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Student Name (As per last

qualification mark sheet) CHAVALI VENKATA MARUTIRATNA PRAKASH

Enrollment Number IIMTS/IND/MPTE/CV5173/03B17

Course title MPTE

Semester No. 1

Subject title General Engineering

Examination paper receiving date 27 / 12 /2017

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Q1 (a) What is understood by the term management ? explain lucidly.

(b) Define organization .Discuss the issues involved in divisional versus functional choice

in the design of an organization.

Management is the process of reaching organizational goals by working with and through people and other
organizational resources.

Management has the following 3 characteristics:

It is a process or series of continuing and related activities.

It involves and concentrates on reaching organizational goals.

It reaches these goals by working with and through people and other organizational resources.

MANAGEMENT FUNCTIONS:

The 4 basic management functions that make up the management process are described in the following sections:

PLANNING

ORGANIZING

INFLUENCING

CONTROLLING.

PLANNING:

Planning involves choosing tasks that must be performed to attain organizational goals, outlining how the tasks must
be performed, and indicating when they should be performed.

Planning activity focuses on attaining goals. Managers outline exactly what organizations should do to be successful.
Planning is concerned with the success of the organization in the short term as well as in the long term.

ORGANIZING:

Organizing can be thought of as assigning the tasks developed in the planning stages, to various individuals or groups
within the organization. Organizing is to create a mechanism to put plans into action.

People within the organization are given work assignments that contribute to the company’s goals. Tasks are
organized so that the output of each individual contributes to the success of departments, which, in turn, contributes
to the success of divisions, which ultimately contributes to the success of the organization.

INFLUENCING:

Influencing is also referred to as motivating,leading or directing.Influencing can be defined as guiding the activities of
organization members in he direction that helps the organization move towards the fulfillment of the goals.
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The purpose of influencing is to increase productivity. Human-oriented work situations usually generate higher levels
of production over the long term than do task oriented work situations because people find the latter type
distasteful.

CONTROLLING:

Controlling is the following roles played by the manager:

Gather information that measures performance

Compare present performance to pre established performance norms.

Determine the next action plan and modifications for meeting the desired performance parameters.

Controlling is an ongoing process.

Q1 (b) Define organization .Discuss the issues involved in divisional versus functional choice

in the design of an organization.

ORGANISATION

A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations
have a management structure that determines relationships between the different activities and the members, and
subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open
systems--they affect and are affected by their environment.

Organizational design is a step-by-step methodology which identifies dysfunctional aspects of work flow, procedures,
structures and systems, realigns them to fit current business realities/goals and then develops plans to implement
the new changes. The process focuses on improving both the technical and people side of the business.

For most companies, the design process leads to a more effective organization design, significantly improved results
(profitability, customer service, internal operations), and employees who are empowered and committed to the
business. The hallmark of the design process is a comprehensive and holistic approach to organizational
improvement that touches all aspects of organizational life, so you can achieve:

Excellent customer service

Increased profitability

Reduced operating costs

Improved efficiency and cycle time

A culture of committed and engaged employees

A clear strategy for managing and growing your business

By design we’re talking about the integration of people with core business processes, technology and systems. A
well-designed organization ensures that the form of the organization matches its purpose or strategy, meets the
challenges posed by business realities and significantly increases the likelihood that the collective efforts of people
will be successful.
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As companies grow and the challenges in the external environment become more complex, businesses processes,
structures and systems that once worked become barriers to efficiency, customer service, employee morale and
financial profitability. Organizations that don’t periodically renew themselves suffer from such symptoms as:

Inefficient workflow with breakdowns and non value-added steps

Redundancies in effort ( we don’t have time to do things right, but do have time to do them over )

Fragmented work with little regard for good of the whole (Production ships bad parts to meet their quotas)

Lack of knowledge and focus on the customer

Silo mentality and turf battles

Lack of ownership ( It’s not my job )

Cover up and blame rather than identifying and solving problems

Delays in decision-making

People don’t have information or authority to solve problems when and where they occur

Management, rather than the front line, is responsible for solving problems when things go wrong

It takes a long time to get something done

Systems are ill-defined or reinforce wrong behaviors

Mistrust between workers and management

Methodology

Although adaptable to the size, complexity and needs of any organization, the design process consists of the
following steps.

