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ACCA Applied Knowledge · Business and Technology · Financial systems and technology

A manager at Corvo Ltd receives a monthly report comparing actual costs with budget for her department, with explanations of the main differences, to help her take corrective action. Which statement best describes this report?

The report is management accounting information produced for internal use. It supports planning, control and decision making by comparing actual costs with budget. Unlike financial accounting, it need not follow IFRS formats, is not filed with regulators, and is not subject to external audit before being issued to managers.

  1. AIt is management accounting information produced for internal decision making and controlCorrect
  2. BIt is financial accounting information, as it must follow IFRS Accounting Standards
  3. CIt is a statutory report that must be filed with the regulator each month
  4. DIt is audit evidence that must be verified by the external auditor before issue

Explanation

Budget versus actual reports are internal management accounting outputs designed for control and decisions. They are not bound by IFRS formats, are not filed with regulators and do not require external audit before issue, which is the error in the other options.

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