Management in entities includes all the activities of an organization that guarantee compliance with the goals and objectives outlined from the strategic design developed with the participation of management and other workers, includes the timely and systematic evaluation of its operational performance based on of the planned strategies.
cuba-management-models-complementation-internal-control-and-new-approachesCuban entities require management models that propitiate and promote efficient results, in their development in the last two decades they have worked with the Model proposed by Business Improvement and what is defined in the new approach of the Internal Control System.
These two management models have been developed and applied in the country for more than 5 years and they are at an important moment for their improvement, evaluating their points of contact and starting from the application diagnosis that has been determined so far in the country.
The objective of this work is to expose the contact criteria and possible complementation of these two management models that today coexist in the Cuban entity, and to state the elements of one and the other that can be eliminated to help achieve efficiency in these management models.
Development.
Business Improvement. Characteristics. Application experience
It is a process of continuous improvement of the internal management of the company that allows to systematically raise its performance level and provide competitive services, achieving MAXIMUM EFFICIENCY AND EFFICIENCY in its management.
Systems that integrate it
- General Organization System. Management Methods and Styles System. Man Attention System. Organization of Production of Goods and Services System. Quality Management System. Human Capital Management System. Environmental Management System. Innovation Management Planning System Economic Procurement System Accounting System Internal Control System Financial Relations System Cost System Price System Information System Marketing System Business Communication System
WHAT DOES THE REGULATION ESTABLISH FOR THE IMPLEMENTATION AND CONSOLIDATION OF THE STATE BUSINESS ADDRESS AND MANAGEMENT SYSTEM ?
It is the management instrument so that state-owned companies and senior management organizations can, in an orderly manner, carry out the necessary transformations in order to achieve maximum effectiveness and efficiency in their comprehensive management and contains the following in its main content:
- characteristics
- Main technical and performance standards,
- Different procedures,
- Delegated powers to companies and higher management organizations
- Frameworks established in the development for the implementation of the Direction and Management System.
OBJECTIVES OF THE BUSINESS IMPROVEMENT PROCESS
Business Improvement, is governed by the policies of the Communist Party of Cuba, the State and the Government and has as
OBJECTIVES:
- Guarantee the implementation of a Management and Management System (SDG) in state companies and higher management organizations that achieve significant organizational change within them and fully manage the systems that comprise it.
- Guarantee the development of an organized, disciplined, ethical, participatory, effective and efficient business system that generates greater contributions to socialist society and that all companies become organizations of high social recognition.
GENERAL ORGANIZATION OF THE BUSINESS IMPROVEMENT PROCESS.
Each Organism or Provincial Administration Council must conceive in its strategy, the implementation of the Direction and Management System in its business system and prepare annual schedules approved by the head of the Organism or the Provincial Administration Council.
Each company must create improvement groups, it can also go to the service of external consultants; The maximum responsibility for this process is always the CEO and other managers of the company.
Steps in the Business Improvement process
Step One: Staff Preparation.
Second Step: Initial Diagnosis of the company.
Third Step: Approval of the Diagnosis.
Fourth Step: Design of the Direction and Management System in the company and preparation of the final Business Improvement file.
Fifth step: Defense and approval of the file in the Executive Group.
Step Six: Verification by the Provincial Executive Secretariat for Business Improvement about the satisfactory preparation of the workers and the board of directors to undertake the implementation stage.
Step Seven : Approval of the file by issuing the CECM agreement that authorizes the application of the system.
Eighth Step: Implementation in accordance with the established schedule.
Step Nine: Continuous system improvement.
Step Ten: Consolidation of the system
We will explain some steps that due to their importance deserve the detail.
The OSDE that have the endorsement of the accounting and that more than 50% of their companies are authorized to implement the system, must carry out the diagnosis of their organization.
The companies that are implementing the system should, as a rule, every one or two years carry out a new diagnosis that allows them to detect new problems and difficulties that have arisen.
