Russian enterprises, due to legal requirements, may have obligations to provide various types of reporting to government agencies - in particular, accounting reports. The preparation of relevant documents may require the consolidation of significant amounts of internal corporate resources. At the same time, many companies pay attention to the formation of specifically management reporting. It is not necessary to submit it to government agencies, but many corporations form it, and this process may require no less effort on the part of the company. Why does it make sense to apply them? What is the usefulness of the appropriate type of reporting?

The role of management reporting

What is management reporting and what is its role in an enterprise? This term is understood as a set of internal documents that contain figures reflecting various aspects of the company’s business activities.

Management reporting, unlike, for example, accounting reporting, is prepared voluntarily. It does not need to be sent to the Federal Tax Service and other government bodies. Its role is to provide the company's management or its owners with reliable information about the state of affairs in the organization.

Management reporting can complement accounting or financial reporting in terms of generating data that is extremely important for optimizing the business model and increasing the profitability of the company. The type of activity under consideration may also include non-financial information, which is important for the correct interpretation of the effectiveness of management decisions made by the company's management. This type of reporting is valued not for the fact that it contains impressive numbers, but quite the opposite - for the opportunity to detect shortcomings in the enterprise’s business model that hinder successful growth.

Management reporting is a significant component of planning. The documents that form it include data that is of great importance for calculating the prospects for implementing certain decisions at the management level. In turn, upon completion of one or another stage of the company’s development, the type of reporting in question will allow us to analyze at some points the company’s management should have acted differently and what this was connected with.

Benefits of Management Reporting

What is the fundamental difference between financial, accounting and management reporting? First of all, methodology. The first two types of financial reporting involve the collection of mainly statistical information reflecting the turnover of capital in certain areas of business processes. In turn, management reporting involves not only the reflection of statistics, but also the interpretation of relevant figures. The company's management will be able not only to observe certain indicators, but also to understand what they mean.

Thus, an organization’s management reporting can show what causes higher profitability in the production of specific types of products or, conversely, what is the reason for insufficient revenue indicators and too high costs in a particular area of ​​business. Interpretation of the figures recorded in management reporting allows the company’s management to make intelligent decisions regarding necessary purchases, renewal of fixed assets, modernization of equipment, etc.

Internal management reporting, if prepared in a timely manner, can promptly identify those areas of the business process in which the performance of the company’s employees is not high enough.

What may be contained in the documents that make up the type of reporting under consideration? The fact is that sources of information of the corresponding type can be presented in a large number of varieties. As a rule, certain documents are adapted for specific managers. Reporting is called management reporting mainly due to the fact that it is intended specifically for managers.

The management structure of modern organizations, as a rule, includes the positions of a general director, as well as his deputies. These could be: a deputy for production, for sales, or, for example, for financial issues. In the first case, internal management reporting may include data relating to:

• the cost of manufactured products or services (in relation to specific types of products);
• characteristics of work in progress, release of goods and services in relation to orders from specific customers;
• the volume of production of products that are sent to the warehouse;
• stocks of raw materials, materials or components that are used in the production of goods.

If reporting is submitted to the Deputy Director of Sales, then its structure may include:

• information about the sales structure in relation to specific types of goods and services, with specific customers;
• data on the dynamics of product shipments;
• information about stocks in the warehouse;
• data on the cost of selling goods or delivering to consumers;
• planned indicators regarding the receipt of goods at the warehouse;
• information on accounts receivable for sold items.

If reporting is subject to submission to the Deputy Director for Finance, then it may contain:

• information on the execution of the enterprise budget;
• information on costs associated with business activities;
• figures reflecting the cost of goods or services produced;
• profit and loss data;

The reporting may also contain information about accounts receivable and the company’s own debts on loans and other obligations.

Frequency of management reporting

How often should management reporting be prepared? It is desirable that information reflecting the specified areas of activity of the enterprise should not be out of date by more than a week. In some cases, a particular enterprise may have identified key indicators that will need to be updated more often. Likewise, management can record secondary indicators that do not require much time to compile, and therefore such information can be provided much less frequently.

Shareholder reporting

The main feature here is that the company's shareholders may not take any direct part in the management of the company. It's often the case that the only area they're interested in is pure profit numbers. Detailing management decisions in reports provided to company shareholders is in some cases inappropriate. However, since the owners of the company are the ones who make key decisions regarding the appointment of top managers, the reports will be able to reflect information characterizing the effectiveness of the work of the general director and his deputies.

What might reporting look like?

What forms of management reporting are there? We noted above that, unlike financial and accounting documents, the corresponding type of paper is essentially unofficial in nature. Management reporting forms are not regulated in any way by law. Therefore, they can be developed by the organization based on the most appropriate structure - for example, depending on the recipient of the reports.

