THE EFFECTIVELY CONTROLLED ORGANIZATION
by Lawrence L. Leonard Partner, Los Angeles Office
Presented before the San Francisco Area Chapter, Institute of Internal Auditors, Inc.-February 1972
The establishment of effective controls should be one of management's important goals in every organization. Fulfillment of this goal requires the development of specific programs and systems that are identified and described, worded in one way or another, in every planning and control textbook. These programs and systems serve as a starting point in my talk tonight. The fact that they are public knowledge does not imply that they are functioning well in most organizations. If they were, the internal auditors' job would not be as demanding as it is.
An effectively controlled organization frequently will have the following programs and systems in effect:
Statement of objectives
Statement of policies that establish the broad framework or environment within which the organization will pursue the objectives
An organizational structure and assignment of functional responsibilities at all levels so that decisions can be made at the appropriate points in the organization
Standard practices, procedures, and decision-making techniques by which the functions of the organization will be achieved
Operating standards, guidelines and other criteria by which performance can be evaluated
A system of planning in which the organization's resources, procedures, standards and objectives can be integrated into a plan of action that will stimulate results
A system of accounting for the operations of the organization which will ensure that information can be gathered and reported to managers for planning and control purposes
A reporting system that will communicate the plans and results of operations in a format most useful to each manager on a timely basis.