Controlling techniques presented include budgetary control, control through costing, break-even analysis, responsibility accounting, internal audit, PERT/CPM, financial ratio analysis, value added analysis, management audit, and human resource accounting. Budgetary control involves comparing actual performance to budgeted figures to calculate variances. Control through costing monitors costs through cost standards and classifications. Break-even analysis establishes the relationship between production quantity, costs, profits and sales price. Responsibility accounting assigns responsibility for costs and performance to responsibility centers.

1. CONTROLLING
TECHNIQUES
Presented by: Sheetal Garg,M.com (previous year)

2. Introduction
As we know, controlling is the last function of management . Its refers to the
comparison of actual work with pre- determined standards and find out
deviations between them and taking corrective action.
Controlling is most important functions of management because all the
previous functions evaluation has been done through controlling whether they
are in right direction to achieving organizational goals or not. there are
Various techniques for controlling .

3. Controlling techniques
At operational level:
 Budgetary control
 Control through costing
 Break – even analysis
 Responsibility accounting
 Internal audit
 PERT/ CPM
Overall control techniques:
 Financial ratio analysis
 Value added
 Management audit
 Human resource accounting

4. Budgetary control
Budgetary control is the process of determining various budgeted figures
for the enterprise for future period and then comparing the budgeted
figures with actual performance for calculating variances, if any.
Comparison Actual
performanc
e
Budgeted
figures

5. Types of budgets:-
Master and functional budgets
Capital and revenue budgets
Long term and short term budgets
Fixed and flexible budgets

6. Control through costing
 Cost control is a control of all the costs of an enterprise
in order to achieve cost effectiveness in business
operations.
 Types of cost includes:- fixed cost, variable cost and
semi- variable costs.
 The cost standards are fixed for each product or activity
and actual cost records are also sent to the incharge of
the product or activity. In case of any deviation in cost,
immediate remedial measures are taken up.

7. Break- Even Analysis
 Break even analysis is basically concerned with cost-
volume – profit analysis.
 Break even point is that level of production where the
total revenue of an organization equals its total costs.
 Break – even point establishes a relationship among the
quantity of production, cost of production, profit and
sales price.
 Formula to calculate break- even point:-
This Photo by Unknown Author is licensed under CC BY-SA-NC
This Photo by Unknown Author is licensed under CC BY-SA-NC

8.  In responsibility accounting all the activities are divided into
separate groups and somebody is appointed as the head of
each groups, these groups are called responsibility centres and
the entire responsibility for the success or failure of these
Centre lies on the head or the departmental manager.
 To evaluate the progress of departmental manager the costs
are divided into parts:-
I. Controllable costs
II. Uncontrollable costs
Responsibility accounting

9. Controllable costs :
Controllable costs can be minimized by the manager by using his
authority. A departmental manager can be held responsible for
only controllable costs.
Uncontrollable costs:
Uncontrollable costs are those in respect of which a departmental
manager has no control or can be said that these costs are out of
control i.e. fixed cost.
* Types of responsibility centres:
Continue:
Cost or expense centre
• Profit centre
Profit centre
Investment centre

10. It refers to that control technique under which an internal
auditor attempts at regular and independent appraisal of
accounting, financial and other operations of the business.
Apart from this, he evaluates the plans of the enterprise
and highlights their weakness and suggest way to
overcome them, internal audit is regularly operating which
keeps the employees ever alert.
Internal Audit

11.  This technique is used in those enterprises where many activities have
to be done in order to give a final shape to project.
 In this system different activities are arranged in a sequence in the
form of diagram which is known as programme network.
 ccccccc
Programme evaluation and
review technique (PERT)
This Photo by Unknown Author is licensed under CC BY-SA-NC

12. It refers to controlling technique which is used to check the costs
in works/projects repeatedly and other remaining things are
similar with PERT.
*Key differences between PERT and CPM:-
• PERT is used in completely new projects where as CPM is used
where there is some experience in this field. For example:
building construction, bridge construction.
• Pert is used in entirely new projects, the time of different
activities is uncertain. Whereas CPM is used in respect of
activities done repeatedly and the time in respect of these
activities has certain.
• PERT lays more emphasis on time element, while under CPM
an efforts are made to make the optimum use of resources at
the minimum costs.
Critical path method(CPM)

13.  Financial ratio analysis identifies the relationship behaviour two financial variables in
order to derive meaningful conclusion about their behaviour.
 In the case of measurement of overall performance, generally, four types of ratios are
considered . These ratios are following this:-
Financial ratio analysis
Liquidity ratios
Activity ratios
Leverage ratios
Profitability ratios

14.  The efficiency of an organization is judged by the amount of profit it
earns in relation to the size of its investment, popularly known as
return on investment.
 This technique offers a sound basis for inter- organizational
comparison of financial performance. If the rate of return on
investment of the organization is lower than similar type of
organization, management may analyze the causes for this and suitable
actions may be taken to arrive at desirable rate of return.
Return on investment
This Photo by Unknown
Author is licensed under CC
BY-NC

15. Value added includes :-
• Economic value added:
It refers to that technique of control which measures the company performance
based on true economic profit.
The difference between earnings and cost of capital is known as EVA.
• Market value added:
It refers to that technique of controlling which measures the wealth of
shareholders based on difference between the market value and book value of
capital invested.
Value added
Economic
value
added
Market
value
added
Value
added

16.  Management audit involves evaluation of management as a
whole.
 It examines the total managerial process of planning ,
organizing, staffing, directing and controlling as well as
organizational plans, objectives, policies, procedures,
system of control, etc., to advise the top management for
necessary adjustment in the organization to make it more
effective.
 only management is only responsible for all the
functioning in the organization . Thus management audit is
most important.
Management audit

17. Human resource accounting is the process of identifying and
measuring data about human resources and communicating
this information to interested parties.
Methods of Human Resource Accounting :-
1. Historical cost method
2. Replacement cost method
3. Standard cost method
4. Present value of future earnings method
5. Expected realizable value method
Human resource
accounting

18. Final words…..
As wediscussed above,wehave
varioustechniques forcontrolling.
anytechniqueorcombination of
controlorganization.Butbefore
technique ,considersyourbusiness
whichtechnique wouldbesuitable.
advantagesanddrawbacksofthat
aregoingtoapplyinginbusiness