
the basis of collected information related to present, past or future.
-G.R. Terry
A good business report is a communication that contains factual informa
tion, organised and presented in clear, correct and coherent language."
Johnson and Savage
In simple words, report can be defined as "a form of statement which
presents and examines facts relating to an event, problem, progress of action,
state of business affairs etc. and for the purpose of conveying
information,
reporting findings, putting forward ideas and making recommendations as the
basis of action".
So report is an impartial presentation of facts. These facts may arise out of
available factial data or through enquiry, investigation, survey, interview, experi
Iments or esearch. Amere expression of opinion without supporting factual data is
not a repor
OBJECTSOR PURPOSE OF REPORTS
The reports are prepared and written to serve the following purposes :
i Means of Communication. Reports are means of upward
is acommunication from some one who has the communication. It
information to someone who
needs that information for carrying out functions of management. Reports
providenformation to executives, government agencies, shareholders, cred1
tor: ustomers or general public.
(u) Serve as Record. Reports provide valuable records for future reference.
Renorts record facts and results of investigations. The facts can be of great
importance in future.
(ii) Legal Requirements. Reports are also written and submitted to fulfil legal
requirements. For instance, Annual Report of Company's Accounts is
ManagementReporting 7.3

necessary to be furnished to sharehaldere under Companies h

Similarly, audit report of accounts must accompany the income-tax return
under Income Tax Act, 1961.
and
(iv) To Develop Public Relations. Reports of general progress of business
utilisation of national resources to public helps in increasing the goodwilland
developing public relations.
(u) Basis to Measure Performance, Routine renorts about the work pertormanco
of employees help the management to measure performance in view Or
objects. The reports on performance shall become the basis for promottos
and incentives.
(ui) Control Purposes. Reports are the b2sis of any control process. It is on tne
basis o reports, actions are initiated and instructionsare given to improve tne
performance.
MANAGEMENT REPORTING
Manage
The process of providing information to the management is knowWn as
management so as
ment Reporting: The reports are regularly sent to various levels of
These reports als0
to enable in judging the effectiveness of their responsibility centres.
become a base for taking corrective measures, if necessary.
useful for two general
Reports on what has happened in a business, are respectively".!
control,
purposes which may be called information and -Anthonyand Reece
is going on. Control
Information reports are useful to tell management what performance and economic
assessing personal
reports, on the other hand, are usefulin
performance.
Communication is both downward
Reporting is not equivalent to communication.lower levels and reactions of lower
communicated to
and upward i.e. decisions are The
are communicated to top level management. Reporting is only upward. level
levels accountant and sent for the review of top
reports are prepared by the managementreports may be oral, written or graphic. The
management. The communication of is linked
quartely or yearly. The timing of reports
reports may be sent weekly, monthly,
production reports may be weekly, whereas
profitability
with their nature. The sales and
reports may be yearly.
METHODOF REPORTING
ways. 1The method ef reporting may
Reports may be presented in a number oi conveyed, the volume of data or
information to be
depend upon the nature of available for communications.
media
information to be given or the
may be used :
Following methods of reporting
1. Written Reporting management
may be sent to difterent levels of
A number of written reports
These reports may be : Statements
Financial
fa) Formal following
with any or some of the
Such statements may deal
against the budgeted ones.
) Actual figures
Accounting Principles.
Robert. N. and Reece, James S.--Management
1. Anthony,
7.4 Management Reporting
different periods of
(1) Comparative accounting statements giving information at
time.
(b) Tabulated Information
The tabulated statistics which include analysis according to products, time,
tabulated
terTitories etc. A particular type of information, for example sales, may be
as per different periods, products, areas etc.
(c) Accounting Ratios
statements. The
Accounting ratios may be presented as a part of formal financial ratios may be
statements. The
raios are useful in appropriate analysis of financial ratios, etc.
Current rat'os, efficiency ratios, long-term solvency ratios, profitability
2. Graphic Reporting
pictures. These
The reports may be presented in the form of charts, diagrams and
presented. A look
reports have theadvantage of guick grasp of trends of information information.
the
at the chart or diagram may enable the reader to have an idea about
3. Oral Reporting
Oral reporting may be in the following forms :
(a) Group meetings
(b) Conversation with individuals
Oral reporting is helpful only to a limited extent. It cannot form a part of important
managerial decision-making. For that purpose the reports must be in writing so that
these may be referred in future discussions too.
A
combination of written, graphic and oral reporting may be useful for the concern.

