PART 2 Flashcards
Provides a formal means for monitoring the function of internal controls.
Management Reporting System
Applications are discretionary.
Management Reporting System
Produces the financial and nonfinancial information needed by management to plan and control its business.
Management Reporting System
Factors That Influence the MRS
● Management principles
● Management function, level, and decision type
● Problem structure
● Types of management reports
● Responsibility accounting
● Behavioral considerations
Management Principles
Formalization of tasks
Responsibility and authority
Span of control
Management by exception
Management structures the firm around the tasks it performs rather than around individuals with unique skills.
Formalization of tasks
It allows specification of the information needed to support the tasks.
Formalization of tasks
Responsibility is an individual’s obligation to achieve desired results.
Responsibility and authority
Authority is an individual’s power to make decisions within the limits of that responsibility.
Responsibility and authority
Managers delegate responsibility and authority downward to subordinates.
Responsibility and authority
The number of subordinates directly under the manager’s control.
Span of control
Detailed reports for managers with narrow spans of control.
Span of control
Summarized information for managers with broad spans of control.
Span of control
Managers should limit their attention to potential problem areas.
Management by exception
Reports should focus on changes in key factors that are asymptomatic of potential problems.
Management by exception
Is an individual’s power to make decisions within the limits of that responsibility.
Authority
is an individual’s obligation to achieve desired results.
Responsibility