What to do when I receive the CECM Agreement at the company?
- Use the prepared schedule as a permanent work tool. Inform the workers and the political organizations of the company of said approval. Create the expert committees. Evaluate the suitability of the workers. Put into effect, by the general director of the company, the supplementary template in the event that Proceed Start the preparation and enforcement of the different regulations or procedures The general director of the company must issue the resolutions: staff, functions, powers, structure, appointments of managers, employment contracts, etc. Make the planned organizational changes Link the salary to the results. Control, in each board of directors and in individual offices, the progress of the implementation process and the necessary measures to be taken to rectify delays or difficulties.Evaluate weekly with the improvement group the progress of the implantation and take the necessary measures for its normal development.
STEP NINE: CONTINUOUS IMPROVEMENT OF THE SYSTEM
- Constant monitoring and adjustment process. Constant improvement. What does not work well, after checking and analyzing its causes, is changed or eliminated. Act with flexibility and adapt to internal and environmental changes. Change is not proposed for change, It is changed when it is demonstrated that a transformation is imposed It is changed when it is shown that what is stated in the file is not rational and that the new transformation is viable, rational and that it does not deteriorate the economic and other goals and objectives. They are materialized by a written resolution of the CEO approving it and it will be attached to the file, without altering the content of the originally approved one The payment systems approved in the Business Improvement file, if not applied,The new system to be applied must be submitted to the GEPE for approval. Always observe the provisions of these regulations and the principle of comprehensiveness.
Step 10: System Consolidation
It is when the company manages to apply to its full extent and with satisfactory results all the systems that make up this Regulation, with significant economic results and contribution to society. To do this, you must request the certification of the consolidation of the Business Improvement from the Executive Group.
ON SUSPENSION OF IMPROVEMENT
The heads of the Organisms or the Provincial Administration Council will evaluate, in correspondence with the established cadres policy, those responsible and the corrections to be applied to each one. The Executive Committee of the Council of Ministers may guide the taking of additional measures in correspondence with the violations committed.
The company's board of directors must immediately make an action plan, which must be evaluated and checked in an assembly with the workers periodically; the supreme objective must be to guarantee a commitment from all workers and cadres to recover the lost condition.
When it manages to eradicate the deficiencies that caused the suspension, the Head of the Organism or Council of the Provincial Administration will request the Government Group to reincorporate the company to the system; accompanying the concrete evidence that proves its eradication
Once the evidence has been analyzed and if they are positive, the Executive Committee of the Council of Ministers will issue the corresponding agreement reintegrating the company into the application of the Direction and Management System, which will communicate to the Agency or the Provincial Administration Council as appropriate.
In these cases, it is advisable to carry out an act with all the workers of the company with the participation of leaders of the higher instance where all the workers are congratulated and the work carried out to eradicate the deficiencies is recognized.
The Internal Control System. New Approaches.
The integrated economic world that exists today has created the need to achieve methodologies and concepts at all levels of the various administrative and operational areas in order to be competitive and respond to new business demands, thus emerging a new concept of control. internal where a common structure is provided which is documented in the so-called COSO report, published in the US in 1992, emerged as a response to the concerns raised by the diversity of concepts, definitions and interpretations existing around the aforementioned theme..
In it, Internal Control is defined as ”…. a process carried out by the Board of Directors, the management and the other members of an entity, in order to provide a reasonable degree of confidence in achieving the objectives in the following areas or categories:
- Effectiveness and efficiency of operations; Reliability of financial information, and Compliance with laws and regulations. Control of Resources of all kinds.
The Internal Control Management System is conceived as the commitment of all its employees to do things well from the beginning, in an organizational environment aimed at continuous improvement, to processes that are coherently conceived and executed according to an ideal documentary scheme and a measurement system that facilitates the performance of the entity and its ability to provide products and services that respond to the needs and expectations of its customers, consequently guiding its actions towards meeting institutional objectives.
