SYLLABUS

AKU 3203 – MANAGEMENT CONTROL SYSTEM

Prerequisite: AKU 2202 Managerial Accounting
Credit Hours: 3

Instructor:

Course Description
Controlling organization’s activities is one of the managers’ main functions. The control
mechanism allows management to ascertain whether members of the organization were taking
actions consistent with the objectives of the organization. In small organizations, control can be
done by direct supervision on a daily basis. As organizations grow, controlling organizations in
such a way is difficult, if not impossible, to do. Changes in the external condition (e.g., the
competition intensifies) further complicate the control issues. In this situation, managers need
tools that enable them to give up their involvement in the daily supervision of the organization’s
activities, while still maintaining their control function.
This course discusses techniques for controlling complex organizations. The discussion of the
control will be divided into two parts: the management control structure and the management
control process. However, before discussing these two components of MCS, the characteristics
and general control issues will be discussed. Recent development in control techniques, such as
balanced scorecard, is also discussed. Finally, the course also discusses the application of the
control models in service industry and multinational corporations.

Course Objectives
Upon completion of the course students are expected to be able to:
1. Describe the important elements of management control systems
2. Explain the concepts of organizational structure, decentralization, and responsibility centers
3. Explain what, when and why a transfer pricing system is needed
4. Explain the relationship between strategy, budget, and evaluation
5. Explain different ways to evaluate the performance of responsibility centers
6. Explain potential disfunctional behavior induced by inappropirate control systems

Course Material
Required:
Anthony, R.A. and Govindarajan, V. 2010. Management Control Systems, 9th Edition. New
York: McGraw Hill.

Student’s Responsibilities
1. Class meeting will be used by the lecturer to confirm student’s understanding of the
underlying concepts of accounting. Students should read the chapter assigned and are
required to do and submit the individual homework assigned and group assignment before
each class meeting.
2. Students are expected to attend all scheduled class meetings. Absence from class meetings
shall not exceed 25%. Students who exceed the 25% limit without a medical or emergency
excuse acceptable to and approved by the Associate Dean of Academic shall not be allowed
to take the final exam and shall receive a grade of E from this course.
3. Operating mobile phone and other communication devices are strictly prohibited during class
meetings. Any student found operating these devices should leave the class and will be
considered as an absence for the class meeting.

Academic Integrity
Academic integrity forms a fundamental bond of trust between colleagues, peers, lecturers, and
students, and it underlies all genuine learning. There is no tolerance for plagiarism or academic
dishonesty in any form, including, but not limited to, viewing the exams of others, sharing answers
with others, using books or notes while taking the exam, copying answers or papers, or passing off
someone else’s work as one’s own. A breach of ethics or act of dishonesty can result in A FAILURE
OF AN ENTIRE COURSE (a grade of “E”).

Teaching Methods
The sessions will be held mostly through discussions. Lecturing will be pushed at the minimum
level. Participation is not an option: students should participate actively in the discussion.
Reading materials should be read before attending the class. Cases should also be prepared
before attending the class.

Grading
Your grade will be determined based on your total score on the following items:
Mid Exam 30%
Final Exam 30%
Quizzes and assignments 15%
Homework 15%
Project 10%
100%

Your final score will be mapped to a course grade based on the following scheme:
A 90 or above C+ 65 to 69
A- 85 to 89 C 60 to 64
B+ 80 to 84 D 50 to 59
B 75 to 89 E below 50
B- 70 to 74

Course Outline

Week Topic Chapter Homework

1 Syllabus and Introduction: The Nature of Syllabus -
Management Control Systems and Ch 1
- Basic Concepts
- Boundaries of Management
Controls
- Road Map for the Reader
2 Understanding Strategies Ch 2 (please provide)
- Goals
- The Concepts of Strategies
- Corporate-Level Strategy
- Business-Unit Strategies
3 Behavior in Organizations Ch 3 (please provide)
- Goal Congruence
- Informal Factor that Influence
Goal Congruence
- The Formal Control Systems
- Types of Organizations
- Functions of the Controller
4 Responsibility Centers: Revenue and Ch 4 (please provide)
Expense Centers
- Responsibility Centers
- Revenue Centers
- Expense Centers
- Administrative and Support
Centers
- Research and Development
Centers
- Marketing Centers
5 Profit Centers Ch 5 (please provide)
- General Considerations
- Business Units as Profit Centers
- Other Profit Centers
- Measuring Profitability
6 Transfer pricing Ch 6 (please provide)
- Objectives of Transfer Prices
- Transfer Pricing Methods
- Pricing Corporate Service
- Administration of Transfer
Prices
7 Measuring and controlling assets Ch 7 (please provide)
employed
- Structure of the Analysis
- Measuring Assets Employed
- EVA versus ROI
- Additional Considerations in
Evaluating Managers
- Evaluating the Economic
Performance of the Entity
MID EXAM
8 Strategic Planning Ch 8 and (please provide)
- Nature of Strategic Planning Ch 9
- Analyzing Proposed New
 Programs
- Analyzing Ongoing Programs
- Strategic Planning Products
Budget Preparation
- Nature of the Budget
- Other Budgets
- Budget Preparation Process
- Behavioral Aspects
- Quantitative Techniques
9 Analyzing Financial Performance Ch 10 (please provide)
Reports
- Calculating Variances
- Variations in Practice
- Limitations of Variance
Analysis
10 Performance Measurement Ch 11 (please provide)
- Performance Measurement
Systems
- Interactive Control
11 Management Compensation Ch 12 (please provide)
- Research Findings on
Organizational Incentives
- Characteristics of Incentive
- Compensation Plans
- Incentives for Corporate
Officers
- Incentives for Business Unit
Managers
- Agency Theory
12 Control for Differentiated Strategies Ch 13 (please provide)
- Corporate Strategy
- Business Unit Strategy
- Top Management Style
13 Service Organization Ch 14 (please provide)
- Service Organization in General
- Professional Service
Organizations
- Financial Service Organizations
- Health Care Organizations
- Nonprofit Organizations
14 Multinational organization Ch 15 (please provide)
- Cultural Differences
- Transfer Pricing
- Exchange Rate
FINAL EXAM