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CMA Final · Cost and Management Audit · Management Reporting Issues and Analysis

Which of the following is the most appropriate design feature of a responsibility-based management reporting system?

A responsibility-based reporting system gives each manager information on items he or she can control or significantly influence, and summarises detail as reports move to higher levels. This ensures accountability and avoids overloading senior management with operational detail they do not need.

  1. AEach report to a manager includes all costs of the organisation regardless of control
  2. BReports to a manager contain only those items the manager can control or significantly influence, with detail decreasing at higher levelsCorrect
  3. CReports are identical for all levels so that comparison is easy
  4. DReports are prepared only at year end to avoid frequent changes

Explanation

Responsibility reporting aligns information with controllability, and the level of detail is summarised as it moves upward. Including uncontrollable costs or giving identical reports to all levels blurs accountability and overloads senior managers. Annual-only reporting prevents timely control.

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