Processing Information for

Management Needs

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Management Decision Making
and Reporting

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Qualities of Useful Information
1. Relevance
2. Accuracy
3. Timeliness
4. Conciseness
5. Clarity
6. Quantifiability
7. Consistency
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Financial Reporting to Internal & External
Users
Internal reports
- more details
- not constrained by FRS
- mainly intended for
managerial planning and
control

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Financial Reporting to Internal & External
Users
External reports
- less details
- should conform with FRS
- compliance with the
requirements of external
stakeholders and regulatory
bodies or state law.
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Budgetary Reporting Systems
- Integrated set of reports that
aid in planning and controlling a
firm’s operations.
- Involves the preparation of long
and short-term sales forecast
based on a variety of inputs.
- The financial plan serves as the
target to be achieved.
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Responsibility and Profitability Reporting
Systems
- it feeds accountability
information.
- the reports contain budgeted
amounts (profit or costs or
expenses), that are controllable
by the responsible manager
representing the performance
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Data Warehouse
- a large store of data accumulated
from a wide range of sources within a
company and used to guide
management decisions.
- data warehousing emphasizes the
capture of data from diverse sources
for access and analysis rather than for
transaction processing.
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Decision Support
and
Expert Systems

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Decision Support Systems
- Aids high and middle level managers
in making strategic and tactical
planning decisions.
➢Broader understanding by the
decision makers of the array of
factors involved in problems
requiring complex decisions and
their relationships to each other.
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Typical functions aided by DSS
➢ sales forecasting
➢ production scheduling
➢ inventory control
➢ purchasing
➢ physical distribution
➢ investment planning
➢ cost analysis
➢ financing
➢ accounting control
➢ personnel planning
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Analysis Techniques Using a DSS Financial Model
1. Time based simulation
- projects the values of the key
factors and criteria over future time
periods given current data values and
expected rate of change.
- e.g., simulation of the firm’s budget
over five years with values of sales and
net income calculated each year.
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Analysis Techniques Using a DSS Financial Model
2. “what-if” analysis
- allows the user to ask questions in
order to determine how key factors will
respond to assumed changes or
conditions.
- e.g., what will be the increase in the
labor cost next year if a P20 per hour
average wage increase is granted?
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Analysis Techniques Using a DSS Financial Model
3. Sensitivity analysis
- a special version of the “what-if”
analysis technique revealing the
sensitivity of the decision model criteria
to changes in the value of key factors.
- e.g., what will be the effect on the
net income if unit sales decreased by
10% next year?
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Analysis Techniques Using a DSS Financial Model
4. Goal-seeking techniques
- allows the user to determine the
levels of key factors needed in order to
achieve a desired level in a model
criterion.
- e.g., what volume or level of sales
units must be generated in order to
achieve a 25% share of the market.
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Expert Systems
- simulates the thinking process
of one or more human experts
in solving a complex problem
or in making decisions.
- it specifically recommends a
solution to a problem.

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