Perhaps the deputy director for finance will be more comfortable dealing with spreadsheet documents, and the owner of the company with graphs that clearly show how profits change depending on certain factors. In some cases, the reporting forms in question may be very similar to those prepared for the collection of financial or accounting indicators

Reporting procedure

How can documents of this type be generated? The reporting in question involves solving two groups of problems.

First, it is collecting the necessary numbers. Their source will likely be files generated by the company's accounting and production departments during ongoing activities. For example, if a certain volume of goods was shipped to a warehouse, the corresponding data is usually recorded in the company’s CRM system. Data on other business activities carried out at the enterprise are reflected similarly.

Secondly, this is the interpretation of indicators collected at various sites of production or presented in accounting figures. An analysis of management reporting is required. Its implementation, again, will depend on where exactly the relevant documents should be transferred. Moreover, in some cases less detail and in others greater detail of indicators is desirable. Similarly, a lengthy interpretation of the results may be encouraged or, conversely, extreme brevity may be required.

In some cases, interpretation of the numbers may not be necessary at all - for example, if it comes to handing over reports to an experienced financial director. He probably interprets results better than any other manager, and pure numbers will be enough for him.

Algorithm for generating reports

Let's consider how management reporting can be generated in practice. Among Russian experts, a popular algorithm involves solving the problem under consideration in the following stages.

The first step is to find out what type of reporting information the general director, his deputies and owners want to see, and with what frequency. Some may prefer to see the numbers weekly, while others may want to see key indicators once a month. It is also advisable for the future report preparer to find out at the very beginning of interaction with management what type of data is most likely to be a priority and what type of data will be secondary.

The next step is communication with an accountant to determine an algorithm within which the person involved in solving the problem under consideration will request the necessary numbers. The reporting preparer can also interact with other employees of the company in those areas where indicators that are significant for the necessary documents are formed. The enterprise must develop a management reporting system in which all competent employees will participate.

The next step is to create document forms in which, on the one hand, the numbers will be recorded and, on the other, interpreted. At the same time, the person responsible for reporting may be faced with the need to create different forms of documents adapted for a specific addressee - the general director, his deputies, owners.

The next steps will be related to the actual generation of reports. If the enterprise is small, then, in principle, the person involved in solving the problem in question can try to collect the necessary numbers himself. But it is likely that he will need the help of his work colleagues. In this case, the practical stages associated with collecting information may be preceded by some meetings at which the person will tell other employees about the basics of management reporting, the purpose for which the relevant documents are generated and why this is important for the company. The solution to this problem can be facilitated by the management of the company by issuing local legal acts that require individual employees to assist in the work of the person responsible for reporting.

Types of reporting

Having examined the key principles of management reporting, we can study certain types of corresponding models for displaying figures reflecting the activities of an enterprise.

The first type of reporting in question is the management balance sheet. What are its features?

The management balance sheet is, in principle, similar to the accounting balance sheet. Its fundamental difference lies in its functional purpose. The management balance sheet is designed not only to reflect numbers, but also to interpret them from the point of view of the effectiveness of the organization’s business model, the state of affairs in terms of the organization’s assets, the company’s obligations to partners and vice versa.

The numbers that include accounting, management, and financial reporting can, in principle, be entered into the same forms. However, how the relevant indicators are interpreted may determine the creation of documents in a completely original structure. It matters who the users of management reporting are - we said this above.

The balance sheet we are considering involves the inclusion of information that may be of interest to both the director and any of his deputies, as well as the owner of the company. In this sense, it can be a fairly universal document.

What other types of management reporting are there? Among these is the profit and loss statement. At the same time, it is traditionally considered to be an accounting source. A profit and loss statement is a document that enterprises are required to submit as part of official reporting to regulatory authorities. At the same time, it may well be used as a source in the formation of management reporting. This is primarily due to the very convenient structure of this document.

An organization's profit and loss statement records the financial results of the company's activities for a specific period of time. It reflects figures regarding income, costs, as well as financial results with an accrual total. The structure of the document of this type reflects: sources of revenue, expense items, and profitability of the company. But, as we defined above, management accounting and reporting involve not so much solving problems associated with collecting numbers, but rather interpreting various indicators. Therefore, the document in question will probably need to be accompanied by additional sources that will record the necessary explanations regarding the figures reflecting the company’s income, expenses and profits.

Another significant document is the cash flow statement. This source reflects the financial income of the company in correlation with the sources, as well as payments to the company in relation to key areas of expenses - also in relation to a specific period. The cash flow statement can show how things are going in the company in terms of current production results and in the area of ​​liquidity. This document allows you to assess the creditworthiness of the company. The source in question may be useful to both the company’s management and its owners.

The main types of management reporting we have considered - the profit and loss statement, balance sheet, as well as a document recording data on cash flows - can, of course, be supplemented by other sources. They can be either similar to those we studied or based on fundamentally different approaches to compilation.

Difficulties in reporting

So, we have studied what management reporting is, how it differs from accounting or financial reporting, and have become familiar with the procedure for its formation. It will also be useful to consider the possible difficulties accompanying its preparation.

According to experts in the field of business management, the most important problem characteristic of the reporting process in question is the lack of loyalty to the relevant document on the part of the company’s employees, and in some cases, also top managers and owners. Company employees - accountants, production site employees - do not always perceive management reporting as a document that should be given time, on which it makes sense to spend effort. Enterprises, as you know, are already obliged to provide official documents to government bodies, the preparation of which is not the easiest task.

A similar position, when management reporting is not perceived as something worthy of attention, can also be held by top managers and owners, as we noted above. Many of the managers, according to experts, treat the documents in question as a kind of method of misleading management, especially if it is necessary to divert attention from not the most outstanding production indicators.

How to solve a problem like this? Analysts recommend starting at the management level. It would be more justified to interest managers in the need to prepare management reporting, so that they, in turn, formulate the necessary local legal acts, according to which other employees will have to assist in the formation of relevant documents.

Another difficulty characterizing the solution to the problem in question is the need to constantly develop new approaches to interpreting the figures contained in the reporting. This may be due, first of all, to changes in the production structure of the business. In the case of accounting and financial statements, as we know, no interpretation of the numbers is required. Therefore, it becomes possible to use standardized forms in which relevant indicators are recorded.

Management reporting of an organization, in turn, solves slightly different problems. It is needed, first of all, by the company itself, and not by government agencies, as is the case with accounting and financial indicators. If the interpretation of the figures contained in management reporting, given the structure of production in a certain period, played a positive role, then it is not guaranteed that it will be as useful, provided that the characteristics of certain business processes have changed. Most likely, the preparer of reporting documents will have to improve approaches to interpretation as the company's production activities change. This may require a lot of time - both his personal time and that of colleagues from whom he can turn for advice, opinions or some supporting indicators reflecting the company's performance in order to understand how to improve the approach to interpreting the numbers.

The noted problem can be solved, again, through periodic communications with colleagues in the format of meetings, the subject of which is the consideration of current production indicators, as well as the development of measures to improve them, including through the introduction of new reporting methods, such as management. In the context of positive approaches to optimizing production performance, it is more likely to be perceived positively by company employees.

For what purposes are internal management reporting used? What is the reporting procedure and what does it include? Where can I find a sample for filling out a management reporting form?

Let's imagine the situation. At one enterprise, the financial service prepares weekly management reports for management, which contain everything: main financial indicators, company expenses, information on shipments and remaining goods in the warehouse, information on loan repayments, etc.

In another company, a young accountant deals with financial documents; no one prepares management reporting as such. So the director doesn't even know where the money goes and how things are going with loan payments.

In which company do you think management makes smarter and more effective decisions? Of course, in the one, you answer, where there is clear interaction between performers and management. Management reporting serves as just that. link.

About how management reporting is prepared, and what problems it solves, I, Denis Kuderin, an expert on economic issues, will tell you in a new article.

Make yourself comfortable and read to the end - at the end you will find a review of companies that help organize management accounting at your enterprise, plus tips on how to distinguish professional performers from amateurs.

1. What is management reporting and what is it used for?

Enterprise management– a continuous process, the essence of which is influencing an object in order to stabilize, control or change it in accordance with business objectives. Another management function is the rational use of the company’s workforce and resources to increase profitability.

To maintain a business in an efficient and competitive state, managers must constantly make certain decisions. These decisions are based on current information about the affairs of the enterprise. This is exactly the information that management reporting (MA) provides to management.

– a company’s internal control tool and a way to assess its economic prospects.

Unlike financial statements, no one obliges you to prepare management reports . But managers need it to effectively manage their business. The MA contains information about all structural divisions of the enterprise.

It can be argued that a competent manager is able to evaluate economic indicators based on accounting records. This is partly true, but accounting does not reveal all the nuances of the enterprise.

From accounting reports It’s difficult to know which products are in high demand, and which one is the other way around. shows a more clear picture.

Example

Company "Siberian semi-finished products" expanded its product range last year. With the help of management reporting, which the executive director proposed to introduce at the enterprise, management found out that the products that are in greatest demand are “ Family dumplings" And " Country sausage" We decided to increase the production of these items.

The MA also showed that purchasing packaging materials from suppliers is less profitable than making them yourself. Director decided to open a new workshop for the production of our own packaging.

Reporting is needed by economical, far-sighted and prudent owners who want to make a profit not only by increasing production volumes, but also by increasing labor productivity, as well as reducing unnecessary expenses. This is an integral part of being literate.

Who is customer management reporting? TOP managers And line managers– production directors, financial directors, sales managers, etc.

