Management Control Systems

mismanagement and frauds. . accounting and financial management areas.Concept of Management Control    Ensure that Resources are mobilised and deployed efficiently and effectively. Management control covers the administrative. Methods and procedures adopted by management to provide reasonable assurance that available resources and assets are properly deployed and safe guarded against waste.

organizing and leading. Control is an integral and essential art of the management process and all the managerial efforts of an organization. William Newman: According to him-control one of the basic phases of managing. .MANAGEMENT CONTROL DEFINED   Robert Anthony and Vijay Govindrajan: Management control is a process by which managers influence other members of the organization to implement the organization strategy. along with planning.

Aims at assuring that all aspects are in balance and are operating in close co-ordination.CHARACTERISTICS OF MANAGEMENT CONTROL       Focuses on programs and responsibility centers. Relies on two types of information viz. Built around financial structures Follows a definite pattern and time schedule Co-coordinated and integrated to other sub systems . planned data and actual data.

PROCESS OF MANAGEMENT CONTROL        Organizing the process Segmenting the organization Risk assessments: Planning further activities Management control evaluations: Corrective actions Reporting: .

FACTORS AFFECTING MANAGEMENT CONTROL       Identify the key factors in the business operations Basis for establishing standards of performance such as budgets. standard cost Define the information required for measuring the performance Establishing a reporting system process of measuring may lack objectivity Management control specialists .

MANAGEMENT CONTROL SYSTEMS   It system refers to a framework by which the manager controls the actions of his subordinates and the entire operation of an organization. comparison of actual with targets. It facilitates target fixation. collection of information. . identifying and reporting variations and initiating suitable action to ensure attainment of objectives.

functions on the basis of two sets of information viz. Management Control System covers all functional aspects of a company¶s operation.NATURE OF MANAGEMENT CONTROLS    Focuses on those activities that facilitate attainment of targets of responsibilities centres. . planned data and actual data.

. Management Control System is a coordinated and integrated system. It follows a definite pattern and sequence of activities. although non-monetary variables are also taken in to consideration.   It is built around financial variables.

SCOPE OF MANAGEMENT CONTROL SYSTEM       Management control system process involves communications and interactions in the form of memoranda meetings and conversations In addition it also includes the following Programs/Goals Budgeting Operating and Accounting Reporting and Analysis .

ESSENTIALS OF A GOOD MANAGEMENT CONTROL SYSTEM     Effective Planning Involvement of Top Management: Motivation of Employees: Establish proper communication mechanism: .

Coordinating the activities of the organization iii. v. Evaluating information and deciding the action to be taken. Influencing people to change their behavior.Importance of a well structured control system       Control systems in an organization involve the following activities: i. . Planning-decides what the organization should do ii. Communicating information to different levels of the hierarchical structure iv.

           Perception Attitudes and Beliefs Motivation Goal Congruence Inter-unit Conflict and Cooperation Managerial Styles Force Field Analysis Resistance to Change Entrapment Compromising and Sacrificing Socio-Cultural Influences .Significance of human behaviour pattern in Management control.

STRATEGIC PLANNING. MANAGEMENT CONTROL AND OPERATIONAL CONTROL           a) Level b) Focus c) Complexity d) Element of Judgement e) Information f) Purpose of Estimates g) Persons involved h) Source discipline i) Time Horizon j) Nature of activity .

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