Group H : Elena Czarnecki, Stephan Oesterbeck, Management Control Systems

Isaac Ampong, Andjela Dejanovic 01.03.17

Case 1: The Society of Jesus

Overall Structure
The Society of Jesus is a highly centralized congregation of the Catholic Church. The organizational
structure of the Society of Jesus can be compared to the theory of Defenders. Approved by the pope
the organization has a kind of niche position in the market. It is very stable and based on strict
plannings. Information is distributed vertically between the members and the head office and
processes are highly standardized (Macintosh, 1994).

Founded in 1539 they started to implement an accounting system which not only aimed to record the
financial flows of the organization but also was a method to educate its members. The methods
Accounting for the Sin and Accounting for the Soul combined the formal demands of
bookkeeping with the request of self-reflection and self-discipline which results in a corporate spirit
that is driven by its members and enables the highly hierarchical organization to be surprisingly
flexible.

Accounting for the Sin

Accounting of the Sin describes the process to not only write down the financial in- and outcomes but
also to think about ones sins and mark and reflect them accordingly on paper. This approach is not
imposed by the organization but implemented in the members behavior. Thereby, the members create
a self-controlling system that impacts their behavior and the spirit of the whole organization
positively. In accordance with Macintosh and Quattrone (2010) it can be seen, that a companys
strategy is very much created by humans itself and influenced by daily actions and routines. The
Society of Jesus manages to use its formal accounting system to influence its members in a, from their
perspective, desirable way wherefore the method can be considered as a successful MCS (Merchant &
Van der Stede, 2012; p.6).

The method is very much dependent on the trustworthiness of its users. No one can prove the details.
Therefore, we see the risk that people do not give correct details and thereby deceive themselves as
well as their organization. In an organizational surrounding such a system bears a high risk for
financial fraud.

Accounting for the Soul

With the accounting for the soul the Jesuits implemented a highly standardized accounting systems,
that made it possible to steer the fast growing order completely centralized from Rome. This
accounting system consisted of information (knowledge) about the order members that are stored and
transferred to the head office. Since this management control system used by the Jesuits was
Group H : Elena Czarnecki, Stephan Oesterbeck, Management Control Systems
Isaac Ampong, Andjela Dejanovic 01.03.17

standardized through the whole organization and at the same time designed to provide high efficiency
of monitoring the organization members, it provided the potential for a fast growth. However, this
extremely high degree of centralization is untypical for big organizations since it often creates
problems (Merchant & Van der Stede, 2012; p.15). With a growing size of the order, the detailed
tracking of each member created a flood of information's, which needed to be processed in the
headquarter.

Moreover, with their standardized and centralization focused strategic approach, the Jesuits missed
out the opportunity to take geographical differences into consideration of the various areas they were
operating in. As it is pointed out by Hofstede (amongst others) cultures differ significantly in their
dimensions (Merchant & Van der Stede, 2012; p.691) and thus the preferences attitudes of individuals
regarding effective management control systems as well as working methods differ. The key business
area of the Jesuits, education, is highly dependent on individual preferences, and with missing out on
the adaption of local culture they possibly miss out changes to improve in their education quality and
their quality of steering members of the organization. This possibility of improvement is also missed
by the communication, since the different colleges seem not to communicate with each other but only
with the head office.

Solutions
As a possible solution to the before mentioned problems we suggest to adapt to the Think Global
Act local approach. This would include a decentralization from the head office in Rome to the
different geographical areas. With this decentralization it is possible to adapt more to local needs
without increasing the workload of the head office. Moreover, the management accounting system
should include an analysis of the reasons why outcomes improve or worsen, instead of just focusing
on the result control (Merchant & Van der Stede, 2012; p.686).

Literature
Macintosh, N.B. (1994): Management accounting and control systems. Chichester, John Wiley.
Machinthosh, N.B. and P. Quattrone (2010). Management accounting and control systems. An
organizational and sociological approach. Chichester, John Wiley.
Merchant, K.A. and van der Stede, W.A. (2012): Management Control Systems: Performance
Measurement, Evaluation and Incentives. Third Edition. Financial Times Prentice Hall: Essex