Planning is the development of a consistent
set of actions, resources, and measurements
by which the achievement of objectives can
be assessed.
... [Show More] Planning takes into account the
interactions between the organization and its
environment in whatever is to be done.
Control is the process by which managers
assure that resources are obtained and used
in an efficient and effective manner to carry
out the plan and accomplish the organization’s
objectives. Control implies that performance
measurements are reviewed to
determine if corrective action is required.
Planning and control are interrelated.
Control is carried out within the established
planning framework and serves to evaluate
conformance to the plan so that organizational
objectives are achieved.
Q1-2. Short-range plans usually deal with a period
of a quarter or a year, while long-range plans
usually cover three to five years. Short-range
plans are detailed enough to permit preparation
of a complete set of financial statements
as of a future date, while long-range plans
culminate in a very summarized set of
expected results or a few quantified objectives,
such as financial ratios.
Q1-3. Long-range plans contain quantitative results,
while strategic plans are the least quantifiable
of all plans. Long-range plans usually extend
three to five years into the future, while strategic
plans may contemplate shorter or much
longer periods. Long-range plans covering a
three-to-five-year period would be prepared
every three to five years, or might be systematically
updated each year to maintain a complete
plan, while strategic plans are
formulated at irregular intervals by an essentially
unsystematic process.
Q1-4. Accountability is identical with responsibility
accounting. Accountability deals with the discharge
of an individual’s responsibility to
achieve assigned objectives within the costs
and expenses allowed for the performance
and agreed to by the individual.
Q1-5. The controller does not control, but aids the
control task of the managerial levels by issuing
reports pointing out deviations from the
predetermined course of action.
Q1-6. The cost department keeps detailed records
of materials, labor, factory overhead, and
marketing and administrative expenses; analyzes
these costs; issues control reports; prepares
cost studies for planning and decision
making; and coordinates cost and budget
data with other departments.
Q1-7. For product research and design, the manufacturing
departments need estimates of
materials, labor, and machine process costs;
for measuring and efficiency of scheduling,
producing, and inspecting products, the
departments need to know the costs incurred.
The personnel department supplies employees’
wage rates. The treasury department
needs accounting, budgeting, and related
reports in scheduling cash requirements. The
marketing department needs cost information
in setting prices. The public relations department
needs information on prices, wages,
profits, and dividends in order to inform the
public. The legal department needs cost information
for keeping many affairs of the company
in conformity with the law.
Q1-8. Modern techniques in communications give
the controller and staff the means to transmit
information in the form of results, analyses,
and forecasts in a way never before possible.
Profit opportunities or control actions have
been delayed or missed entirely because
timely information that might have improved
the cost and profit position of the company
was poorly communicated.
Q1-9. The budget is an essential cost planning tool
because it (a) supplies information and serves
as a standard of performance for cost control
by the supervisors responsible for cost; (b) provides
an easy method for anticipating profits at
an anticipated sales level; (c) helps in forecasting
sales, costs, expenses, and profits for a
period of one year or more in advance.
Q1-10. These standards will not necessarily be able
to prevent management fraud, but they do
give internal accountants some guidance on
how to proceed if they encounter a questionable
practice.
Q1-11. CASB standards: (a) enunciate a principle or
principles to be followed; (b) establish practices
to be applied; (c) specify criteria to be
employed in selecting from alternative principles
and practices in estimating, accumulating,
and reporting contract costs. The
standards are backed by the full force and
effect of the law. [Show Less]