Management Control Systems in Nepalese Commercial Banks (original) (raw)
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Effect of Management Control System on Perceived Performance of Commercial Banks in Nepal
Pravaha
Management control system is to provide information that is useful for managerial decision-making, planning, monitoring and evaluation of organizational activities to alter employee behavior. The main purpose of the study is to show the effect of MCS on perceived performance of Nepalese commercial Banks. This study followed the descriptive and inferential statistics. Descriptive and analytical research design has been used. As per the descriptive statistics most of the respondent were agreed that MCS has increased the perceived performance of commercial Banks. There exists strong correlation among the dependent and independent variables. The correlation is statistically significant at 1 percent level of significant.
Management Control Systems in Banking Sector of Nepal I. Background
Purpose-The purpose of this study is to examine whether the mechanisms of MCS have been adequately developed and applied in the Nepalese banking sectors or not. Design/Methods/Approach-Descriptive and analytical research designs have been used for the study. Primary data has been collected through the questionnaires using convenience and judgmental sampling from the Nepalese commercial banks. Questionnaires have been developed in five scales while mean, standard deviation, coefficient of variation, correlation and factor analysis have been used as tools. Cronbach's alpha test has been done to test the reliability of the data. Findings-All the commercial banks have adequately developed and applied the mechanisms of MCS. Similarly, of them have considered the mechanisms of MCS to be equally important. Research limitations and implications-Only eight mechanisms of MCS, i.e. TQM, TBM, ABC, BSC, BM, RE, SVA and CIP have been used. There are other mechanisms of MCS also which other researchers can use in the future. A management control system (MCS) is a logical integration of techniques to gather and use information to make planning and control decisions, to motivate employee behavior, and to evaluate performance. It refers to the design, installation and operation of management planning and control systems. MCS is the formal, information based, routine and procedure managers use to maintain or alter patterns in organizational activities (Simons, 1995). Conventionally, the term "Management Control Systems" refers to the deployment of various techniques in hierarchical organizations in order to monitor and measure employee performance against certain management targets. In this sense, conventional MCS that focuses on improving operational effectiveness is no longer sufficient to create sustainable competitive advantages. MCS must be expanded to managerial practices that cultivate employee cooperation and creativity in the discovery and exploitation of new business opportunities (Cusumano, 1997). MCS embodies the techniques & mechanisms which companies employ to pursue strategies to accomplish goals successfully. MCS integrates, motivates, assists decision making, communicates objectives, provides feedback etc. Management Controls fall into two general categories (Simon, 1995): the first category involves output controls in which specific outcomes, e.g. division profit and budget variances are measured, monitored, compared against expectations, and corrective action taken when appropriate. This category also includes administrative controls or action controls that involve formal rules, standard procedures and manuals, and monitoring compliance there with. The second category includes behavior control, personnel control and social control. This category involves such controls as shared values and norms, along with group interaction to maintain them, selection and placement of personnel with desired skills and attitudes, work design and allocation and observation of the work behavior of personnel. A well designed MCS aids and coordinates the process of making decisions and motivates individuals throughout the organization to act. It also facilitates forecasting revenue and cost-driver levels, budgeting, measuring, and evaluating performance (Kaplan & Atkinson, 2005). Anthony (1997) explained four steps in the MCS process in sequence as they are found in practice. They are programming, budgeting, execution and evaluation. Similarly, Jawahar Lal (2003) described three steps of MCS they are strategy formulation, management control and task control Thus, MCS is the formal, information-based routine and procedure managers use to maintain or alter patterns in organizational activities. It facilitates the accomplishment of an organization's strategic objectives. It defines the decision space of individuals within an organization in order to affect their behavior (Simons, 1995). It can be defined as a system that comprises a combination of control mechanisms designed and implemented by management to increase the probability that organizational actors will behave in ways consistent with the objectives set for the organization. It is a process for motivating and inspiring people to perform organizational
Application of Management Control System in Nepalese Commercial Banks
2007
This paper attempts to examine the application of management control system in Nepalese commercial banks. The Nepalese commercial banking sector is very competitive. The commercial banks are competing mainly in service and many of them adapting differentiation strategy. The priority of the majority of commercial banks is customer retention. Commercial banks are encouraging employees to upgrade their knowledge and skill. The working environment is also congenial in Nepalese commercial banks and the informal organization and communication system also gradually exist in some of the commercial banks of Nepal. However, the future research needs to examine the relationship between management control system and effectiveness of the commercial banks of Nepal.
