Ch 11 Student Financial Control Theme 2.pptx - Financial Control Contemporary Management Accounting Issues Accounting 586 Chapter 11 Focus of the Theme

Ch 11 Student Financial Control Theme 2.pptx - Financial...

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Financial Control Contemporary Management Accounting Issues Accounting 586 Chapter 11
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Focus of the Theme and this Chapter Theme 2 examines budgeting & control The last chapter examined budgeting for planning and coordination Now we turn to the organizational structures and methods providing financial control Tend to focus of the financial aspects of control
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Importance of Financial Control The class of variables which organizations typically exert most influence over are costs Tendency to focus on the financial aspects of control However, using the BSC the concept of control can be expanded to the other 3 levels Financial control facilitates strategy implementation by
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Environment of Financial Control Financial control uses financial information and measures to assess organizational and management performance Traditionally financial control was based solely on financial measures (discussed in Theme 1)
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The Balanced Scorecard and Financial Control This approach adds to traditional financial control (what to do for financial success) the perspectives of Internally Decision making Externally Organizational performance
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The Balanced Scorecard and Financial Control The process perspective provides The learning & growth perspective How or why employees are
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Basics of Financial Control Financial control in an organization & its units have both internal and external aspects Internal: decision making External: overall firm performance regarding Control structures (Authority & responsibility) Examples: Light and Power company, Auditing a class Centralized Sr. Managers have the authority and responsibility Lower level management: Tasks are defined in detail for employees Issue becomes some difficulty in or with growth and diversity of products and services Decentralized Financial control and organizational structure are related
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Decentralization Decision-making authority is delegated to frontline managers Better knowledge Better to adapt Shifts evaluation from tasks to results Also provides career paths or training Historic perspective on decentralization Organizational structures in U.S. evolved to in early 1900s As organizations grew the product lines of the services become more diversified
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Advantages of Delegated Decisions Advantages from decisions by decentralized rather than centralized managers
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Decentralization Why financial control is needed with decentralization Results are measured in financial terms Degrees to decentralization
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