All of us make decisions. With good luck we make the right decisions, with bad luck we create disasters. Fortunately, this need not be. Helped by the development of quantitative techniques & management control systems, we can now make rational decisions based on organized knowledge, with clearly specified consequences. Not guesswork but logical analysis is the sound basis for solving problems in business and industry, government, and education etc.
The role of management is to plan, organize, integrate and interrelate organizational activities to achieve organizational objectives. This role is facilitated through management control systems. A management control system is a set of interrelated communication structures that facilitates the processing of information for the purpose of assisting managers/executives in coordinating the parts and attaining the purpose of an organization on a continuous basis.
Control systems are employed in all organizations. They are concerned with
Formal controls are laid out in writing by the management, whereas informal controls arise as a result of employees’ behavior. Examples of formal controls are plans, budgets, policies & procedures. Formal controls are framed by the managers. Informal control include group norms and organizational culture. Informal control often originate with employees and are affected by general socio-cultural factors.A control system brings unity out of the diverse activities of an organization.
We add value in the following areas as Management Accountants: