Management Accounting Systems and

Management Accounting Reporting Integration

within Organizational Process
General management of a company and assignment of responsibilities within the organization
is affected by management accounting systems. Management accounting reports are a great
indicator of duties that should be performed by every member of the workforce (Hilorme et
al., 2019). Such decisions are informed by flaws that are identified by performance reports
and boundaries set for each employee to ensure effectiveness. Division of labor and
specialization are vital aspects of production that are affected my management accounting
reports due to the various insights discovered.

Acquisition of assets for organizational growth and assets assignment to various sectors of a
business is also affected by management accounting reports. These reports identify the
investments that are profitable for a business and encourage increased investment in these
ventures (Doktoralina and Apollo, 2019). Additionally, they discourage investment in loss-
making ventures, ensuring that a business can minimize wastage. Management accounting
reports also identify sectors that are not adequately furnished with resources and enable
management to make these decisions that increase allocation. Resource allocation does not
necessarily refer to finances as it can also refer to the allocation of human resources to a
department based on the reports.

Management is a crucial part of making decisions on employee hiring, demotion, and

promotion based on both performance and customer demands. Management reports that
indicate the input of various employees and sectors are integrated into the human resource
department (Brierley, Gwilliam, and David, 2018). These reports can influence the hiring of
additional employees if a business is booming and there is a need for a bigger workforce. The
demotion of workers and the promotion of others can be necessitated by levels of customer
satisfaction discovered by situation analysis reports.

Long-term decisions on the longevity of a business such as product diversification and

stopping the production of a specific product are also affected. Budgeting and forecasting are
affected by management accounting reports and these affect long-term business decisions
(Ahmed, Ameen, and Hafez, 2018). Financial reports indicate the health of a business and
negative finances may encourage management to quit on a product that is causing losses.
Losses may also be necessitated by the rigidity of a company to one product and these reports
necessitate diversification of production. Trendy products are often profitable at the start but
gradually become loss-making ventures. Through management accounting, a company can
forecast when that is likely to occur and make decisions that prevent this such as permanent
closure.
Prior information of internal stakeholders before meeting external stakeholders and making
decisions that mitigate flaws that may affect the external stakeholders is also a role of
management accounting. Internal stakeholders essentially run a business but external
stakeholders including the various management institutions are also crucial (Ahmetshina,
Vagizova, and Kaspina, 2017). When internal management is capable of detecting a flaw
within the system in time, they can rectify and evade potentially harmful effects of external
stakeholders. This may include data of irregularities that were not previously detected.