CMA Final · Cost and Management Audit · Management Reporting Issues and Analysis
A plant manager receives a daily report showing machine downtime, rejects and material usage against targets. Which reporting principle is most directly served by issuing this report daily rather than monthly?
Timeliness is the principle served. Operational control data such as downtime, rejects and material usage is useful only if received quickly enough for corrective action, so daily reporting suits the plant manager better than a monthly report that arrives after problems have grown.
- ATimeliness, so corrective action can be taken while it still mattersCorrect
- BComparability across several financial years
- CStatutory compliance with the Companies Act
- DMateriality of information to external shareholders
Explanation
Operational control information loses value as time passes. Daily issue lets the manager act on downtime and rejects immediately. Comparability and shareholder materiality are not the purpose of a shop-floor control report, and no statute mandates a daily report.
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