Charter the design process

As senior leaders, you come together to discuss current business results, organizational health, environmental
demands, etc. and the need to embark on such a process. You establish a charter for the design process that includes
a case for change, desired outcomes, scope, allocation of resources, time deadlines, participation, communications
strategy, and other parameters that will guide the project.

(At times, senior teams may go through either a strategic planning process or an executive team development
process prior to beginning a redesign initiative, depending on how clear they are about their strategy and how well
they work together as a team.)

Assess the current state of the business

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You don’t want to begin making changes until you have a good understanding of the current organization. Using our
Transformation Model, we facilitate a comprehensive assessment of your organization to understand how it
functions, its strengths and weaknesses, and alignment to your core ideology and business strategy. The assessment
process is astounding in the clarity it brings an organization’s leaders and members, not only regarding how the
organization currently works but how the various parts are interrelated, its overall state of health and, most
importantly, what needs to be done to make improvements.

Design the new organization

The senior team (and/or others who have been invited to participate in the process), look to the future and develop
a complete set of design recommendations for the ideal future. At a high level, the steps in this process include the
following:

Q2 (a) Discuss the role of planning practices in Indian organizations in the light of changed

circumstances.

Streamlining core business processes—those that result in revenue and/or deliverables to customers.

Documenting and standardizing procedures.

Organizing people around core processes. Identifying headcount necessary to do core work.

Defining tasks, functions, and skills. What are the performance metrics for each function/team? How are they
evaluated and held accountable?

Determining facility, layout and equipment needs of various teams and departments throughout the organization.

Identifying support resources (finance, sales, HR, etc.), mission, staffing, etc. and where should these should be
located.

Defining the management structure that provides strategic, coordinating and operational support.

Improving coordinating and development systems (hiring, training, compensation, information-sharing, goal-
setting, etc.).

At some point the design process morphs into transition planning as critical implementation dates are set and
specific, concrete action plans created to implement the new design. And a key part of this step includes
communicating progress to other members of the organization. A communications plan is developed that educates
people in what is happening. Education brings awareness, and everyone’s inclusion brings the beginning of
commitment.

Implement the design

Now the task is to make the design live. People are organized into natural work groups which receive training in the
new design, team skills and start-up team building. New work roles are learned and new relationships within and
without the unit are established. Equipment and facilities are rearranged. Reward systems, performance systems,
information sharing, decision-making and management systems are changed and adjusted. Some of this can be
accomplished quickly. Some may require more detail and be implemented over a longer period of time.
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Example:

A few years back we worked with a company within the aluminum industry. The company recognized they were
becoming bureaucratic and unresponsive to their customers needs. Following a period of assessment of the
strengths and weaknesses of the existing organization, they went through a process of organizational redesign in
which they organized their front office functions to become more collaborative and customer focused. The diagrams
below illustrate, at a high level, this change.

Summary

This approach to redesign results in dramatic improvements in quality, customer service, decreased cycle times,
lower turnover and absenteeism, productivity gains from 25 to at least 50%, etc. The good news is that it can be used
in most any type and size of business. The length of time required to complete a redesign varies depending on the
nature, size and resources of the organization. Large and complex redesign projects can be completed within several
days. Smaller organizations require much less time and fewer resources

2 (b) Who developed the four Cs model of human resources management and why ?

Explain the two critical factors involved in it.

To evaluate the effectiveness of the HRM process within an organization, the Harvard researchers have proposed a
four C’s model: Competence, Commitment, Congruence, and Cost effectiveness. Let us look at some examples of
questions related to each of the four C’s, and some methods for measuring them.

1.Competence

How competent are employees in their work? Do they need additional training? Performance evaluations by
managers can help a company determine what talent it has available. To what extent do HRM policies attract, keep,
and develop employees with skills and knowledge needed now and in’the future?’

2.Commitment

How committed are employees to their work and organization? Surveys can be conducted through interviews and
questionnaires to find answers to this question. Additional information can be gained from personnel records about
voluntary separation, absenteeism, and grievances. To what extent do HRM policies enhance the commitment of
employees to their work and organization?

