Question

What are the requirements of good control standards?

Answer 1

1. Suitability: The standards should be suitable and relevant to the specific activity or function being controlled. They must reflect the objectives of the organization and provide a clear benchmark for performance evaluation.
2. Measurability: Control standards should be quantitative wherever possible so that deviations can be measured objectively. For example, production output can be measured in units, and costs can be assessed in rupees.
3. Attainability: They must be realistic and achievable under normal operating conditions. Standards that are too high or too low may demoralize employees or result in complacency.
4. Flexibility: Since business environments are dynamic, control standards should be flexible to accommodate changes in the external and internal environment, such as market fluctuations or technological advancements.
5. Economy: Setting and enforcing standards should be cost-effective. The benefits derived from control should outweigh the costs involved in implementing and maintaining the system.
6. Timeliness: Controls and standards should be timely so that corrective action can be taken before major issues arise. Delayed information may result in lost opportunities and inefficiencies.