ACCT 463 Lecture Notes - Lecture 3: Pit Manager, W. M. Keck Observatory, Earnings Management
31 Mar 2018
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Document Summary
Personal limitations: having the best person for the job and the result/action must be, more motivational controllable by employee, tight result controls: direction. Lecture 3: control tightness and control system costs: can the tightness of controls help guarantee proper behaviour, controls need to address: direction, motivation, personal limitations. Tight personnel/cultural controls: consider: capability, training; pride in work; belief in cause; ethics. Behaviour displacement: cost of poor designed control system: the results or actions desired is incongruent/incomplete misaligned/misdirected employees, behavioural displacement and result controls, 1. Incorrect understanding/reward: higher commission on add-ons: drop focus on core business and sell add-ons. Incomplete specification: not rewarded for safety: cutting corners to save money, compensation on pieces sold: force clients to buy pieces even if not needed, 3. Over-quantification: using financial accounting results (as result controls: cost and conservatism: profit of investments recorded at historical cost until sold. ), and combine controls to enforce desired behaviour. Gamesmanship: improve performance indicators without positive economic effect.
