FINANCIAL CONTROLLERSHIP

LESSON 1

FINANCIAL CONTROLLERSHIP

 Is a management function that supervises the accounting and financial reporting

of an organization. It is responsible  in the implementation and monitoring of
internal controls.

Changing Roles of Controller 

 Reporters TO Navigators TO Business Partners

CONTROLLERS AS A REPORTERS

 Responsible in financial metrics used to run a company.

 In the past, it was a challenge to provide the required financial information on time
and at the necessary level of detail and accuracy – controllers were successful in
meeting this challenge.

 They are now the single source of truth for financial metrics in company. IT has
helped them enormously in the process.

CONTROLLERS AS NAVIGATORS

 Controllers does not only supply numbers but also use them for management control
purposes.

 They apply basic cybernetic control system and have much closer contacts with
managers than a reporter has when dealing with managers.
  It is just as important to have a good people, skills as it is to have a specialized
knowledge in control systems and accounting navigating requires considerably
business knowledge.

CONTROLLERS AS BUSINESS PARTNERS

 Controllers evolved even further into some called Business Partner.

 They have a broader range of tasks in addition to traditional financial measures.

 They are closer to the business and has a full spectrum of management skills.

 Business Partners have to be service oriented and proactive which means they do not
wait for the manager to tell them before they start looking for a problem.

 This also changes the way controllers carry out their work.

THE CONTROLLERS EVOLUTION

 The transformation from Reporter to Business Partner is no coincidence. More intense

competition and competitive dynamic put pressure on managers to make decisions and
they rely on controllers for support.

 Working in management control has meant that controller has gradually learned the
ins and outs of business and they have become important partners for managers.

 This strengthens their position in the company and gives them the opportunity to
switch to a career in management from CONTROLLER TO CFO TO CEO.

WHAT DOES FINANCIAL CONTROLLER DO?

 A Controller position is going to look slightly different depending upon the size of the
company you’re at, but for the most part, these are the ten main job functions
performed by a Controller and what will be doing as a Financial Controller.
1. Ensure Internal Controls

 What you’ll do is you’ll develop and update accounting policies and procedures that
are going to ensure things like separation of duties, proper approval of disbursements,
and any other controls that will help prevent fraud in the company.
 For publicly traded companies, this will include SOX requirements as well.

2. Lead Accounting Team

 Unless you’re working at a small company where you are the entire accounting

department, you will have staff supporting you.
 This means that you’ll be responsible for training and developing your staff, as well
as making sure that all of your staff is cross trained.
 Of course, with staff comes personnel issues—this includes interviewing and hiring
staff, addressing conflicts that may come up, performance issues, as well as employee
evaluations.
 If you’re one who doesn’t want to supervise others, what you’ll want to consider is a
position at a smaller company where you either won’t have staff or you’ll have very
minimal staff.

3. Oversee All Accounting Functions

 You will be responsible for all of the accounting operations. This includes accounts
payable, accounts receivable, general ledger functions, financial reporting, and in the
case of smaller companies, the payroll related activities as well.
 To break this down, you might be the one who reviews invoices and ensures proper
general ledger coding. You will ensure that vendors are being paid on time and
customers are being invoiced and collections are being made on those invoices.
 And again, at a small company, you’ll be overseeing payroll functions as well.

4. Manage Financial Statement Close

 One of the main responsibilities you will have is to produce monthly financial
statements on time. You’ll be responsible for handling all of the month-end and as
well as the year-end close processes. You’ll definitely need to plan on the first several
days of your month to be very busy!
 You may be making journal entries, reconciling accounts, reviewing the general
ledger for coding errors, or you may be reviewing the work of your staff that’s
performing these duties.
 You’ll also be responsible for assembling any monthly financial packet that’s required
for bank compliance, board meetings, or any other third party user

5. Perform Financial Analysis

 Typically, you’ll be doing a fair amount of analysis on the financials.

  This can include preparing monthly sales and gross profit analysis and other statistical
reports, analyzing monthly operating results against the budget, and preparing month
over month or year over year variance reporting
 Also included may be calculating operating metrics and making recommendations on
ways to measure the performance of the company based on the financial results.

6. Cash Management

 In the absence of someone who exclusively handles the treasury operations, you’re
the one who will handle cash management. This may include:
 Monitoring cash flow on multiple bank accounts
 Preparing cash flow forecasts to distribute to executive management along with
recommendations on treasury decisions
 Making cash transfers and initiating wires when necessary

7. Budget and Forecasting

 You will be deeply involved in the annual budget process, as well as developing
forecasts and projections

8. Collaborate with Third Party Accountants

 You will work very closely with outside accountants like auditors and tax preparers.
 You’ll be heavily involved in any annual financial audits including coordinating with
the auditors and serving as their main contact point during the audit.
 You’ll also be providing information to the tax accountants such as financials and
fixed asset information.
 And finally, once the tax returns are done, you’ll be giving the tax returns a review
and sign off on them.
 Also, you will be maintaining relationships with financial institutions, attorneys,
insurance brokers, and other professionals.

9. Handle Tax Filing and Compliance

 You may not be the one who prepares the tax returns but you’ll be responsible for the
accuracy and timeliness of all tax returns and annual report filings.
 Along with income taxes you may be responsible for sales tax, payroll tax, property
tax, excise tax, W2 and 1099 reporting, and any other tax filings that may apply.
10. Work Closely with Company Leaders

 The Financial Controller for a large company might report to the CFO, while the
Controller for a small company may be reporting directly to the owner. Either way,
you’ll be working directly with leaders of the company.
 This means that you may review financial statements and budgets with departmental
managers and discuss material variances or help them to understand trends that you
see on the financials that impact their department.
 Also, you’ll respond to questions from senior management regarding financial results,
forecasts, and performance metrics.
 And you will be talking a lot to department leaders throughout the annual budget
preparation process.