REQUIREMENTS OF A GOOD REPORT

Areport is a vehicle carrying information to those who need it. Areport is prepared
by putting in labour by the executives. The usefulness of the report will depend upon
its quality and the way in which it has been communicated. Areport should be prepared
in a way it serves the purpose and presented at a time when it is needed. Good reporting
is thus essential for effective communication.
A good report should have the following requisites -
1. Good Formn and Content
Thefollowing points be taken intoaccount while preparing a report :
i) The report should be given a proper title, headings, sub-headings and
paragrraph divisions. The title will explain the purpose for which the report has been
prepared the title also enables to point out the persons who need the report. A
production report may be titled as Production Report for the Month of April 1992'.. The
the report.
title explains the purpose and period of preparing
fil If statistical figures are to be given in the report then only significant figures
andtotals should be made a part of it and other detailed figures should be given in
appendix.
fii) The reports should contain tacts and not opinions. The opinion may come, if
otherwise.
essential, as a sequel to certain facts and not
i) The report must contain the date of its preparation and date of submission.
it should bear
lu) Ifthe report is preapred in response to a request or letter then
request or letter.
reference number of such
ManagementReporting 7.5

(u) The contents of a report must serve the purpose for which it has been prepared.
Separate reports be prepared for different subjects. Various aspects of the subject
should be properly conveyed.
(uii) The contents of the report should be in a logical sequence.
2. Simplicity
The report shouid be presernted in a simple, unambiguous and clear language.
The language should be non-technical. If the report is loaded with technical termino!
ogy, it will reduce its utility because the reader may be unfamiliar with that language.
The reader should be able to understand the report without any difficulty. The report
shouldalso be readable. The figures should be rounded so as to make them easily
understandable. If possible, charts, diagrams or graphs should be used for presenting
information.
3. Promptness
Promptness in submitting a report is an essential element of a good report. The
reports should be sent at the earliest. These are required for studying the progress and
performnance of various departments. A considerable delay in the occurance of an event
and reporting of the same will defeat the purpose of reporting. Information delayed is
information denied. The quick supply of reports will enable the management to take
Corrective measures at the earliest.
The reports are to be based on information, the promptness in reporting will
quick
depend on quick collections of facts and figures. Following steps may help in
reporting.
in the organisation to
() A proper record-keeping system should be introduced
meet various informational needs.
(i) To avoid clerical errors, mechanised accounting should be used.
bottlenecks in collecting
(i) The accounting work should be centralised to avoid
information.

REQUIREMENTS OF A GOOD REPORT

1. Good Form and content
2. Simplicity
3 Promptness
4 Relevency
5 Consistency
6 Accuracy
7 Controllability
8 Cost consideration
9 Comparability
10. Frequency of Reports

