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What is the difference between Financial and operational controls ? An answer with a simple example for both controls would be helpful.
operational controls – can be everything re: operations of the business, depending on the business, controls over labour (time management, efficiency etc), materials usage, processes, answering to complaints, etc. but operational managers may don’t have control over financial aspects.
For example the production manager may send request to procurement dep. to purchase some materials, but does not negotiate prices, does not carry out the transaction, does not sign the contract, does not pay etc. Production manager may want to hire more people and will take part in interviews, but it is not him who would say the financial conditions. It would be somebody from HR following the internal policies previously authorized by directors.
Financial controls would be linked to the money spending safety – from petty cash – how it is handled, to authorization of the purchases of new machinery. It would be looking how these decisions are made. If the person was authorized to spend money, if not exceeded the limit allowed, if it was best choice(for example requirement to keep evidence that you had 3 offers and choose the best etc.) or the purchase was from family member and not the best for the entity.
In small entity often you can’t see so distinguished roles.
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