A criterion defines the specific scale we use to assess the desired outcome. A standard is the desired level of a criterion defined with respect to the objective. Measures are the processes used to determine the actual level achieved on the desired criterion. In conducting the control process, managers define criteria and standards which are congruent with the firm's operating objectives. We use measures to determine the actual level achieved on the specified criterion.
Managers compare actual levels with the defined standards.
If managers observe discrepancies, they must take action to bring the actual performance of the firm into compliance with the objectives. This often takes the form of revising operating procedures so the actual results are congruent with standards. It may also be appropriate to modify or adjust objectives if the managers determine that objectives were originally set at unattainable levels. In any case, it is the manager's duty to assure that actual results conform to desired outcomes. The tool most commonly used to control financial resources is the budget.