Preparation, Planning, Implementation, and Review as Certain Stages of the Managerial Accounting - Term Paper Example

MIS Management accounting is a branch of accounting, which is mainly dealing with various managerial aspects mainly handled by the managers within the organization, which is essential for taking appropriate decisions. The concept of management accounting is under the control of Management accountant who is responsible for the preparation of financial statements, and management accounting report for taking appropriate decisions. Management accounting should determine the success or failure of an organization. Moreover, it is very essential for taking the appropriate decisions. The main theme of a management accounting report is that to provide logical information about the business and its functioning through out the levels of an organization. Due to the changes taking place in the accounting field today, it is necessary to bring appropriate measures for improving the managerial accounting techniques and procedures. Obtaining adequate in formations required for the organization is the main driving force for change. For meeting the organizational goals, it is necessary to implement the relevant managerial accounting policies effectively. Increased competition requires adequate changes in the management techniques. Earlier period, management accounting was concentrated for the determination of cost, control of finance, and also to provide concentration for minimizing the wastage of resources. In addition to this, the management accountant is also responsible for the preparation of accounting statements in an effective manner. But recently, the role of management accountant is enhanced due to the changing scenario of the world of accounting. As far as an organization is taken in to consideration, management accountant is responsible for taking the adequate managerial decisions for the future running of the entity. Management accountant is one who should possess thorough knowledge about the relevant aspects of the enterprise as a whole. The concept of accounting point of view of both management and financial accounting is not at all similar. The MIS (Management Information System) is very crucial in recent days. "MIS (management information systems) is a general term for the computer systems in an enterprise that provide information about its business operations. It's also used to refer to the people who manage these systems." (Moore 2007). For the purpose of mitigating the existing difficulties associated with the concept of managerial accounting and its principles and policies, it is necessary to undertake effective implementation strategy and also to undertake the reinvention of management accountants. The organizational customs and its environmental factors are also effecting this reinvention to certain extend. Management accounting principles and its applications are fundamental for the preparation of financial statements and report to the entity for taking appropriate future decisions. Management accounting is highly concentrating for taking the most relevant decision required within the organization, and it is necessary to obtain the proper information about the entity for taking decisions, and such information should be more accurate in nature. MIS is a significant concept, because it is possible to undertake the business operations more effectively through this system. So, major factors responsible for changes in the management information system are- Changes take place in the economy. Awareness about global competition. Emergence of recent innovative measures and technology. Therefore, it is crucial to consider the changes in the organization in an effective manner for taking the prominent decision which may affect the performance of the entity in future. Implementation of strategic management accounting tools are also effective for this. So, the effective installation of the MIS is important for the adequate functioning of an entity. It is very essential to maintain and develop a proper accounting theory for the proper implementation of accounting procedures and the effective reporting of financial statements. Financial reporting and its disclosure are now related with the environmental performances in an effective manner. If a particular organization is running by giving appropriate stress for its environmental issues is mean that it is highly relating to the sustainability as well as the existence of the particular society in which the organization belongs to. Nowadays, the accounting system requires the disclosure of environmental facts in respect of financial accounting reports. The main purpose of preparing the financial accounting report is that to provide useful information about the business to its ultimate end users. Such categories of users shall be owners, shareholders, investors, employees, suppliers, creditors and the public as a whole. Moreover, the report so made should be more relevant, it should possess the quality of materiality, accuracy and comparability. Environmental performance and economics measurements are related to certain extend, as far as the accounting policies and reporting procedures are taken in to consideration. The users of accounting reports should have a thorough and sufficient knowledge about the changes takes place within the organization as well as in matter of accounting standard context. The accounting report should disclose the environmental performances, for the purpose of easily identifying and evaluating that the organization is running as per the requirements of the society. Moreover, this helps to develop the reputation of the organization by comparing various environmental data obtained from the annual accounts of the company. Nowadays, most of the large size companies are in a position to provide a proper disclosure about the social and environmental performances in the financial reports to certain extend. Rather than this, during recent time period, the responsible personnel in an organization are providing more stress for the environmental policies and plans than that of the accounting policies. Disclosure of environmental matters in the financial accounting report is developing a proper link between the environmental and financial performance of a particular entity. Every organization shall have its own reporting system. The reporting system should be standardized as far as possible. This leads to a systematic approach and an economic use of resources. But review of reports is essential, it refers to updating the report or reporting system on a continuous basis with a view to make it in tune the changed circumstances and there by enhancing its utility. However, it is not necessary that whatever information obtained through various sources would ultimately enhance the value of decision making. Thus, MIS facilitates the management to integrate all its activities towards well settled goals and objectives of the entity. Management of future implies management of information. A mass of information is generated by internal as well as external sources. Therefore, management must have a well organizes and up to date MIS on the basis of which management at all levels can take prompt and sound decisions on all business problems. MIS can help in achieving these goals by improving the quality of managerial decisions. Today, MIS is considered as a resource together with other resources like men, materials, money, and machines. Management information is a chain which links all the process of management. The system