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Discussion Board 3, Question 1

Question 1 poses the statement, “As a practical matter, planning and control mean exactly the same thing,” then asks the reader to offer an opinion of agreement or disagreement on that statement.  This question is an appropriate one for analysis in the context of budgeting within an organization.  The basic response should be that of disagreement, as planning and control are not at all the same.  However, the two subjects are closely interrelated.  As will be seen in the following analysis, planning means very little in the absence of control and control has no direction without effective planning (Pujari, 2015). 

One can easily see the fundamental difference between planning and controlling simply through defining both terms.  Garrison, Noreen, and Brewer (2014) define planning as, “developing goals and preparing various budgets to achieve those goals” (p. 343).  In this respect planning should be viewed as the blueprint or roadmap for how the organization achieves its strategic goals.  Planning starts with establishment of a vision for the organization, then deciding on courses of action (both operational and financial) to achieve that vision.  There are many types of planning, all with appropriate places in a business environment.  As it pertains to accounting, a budget is a plan that articulates goals monetarily (Garrison, Noreen, & Brewer, 2014).  A good organizational budget lays out revenue and expense goals for the period, allowing management to track performance against those goals as time elapses in the period.

Garrison, Noreen and Brewer (2014) describe control as “gathering feedback to ensure that the plan is being properly executed or modified as circumstances change” (p. 343).  If planning is stating goals and establishing the blueprint for achieving those goals, the simplest view of controlling is the combination of activities that examine performance related to the plan and the actions taken to correct the course of the organization if it strays from any part of the plan.  Specific to budgeting, control actions include identifying and measuring budget variances, as well as undertaking measures to find the causes of any variances.  Control adds value to the organization by outlining areas in need of improvement, allowing management to direct their efforts towards those areas with the aim of positively impacting performance (Kaufmann, 2012).

Relating back to the original question, the definitions of planning and controlling put forth in this writing clearly show the two are separate, distinct processes.  However, one can easily see the relationship between planning and controlling.  One is essentially useless without the other.  Plans are ineffective without control processes because without control, management will have no idea how the organization performs relative to the plan.  Further, management is not able to take actions to improve organizational performance without control activities that illuminate the need for improvement.  The same statement should be made of controlling.  In a sense, process of controlling receives its mandate from the plan.   Without the plan, control would be impossible since there would be no targets to control against (Pujari, 2015).