Management Control Systems Case Study from the National Commercial Bank in Albania
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International Journal of Accountancy (IJA) ISSN 2738-2249, 2021
Abstract Globalization has resulted in complex business procedures and activities as a result of global organizations. In the case of banking sector procedures, complicated banking transactions and an increase in banking activity fraud have prompted a focus on the Banking Sector's Internal Control System. Every organization relies on an effective Internal Control System. Accordingly, the purpose of this research is to examine and compare the level of effective internal control systems of state-owned and private domestic commercial banks in the Anuradhapura district. The level of effectiveness of the Internal Control System was assessed using the five components of the Committee of Sponsoring Organizations (COSO) framework (Control Environment, Risk Assessment, Information and Communication System, Control Activities, and Monitoring Activities). Structured questionnaires were used to collect data from fifty respondents from state-owned and thirty respondents from private domestic commercial banks, respectively. Managers (76.25 percent response rate) and secondary officers were the most common respondents (response rate was 23.75 percent). Descriptive analysis with one-sample t-test and independent sample t-test were used to analyze the data. The results of the study indicated that the level of the effective control environment, information and communication systems, and control activities are different between StateOwned and Private Domestic Commercial Banks in Anuradhapura district, whereas the level of effective risk assessment and monitoring activities are not different between State-Owned and Private Domestic Commercial Banks in Anuradhapura district. The findings of this study will help practitioners as a guideline to get the maximum benefit of their Internal Control System. Keywords: COSO Framework, Internal Control System, Level of Effective Internal Control System, Private Domestic Commercial Banks, State-Owned Commercial Banks
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The effectiveness of Internal Control Systems of banks. The case of Ghanaian banks
International Journal of Accounting and Financial Reporting, 2014
This study evaluated the control environment and monitoring activities components of Internal Control Systems of Ghanaian Banks using COSO’s principles and attributes of assessing the effectiveness of internal control systems. A five point Likert scale was used to measure respondent’s knowledge and perception of internal controls and the bank’s internal control system effectiveness. Responses ranged from strongly disagree to strongly agree, where 1 represented strongly disagree (SD) and 5 represented strongly agree (SA). Statistical Package for Social Sciences (SPSS) was used to analyse data and presented in the form of means and standard deviations for each question and each section of the questionnaire. The study found out that, strong controls exist in the control environment and monitoring activities components of the internal control systems of banks in Ghana. The two components were highly rated by respondents with average means of 4.72 and 4.66 respectively. The study recomme...
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Managerial effectiveness and its correlates in Indian banking industry
PSU Research Review, 2020
PurposeVarious scams and swindles in banks demand effective supervision and competent workforce, as it involves with workplace accountability and undertaking customer support services. The purpose of this paper is to examine the managerial effectiveness of selected public, private and foreign banks in India.Design/methodology/approachIn total, 467 questionnaires from (middle and top-level) managers of (five public, five private and five foreign banks) fifteen banks have been considered. The descriptive statistics,t-test and ANOVA are used to differentiate each sector of banks.FindingsThe significant difference denoted in terms of managerial effectiveness among banks. The results revealed that managers of public banks are action-oriented and receptive to feedback, whereas the manager of private sector banks embodies self-disclosure and perceptiveness. The correlates, namely, action-orientation, self-disclosure and receptivity to feedback evident significant among foreign banks.Practi...