Management Control System

Management Control System Definition of Management Control System According to Anthony and Reece (1984: 824) defines the management control system as a system that has a function in controlling every activity that occurs within a company in an effort to determine the appropriate strategy to be implemented and achieve the company's goals. Meanwhile, according to Suadi (1999: 8-9), defines the management control system as a system consisting of various sub-systems that are related to one another. The sub-system consists of budgeting, programming, reporting, accounting, and accountability. A company that is considered good itself must be able to fulfill several things, namely: • Having performance benchmarks that reflect a company or organization can run efficiently, effectively, and productively. • Have a policy in determining benchmarks within a company. • Able to appreciate every resource that exists or is owned by the company or organization. According to Edy Sukarno, the definition of a management control system is an integrated system consisting of processes, strategies, accounting, accountability, budgeting, and programming that have the aim of assisting individuals in running a company or organization so that the results to be achieved can be as optimal as possible. In addition, the management control system itself has various important characteristics in running a company or organization as follows. • The first characteristic of the management control system is that it can be used to control the entire company or organization. What is included in this is all the resources that can be used, both human resources, existing tools and technology to the results that can be obtained by a company, with the management control system the process of achieving the goals of a company can run well. • The second characteristic of the management control system is that it is the opposite of a strategy or evaluation technique as a whole or integrated in the company, besides that it has a nature that does not really require a definite count when evaluating something. • The third characteristic of the management control system is that it has an orientation towards humans, this is because the existing system is used to assist managers in achieving company strategy and is not used to improve the details of company records.achieving company strategy and is not used to improve the details of company records. Management Control System Functions Here are some of the functions of a management control system in a company or organization: • Conduct proper planning for a company • Perform proper coordination between sections • Conducting a good information communication process • Making a decision on something • Motivating workers or human resources who work in a company to have behavior or values and norms that are in accordance with company goals. • Controlling everything that happens in a company • Assessing the performance of resources within the company • Improve the accountability system of a company • Stimulate and generate a sense of compliance with applicable operational rules • Protect all assets in a company • Manage all activities that occur in a company so that their implementation is efficient and effective Benefits of a Management Control System The control system also has various benefits for a company, as follows: • The first benefit of the management control system is that it can find out the extent of the program being carried out by the company. The management control system can also see whether it is in accordance with the standards and work plans that have been set. • The second benefit of the management control system is that it can find out if there are various deviations that occur in the process of carrying out an activity. • The third benefit of the management control system is that it can find out how the time and resources provided can be fulfilled and utilized by the company properly. • The fourth benefit of the management control system is that it can find out the various factors that cause deviations in an activity. • The fifth benefit of the management control system is that it can provide space for company supervision to see and reflect on the work they have. • The sixth benefit of the management control system is that it can receive information and various perspectives from other people regarding an activity. • The seventh benefit of the management control system is that it can support every member of the company both in terms of personal and work being done. • The eighth benefit of the management control system is to ensure that everyone provides proactive and reactive reactions. • The ninth benefit of the management control system is to ensure the quality of every job done meets predetermined standards. • The tenth benefit of the management control system is to ensure that every member of the company does not experience difficulties or problems both in personal matters and company tasks. Elements of a Management Control System There are four elements of the management control system, namely, detectors, selectors, effectors, and communicators that have a relationship with each other. The process of a company's management control system generally starts with the detector element which functions to find information about an activity. 1. Detector The element of the first management control system is a detector which is a company's tool in identifying what is actually happening in a management control process in a company or organization. 2. Selector The second element of the management control system is a selector which is a tool used by a company to assess the significance of what is happening or what is happening in the management control process. 3. Effector The third element of the management control system is an effector which is a tool used by a company to encourage certain behaviors or actions when activities carried out are not in accordance with existing guidelines or benchmarks. 4. Communicator The fourth element of the management control system is a communicator which is a tool used to transmit information between the detector section to the assessor or vice versa. In addition, this element is also an information system whose form can be formal or information, which can provide various information to company leaders about everything that happens or activities carried out in a company. After having information, then the selector element functions to record these various activities and then compare them with the standards and benchmarks that exist in a company. These benchmarks are usually in the form of various criteria that must be met regarding all activities that should be carried out and existing justifications. Then, there is an improvement process carried out by the effector element which makes various existing stores changed so that the activities that have been determined can enter the criteria and benchmarks determined by the company. Stages of the Management Control System In the management control system, there are four stages that are related to one another. Check out the following information. 1. Programming The first stage of the management control system is programming, which is the process of preparing various programs that will be used by a company or organization in calculating estimates of how much resources the company needs. 2. Budgeting The second stage of the management control system is budgeting, which is the process of planning and controlling management expressed in certain financial units that will be used by a company for a certain period of time. The budget that will be prepared at this stage by the company is based on various budgets in the responsibility center. 3. Operations and accounting The third stage of the management control system is operations and accounting, which is the process of recording through various resources used by the company as well as the income earned during a certain period of time. In this stage of operations and accounting, the records will be categorized according to the various programs that have been established in the responsibility center. The various categories that are in accordance with the previous programs that have been carried out will serve as the basis for the programming process in the future. 4. Report and analysis The fourth stage of the management control system is a report and analysis which is the selection of an appropriate strategy for review. At this stage there are also various policies carried out by the company such as deleting, changing, adding to existing programs, as well as being taken into consideration for the company to change its budget in the future.