• Determine the relationship of controlling to planning. • Enumerate the different steps in Planning. PLANNING & CONTROLLING Planning is the process of thinking about and organizing the activities required to achieved desire goals.
Controlling can be defined as a managerial
function to ensure that activities in an organization are performed according to the plans. What is done in PLANNING and CONTROL? • Management planning is about setting the goals of the organization and identifying ways to achieve them. • This may be broken down into long-term plans and short-term plans. • In the process of planning, resources have to be identified including manpower resources, production capacity, and financial resources. • Once the plan is set, it has to be quantified or else it will be useless. • Budgets and projected financial statements are then compared with the actual performance, which is where the “controlling” function comes into play. • If the actual performance falls short of the budgets or of the projections, it doesn’t mean that the management is not doing its function. • To be effective, controlling must include a reward system for those who deliver and a penalty for those who do not deliver whose reasons for failing to meet objectives are within their control. What Are the Steps in Planning? Step number 1 is to… 1. Set goals or objectives. – The goals of a company can be divided into: short-term goals ‒ can be for a year; medium-term goals ‒ can be between one and three years; and long-term goals ‒ can be five to 10 years or even longer. Step number 2 is to…
2. Identify resources. – Resources include:
production capacity; human; and financial. Step number 3 is to…
3. Identify goal-related tasks.
– In this step, management must figure out how to achieve an objective. Step number 4 is to…
4. Establish responsibility centers for
accountability and timeline. – If tasks are already identified to achieve goals, the next important step to do is to: Identify which department should be held accountable for this task; and Set a timeline for the activities, especially for those activities which are not normally done on a daily basis. Step number 5 is to…
5. Establish an evaluation system for
monitoring and controlling. – The management must establish a mechanism which will allow plans to be monitored, which can be done through quantified plans such as budgets and projected financial statements. Step number 6 is to…
6. Determine contingency plans.
– In planning, contingencies must be considered as well. Budgets and projected financial statements are anchored on assumptions. If these assumptions do not become realities, management must have alternative plans to minimize the adverse effects on the company. Seatwork 1. Why is planning important in the success of an organization? 2. How is controlling related to planning? 3. What are the different steps in planning? Discuss each briefly. 4. What is the importance of quantifying a plan? Assignment What are the different budget preparations that an accountant should prepare? Define each.