Certified Internal Auditor (CIA) Practice Test

Which statement best describes the relationship between planning and controlling?

1. Planning looks to the future; controlling is concerned with the past.

2. Planning and controlling are independent of each other.

3. Planning prevents problems; controlling is initiated by problems.

4. Controlling cannot effectively operate without planning tools.

The correct answer is: Controlling cannot effectively operate without planning tools.

The statement that controlling cannot effectively operate without planning tools is accurate because effective control mechanisms rely heavily on the foundation laid during the planning phase. Planning involves the establishment of objectives and the formulation of strategies to achieve those objectives. It provides a blueprint for what needs to be done and sets performance standards. Without planning, there would be no clear objectives or benchmarks to measure performance against, which are essential elements in the controlling process. The controlling function assesses actual performance against these pre-established plans, identifies variances, and provides feedback for corrective action. Therefore, the planning tools serve as important benchmarks and guidelines that enable effective monitoring and evaluating of performance comprehensively. In contrast, while the other options touch on relevant aspects of planning and controlling, they either misrepresent the nature of the relationship between these two functions or emphasize misunderstandings of their interplay. Planning and controlling are inherently interconnected elements of effective management, working together to ensure that organizational goals are met efficiently and effectively.