CHAPTER 5:

CONTROLLING
 After studying this chapter, students
will be able to:

5.1 Explain the Concept of Controlling in

Organization
5.1.1 Define controlling in organization
5.1.2 Explain the importance of controlling
5.1.3 Explain the controlling process
a. Set the standard
b. Measure the actual performance
c. Compare the actual performance with
the standard
d. Taking corrective action
5.1.4 Explain the principles of effective control in
organization
 CONTROLLING
5.1.5 Classify the types of controlling in organization

a. Control types by timing

i. Feed forward control
ii. Concurrent control
iii. Feed back control

b. Financial controls
i. Financial statement
ii. Ratio analysis

c. Benchmarking
IMPORTANCE OF CONTROLLING
IMPORTANCE OF CONTROLLING
IMPORTANCE OF CONTROLLING
CONTROLLING PROCESS

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 CONTROLLING PROCESS
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 CONTROLLING PROCESS
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 CONTROLLING PROCESS

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 CONTROLLING PROCESS

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PRINCIPLES OF EFFECTIVE
CONTROLLING
PRINCIPLES OF EFFECTIVE
CONTROLLING
PRINCIPLES OF EFFECTIVE
CONTROLLING
PRINCIPLES OF EFFECTIVE
CONTROLLING
 PRINCIPLES OF EFFECTIVE
CONTROLLING
Attainment of Contribute to achievement of goals quickly and
accurately detecting actual and potential
objective deviations from plans to be corrective action.

Reflection of plans Must coordinated with the organization’s plan.

Controlling to support the plans.

Control Primary responsibility for the exercise of

controls rests with the manager charged the
responsibility execution of a particular plan.

Efficiency of Detect the causes of deviation. In ideal prevent

deviations rather than detecting after occur –
controls use feedforward control.
 PRINCIPLES OF EFFECTIVE
CONTROLLING
Focus on their attention on critical points of
Critical points performance rather than wasting time and effort
to check every detail of performance.
More effective when they meet the individual
Individuality of requirements of manager eg relation to their
controls position, operational responsibility etc.

Reviewed periodically and adjusted as

Review necessary.

If any deviation, action must be taken, if not no

Action use for a control system.
 CONTROLLING

LEARNING OBJECTIVE

5.1.5 Classify the types of controlling in organization

a. Control types by timing

i. Feed forward control
ii. Concurrent control
iii. Feed back control

b. Financial controls
i. Financial statement
ii. Ratio analysis

c. Benchmarking
TYPES OF CONTROLLING

Financial
1 By Timing
Control
2

3 Benchmarking
1 CONTROL TYPES BY TIMING
 2 FINANCIAL CONTROL
1. Financial statements – to calculate financial value organization
- To measure :
*liquidity position
*long term liability and equity
*equity and profitability position (ability to earn profit)
- Including financial statements
• Break-even analysis – relationship sales/revenues and cost, TC and TR
• Cash flow statement – measures cash position
• Balance sheet (statement of financial position) – show organization
asset, liabilities and net worth at a particular point in time
 2 FINANCIAL CONTROL

2. Ratio Analysis
• Used to report key figures from organization’s financial
records as percentages or fractions
• There are many kinds of ratios such as
– Return on investment
– Current ration
– Debt ratio
– Inventory turnover
• The management use different ratios depending on the
organization’s purpose and objective of particular
problems or economic problems
 3 BENCHMARKING
•Simple meaning : Improve ourselves by learning
from others

•Benchmarking is measures its practices, products

or services againts its biggest competitor or the
leading companies in the industry
That’s all…tqvm
See you next chapter
Opss..
Let’s do some exercise
#Quiz2
THANK YOU