PLANNING

Objectives

• Appreciate the importance of planning.

• Determine the relationship of controlling to
planning.
• Enumerate the different steps in Planning.
 PLANNING & CONTROLLING
Planning is the process of thinking about
and organizing the activities required to
achieved desire goals.

Controlling can be defined as a managerial

function to ensure that activities in an
organization are performed according to
the plans.
 What is done in PLANNING and
CONTROL?
• Management planning is about setting the
goals of the organization and identifying ways
to achieve them.
• This may be broken down into long-term
plans and short-term plans.
• In the process of planning, resources have to
be identified including manpower resources,
production capacity, and financial resources.
• Once the plan is set, it has to be quantified or
else it will be useless.
• Budgets and projected financial statements are
then compared with the actual performance,
which is where the “controlling” function comes
into play.
• If the actual performance falls short of the
budgets or of the projections, it doesn’t mean
that the management is not doing its function.
• To be effective, controlling must include a
reward system for those who deliver and a
penalty for those who do not deliver whose
reasons for failing to meet objectives are
within their control.
What Are the Steps in
Planning?
 Step number 1 is to…
1. Set goals or objectives.
– The goals of a company can be divided into:
short-term goals ‒ can be for a year;
medium-term goals ‒ can be between one
and three years; and
long-term goals ‒ can be five to 10 years
or even longer.
 Step number 2 is to…

2. Identify resources.
– Resources include:

production capacity;
human; and
financial.
 Step number 3 is to…

3. Identify goal-related tasks.

– In this step, management must figure out how
to achieve an objective.
 Step number 4 is to…

4. Establish responsibility centers for

accountability and timeline.
– If tasks are already identified to achieve
goals, the next important step to do is to:
Identify which department should be held
accountable for this task; and
Set a timeline for the activities, especially
for those activities which are not normally
done on a daily basis.
 Step number 5 is to…

5. Establish an evaluation system for

monitoring and controlling.
– The management must establish a
mechanism which will allow plans to be
monitored, which can be done through
quantified plans such as budgets and
projected financial statements.
 Step number 6 is to…

6. Determine contingency plans.

– In planning, contingencies must be
considered as well. Budgets and projected
financial statements are anchored on
assumptions. If these assumptions do not
become realities, management must have
alternative plans to minimize the adverse
effects on the company.
Seatwork
1. Why is planning important in the success
of an organization?
2. How is controlling related to planning?
3. What are the different steps in planning?
Discuss each briefly.
4. What is the importance of quantifying a
plan?
Assignment
What are the different budget preparations
that an accountant should prepare? Define
each.