3.Congruence

Is there congruence, or agreement, between the basic philosophy and goals of the company and its employees? Is
there trust and common purpose between managers and employees? Incongruence can be detected in the
frequency of strikes, conflicts between managers and subordinates, and grievances. A low level of congruence results
in low levels of trust and common purpose; tension and stress between employees and managers may increase.
What levels of congruence between management and employees do HRM policies and practices enhance or retain?

4.Cost effectiveness

Are HRM policies cost-effective in terms of wages, benefits,

Turnover, absenteeism, strikes, and similar factors?

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Even more difficult than addressing and measuring the extent of the four C’s within a company is the problem of
assessing HRM outcomes. In other words, how do you make judgments about the long-term consequences of HRM
policies on employee and societal well-being and organizational effectiveness? How, for example, do you go about
the formidable task of assigning a value to employee commitment or to an organizational climate and culture that
encourages motivation and employee growth? In the final analysis,

Managers need the participation of a broad range of stakeholders (including management, unions, and
governmental agencies) to obtain the data needed to evaluate the impact of HRM practices and policies.

By shaping HRM policies to enhance commitment, competence, congruence, and cost effectiveness, an organization
increases its capacity to adapt to changes in its environment. High commitment, for example, means better
communication between employees and managers. Mutual trust is enhanced, and all stakeholders are responsive to
one another’s needs and concerns whenever changes in environmental demands occur. High competence means
that employees are versatile in their skills and can take on new roles and jobs as needed. They are better able to
respond to changes in environmental demands. Cost effectiveness means that human resource costs, such as wages,
benefits, and strikes, are kept equal to or less than those of competitors. Finally, higher congruence means that all
stakeholders share a common purpose and collaborate in solving problems brought about by changes in
environmental demands. This capacity to collaborate is crucial in an ever-changing environment.

Q3 (a) What is plant layout ? Explain the objective of good plant layout.

Industrial Plant Layout: Meaning, Definition, Need and Importance!

Meaning:

Plant layout is the most effective physical arrangement, either existing or in plans of industrial facilities i.e.
arrangement of machines, processing equipment and service departments to achieve greatest co-ordination and
efficiency of 4 M’s (Men, Materials, Machines and Methods) in a plant.

Layout problems are fundamental to every type of organization/enterprise and are experienced in all kinds of
concerns/undertakings. The adequacy of layout affects the efficiency of subsequent operations.

Plant layout refers to the physical arrangement of production facilities. It is the configuration of departments, work
centres and equipment in the conversion process. It is a floor plan of the physical facilities, which are used in
production.

A plant layout study is an engineering study used to analyze different physical configurations for a manufacturing
plant. It is also known as Facilities Planning and Layout.

Design of a good industrial layout

Facility Layout Planning

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Some Precise Definitions for Plant Layout:

According to Moore Plant layout is a plan of an optimum arrangement of facilities including personnel, operating
equipment, storage space, material handling equipment and all other supporting services along with the design of
best structure to contain all these facilities .

Plant layout is the arrangement of machines, work areas and service areas within a factory . —George R. Terry

Plant layout involves the development of physical relationship among building, equipment and production
operations, which will enable the manufacturing process to be carried on efficiently . —Morris E. Hurley

Plant layout can be defined as a technique of locating machines, processes and plant services within the factory so
as to achieve the greatest possible output of high quality at the lowest possible total cost of manufacturing . —
Sprigal and Lansburg Plant layout ideally involves the allocation of space and the arrangement of equipment in such
a manner that overall operations cost can be minimised. —J. Lundy

From these definitions it is clear that plant layout is arrangement and optimum utilisation of available resources in
such a manner so as to ensure maximum output with minimum input.

Objectives of Plant Layout:

The primary goal of the plant layout is to maximise the profit by arrangement of all the plant facilities to the best
advantage of total manufacturing of the product.

Q3 (b) What is maintenance planning ? Discuss its importance in Indian industrial scenario.

Maintenance Planning & Scheduling

To achieve world class performance, organizations must plan, schedule and track maintenance activities. In the
maintenance world, planning and scheduling are two different functions that work together to create a maintenance
program. Planning is the the process of planning, while scheduling is the process of reconfiguring workloads in a
production/manufacturing process. Scheduling is used to allocate plant and machinery resources, plan human
resources, plan production processes, and purchase materials.

