Non-Budgetary Control Techniques

Non-Budgetary Control Techniques

There are, of course, many traditional control  devices not connected with budgets, although some may be related to, and used with, budgetary controls. Among the most important of these are statistical data, special reports and analysis, analysis of break- even points, the operational audit, and the personal observation.

1 Statistical data:

Statistical  analyses  of  innumerable  aspects  of  a  business  operation  and  the  clear presentation of statistical data, whether of a historical or forecast nature are, of course, important to control. Some managers can readily interpret tabular statistical data, but most managers prefer presentation of the data on charts.

2 Break- even point analysis:

An  interesting  control  device  is  the  break  even  chart.  This  chart  depicts  the relationship of sales and expenses in such a way as to show at what volume revenues exactly cover expenses.

3 Operational audit:

Another  effective  tool  of  managerial  control  is  the  internal  audit  or,  as  it  is  now coming to be called, the operational audit. Operational auditing, in its broadest sense, is the regular and independent appraisal, by a staff of internal auditors, of the accounting, financial, and other operations of a business.

4 Personal observation:

In  any  preoccupation  with  the  devices  of  managerial  control,  one  should  never overlook the importance of control through personal observation.