Performance Evaluation Summary

The budget process alone is not sufficient to maintain adequate management control. Too often, organizations tend to expect results from budgetary control and fail to recognize its behavioural implications. As a result, pressures are created leading to mistrust, hostility and actions detrimental to the long-term prospects of an organization. It follows that accountants should work more closely with behavioural scientists and that they should learn more about the behavioural implications of organizational control.

Participation schemes may be introduced into organizations with due consideration for the psychological problems entailed. One such scheme is management by objectives. Management by objectives differs from the conventional budgetary control theory in that it enables the precepts of Theory Y to be put into practice by creating an environment which allows employees to develop as individuals and to exercise responsibility through self-control. Self-control is found to induce stronger work motivation, for by giving individual managers greater freedom of action, it affords them in greater measure the satisfaction and pleasure which a sense of accomplishment confers.

Being concerned with the provision of information for planning and control, the accountant should find a knowledge of organization theory particularly useful in understanding the internal and external influences which affect the nature of organizational activities and the environment in which decisions are made. These influences have implications for the design of control systems, and the significance of contingency theory lies in the identification of their sources.


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Some of the assumptions upon which we have so far relied have been necessary for the purpose of facilitating the examination of the basic aspects of accounting for planning and control. If an accounting system is to be effective in providing information for planning and control purposes, it should be capable of adapting to organizational and environmental factors peculiar to individual enterprises. Different enterprises may require different methods of control depending on the internal and external influences affecting their own activities. Hence, some of our assumptions may be more applicable to some... see: Organization Theory