Cost & Management Accounting Reporting System -Necessity, Role & Control Framework: An Analysis
Management & Cost Accounting Reporting Systems are interwoven in the management processes of all well managed organizations across the globe. The necessity of such reporting systems is going to increase in future as the market-place become highly competitive and organization functions become more complicated and inter-twined. This fact also brings to fore the necessity of a common control framework to monitor this system so that it can contribute effectively and efficiently to the pre-determined organizational goals.
What is Cost & Management Accounting Reporting Systems?
Cost Accounting Reporting System deals with the process of tracking, measuring, recording and classifying the appropriate allocation of expenditure (financial and non-financial) for the determination of the cost of product or service in an organization and for the presentation of suitably arranged data for the purpose of control and guidance of management ( Horngren et al, 2010). Costs are measured in terms of Direct Costs, Indirect Costs and Overhead / Absorbed Costs. Managers use cost accounting to support decision making to reduce a company's costs of products and services and improve its profitability.
Management Accounting Reporting System is concerned with the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of financial and non-financial information used by managers to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources to managers within organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions thereby enhancing both customer and shareholder