Characteristics of a Good Report - Audit report, Auditing & Secretarial practice | Auditing and Secretarial Practice - B Com PDF Download

A report should contain all the information which are required by the interested parties. Hence, some principles are followed while drafting a report. These principles are simply guidelines.

The accountant should not feel that he has to conform to a set of rules that places him in a straight jacket. However, there are few guides that he should keep in mind. The rules will not be valid in all cases because of the difference in capabilities of top management to digest information and because of variations in the form in which management wants that information.

Therefore, a report is prepared by considering the following points.

Qualities or Characteristics of Good or Essential report

1. Suitable Title

A suitable title has to be provided to each report according to the nature of contents. It should also highlight upon its origin and the person for whom it is being prepared.

2. Simple

A report should be readable by an ordinary layman and in known language. Such type of simple style of language is used in the report preparation. As far as possible, scientific or technical language is best left out of reports, unless it becomes unavoidable. In case the reports are of regular nature, it is preferable to get language more or less standardized.

3. Promptness

A report should be prepared and submitted within short span of time or time stipulated by the request letter. Information delayed is information denied. At the same time, accuracy of information should not be given up at the cost of achieving objective of promptness. The following steps may be taken to collect the information as early as possible.

• Accounting records should be kept in such a way that fulfill the requirements of submission of different reports.
• Mechanical devices can be used for record keeping at the maximum to avoid clerical errors and increase productivity.
• Accounting work should be departmentalized in order to prevent bottle necks in reporting.
• In the case of prevailing abnormal or extra-ordinary situation, the employees are asked to report the same immediately.

4. Comparability

Sometimes a report is prepared with some comparative information. In this case, a standard information is compared with actual information. If not so, current year information is compared with last year information. In certain cases, the prospective information is prepared well in advance and the actual information is compared. The main objective of comparability is to highlight significant variations.

5. Consistency

A report should be prepared for many years from the same type of information and statistical data. If so, there is a possibility of preparing a report in consistency. It is possible if same accounting principles and concepts are used for collecting, classifying, tabulating and presenting the information. The usage of report is increased through consistency.

6. Precise and Accurate

A report should be precise, accurate and specific. It can be just a bad reporting practice to supply too much information which over whelms the order; as too little which leaves him guessing. If report is quite long or detailed, then a synopsis should be prepared to cover all significant facts and conclusions.

7. Relevant Information

Relevant accurate data is alone included in the report. If not so, it will involve unnecessary expenditure and the reports will be a waste.

8. Presented to Required Person or Group or Department

The reports should be specific and presented only to the person in need. Sometimes, reports are sent to various departments in a routine way, if so, the reports are prepared in such a way that includes common information.

9. Routine Details

Every report should contain the routine details like the period of time of preparing report, the period covered in the report, date of presentation of report, the units of information, the name of the person preparing and presenting it, names of persons to whom it is being submitted. etc.

10. Timeliness

A report should be prepared and presented within the stipulated time. If a report is received late, there is no meaning of preparing such report and no use for management. If the report is presented in time, necessary actions may be taken.

Obviously financial data are more valuable when the events are fresh in the minds of users. The element of time elapsing between the events and the report determines to a large extent, the value of financial reports. Timeliness is generally more important than a high degree of accuracy in the figures.

11. Adaptability

The format and contents of the report should be suitable to the person or group of persons who are going to use the report and the purpose for which it is required. A report can be adoptable if it is prepared and presented according to the needs of the different levels of management (top, middle and lower).

According to Welsch,

12. Ability to Control

The reports should give full details of variances such favorable and unfavorable. In the case of unfavorable variances, the report should contain a massage about the unfavorable variances which are controllable at that point. If so, corrective controllable actions may be taken by the appropriate level of authority. Moreover, some unfavorable variances which are beyond the control of the executive receiving the report should be mentioned separately or highlighted in the report.

13. Economy or Cost Consciousness

This cost of preparing and presenting the report should also be considered. This cost should also be considered. This cost should not be more than the advantage derived from such reports. The cost of preparing the report should be reasonable so that reporting may be used by all types of concerns.

14. Effective Communications

If the management executives have taken the action on the basis of report and the report influence decisions, there is an effective communication.

In order to be useful to management, accounting information must be communicated to managerial personal. Communication implies that a person receiving the information understands the nature and significance of material contained in the reports he receives when communication is genuinely effective, management’s actions and decisions are likely to be based on the facts which they receive rather than on untested impressions and guesses.

However, there is a reason to believe that accounting reports to management have not always achieved their intended purpose because the reports were not understood, recipients lacked time required to grasp the meaning or contents of reports was not relevant to problems facing the persons who received them.

15. Principle of Exception

The principle of exception should be followed while preparing and presenting the reports. If so, trouble spots and/or illuminating priority areas are calling for management attention and action. In this case, some benefits are derived such as essential matters only included in the report to the user of the report, more concentration is possible and minimum data is included in the report. Even though, this principle has limited use.

16. Frequency of Reports

The frequency of reports should be decided, well in advance according to the nature of information and its purpose. It means that the reports should be sent regularly when they are demanded or required. Therefore, some reports may be sent daily, some weekly, some once in ten days, some fortnightly, some monthly and so on.

17. Media of Presentation

A report may be prepared for presenting the same in several medias. Therefore, a report may be in written form or oral form or graphic form. An ideal report is presented in the form which carries successful blending of different media.

18. Attractiveness

The style of presenting the report should attract the attention of the user of the report. In meeting this broad requirement for attractiveness in reporting, the accountant assumes the role of an artist. His task is to print a picture that will appeal to the eyes. His report should serve as panorama which is attractive in an artistic sense and therefore one that will be regarded and studied by the potential viewer.

19. Co-ordination of Data

All type of information are collected from various departments including accounting data while preparing the report. In this case, there is a need of coordination of data. It means that data used by different departments should not be unrelated, otherwise a lot of misunderstandings and confusions may arise which would defeat the very purpose of reporting.

20. Up to Date

A report should contain only latest information. Even though, excessive information cannot be included in the report. It means that report should be kept up to date which are necessitated by the changing conditions.

21. Number of Reports

There is no ideal number of reports to be used in an organization. At the same time, a report should be an additional one and should not give birth to be a duplication. Therefore, reports should be prepared and used only for selective areas. The number of reports should be kept as minimum as possible.

22. Good Form and Content

The following points are to be considered while drafting a report.

• A report is prepared in well classified paragraph with suitable heading and sub-heading if possible.
• The title of the report explains the purpose for which the report is prepared and the period covered by the report. For example: Report of the Performance of Sales Representatives of January 2011.
• The title also enables to point out the persons who need the report.
• If statistical figures are to be given only significant figures given in the body of the report and other detailed figures should be given in appendix.
• The reports should contain facts and not opinions. The opinions are given if necessary.
• The report must contain the date of its preparation and date of submission.
• Sometimes a report is prepared on the basis of request made by the management. If so, the report should bear the reference numberof such request or letter.
• A report is prepared to satisfy only one purpose. Separate reports be prepared for different subjects.
• The contents of the report should be in a logical sequence.