4. Relevency
Thereports should be presented only to the persons who need them. They should
bemarked to relevant officials. Sometimes reports are sent to various departments
in a routine way, then it will involve unnecessary expenditure and the reports will not
 7.6 Management Reporting
to be sent muSt be
1emamn secret. The persons or departments to whom the report is
clear to the sender. People do not give much attention to reports coming in aroutine
expenditure and reduces the
Way. So, this type of practice involves unavojdable
importance of reports.
5. Consistency not ln
There should be a consistency in the preparation of reports. The comparability of
Teports willbe possible onlv if they are consistent. For consistency, the reports should
possible
oe prepared trom the same tvpe of information and statistical data. This will be
11 Same accounting principles and concepts are used for collecting, classitying,
tabulating and presenting of information. Consistency in reporting enhances their
utility.
6. Accuracy (sNei
The reports should be reasonably accurate. Statistical reports may sometimes be
approximated to make them easily understandable. The production of figures accurate
upto paise may be difficult to be remembered, their reasonable approximation may
make them readable and understandable The degree of accuracy depends upon the
nature of information and the prupose of its collection. The approximation should not
be done upto the level where information loses its form and utility. So accuracy should
be used to enhance the use of reports,
7. Controllability
The reports should be addressed to appropriate persons in respective responsi
bility centres. The reports should give details of variances, which are related to that
centre. This will help in taking corrective measures at appropriate levels. The variances
which are not controllable at a particular responsibility centre may also be mentioned
separately in the report.
8. Cost Consideration.
The costof preparing and presenting the report should also be considered. This
cost should not be more than the advantage derived from such reports. The cost should
be reasonable so that reporting may be used by all types of concerns. The cost-benefit
analysis willhelp in deciding about the adoption of reporting system.
9. Comparability.
The reporting system is meant to help management in taking correct decision and
improving the operational efficiency of the organisation. This objective willbetter be
achieved if reportsgive comparative information.
The comparative information can be in relation to previous periods, current
standards, or budgets. This information helps in finding out deviations or variances.
Where performance is below standards or expectations, such variances can be
highlighted in the reports. The 'management by exception' is possible when exceptional
information willbe suppliedto themanagement 'Thecomparative reporting will, at once,
help the reader to reach at conclusions about the performance of the responsibility
centre mentioned in the report.

10. Frequency of Reports

Alongwith promptness, the frequency of reporting is also significant. The reports
should be sent regularly when they are required. The timing of reporting vill depend
Management Reporting 77
unon the nature of informationand its purpose. Some reports may be sent daily, sore
weekly, some monthly and so on.
Frequency of reports means that these should be sent when required. The reporis
are prepared at appropriate times and sent to appropriate persons as per their
requirements.

KINDS OF REPORTS 2
The reports may be classified into the following categories :
1. According toObject and Purpose
(a) External Reports.
(b) Internal Reports.
2. According to Nature
(a) Enterprise Reports.
(b) Control Reports.
(c) Investigative Reports.
3. According to Period
(a) Routine Reports,
(b) Special Reports.
4. According to Functions
(a) Operating Reports;"
(b) Financial Reports.
1. Classification According to Object or Purpose
be discussed
Classification of reporting according to object or purpose may
as under :
persons outside the business are
(a) External Reports. The reports meant for
company reports may be sharehold
known as external reports. Outsiders interested in
company may not be answerable to outsiders
ers, creditors or bankers. Though the
The company publishes Income
but still some reports are meant for outside public. and these statements
Statement and Balance Sheet at the end of every financial year of
Exchanges. Final statements
are filed with the Registrar of Companies and Stock
details. In India, Companies Act has
accountsare expected to conform tocertain basic
information in final accounts.
made it compulsory to disclose some minimum
those reports which are meant for
(b) Internal Reports. Internal reports refer to are
public documents and thev
different levels of managemnt. Internal reports are not
reports are prepared bv keeping in
not expected to conform to any standards. These
reports may be meant for top leve!,
view the needs of disposalfor scanning them. These for differernt levels of
middle level and lower level of management. The reports meant
The frequency of
management have been discussed separately, latter, in this chapter.
Some of the internal
they serve.
these reports vary in accordance with the purpose
loss and finania
reports that arc commonly used are : period report about profit or
cost of
position, statement of cash flow and changes in working capital, report about
production, production trends and utilisation of capacity, labour turnover reports,
material utilisation reports, periodic reports on sales, credit collection period and
selling and distribution expenses, report on stock position, etc.
 7.8
Management Reporting
2. Classification According to Nature
According to nature, reports are divided into three categories :
(a) Enterprise Reports. These reports are prepared for the concern as a whole.
These reports serve as achannel of communication with outsiders. Bnterprise reports
may concern all activities of the enterprise or may be rleated to different activities
Enterprise reports may include balance sheet, income statement, income tax returns,
employment reports, chairman's report, etc. These reports contain standarised
information and are beneficial to outsiders. The interpretation of financial statements
can also be undertaken from these reports. The reports are important from financial
analysis point of view.
(b) Control Reports. Control reports deal with two aspects. One aspect relates
to the personal performance and the second aspect deals with the economic perfor
mance. The first type of reports are reported to judge the performance of managers and
heads of responsibility centres with what perforamce should have been under the
prevailing circumstances. The reasons for deviations in performance are also
identified. The second type of reports show how well the responsibility centre has faired
as an economic entity. Such analysis is máde periodically. This type of analysis requires
the use of fullcost accounting rather than responsibility accounting.
Control reports should consider the following :
(i) control reports should be related to personal responsibility.
(i) they should compare actual performance with the standards.
(üi) they should highlight significant information.
(iv) these reportsshould be sent at a proper time as to enable taking corrective
measures.

(c) Investigative Reports. These reports are linked with control reports. In case
Some serious problem arises then the causes of this situation are studied and analysed.
Investigative reports are based on the outcome of special solution studies. These reports
are intermittent and are prepared only when a situation arises. They are prepared
according to the nature of every situation. They are helpful to the management in
analysing the causes of some problems.
3. Classification According to Period
According to period the reports may be
(a) Routine reports and
(b) Special reports.
(a) Routine Reports. These reports are prepared about day-to-day working of the
concern. They are periodically sent tovarious levels of management. These reports
may differ according to the nature of information and detailsto be reported. So far
as the timing is concerned they may be sent daily, weekly, monthly, or quarterly.
Routine reports may relate to sales information, production figures, capital
expenditure, purchases of raw materials, market trends, labour situation, etc.
There isa tendency to ignore routine reports by all recipients because of their
routine nature. Important information ina different
the reportink.
should be highlighted or presented
in adifferent way or may be written in
(b) Special Reports. The management may confront some difficulties and routine
such
anorts may not give sufficient intormation to tackle these situations. Under
ManagementReporting 7.9

circumstances, special reports are called for. Special reports are required for special
purposes only.
These reports are prepared according to the need of the situation. Available
accounting information may not be sufficient, so data may have to be specially collected.
There may be a need to put extra staff for compiling these reports It may also involve
co-ordination of different departments and different level of management.
'special reports should be divided into sections,each covering the following
main purposes'. 1. Reasons for the report 2. Investigation made 3. Finding
aconclusion and recommendations. J. Batty'
Special reports may deal with the following topics :
) Information about market analysis and methods of distribution of competitors.
i) Technologocial changes in the industry.
(iüi) Problems about the purchase of raw materials, etc.
(iu) Reports about the change in methods of production and their implications.
(u) Trade association matters.
() Report by the secretary on company matters.
(vii) Political development at home and abroad having impact on business.
4. Classification of Reports According to Function
According to function, the reports may be divided into two categories
(a) Operating reports ; (b) Financial reports.
(a) Operating Reports. These reports provided information about operations of
the concern.
The operating reports may consist of the following :
() Control Reports. These reports are used for managerial control. They are
intended to spot deviations from budgeted performance without loss of time so that
corrective action can be taken. Control reports are also used to assess the performance
of individuals.
(ü) Information Reports. These reports are prepared to provide useful
information which will enable planning and policy formation for future. Information
reports can take the form oftrend reports and analytical reports. Trend reports provide
information in comparative form over a period of time. Graphic representations can be
effectively used in trend reports. As opposed to trend reports, analytical reports provide
information in a classified manner about composition of certain results so that one can
identify specific factors in the overall total.
(b) Financial Reports. These reports provide information about the financial
position of the concern on specific dates or movement of finances during a specific
period. The balance sheet provides information about the financial position on a
particular date. On the hand, cash flow statementprovides data about the movement
of cash during a particular period. These reports can be either static or
dynamic.
Balance sheet and other subsidiary reports are examples of static reports ; cash flow.
fund flow statements and other reports showing financial position as
budgeted are examples of dynanic reports.
compared to the

