| Management accounting involves the process of | | | | should not merely create required reports but |
| transforming data about an organisation's | | | | communicate them to users in manner that |
| operations into information that managers can use | | | | increases the value of the information. |
| for myriad reasons. However, accounting requires | | | | 6) Timely |
| the production of good information according to | | | | Since information has an objective, there are |
| general standards that enhance the usefulness | | | | usually periods within which these objectives |
| and quality of information. | | | | operate. Good information neither is produced too |
| 1) Completeness | | | | frequently nor is it compiled after it is needed |
| This means that it provides intended users with all | | | | most. For instance, information that reaches a |
| the information that is necessary to fulfil their | | | | decision-maker after the decision is of limited use |
| needs and requirements. Completeness also | | | | in the context of the decision-making process. |
| suggests that all necessary information is included | | | | 7) Confidence |
| in any report that the organisation produces. The | | | | Management info should be relaible, especially as it |
| assumption is that there would be no error of | | | | is a vital cog in the decision-making process. This |
| omission. | | | | is a critical aspect of good accounting information, |
| 2) Relevance | | | | especially where critical decisions are taken based |
| There is always an objective to be fulfilled when | | | | on such information. There must be confidence in |
| accounting information is required. For it to be | | | | the competence and integrity of those who |
| valuable, it should be relevant to both the | | | | produce accounting information. |
| objective and the intended user. For instance, an | | | | 8) Volume |
| analysis of the prime cost of a project should not | | | | Information overload can be a problem - |
| include information on indirect costs. It is important | | | | particularly with the inherently limitations of the |
| that any figures or reports should stick to the | | | | human mind. Accounting information needs to be |
| point and not provide more info than is necessary. | | | | distilled in a manner that makes it clear and |
| Irrelevant information wastes time and can | | | | concise and does not overwhelm the user. An |
| increase the cost of information production. | | | | unnecessarily high volume of information (although |
| 3) Accuracy | | | | accurate and relevant) can do just that. |
| It is almost self-evident that management | | | | 9) Cost-efficient |
| information (MI) should be accurate. This does not | | | | Valuable information should not cost more to |
| suggest that you must always state figures and | | | | produce than it is worth. This is the reason why |
| facts down to the last penny or detail. What it | | | | management reports that are produced more |
| means is that info should be accurate enough for | | | | regularly than required is less useful/ valuable than |
| its intended purpose (or user), without being | | | | information that is produced to satisfy a specific |
| unnecessarily detailed. Inaccurate information | | | | need or requirement. |
| cannot provide a valid representation of reality | | | | 10) Communicated through the right channel |
| and can limit the effectiveness or worth of | | | | You can present and communicate management |
| decisions based on it. | | | | information in a number of ways. The most |
| 4) Clarity | | | | important factor is whether you communicate |
| It is useless to have accurate, timely and | | | | and distribute it through the appropriate channels. |
| complete information if it is not clear to the user. | | | | Since MI is created for certain users, you can |
| The ability of the user to understand and properly | | | | judge the appropriateness of the communication |
| comprehend what is presented is critical. This is | | | | channel by the effect on intended users. You can |
| another reason why a company would implement | | | | communicate some accounting information |
| policies governing management accounts. | | | | informally, while others require a very formal |
| 5) Properly communicated | | | | approach that strictly adheres to standards. |
| It is necessary for organisations to monitor | | | | At any point in time, some characteristics may be |
| activities and management information is useful in | | | | more important than others are. Generally, good |
| so doing. However, MI is properly communicated | | | | management accounting information possesses all |
| to those who need it. Accounting departments | | | | or most of the ten aforementioned qualities. |