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ACCA Applied Knowledge · Business and Technology · Accounting and finance functions within business organisations

A manufacturing company's finance team produces monthly reports comparing actual costs with budget for each department manager, highlighting variances and suggesting corrective action. Which role of the accounting function does this primarily illustrate?

This illustrates the function providing information to management for planning, control and decision making. Variance reports compare actual results with budget so managers can take corrective action. It is internal management accounting, not statutory reporting for external users, external audit or raising long-term finance.

  1. AProviding information for planning, control and decision making by managementCorrect
  2. BComplying with statutory filing requirements for external users
  3. CSafeguarding assets through external audit procedures
  4. DRaising long-term finance from capital markets

Explanation

Budget-to-actual variance reports are internal management information used to control operations and take corrective action. They are not statutory reporting, external audit work or fundraising, so the distractor on statutory filing is wrong because it concerns external users.

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