Which is not an essential component of management reporting ?
Answers
Explanation:
The need for management reporting
Inefficient reporting processes that yield inaccurate and dated information normally cause more harm than good. Strong management reporting is a necessity to produce timely, reliable information, in order to make high-quality business decisions about the future of your company. Insight gathered from reporting allows for deeper analysis to understand problems, provide accurate comparisons against competitors and implement controls to hold employees accountable for budgets.
Effective processes uncover material financial misstatements prior to circulating information with investors and other stakeholders, and identify and address problem areas before they elevate to unmanageable levels. Without management reporting, employees may know there is a problem, but are unable to identify its origin. Reporting identifies the problem’s source, so you can begin working toward a solution. It also allows you to understand your current financial position compared to competitors, in order to focus or realign business strategies to improve specific operating activities.
Often, businesses attempt to develop reporting processes, but miss the mark in achieving desired results. Common challenges include:
Selecting and correctly using the right system to develop and deliver reports
Manipulating data in order to display the best metrics to make better business decisions and understand the company’s current position
Implementing an inefficient accounting close process that does not allow for timely report delivery to stakeholders
Ensuring the integrity of the data
Adopting management reporting processes at the incorrect stakeholder levels throughout the organization
Essential components to management reporting
A successful management reporting process contains several key elements. Your program should begin with accurate, healthy data and metrics to support core business strategies and initiatives to specific stakeholders. Data should support both the long- and short-term vision for the company, and should be trustworthy and from a reliable source. For example, failing to remove data for a discontinued product will negatively skew the remaining pool of data and your ultimate reporting information.
When communicating data, consider formatting, report priority and user-friendly interfaces. Information should be easy to digest and understand, as tight and compact as possible, in order to meet specific user needs.