Controlling - the process of planning, coordinating and monitoring the course of economic processes which goal is to maintain the organization in achieving its objectives. Idea of controlling is to build a logical system, which through the orderly combination of different structural elements of the company involved in the business expressed in financial, economic, organizational and technical indicators help managers make more accurate and reliable decisions on an operational and strategic scale.
Types of controlling Concepts
Controlling oriented on accounting
Concept of financial accounting is oriented on costs, planning, monitoring and control of the business in order to ensure liquidity and profitability of all operations. But mechanical transfer of accounting principles for controlling process often leads to confusion. This is apparent in analysis of short-term profit and loss account. This account is based on the legal provisions of the Accounting Act and does not answer the basic question of whether the business if profitable or not.
Controlling oriented on information processing
This concept says that controlling helps making effective decision through providing valuable information. It involves the acquisition, enrichment, and coordination of information processes, which are used by managers in control of the company. Information is obtained and prepared for the different levels of managerial structure. Information is the core of the controlling system. It is dominated by two areas of information-related tasks:
- acquiring, storing and processing data and passing them as input to the planning and control processes,
- measuring effects of achieved results of actions and decisions.
Managers must determine the appropriate amount of information and the time of acquisition.
Changes in the environment is increasingly dynamic and ever shorter business cycles require quick provision of information, so that the information must be current.
Controlling as a management subsystem
According to this concept constrolling is part of the enterprise management system. Here, the immediate aim of controlling is to ensure the company's ability to anticipate, adapt, and coordinate various actions. This is completed through the following activities:
- Planning - oriented by nature for the future, characterized by bounded rationality. Planning deals with uncertain information about future.Uncertainty is greater, the farther reaches the planning horizon. Each plan carries the risk of error.
- Providing information - conducting planning or control requires information - at the right time, place and properly processed. Information is not necessarily knowledge, but must be purposeful.
- Control - complements the planning, measures the degree of results and compares it with the benchmark. An important element of control is to establish norms, standards and methods for the measurements.
- Coordination - determine relations between all necessary actions which must be performed to achieve company's goals. Its mission is to improve the efficiency and effectiveness of the management system, which means that the benefits of coordination must outweigh its costs.
- Marrakchi Chtourou, S., Bedard, J., & Courteau, L. (2001). Corporate governance and earnings management. Corporate Governance and Earnings Management (April 21, 2001).