To compile a document, various forms are used, most often tables, graphs, and diagrams.

The information should be:

• reliable– reflect real processes without any additions or manipulations;
• address– addressed to specific users, for example, the general director;
• confidential– there is no need for outsiders to know about the internal affairs of the company;
• operational– ready for use at the right time and containing up-to-date data;
• useful for making management decisions.

Where can I get data for reporting? From accounting programs, financial documents, accounting reports. To begin with, of course, you need to establish a functional system for transmitting information at the enterprise.

For example, consumables have gone into production from a warehouse - the responsible persons (storekeeper and workshop manager) must document this matter.

In a large enterprise, it will be difficult to cover all aspects of production, so those responsible for drawing up the MA must act according to a pre-developed plan.

- « Comrade Novoseltsev, is this your report? You need to deal with the matter seriously or not at all. Statistics is a science; it does not tolerate approximation. How can you use unverified data? Take it and remake it!”

From the film “Office Romance”

Novoseltsev with a report - a still from the film Office Romance

Now I will list the main tasks of the MA:

• providing management with reliable and up-to-date data regarding the financial and production activities of the company;
• forecast and analysis of the operation of the enterprise and its branches;
• increasing financial discipline;
• reduction of production costs;
• increased profits as a result of making economically feasible decisions.

The MA does not need to be sent to the Federal Tax Service or anywhere else. This is a document for internal needs. It allows managers or owners to be aware of the objective situation at the enterprise. The document reflects the main processes that occur or occurred within the company during the reporting period.

2. What does management reporting include - overview of the main points

Now about what is included in the UO. Unlike financial and tax accounting, which are strictly regulated by law, management reporting is prepared in free form and meets the needs of the management of a particular company and meets the objectives.

For this reason, there are many options for such documents. However, there are points that should be included in the report without fail, so that management can analyze the current economic situation in the company and objectively assess the prospects.

Point 1. Operating reports

Operations- This is the main work of the company aimed at making a profit. This includes the production of products, the provision of services and any other core activity through which the company earns money.

This report includes the following data:

• on the production of goods;
• on the acquisition of inventory items;
• on the purchase of raw materials, consumables and components;
• on stocks of finished products in warehouses;
• about cash flow;
• about accounts receivable.

The operating instructions are a document that reflects the current state of affairs.

Point 2. Reports on investment activities

Investment- part of the company's financial activities. Even a small enterprise invests in the development and expansion of production.

The MA on investments reflects the following parameters:

• movement of fixed assets;
• movement of the company's intangible assets;
• long-term cash deposits;
• planned capital investments;
• data on the implementation of investment projects.

Point 3: Financial statements

Financial activities– these are short-term investments, attracting borrowed And joint stock capital, lending and cash management (enterprise cash desk). All these aspects are reflected in the financial LO.

Point 4. Reports on sales or services provided

Sales report compiled by the enterprise sales service for the head of the sales department, commercial and general directors. It shows the quantity of products sold and at what prices.

Sometimes additional items are included - shipment dynamics, information about inventories in warehouses, sales costs, information about accounts receivable.

Point 5. Procurement reports

IN procurement report includes information on the purchase of raw materials, consumables, equipment, tools and other production assets. A separate document of this kind is needed at large production facilities where a variety of material assets are used for work.

For clarity, let’s put the basic types of educational institutions in a table:

3. The procedure for preparing management reporting - 6 main stages

Management reporting is prepared in different ways. Several years ago I worked in a company where I participated in the preparation of reporting documents a whole staff of accountants and financial specialists.

The report was detailed and detailed, which allowed management to carry out comprehensive analytics and adjust the operation of the enterprise in a timely manner, if necessary.

In another company where I also worked, the report was handled by one accountant using 1C, and he entered all the data into the program manually. There was little sense in such a report.

To create a competent and useful report, use a ready-made algorithm. The scheme does not pretend to be the ultimate truth - when creating your own report, take into account the specifics of the enterprise and its scale.

Stage 1. Setting goals and objectives

First we need a clear understanding of the problems that need to be solved using management reporting. It is useful for the CEO of the company to have the necessary information at least every week . And if the enterprise is a time of change and the introduction of new technologies and methods, then more often.

The goals in each case are individual: control of income and expenses, analysis of product costs, assessment of the efficiency of departments, tracking the dynamics of receivables and payables.

The form in which the MA is provided to management is also important. It is more convenient to use tables and graphs than text files. The more detailed the documents, the better..

But remember – you cannot embrace the immensity. You need to be able to structure information by income and expense groups, by types of clients, by departments, sum up interim results.

The frequency of reporting is regulated by management itself. If the director requires a report to be prepared weekly, it will be prepared weekly. The situation is similar with detailing.

