Answer to Question #257618 in Management for John

Question

Recommend any 4 ways in which Klaus can exercise both periodic and occasional control within his division. You may choose any amount from either category(periodic or occasional), as long as you ensure you cover at least one from the one category. Provide Klaus with useful and practical ideas which he will be able to implement immediately

Answer 1

Discussion

Control in a business setting, or organizational control, involves the processes and procedures that regulate, guide, and protect an organization. It is one of the four primary managerial functions, along with planning, organizing, and leading. One common type of control companies use is a set of financial policies. These policies may not be communicated to all employees, but they exist for all but the smallest firms. Controls start with managing cash. For instance, a firm may require two signatures on cheques more than $5,000 or have one person to log journal entries and another person to review the entries. These policies help prevent fraud and errors as well as monitor whether company goals are being met. In larger companies, each department manager submits an annual budget and profit-and-loss statements.

The following internal control activities can be found in the workplace. All employees fit into the organizational picture of internal control, Klaus can exercise these useful and practical ideas which can be implemented immediately;

• Segregation of Duties

Duties are divided among different employees to reduce the risk of error or inappropriate actions. For instance, responsibilities for receiving cash or cheques, preparing the deposit, and reconciling the deposit should be separated.

• Authorization and Approval

Transactions should be authorized and approved to help ensure the activity is consistent with departmental or institutional goals and objectives. For instance, a department may have a policy that all purchase requisitions and invoice vouchers must be approved by the director. It is important that the person who approves transactions have the authority to do so and the necessary knowledge to make informed decisions.

• Reconciliation and Review

Performance reviews of specific functions or activities may focus on compliance, financial, or operational issues. Reconciliation involves cross-checking transactions or records of activity to ensure that the information reported is accurate. For instance, revenue and expense activity recorded on accounting reports should be reconciled or compared to supporting documents to ensure that the transactions are recorded in the correct account and for the right amount.

• Physical Security

Equipment, inventories, cash, cheques, and other assets should be physically secured and periodically counted and compared with amounts shown on control records. For instance, the periodic confirmation of equipment by individual departments is a physical security control.

Reference

Bidwell, C. E., Frank, K. A., & Quiroz, P. A. (1997). Teacher types, workplace controls, and the organization of schools. Sociology of Education, 285-307.