Definition of Data: Facts of information, especially used to find out things and make a decision.

No attempt has been made to describe the nature of information that may come in many shape and forms.


Definition: Management Information System (MIS) is a planned system of collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management. MIS is a subset of the overall internal controls of a business covering the application of people, documents, technologies, and procedures by management accountants to solving business problems such as costing a product, service or a business-wide strategy. Management Information Systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making.
On the other hand, MIS can be clarified as computer-based or manual system that transforms data into information useful in the support of decision making. . MIS can be classified as performing three functions:
(1) To generate reports-for example, financial statements, inventory status reports, or performance reports needed for routine or non-routine purposes.
(2) To answer what-if questions asked by management. For example, questions such as "What would happen to cash flow if the company changes its credit term for its customers?" can be answered by MIS. This type of MIS can be called Simulation.
(3) To support decision making. This type of MIS is appropriately called Decision Support System (DSS). DSS attempts to integrate the decision maker, the data base, and the quantitative models being used.

Information can be divided by two:
1. Formal Information
a) Formal information has rules and procedure, a hierarchy, routing system for data and information flow
b) It sets procedures for data and information processing
c) The data and information tend to be quantitative though this is changing as computer system become capable of greater storage
d) Tend to be fairly inflexible and slow to change

2. Informal Information
a) Operates without rules and procedures
b) Information gets passed through virtually accidentally (casual conversation)
c) Has no firm structure, hierarchy and does not undergo any uniform or routine transformation as it passes around the information system
d) Information can be both qualitative and quantitative.


Financial Information

Financial information can be classified as information that could affect financial decisions.

Non Financial Information


Qualitative Information

Qualitative observations do not involve measurements and numbers. Example: ("My brother is shorter than my sister,") is a qualitative observation. Qualitative is based on observed opinion.
4 principal qualitative characteristic of useful accounting information are:
1. Understandability – easy to understand
2. Relevance – information must be relevant
3. Reliability – free from any of influences and bias
4. Comparability – can be compared between industry, current and previous

Others Characteristic of Qualitative Information

1. Timeliness – the delay in supplying the information might cause that particular information is no longer reliable.
2. Materiality – all items that are material will be reported. Materiality depends on the size of items and something that may influence the judgement of the users of the users of accounting information.
3. Verifiability – information is reliable if it can be verified by various means. Once verified the information will be more reliable.
4. Prudence – requires being more cautious in the exercising of judgement to ensure that income is not overstated and expense understated.
5. Completeness – Omission of information may render to users of committing false and misleading.
6. Neutrality – The information must be free from bias and should not govern by economic consequences of the reporting.

Quantitative Information

Quantitative observations that involve measurements and numbers ("My brother is 30cm shorter than my sister," is a quantitative observation.)
Quantitative is based on known quantities. It is capable in being expressed in numerical term and measured in money terms that can be quantified. This part of information system is called accounting information system. Accounting information system is the important element of organization in order to survive in condition of economic scarcity and competition.

Quantitative method in the information System

1. Modern management information system collects the entire data together (database).
2. Appropriate processing, provides the information which is important to each manager.
3. Some information originated in accounting information system.
4. System has become more sophisticated (largely as a result of the impact of widespread computerization).
5. The techniques of quantitative analysis (statistics) apply to all the data in this system, whether or not they are accounting data.


Definition of Objectives:
Objectives are specific statements describing what the organization is trying to achieve, usually with a one-year window. Objectives should be written at a low enough level that it is clear whether they have been achieved within the timeframe set. A well-worded objective will be Specific, Measurable, Attainable/Achievable, Realistic, and Timebound (SMART).

Specific. Effective objectives should be concrete, not “fluffy.” Setting an objective for the department to “improve quality” is not specific enough.

Measurable. Effective objectives should be measurable. Numerical goals are easiest to measure again. “Reduce absenteeism by 5% over the next 6 months in Dept. X” is a worthwhile, measurable goal.

Attainable. At the same time, objectives that are set “in the sky” will not be motivational to employees who will be quick to realize if they are not attainable.

Realistic. Taking into consideration everything else that is going on in the company, do the new objectives seem realistic? If there is a major economic downturn and your key product line is an expensive luxury item, is it realistic to set a goal to increase sales by 20 percent during the next quarter?

Timely. Objectives must have stated deadlines to be effective. The key to insuring their success, therefore, is to measure against the goals at the stated time.

Examples of Organizational Objectives

• To ensure the maximum profit are made.
• To obtain a minimum specific share of the market for its goods and services.
• To have the greatest share of the market for its good and services.
• To achieve the highest possible level of quality in the goods being manufactured or services offered.
• To ensure all customer are fully satisfied with our goods and services.
Major Categories of Organizational Objectives
Peter Drucker, famed management guru, found the following 8 categories of objectives common to most companies:
1. Market standing. While not every company can have the largest share of its market, the goal should always be to increase the share they have. (Okay, ideally, the goal is to be a monopoly and be the “sole source vendor” for your product that everyone wants! But that’s illegal in this country – ask Bill Gates – so we’ll have to settle for being number one in the category).
2. Innovation. We want our company to continuously improve. Make the product better, cut down production time, improve the shipping process. This isn’t an easy goal to measure sometimes, but it is vastly important in a dynamic marketplace.
3. Productivity. We have to set specific, measurable goals for how many products we will product in a given period of time within specific margins for error.
4. Physical and financial resources. Where will we get our operating capital? How will we use our profits?
5. Profitability. We must set specific goals for how much profit we expect to make on each product, unit, etc.
6. Managerial performance and development. Where will the next group of managers come from when the current group retires? How are we preparing the up-and-coming managers?
7. Worker performance and attitude. Again, these are not always easy to measure, but we must create specific goals for getting our employees to “be all they can be.”
8. Public responsibility. We must set goals that identify our plans for being a good corporate citizen within the communities we work in and in the world at large. This may involve issues from the environment to sponsoring a little league team.


