ACCA Strategic Professional · Strategic Business Leader · Internal control and management reporting
Brennar Pharma's board wants management reports that help it judge whether strategy is being achieved, not just monitor last month's results. Currently reports contain only historic financial variances. Which change would MOST improve the usefulness of the reports for the board's purpose?
Adding forward-looking and non-financial indicators tied to strategic objectives best serves the board. Historic financial variances only show past results, while measures like pipeline progress and customer data indicate whether strategy is being delivered and allow earlier corrective action.
- AAdd forward-looking and non-financial indicators linked to strategic objectives, such as pipeline progress and customer measuresCorrect
- BIncrease the number of decimal places in the financial figures
- CDistribute the reports to all employees
- DReplace monthly reports with annual reports only
Explanation
Strategic oversight needs leading indicators and measures linked to objectives, such as in a balanced scorecard approach. Purely historic financial data is a lagging view. Greater precision, wider circulation or less frequent reporting does not improve decision relevance.
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