Why is implementing a control system important

Controls should also reflect the place in the organization wherein responsibility for action lies, thereby enabling managers to correct deviations from plans. Flexibility is another essential characteristic of an effective control system. This means that the control system itself must be flexible enough to accommodate the change. In other words, the controls should remain workable in the face of changed plans, unforeseen circumstances, or outright failures. The illustration may be of an organization whose diverse product lines require different raw materials.

When a change in the product line changes the number of raw materials needed, or when the required quantities of any of the existing materials change, the control system, should be able to accommodate the revised requirements.

Yet the seniors and probably other students with certain problems may simply have to take the course and they will be accommodated in its flexible computerized admission registration system.

Control systems must also be accurate managerial decisions based on inaccurate information that may prove costly and harmful. If for example, sales estimates are artificially high, a manager might either cut advertising on the assumption that it is no longer needed or increase advertising to enhance the sale. Similarly, a manager, unaware of the hidden production cost, may quote a sales price much lower than is desirable. An effective control system not only checks for and identifies deviation but also is programmed to suggest solutions to correct such a deviation.

For example, if inventory of a particular item drops below five percent of maximum inventory at hand, then the computer will signal for replenishment for such items. A good system of control should work on the exception principle, so that only important deviations are brought to the attention of management, In other words, management does not have to bother with activities that are running smoothly.

This will ensure that managerial attention is directed towards error and not towards conformity. This would eliminate unnecessary and uneconomic supervision, marginally beneficial reporting and a waste of managerial time.

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The cookie is used to store the user consent for the cookies in the category "Analytics". The cookies is used to store the user consent for the cookies in the category "Necessary". The cookie is used to store the user consent for the cookies in the category "Other. Suggested Case Studies. Textbook Price: Rs. Implementation of Management Control Systems : Overview There is no certainty that management control systems will always be effective, either in terms of design or in terms of implementation.

These systems can only increase the probability of achievement of organizational objectives of effectiveness, efficiency, accuracy of financial reporting, and compliance. Management controls should be integrated or in-built into the organization's activities. These in-built control systems will influence the organization's capability to achieve its objectives and also help in improving the quality of its business operations. There are five components of management control - control environment, risk assessment, control activities, information and communication, and monitoring the control system.

Control activities refer to the policies and procedures that are used in an organization to provide a reasonable assurance that the directions and instructions given by the management are followed appropriately. Control activities differ depending on the business environment, organizational objectives, complexity in business operations, the people involved in the implementation of these activities, and organizational structure and culture. Conducting meetings helps in improving decision making and also in reducing the time taken for the decision-making process.

Four different types of meetings which serve different purposes are: the daily check-in, the weekly tactical, the monthly strategic, and the quarterly off-site review. Information systems will not be effective without proper communication between the different levels of management.

Communication is not only required to pass on the information but is also necessary for coordination of work, assigning responsibilities, etc. Two types of communications - internal communication and external communication - take place in any organization.