Convention in Financial Control
The purpose of this chapter is to look at the role of convention in financial control. In the first two sections of the chapter, the conventions focused upon are social in nature, and have to do with the pervasiveness of allocation procedures in financial measurement for divisions of an enterprise. Since financial measurement is no more than a precondition for financial control, the chapter proceeds to examine how current or prospective financial outcomes may be evaluated in relation to non-financial outcomes occurring at the same time. The interpretation of financial outcomes is seen to be dependent upon the way in which the management control system is bounded and structured, which gives rise to an examination of the conventions employed in visualising the consequences of a business decision. Particular attention is paid to multiattribute utility analysis as being a technique for visualising a rich variety of interrelated consequences. This, too, proves to be subject to convention, but examination of a case study indicates that the application of the conventions required by multiattribute utility theory may not limit the usefulness of its results any more than they have already been limited by difficulties associated with the availability of data. The conclusion takes the form of a plea for a less global approach reflecting cost-benefit considerations in the visualisation of management control systems.
KeywordsCash Flow Financial Control Fish Catch Management Control System Replacement Cost
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