INTERNATIONAL CONTROLS

IMPORTANCE OF CONTROLS

MORE IMPORTANT THE LARGER THE FIRM AND THE NUMBER OF EXTERNAL FACTORS INCREASES

MORE DELEGATION OF AUTHORITY, MORE NEED FOR CONTROLS

CHARACTERISTICS OF EFFECTIVE CONTROL SYSTEM

ACCURACY

TIMELINESS

OBJECTIVITY

ACCEPTABILITY

CLARITY

COST EFFECTIVENESS

RELEVANCE

CONTROL MECHANISMS

INTERNATIONAL ACCOUNTING AND AUDITING CONTROLS

• MEASURE FINANCIAL RESULTS OF COMPANY
• HISTORICAL, BASED ON ACTIVITIES ALREADY PERFORMED
• ILLEGAL ACTIVITES
• LANGUAGE DIFFICULTIES

CONTROL THROUGH PLANS, POLICIES, AND PROCEDURES

• ACTIVITIES PERFORMED TO ACCEPTED STANDARD
• USE PLAN TO MEASURE PERFORMANCE AGAINST
• STANDARDIZED PROCEDURES REDUCES CONFUSION, BUT REDUCES FLEXIBILITY

ADDITIONAL CONTROLS

BUREAUCRATIC VS CORPORATE CULTURE CONTROL

BUREAUCRATIC: FORMAL, EXPLICIT, RIGID MEASURES

CORPORATE CULTURE: LESS RIGID, INFORMAL

USUALLY USE MIX

CENTRALIZED VS DECENTRALIZED

FACTORS INFLUENCING

• INDUSTRY
• TYPE OF SUBSIDIARY
• FUNCTION
• PARENT PHILOSOPHY
• PARENT CONFIDENCE IN SUBSIDIARY
• CULTURAL SIMILIARITY
• FIRM-SPECIFIC ADVANTAGE

INFORMATON SYSTEMS AS PART OF CONTROL SYSTEMS

SETTING UP IS, NEED TO KNOW:

• WHAT INFORMATION IS NEEDED?
• WHO WILL ACCUMULATE THE INFORMATION?
• WHO WILL RECEIVE THE DATA AND INFORMATON?
• WHAT FORM WILL THE INFORMATION TAKE?
• WHEN WILL INFORMATION BE AVAILABLE?

PERFORMANCE EVALUATION

HOW OFTEN

HOW EVALUATE

GOAL-BASED APPROACH

ORGANIZATIONAL STRUCTURE AND CONTROL

DIFFERENT TYPES, DIFFERENT CONTROL MECHANISMS

CAN BE SPECIFIC TO SPECIFIC COUNTRIES

SEE HANDOUT FOR EXAMPLES