1. Batty, J. Management Accounting, p. 372

7.10
Management Reporting
LEVELS OF MANAGEMENT AND REPORTING
There are generally,three levels of management and their informational needs are
different. Same type of information and in the same form and content may not be needed
at all the managerial levels.
The three levels of management are :
(a) Top Level Management
(b) Middle Level Management
(c) Lower Level Managemernt Or First Line Management
The information to be presented and the method of reporting should meet the
specific requirements of various levels of management.
The guiding principles for reporting to different levels of management are
as follows :

1. The lower the level of management the more detailed will be the reports and
higher the levelof management the shorter or summarised will bethe reports. The lower
level management consisting of foremen, section incharges, superViSors, etc. need
more detailed reports because they are concerned with actual execution of work. On
theother hand, top managment (i.e. Board of Directors) has limited time and needs
summarised reports. Sometimes only exceptional matters are reportedto this level.
2. The frequency of reports is also connected with the level of management the
lower the levelof management the higher will be the frequency of reporting. The middle
and lower levels of management need the reports morefrequently because they deal
with day-to-day operations of the business. The top level managenent will ask for
the reports when some decision is to be taken or some policy has tobe decided.
3. The number of reports to be sent is also concerned with the levels of
management. The top level mnanagemnent will get maximum number of reports and
lower levels willget lesser number of reports. The top management is toget reports
about every activity in the business while lower level management is concerned with
a particular department or section so it will get information about this area only. The
Board of Direcotrs will receive a large number of reports because it controls every
function in the organisation.
(a) Reports for Top Level Management
Top level management consists of Board of Directors. Top level management is
concerned with policy planning and co-ordinating activities. The goals are set for the
organisation and policies are devised to achieve these goals.
Thework of executing policies is left to the top level management :
(ü Periodic report about profit and loss account and balance sheet.
fü Statements of funds flow and cash flow at regular intervals.
(ui) Reports on production trends and utilisation of capacity.
(iv) Reports about cost of production.
(u) Periodic reports on sales, credit collection period and selling and distribution
expenses.
luil A
statement on development and research expenditure.
(b) Reports for Middle Level Management
TheMiddle level management is assigned the work for executing various policies.
ManagementReporting 7.11

The objects or goals are set bytop management. The requisite authority is delegated
to middle level management so that organisationalgoals may be achieved. Thereports
eubmitted to middle level management are detailed so that a corrective view of
nerformance of different departments is undertaken. The work of co-ordinating
activities of different departments is also undertaken by middle managemnent.
The reports submitted to middle managemnent may be classified as follows :
() Production Manager
1. Actual production figures alongwith budgeted production figures for that
period. These reports are gernerally daily, weekly or fortnightly.
2. The figures about the avialability and utilisation of workers. Figures about
normal and abnormal idle time are also reported.
3. Capacity Utilisation Reports;
4. Material Usage Reports ;
5. Machine and Labour Utilisation Reports ;
6. Absenteeism and Labour Turnover Reports ;
7. Scrap Report;
8. Machine Hours Lost Report ;
9. Stock Position Report ;
Production, etc.
10. Analysis of Budgeted cost of Productionand Actual Cost of
(i) Sales Manager
submitted area
1. Reports on actual and budgeted sales. These reports are
wise and product-wise.
and orders still to be
2. Weekly reports on orders booked, orders executed
executed.
etc.
3. Reports on credit collection and bad debts,
4. Reports on stock position.
well as area wise.
5. Analysis of Selling and Distribution Expenses, product as
6. Market Survey Reports.
7. Reports on customer's complaints.
8. Reports on effectiveness of sales promotion compaigns, etc.
(iii) Purchase Manager
orders pending.
1. Raw materials purchased, actual materials received and
2. Use of raw materials for production.
level or maximum
3. Raw materials balance and information when minimum
level rcaches.
4. Analysis of purchase expenses.
5. Budgeted cost of Purchases and Actual cost of purchases, etc.
(iv) Finance Manager
1 Cash and Bank position reports.
2. Periodic fund flow and cash flow statements.
3. Debtors collectionperiod reports.
4 Average Payment period.
5. Analysis of working capital
7.12 Management Reporting
6. Report on budgeted profit and actual profit.
7. Statement of financial position.
8. Capital expenditure reports, etc.
(c) Reports for Lower Level Management
They are
Junior level management consists offoremen or sectional in-charges. day-to-day
the
Tesponsible for the actual execution of policies. They are in touch with
juniors. Junior leve]
pertormance of their sections. They get daily reports from their management.
management prepares and sends regular reports to middle level
Reports for foremen may include :
1. Labour Utilisation report and causes of lost time.
2. Worker's efficiency reports.
3. Scrap report.
4. Actual shop expenses against budgeted expenses.
5. Maintenance cost reports, etc.
REPORTING SYSTEM
originate from
The reporting system involves all levels of management. Thereports
consisting of B0ard of
Junior levels of management and go upto top level management,
Directors.
given
The reporting system of a large scale organisation is shown in the chart,
above:

