This chapter explores the strategies used to control the processes of a business organization. Recall from Chapter 1 that business organizations are composed of three major components: the management process, the operations process, and the information process. This chapter concentrates on controlling the entire business process (i.e., the combined management, operations, and information processes).
What are the three primary reasons that management exercises control over business processes? Explain.
It is management’s responsibility to exercise control over the business process. The major reasons for exercising this control are (1) to provide reasonable assurance that the goals of each process are being achieved, (2) to mitigate the risk that the enterprise will be exposed to some type of harm, danger, or loss (including loss caused by fraud, natural disasters, and terrorist attacks, or other intentional and unintentional acts), and (3) to provide reasonable assurance that certain legal obligations, such as accurate financial reporting, are being met. The sections that follow address all of these reasons.