Stage 2. Determining the circle of officials who need management reporting

This is a necessary stage for the effective organization of the process of preparing the MA. Determined to whom exactly and what kind of reporting provided.

It is also important not to forget about responsible for reporting. Often managers or leading specialists of the relevant departments are appointed responsible. They are responsible for both the content of reports and the timing of their preparation and submission.

Large companies also organize special units on the preparation of management reporting.

Stage 3. Determining the information that should be presented in management reporting

What information will be contained in the report depends on the purpose of compiling this document. As a rule, it includes the most significant data that reflects the real economic and financial situation at the enterprise.

It will be good if it is taken into account logical relationship of indicators for the convenience of the process of analyzing the UO and conclusions. Sometimes managers ask those who generate reports immediately formulate key conclusions .

Stage 4. Determining the possibility of using information generated in accounting systems

Assess what information we need for management purposes already contained in accounting information systems companies. It's about accounting, financial, tax and other accounting systems that have already been established and are successfully operating at the enterprise.

If this is so, then you can and should try to use it, which can significantly simplify the task and save you from "double work".

Reporting should be regular, clear and structured

Stage 5. Development of regulations for management reporting

Definitely needed reporting regulations – who will provide them, in what form and within what time frame. Document these agreements.

Let each head of the FRC (financial responsibility center) monitor the execution of the process.

Stage 6. Development of tools for collecting, generating and processing management reporting information

Instruct IT specialists to develop programs (or file templates) in which responsible persons will generate reports.

But don't forget about the main principles:

• the costs of automation must be compensated by the benefits from its use;
• a bad program - worse than a thoughtfully designed Excel spreadsheet system.

If the company does not have its own IT specialists, use the help of third-party companies. There is information about them in the next section.

- Lyudmila Prokofievna, you turned out to be amazingly insightful. You are just looking into the distance! I'm currently working on my report, and it's getting better and better right before my eyes!

I’m glad for you, comrade Novoseltsev...

From the film “Office Romance”

4. Assistance in preparing management reporting – review of the TOP 3 service companies

Do you want to implement a management reporting system in your company, but have no idea where to start? Do you want to entrust this task to professional performers?

Expert review will help you choose reliable partners who will develop, implement and launch an effective management system in your company.

A multidisciplinary company that has been operating in the consulting services market for more than 20 years. The company's areas of interest include: management and tax consulting, organization and automation of accounting, development of budgeting systems and many other relevant services for business.

Specialists will develop effective management accounting for the customer’s company based on 1C software products. The client receives: debugging of business processes, consulting support at all stages of implementation of management reporting, a modern automated enterprise management system.

An experienced team of practitioners with extensive experience in building and debugging management accounting and budgeting systems. Professionals will set up accounting from scratch for small and medium-sized businesses, they will improve the system of financial and management control at large enterprises.

If necessary, specialists from the Uchet Chetko company train your employees the basics of working with automated systems, organize work with documents, optimize enterprise costs, and develop unique programs for individual use.

3) GBCS

The GBCS consulting company has 28 qualified experts in the field of management accounting automation. Specialists will create an effective accounting system, establish budgeting at the client’s site, improve the financial situation in production, and reduce costs.

Don’t waste time developing management accounting on your own - trust those who know how to do it quickly and professionally. On the company's account - more than 50 ready-made projects. Developments from GBCS have already helped clients earn more than 60,000,000 rubles in net profit.

5. How to choose a management reporting company – 3 signs that you are working with professionals

Selecting truly competent performers is always difficult.

09.03.2013

The article discusses the most common problems associated with the preparation of management reporting and ways to solve them. The optimal composition of management reporting is given so that it is not overloaded and at the same time provides users with the information they need to make management decisions.

It is no secret that often a business owner is not satisfied with the composition and quality of the management reporting he receives.

Sometimes the reporting is prepared very late, sometimes its reliability is in doubt, sometimes the formats of management reporting are changed over and over again.

A common situation is when a company does not have a universal set of management reporting forms.

The most common claims from the owner in this case are the following:

1. Reporting is not provided promptly: From the moment of asking a question to receiving an answer, several hours may pass, and in especially severe cases, days. It is understandable that when the data is finally ready, it may become irrelevant. Making a competent management decision based on them will be problematic; you will have to use your intuition. The owner asks the following question, which requires financiers a few more hours/days to answer... In this case, there is no need to talk about high business manageability.


2. Doubtful reliability of reporting. Often, the owner, having received information and starting to ask questions, cannot receive a quick, competent answer from financiers (see reason No. 1), or, having received transcripts, finds inaccuracies in them, and having found one thing, begins to doubt all the figures. Or the owner is not clear about the reporting process itself, and this creates distrust in financiers. I don’t want to say that the owner must understand the reporting technology, but he must be sure that financiers have all the mechanisms to obtain reliable reporting, and the task of the financial director, if the owner has questions, is to explain in simple language where a specific figure came from .


3. Report format is difficult to understand. Many owners complain that it is difficult for them to independently read and understand the cumbersome tables filled with numbers that financiers provide them with. Often the owner does not have a financial education, or due to his individual characteristics it is difficult for him to read and understand numbers; he perceives information better on graphs.

All these reasons together can lead to a stalemate when the owner bombards financiers with more and more new requests, and they prepare more and more new forms of management reporting to answer them.

Sometimes the owner asks to decrypt the information provided, and in order to prepare such a decryption, the financier literally invents a new form on his knees in a short time.

And since the owner, as a rule, is not limited to one question when studying management reporting, the number of such forms grows and multiplies exponentially. Need I say that every financier also has a current workload? The absence of an approved and understandable list of reporting forms, deadlines for their submission and responsible persons entails overtime and increases the level of stress in the financial department.

The first thing you should always remember is: composition of management reporting should be sufficient, but not excessive.

The quality of management decisions does not depend on the number of reports prepared, but on how quickly they are prepared, how reliable the information in them is, how readable and understandable it is.

Thus,

• speed of formation (timeliness)
• data reliability
• ease of perception by the end user
• not overloading reporting with unnecessary forms

These, in my opinion, are the main criteria that management reporting in any business should ideally satisfy.

The composition of management reporting, as has been said more than once (you can read more in the article "Relation and differences between management accounting and accounting"), includes operating (or support) and final financial budgets.

Both operational and financial budgets should be formed both according to plan and in fact. At their core, operating budgets are transcripts of financial budget figures. If their composition is sufficient, no additional transcripts to management reporting are required.

In general, the recipe for solving the above problems in the preparation of management reporting is very simple. Here it is:

1. Step 1: Determine a complete list of operating budgets.

For example, for a small retail chain this list could be like this:

• Revenue plan
• Calculation of planned cost
• Plan for rent and utilities in detail by retail outlets and management staff (rent of office and central distribution warehouse).
• Plan for commercial and administrative expenses of the management apparatus.
• Salary plan and deductions from salespersons' salaries
• Salary plan and deductions for management staff
• Tax plan: VAT, income tax, property tax, simplified tax system, UTII, etc.
• Depreciation plan
• Plan for direct expenses: in detail by retail outlets and management staff

The composition of operating budgets for a manufacturing enterprise will be somewhat more complex and broader; the principle, I think, is clear.

A list of financial budgets for any business it will always be like this:

• Income and Expenditure Budget (IBB)
• Cash Flow Budget (CFB)
• Managerial balance
• Changes in capital (as an additional form)

1. Step 2: For each operating budget, prescribe and approve the frequency of preparation (options: daily, monthly, quarterly), deadlines for preparation and approval. Register and approve those responsible. All of this is true for both preparing planned and actual budgets.
2. Step 3: For each financial budget, prescribe and approve the frequency of preparation (options: daily, for example, BDDS, monthly, quarterly), preparation and approval deadlines. Register and approve those responsible. All this is also true for both preparing planned and actual budgets.

TIP 1:

I would recommend that the timing of preparation and approval of planned budgets be specified separately from the timing of preparation and approval of actual budgets. Because the planning process (budget period), in contrast to the preparation of actual budgets, is, firstly, more extended in time, and, secondly, the mechanism for forming plans itself differs from the mechanism for collecting actual data.

TIP 2:

When setting deadlines for the preparation and submission of operating budgets (both planned and actual), you need to go “from the end”, i.e. First determine the date by which final financial budgets need to be received. And then, starting from this date, “unwind” the chain of budgets back. Thus, the start date of the budget period will be calculated for planning.

The situation with actual budgets is different: we must start from the dates of readiness of operating budgets, because they depend on the deadlines by which it is possible to collect primary documents, and from them to the date of submission of actual financial budgets.

1. Step 4: develop unified formats for operating and financial budgets. The recommendation here is simple: we must strive to ensure that the formats of operating and financial budgets are unified for all divisions of the company. This is especially important to carry out and control for holding companies that have several lines of business, as well as for companies with a developed branch network.

If this requirement is not met, data consolidation will take enormous time and lead to an increase in the number of errors.

Here, in fact, is the entire algorithm for solving the most common problems associated with the preparation of management reporting.

You may say that it is easy to reason in theory, but in practice recommendations alone are not enough.

Yes and no. If you take the above algorithm to solve problems with management reporting and clearly think through and implement everything in accordance with it, I assure you that your most difficult problems with management reporting will go away. Another thing is that yes, you will have to work hard on this yourself. Thinking through the composition of budgets, their relationships and timing is not easy. But it is feasible.

I wish you every success in this endeavor! You can send me your questions by email.

