Objective control is an important concept for anyone who is running a business or organization. It is the ability to measure and analyze the results of your efforts objectively and accurately, and to use that information to make better decisions and take corrective action as needed. In this blog post, we will explore what objective control is, provide a definition and some examples.
We will also discuss the importance of objective control, and how it can be used to ensure organizational success. By understanding how to use objective control, businesses and organizations can make more informed decisions that will lead to improved performance. Furthermore, objective control can help identify problems and opportunities for improvement that may have otherwise been overlooked. Lastly, we will review the steps needed to implement and practice objective control.
By the end of this post, you should have a better understanding of what objective control is, how it can be used to improve organizational performance, and the steps needed to successfully use it. So read on to learn more
Auditing Basics: What are Control Objectives?
What is objective control?
One of the five main methods for managing people, events, and outcomes in a workplace is objective control. Those five management control systems include:
The top-down control techniques among these five strategic management strategies are objective and bureaucratic control. This indicates that corporate management develops and upholds its own procedures to direct employees’ behavior or performance. This contrasts with normative, concertive, and self-control, which involve team members actively supporting and participating in the management process at all levels of the business. Oblique control concentrates on observing and measuring team member behavior, while bureaucratic control concentrates on whether people are adhering to rules and regulations.
Behavior control
The goal of behavioral objective control, also known as behavior control, is to manage the actions and conduct of internal team members while they work. By providing instruction and ongoing feedback to encourage improvement, managers can assist team members in exhibiting positive work behaviors. They can gauge these behaviors by gathering data on team member satisfaction and performance, then apply what they learn to establish rules that effectively control team member behavior.
Example 2
The management team may employ objective control to help supervise content writers who are paid an annual salary by a company to contribute to the creation of blog, social media, and email marketing content.
To do this, they might calculate the number of words the writers must produce each day in order to produce as many articles as they did the previous month. In order to establish precise and accurate guidelines for writers’ work, they can communicate with them about this daily word goal. They might also monitor which blog topics attracted the most reader traffic and establish rules directing authors to address those topics more frequently. Management gives writers the option to work flexible hours from home if they so choose, as long as they meet their daily word count. This is an example of output control.
What is a Control Objective?
What are control objectives in auditing? A simple question. However, there are many definitions for a control objective. It all comes down to context. The following, for instance, outlines three different categories of control objectives:
- Accurate and reliable financial reporting;
- Compliance with laws and regulations; and
- Effectiveness and efficiency of the organization’s operations.
The additional focus of a SOC 1 examination is on a service provider’s offerings that could impact a user entity’s internal control over financial reporting. To address risks to a user entity’s internal control over financial reporting, one could slightly modify the AICPA’s definition of a control objective for a SOC 1 and state that it serves as the reason for a set of controls at a service organization.
Sometimes we are asked about SOC 2 control objectives. Instead of the audit control objectives that a company thinks apply to its users’ internal controls over financial reporting, SOC 2 assessments are based on the Trust Services Criteria. To learn more about the distinctions between SOC 1 and SOC 2 reports, read another one of our posts.
A key part of a SOC 1 or SOC 2 audit is identifying risks that endanger the accomplishment of your control objectives and putting related controls in place. Control objectives aid in ensuring that an organization’s security posture is — and is kept — strong during a SOC 1 or SOC 2 audit. You would need to put controls in place to ensure that this objective was met if one of your control objectives was to “Our controls provide reasonable assurance that we restrict unauthorized access to our critical systems.” Your auditor may check that you have controls like locked doors, badges, monitoring systems, and logical access controls in place to validate this control objective.
You and your auditor will select roughly 10 to 30 control objectives to be covered by the audit during the scoping phase of a SOC 1 or SOC 2 audit. For you to get the most out of your audit, choosing the best control objectives for your organization is essential. Because of this, organizations should collaborate with senior-level, knowledgeable information security specialists who can help write the control objectives and ensure that they’re presented logically.
During a SOC 1 or SOC 2 audit, your auditor will be determining whether your organization meets these control objectives by validating the statements that address how risk will be effectively managed by the organization. The AICPA mandates that specific control objectives and controls intended to achieve those objectives be included in the description of the service organization’s systems. Control objectives are typically presented in a matrix format.
How to Identify the Right SOC 1 Control Objectives for an Organization
The control objectives in a SOC 1 report aid auditors of a user entity in determining how controls of the service organization affect the user entity’s financial statement assertions. Therefore, the management of the service organization should choose control objectives that relate to the types of assertions that are common to many user entities’ financial statements when deciding which control objectives to include in the description of a report.
Control goals must be specially adapted to the services provided by the service organization. A service organization should also make an effort to have a full set of control objectives within the parameters of the SOC 1 engagement. Meaning that all key aspects of the services that may be important for user auditors’ evaluation of their client’s internal controls over financial reporting should be covered by the control objectives.
Companies offering various services, such as providers of data center services and software as a service (SaaS), would not have the same control objectives in their reports. However, they may have some in common (i. e. , Physical Security). Similar, but not necessarily identical, control objectives will likely exist among businesses that offer the same services.
Ask the management of the service organization or a user organization to provide a list of the primary processing activities offered to user organizations if you are having trouble identifying or are unsure if you have the right control objectives. This exercise ought to identify the proper areas for which control objectives should be created quickly. Make certain that all control objectives pertain to actions the service provider actually takes.
FAQ
What is a control objective example?
These are the goals your organization is working to accomplish. ‘Our controls provide reasonable assurance that we are preventing unauthorized access to sensitive information,’ as an example
What are the objects of control?
The categories of control objectives include compliance, financial reporting, strategic, operational, and unknown. The Risks associated with a Control Objective can then be defined after it has been identified. Typically, each Control Objective has one Risk attached to it.
What are two kinds of objective control?
Behavioral control and output control are the two categories of objective control.
What is the function of objective control?
Control’s goals are to make sure that actions are taken in accordance with the predetermined standard, which is to make sure that each action is leading to the desired outcome.
