Executive Summary The term performance management was not common until the 1970s. From then on, the performance language has turned out to be each day attribute of operations in numerous public sector firms. According to Fullerton & Wempe (2009, p. 215), the performance language has been related to the setting of the management control system which is very important in achieving organizational objectives and integrity and upholding shareholder confidence. Therefore, this report will focus on the management control system at the external audit department of Deloitte Company. This will be evaluated based on actions and results which this department often wishes to control for its clients.
Also, this report will discuss the organizational context influencing management control system choices and identify and justify financial and non-financial key performance indicators relevant to the audit department. This finalized by a critical evaluation of the proposed management control system consisting of the balanced scorecard and job analysis. Introduction Since the 1970s, companies have created management control systems and implemented them within different functional areas including production, external audit, accounting, human resource, and marketing among others (Bourne, Melnyk & Faull 2007, p. 781).
The system has been widely in recent years to gauge the performance of these departments. Within the companies, these systems play different roles because different departments have dissimilar actions. However, one common thing with a management control system is that every management expects is such systems to restore accountability and integrity. Among the functional areas mentioned, the external audit has been regarded by various management theories as one which uphold transparency, accountability as well as internal control within organizations. According to Carpinetti, Galda´ mez & Gerolamo (2008, p. 407) various researches claim that after the election of 1997, Labour Government of UK came to power and promoted the subject of controlling and managing public expenditure and enhancing public services through external auditing (Folz, Abdelrazek, Chung 2009, p. 67).
Due to the importance of this functional area, this report will focus on key activities and results which can be controlled by means of the management control system at the external audit department of Deloitte. Also, this report will describe the organizational context influencing management control system choices and identify and justify financial and non-financial key performance indicators relevant to the external audit department. Company Background Deloitte Touche is a professional service company that was first established in the UK in 1845 but later moved its headquarters to the US (Deloitte 2014).
The company has grown over the years and now operates in 150 countries across the globe with over 200000 employees. Its growth has seen accumulate the largest share of the market based on revenue ahead of PricewaterhouseCoopers, Ernst & Young, and KPMG. Deloitte offers services like tax, audit, consulting, financial advisory, and enterprise risk.
Today, Deloitte UK has the leading number of customers among the FTSE 250 firms (Deloitte 2014). With Audit division, Deloitte offers traditional audit and accounting services including IT control assurance and external auditing. Actions and results Many companies fail to register good performance either because they have not adopted any management control system or they have interfered with the one they are implementing (Franco-Santos 2007). For that reason, external audits at Deloitte normally design for their client's management control system which controls actions that are intended to be controlled are the dubious evaluation of results, misstatements, internal control, and independence of the Auditor, poor reporting, risk management practice and conflict of interests.
In controlling such factors, different performance controlling tools can be used including program management (staff training), balanced scorecard, and job analysis.
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