Management information systems (MIS) are a valuable tool that executives uses to gauge the effectiveness of their business operations. MIS can provide valuable insight into a company's financial health, and assist managers with making critical business decisions. The style and format of MIS have changed throughout the years, but managers still rely on these systems to perform their day-to-day activities.
A management information system focuses on how and what information should be retrieved so managers can make effective decisions. MIS reporting also provides information regarding a company's major processes, such as internal controls, operating procedures and audit preparation. With these systems in place, managers can improve workplace safety, decreasing expenses and maintain client relationships.
Internal controls are specific guidelines that direct the operation of a division or department. Employee responsibilities and work flow management are integral components of a company’s internal controls. Additional internal controls also are in effect in accounting departments, ensuring that all financial information is properly analyzed and recorded. Publicly held corporations must have strong financial internal controls in place to meet Securities and Exchange Commission (SEC) requirements. Failure to adhere to these financial guidelines may result in fines being issued by the SEC.
Operating procedures are the daily activities that involve company personnel and resources. MIS provides guidelines, or standard operating procedures, for personnel to follow when dealing with vendors, clients and government agencies. MIS help protect a company from any legal actions that can arise from daily operations. Department managers usually analyze and review the MIS to ensure the company's mission is fulfilled and department goals are being met.
There are two types of workplace audits: financial and operational. Financial audits verify that companies are recording all financial information according to Generally Accepted Accounting Principles (GAAP). This enables them to assure investors and regulators of their financial stability. Operational audits test the effectiveness of division guidelines on a company’s operations. Management must ensure that employees are following policy when conducting business and that no safety violations are occurring. Some operational audits are required for government certifications.
Technology has greatly increased the functionality of traditional management information systems. Companies now have access to all major divisions and their reports in a shorter time span. This improves overall operations. In addition, with a companywide MIS, managers have the capability of creating reports quickly when a new division or process begins business operations.