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Financial Control and Achieving Objectives

"Control is the process of ensuring that a firm's activities conform to its plans and that its objectives are achieved." There can be no controls without objectives and plans.

Evaluate this statement.

Please include the following issues and practical examples wherever possible.

1. Define a control system as one that is capable of measurement and capable of providing information for management.

2. What are the different types of control mechanisms?

Thanks.

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1. Define a control system as one that is capable of measurement and capable of providing information for management.
Control is the process of ensuring that a firm's activities conform to its plans and that its objectives are achieved." There can be no controls without objectives and plans.

The above statement is correct. Let us understand it.
Control is the "final link in the management functions" (Robbins & Coulter, 2005, p. 459) and in which planning can occur throughout the organization. Management control system is the process of influencing human behavior in order to implement the strategy of the organization. Controlling is much broad then the monitoring. It involves laying down the standard, using the techniques to influence the human behaviour to achieve the standards. After it the performance is measurement and corrective action is taken.
Strategic control is concerned with the monitoring progress in accomplishing the strategic goals of the organization. It is very critical to any organization, because without it the results could be chaotic. Organization have to improve their operational performance by proper evaluation and control mechanisms.
http://www.2gc.co.uk/pdf/2GC-FAQP02.pdf
Thus Strategic control system is designed to support managers in evaluating the organization's progress regarding its strategy and when discrepancies exit, taking corrective action. The dual responsibilities of the control system are efficiency and flexibility. As control mechanisms and/or tools assist in increasing communication, empowering the workforce, and attaining the goals set forth by helping management in the company evaluate and compare the performance of the company and/or employee over a specified time period to standards that have been preset, benchmarks and desired targets. They will help them adhere to their strategic plan and quickly and efficiently and correct any variations or errors that have occurred. It should ensure ethical conduct by business. All business records, accounts and reports to government agencies and others should be prepared with care and honesty. All company funds, assets and liabilities should be recorded in accordance with appropriate company accounting procedures. It is the organization's responsibility to create a culture of honesty and high ethics. Such a culture is rooted in a strong set of core values (or value system) that provides the foundation for employees as to how the organization conducts its business. It also allows an entity to develop an ethical framework that covers (1) fraudulent financial reporting, (2) misappropriation of assets, (3) corruption, as well as other issues.
The negative impact can be that it can lead to the rigidity and might stifle creativity. Managers control employees and want them to change their behavior in response to control. Employee resistance to control efforts can bring about dysfunctional consequences. Some of the dysfunctional consequences are providing inaccurate information, sabotage, abetting one manager on another and so on..

Thus organization has to strike right balance. Control activities occur at all levels and functions of the entity. Creating a culture of honesty and high ethics should include the following.
? Setting the tone at the top
? Creating a positive workplace environment
? Hiring and promoting appropriate employees
? Training
? Confirmation
? Discipline

It is a process of comparing the standards with the actual results to find out variation and then to take corrective action. As we have discussed above that the in the elements of control that it's pervasive. It is dealt as each level of management function. Control process is cyclical. It never ends. It results in identification of new problem areas and need to be addressed through installation of performance standards. Control is anticipatory and retrospective. Each person in ...

Solution Summary

Almost 2300 words outline a control system that can measure and report as well as different control mechanisms.

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