Computerized Maintenance Management Systems (CMMS) offer the tools to plan and schedule maintenance,
measure what you treasure, and act on the results. However, a successful implementation process is critical to
leverage the full power of a maintenance management system. There are three main elements that are associated
with a CMMS implementation journey:

1. Continuous Improvement

2. CMMS building blocks: assets, PMs, contacts, parts, work orders, and schedules

3. Asset Reliability Strategies or best practices such as ISO 55000, ISO 14224, KPIs, MRO, TPM, and RCM
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Q5 (a) What is a Sales Forecast ? why is it important.

(b) What are the major activities of financial institutions in India ?

Sales Forecast

Sales forecasting is the process of estimating future sales. Accurate sales forecasts enable companies to make
informed business decisions and predict short-term and long-term performance. Companies can base their forecasts
on past sales data, industry-wide comparisons, and economic trends.

It is easier for established companies to predict future sales based on years of past business data. Newly founded
companies have to base their forecasts on less-verified information, such as market research and competitive
intelligence to forecast their future business.

Sales forecasting gives insight into how a company should manage its workforce, cash flow, and resources. In
addition to helping a company allocate its internal resources effectively, predictive sales data is important for
businesses when looking to acquire investment capital.

Sales forecasting allows companies to:

Predict achievable sales revenue;

Efficiently allocate resources;

Plan for future growth.

Sales Planning

When your sales reps make their forecasts, they are also planning their future activities, providing each of them with
a business plan for managing their territory. Assuming that each of them has a quota to fill, forecasting is the tool
that helps them identify the customers to meet their objectives.

Demand Forecasting

The sales forecast is your best tool to get a good estimate of the demand for the products you sell. Your sales team is
the front line for your business and best positioned to gather information about anticipated demand.

Higher OTIF Delivery

With accurate sales forecasting, you can achieve a higher rate of on time in full, or OTIF, delivery. The information
from sales forecasts guarantees that sufficient product will be manufactured or ordered to service customers on a
timely basis, resulting in happier customers and fewer complaints.
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Inventory Controls

The more accurate the sales forecast, the better prepared your company will be to manage its inventory, avoiding
both overstock and stock-out situations. Stable inventory also means better management of your production.

Supply Chain Management

When you can predict demand and manage production more efficiently, you also have better control over your
supply chain. This affords you the opportunities to manage resources and take full advantage of just-it-time ordering.

Financial Planning

Anticipating sales gives you the information you need to predict revenue and profit. Having good forecasting
information at your disposal also gives you the ability to explore possibilities to increase both revenue and net
income.

Internal Controls

Having a gasp on the projected production rates for your business makes it possible for you to have better control of
your internal operations. By anticipating future sales you can make decisions about hiring – permanent or temporary
– marketing and expansion.

Continuous Improvement

Continuous improvement is a goal of many if not most businesses. By forecasting sales and continually revising the
process to improve the accuracy, you can improve all aspects of your business performance.

Price Stability

With solid forecasting, the good levels of inventories that you maintain will prevent the need for panic sales to rid
your business of excess merchandise. Sales may be managed on a thoughtful planned basis.

Marketing

Sales forecasting gives marketing an advanced look at future sales and offers the opportunity to schedule
promotions if it appears sales will be weak. In extreme cases, sales forecasts may lead to discontinuing slow-moving
products.
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(b) What are the major activities of financial institutions in India ?

The Financial Institutions in India mainly comprises of the Central Bank which is better known as the Reserve Bank of
India, the commercial banks, the credit rating agencies, the securities and exchange board of India, insurance
companies and the specialized financial institutions in India.

Reserve Bank of India:

The Reserve Bank of India was established in the year 1935 with a view to organize the financial frame work and
facilitate fiscal stability in India.

The bank acts as the regulatory authority with regard to the functioning of the various commercial bank and the
other financial institutions in India.

The bank formulates different rates and policies for the overall improvement of the banking sector. It issue currency
notes and offers aids to the central and institutions governments.

Commercial Banks in India:

The commercial banks in India are categorized into foreign banks, private banks and the public sector banks. The
commercial banks indulge in varied activities such as acceptance of deposits, acting as trustees, offering loans for the
different purposes and are even allowed to collect taxes on behalf of the institutions and central government.