Management reporting is one of the most important sources of obtaining information about the company’s performance, based on a set of financial, sales, marketing, production and other indicators.

Information in management reporting should be economically interesting and actively used by managers, founders and business owners. The data disclosed in management reporting is necessary for the analysis of all activities. This helps to timely identify the reasons for possible deviations from the parameters set by the business strategy, as well as show reserves (financial, material, labor, etc.) that have not been used by the company until this time. The process of setting up and implementing management reporting can be divided into 7 stages.

Step 1. Diagnostics of the existing management system in the company.

This stage is necessary to analyze the organizational structure of the company; the format of process modeling is determined. If the company has business process diagrams and their descriptions, these documents are analyzed and the main problem areas that require optimization are identified.

Step 2. Creating a management reporting methodology

This stage is necessary for delegating authority in terms of drawing up operating budgets and determining the responsibility of specific financial responsibility centers (FRCs) for drawing up certain budget plans (segments of management reporting).

Goals and objectives solved as a result of the implementation of management reporting in the company:

• Establishing and achieving specific key performance indicators (KPIs);
• Identification of “weak” links in the organizational structure of the company;
• Increasing the performance monitoring system;
• Ensuring transparency of cash flows;
• Strengthening payment discipline;
• Development of an employee motivation system;
• Prompt response to changes: market conditions, sales channels, etc.;
• Identification of the company’s internal resources;
• Risk assessment, etc.

The composition of management reports depends primarily on the nature of the company's activities. As practice shows, the composition of management reporting (master report) usually includes:

• Cash flow statement (direct method);
• Cash flow statement (indirect method);
• Profit and Loss Statement;
• Forecast balance (managerial balance);

Consolidation of budgets

The preparation of consolidated management reporting is a rather labor-intensive process. Consolidated financial statements treat a group of related entities as a single entity. Assets, liabilities, income and expenses are combined into a common management reporting system. Such reporting characterizes the property and financial position of the entire group of companies as of the reporting date, as well as the financial results of its activities for the reporting period. If the holding consists of companies that are not connected with each other at the operational level, then the task of consolidating management reporting is solved quite simply. If business transactions are carried out between the companies of the holding, then in this case not everything is so obvious, because it will be necessary to exclude mutual transactions so as not to distort the data on income and expenses, assets and liabilities at the holding level in the consolidated statements. The company's budget policy needs to consolidate the rules and principles for eliminating VGOs.

For this, it is more advisable to use specialized information systems, for example, “WA: Financier”. The system allows you to eliminate intra-company turnover at the level of processing primary documents and quickly obtain correct information, which simplifies and speeds up the process of generating management reporting and minimizes errors associated with the human factor. At the same time, the reconciliation of intragroup turnover, their elimination, the execution of corrective entries and other operations are carried out automatically.

Example: Company A owns Company B 100%. Company A sold goods for the amount of 1,500 rubles. The purchase of this product cost company A 1000 rubles. Company B paid for the goods delivered in full. At the end of the reporting period, Company B did not sell the product, and it is included in its reporting.

As a result of consolidation, it is necessary to eliminate the profit (500 rubles) that the company has not yet received and reduce the cost of inventories (500 rubles). To exclude VGOs and profits that Company B has not yet earned. Adjustments need to be made.

Result of management reporting consolidation

Determination of key performance indicators (KPI – Key performance indicators)

The introduction of key control indicators allows you to manage financial responsibility centers by setting limits, standard values ​​or maximum boundaries of accepted indicators. The set of performance indicators of individual central financial districts significantly depends on the role of this center of responsibility in the management system and on the functions performed. The indicator values ​​are set taking into account the company’s strategic plans and the development of individual business areas. The system of indicators can take on a hierarchical structure, both for the company as a whole, and with detail down to each center of financial responsibility. After detailing the top-level KPIs and transferring them to the levels of the Central Federal District and employees, staff remuneration, etc. can be linked to them.

Monitoring and analysis of the execution of management reporting.

For the execution of budgets included in management reporting, three areas of control can be distinguished:

• preliminary,
• current (operational)
• final.

The purpose of preliminary control is to prevent potential budget violations, in other words, to prevent unreasonable expenses. It is carried out before business transactions are carried out. The most common form of such control is the approval of requests (for example, for payment or shipment of goods from a warehouse).

Current control over budget execution involves regular monitoring of the activities of financial responsibility centers to identify deviations in the actual performance indicators from those planned. Conducted daily or weekly based on operational reporting.

Final control of budget execution is nothing more than an analysis of the implementation of plans after the close of the period, an assessment of the financial and economic activities of the company as a whole and for management accounting objects.

