ACCY304-04 intr controlsystems2

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Introduction to Control Systems

Session 4January 30, 2012

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Department of AccountancyUniversity of Illinois at Urbana-Champaign


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Accountancy Peer Tutor Center

Sunday through Wednesday from 6:30-8:30 p.m.

2011 BIF

Start: Sunday January 29

For more information see:

http://www.business.illinois.edu/accountancy/programs/tutorcenter.html



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Course Elements

Group Field Project (GFP)

In the Group Field Project, each group willidentify, empirically investigate, document andevaluate an accounting control system in anexisting organization



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GFP - Assignments

Progress Report 1

Progress Report 2

Final report and presentation



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GFP - Process

Select a topic

Select an organization

Plan and conduct field interviews



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What is control?

Control should help an organization reach itsgoals

Those elements of an organization (includingresources, systems, processes, culture, structureand tasks) that, taken together, support people inthe achievement of the organizations objectives(COCO 1995)



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Room

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A simple control system


Thermostat

Temperature sensor

Temperature

Objective

Furnace &

Air conditioner


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Evolution ofAccounting Control


Purpose

Capability

Monitoring


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COCO Framework


Purpose

Commitment

Capability

Monitoring

&Learning


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COCO Framework



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Applying COCO

Use the criteria to assess the effectiveness of thecontrol system

Whether satisfied? , not just What is?

Identify control system in place Specify ideal control system

Assess the effectiveness of current control systems

Identify possible missing controls



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Applying COCO

Criteria need to be interpreted in the context ofparticular objectives

The criteria are goals to be worked toward over

time; they are not minimum requirements

The criteria are interrelated

Control elements cannot be designed or evaluated inisolation from each other



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COCO Limitations

Broad

Requires individual and specific adaptation/interpretation

Little guidance on evaluating the effectivenessof controls

Focus is on assessing the existence of controls

No focus on the efficiency of controls

Department of Accountancy

University of Illinois at Urbana-Champaign


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Papa Johns and Pizza Hut:Strategies

Papa Johns

Chilled/freshdelivery/storage

Project next day usage

Six feature inspection

Secret shoppers/Inspectors

Why?

Strategy: Superiorquality (Freshness)

Pizza Hut

Frozen delivery/storage

Thaw and use labels

Cookability bar/perfect

pizza check Inspectors

Why?

Strategy: Whats rightfor customer;streamlinedoperations

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Papa Johns vs. Pizza Hut:Summary

Same industry, direct competitors does not meanthat strategies are the same

Maybe same ends, but not same means

If strategies are not the same, controls should notbe the same

Controls should reflect strategy

What works for one may not work for another(trade-offs)



ACCY304-04 intr controlsystems2

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