Accounting, Budgeting and Control Systems in Their Organizational Context : Theoretical and Empirical Perspectives

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The control system of an organization is represented by a series of concentric circle. It consist three layers in one environmental organization. Each element connecting each other and created a control system in those organization. First element is the innermost circle comprises the “core control system”. This cybernetic structure consisting of four subsystems (planning, operations, measurement and evaluation-reward) which are articulated by feedback and feed forward loops. Second element as the middle circle comprises the organization’s structure (its set of rules and their interrelationship). And the last element as the outer circle represents the organization (its value system, beliefs, assumptions, the patterned ways of thinking which are characteristic of the entity). The validity and implications of these ideas are examined in the context of the control systems of three organizations. The results suggest the need for a different orientation of the role that accounting and budgeting play in the control process as well as a broader concept of control itself. Based on case studies: 1. Medium sized residential real estate company : Conventional budgeting and control system. This study aimed to test whether a budget is a control system or a component of the overall control system in a company. 2. Small distributor of industrial abrasives : accounting system and organizational. This study aimed to see whether the accounting system can function as part of the control system in a company. 3. Very large US financial institution: Organizational culture and zero based budgeting as control mechanism. This study aimed to test whether a budget is a control system or a component of the overall control system in a company. The need for a different orientation of the role that accounting and budgeting play in the control process as well as a broader concept of

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