Internal and External reports | Meaning | Types

The reports are classified on the basis of purposes also. They are internal reports and external reports.

  1. Internal Reports
  2. External Reports

Internal and External reports - Meaning and Types

Internal and External reports – Meaning and Types

What are Internal Reports?

Reports that are prepared by the management accountant and submitted before the different levels of management for the purpose of planning and control are called Internal reports.

Types of Internal Reports

Internal reports may be of the following types.

1. Routine Reports

It is otherwise called general reports or periodical reports. These types of reports are submitted before management at periodic intervals.

The period of intervals may be a week, fortnightly, monthly, quarterly, half-yearly and yearly. Sometimes, some reports are prepared and submitted even daily also.

Examples of Routine reports

The following are the examples of routine reports.

1. Production Report.

2. Sales Report.

3. Production Cost Report.

4. Direct Labour Hours Report.

5. Direct Labour Cost Report

6. Operating Report.

7. Schedule of Debtors

8. Research and Development Report.

9. Funds from Operation Report.

10. Working Capital Changes Report.

2. Special Reports

A report is prepared and submitted on a request of the management for achieving a specific objective i.e. Special Report. Such type of special report do not deal with the day-to-day problem.

Special report is presented only after making an investigation very clearly with regard to any specific problem which requires special attention.

Generally, the following matters may be covered in the special report.

1. Utilization of Idle Capacity.

2. Effect of ideal capacity on cost of production.

3. Make or buy Decision.

4. Creation of New Market.

5. Introducing New Product.

6. Need of Advertisement.

7. Cost Reduction Schemes.

8. Whether to purchase or hire a fixed asset.

9. Research and Development expenditure problems.

10. Effect of Labour Dispute and so on.

3. Management Level Reports

The management level is classified as top level, middle level and lower level. A report cannot be useful to all the levels of management. Hence, a report is prepared and submitted according to the level of management.

The management level report includes

1. Reports to Foreman

2. Reports to First Line Manager

3. Reports to Department Manager

4. Reports to General Manager

5. Reports to Company Secretary

6. Reports to Board of Directors

7. Reports to Managing Director

In the case of top level management, a report is prepared in a more summarized way. But, in the case of lower level management, the report is prepared in a more detailed way.

What are External Reports?

Reports that are prepared and submitted before the external parties such as shareholders, Government and Credit Institutions are called external reports.

Types of External Reports

The following are some of the types of external reports.

1. Reports to Shareholders

The shareholders, who are the real owners of the company, are interested to know the performance of the company. Hence, the reports such as annual reports which includes balance sheet and income statement and directors reports prepared for the shareholders.

2. Report to Government

Information regarding income tax and sales tax are submitted to the Government.

3. Report to Credit Institutions

A company can avail credit facility from the banks and financial institutions. In this case, they are interested to know the solvency position of the company. Therefore, financial performance and financial position reports are submitted before the credit institutions.

4. Report to Stock Exchange

Generally, every company has listed its shares any one of the stock exchange. Hence, a report on the prescribed form has to be submitted to the stock exchange authorities. In addition, a copy of annual accounts has also to be sent to them.

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