A good reporting system helps the management in proper planning and controlling. If the reports are available to every level of management at the proper time, current activities may be regulated and controlled and necessary corrective actions may also be taken in time. Hence, some principles have been followed for making the reporting system more effective. Such principles are briefly explained below.
General Principles of Reporting System
1. Proper Flow of Information: The information should be free flow from the proper place to the right end user of the report. Hence, the information should be presented in the right format and at a proper time so that it helps in planning and co-ordination. The flow of report should not be delayed at any cost. Flow of information is a continuous activity. Information may flow upward, downward or side ways within an organization. Orders, instructions, plans etc may flow from top to bottom. Reports of grievances, suggestions etc. may flow from bottom to top. Notifications, letters, settlements and complaints may flow from outside. Annual Report, Financial Statement Analysis Report, Directors Report, Auditors report etc. may flow from inside to outside. Information flows as sideways from one manager to another at the same level through meetings, discussion etc.
2. Proper Timing: The very purpose of preparation of report is controlling the unfavorable activities. Hence, the report should be submitted at the required time at any cost. If not so, there is no use of preparing such report. Moreover, the efforts used for preparing the report and time are also waste. In the case of routine report, the time schedule should be strictly adhered to. The absence of information at required time leads to taking wrong decision.
3. Accurate Information: The report contains only accurate information. If wrong information are included in the report, it may lead to take wrong decision. Hence, the supply of accurate information helps the managerial executives to understand the situation very clearly. At the same time, the presentation of accurate information in the report should not involve excessive cost of preparation and should not result in the delay in the presentation of report.
4. Relevant Information: Proper attention should be devoted to include only relevant information in the report. The inclusion of irrelevant information is waste one and increase the time in the report preparation. Moreover, the irrelevant information confuse the end user of the report.
5. Basis of Comparison: The information bestowed by reports will be helpful when it carries provision to compare with past figures, standards set or objectives. The trend of the variation can be find out only through the comparison. Corrective action can be taken with the help of comparative information.
6. Reports should be Clear and Simple: The very purpose of preparing a report is helping the management in planning, coordinating and controlling. Hence, the report should be presented in very simple terms and can be clearly understood by anybody. If not so, there is no meaning of preparing a report. The method of presenting a report is in such a way that attracts the eye of the readers and enables them to arrived at a conclusion. The arrangement of information in a report is in brief, complete, clear and simple.
7. Cost: The management incur some expenses with regard to report preparation. Such expenses should be commensurate with the benefits derived from the report preparation. If possible, more benefits may be available than the expenses incurred. In this way, reporting system can be installed. In other words, there should be an endeavor to make the system as economical as possible.
8. Evaluation of Responsibility: The reporting system has been installed in such a way to evaluate the managerial responsibility. The standards or targets are fixed for each functional department. The record of actual performance is monitored along with the standards so as to enable management to assess the performance of different individuals.