Components and Regulations
The process characteristic, awarded in the concept of internal control, indicates that its elements must be integrated with each other and implemented in an interrelated way, influenced by the management style.
Adopting more advanced and rigorous systems, assimilable by the economy of the entities, will also influence the management style, taking into account that our entities are not subordinate to a single owner or a small group of them, and that therefore it is obliged to a necessary feedback of the internal control systems and the provisions and regulations established by the competent bodies.
The internal control components are:
Control environment:
Control environment factors include the integrity, ethical values, and capabilities of the entity's employees, management philosophy and management style, how management assigns authority and responsibilities, and professionally organizes and develops to its employees and finally the attention and guidance provided by the board of directors
Therefore, the control environment sets the tone for the operation of an organization and influences the awareness of its employees regarding control.
- Norms that make it up: Integrity and ethical values, Professional competence, Atmosphere of mutual trust, Organization chart, Assignment of authority and responsibility, Policies and practices in personnel and Control Committee.
Risk assessment
It consists of the identification and analysis of the risks relevant to achieving the objectives and serves as the basis for determining how the risks are to be managed. As economic, industrial, legislative, and operational conditions will continually change, mechanisms are required to identify and address the risks associated with change. We must bear in mind that each entity faces various external and internal risks and a precondition for the evolution of risk is the identification of the objectives at the different levels linked to each other and internally consistent.
- Norms that make them up: Risk identification, Risk estimation and Change detection
Control activities
These are the policies and procedures that help ensure that management instructions are followed. They help to ensure that the necessary measures are taken to control risks related to the achievement of objectives.
These activities include approvals, authorizations, verifications, profitability reviews, operations and safeguarding of assets.
- Rules that make them up: Separation of tasks and responsibilities, Coordination between areas, Documentation, Defined levels of authorization, Timely and adequate registration of transactions and events, Restricted access to resources, assets and records, Rotation of personnel in key tasks, Control of the information system, Control of information technology, performance indicators and independent internal audit function
Information and communication
This activity encompasses the construction of accounting information and is intended for employees to understand what their role is in the internal control system and how individual activities are related to the work of others.
Therefore, they must have means to communicate significant information to higher levels and, in general, there must be effective communication with third parties such as clients, suppliers, control bodies and shareholders.
- Norms that make it up: Information and responsibility, Information content and flow, Information quality, Flexibility to change, The information system, Management commitment, Communication, organization values and strategies, Communication channels
Supervision or Monitoring
It is a process that checks that the proper functioning of the system is maintained over time. This is accomplished through ongoing monitoring activities, periodic evaluations, or a combination of both. The extent to which the frequency of periodic evaluations will depend on a risk assessment and the effectiveness of ongoing monitoring processes.
- Norms that make it up: Evaluation of the Internal Control System, Efficiency of the Internal Control System, Audits of the Internal Control System, Validation of the assumptions assumed and Treatment of the deficiencies detected.
Conclusions
It is essential to establish and develop management models that support the current criteria of the economic model that we intend to implement, but that do not imply duplication in the efforts that entities have to make for its implementation.
Internal control is an effective instrument to achieve efficiency and effectiveness in the work of entities. The development of new terms related to Internal Control unlike what was identified until now, that is, only accounting. The introduction of new questions that contribute generalizing elements for the elaboration of the Internal Control Systems in each entity
The purpose of the Business Improvement process is to guarantee the implementation of a Direction and Management system in the entities that achieve a significant organizational change in the entities within them and to fully manage the systems that compose them.
With this approach to the analysis of the provisions of Decree Law 281 on business improvement and Resolution 297 on the new concepts of internal control, and the complementation of both in many aspects of the provisions of these regulations, it is intended:
- Link the information that is prepared as required by these regulations. Make the use of personnel more efficient by linking these requirements. Avoid duplication in control actions developed in the entities.