(a) Investors. The providers of risk capital and their advisers are concerned with the risk inherent in, and return provided by, their investments. They need information to help them determine whether they should buy, hold or sell. Shareholders are also interested in information which enables them to assess the ability of the enterprise to pay dividends.
(b) Employees. Employees and their representative groups are interested in information about the stability and profitability of their employers. They are also interested in information which enables them to assess the ability of the
enterprise to provide remuneration, retirement benefits and employment opportunities.
(c) Lenders. Lenders are interested in information that enables them to determine whether their loans, and the interest attaching to them, will be paid when due.
(d) Suppliers and other trade creditors. Suppliers and other creditors are interested in information that enables them to determine whether amounts owing to them will be paid when due. Trade creditors are likely to be interested in an enterprise over a shorter period than lenders unless they are dependent upon the continuation of the enterprise as a major customer.
(e) Customers. Customers have an interest in information about the continuance of an enterprise, especially when they have a long-term involvement with, or are dependent on, the enterprise.
(f) Governments and their agencies. Governments and their agencies are interested in the allocation of resources and, therefore, the activities of enterprises. They also require information in order to regulate the activities of enterprises,
determine taxation policies and as the basis for national income and similar statistics.
(g) Public. Enterprises affect members of the public in a variety of ways. For example, enterprises may make a substantial contribution to the local economy in many ways including the number of people they employ and their patronage of local suppliers. Financial statements may assist the public by providing information about the trends and recent developments in the prosperity of the enterprise and the range of its activities.

The management of an enterprise has the primary responsibility for the preparation and presentation of the financial statements of the enterprise. Management is also interested in the information contained in the financial statements even though it has access to additional management and financial information that helps it carry out its planning, decision-making and control responsibilities. Management has the ability to determine the form and content of such additional information in order to meet its own needs.


Financial accounting is the branch of accountancy concerned with the preparation of financial statements for external decision makers, such as stockholders, suppliers, banks and government agencies. Financial accounting provides information about profit, loss, cost, etc of the collective activities as a whole. This system does not fully analyse the losses due to idle time, idle plant capacity and inefficient labour.
The accounting equation (Assets = Liabilities + Owners' Equity) and financial statements are the main topics of financial accounting.

Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.
In contrast to financial accountancy information, management accounting information is:
• usually confidential and used by management, instead of publicly reported;
• forward-looking, instead of historical;
• pragmatically computed using extensive management information systems and internal controls, instead of complying with accounting standards.

This is because of the different emphasis: management accounting information is used within an organization, typically for decision-making.
According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non management groups such as shareholders, creditors, regulatory agencies and tax authorities" (CIMA Official Terminology)

The American Institute of Certified Public Accountants(AICPA) states that management accounting practice extends to the following three areas:
*Strategic Management—Advancing the role of the management accountant as a strategic partner in the organization.
*Performance Management—Developing the practice of business decision-making and managing the performance of the organization.
*Risk Management—Contributing to frameworks and practices for identifying, measuring, managing and reporting risks to the achievement of the objectives of the organization.

Cost accounting is the process of tracking, recording and analyzing costs associated with the products or activities of an organization. In modern accounting, costs are measured in accordance with the Generally Accepted Accounting Principles (GAAP). GAAP reporting records historical events and assigns a monetary value to each event that has taken place. Costs are measured in units of currency by convention. Cost accounting could also be defined as a kind of management accounting that translates the Supply Chain (the series of events in the production process that, in concert, result in a product) into financial values. Managers use cost accounting to support decision making to reduce a company's costs and improve its profitability. Mean that, Cost accounting provides cost data for use in both management & financial accounting. This system determines the costs of products or service. It is concerned with the ascertainment of past, present and expected future cost of products manufactured or service applied.


Users of Information Financial accounting primarily provides information for external users of accounting data, such as investors and creditors. Management accounting provides information for internal users of accounting data. Internal users include employees, managers, and executives of the company.

Types of information Financial accounting only reports information on financial transactions that have occurred in the past.
Management accounting concentrates on past and present information, as well as the forecasting of future financial transactions.

Regulatory Oversight In order to protect public interest, financial accounting is regulated by the Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB), and the Public Company Accounting Oversight Board (PCAOB). Management accounting is not regulated by any specific agencies. This is because the information provided by management accounting is intended for internal users only and is not available to the public. Therefore, since there is no public interest, there is no need to protect public interest regarding this information.

Frequency of Reporting The focus of financial accounting is reporting on historical information. The information is reported periodically. It is often broken down into monthly, quarterly, and annual reporting periods. At a minimum, financial accounting information must be reported annually.
Management accounting information is reported continually. Internal users need to evaluate past, present, and potential future information in order to make decisions. Therefore, these users continuously need information in order to make the appropriate decisions.


• It reveals profitable and unprofitable activities.
• It helps in controlling costs with special techniques like standard costing and budgetary control.
• It supplies suitable cost data and other related information for managerial decision making such as introduction of a new product, replacement of machinery with an automatic plant etc.
• It helps in deciding the selling prices, particularly during depression period when prices may have to be fixed below cost.
• It helps in inventory control.
• It helps in the introduction of a cost reduction program and finding out new and improved ways to reduce costs.
• Cost audit system which is a part of cost accountancy helps in preventing manipulation and frauds and thus reliable cost can be furnished to management.


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