TECHNICAL UNIVERSITY OF MACHALA

ACADEMIC UNIT OF SCIENCES

BUSINESS

ACCOUNTING AND AUDITING

GROUP EXTRA-CURRICULAR WORK

CONTROL SYSTEMS AND PROCESSES

MEMBERS:

BATIOJA JOSEPH ESTIBEN

MASACHE MARÍA JOSÉ

MUÑOZ KEILY JANINA

STEFANY SOLANGE PEÑA

VILLEGAS ALEXANDRA

SUBJECT: ADMINISTRATION

TEACHER: ENG. COM. YOLANDA LAÍNEZ ÁLVAREZ

CURSO:1ER. NIVEL DE CONTABILIDAD Y AUDITORIA “B” VESPERTINO

MACHALA- EL ORO- ECUADOR

2016
 CONTROL SYSTEMS AND PROCESSES

According to (Gareth & Jeniffer, 2006) "control is the process by which managers
they monitor and regulate the efficiency and effectiveness with which an organization and its members

they carry out the activities required to achieve organizational goals.

According to (Anzola, 2002), the control function consists of measurement and correction of
performance of the company's components, in order to ensure that they are achieved
the goals and the plans devised for their achievement.

According to (Draf, 2004) "In a company, control consists of verifying if everything is carried out

in accordance with the adopted program, the orders given, and the principles
admitted.... Its purpose is to point out the errors, in order to correct them and avoid their
repetition.

Therefore, control is an Administrative Process closely tied to Planning, it is the

phase through which the results obtained are evaluated in relation to what was planned, to
end of correcting deviations and errors to continuously improve.
According to (Chiavenato, 1998) "control is a cyclical process composed of four phases":

Establishment of standards or criteria

Standards represent the desired performance. Criteria represent the norms.

that guide decisions. They are provisions that provide means to establish it
what should be done and what performance or result will be accepted as normal or
desirable. They constitute the objectives that the control must ensure or maintain. The
standards can be expressed in time, money, quality, physical units, costs,
or by means of indices.

2. Performance Observation
To control a performance, one must at least know something about it. The
The control process acts in order to adjust operations to certain standards.
previously established and works according to the information it receives. The
observation or verification of performance or results seeks to obtain information
it is specific about what is being controlled.
3. Comparison of performance with the established standard

Every activity undergoes some kind of variation, error, or deviation. It is important

determine the limits within which that variation can be accepted as normal or
desirable. Not every variation requires corrections, only those that exceed the limits
from the normal

4. Corrective action

The objective of control is to keep operations within the standards.

established, so that the objectives are achieved in the best way. Thus, the
variations, errors or deviations must be corrected so that operations can
normalize. The corrective action seeks to achieve that what is done, is done
exactly in accordance with what was intended to be done.

IMPORTANCE OF CONTROL IN A COMPANY

IN ORGANIZATION

According to (Sinisterra & Polanco, 2007) "One of the most obvious reasons for the
The importance of control is because even the best plans can deviate.

The control is used for:

1. Create better quality

2. Facing Change
3. Produce faster cycles
4. Add value
5. Facilitate delegation and teamwork
The control focuses on assessing and correcting the performance of the activities of the
subordinates to ensure that the organization's objectives and plans are being
carrying out.

From this, one can deduce the great importance of control, for it is only through
From this function, we will be able to determine if what was done aligns with what was planned, and in case

if there are deviations, identify those responsible and correct those errors.

CONTROL PROCESS

The control process, whether at the input stage, conversion, or production, can be
break down into four steps: the establishment of performance standards and then the
measurement, comparison, and evaluation of performance.

STEP 1

ESTABLISH PERFORMANCE STANDARDS, GOALS OR

OBJECTIVES WITH WHICH PERFORMANCE WILL BE COMPARED

In step 1 of the control process, managers decide the standards of

performance, goals or objectives that will be used in the future to evaluate performance of
the entire organization or part of it. The performance standards that they choose
administrators measure efficiency, quality, responsiveness to consumers
and innovation, so administrators have the responsibility to choose the
standards that allow them to better evaluate how well the part performs
organization they lead. (Gareth & Jeniffer, 2006).
STEP 2

MEASUREMENT OF REAL PERFORMANCE

Once the administrators have chosen what

standards or goals will be used to evaluate the
performance, the next step in the control process
It is to measure actual performance. In practice, the
administrators can measure or evaluate two things: the
real results that arise from the behavior of their
members and the behaviors themselves.

