Lyceum of Cavite-East
ABM – 11
CONTROLLING
Definition and Nature of Management Control
CONTROLLING
- Refers to the act of guiding and monitoring processes, performance, or people to ensure
they align with established goals or standards.
NATURE OF CONTROLLING
- Ongoing Process: Controlling is a continuous activity, not a one-time event.
- Responsibility of Everyone: All employees are responsible for controlling, even outside their
direct duties.
- End Function: Controlling happens after other management functions like planning.
- Dynamic Process: Controlling is flexible and adjusts to changes.
THE CONTROL PROCESS
1. Establishment of Standard: Set clear standards to measure against.
2. Measure of Performance: Assess the actual performance.
3. Comparison of Actual Performance with the Standard: Compare actual performance to the set
standard.
4. Taking Corrective Actions and Realigning Processes: Implement actions to correct deviations
and adjust processes.
THE LINK BETWEEN PLANNING AND CONTROLLING
Planning and Controlling are closely related management functions.
- PLANNING identifies the goals and standards that an organization should aim for
- CONTROLLING ensures that the performance of the whole organization conforms to the outlined
plans.
- CONTROLLING also provides management with vital information that can be used in the
formulation of new plans for the company.
- PLANNING provides the baseline of the company’s future while
- CONTROLLING becomes the tool that ensures the company’s success.
The failure of controlling would mean failure of planning, and success of planning means
success of controlling.
All forms of management controls are designed to give manager information regarding progress,
the manager use this information to:
1. Prevent crises
2. Standardization outputs.
3. Appraise employee performance
4. Update plans
5. Protect an organization’s asset
CONTROL METHODS AND SYSTEM
Control methods are used for measuring an organizations financial stability, efficiency
effectiveness, and production output etc.
METHODS OF CONTROL
A. Quantitative methods – which make use data and different tools expressed in members
for monitoring and controlling production output.
Budgets – is a financial plan for a specific period that forecasts anticipated revenues and
expenses to guide spending and resource allocation.
Audits – Internal auditing involves the independent review and evaluation of the organizations,
nontactical, such as accounting and finances.
B. NONQUANTITATIVE METHOD – refer to the overall control of performance instead of only
those of specific organizational processes.
OTHER CONTROL METHODS
1. Feed forward control – prevents problems
2. Concurrent control - takes place while work activity is happening.
3. Feedback control – takes place after the occurrence of the activity.
4. Employee discipline – involves management implementing rules and actions to
correct employee behavior or poor performance that violates company policies
5. Project management control – ensures that the task of getting a project’s activity
done on time.
Various Control Methods and System in Monitoring and Controlling The General Conduct
Of Company Operations
1. Administrative Control – it is establishing procedures and policies.
2. Performance Appraisal – provides general impression of employee performance.
3. Quality Control – relies on the quality of products and services as a basis for establishing
performance standards.
Application of Management Control in Accounting and Marketing Concepts
and Techniques
Accounting Department provides financial information that can help determine the financial
stability of the organization.
Marketing Department, provides data on the company’s sales performance.
MANAGEMENT CONTROL
- Is the process of setting standards, monitoring performance, and taking corrective action to
ensure an organization’s activities align with its strategic goals.
SALES
- The exchange of a product, service, or asset for money or other compensation, or the
number of goods and services sold.
ACCOUNTING OR FINANCIAL CONTROL
Financial Controls – it is the important tools that determine whether the company is on track
toward achieving it’s financial goals.
Financial Ratios – one of the control methods utilized in financial control.
Financial Statements – are formal records of the financial activities and position of a business,
person, or other entity.
THE MAIN TYPES OF FINANCIAL STATEMENTS IS BALANCE SHEET AND
INCOME STATEMENT
Balance Sheet – Is a financial statement contains the company’s assets, liabilities, and capital
account.
Assets – Are things or resources that the company owns.
Liabilities – Are the obligation of the company to creditors for past transactions.
Owner’s Equity or Stockholder’s Equity – shows the amount of the capital of the owner’s
business have invested.
Owner’s Equity – applicable for sole proprietorship
Stockholder’s Equity – applicable for corporation
The standard formula for determining the financial status of the company using a balance sheet is
Asset = Liabilities + Owner’s Equity
INCOME STATEMENT – is a financial report showing a business’s revenues, expenses, and profit
or loss over a specific period or often a year.
Revenue – this is the primary income from primary activities.
Sales Revenue – refers to revenue gained from the sale of goods.
Other Revenue – comes from the secondary activities unrelated to the main business.
Expenses – these are costs incurred in the operation of the business.
Net Income – lists the revenues and expenses incurred by the company, and the total expenses is
subtracted from the total revenues.
Profit – Indicates the expenses are less than the total revenue.
Loss – if the expenses are greater than the revenue.
ACCOUNTING/FINANCIAL CONTROL RATIOS
Liquidity Ratio – are a measure of the ability of a company to pay off its short-term obligation.
Leverage Ratio - is a measurement used to determine the relationship between a company’s
debt and assets.
Activity Ratio – determines if the organization is carrying more inventory than what it needs.
Profitability Ratio – the profits that are being generated.
MARKETING CONTROLS
- Control is also applicable in marketing because it helps ensure that marketing activities are
working effectively toward achieving business goals.
Five Types of Marketing Control:
1. Strategic control – Is the process of monitoring, evaluating, and adapting a strategy as it’s
implemented to ensure it remains relevant and achieves organizational objectives.
2. Annual plan control – involves analyzing a company’s sales date to determine trends and
changes in sales figures and identify any discrepancy.
3. Customer Tracking – These are methods that determine customer behavior.
4. Profit Control – the profitability of company activities and identifies where the company is
making or losing money.
5. Efficiency control – track of the efficiency marketing expenditures such as sales force,
advertising, sales promotion and distribution.