In the process of executing budgets, it is important to identify deviations at the earliest stages. Determine what methods of preliminary and current budget control can be used in the company. For example, introduce procedures for approving requests for payment or release of materials from the warehouse. This will allow you to avoid unnecessary expenses, prevent budget failure and take action in advance. Be sure to regulate control procedures. Create a separate budget control regulation. Describe in it the types and stages of inspections, their frequency, the procedure for revising budgets, key indicators and ranges of their deviations. This will make the control process transparent and understandable, and will increase executive discipline in the company.

STEP 3. Design and approval of the company's financial structure.

This stage includes work on the formation of classifiers of budgets and budget items, the development of a set of operating budgets, planning items and their relationships with each other, and the imposition of types of budgets on the organizational units of the company’s management structure.

Based on the organizational structure of the company, a financial structure is developed. As part of this work, financial responsibility centers (FRCs) are formed from organizational units (divisions) and a model of the financial structure is built. The main task of building the financial structure of an enterprise is to get an answer to the question of who should draw up what budgets in the enterprise. A correctly constructed financial structure of an enterprise allows you to see the “key points” at which profits will be formed, taken into account and, most likely, redistributed, as well as control over the company’s expenses and income.

The Financial Responsibility Center (FRC) is an object of the company’s financial structure that is responsible for all financial results: revenue, profit (loss), costs. The ultimate goal of any central financial institution is to maximize profits. For each central financial district, all three main budgets are drawn up: a budget of income and expenses, a cash flow budget and a forecast balance (managerial balance sheet). As a rule, individual organizations act as central financial districts; subsidiaries of holdings; separate divisions, representative offices and branches of large companies; regionally or technologically isolated types of activities (businesses) of multi-industry companies.

Financial accounting center (FAC) is an object of the company’s financial structure that is responsible only for some financial indicators, for example, income and part of the costs. For the DFS, a budget of income and expenses or some private and functional budgets (labor budget, sales budget) are drawn up. The DFS can be the main production workshops participating in unified technological chains at enterprises with a sequential or continuous technological cycle; production (assembly) shops; sales services and divisions. Financial accounting centers may have a narrow focus:

• marginal profit center (profit center) - a structural unit or group of units whose activities are directly related to the implementation of one or more business projects of the company that ensure the receipt and accounting of profits;
• income center - a structural unit or group of units whose activities are aimed at generating income and do not include profit accounting (for example, a sales service);
• investment center (venture center) - a structural unit or group of units that are directly related to the organization of new business projects, profits from which are expected in the future.
• cost center is an object of the financial structure of an enterprise that is responsible only for expenses. And not for all expenses, but for the so-called regulated expenses, the expenditure and savings of which the management of the Central Bank can control. These are departments that serve the main business processes. Only some auxiliary budgets are drawn up for central planning. The auxiliary services of the enterprise (housekeeping department, security service, administration) can act as a central protection center. A cost center may also be referred to as a cost center (cost center).

STEP 4. Formation of a budget model.

There are no strict requirements for the development of a classifier of internal management reporting. Just as no two companies are exactly alike, no two budget structures are exactly alike. Unlike formal financial statements: profit and loss statement or balance sheet, management reporting does not have a standardized form that must be strictly followed. The structure of internal management reporting depends on the specifics of the company, the budget policy adopted by the company, the wishes of management regarding the level of detail of articles for analysis, etc. We can only give general recommendations on how to draw up the optimal structure of management reporting.

The structure of management reporting should correspond to the structure of the company's daily activities.

Classification of articles using the example of the Cash Flow Statement.

STEP 5. Approval of budget policy and development of regulations.

Budget policy is formed with the aim of developing and consolidating the principles for the formation and consolidation of indicators for these items and methods for their assessment. This includes: determining the time period, planning procedures, budget formats, and the action program of each of the participants in the process. After developing the budget model, it is necessary to move on to regulating the budget process.

It is necessary to determine which budgets are formed in the company and in what sequence. For each budget, it is necessary to identify a person responsible for preparation (a specific employee, a central financial district) and someone responsible for the execution of the budget (the head of a department, a head of a central federal district), and establish limits, standard values ​​or maximum boundaries for the performance indicators of a central federal district. It is imperative to form a budget committee - this is a body created for the purpose of managing the budget process, monitoring its execution and making decisions.

Step 6. Audit of accounting systems.

At the stage of development and approval of the composition of the company’s management reporting, it is also necessary to take into account that the classifier of budget items must be sufficiently detailed to provide you with useful information about the company’s income and expenses. At the same time, you need to understand that the more levels of detail are allocated, the more time and labor costs will be required to draw up budgets and reports, but the more detailed analytics can be obtained.

It is also necessary to take into account that as a result of developing a management reporting methodology, adaptation of accounting systems may be required, because To analyze budget execution, planned indicators will have to be compared with available actual information.

Step 7. Automation.

This stage includes work on selecting a software product, creating technical specifications, implementation and maintenance of the system.