However, in general, it is more difficult to measure results than behaviors.

because the first are more tangible and objective. Therefore, the first class of
performance measures that managers tend to use are those that measure the
results. (Gareth & Jeniffer, 2006).

STEP 3

COMPARISON OF ACTUAL PERFORMANCE WITH STANDARDS

PERFORMANCE

During step 3, the administrators evaluate whether the performance deviates and to what extent.

measure of the chosen performance standards in step 1. If the performance is better than
Expectedly, the administrators could understand that they set performance standards.
too low and they can raise them for the next period, in order to stimulate
his subordinates to exceed themselves. However, if the performance is too low and does not
whether they complied with the rules or if the rules were too high and the employees did not
they were able to fulfill them, the administrators must decide whether to take corrective actions.

(Gareth & Jeniffer, 2006).

STEP 4

EVALUATION OF THE RESULT AND INITIATION OF ACTIONS

Corrective Actions

The final step in the control process is to evaluate the results and make changes accordingly.
is appropriate. Whether or not performance standards have been met, the
administrators can learn a lot during this step. If they decide that the level of
performance is unacceptable, they must try to change the way in which they are carried out
work activities to solve the problem

REQUIREMENTS FOR GOOD CONTROL

To be effective, control demands a series of requirements and characteristics:

SIMPlicidad: Indicates that the process is simple, everyone should understand

perfectly what is intended with it.

ADAPTABILITY: The control system must incorporate mechanisms capable of

adapt to the changing conditions of the environment.
 EFFECTIVENESS and EFFICIENCY: The signals must be generated at the moment
timely, as quickly as possible, and the corrective measures should be applied in the
ideal moment for them to generate the expected effects.

CONTINUITY: The control must be carried out regularly.

ACCEPTANCE: The control must be accepted by all.

APPROACHES ON STRATEGIC POINTS: Areas must be controlled

where the deviations are more relevant. Controls are more effective when
they are applied selectively at critical points.

If these requirements are met, it is easy for the control to be understood by everyone.
members as a way to prevent and correct problems.
 HOW TO MAKE SYSTEMS PRODUCTIVE
CONTROL?

According to (Amat, 2000) "Defines that the problem of Control lies in the design of the
mechanisms that allow for the match between individual behavior and the
required by the organization, and that there are three types of Control: Strategic, of
Management and Operations.

Strategic Control: It is based on strategic planning, therefore it is

in the long term and focuses on aspects related to adaptation to the environment,
marketing, markets, productive resources, technology, resources
financial, etc.

Management Control: It is based on the preparation of budgets, planning

short-term budget (less than a year), tries to ensure that the company,
just as each department individually achieves its objectives.

Operational Control: It directs its action towards operational planning, that is,
that ensures that the tasks performed at each workplace day by day are
execute correctly.
 ESTABLISHMENT OF STANDARDS

Control involves checking that the

results are in accordance with the
planned, for which it is required
establish indicators or units of
measurement of results.

A standard or indicator can be defined as a unit of measurement that serves as

pattern for carrying out the control.
Much Galindo

Standards are benchmarks against which performance is measured.

real or expected. Under simple operating conditions, a manager could exercise the
control through careful personal observation of the work being done; without
embargo, in most operations this is not possible due to its complexity and the
the fact that it has much more to do than to personally observe the
performance all day.
Harold Koontz, Heinz Weihrich, Mark Cannice

Since plans are the yardsticks against which managers design the
controls, logically, the first step of the control process would be to establish plans. Without
embargo, since the plans vary in details and complexity and that, usually, the
administrators cannot monitor everything, special standards are established.

Standards are simply performance criteria. They are the selected points.
of a whole planning program in which performance measures are established for
that the administrators receive signals about how things are going and do not have to watch over
each step in the execution of the plans. There are many types of standards.
 CRITICAL CONTROL POINTS

The administrator must establish special attention points and then monitor them to
make sure that the entire operation proceeds as planned.
The selected points for control must be critical, in the sense of being factors
limitations in the operation, or being better indicators than other factors about whether the
planes are functioning. With such standards, administrators can manage a
greater group of subordinates and thus increase their scope of management, with the
resulting cost savings and improved communication.

The principle of critical control points, one of the most important control principles
important establishes that effective control focuses attention on those factors
critics to evaluate performance in relation to the plans. Another way to control
is to compare the company's performance with that of other companies based on the
benchmarking points.

