CONTROLLING

By Group No. 009

INTRODUCTION

Control is last function of the management.

Controlling function will be unnecessary to the
management if other function of management are
performed properly.
If there is any imperfection in the planning and
performance, control will be needed.
Planning identifies the activities and controlling regulates
the activities.
Success or failure of planning depends upon the result of
success or failure of controlling.
Henry Fayol -“Control consists in verifying whether
everything occurs in conformity, is with the plan
adopted, the instruction issued and principles
established. It has for its object to point out weakness
and errors in order to rectify them and prevent
recurrence”

J. K. Rosen – “Control is that function of the system

which provides direction in performance to the plans”
The term control covers all the activities of a business
concern
 Policies of the company
 Organization
 Personnel employed in the organization
 Capital available to concern
 Production
 Wages and salaries paid to employees
 Cost of production
 Public relation
 Tools and equipment
 Research and development
 Overall Control
 ESTABLISHING STANDARDS

 MEASURING PERFORMANCE

 COMPARISION OF ACTUAL PERFORMANCE

WITH STANDARDS

 TAKING CORRECTIVE ACTION

 REQUIREMENTS OF EFFECTIVE
CONTROL SYSTEM

 FEEDBACK .
 OBJECTIVE .
 SUITABILITY .
 PROMPT REPORTING .
 FORWARD LOOKING .
 FLEXIBLE .
 ECONOMY .
 INTELLIGBLE .
 SUGGEST REMEDIAL ACTION .
 MOTIVATION .
TECHNIQUES OF CONTROL

 STATISTICAL CONTROL REPORT .

 PERSONAL OBSERVATOIN .

 COST ACCOUNTING AND COST CONTROL .

 BREAK-EVEN ANALYSIS.

 SPECIAL CONTROL REPORT .

 MANAGEMENT AUDIT .
 RETURN ON INVESTMENT .

 PERFORMANCE EVALUATION
AND REVIEW TECHNIQUE.

 CRITICAL PATH METHOD .

 PRODUCTION CONTROL .

 MANAGEMENT INFORMATION SYSTEM .

 STANDING ORDERS .

 BUDGETARY CONTROL .
 CONTROLLING PROCESS .

 UNIVERSAL .

 FORWARD LOOKING .

 DYNAMIC PROCESS .

 CONTROL INVOLVE MANAGEMENT .

 INFLUENCING FACTOR .

 AN ESSENCE OF ACTION .
 JUDGING THE ACCURACY .

 MINIMISE DISHONEST BEHAVIOUR .

 BETTER PERFORMANCE .
 ADJUSTMENT IN OPERATION .

 VERIFICATION OF POLICY .

 MANAGERIAL ACCOUNTING .

 PSYCHOLOGICAL PRESSURE .

 MAINTAINING MORALITY .

 CO-ORDINATION .

 EFFICIENCY .
 LIMITATIONS OF CONTROL

 ABSENCE OF PERFECT STANDARDS .

 UNCONTROLLABLE FACTORS .

 DIFFICULTY IN FIXING RESPONSIBILITY .

 EXPENSIVE PROCESS .
 BUDGET
DEFINITION

BUDGETARY CONTROL INVOLVES THE USE OF

BUDGETS & BUDGETARY REPORTS THROUGHOUT
THE PERIOD TO COORDINATE, EVALUATE &
CONTROL DAY TO DAY OPERATIONS IN
ACCORDANCE WITH THE GOALS SPECIFIED BY THE
BUDGET – GIEN A. WELSCH
CHARACTERISTICS OF BUDGET
 Participation: involve as many people as possible in drawing up a
budget.

 Comprehensiveness: embrace the whole organization.

 Standards: base it on established standards of performance.

 Flexibility: allow for changing circumstances.

 Feedback: constantly monitor performance.

 Analysis of costs and revenues: this can be done on the basis of

product lines, departments or cost centers.
 TYPES OF BUDGET
(ON THE BASIS OF PURPOSE)

MASTER BUDGET

SALES BUDGET

CASH BUDGET

PRODUCTION BUDGET

PHYSICAL PROPERTY BUDGET

TIME AND MATERIAL BUDGET

 TYPES OF BUDGET
(ON THE BASIS OF PURPOSE)

SELLING & DISTRIBUTION COST BUDGET

BALANCE SHEET BUDGET

SUPPLIES BUDGET

PRODUCTION COST BUDGET

PRODUCTION OVERHEAD BUDGET

RESEARCH & DEVELOPMENT BUDGET

 TYPES OF BUDGET
(ON THE BASIS OF NATURE)

FIXED BUDGET

FLEXIBLE BUDGET
 ADVANTAGES
Compels management to think about the future, which is probably the most important
feature of a budgetary planning and control system.

 Forces management to look ahead, to set out detailed plans for achieving the targets for each
department, operation and (ideally) each manager, to anticipate and give the organisation
purpose and direction.

 Promotes coordination and communication.

 Clearly defines areas of responsibility.

 Provides a basis for performance appraisal (variance analysis).

 Enables remedial action to be taken as variances emerge.

 Motivates employees by participating in the setting of budgets.

 Improves the allocation of scarce resources.

 Economises management time by using the management by exception principle.

INACCURACY
DISADVANTAGES
PERSONAL BIAS

NON-AVAILABILITY OF CO-OPERATION

RIGIDITY

RESULTS ARE NOT ATTAINABLE

CONSISTENCY

TIME CONSUMING PROCESS

INEFFCTIVE BUDGETARY CONTROL

DISCOURAGES THE INITIATIVE

MORE PAPERWORK
WE HOPE THE PRESENTATION
WAS IN

CONTROL

THANK YOU