Control Systems - Rendell Company Report

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T6Rendell Company
* Divisional controllers report to general managers from 1985 onwards * 7 Distinct business units with their own profits, sales * 1980 corporate controllers responsible for 1) financial accounting 2) internal auditing 3) analysis of capital budget * Reports went directly to top management from divisions

* Mr. Hodgkin wanted to play a more active role in establishing budgets and analyasing performance (would personally review budgets and study divisional performance and hired analysts to help) * Divisional managers discussed their budget with top management with divisional controller present * Divisional controllers primary responsibility was to divisional managers as opposed to corporate controllers so Bevins thought he wasn’t getting enough clear info on performance of units * Harrigan: Divisional controllers shouldn’t be “front office spies” if they want to have good working relationships with managers and help them with the control functions * Corporate controllers shouldn’t put divisional controllers in awkward positions regarding more data/opinions on financials. Questions:

1. What is the organizational philosophy of Martex with respect to the controller function? What do you think of it? Should Rendell adopt this philosophy? * Divisional controllers report to corporate controllers

* Responsible for establishing cost and profit standards and ensure follow through * Not intended to take initiative away from DMs
* More formal line relationships as controllers work physically separate from division managers * Set of formal policies, goals, practices that employees (managers) are aware of before beginning in the orgnization * Accounting system controlled by controller division so systems are not tailored to each BU * Divisional managers at Martex like this system because it gives them an unbiased partner with relevant information, controller can do better analysis and there is little...
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