Critically Evaluate the Following Statement, Using Examples from the Module Where Appropriate. “Accounting Processes and Reports Have Roles to Play in the Management of Every Organisation, but They Must Be Seen as Only

In the corporate environment, decisions are made and actions are taken primarily based on the information managers are presented with. Accounting information is also used to develop knowledge of and meaning for unknown possible future actions. It is imperative, therefore, that attention is given to the importance of the different forms of information that exist in a business. Even with this knowledge, surprisingly, ‘there are remarkably few studies of what information managers actually use or might use’ (Hall 2010).

Accounting processes and reports are the most common and formalised way of presenting information. Typically, these reports are financial, quantitative, internal, periodic, and are commonly used as a performance measure, both for individual employees and for the firm’s health as a whole. Reports are not the only information that managers use though, and whilst they are perhaps some of the most obviously used, evidence suggests that, as McKinnon and Bruns state, it “must be seen as only a part of the much larger set of information managers want and use”. Other information can include data on competitors, employee satisfaction, behavioural and goal commitment reports.

It is easy to see why accounting reports and processes may be seen as the only set of information a manager might need. The data given is the basis for managerial learning about day-to-day actions, and also for evaluation and comparison with competitors. The translation into financial numbers also provides a basis for the language of communication between managers. However, there is no point having a basis for comparison if there is no data with which to compare.

Whilst it is clear that accounting reports and processes play a significant role in the daily use and planning of a manager, to say managers only want and use that form alone provides a very narrow view of the firm. Firstly, there are limitations with these forms. There is a lot about the business that cannot be retrieved...