Meaning of Controlling Part I
What does controlling mean?
Controlling is a term that comes from English. Translated, controlling means something like controlling, steering or regulating. Many people mention accounting and controlling in the same breath and often equate them. But this is wrong. In this article we will show you what controlling means in concrete terms.
Controlling as a sub-area of corporate accounting
According to Dictionaryforall, controlling is part of corporate accounting and is only a part of it. The large area of corporate accounting comprises four sub-areas . These are external accounting, internal accounting, planning accounting and business statistics and comparative accounting. In controlling, you have the task of controlling all business processes in a company. From this data you create analyzes that make it possible to get a precise overview of the company’s profitability, profit and value at any time. Controlling is an important instrument in the controlling process both for the strategy of a company and for management and planning.
Controlling helps to correct mistakes quickly
For a company it is important that there is constant cooperation in the area of controlling with all departments of a company. Only in this way is it possible for errors or undesirable developments to be identified quickly and thus remedied or corrected. For this reason, it is extremely important that the so-called Business Intelligence is included in controlling. This enables you to automatically collect data and evaluate it. An almost inestimably important factor in the controlling cycle for controlling . In order to be able to identify everything in the company, controlling is divided into the two areas of operational and strategic controlling.
Tasks and functions of controlling – the controlling cycle
The main task of controllers is to present all important key figures in a company to the executive board or management in a transparent manner. Controlling plays a very important role, especially in large companies. Without this work, meaningful planning and the definition of goals for a company would hardly be possible. Depending on the size of the company, the number of individual tasks also increases. However, the basic tasks include:
- Constant monitoring of all company figures
- Evaluate data and prepare it transparently for management
- To support companies in defining goals and achieving them
- Planning and control of various projects
- Create profitability calculations
- Optimization of processes and workflows
- Carry out goal checks and results checks
The controlling cycle in a project, for example, is derived from the tasks and functions of controlling.
Planning is one of the most important tasks in the area of controlling. There are many forms and characteristics of planning. For you, this involves creating budget plans for projects or individual cost centers , planning the company’s liquidity and coordinating strategic and operational planning. In controlling, when planning, it is always ensured that attention is not only paid to the current situation . Rather, it is also about a long-term orientation of the company, i.e. the target situation. In controlling, therefore, the vision of a company is also taken into account and you use your planning to derive realistic goals and how they can be achieved.
The basis for planning for controlling are the project plans. The data contained in the project plans represent the target specifications. These specifications are to be achieved within the framework of the implementation of a project.
Information and implementation
The role of controlling in a company has changed in recent years. The collection and processing of information and data is increasingly being transferred to certain IT areas. In controlling, you are therefore taking on more and more tasks in the area of communication and mediation . In the management floor, more and more importance is attached to the fact that data and key figures can be called up at the push of a button. But that doesn’t mean that your controlling tasks will become less valuable. On the contrary – IT is only able to collect and evaluate the data, but only you with your knowledge can competently evaluate the numbers. It is therefore important for you to correctly assess the following factors:
- Which methods should best be used?
- What specific data do you need for this?
- And which form do you choose for an understandable presentation?
In the context of a project, the project members usually work on their own responsibility. Because in order to always be up to date with the latest project status, a constant exchange of information is required. However, this exchange of information must take place in both directions. For example, if you are the person responsible for the project, your tasks also include informing project members about the status.
Control and deviation analysis
Every planning also requires a corresponding control . Planning something will only lead to the desired goal if everything is analyzed and recorded if there are deviations . However, this does not mean that every deviation is to be assessed negatively. As a rule, it is hardly possible that a specific goal is actually met. It is therefore important for you to use appropriate methods to identify at an early stage why a deviation has occurred, whether this deviation is justifiable or whether you have to take measures in order not to jeopardize the achievement of the goal. For this, it is always important to compare the target state and the actual state with one another.
If you want to manage and control a company successfully, you also need the right controlling key figures . This means that a place is necessary from which the required data can be called up in a meaningful way, in the desired detailed form and, above all, at the desired time. This requires the right controlling instruments, which are necessary for the precise determination of this information. In the course of projects, this means that there must always be countermeasures in the event of deviations that endanger the achievement of goals. If necessary, it is also necessary to adapt or even change the project plans.
This controlling cycle repeats itself over and over again in the course of a project. This process continues until a project has been successfully completed.