Responsibility accounting is control device

Responsibility accounting is control device.A control system to be effective should be such that deviations from the plans must be reported at the earliest so as to take corrective action for the future. The deviations can be known only when performance is reported. Thus responsibility accounting system is focused on performance reports also known as responsibility reports, prepared for each responsibility unit. Unlike authority which flows from top to bottom, reporting flows from bottom to up. These reports should be addressed to appropriate persons in respective responsibility centers. The report should contain information in comparative from as to show plans and the actual performance and should give details of variance which are related to that center. The variances which are not controllable at a particular responsibility center should also mention separately in the report. To be effective, the reports should be clear and simple. The function of responsibility accounting system becomes more effective if participative or democratic style of management is followed, wherein, the plans are laid or budgets and standards are fixed according to the mutual consent and the decisions reached after consulting the subordinates. It provides motivation to the workers by ensuring their participation and self imposed goals. It is well accepted fact that at successive higher level of management in the organizational chain less and less time is devoted to control and more and more to planning. Thus, an effective responsibility accounting system must provide for management by exception i.e., it should focus attention of the management on significant deviations and not burden them with all kind of routine matters, rather condensed report requiring their attention must be sent to them particularly at higher level of management.

The aim of responsibility accounting is not to place blame. Instead it is to evaluate the performance and provide feed back so that future operations can be improved. Goals and objectives are achieved through people and, hence, responsibility accounting system should motivate people. It should be used in positive sense. It should not be taken as a device to punish subordinates. It should rather help in improving their performance. Subordinate sometimes dislike control because they take them as restraints. The best responsibility accounting system enlightens employees about the positive side of control. To ensure the success of responsibility accounting system, it must look into human aspect also by considering needs of subordinates, developing mutual interests, providing information about control measures and adjusting according to requirement.