Effective Control

Control
Management Control is a systematic effort to set standards with planning objectives, to design information feedback systems, to compare actual performance with these predetermined standards, to determine whether there are any deviations and to measure their significance, and to take any action required to assure that all corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives.

Steps in the Control Process

Establish standards and methods for measuring performance. Measure the performance. Determine whether performance matches the standard. Take Corrective action.

Significance of Control
To Create better Quality To Cope with Change To Create faster Cycles To Add Value To Facilitate Delegation and Teamwork

The Changing Philosophy of Control

Bureaucratic Organizations Decentralized Organizations

Designing Control Systems

Identifying Key Performance Areas. Identifying Strategic Control Points.

Types of Controls
Controls Based on Events:
Feed-forward (Preliminary/ Preventive) Concurrent (Ongoing Activities) Feedback (Post Action/ Output)

Controls Based on Application:

Financial Control Budgetary Control Audits

Financial Control
Financial Statements: (Ratio Analysis)
Balance Sheet Income Statement/Profit & Loss Account Cash Flow/Sources and Uses of Funds Statements

Budgetary Control Methods

Responsibility Centers:
Revenue Centers Expense Centers Profit Centers Investment Centers

Types of Budgets
Operating Budgets
Expense Budgets
Engineered Cost Budgets Discretionary Cost Budgets

Revenue Budgets Profit Budgets

Financial Budgets Variable Versus Fixed Budgets

Fixed Costs Variable Costs Semi-variable Costs

Auditing
The Process of appraisal of any financial statement is called Auditing. They are of two types:
External Audit Internal Audit

Thank You