Credit Rating Agencies in India:

The credit rating agencies in India were mainly formed to assess the condition of the financial sector and to find out
avenues for more improvement. The credit rating agencies offer various services as:

Operation Up gradation

Training to Employees

Scrutinize New Projects and find out the weak sections in it

Rate different sectors

The two most important credit rating agencies in India are:

CRISIL

ICRA

Securities and Exchange Board of India:

The securities and exchange board of India, also referred to as SEBI was founded in the year 1992 in order to protect
the interests of the investors and to facilitate the functioning of the market intermediaries. They supervise market
conditions, register institutions and indulge in risk management.

Insurance Companies in India:

The insurance companies offer protection against losses. They deal in life insurance, marine insurance, vehicle
insurance and so on. The insurance companies collect the little saving of the investors and then reinvest those
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savings in the market. The insurance companies are collaborating with different foreign insurance companies after
the liberalization process. This step has been incorporated to expand the Indian Insurance market and make it
competitive.

Specialized Financial Institutions in India:

The specialized financial institutions in India are government undertakings that were set up to provide assistance to
the different sectors and thereby cause overall development of the Indian economy. The significant institutions
falling under this category includes:

Board for Industrial & Financial Reconstruction

Export-Import Bank Of India

Small Industries Development Bank of India

National Housing Bank

Q4 (a) What is design analysis and how is it used in a value analysis programme ?

------------------------------------------------------------------------------------------

(b) What are the financial statements ? explain internal and external reporting of

financial statements.

Financial Statement:

Financial statements are written records of a business's financial situation. They include standard reports like the
balance sheet, income or profit and loss statements, and cash flow statement. They stand as one of the more
essential components of business information, and as the principal method of communicating financial information
about an entity to outside parties. In a technical sense, financial statements are a summation of the financial position
of an entity at a given point in time. Generally, financial statements are designed to meet the needs of many diverse
users, particularly present and potential owners and creditors. Financial statements result from simplifying,
condensing, and aggregating masses of data obtained primarily from a company's (or an individual's) accounting
system.

FINANCIAL REPORTING

According to the Financial Accounting Standards Board, financial reporting includes not only financial statements but
also other means of communicating financial information about an enterprise to its external users. Financial
statements provide information useful in investment and credit decisions and in assessing cash flow prospects. They
provide information about an enterprise's resources, claims to those resources, and changes in the resources.
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Financial reporting is a broad concept encompassing financial statements, notes to financial statements and
parenthetical disclosures, supplementary information (such as changing prices), and other means of financial
reporting (such as management discussions and analysis, and letters to stockholders). Financial reporting is but one
source of information needed by those who make economic decisions about business enterprises.

The primary focus of financial reporting is information about earnings and its components. Information about
earnings based on accrual accounting usually provides a better indication of an enterprise's present and continuing
ability to generate positive cash flows than that provided by cash receipts and payments.

MAJOR FINANCIAL STATEMENTS

The basic financial statements of an enterprise include the 1) balance sheet (or statement of financial position), 2)
income statement, 3) cash flow statement, and 4) statement of changes in owners' equity or stockholders' equity.
The balance sheet provides a snapshot of an entity as of a particular date. It list the entity's assets, liabilities, and in
the case of a corporation, the stockholders' equity on a specific date. The income statement presents a summary of
the revenues, gains, expenses, losses, and net income or net loss of an entity for a specific period. This statement is
similar to a moving picture of the entity's operations during this period of time. The cash flow statement summarizes
an entity's cash receipts and cash payments relating to its operating, investing, and financing activities during a
particular period. A statement of changes in owners' equity or stockholders' equity reconciles the beginning of the
period equity of an enterprise with its ending balance.

Items currently reported in financial statements are measured by different attributes (for example, historical cost,
current cost, current market value, net reliable value, and present value of future cash flows). Historical cost is the
traditional means of presenting assets and liabilities.

Notes to financial statements are informative disclosures appended to the end of financial statements. They provide
important information concerning such matters as depreciation and inventory methods used, details of long-term
debt, pensions, leases, income taxes, contingent liabilities, methods of consolidation, and other matters. Notes are
considered an integral part of the financial statements. Schedules and parenthetical disclosures are also used to
present information not provided elsewhere in the financial statements.

