Qualities And Characteristics Of Responsibility Performance Reports: Responsibility performance Reports may tend to highlight departmental efficiencies and inefficiencies. Utmost Care should be taken see that such reports do not encourage departmental activities aimed at “making a good showing” regardless of the effect on the entire organization. Responsibility performance reports should be based on certain fundamental qualities and characteristics:
1. Responsibility performance Reports must fit the organization chart; that means, the report should be addressed to the individual responsible for the items covered by it and who, in turn, will be able to control those costs under his jurisdiction. Managers should be educated to use the results of the responsibility reporting system.
2. The nature of Reports should be prompt and timely. Prompt issuance of a report needs that cost records be organized so that information is available when it is required.
3. Responsibility performance Reports should be issued regularly. Promptness and regularity are closely tied in with the mechanical assistance used to assemble and issue the reports.
4. These Reports must be easy to understand. Often they contain accounting terminology that managers with little or no accounting training find difficult to understand, and important information may be incorrectly communicated. So, accounting terms should be explained or modified to fit the users of the report. Top management must have some knowledge of the kind of items chargeable to an account as well as the methods used to compute overhead rates, make cost allocations, and analyze variances.
5. Responsibility performance Reports should communicate or convey sufficient but not excessive detail. The amount and nature of the detail depend largely on the management level receiving the report. Reports to management should neither be flooded with immaterial facts nor so condensed that management lacks vital information essential to carrying out its responsibilities.
6. Reports may provide with comparative figures; i.e., a comparison of actual with budgeted figures or of pre-determined standards with actual results and the isolation of variances.
7. Responsibility performance Reports should be sufficiently analytical. Analysis of underlying papers, such as labour time tickets, scrap tickets, work orders, and materials requisitions, reasons for poor performance which might have been due to power failure, machines breakdown, setup, an inefficient operator, poor quality of materials, or many other similar factors.
8. Reports for operating management should be stated in physical units as well as in amounts since amounts information may give a foreman not trained in the language of the accountant a certain amount of difficulty.
Responsibility performance Reports may tend to highlight supposed departmental efficiency and inefficiencies. Care should be exercised to see that such reports do not encourage departmental activities aimed at “making a good showing” regardless of the effect on the entire organization.