FINANCIAL

CONTROLLERSHIP
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

What Is a Controller?
A controller is an individual who has responsibility for all accounting-
related activities, including high-level accounting, managerial
accounting, and finance activities, within a company. The duties of a
controller include assisting with the preparation of the operating
budgets, overseeing financial reports, and performing essential duties
relating to payroll.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

MAIN JOB FUNCTIONS

1. Planning. The controller is responsible for determining who does the work,
what work is to be done, and the timing of work completion in the accounting
department, especially in regard to the timely processing of transactions and the
issuance of accurate financial statements. This also extends to the budget, where
the controller guides the budgeting process through other departments.
2. Organizing. The controller is responsible for obtaining and keeping the services
of experienced and well-trained accounting personnel; this is by far the most
important organizational task. This also involves obtaining sufficient floor space,
office equipment, and computer hardware and software to complete all assigned
work.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

MAIN JOB FUNCTIONS

3. Directing. The controller is responsible for ensuring that all employees

in the department work together in an orderly manner to achieve the
controller’s plans.
4. Measuring. The controller is responsible for measuring the
performance of all key aspects of the department to ensure that
performance matches or exceeds standards and that errors are caught
and corrected.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

MAIN JOB FUNCTIONS

5. Financial analysis. The controller is responsible for the review, interpretation,

and generation of recommendations related to corporate financial performance.
This requires excellent communication skills (both written and oral), so that the
controller’s information is properly and effectively conveyed to the other
members of the management team.
6. Process analysis. The controller is responsible for periodically reviewing and
evaluating the performance of each major process that is involved in the
completion of transactions, with the dual (and sometimes conflicting) objectives
of maintaining tight financial controls over processes while also running them in a
cost-effective and efficient manner.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

JOB DESCRIPTION (the controller’s responsibilities)

Auditing
• The scheduling and management of periodic internal audits, as well as the preparation
of resulting audit reports and the communication of findings and recommendations to
management and the board of directors.
• The preparation of work papers for the external auditors and the rendering of any
additional assistance needed by them to complete the annual audit.
Budgeting
• The coordination of the annual budgeting process, including maintenance of the
company budget, and the transfer of final budget information into the financial
statements.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

JOB DESCRIPTION (the controller’s responsibilities)

Control Systems
• The establishment of a sufficiently broad set of controls to give management assurance
that transactions are processed properly.
Cost Accounting
• The coordination of periodic physical inventory counts.
• The periodic analysis and allocation of costs based on activity-based costing pools and
allocation methods.
• The continual cost review of products currently under development, using the principles of
target costing.
• The periodic compilation and evaluation of inventory costs.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

JOB DESCRIPTION (the controller’s responsibilities)

Financial Analysis
• The periodic comparison of actual to budgeted results and the communication
of variances to management, along with recommendations for improvement.
• The continuing review of revenue and expense trends and the communication
of adverse trend results to management, along with recommendations for
improvement.
• The periodic calculation of a standard set of ratios for corporate financial
performance and the formulation of management recommendations base on
the results.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

JOB DESCRIPTION (the controller’s responsibilities)

Financial Statements
• The preparation of all periodic financial statements, as well as their
accompanying footnotes.
• The preparation of an interpretive analysis of the financial statements.
• The preparation and distribution of recurring and one-time
management reports.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

JOB DESCRIPTION (the controller’s responsibilities)

Fixed Assets
• The annual audit of fixed assets to ensure that all recorded assets are
present.
• The periodic recording of fixed assets in the financial records and their proper
recording under the correct asset categories and depreciation methods.
• The periodic review of fixed assets to determine the existence of any
impairment.
• The proper analysis of all capital expenditure requests.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

JOB DESCRIPTION (the controller’s responsibilities)

Policies and Procedures

• The creation and maintenance of all policies and procedures related to the control of
company assets and the proper completion of financial transactions.
• The training of department personnel in the use of accounting policies and procedures.
• The modification of existing policies and procedures to match the requirements of
government regulations.
Process Analysis
• The periodic review of all processes involving financial analysis to see if they can be
completed with better controls, lower costs, or greater speed.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

JOB DESCRIPTION (the controller’s responsibilities)

Transaction Processing
• The timely completion of all accounting transactions at the intervals
and in the manner specified in the accounting policies and procedures
manual.
• The proper completion of all transactions authorized by the board of
directors or in accordance with the terms of all authorized contracts.
• The proper approval of those transactions requiring them, in
accordance with company policy.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

JOB QUALIFICATIONS

Analysis of information. The controller must be sufficiently comfortable

with financial information to readily understand the meaning of a variety
of ratios and trends and what they portend for a company.
Communication ability. A key component of the controller’s function is
compiling information and communicating it to management. If the
compiling part of the job goes well, but management does not
understand its implications, then the controller must improve his or her
communication skills in order to better impart financial information to the
management team.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