Each financial statement has a heading, which gives the name of the entity, the name of the statement, and the date
or time covered by the statement. The information provided in financial statements is primarily financial in nature
and expressed in units of money. The information relates to an individual business enterprise. The information often
is the product of approximations and estimates, rather than exact measurements. The financial statements typically
reflect the financial effects of transactions and events that have already happened (i.e., historical).

Financial statements presenting financial data for two or more periods are called comparative statements.
Comparative financial statements usually give similar reports for the current period and for one or more preceding
periods. They provide analysts with significant information about trends and relationships over two or more years.
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Comparative statements are considerably more significant than are single-year statements. Comparative statements
emphasize the fact that financial statements for a single accounting period are only one part of the continuous
history of the company.

Interim financial statements are reports for periods of less than a year. The purpose of interim financial statements is
to improve the timeliness of accounting information. Some companies issue comprehensive financial statements
while others issue summary statements. Each interim period should be viewed primarily as an integral part of an
annual period and should generally continue to use the generally accepted accounting principles (GAAP) that were
used in the preparation of the company's latest annual report. Financial statements are often audited by
independent accountants for the purpose of increasing user confidence in their reliability.

Every financial statement is prepared on the basis of several accounting assumptions: that all transactions can be
expressed or measured in dollars; that the enterprise will continue in business indefinitely; and that statements will
be prepared at regular intervals. These assumptions provide the foundation for the structure of financial accounting
theory and practice, and explain why financial information is presented in a given manner.

Financial statements also must be prepared in accordance with generally accepted accounting principles, and must
include an explanation of the company's accounting procedures and policies. Standard accounting principles call for
the recording of assets and liabilities at cost; the recognition of revenue when it is realized and when a transaction
has taken place (generally at the point of sale), and the recognition of expenses according to the matching principle
(costs to revenues). Standard accounting principles further require that uncertainties and risks related to a company
be reflected in its accounting reports and that, generally, anything that would be of interest to an informed investor
should be fully disclosed in the financial statements.

ELEMENTS OF FINANCIAL STATEMENTS

The Financial Accounting Standards Board (FASB) has defined the following elements of financial statements of
business enterprises: assets, liabilities, equity, revenues, expenses, gains, losses, investment by owners, distribution
to owners, and comprehensive income. According to FASB, the elements of financial statements are the building
blocks with which financial statements are constructed. These FASB definitions, articulated in its "Elements of
Financial Statements of Business Enterprises," are as follows:

Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past
transactions or events.

Comprehensive income is the change in equity (net assets) of an entity during a period from transactions and other
events and circumstances from nonowner sources. It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners.

Distributions to owners are decreases in net assets of a particular enterprise resulting from transferring assets,
rendering services, or incurring liabilities to owners. Distributions to owners decrease ownership interest or equity in
an enterprise.
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Equity is the residual interest in the assets of an entity that remains after deducting its liabilities. In a business entity,
equity is the ownership interest.

Expenses are outflows or other uses of assets or incurring of liabilities during a period from delivering or producing
goods or rendering services, or carrying out other activities that constitute the entity's ongoing major or central
operation.

Gains are increases in equity (net assets) from peripheral or incidental transactions of an entity and from all other
transactions and other events and circumstances affecting the entity during a period except those that result from
revenues or investments by owner.

Investments by owners are increases in net assets of a particular enterprise resulting from transfers to it from other
entities of something of value to obtain or increase ownership interest (or equity) in it.

Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to
transfer assets or provide services to other entities in the future as a result of past transactions or events.

Losses are decreases in equity (net assets) from peripheral or incidental transactions of an entity and from all other
transactions and other events and circumstances affecting the entity during a period except those that result from
expenses or distributions to owners.

Revenues are inflows or other enhancements of assets of an entity or settlement of its liabilities (or a combination of
both) during a period from delivering or producing goods, rendering services, or other activities that constitute the
entity's ongoing major or central operations.

