Management control

Master 1

INTRODUCTION

1
EDC

Management Control

Master 1

INTRODUCTION
 A few precisions
Management control refers to an organizational and managerial
process, while management accounting refers to the measurement
systems that support management control (which can include cost
accounting not seen in this class)

Management accounting is therefore a part of management control

In this class, we will study some management accounting tools from

the broader perspective of management control
0. Course presentation
Learning objectives
Management control is for managers and not only for
controllers. All students will be confronted to
management control processes one day or another.
• At the end of the class, you must be able to :
‒ Understand the main principles of management control ;
‒ Work on a budget proposal within a given responsibility area and
understand how it affects the company accounts as well as the
other functions of the organization
‒ Compute cost and income variances and explain a budget
monitoring statement;
‒ Participate in the construction of a dashboard or a balanced
scorecard within a given responsibility area
 0. Course presentation
Syllabus
Topic 1: Overall presentation of the course S1
Topic 2: Responsibility centers + transfer prices S1 + beg. S2
Topic 3: Management control and planning S2
Topic 4: Functional budgets S3 + beg. S4
Topic 5: Overall budget End. S4 + S5
MCQ on topic 1 to 5
Topic 6: Budgetary practices S6
Topic 7: Budget monitoring S7 + beg. S8
Topic 8: Dashboards and balanced scorecards S9
Synthesis case S10
0. Course presentation
Evaluation

• Multiple-Choice Questionnaire
on topics 1 to 5 20%

• Final exam
3 hours, no documents allowed 80%
Topic 1: What is management control?
 What control means in management
control
• To control means :
 to monitor and guide in the right direction

• To control does not mean:

 To force
 To keep under surveillance
 To watch (somebody) closely

 Management control is necessary for an organization to

reach its goals

Source : Giraut et al., 2009

Management control, a definition
Strategy

Performance definition

Management control

A process Designed for

An information managers
system
The goal of management control
The management triangle
Objectives (Expected)

Eff
cy

ec
an

tiv
ev

en
rel

es
Means Efficiency s Achievements (realized)
The 3 functions of management control
(Bouquin)

To guide the behaviors To draw the links between

of independent actors resources and goals

The
management
control function

To Connect strategy and

the everyday life of the
organization
The control process

 The double-loop process

Planning Actions Results

Regulation loop

Learning loop

Management control: a double loop

Regulation loop: to monitor action plans
Learning loop: to update objectives
 The control process and its tools
Steps Tools
Functions
Before acting Mid-term planning operating plan and/or balanced
Setting scorecards
goals Short-term planning Budgets
Transfer prices
Balanced scorecards
Cost accounting (projected)
In action Execution Collecting information
Monitoring
Feedback loop – learning Budget monitoring, Re-forecasts
loop Dashboards/ balanced scorecards
Cost accounting (realized)
After acting: Assessing the situation Reporting
Post- Incentives / pay
evaluation
 Strategic/management/operational
control
• Strategic control: defining the group strategy (and
sometimes business units) in a strategic plan – managed by
the strategic planning department

• Management control: Linking strategy to everyday

activities

• Operational control: on tasks and detailed results for

different functions: usually managed internally by each
function (ordering, sales control, etc.)
"Mainstream" management control: results
control
• Guide What?: Managers' behaviors
• Control what?: results (financial or not) i.e. managers'
performance
• How?: objectives (mandatory results)/means (teams,
equipments, premises)
• Why?: to implement the strategy of the organization
 Management control is not what the
controller does
Management control
What a controller does
Budgeting, operating
Objectives, plan, Building
Action plans dashboards, meetings
Learning loop… with management, Sometimes:
building tools and Stock management,
The work of procedures, ad-hoc Internal audit
the analyses
Accounting tasks,
managers IT management, ….