CRITICAL POINT STANDARDS (Gómez, 2010)

Every objective, every goal, every policy, procedure can become a

standard against which actual or expected performance could be measured. However, in the
in practice, standards tend to be of the following types:
physicals,
of costs,
of capital,
of income,
5) of programs.
6) intangibles,
7) goals as standards and
8) strategic plans as control points for strategic control.
Physical standards

Physical standards are non-monetary and non-common measures at the operational level, in
those that use materials, hire labor, provide services and
They produce goods. They can reflect quantities, such as hours of labor per unit of
production, pounds of fuel per horsepower per hour can also
reflect quality, such as bearing hardness, proximity of tolerances.

Cost standards

Cost standards are monetary measures and like physical standards, they are
common at the operational level. They add monetary values to specific aspects of the
operations. Some common examples of cost standards are the measures of
wide use as direct and indirect costs per unit produced, labor cost of
work by unit, or by hour.

Capital Standards

There is a variety of capital standards, which arise from the application of measures.
monetary to physical items. They relate to the capital invested in the company plus
that with the operating costs and therefore, they are primarily related to the
balance sheet, more than with the income statement. Perhaps the broader standard
use for a new investment.

Revenue Standards

Income standards arise from assigning monetary values to sales. They can
include standards such as revenue per bus passenger-mile, average sales per
client and sales per capita in a specific market area.
Program Standards

A manager can be assigned to implement a variable budget program, a

programa formal de seguimiento para el desarrollo de nuevos productos, o un programa
to improve the quality of the sales force. Although it may be necessary to apply certain
subjective judgment when evaluating the performance of a program, times and other factors are
they can be used as standard objectives.

Intangible Standards

More difficult to establish are the standards not expressed in physical measures or
monetary. What standards can an administrator use to determine the
competence of the divisional purchasing agent or the human resources director? What
we can use to determine if the advertising program meets the objectives
short and long term? Or if the public relations program is successful?

Goals as Standards

With the current trend for better companies

managed to establish a whole network of goals
qualitative or quantitative verifiable at each level of
the administration, the use of intangible standards, yes
well it continues to be important, it is decreasing.
In operations of complex programs, as well as in
the performance of the administrators themselves, the
researchers have found that through the
it is possible to define goals.
 CONTROL SYSTEM
They are formal systems for goal setting, monitoring, evaluation, and feedback.
whose information indicates to the managers whether the strategy and structure of the organization
They are working efficiently and effectively.

An effective control system has three characteristics:

You have enough flexibility to allow managers to react.

due to unexpected events.
Provides accurate information and gives managers a real picture
of organizational performance.
Provides timely information to managers, because making decisions based on
Outdated information is a guarantee of failure.

An administrative control system is a means to collect and utilize information to

end of helping and coordinating planning and control decisions within a
organization and guiding the behavior of its managers and employees.

An administrative control system contains financial and non-financial information in

each of the following four perspectives:
 Financial perspective.- For example, stock price, net income,
return on investment, cash flow from operations and costs for
gallon of gasoline.

Perspectiva del cliente.- Por ejemplo,satisfacción del cliente, tiempo invertido

in responding to customer questions regarding products, purchases
repeated from customers and market participation in key segments.

Internal process perspectives.- For example, timely delivery of gasoline

from the refineries to the gas stations, quality of gasoline, time of
inactivity in the refineries, number of days lost due to accidents and problems
environmental, service speed at gas stations, friendliness of the
employees and supply of convenience stores.

Learning and growth perspective - The importance is undeniable.

growing trend that innovation has had in recent years. This is the reason that
it involves including a specific perspective called training but that wants
to encompass the ability of an organization to improve and learn. The
objectives will be related to organizational climate, competencies,
absenteeism, incentives, intellectual capital, etc.

Ultimately, administrative control systems consist of control systems.

formal and informal. The formal administrative control system of a company includes
implicit rules, procedures, performance measures, and incentive plans that
guide the behavior of their managers and other employees. The control system
formal includes several systems in turn.

For example: the administrative accounting system provides cost information,

income and profit. Human resource systems provide information about
recruitment, training, absenteeism and accidents, and quality systems
provide information about performance, defective products, and late deliveries to
the clients.
The informal administrative control system includes shared values, loyalty and
the mutual commitments between the members of the company, the company culture
and the unwritten rules about acceptable behavior for managers and employees.

The new forms of information techniques have revolutionized the systems of

they facilitate the upward and downward flow of accurate information and
timely to the entire organizational hierarchy, as well as to functions and divisions. Today in
day, employees at all levels of the organization routinely enter
information to the system or information network of the company, initiating the
chain of events that affect decision-making in another part of the organization.

Control and information systems are developed to measure performance in each

stage of the process of transforming inputs into finished goods and services.

