Professional Documents
Culture Documents
Chapter 1
Chuẩn mực và
Management and Control
tiêu chuẩn trong
kiểm toán hoạt động
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Learning outcomes
❖Management and Control
❖Causes of management control problems
❖Control problem avoidance
❖Control Alternatives
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Objectives
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1.1. Management control
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Function and benefit
of Management Control
❖ Benefit …
▪ increased probability that the organization’s
objectives will be achieved.
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Management and its components ...
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Management and its components ...
❖ Management …
❖ Process-breakdown …
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Objective setting
...
❖ Objectives are …
• a necessary prerequisite for any purposeful activities.
❖ Objectives can be …
• financial versus non-financial;
• quantified, explicit versus implicit;
• economic, social, environmental, societal.
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Strategy formulation ...
❖ An organization must select any of innumerable
ways of seeking to attain its objectives.
❖ Hence,
… strategies put constraints on employees to
focus activities on what the organization does
best or areas where it has an advantage over
competitors.
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Control ...
❖ Strategic control …
• Is our strategy (still) valid?
• Strategy revision -- “intended” vs. “emergent” strategies.
❖ Management Control …
▪ Are our employees likely to behave appropriately?
(design)
• Do they understand what we expect of them?
• Will they work consistently hard and try to do what
is expected of them?
• Are they capable of doing what is expected of them?
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The planning / control cycle
...
Goals Objective Setting
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1.2.The basic control
problem ...
❖ Management control is about encouraging
PEOPLE to take desirable actions,
• i.e., it guards against the possibilities that employees will
do something the organization does not want them to do,
or, fail to do something they should do.
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Recall that ...
❖ Management Control is about taking steps to help
ensure that the employees do what is best for the
organization.
❖ Three issues:
• Do they understand what we expect of them ...
Lack of direction
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Lack of direction ...
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Motivational problems ...
❖ When employees ‘choose’ not to perform as
their organization would have them perform.
❖ Because …
▪ Lack of goal congruence
• Individual goals do not coincide with organizational goals.
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Personal limitations …
❖ Sometimes, people are “unable” to do a good job because of
certain personal limitations they have.
❖ Remedies:
▪ Training
▪ Job assignment / promotion
▪ Job design
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Management control is more than ...
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Control and “good” control ...
❖ Again, … management controls include all the devices
managers use to ensure that the behaviors and decisions
of people are consistent with the organization’s objectives
and strategies.
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Control can be achieved through ...
• Action Controls;
• Results Controls;
• People Controls.
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1.3.Control-problem avoidance ...
❖ Four strategies …
▪ Risk sharing
• Sharing risks with outside entities can bound the losses that could be
incurred by inappropriate employee behaviors
▪ Activity elimination
• e.g., subcontracts, licensing agreements, divestment.
▪ Automation
• Computers / robots eliminate the human problems
of inaccuracy, inconsistency, and lack of motivation;
• Only applicable to relatively easy decision situations;
• Automation can be very costly.
▪ Centralization
• Superiors reserve for themselves the most critical
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1.4. Control alternatives
❖ Controls can focus on:
PERSONNEL CONTROLS
▪ the types of people
employed and their
shared values and
norms.
Or any combination of those ...
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Depending on ...
Action Control
and/or Action Control
Results Control (e.g., large projects)
High Low
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Overview ...
Can people be avoided? Yes Control-problem
(e.g., automation, centralization)
avoidance
No
Yes
Can you rely on people involved?
No Personnel controls
Yes
Can you make people reliable?
No
Have knowledge about what Yes Able to assess whether
specific actions are desirable? specific action was taken?
Yes
No
Action controls
Have knowledge about what Yes
results are desirable? Able to measure results?
Yes
No
Results controls
?
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