Definition
Everybody knows what controlling is, the problem is only
that everybody know something different. In fact the
definition of controlling is everything else then straight
forward. Nevertheless its part in a companies setup is
undisputedly necessary.
A helpful definition pointing in the right direction is:
"Controlling is a means of steering cross-functionally, supporting
the entrepreneurial Decision and steering process of the
Company with target-oriented information processing and
information development."
In essence it is about providing guidance by means of
information
The Controlling Lifecycle
During the lifecycle of controlling there are several
phases which are to be take care of:
Planning, Defining, Implementing, Monitoring and
Reviewing.
At this point it makes sense to split the general
"Planning" in a "What is to be planned" and "how is it to be
realized" topic.
The Planning ("What") take several input factors and
translates it into a Strategy. The Defining ("How") Takes
the strategy and translates it into a Program. The output of
both these phases are reflected in the respective fiscal
year's budget.
The implementation is the translation of the Operational
program into Projects, Initiatives, Concepts and Operational
activities. In the Monitoring phase Budgets are compared to
Actuals and their results are reflected in the respective
fiscal period forecast. The Review finally leads to the
determination of reasons for deviations and respective
mitigative corrective actions.
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Functions of controlling
The controlling functions which come
up along the lifecycle of Controlling are numerous, but in
generally they revolve around the following topics:
Identification and
documentation:
- Identification of the degree of
performance of the Accounting
system
- Establishment of a
responsibility accounting
- Implementation of changes in
Accounting/Controlling aspects
- Special analysis such as
profitability calculations, investment
calculations,
benchmarking ..
Planning and Advice
- Establishment of the overall commercial plan
- Support
an advice in the development of achievable, realistic but
still
challenging targets
- Coordination of the
individual sup-plans
- Observation of external trends and
external influences on the
operation
Specification and Guidance:
- Plan target specifications
- Initiation of
countermeasures on identified deviations
- Initiation of
innovations
- Directives on Reporting
- Analysis
Monitoring:
-
Plan execution monitoring
- Performance monitoring
-
Deviation monitoring and Root cause analysis
Conclusion
The establishment of a controlling
function is vital for every company, yet its implementation
is not straight forwards.
In order not to get sidetracked it is
advisable to get external support coaching you through the
establishment process.
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