An important tool that was mentioned in the text (that I am familiar
with) is responsibility accounting. This very useful tool provides an
organization with reporting on individual departments, cost centers,
locations, etc. This type of reporting allows managers to
evaluate/analyze the performance of the subunit(s) for which they
are responsible. Additionally, it holds them accountable for their
results in comparison to their individual budget (Romney et al., 2020).
Responsibility accounting also provides managers a convenient way
to closely monitor costs and revenues throughout the fiscal year.
Decisions based on the reported results may warrant the need of
adjustments to activities and/or strategies put in place to arrive at
more favorable results. In many cases, responsibility accounting may
trigger organizations to issue rewards and penalties based on their
individual results. Putting a system in place to reward (or penalize)
employees is a great way to improve performance.
Reference
Romney, M. B., Steinbart, P. J., Summers, S. L., & Wood, D. A. (2020).
Accounting Information Systems (15th ed.). Pearson Education (US).
https://mbsdirect.vitalsource.com/books/9780135573082
