Operating Information
By far the largest quantity of Information that flows through a business is operating
information, that is information that is generated in the course of day-to-day
operations. There is great variety in this information, but in general terms it can be
classified into a relatively few main streams, some of the most important of which
are:

A production stream, consisting of records showing the detail on orders
received from customers, instructions for producing the products to meet these
orders, and records of work in process and finished goods inventories. The
nature of the production stream varies widely in different industries, but it
tends to be similar for companies within a given industry. In some industries,
such as banks and insurance companies, the majority of employee’s process
“papers” in essentially the same way that employees in a factory process
material.

A purchasing and materials stream, consisting of records having to do with
materials and services ordered; with their receipt, with keeping track of
materials while they are in inventory, and with their issue to the production
“departments.”

A payroll stream, consisting of records which show how; much each
employee has earned, the nature of the work that employees did, and how
much they have been paid. Because payroll records must conform to
requirements set forth in social security regulations, there is a great deal of
similarity in the payroll records of most companies.

A plant and equipment stream, consisting of records showing the cost,
location, and condition of each significant non-current asset, together with the
related depreciation data.

A sales and accounts receivable stream, consisting of detailed data on each
order booked, each sales transaction, the credit to accounts receivable that is
generated by the transaction, amount that customers pay, and amounts that
customers currently owe.

A finance stream, consisting of records of cash movements and cash
balances, investments, borrowings and payments made to lenders, and
dividends and other transactions with shareholders.

Cost stream, consisting of records of costs incurred in manufacturing goods
or rendering services.

Responsibility accounting stream, consisting of the revenues, expenses and
investment of responsibility centers.
With the exception of the responsibility accounting stream, these streams of
information are required for purposes other than management control. Summarizing
data that was originally generated for other purposes derives much information used
in the management control process. The additional cost of using these data for
management control purposes is relatively small. Indeed there is such a tremendous
difference in the cost of summarizing information that exists in these operating
streams and the cost of collecting-data, that systems designers often specify that
management control information be obtained from operating information, even
though the available data are not quite what is desired.
Credit: Management Control Systems-MGU