Thanks to the implementation of new economic reforms by the UAE government, businesses in the country are slowly but surely realigning themselves to comply with these accounting practices. In order to comply with the amendments to the Commercial Companies Law, VAT, Economic Substance Regulations (ESR), Anti-Money Laundering and Combating Financing of Terrorism (AML-CFT), and Ultimate Beneficial Ownership, businesses are now required to maintain their business records. As one of the leading accounting firms in Dubai and the UAE, we encourage companies to use Management Information System (MIS) reports to address the challenging issues brought on by the recent changes.
The implementation of Corporate Tax in 2023 will ensure that businesses are now more thorough and elaborate with their accounting practices. Business owners are now required to keep daily books of records, company accounts, and other crucial financial information due to the increased compliance requirements. Businesses must keep accurate MIS reports in order to make wiser business decisions. Failure to do so will have an impact on their everyday operations and could result in a serious financial crisis.
As a company, you may not know how to prepare MIS Report or why it is important. So, in this article, we outline what an MIS report is along with reasons why you shouldn’t discount its importance to the accounting process.
Continue reading to know more about it.
What is MIS and MIS Report?
The acronym MIS stands for Management Information System, which helps a corporate entity to identify potential bottlenecks, problems, and red flags. MIS enables the business to properly examine and evaluate the data it has gathered to develop strategic responses to the issues found. Companies prepare this report using a combination of software, hardware, systematic processes, and processes, including storage, using data sourced from various departments.
Every management relies on MIS reports to evaluate the operation, well-being, and financial standing of their business and to facilitate quicker decision-making. Trends, inventory, cash flows, and a wide range of other information are available through MIS reports, which are typically integrated with the accounting software.
Why should companies use MIS reports?
A company may benefit from the following benefits of MIS when making decisions during its growth phase:
1. The MIS’s ability to produce reliable reports that the management can rely on to make choices with confidence is its first key benefit.
2. It aids in the eradication of errors and faults that could happen during manual entries and also offers accurate reports with maximum effectiveness, increasing the management’s confidence in MIS reports.
3. It enables the management to efficiently and methodically gather all of the company’s records and papers, as well as to manage a large amount of financial and operational data quickly.
4. MIS reports assist in ensuring a proper and efficient flow of information throughout the entire company and its departments, allowing management to quickly pinpoint the source of any information and hold staff members accountable.
5. MIS streamlines these complications and permits considerable management of business information as the difficulty of managing corporate information grows with technological advancements.
How does MIS reporting work?
Analytical reporting based on business-related informational data is what MIS reporting is all about. It gives management a clear picture that helps them make decisions by covering all aspects of the company in addition to its financial statements. An MIS report combines all of a company’s operations and departments, guaranteeing complete departmental coordination and effective execution of plans and strategies.
Detecting, monitoring, and evaluating a business’s daily operations are all part of MIS reporting. It focuses on giving a clear picture of the company’s performance, that of its personnel, its financial situation, customer relationship management, etc., ensuring continuous monitoring of the company’s operations to prevent expensive mistakes. It recognises discrepancies between the planned performance and actual performance and offers a fix if required.
Typically, companies create different types of MIS reports on a weekly, monthly, half-yearly, or annual basis. The management may receive reports from numerous departments as part of the MIS report, giving them important new information about how various departments operate. The MIS report gathers all the data, such as statistical, unprocessed business data, current business trends, etc., and organises it logically. Additionally, it has the following elements that are crucial to its efficient operation: – people, data, equipment, programmes, and business practices.
Types of MIS reports
The following are the main type of MIS reports prepared by the companies:
a) Summary Report
It is a distinct kind of report in which a sizable amount of business data is shown in a succinct and summarised way. These could include studies on client segmentation, demographics, current market trends, etc.
b) Trend MIS Report
This kind of report focuses on comparing the performance of a new product, service, or technology in the past and the present to highlight changes and determine whether there is a positive or negative difference. This report helps in understanding how well a company’s new product or service performs.
c) Exception MIS Report
Companies prepare an Exception MIS Report in response to the unforeseen conditions that they may encounter from time to time that could alter how an organisation normally operates. For instance, there may occasionally be a lack of raw materials, preventing the company from meeting the demand for essential commodities. An exception report helps determine this and helps in resolving the issue before it leads to bigger problems.
d) Sales MIS Report
This report primarily focuses on the product or service sales of a company on a weekly, monthly or yearly basis. The report helps detect any sales that fall short of expectations, their impact on the revenue, the reason why they didn’t perform, the decisions that led to the sale, etc. A company’s marketing and sales divisions are responsible for preparing a Sales MIS report.
e) Inventory MIS Report
The firm’s inventory consumption is continuously tracked and monitored by MIS. It keeps track of all different kinds of inventories, including work-in-progress inventories, sale inventories, semi-finished goods, completed goods, etc. The Inventory MIS reports recommend the necessary management strategies for managing such inventories. It will, for example, advise buying more raw materials if there is a low inventory of raw materials.
f) Budget MIS Report
Companies create a Budget MIS report to determine the funds required for seamless operation along with the best possible way to allocate them. Through MIS, businesses can quickly determine their funding needs and allocate the necessary amounts without wasting any.
g) Production MIS Report
Production MIS reports are mostly generated by a company’s manufacturing division. This report compares a firm’s target production and actual production. The management therefore can assess the firm’s performance and growth rate by determining the variation between the two.
h) Cashflow MIS Report
The management can assess the actual inflow and outflow of cash in the company with the help of a Cashflow MIS Report. With the help of this report, the management can readily identify areas that require more funding, and how to best employ those funds, etc.
i) Profit MIS Report
The accounts department of the company prepares this report to assess the discrepancy between the actual profits obtained and the expected earnings and if required, determine the causes of such discrepancies.
j) Financial MIS Report
The accounting and finance team of a company puts together the Financial MIS report. All accounting records and statements, including income statements, balance sheets, profit and loss statements, expense statements, etc., are part of this report. Making financial decisions and carrying out other financial actions, such as paying dividends and other payments, depend greatly on these statements and the report.
How Nair & Nelliyatt Chartered Accountants can help?
MIS reports must be prepared carefully because they are important for a company’s growth and financial well-being. Your company’s financial team may not fully know how to prepare MIS report, which can lead to unforeseen challenges in the future.
As one of the leading accounting and auditing firms in Dubai and the UAE, we are well-equipped to help your company prepare and maintain accurate MIS reports. We provide tailored and timely MIS reports for your organisation, and our financial experts check and verify the correctness and reliability of the data and information we receive from your firm. Most importantly, you can count on our team of qualified professionals to constantly deliver the best services that are in line with your expectations.
Reach out to us at info@nn-ca.com or +97143577678 today.
