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N. Ramachandran

Management Control and Reporting Systems By Mohinder N. Kaura Publishers: Response Books, New Delhi Price: Rs 250

We have witnessed many changes due to globalisation, privatisation, liberalisation and aggressive competition in the industrial sphere. Global competitive forces at work could weed out inefficient units or units which are unable to survive. Darwin's Theory of Survival has become a stark reality when we look at the way the big MNCs had to painfully face the phase of extinction.

To survive in a highly competitive global environment, business entities need to focus more on implementing sound management control systems and techniques. Further, there is a dire need to review such control systems in existence, more frequently than even before, to survive in an ever-changing dynamic and highly competitive business environment.

The book under review, highlights the importance of management control systems through appropriate reporting mechanism.

According to the author, management control and reporting systems deal with measurement, control, review mid redirection of performance evaluation of a business entity and its units. Normally in any business entity, the top management is concerned with policy formulation while the executive management will concern with policy implementation as well as its performance evaluation.

Many organisations have come to grief due to inadequate or inappropriate performance evaluation measures. In several instances performance evaluation is not done in a discreet way as to warrant a systematic and scientific approach towards performance evaluation through well thought-out and well-designed control system taking in to account both financial and non-financial parameters. Though every management is concerned with accomplishment of organisational objectives, enough attention is not bestowed towards exercising right checks and controls at the appropriate time.

Viewed in such a backdrop, evaluation/control systems need to be properly designed and effectively executed. It is the duty of the top management to conceive, design and implement sound management controls and reporting systems. No doubt even the mere existence of such a system alone cannot ensure good performance. What needs to be done is to undertake a systematic review and effective evaluation of the control systems in vogue at periodic intervals so as to go in for necessary course correction measures in the right perspective. Such a system of management control has become a dire necessity in the wake of intense competition, wide spread phenomenon of slow down and world-wide bankruptcies.

The management control system is essentially a strategic tool for holding managers accountable and responsible for their performance. Existence of such a system also provides a feedback for managers to know how they perform, in which direction the organisations are heading for and what type of course correction would be desired to stay on course.

The book deals with three sub-systems: strategic control systems; business unit/divisional control systems and operational control systems. The book elaborates on the basic steps in management control processes such as need and scope for controls and ascertaining the key factors affecting performance; deciding and determining the appropriate control tools, techniques and systems and method of implementation; measuring and evaluating the performance at subunit levels/organisational levels and identifying deviations from desired levels. Deciding on course correction measures through revision of policies, procedures and programmes or through redeployment of resources and efforts for attaining organisational goals.

The book is divided into five parts — the opening section dealing with structure of management control systems; the next part focuses on the process of management control system; the following section deals with management reporting systems; the penultimate part details management control systems as applicable for banks/financial institutions, research organisations and export-oriented units and the book concludes by covering issues of consequence for management control and reporting systems. The entire subject area is covered in 16 chapters.

The author has furnished case lists under most of the chapters followed by references for further study. The book provides formats for reporting systems for adoption by different business entities. Though control systems as applicable for banks are presented in one of the chapters, it does require greater elaboration in the wake of introduction of asset liability in management concepts and risk-based supervision systems. On the whole, the book is a timely and welcome publication in the subject area. The author has presented the subject in a simple and readable form.

The reviewer is Principal, Staff Training College, Karur Vysya Bank.

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