20. Administrative and Financial Control

According to Stoner, organizations use control procedures to make sure they are moving toward their goals and using their resources efficiently.

Continuing with Stoner, administrative control is the process that ensures that actual real activities fit to projected activities.

According to Robert J. Mockler, administrative control is a systematic effort to establish performance standards with planning objectives, to design feedback systems, to compare real results with previously established standards, to determine if differences exist and to measure their importance.

Mockler's definition divides control into 4 steps:

1. Establish standards and methods to measure performance.

2. Measure the results.

3. Determine if the results correspond to the parameters.

4. Take corrective action.

The control serves to monitor that the changes of the environment, as well as its repercussions in the advancement of the organization.

Finally, according to Stoner, the financial statements (the financial controls), review liquidity, general financial situation and profitability. We have such financial statements as the balance sheet, income statement and cash flows.

There are other financial controls, like budgets and internal and/or external audits. Personally, to the last ones, I would add the financial reasons mentioned by Van Horne.

July 2023