Reporting to Management
Scetional Incharge Sectional Incharge Sectional Incharge
Department A Department -B Department-C

Deputy Manager Deputy Manager Deputy Manager

Depart1nent -A Department-B Department-C

Functional Area

Controller Factory Purchase Sales Personnel

Manager Manager Manager Manager
Maintenance Incharge of Incharge of Incharge of Incharge of
of Accounts Production Purchases Marketing Manpower Planning

MANAGING DIRECTOR

BOARD OF DIRECTORS
 Management Reporting 7.13

The sectional incharge of every section regularly reports the progress of his section
to his superior. In this diagram, Functional Managers have Deputy Managers who
control departmental sections. The combined reports of different sections reach the
departmental manager, called functional manager. Different Functional Managers
submit the progress of their departments to the Managing Director. The brief summaries
of departmental reports are submitted to the Board of Directors for reviewing policies
and making strategy for the future. An effective reporting system will enable the top
management to remain in constant touch with the progress of different departments.
GENERAL PRINCIPLES OF A GOOD REPORTING SYSTEM
Agood reporting system is helpful to the management in planning and controlling.
Every level of management needs information relating to its activities centre so that
effective planning may be undertaken and current activities mnay be controlled and
necessary corrective measures may also be taken in time, if needed. Some general
principles are followed for making the reporting system effective.
These principles are discussed as follows :
1. Proper flow of Information. A good reporting system should have a proper flow
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 a proper time so
that it helps in planning and co-ordination. The frequency of reports will depend upon
the nature of report, the types of data required for preparing the information and cost
that it does not
involved in preparing such reports. The flow of reports should be such
intervals so that
cause delay in taking decisions. The reports should flow at regular
informational needs of different managerial levels are met at a proper time.
organisation.
Flow ofinformation is a continuous activity and effects all levels of the Orders,
organisation.
Information may flow upward, downward or sideways within an
suggestions
instructions, plans etc. may flow from top to bottom. Reports grievances, complaints may
etc.may flow from bottom to top,. Notifications, letters; settlemnents,
manager to another at the
flow from outside. Information also flows sideways from one
same level through meetings discussions etc.

Govt. Top Management *Reports flow from bottom to top

Union Middle Management * Information may flowv upward,

< ‘ downward or sideways
Customer and public Lower Management

(Flow of Information and Reports)

controlling device so thev should

2. Proper Timing. Since reports are used as a
of an event. The time
be presented at the earliest or immediately after the happenings minimum:
of reports should be reduced to the for routine
required for preparation
reports the period should be known and strictly adhered to. It will be a waste of time and
effort to prepare information which is too late to be of any use. The absence of
information when needed will either mean wrong decisionsor deferment of decisions on
matters which may be urgent in nature.
3 Accurate Information. The information should be as accurate as possible, If
the information supplied is inaccurate it may result in making Wrong decisions
 7.14 Management Reporting
However, the degree of accuracy may differ in different reports. Sometimes, Dart
information may be supplied as a guide for future policy making, so the degree of
problem nf
accuracy may be less. The supply of exact figures may involve a
understanding.Approximate figures are more understandable than accurate figures
nor it
given upto paisa. Accuracy should also not involve excessive cost of preparation have
should be achieved at the sacrifice of promptness of presentation. It will be better to
approximate figures at a proper time than delayed information prepared accurately.
4. Basis of comparison. The information supplied through reports will be more
usetul wvhen it is supplied in comparison with past figures, standards set or objectives
laid dovn. The comparison of information with past or budgeted 1igures will enable the
reader to find out trendsof variations. The decision taking authority will be able to make
be
use of comparative figures while taking a decision. Corrective measures can also
initiated to improve upon the past performance. The mánagement accountant can make
information.
the reports more useful by giving his own interpretations to the

