Advanced

‘Textbooks on accounting often describe manage¬ ment information and financial control systems as if they work in exactly the same way as machine control systems. Many accountants appear to assume that they do work in this way. The problem is that business operations do not function like machines. Unless a financial control system is very well designed and managed, then it can easily distort the functioning of a business operation.’

One comment on the design and use offinancial control systems Requirements Having regard to this comment,

(a) • explain the concepts of management infor¬

mation system design, and the role that such systems play in the financial control of business operations;

• explain the role that performance evalu¬ ation plays in a management information system;

• compare and contrast output controls and input controls in the context of a manage¬ ment information system; (11 marks)

(b) explain

• the manner in which management informa¬ tion systems can distort the functioning of the business operations they are meant to serve;

• the action that might be taken by the chartered management accountant in order to avoid such distortion; (9 marks)

(c) explain how the use of PCs, spreadsheets and databases contributes to the cost-effectiveness of management information systems.

(5 marks) (Total 25 marks) CIMA Stage 3 Management Accounting Applications