SUBSEQUENT EVENTS

In accounting terminology, a subsequent event is an important event that occurs between the balance sheet date
and the date of issuance of the annual report. Subsequent events must have a material effect on the financial
statements. A "subsequent event" note must be issued with financial statements if the event (or events) is
considered to be important enough that without such information the financial statement would be misleading if the
event were not disclosed. The recognition and recording of these events often requires the professional judgment of
an accountant or external auditor.

Events that effect the financial statements at the date of the balance sheet might reveal an unknown condition or
provide additional information regarding estimates or judgments. These events must be reported by adjusting the
financial statements to recognize the new evidence. Events that relate to conditions that did not exist on the balance
sheet date but arose subsequent to that date do not require an adjustment to the financial statements. The effect of
the event on the future period, however, may be of such importance that it should be disclosed in a footnote or
elsewhere.

PERSONAL FINANCIAL STATEMENTS

The reporting entity of personal financial statements is an individual, a husband and wife, or a group of related
individuals. Personal financial statements are often prepared to deal with obtaining bank loans, income tax planning,
retirement planning, gift and estate planning, and the public disclosure of financial affairs.

For each reporting entity, a statement of financial position is required. The statement presents assets at estimated
current values, liabilities at the lesser of the discounted amount of cash to be paid or the current cash settlement
amount, and net worth. A provision should also be made for estimated income taxes on the differences between the
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estimated current value of assets. Comparative statements for one or more periods should be presented. A
statement of changes in net worth is optional.

What are Internal Reports?

Reports that are prepared by the management accountant and submitted before the different levels of management
for the purpose of planning and control are called Internal reports.

Types of Internal Reports

Internal reports may be of the following types.

1. Routine Reports

It is otherwise called general reports or periodical reports. These types of reports are submitted before management
at periodic intervals.

The period of intervals may be a week, fortnightly, monthly, quarterly, half-yearly and yearly. Sometimes, some
reports are prepared and submitted even daily also.

Examples of Routine reports

The following are the examples of routine reports.

1. Production Report.

2. Sales Report.

3. Production Cost Report.

4. Direct Labour Hours Report.

5. Direct Labour Cost Report

6. Operating Report.

7. Schedule of Debtors

8. Research and Development Report.

9. Funds from Operation Report.

10. Working Capital Changes Report.

2. Special Reports

A report is prepared and submitted on a request of the management for achieving a specific objective i.e. Special
Report. Such type of special report do not deal with the day-to-day problem.

Special report is presented only after making an investigation very clearly with regard to any specific problem which
requires special attention.

Generally, the following matters may be covered in the special report.

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1. Utilization of Idle Capacity.

2. Effect of ideal capacity on cost of production.

3. Make or buy Decision.

4. Creation of New Market.

5. Introducing New Product.

6. Need of Advertisement.

7. Cost Reduction Schemes.

8. Whether to purchase or hire a fixed asset.

9. Research and Development expenditure problems.

10. Effect of Labour Dispute and so on.

3. Management Level Reports

The management level is classified as top level, middle level and lower level. A report cannot be useful to all the
levels of management. Hence, a report is prepared and submitted according to the level of management.

The management level report includes

1. Reports to Foreman

2. Reports to First Line Manager

3. Reports to Department Manager

4. Reports to General Manager

5. Reports to Company Secretary

6. Reports to Board of Directors

7. Reports to Managing Director

In the case of top level management, a report is prepared in a more summarized way. But, in the case of lower level
management, the report is prepared in a more detailed way.

What are External Reports?

Reports that are prepared and submitted before the external parties such as shareholders, Government and Credit
Institutions are called external reports.
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Types of External Reports

The following are some of the types of external reports.

1. Reports to Shareholders

The shareholders, who are the real owners of the company, are interested to know the performance of the
company. Hence, the reports such as annual reports which includes balance sheet and income statement and
directors reports prepared for the shareholders.

2. Report to Government

Information regarding income tax and sales tax are submitted to the Government.

3. Report to Credit Institutions

A company can avail credit facility from the banks and financial institutions. In this case, they are interested to know
the solvency position of the company. Therefore, financial performance and financial position reports are submitted
before the credit institutions.

4. Report to Stock Exchange

Generally, every company has listed its shares any one of the stock exchange. Hence, a report on the prescribed form
has to be submitted to the stock exchange authorities. In addition, a copy of annual accounts has also to be sent to
them.

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