Anthony J. Berry

Control, organization and accounting

Organization control is a subject of fundamental importance to the designer of accounting control systems. Yet discussions of accounting control tend to take place against a back-cloth of incomplete and outmoded theories of organization and simplistic and authoritarian concepts of control. In this paper, the applicability of a cybernetic model of control to the control of human organizations is explored, with particular reference to the role of accounting information systems. The analysis uncovers a number of issues that require resolution before the model can be applied to accounting information system design. Some directions for research on accounting controls are discussed.

Chapter 14 – Case-Based Research in Accounting

Publisher Summary The chapter discusses case-based research in accounting and its benefits. It describes the richness of this kind of research that addresses the task of understanding and theorizing the content, processes, and context of the accounting practice. It presents a personal reflection of the authors on their case research and enumerates the problems faced. It outlines some ideas on how to think about, construct, design, and interpret case-based research in accounting. This kind of research has moved on from positivist methods to include constructivist and subjectivist approaches. The chapter briefly reviews these issues and discusses certain methods that are used in accounting research, followed by a review of some issues and compromises involved in a research design, and in conducting a case-based fieldwork. It also explores a few skills required to undertake case-based research and some considerations of the ethical issues that can arise. Finally, the chapter considers the contributions and limitations of case-based research in accounting.

Structures of control

As Chapters 1 and 2 have shown, there are lots of different approaches to considering control. Different approaches lead to the creation of diverse structures within organisations. When we come to consider the structures of control then, once more, we can look at the creation of these structures through a number of different ‘lenses’. The approaches adopted by organisational theorists and by economists are the two with which we shall be concerned in this chapter. The approaches adopted by organisational theorists are important because they have provided ways of structuring organisations and the processes within them. The approaches of economists are included because they provide a framework for discussion of the question as to whether large organisations are the best way of structuring industries and services. This then provides a framework for the chapter. First, consideration will be given to the question of structuring large organisations and the tasks within them. This will be done through a reflection of the influence of classical management theorists, as well as by giving some attention to more recent attempts to structure through divisions or matrices. Next the contribution of the economists will be presented, in particular the debate as to the reasons for the formation of markets or hierarchies in particular circumstances. Finally the debate as to the superiority of either markets or hierarchies as a structure for organising the supply of goods and services in contemporary society will be raised.

Spanning Traditional Boundaries: : Organization and Control of Embedded Operations

In management texts, management and control of operations is handled through the establishment of models and budgets of various kinds. Takes a broader view of operations. Follows this by consideration of modes of control for networks. Then considers financial control and clan control issues in embedded networks or chains of operations. In the first section develops some of the characteristics of the embedded firm. Follows this by a discussion of the problem of control in and out of chains of embedded firms. Examines the issues for financial control. Finally explores the social and organizational processes within and between partners in such chains.

Consultancies: Agents of Organizational Development. Part I

In the UK, management consultancy is a £2 billion per annum business sector. Major consultancy firms are global or European enterprises which match and perhaps lead the emerging global or regional nature of markets. Yet little is known about these agencies of change, these intelligence networks which have come to play such a significant, perhaps pivotal role in organizational and management development. Part I of this two‐part article presents the role of management consultancy in the context of a knowledge typology – and reports on some of the findings of a preliminary research project.

Risk distribution in the budgetary process

Budgeting has always been a problematic process. At the end of a budget period it is invariably found that some managers have been able to achieve their budget targets more successfully than others. But when senior managers come to evaluate their subordinates’ performance they have to recognize that some apparent success is caused by certain managers having had easier budgets to attain in the first place. That is, the difficulty of budget targets is likely to vary between one manager and another. Further, it has often been recommended that budgets should be seen as targets that will be achieved only a proportion of the time. In order to motivate the best possible actual performance it is suggested1 that a budget should be pitched at a more difficult level than the performance actually expected. Although such a target will not, on average, be attained it is nevertheless believed that it will motivate managers to achieve a better result than if the budget had been set at a lower level. It is not the purpose of this paper to argue the case for or against the use of budgets as motivational targets. Rather we take as our starting point the observation that budgets are often, in practice, set at levels other than the performance which is expected to occur, and to examine some implications of this observation.

Approaches to control in the organisational literature

As we noted in Chapter 1, not all aproaches to control have adopted a systems perspective. The aim of this chapter is to provide a broad outline of the work of some of the authors and researchers who have considered the problem of control using various social and organisational frameworks. Social and organisational approaches seek to locate control in their context and, therefore, in various different ways take into account the structures, the people connected to them and the environment of the organisation. The approaches give differential emphasis to the various elements. Subsequent chapters will seek to look in more depth at the impact on control of the structures of organisations and the contexts in which they exist, as well as the roles of people within them. The intention in this chapter is not to provide any prescription as to a ‘best’ way to operate systems of control, but to continue the task we began in Chapter 1, of sketching an outline of the huge diversity of approaches which have been adopted in seeking to theorise control in organisations.

Accounting systems and control

The aim of this chapter is to consider the role of accounting systems in organisational control. Every organisation, be it small or large, business or family unit, has some type of accounting system. Accounting systems provide a fundamental way of handling high levels of complexity by the imposition of a set of standard operating procedures; this provides a major strength of accounting as a control system. However weaknesses also stem from the imposition of standard systems in complex situations because inventive human minds find ways of reporting desired results through the manipulation of the system rather than by behaving in expected ways.

The domain of organisational control

Organisational control concerns everyone. Whether you are a manager attempting to run a department, a politician trying to frame legislation to control multinational corporations, or just an individual affected by the activities of the many organisations that have an impact on you, organisational control is a fundamental issue of modern life. In what ways are organisations controlled? By whom and how? And how can we influence what they do? These are some of the questions that this book tries to answer.

Procedures for control

In previous chapters we have addressed the issues of control and of control structures. In this chapter we address the question of procedures for control primarily through consideration of planning. We work from the idea that a plan constitutes a model of the expected or intended future activities of the organisation and can be a basis for control actions; however we will also argue that the procedure of planning contains within it more of the requisite variety for control than is contained in the plan itself.