Management Control

Introduction Management control is to ensure that the organization achieves its objectives. Once the objectives have been agreed, action plans should be drawn up so that the progress can be directed towards the ends specified in the objectives. Such objectives are used to make comparison with alternatives in decision making & are also the critical elements in evaluating the success or failure of the action plans. One of the most widely used management control systems is the budgetary control & the term “Budget” itself is one of the objectives that is expressed quantitatively in financial value [1]. Undoubtedly budget is drawn up for control purposes & guiding the organization towards its objectives. The budgeting process is done quite arbitrary by estimating the expenses in the next year or adding a few percentages from last years’ budget. Any contingency & extraordinary dollar spent would be acquired from the miscellaneous item; as long as it is still a positive figure. The main control function of the budget follows the same old rule: no budget, no expenses. The scope of this paper is to explore better control & management in the organization’s financial resources deployed in training & development, especially in avoiding the ineffective use of resources, increasing accountability, streamlining & improving existing procedures, & managing & measuring performance in a systematic & data-oriented approach. Control & Performance Measurement System Referring to Broadbent & Cullen [2], management control is the process by which management ensures that the organization carries out its strategies, i.e. resources are obtained & used efficiently & effectively in the accomplishment of the company objectives. As pointed out by Brooks [3], the role of management accounting is to concern the performance of the organization & the way in which its activities are planned & controlled by its management. Further supported by Bromwich [4], the major functions of management accounting used by management are to plan, evaluate, & control within an organization & to assure use of & accountability for its resources. Although most literatures reviewed (Jeans & Morrow [5], Murphy & Braund [6], Clark & Baxter [7]) stated that the major use of management accounting control is on manufacturing process, the concept of performance measurement can be widely applicable within the organization. Management controls are undoubtedly basic good management practices & basic management tool to address fraud, waste & abuse. While most literatures would address the issue in organization level but the success of management controls span the whole gamut of management activities of each department. Management controls assist organizations in deciding what should be done or what should be emphasized. They help organizations to allocate funds, monitor activities, and conduct reviews & provide the information organizations need to make mid-course corrections & evaluate individual performance. Such, controls include not only internal accounting controls but also controls that focus on results. Down to departmental level, management control includes all activities designed to ensure that a department accomplishes its objectives; complies with company policies & uses employees’ time & resources appropriately. Departments are responsible for setting up, following, & regularly reviewing their management controls. The basic departmental responsibility in management control should be more than ensuring expense within budget; management controls should include both financial controls & non-financial controls. Establishing & maintaining an internal control structure is an important departmental management responsibility. To provide reasonable assurance that an entity's objectives will be achieved, the internal control structure should be under ongoing supervision by management to determine that it is operating as intended & that it is modified as appropriate for changes in conditions. Department managers are responsible for the management controls in their departments. In addition, to setting up good management control systems, managers should periodically review their systems to ensure they are working. A lot of activities within the organization are very often done mostly for the sake of doing them, not for contributing directly to the results of the organization & the department manager is the one who should conduct ongoing review to eliminate or modify such activities. For example my company is under a laboratory accreditation scheme & all employees are required to attend the mandatory “work safety training”. The job of mine in such training is to ensure all new joined employees are attending & then run the video tape. By applying the input-process-output model, the training can be described in Fig.1: