Explain the concept of Management Information System. Describe various control processes being used in your organization or any organization you are familiar with, Assess the effectiveness of these controls and highlight critical deviations.
MANAGEMENT INFORMATION SYSTEM:-
MIS is a formal method of making available to management the accurate and timely information necessary to facilitate the decision making process and enable the organization’s planning control, and operational functions to be carried out effectively. The system provides information about the past, present, and projected future and about relevant events inside and outside the organization.
Organizations have always had some kind of management information system, even if it was not recognized as such. In the past, these systems were highly informal in setup and utilization. When registrar office staff kept transcripts on handwritten charts, they were using an information system. Not until the advent of computers, with their ability to process and condense large quantities of data, did the design of management information systems become a formal process and a field of study.
The growth of EDP departments spurred managers to focus more on planning their organization’s information systems. These efforts led to the emergence of the concept of computer – based information systems (CBIS), which became better known as computer – based MIS – or simply MIS, As the EDP departments
functions expanded beyond routine processing of masses of standardized date, they began to be called MIS departments.
8. CHAPNED METALS:-
Some control techniques being adopted by a company chapner metals are:-
(A) 1. FINANCIAL CONTROLS:-
Managers in Chapner Metals use a series of control methods and systems to deal with the differing problems and elements of their organizations. The methods and systems can take many forms and can be intended for various groups. Financial Controls have a special prominence, since money is easy to measure and tally.
2. FINANCIAL STATEMENTS:-
Financial statements are used to track the monetary value of goods and services unto and out of the organizations. They provide a means for monitoring three major financial conditions of an organization:
(i) Liquidity: the ability to convert assets into cash in order to meet current financial needs and obligations.
(ii) General Financial Condition: the long-term balance between debt and equity (the assets left after liabilities are deducted).
(iii) Profitability: the ability to earn profits steadily over an extended period of time.
Financial statements are widely used managers, shareholders, financial institutions, investment analysts, unions and other stakeholders to evaluate the organizations performance managers, for example, could the organizations current
financial statements to past statements and to those of competitors as one measure of how well the organization is doing over time. They might be able to see trends that require corrective action. Bankers and Financial analyst on the other hand will use the statements to decide whether they should invest in the firm.
3. BALANCE SHEET:-
The message of a balance sheet is “Here show this organization stacks up financially at this particular point in time”. In its simplest form, the balance sheet describes the company in terms of its assets, liabilities, and net worth. A company’s assets range from money in the bank to the goodwill value of its name in the market place. The left side of the balance sheet lists these assets in descending order of liquidity. A distinction is made between current assets and fixed assets.
4. INCOME STATEMENT:-
While the balance sheet describes a company’s financial condition at a given point in time, the income statement summarize the company’s financial performance over a given interval of time. The income statement, then says “Here’s how much money I’ve made over a given period” instead of “Here’s how much money wve’re worth now”
Income statements, start with a figure for gross receipts or sales and then subtract all the costs involved in realizing those sales, such as the cost of goods sold, administrative expenses taxes, interest, and other operating expenses. What is left
is the net income available for stockholder’s dividends or renitent in the business.
(B) BUDGETARY CONTROL METHODS:-
Budgets are formal quantitative statements of the resources get aside for carrying out planned activities over given periods of time. As such, they are widely used means for planning and controlling activities at every level of the organization. There are a number of reasons for their wide usage.
• First, budgets are stated in monetary terms, which are easily used as a common denominator for a wide variety of organizational activities hiring and training personnel, purchasing equipment, manufacturing, advertising and selling.
• Second, the monetary aspect of budgets means that they can directly convey information on a key organizational resource-capital and on a key organizational goal – profit. They are heavily favored by profit – oriented companies.
Sometimes, the significance of budgetary control is not properly understood, either too much or too little emphasis is given to the budgetary control. this leads to certain dangers which are:-
1. Too much emphasis on budgeting may bring about rigidity in the enterprise. It may deprive the managers of the flexibility they require in managing their departments.
2. A budget which allows liberal expenditure may be used to hide inefficiency.
3. Sometimes, budgets are treated as an end in themselves.
These problems are often faced by chapner metals.
To much of the general public, the term auditing is associated with detecting fraud. Although the discovery of fraud is, one important facet of auditing, it is far from the only one. Auditing has many important uses, from validating the honesty and fairness of financial of statements to providing a critical basis of management decisions. Two ways of auditing are external audit and internal audit.