of collecting and disseminating information is regarded as management information system. Management information is normally available in the form of reports and process of producing it is called as reporting. MIS is a planned and organized approach to the transferring of knowledge of intelligence within an organization for the exercise of management. It is an integrated arrangement of furnishing required information at the right time and in right form to management. It is a communication process in which the information is recorded, stored, and processed for decisions regarding planning, operating, and controlling the enterprise. The raw of information or data is considered as the input, and the processed data or information is the output. So, MIS analyze, rearrange, and present information in an easier form to decision makers. Therefore, MIS is an on going process or technique which aids the efficient performance of management processes at all levels and at different points of time. Objectives of MIS Beneficial to management for taking more timely, accurate and sound decisions. To provide internal and external information to management planning. Essential for setting standards and evaluating performances. Possible to undertake the task of decision making, planning, and controlling with a view to bring co-ordination. To design and developing a management report is not an easy task. For this, it is necessary to consider the organizational objectives, authority responsibility relations etc. While designing the system care has to be taken that there is an active involvement of all concerned, so that every members of the organization should be clear about the need and usage of reporting systems. Making of reports by ignoring the major considerations of an entity should create a lot of problems in the future. The essentials of a good information reporting system are- 1. Proper form- for taking adequate and effective decision, the information should be maintained in a proper form with a appropriate title. 2. Proper time- Information can be supplied without any delay so that it is possible to take timely decision. 3. Proper flow of information- The information system should be designed in such a way that to make the flow of information quickly and continuously according to the needs. 4. Flexibility- It should be flexible as per the user requirements. 5. Economy- The cost of supplying and collecting information should be compared with the benefit derived from the reports. 6. Adequate evaluation- A good system should give information required for the evaluation of each manager's area of responsibility. MIS is effective for better management; it can improve the flow of information through out the organization. It consists of various benefits like- MIS improves the quality of decisions. Possible to improve the managerial efficiency. It is possible to eliminate the waste, and improves the employee wages and morale. Enhances the profitability and productivity. Effective utilization of resources. It facilitates in better planning and possible to undertake comparisons. Aspects or components of MIS MIS involves mainly four aspects like collection of data, storage, processing and transmission of information. A combination of these aspects makes MIS an important tool for decision making. Once MIS is designed and effective for undertaking its operations, the following steps are essential- 1. Input data- With clear and predetermined goals, the system designed should determine what input data is required and how such data can be obtained. 2. Information storage- The data so obtained should be stored in a manner that lends easy accessibility so that it can be readily examined, modified, and utilized for computation. 3. Analysis of data- It consists of:- Defining problems. Determining the causes of the problems. Determining management objectives. Developing solution. 4. Output- The analysis of information so provides output in various ways such as either in the form of tables or figures, or charts and drawings, etc. Thus, the processed data become output which is passed on to different management levels. The core area of the integration of information in MIS is a data base, which is a collection of related data. Installation of MIS- It consists of several steps:- 1. Preparation- The introduction of MIS requires proper and effective preparation. It is required to conduct a proper study of business objectives, plans, policies etc. this will help in deciding the type of data required. In this matter, the organizational structure is also effective, because it should be able to supply the required information. More over, it is requires effective support from top management, otherwise it cannot be successful. 2. Planning- After taking the preliminary steps, it is necessary to evaluate the information needs of various managerial levels. On the basis of which the planning process should be undertaken. For making the system effective, there is a need to study different types of data needed by the entity. 3. Implementation- For the effective implementation of MIS, the active involvement of all members of the entity is crucial. Proper training programmes should be undertaken to educate the managers about the need and usefulness and also the operation of MIS. The manual and mechanical devices are necessary for processing the data should also be decided. 4. Review- It is essential to find out the problems and difficulties faced in the system and the additional requirements. The review of MIS enables to bring in to light the weak points and there by it is possible to undertake the corrective measures. The MIS should be reviewed in the light of changed circumstances. MIS designers should have a thorough knowledge about the objectives and structure of the organization, job descriptions of the staff members, managerial processes etc. They should go through all the records relating to the existing system of information system. Taking in to considerations the environmental factors and the needs of the organization MIS can be designed. While designing the MIS certain factors are relevant to consider- Relevancy- The system should provide only the relevant information to the managers. Timeliness- The system must be capable of supplying information at a time when it is needed. Accuracy- The information to be provided by the system must be accurate and usable as far as possible. Economy- Cost of the system should be less than the benefit expected to be derived from the system. Flexibility- It should be flexible, enough to make necessary changes as and when required. Recency- Information is always alive. As such it has to be kept updated all the time. Use of information- It should be determined how well a manager can use needed information. Flow of information within various parts of the organization- The system should be designed in such a way as to facilitate the flow of information within the various parts of the organization. Information is the core of the three terms like information, management information, and management information system. Information is considered as informing about something generally. In other words, it is the knowledge communicated by others. The effectiveness with which relevant facts are communicated to management, to a large extent, determines the success or failure of various levels of management. Bibliography MOORE, Garrick (2008). MIS. [online]. Search data center.com. Last accessed 23 February 2008 at: http://searchdatacenter.techtarget.com/sDefinition/0,,sid80_gci214098,00.html Read More