GENERAL PRINCIPLESOF A GOOD REPORTING SYSTEM

1. Proper low of Information
2. Proper Timing
3. Accurate Information
4. Basis of Comparison
5. Reports should be clear and simple
6. Cost

7. Evaluation of Responsibility.

5. Reports shouldbe clear and simple. The purpose of preparingreportsis to help

management in planning, co-ordinating and controlling. This purpose can be achieved
only when the reports are easily understood by the readers. The information should be
presented in a clear manner by avoiding extraneous data. Only relevant important
information should become the part of a report. If supporting information cannot be
avoided then it should either be given in appendix or separate chart should be attached
for it.
The method of presenting information should be such that it attracts the eye, and
enables the reader to form an opinion about the information. The graphic presentation
of information will enable the reader to find out the trends and also to determine
deviationsmore quickly than in other methods.The arrangement of presentation should
be brief, clear and complete. Simplicity is a good guide for reports preparation.
6. Cost. The benefitsderived from reporting system must be commensurate with
the cost involved in it. Though it is not possible to assess the benefit of this system in
monetary terns, there should be an endeavour to make the system as economica! as
possible.
7. Evaluation of Responsibility. The reporting system should enable the evalu
ation of managerial responsibility. The targets are fixed for various functional
departmental heads. The record of actual performance is monitoreci alongwith the
standards so as io enable management to assess the perfornance of different individu
als So. management reporting should be devised in a way that it helps in evaluating the
IVork assigned to various persons.
Management Reporting 7.15

PROCESS OF REPORT WRITING

The process of writing and designing a report consists of three stages. These
stages are :
1. Deciding the nature and purpose of the report.
2. Structure of the report.
3. Drafting of a report.
These stages are explained as follows :
1. Deciding the nature and purpose of the report.
The first stage is to know the type of the report. Whether the report is statutory or
non-statutory. Its type shall determine the nature and shape of the report. It is also very
essential to know the purpose or object of the report. The purpose shall determine the
other tWO stages.

Structure of the Report

() Heading
(i) Address
(üi) List of contents
Deciding Nature (iv) Terms of reference Drafting of
of the Report (u) Body of the report Report
(ui) Recommendation
(vii) Reference and Appendices
(vi) Signature
(Process of Report Writing)

