Management Information MA 1 Ibrahim Hameem CIMA exam

Management Information MA 1 Ibrahim Hameem (CIMA exam complete, ACCA professional level student, Diploma in Economics (distinction) , Third year undergraduate reading for BSc. Mathematics and Economics (university of London)

ACCA - Management Information The need for effective control over transactions • In large organisations, which typically can have thousands of transactions, it is very easy for • errors to be made • unauthorized transactions to take place.

ACCA - Management Information The need for effective control over transactions • fraud to be carried out Good control of all transactions is therefore necessary. ‘Internal control’ is the name given to the system used to control transactions. All transactions should be: • authorized • completely recorded • accurately recorded.

ACCA - Management Information • An important part of internal control is known as the segregation of duties. This means that transactions are broken down into different stages with a different person being responsible for each stage. So in a purchase transaction, one person should order the goods, another receive and check them, and a third person should pay for them. Because several people are involved in the transaction it will be more difficult for unauthorized transactions to slip through; also each person, to some extent, checks up on what the previous one has done. For a fraudulent transaction to be processed would probably require collusion (cooperation) between all the parties, and this can be dangerous for the fraudster to organize. Other types of controls include: signatures to authorize amounts, control totals to ensure all transactions have been processed and the use of sequential documents to check if any go astray

ACCA - Management Information Question 01 • Is Bank reconciliation statement a form of internal control? • Yes

ACCA - Management Information SPAMSOAP • S- Segregation • P- Physical controls • A- Authorization • M-Management controls • S- Supervision • O –Organizational controls • A- Arithmetic accuracy • P –Personal controls

ACCA - Management Information Question 02 • Who has the responsibility of designing internal controls? • The board of directors

ACCA - Management Information Features of good management information • Accurate • Complete • Cost beneficial • User friendly • Relevant • Authoritative • Timely • Easy to use

ACCA - Management Information Sources of information Internal sources Budgeted financial statements External sources Financial statements Customer reviews and Magazines and journals feedback written about the company Staff appraisal Websites Post completion audits Press releases and paper articles

ACCA - Management Information Alternative categorization of information • Quantitative and qualitative • Financial and non financial • Historical and future estimates • Routine/ ad hoc information • Numerical/graphical information

ACCA - Management Information Exercise • Fill in the table with an example Type of information Quantitative and qualitative Financial and non financial Historical and future estimates Routine/ ad hoc information Numerical/graphical information Examples Market share , customer feedback and reviews Financial ratios, number of quality defects in a batch Investment appraisal, budgeting, financial statements Variance analysis, market research on a fad Financial ratios, pie charts, graphs

ACCA - Management Information Question 03 • Is management accounting externally focused? • No. it is internally focused. It focusses on creating value within a company.

Management Information MA 1 Ibrahim Hameem (CIMA exam complete, ACCA professional level student, Diploma in Economics (distinction) , Third year undergraduate reading for BSc. Mathematics and Economics (university of London)