In the entry stage, managers use prior control to anticipate.

problemas antes de que surjan, de manera que estos no se sujeten a especificaciones

strict (a form of performance target), an organization can control quality
from the supplies it receives from its suppliers, thereby preventing possible problems
during the conversion process. Likewise, IT can be used to stay in
contact with suppliers and verify their progress.

The conversion stage, concurrent control offers managers a

immediate feedback on the efficiency with which inputs are transformed into
products, so that problems can be corrected as they arise. The
concurrent control offers administrators the need to react with
speed to whoever the source of the problem may be, whether it is a defective batch of
supplies, a machine that is not working properly, or a worker who is missing
skills required to perform their tasks well.
In the production stage, managers use feedback control.
to receive information about consumer reactions to goods and
services, so that corrective actions can be taken if necessary.

CONTROL PRINCIPLES (Münch, 2010)

Balance: For each degree of delegation granted, the level of

corresponding control. Just as authority is delegated and the
responsibility is shared, when delegating authority it is necessary to establish the
mechanisms to verify compliance with the conferred responsibility and that the
authority is exercised.

From the opportunity: Control that is not timely lacks validity and does not fulfill its
Purpose: To be effective, it requires being timely and facilitating its application beforehand.
that errors occur, in such a way that it is possible to take corrective measures with
anticipation. It is essential that controls exist in a timely manner. A control,
when it is not timely, it lacks validity and, obviously, reduces the achievement of the
goals to a minimum.

Regarding the objectives: It refers to the fact that control exists in relation to the objectives, that is,

Control is not an end, but a means to achieve predetermined objectives.

No control will be valid if it is not based on the objectives and if, through it, it does not
the achievement of the same is evaluated. Therefore, it is essential to establish measures
specific performance standards that serve as a benchmark for the evaluation of
established, which are determined based on the objectives. The effectiveness of
control is directly related to the accuracy of the standards. The standards
allow the execution of plans within certain limits, avoiding errors and,
consequently, losses of time and money.
Regarding deviations: Non-conformities or deviations that occur in relation to
the plans must be analyzed in detail, to detect the causes that
originated in order to take the necessary measures to avoid them.

Regarding cost-effectiveness: A control system must justify the cost it represents.

time and money, in relation to the real advantages that this report provides. A control only
it should be implemented if its cost is justified by the results that are expected from it; of
Nothing will be of use to establish a control system if the financial benefits it yields
result in being less than the cost and time involved in their implementation.

Exception: Control should preferably be applied to activities

exceptional and representative in order to reduce cost and time with the purpose of
apply it to strategic functions that require control. It is necessary that in a
the company uses statistics as a means of control by exception. This principle
uses probabilistic, statistical, or random methods

From the controlling function: The person responsible for applying the control should not be

involved with the activity to be controlled. The controlling function under no circumstances
it must understand the controlled function, as control loses effectiveness. This
the principle is basic, as it indicates that the person or function performing the control does not
must be involved with the activity to be controlled. A clear application of this
principle can be found in the following example: the control that prepares the statements
The financial person of a company will not be the most suitable person to audit them or determine.

whether they are true or not, since aspects of a character may intervene in that evaluation
personal.
 AREAS OF CONTROL (Gómez, 2010)

The main areas of control in the company are:

PRODUCTION AREAS: If the company is industrial, the production area

it is the one where products are manufactured; if the company were a service provider,
the production area is where the services are provided; the main controls
existing in the production area are the following:

Production control: The fundamental objective of this control is to schedule,

coordinate and implement all measures aimed at achieving an optimal
performance in the produced units, and indicate the way, time, and place most
suitable for achieving production goals, thus fulfilling all the
needs of the sales department

Quality control: It is used to detect and eliminate any cause that

it may cause an effect on the product.

Inventory control: Its primary objective is to determine the level of

inventory economics regarding materials, work-in-progress products and
finished products

Control of Productive Operations: Every company before starting its

operations must measure all actions to be taken, so that at one moment of
operations course can detect failures and thus correct them, for that of
control must have a strategic, tactical, and operational level.
As the size of the company increases, control becomes more
complex and therefore more difficult to control, for this reason the administrator must
delegate responsibilities.

Maintenance and conservation control: all the actions that have

with the aim of preserving a product or restoring it to a state in which it can
 carry out any required function. These actions include the combination
of the corresponding technical and administrative actions.

Waste control: Waste is any element that contributes

at the production cost without adding any value. Learn to control the
waste and increase their profits.

Cost Control: The managers of a company want that products are manufactured
the products in less time and at a lower cost every day, since of this
this way the product will become more competitive against its direct competitors in
the markets.

