40 ACCOUNTING FOR MANAGERS
corrective action to be reflected either in goal adjustment or in changed behaviour,
and the allocation or utilization of resources (i.e. budgeting and budgetary control,
which are covered in Chapters 14 and 15).
According to Anthony and Govindarajan (2001), every control system has at
least four elements:
1 A detector or sensor that measures what is happening.
2 An assessor that determines the significance of what is happening by comparing
it with a standard or expectation.
3 An effector (feedback) that alters behaviour if the assessor indicates the need to
do so.
4 A communication network that transmits information between the other ele-
ments.
This can be represented in the diagram in Figure 4.3.
There are five major standards against which performance can be compared
(Emmanuelet al., 1990):
1 Previous time periods.
2 Similar organizations.
3 Estimates of future organizational performanceex ante.
4 Estimates of what might have been achievedex post.
5 The performance necessary to achieve defined goals.
Hofstede (1981) provided a typology for management control: routine, expert,
trial-and-error, intuitive, judgemental or political. The first three are cybernetic
and these are described in this chapter. Non-cybernetic controls are described in
Chapter 5.
Control
device- Assessor: Comparison
with standard - Detector: Information
about what is happening - Effector: Behaviour
alteration, if needed
Entity
being
controlledFigure 4.3 Elements of a control system
Reprinted from Anthony, R. N. and Govindarajan, V. (2000).Management Control Systems. (10th edn),
McGraw-Hill Irwin.