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Financial Reporting System (FRS) Financial reporting system provides financial reports needed by external users such as stockholders, creditors and government agencies for decision making. It is connected from the GLS or general ledger system in the sense that the information provided by the FRS are lifted from the summaries of transactions captured by GLS. GLS on the other hand, captures transactions from the transaction processing system (TPS) which represents the day to day and regular transactions of the business TPS as we have discussed before is composed of three transaction cycles: expenditure, conversion and revenue cycles. Each of these transaction cycles is composed of different subsystems. Summarizing the different transactions per subsystem or per its nature helps the firm to effectively and efficiently deal its voluminous transactions. Below is the list of subsystem comprising the expenditure and revenue cycles of the business. TPS Subsystem Description Expenditure cycle Purchases All items purchased by the company are recorded here Accounts Payable All unpaid vendor's invoices are listed and shown Payroll Salary of employees are computed using this system Cash disbursements All payments to vendors and suppliers are processed here Revenue Cycle Sales All items delivered to customers which represents the sales of the firm are recorded here Billing All customers who received the goods should be billed using this system Cash Receipts All collections received from customers/clients and other parties are reflected hereManagement Reporting System (MRS) MRS provides reports needed by management for decision making. Unlike the FRS, MRS reports are discretionary. However, MRS also lifts information from the GLS. In the design of an effective MRS. it is important to note the information that managers need to deal with the problems they face. There are factors which influence management information needs. These are management principles; management function, level, and decision type; problem structure, types of management reports; responsibility accounting; and behavioral considerations a. Management principles- recommend that management should structure the firm around the tasks it performs not the individual performing the tasks (formalization of tasks), identify the vertical reporting channels of the firm through which information flows to determine whether the information needed by managers is more summarized information or more detailed information (responsibility and authority), determine the number of subordinates directly under his or her to know if detailed reports for narrow span of control or summarized reports for broad span of control should be given (span of control) and suggests that managers should limit their attention to potential problem areas not with every activity.b. Management function, level, and decision type - Management performs planning and control functions. Different management levels perform different types of decisions. Operations personnel and operations management deals on decisions regarding operation's control. Middle management performs decision on tactical planning and management controls while top management performs decision on strategic planning controls. C. Problem structure - lower level of management deals with fully structured problems in which the three elements of structure are present: data, procedures and objectives while upper management deals more on unstructured problems in which these three characteristics are not known with certainty. d. Types of management reports-programmed reports that users need like scheduled reports and on-demand reports and ad hoc reports since not all the times that managers know what information they need. e. Responsibility accounting- requires setting of budgets relative to manager's responsibilities and measuring actual performance based on the budget only for those items which are within the control of the manager. The organization identifies what departments are considered cost centers, profit centers and investment centers. f. Behavioral considerations - a carefully structured MRS promotes goal congruence on the part of the employees in the sense that they serve the best interest of the firm as well as satisfying and serving their own best interest. On the other side, if MRS is not carefully design, it could lead to negative results. This is attributed because of too much information given to managers resulting to information overload due to disregard of the designer of the MRS of manager's span of control and also his position level on the management.