COMMERCIAL AREA: It is the area of the company that is responsible for selling or

market the produced products or services.

Sales control: Sales forecasts and budgets are essential

for the establishment of this control, since they allow setting standards for
performances without which it would be to assess sales and set the quotas that must be
to cover.
Propaganda control: it is essential to manage and control the
marketing carried out for the company and the control of advertising carried out for
the same so that the credibility of the product or service is established that
offers the company.
FINANCIAL AREA: It is the area of the company that is responsible for the resources.
financials, such as capital, billing, payments, cash flow, among others. The
The main controls in the financial area are presented below:

Budget control: As already studied, budgets are prepared

during the planning process, however, it is also financial control,
by allowing a comparison of actual results against the budgeted ones, and
provide the basis for applying the appropriate corrective measures
Accounting control: No company, no matter how small, can operate without
success if it does not have truthful, timely, and reliable information about the
business situation and the results obtained in a certain period.

HUMAN RESOURCES AREA: It is the area that manages the personnel.

The main controls that are applied are the following:

Attendance and lateness controls

Vacation control
Salary control
 FAILURES IN THE CONTROL PROCESS (Gómez, 2010)

Witch hunt: the system is headed towards the search for symptoms and culprits in
instead of causes and possible solutions.

Dispersal of responsibility: the control process may not be too much

specific and involve the entire staff, who, when feeling attacked, far from supporting the
restoration of balance, reacts negatively.

Obsession: the control process becomes obsessive, there are too many inspections for it
which becomes expensive.

Nostalgia: the system places too much emphasis on what happened, it becomes recursive, it
what limits effective corrective action

TYPES OF CONTROL (Gareth & Jennifer, 2006)

Control and information systems are developed to measure performance in each

stage of the process of transforming inputs into finished goods and services.
 Prior Control: "Administrators use this control at the entry stage.
to anticipate problems before they arise, so that they do not
present later, during the conversion process” (Gareth & Jeniffer, 2006).

This control allows administrators to anticipate problems beforehand.

to ensure that they are presented; to inspect that the activities are well executed.
Example: A company can control the quality of the inputs it receives from
your suppliers, to avoid problems. IT can also be used where
obtains timely information about changes in task environments, that
they can later impact the organization.

Concurrent Control: "It occurs when workers are expected to

constantly monitor the quality of the goods or services they deliver in each
stage of the production process and inform the managers as soon as
how problems are discovered" (Gareth & Jeniffer, 2006).

This type of control arises in the conversion stage, where the ...
problems at the moment they arise. Example: One of the strengths of the system of
Toyota's production is that individual workers have the authority to tighten
a button and stop the assembly line when a quality issue is discovered,
cuando se han corregido los problemas, el resultado es un producto de buena calidad. O
through IT they alert administrators about the need to react with
speed to any problem.

Feedback control: "Administrators use this control in the

production stage, to receive information about the reactions of the
consumers to goods and services, for taking corrective actions, if
are necessary" (Gareth & Jeniffer, 2006).
 If determines the control for
feedback that consists of the
problem management after they
have originated. Example: The workers
from an organization they monitor the quantity

of customer goods returns,

warn the administrators about the
existence of defective products, thus
they can measure the increases or
reductions in sales, which is why the workers alert the managers about
the changes in consumer tastes, so that they can reduce the
manufacturing of some products.

CONCLUSION

In the administrative process within

a company, if the steps are not taken
how are the planning, organization,
direction and control would not work
adequately also is
fundamental to have a good
communication within the company now
that if all the steps are followed
correctly will help us in decision making

of decisions. Therefore, control is essential because it allows for supervision and

Comparison of the results obtained against the originally expected results,
ensuring that the directed action is being carried out in accordance with the
plans of the organization and within the limits of the organizational structure.
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GROUP WORK RUBRIC 20 POINTS

INDICATORS. Val. HIGH MEDIUM LOW CAL.

FINAL

a) PUNCTUALITY AND INEN TECHNICAL STANDARDS 3 3 1.50 0.75

2402-2010 COVER, MARGINS,
INTERLEAVED, ETC)

b) CONTENT. 4 4 2.00 1.00

c) FOUNDATION, IN-DEPTH. 7 7 3.50 1.75

d) BIBLIOGRAPHY OF BOOKS OR WEBSITES BUT Q

HAVE RECOGNITION NO SERA
VALID WIKIPEDIA, RINCON DEL VAGO, ETC 3 3 1.50 0.75

e) ANNEXES. (EVALUATIONS) 3 3 1.50 0.75

TOTAL 20 20 10.00 5.00