What is a Management Control System?

A management control system maintains a detailed level of oversight over the use of resources within a business. The system assigns responsibility for resource consumption to various individuals, whose performance is judged based on their ability to manage resources in the most effective manner possible. The control system works best when performance is tied to the goals of the organization. The information used in a management control system is based on a budget or other plan that is compared to actual results, with variances being reported to responsibility centers throughout the organization. Some of the techniques that can be used in this type of system are:

Financial Controls

A management control system typically includes a large number of financial controls. These controls are designed to track whether revenues are being generated as intended, or whether additional steps should be taken to bolster them. In addition, financial controls are imposed on the incurrence of expenses, to ensure that they are properly authorized and are being incurred as intended. A further financial control is the financial statements, which managers review for anomalies that may require additional attention.