Managerial Accounting and Organizational Controls Case Study

Managerial Accounting and Organizational Controls - Case Study Example This is done by standard reports that are generated at regular intervals. They may be generated monthly, quarterly, or annually and adhere to standard guidelines that are accepted by the accounting industry. The reports tell the amount of business, cost of sales, debt, and assets that a company has. The reports are used by creditors, bankers, investors, and shareholders to make financial decisions in regard to the company. Government agencies use these reports to calculate taxes and fees. These reports are routinely audited by outside parties to assure that proper accounting methods are being used and that the reports contain accurate information. This helps to safeguard investors and shareholders from financial loss and keeps investors and creditors apprised of the condition of the company's finances. Legal and ethical issues arise when external accounting is faulty and presents an incorrect view of the company's financial situation. If it is done intentionally, it is a grave legal issue as has been seen with some companies in the news recently. If it is done in error, or because of bad judgment, it is a serious violation of ethics and may also be criminal. The importance placed on these reports being correct cannot be overstated.