Saturday, 24 April 2021

How to compile Management reports?

How are the company's management reports classified?

How to ensure transparency and interconnection of data from different groups of management reports?

How to determine which operational management reports are needed in a particular company?

What indicators should contain the main operational management reports of a manufacturing company?


Based on the data of management reporting, operational decisions are made on current operational issues, therefore, management reports include not only quantitative and financial indicators, but also production, price, marketing, efficiency, etc.

Consider the main forms of management reporting, on the basis of which any enterprise can create its own forms of reports, taking into account the specifics of its activities.

How management reports are classified and what data they contain

The activity of the enterprise consists of various business processes (basic, related, providing, management and development processes), and for the effective management of this activity, the management and management of the company need up-to-date information on the functioning of each of these processes. The management reporting system contains a large number of diverse reports that can be classified into the following main groups:

Management Reports


Based on the classification of management reporting of commercial enterprises that we have considered, we can conclude that the main group is periodic reports. They are needed by a wide range of users and are used more often than other groups of reports.

How management report data is interconnected
In turn, all periodic reports can be divided into several groups:

• operational reports on the company's activities;

• consolidated financial statements of the company;

• reports on the financing of the company's activities.

The indicators of these groups of reports are interrelated (see Table 1).

Interconnection of management reports

From Table. Figure 1 clearly shows which operating and financing reports must correspond to the data of the consolidated financial statements – the Income Statement (D&C), the Statement of Cash Flows (NDS) and the management balance sheet.

Consolidated financial reports and reports on the financing of the company's activities, of course, are the main management reports. But, firstly, their forms are quite typical and in many respects similar to the corresponding financial statements, and secondly, they are formed no more than once a month and are not used for the current management of the business.

Therefore, I propose to consider the issue of how to determine the most priority and demanded from operational management reports, on the basis of which the adoption of current management decisions on various aspects of the company's activities is carried out.

How to Determine Exactly Which Major Operational Reports a Company Needs
The demand for certain operational reports depends on the specifics of the business of each particular company. And in order to understand which of the reports are the main ones for a particular company, we will compile an analytical table in which the types of reports are arranged by rows, and the groups of users of these reports are indicated by columns (Table 2).

Operational Management Reports

In the table, user groups are indicated as follows:

SB — business owners;

RK — company management;

TM — top managers;

RP — heads of departments.

In the cells at the intersection of rows and columns, the frequency of demand for reports for different groups of users is indicated:

• D — day;

• H — week;

• M — month.

If we analyze the data obtained by us table. 2, it can be concluded that for a particular company, the main operational management reports are:

• Sales report;

• Product Returns Report;

• Report on production;

• Report on inventories of goods and materials;

• Report on operating costs;

How to reflect the financial structure of the company in the statements
In order for management reporting to be effective, it is important that the grouping of its indicators corresponds to the financial structure of the company's business.

Take, for example, the onega manufacturing company, which produces products in three areas: beverages, meat products and confectionery.

In addition, the company has a network of retail stores, in which, in addition to its own products, purchased goods of other manufacturers are sold.

In management accounting, these four areas are allocated to separate accounting centers, to which data on the sale of products, the cost of its sale, as well as logistics and commercial costs are posted.

Data on management expenses, as well as on other income and expenses, are taken into account in the whole company. The structure of the indicators of the Onega Profit and Loss Statement is presented in.

Consider examples of the formation of the main management reports of the company. The most popular management report is the product sales report. Let's start with it.

Product Sales Report

The commercial service uses various operational and analytical sales reports. Based on the data of these reports, operational management decisions are made.

Periodic sales reporting doesn't require significant data granularity. In this report it is enough to display information:

• sales of products in analytics by product areas and groups of buyers;

• on the cost of sales of products;

• gross sales revenue in similar detail.

For greater informativeness of the report, it is possible to include in it also indicators of profitability of sales, so that users can immediately assess the profitability of sales both in product areas and in groups of customers of the company.

Sales Report Form

For manufacturing plants with multi-nomenclature production, a report on product returns by customers is also important.

In order to effectively manage returns, it is not enough to see data on product types and groups of buyers – it is important to get information about the reasons why buyers returned products. Therefore, in the management accounting of the company, it is necessary to provide analytics for the reasons for returns, and then this management report can be formed in the following form (Table 5).

Product Release Report

Another major management report is the Output Report. It contains not only data on the number of products produced and the amount of costs for its production, but also detailed information on the structure of the cost of production.

An example of a report on the output of finished products (GP), in which its cost is decomposed into three components - raw material costs, direct production and indirect production costs, is given in .

Finished Product Release Report


In the above form, the output of products is detailed not only by its types, but also by nomenclature groups within each type. This is done again in order to increase the efficiency of the provided management information and users could immediately assess the resource intensity of the production of different nomenclature of finished products.

Inventory Report

The inventory management report contains information on the company's reserves at the beginning and end of the reporting period, as well as on the receipt and disposal of reserves during this period. And since these stocks in any company are quite diverse, the information in the report should be grouped by types of goods and materials.

In addition, in order to improve the efficiency of inventory management, it will not be superfluous to include in the report the amount of the illiquid part of the inventory items located in the company's warehouses.

An example of a monthly report on inventories of goods and materials is shown in Table. 7.

When it comes to the main management reports, it is impossible to ignore the report on the operating costs of the enterprise, since they significantly affect the amount of profit from the company's economic activities. In addition, control of operating costs is one of the most important tasks of the financial service of any company.


The performance of the operating expense statement must be identical to that of the consolidated income statement.

Therefore, in the operational report, we provide columns in three areas of expenditure:

• logistics;

• commercial;

• managerial.

And according to the lines of the report, we will display detailed information on groups and cost items, so that users of the report can immediately see in which areas and for what purposes the company's resources were spent during the reporting period.

Table 8 provides an example of a management report on operating expenses grouped by expense direction and cost item.



• All management reports can be grouped into operational, periodic and analytical.

• Periodic management reports are classified into operational, summary financial and company financing reports.

• The management reporting system of any company should be configured in such a way that the indicators of the reports correspond to the financial structure and provide an opportunity to see the relationship between the data of the consolidated and operational management reports;

• In order to understand which of the management operational reports are most in demand in the company, it is enough to analyze the list of reports for the frequency of their submission and the range of users.

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