JOB QUALIFICATIONS

Company and industry knowledge. No accounting system is completely ‘‘plain

vanilla,’’ because the companies and industries in which it operates have a
sufficient number of quirks to require some variation from the typical accounting
system. Accordingly, the controller must have a good knowledge of both company
and industry operations to know how they impact the operations of the accounting
department.
Management skill. The controller presumably will have a staff and, if so, will have
considerable control over the productivity of that group. Accordingly, the controller
must have an excellent knowledge of the planning, organizational, directing, and
measurement functions needed to manage the accounting department.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

ORGANIZATIONAL STRUCTURE OF THE ACCOUNTING

DEPARTMENT
The controller does not operate alone to complete all the tasks outlined through the
last few sections. On the contrary, quite a large accounting staff may complete the
bulk of the work.
Below these managers are a number of subcategories, staffed either by clerks or
degreed accountants, who are responsible for specific tasks. These subcategories
are:
• Cost accounting. This position is filled by a degreed accountant who conducts job or
process costing and verifies the inventory valuation.
• Financial analysis. This position is filled by a degreed accountant who compiles both
standard and special-request analysis reports
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

ORGANIZATIONAL STRUCTURE OF THE ACCOUNTING

DEPARTMENT
• Financial reporting. This position is filled by either a degreed accountant or a
senior-level bookkeeper who prepares the financial statements and
accompanying footnotes, as well as other periodic reports for public
consumption if the company is publicly held.
• General ledger accounting. Frequently combined with the financial reporting
function, this is staffed by similar personnel and is involved with the review
and recording of journal entries and summary entries for subsidiary journals.
• Payroll processing. This position is filled by clerks who calculate pay levels
and hours worked and generate payments to employees.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

ORGANIZATIONAL STRUCTURE OF THE ACCOUNTING

DEPARTMENT
• Tax form preparation and filing. This position is filled by a degreed
accountant, frequently with tax experience in a public accounting
background, who completes and files all government tax forms.
• Transaction processing. This position is filled by clerks (usually
comprising the bulk of all department headcount) who process all
accounts payable, accounts receivable, and cash application
transactions in accordance with rigidly defined procedures.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

ORGANIZATIONAL STRUCTURE OF THE ACCOUNTING

DEPARTMENT
The corporate controller must decide if accounting operations through all company locations are to be
centralized, decentralized, or occupy a position somewhere in between.
Some of the reasons why decentralization should at least be considered as an option are:
• The local organization and retention of accounting information avoids some excuses for inactivity
or poor performance because ‘‘the report was late’’ or ‘‘the report was wrong.’’
• The information sent to a central location often is duplicated at the local site; that duplication can
be avoided by processing it locally.
• The widespread distribution of accounting responsibility in the field allows a company to more
quickly train promising accounting managers and evaluate them for promotion.
• The presence of a local accountant can assist in the rapid investigation and resolution of problems
that would be impossible from a central location.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

ORGANIZATIONAL STRUCTURE OF THE ACCOUNTING

DEPARTMENT
Offsetting these arguments in favor of decentralization are a number of factors in
favor of centralization. The primary reasoning behind the bulk of the pro-
centralization approach is that the efficient use of employees to complete a high
volume of transactions will keep accounting costs down to a bare minimum. The
reasons are:
• The accounting staff can be shifted between tasks to meet peak workloads.
• The use of centralized transaction processing may have a sufficient amount of
volume to justify the use of expensive computer hardware and software that will
considerably improve efficiency, though it would be cost-prohibitive for a smaller
division to use.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

ORGANIZATIONAL STRUCTURE OF THE ACCOUNTING

DEPARTMENT
• The use of a centralized staff may allow for the added expense of a
tailored training program for accountants that will increase their
efficiency, but which would be too expensive to create for the smaller
numbers of accountants at a single division location.
• The use of a centralized operation may allow for the hiring of more
experienced (and expensive) accounting personnel who can do a better
job of managing the department
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

ORGANIZATIONAL STRUCTURE OF THE ACCOUNTING

DEPARTMENT
In many cases, though, the correct method is to opt for a slightly more
expensive middle ground, using a centralized transaction processing
organization, but also paying for a small local staff that can process
exception transactions, investigate variance problems on behalf of the
central organization, and also be a training ground for junior accounting
managers from the central accounting office.
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

ETHICS

The first step by the controller is to convince the management team, and the president
in particular, that the company must adopt a written ethical standard and force the rest
of the organization to adhere to it through regular audits.
Using these preliminary guidelines, the controller can then expand the concept and
promulgate a series of additional guidelines in specific areas related to accounting.
Some of them are:
• Attaining annual business plan objectives
• Compliance with Securities and Exchange Commission (SEC) and other securities laws
and regulations
• Employee discrimination
 FINANCIAL CONTROLLERSHIP
THE CONTROLLER’S JOB

ETHICS

• Gifts and payments of money for no return consideration

• Leave for military or other federal service
• Meals and entertainment expense reporting
• Period-end accounting adjustments
• Political contributions
• Preservation of assets
• Restrictive trade practices
• Use of the company car
• Workplace safety
 FINANCIAL CONTROLLERSHIP

Thank You and God Bless