Everything You Need to Know About MIS Report in Accounting
What is meant by MIS and MIS reports?
MIS means Management Information System, which assists a business firm in detecting the bottleneck areas, errors, and red flags which may affect the firm. MIS helps the firm to analyze the data collected and study it thoroughly to formulate strategical solutions for the problems identified. It is a combination of software, hardware systematic procedures, and processes including storage which generates the report based on data received from different departments of the firm. The top-level management and the executive personnel always depend on the MIS report before making any vital decisions. Below we have explained the meaning, uses and different types of MIS reports in this blog.
Why should a firm use MIS?
MIS may provide the following advantages to a firm while formulating decisions during its growth period:
1.The first significant advantage that the MIS provides is, it generates accurate reports that the management can rely on to make specific decisions without any hesitation.
2. It helps in the elimination of errors and mistakes that may occur during manual entries and it also provides accurate reports with maximum efficiency which increases the confidence of the management in the MIS reports.
3. It helps the management to properly and systematically collect all the records and documents of the firm and it also helps the firm to save time while managing loads of financial and operating information of the firm's business.
4. MIS reports help in ensuring the proper and effective flow of information across the whole firm and its departments through which the management can easily identify the source of any information and it can also set accountability on its employees.
5. As the complexity of management of business information is increasing with the advancements in technologies, MIS has simplified such complexities and facilitated significant management of business information.
What is MIS reporting and how does it work?
MIS reporting is concerned with the analytical reporting on basis of informational data received related to the business. It covers the overall aspects of the firm in addition to its financial statements and provides a crystal-clear picture to management which enables them to facilitate decision making. MIS reports integrate all the activities and departments of a firm and ensure absolute coordination within the departments and proper implementation of plans and strategies.
MIS reporting involves detecting, monitoring, and evaluating all the day-to-day activities of a business. It focuses on providing a concise view of the performance of the business, its employees' performance, financial position, customer relationship management, etc. which ensures continuous monitoring of the activities of the business to avoid costly errors. It detects the variations between the planned performance and the actual performance and it suggests the solution to tackle the variations.
Working of MIS:
- Usually, the MIS reports of different types may be prepared periodically which can be weekly, monthly, half-yearly, or annually.
- The MIS report may include the report of the different departments which may be provided to the management and present them with significant insights into the working of the various departments.
- The MIS report collects all the data such as statistical, raw business data, recent trends in the business, etc. and it simplifies such data and presents it systematically.
- It also includes the following components which are important for its smooth functioning: - people, data, hardware, software, and business procedures.
Some different types of MIS report
Below is a list of common MIS reports that are prepared by the firms:
It is a type of report where the large volume of aggregate business data is showcased in a concise and summarized form. These may include the reports related to demographics, customer segmentation, recent market trends, etc.
Trend MIS report
This type of report focuses on the comparison of past performance and present performance of the new product or new service or new technology etc. to bring out the differences and analyze whether there is a positive or negative deviation. It is prepared to study the performance of the new product or service of a firm.
Exception MIS report
Sometimes the business may face some unanticipated situations which may affect the normal working of the business, so during such situations this type of report is prepared. E.g., sometimes the firm may not be able to supply required goods as per the demand and there may be a shortage of raw material that was unexpected. Hence this shortage was caused as a result of loss by fire in the inventory, this may be identified with help of an exception report and the issues can be resolved as early as possible before it results to further big issues.
Sales MIS report
This type of report mainly focuses on the sales of the product or services of a firm weekly, monthly, yearly, etc. to identify the deviations in sales as per the expectations and it specifies the income, reasons for such deviation, sales decisions, etc. It is prepared by the marketing and the sales department of a firm.
Inventory MIS report
MIS always monitors and tracks the inventory usage of the firm. It keeps track of all types of inventories such as work-in-progress inventories, sale inventories, semi-finished goods, finished goods, etc. and these inventory reports suggest the required strategies that must be made to manage such inventories. If there is a low inventory of raw materials, then it will suggest acquiring more raw materials, etc.
Budget MIS report
Every firm must mandatorily prepare a budget report to assess the required funds and for their proper allocation. Through MIS the firms can easily identify their finance requirements and they can allocate such funds efficiently without any wastage.
Production MIS report
Production report is mainly created by the manufacturing department of a firm. This report is prepared based on the comparison of the target production and actual production of the firm. Variation between the two will enable the management to analyze the success and growth rate of the firm.
Cashflow statement MIS report
With the help of this MIS report, the management can analyze the actual inflow and outflow of the cash in the firm. Through this report, the management can easily detect the area where more fund is required and utilized and where the fund is wasted, and with the help of such a report, the firm can optimize the use of funds.
Profit MIS report
This type of report is prepared by the accounts department of the firm to analyze the deviation between the actual profits earned and the expected profits and it also helps to identify the reasons for such deviations.
Financial MIS report
The financial report is created by the accounting and financial team of a firm. This report includes all the accounting statements and records such as income statements, balance sheets, profit, and loss statements and expense statements, etc. These statements and the report are very crucial for making financial decisions and other financial activities such as payment of dividends etc.
Read More: Accounting Reports Helps in Decision Making Process
From the above information, it is evident that MIS plays a significant role in a firm and it also assists in accounting processes through which the chances of errors can be minimized.
How can CDA help?
Being one of the leading accounting and auditing firms in Dubai, CDA is always ready to provide its assistance to its clients in fulfilling their accounting and bookkeeping needs. CDA with its technologically advanced and highly qualified team always provides the best services without any errors. By making use of all the available resources CDA is bound to render custom-tailored and personalized assistance to its clients in any field of business and financial management. For more detail approach us.
Read More: What are the different types of accounting practices in the UAE?