2. Planning structure of the report.

There is no one way to design the structure of the report. But following parts
are common in any report.
i) Heading.A short. clear, meaningful and attractive heading or title is necessary
report.
for a report. Title or heading should indicate the subject-matter of the
name
(iu) Address. Everyreport is written for some one. Soit is essential to write the
of reader or readers. Report must be addressed to some person or body of persons.
(ii) Contents. It is a list of chapters of the report. The contents of the report are listed
found.
in serial order along with page numbers on which such contents are to be
Contents should be arranged logically.
(u) Terms ofReference or Introduction.It gives the reasons for writing a report. Brief
description of the problem is stated. The object and scope of investigation are also given
in this part.
(u) Body ofthe Report.This part is most important and lengthy. the writer presents
here the facts aid data collected by him. Use of tables, graphs, diagrams can be made
here or in appendices. The analysis of data is shown in this part.
(vi Reconmendations. This part is the summarv of the report and consists of
conclusionsand recommendations. The conclusions are made on the basis of the facts and
collected data. Recommendati0ns or Suggestions are gIven on thc basis of conclusions.
(vi) Reference and Appendices,It is customary to mention, ist of references and
7.16 Management Reporting
taken material
bibliography indicating the: Sources from where the writer has for
the report. Appendices contain diagrams. statistical tables, speciinen forms etc. writing
(vii) Signature. Every report should be signed by the person responsible for its
preparation. Any report submitted by a committee should be signed by the
It is advisable to mention date on the
report. chairman.
3. Drafting of a report.
Drafting ofa report is an important stage in report writing. This stage includes
following considerations:
(i) Collection of data and its analysis. First step in drafting is collecting informa.
tion, facts and data necessarv for the purpose of the report. Data can be collected from
secondary or primary sources. Data is collected by investigations, observations.
interviews or by surveys etc. Collected data has to be classified, tabulated, edited and
analysed. The collected data has to be arranged logically and conclusions are drawn
(i) Fornmat ofa report.The format of a report refers of structure of a report which has
already been explained. It is concerned with the layout of the report and arrangement
of the data. It can be standardised for the purpose. Following is a specimen of a report
form. If report is in a letter form then it has salutation and a complimentary close. E
report is in memorandum form, both salutation and complimentary close may be
dispensed with.
Addressee(s) Date
Dear Sir (s)
Title
1. Terms of Reference
2. Finding of Investigation.
3 Conclusions
4 Suggestions
Prepared by
(Signature)

(i) Writing of report.(guiding principles). Report writing is an art which can be

developed by practising report writing and by studying the reports of other writers.
Reports are written for others so the needs and style preferred by the reader should be
kept in mind while writing a report. The general principles of a good reporting system
which have been explained earlier will help in writing the report.
(iu) Presentation of report. General layout ofa report should be pleasing to the eye.
Report may be typewritten, printed or handwritten depending on the number of copies
required. Sufficient space and margin should be kept on the left hand side. Reports
shouldbe written on one side of the paper with double spacing. Pages, paras and sections
should be numbered. Use of diagrams, illustrations, charts, tables may be made and
these should be numbered. If report is voluminous or is liable to constant handling it
should be in bound form.

TEST QUESTIONS
A. SHORT ANSWER TYPE
1. What are the elements of MIS 2
2. Define a Report.
ManagementReporting 7.17

3. What are the objects of reporting ?

4. What is the purpose of reports.
5. What do you understand by
management reporting ?
6. Write a brief note on internal reports.
7. What are special reports ?
8. Name at least five reports meant for production manager.
Write a brief note on reporting system.
10. What should be the frequency of reports ?
11. Bring out the kinds of reports prepared for different levels of management.
12. What are the objectives of reporting to management ?
13. Define management reporting system.
14. Explain internal and external reports.
15. What are control reports ?
16. What are the different modes of reporting ?
17. What are the essentials of a good reporting system ?
18. Explain the steps to be taken for effective reporting.
19. What are guiding principles of preparing management reports ?
20. What are the types of reports ?
B. ESSAAY TYPE QUESTIONS
1. What do you understand by Reporting to Management ? What are the
essentialcharacteristics of a good report ?
2. What are the essential points kept in mind while preparing a report for the
management?
3 Describe the informational needs of different levels of management.
4. 'Accounting reports are a matter of necessity for the management and not a
matter of convenience.' Explain critically.
5. Discuss various kinds of reports prepared by the management accountant
for different levels of marnagement.
6 What do you mean by a special report ? How is it different from a routine
report. Give the necessity of speciaB reports to the management.
7. Discuss the informational needs of various levels of management.
8. What do you understand by Reporting to Management' ? Discuss brifly the
matter that you would deal with while reporting to management of an
industrial concern and explain the nature of report in respect of each.
9. What is the significance of reporting systen in a company ? Bring out the
kinds of reports prepared for different level of management.
10. Explain the role of reporting system in effective management. Discuss the
various kinds of reports prepared for different levels of management.
11. What are the objectives of reporting to management ? Suggest general
Drinciples tobe borne in mine when designing reports.
12. What is the purpose of acontrol report ? What are the characteristics of good
management reports for control ?