Accounting for Management Control


Accounting for Management Control is a managerial activity concerned with planning and controlling of the corporations financial resources to generate returns on its invested funds. The raising and using of capital for generating funds and paying returns to the suppliers of capital is the finance function of a company. Thus the funds raised by the company will be invested in the best investment opportunities, with an expectation of future benefits. As every business activity either directly or indirectly involves the acquisition and use of funds, there is an inseparable relationship between the finance and other functions like production, marketing etc. The raising of funds and using of money may not necessarily limit the general running of the business. A firm in a tight financial position will give more priority to financial considerations to devise its marketing and production strategies in tune with its financial constraints. On the contrary, management of a business company, with plentiful supply of funds, will be more flexible in formulating its production and marketing policies. In fact, the financial policies will be devised to fit the production and marketing decisions under such a situation. It may be difficult to separate the finance function from the other functions of the business, the finance function can be broadly discussed as
i. Managerial functions
ii. Routine functions
The managerial functions require greater planning, control and execution of financial activities. Whereas, the routine functions need a greater managerial talent to carry them out. The routine functions are mainly incidental to the effective handling of the managerial functions. Some of the important routine functions are:
i. Supervision of cash receipts and payments and safeguarding of cash;
ii Custody and safeguarding of securities, insurance policies and other valuable papers;
iii. Taking care of the methodological...