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Concepts in Management Control Management Control Systems Definition logical integration of management accounting tools to gather and report data and evaluate performance Purposes of Management Control Systems (MCS) communicate the organisation’s goals clearly

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Presentation Transcript
management control systems
Management Control Systems
  • Definition
    • logical integration of management accounting tools to gather and report data and evaluate performance
  • Purposes of Management Control Systems (MCS)
    • communicate the organisation’s goals clearly
    • ensure that every manager understands the specific actions required to achieve organisational goals
    • communicate results of actions across the organisation
issues in designing management control systems
Issues in Designing Management Control Systems
  • Responsibility Centres
    • are defined as a set of activities assigned to a manager or a group of employees
    • report on
      • results of activities
      • the manager’s influence on those results
      • effects of uncontrollable events
  • Classification according to financial responsibilities
    • cost centre
    • profit centre
    • investment centre
nonfinancial measures
Nonfinancial Measures
  • Reasons to incorporate nonfinancials
    • improvement of organisational control
    • increased timeliness
    • ease of understanding by employees at lower levels
    • stress on activities
  • Examples
    • quality level
    • cycle time
    • productivity
combining financials and nonfinancials in a balanced scorecard
Combining Financials and Nonfinancials in a Balanced Scorecard

Results (Financial)Perspective

BalancedScorecard

External (Market) Perspective

Internal (Process) Perspective

Future (Learning) Perspective

further issues in management control and performance management
Further Issues in Management Control and Performance Management
  • Alternative Measures of Achievements
    • Profits
    • Residual Profits (EVAs)
    • Return on Investments
  • Mechanism of Setting and Evaluating Transfer Prices
  • Motivation, Performance and Rewards
  • Incorporation of Risk

 Managerial Accounting Elective