Controllership ACCT 7320Prof Charles Bailey Overview of the

Controllership ACCT 7320—Prof. Charles Bailey Overview of the Course Fall 2015

What is a “Controller”? n Chief Accounting Officer (CAO) n More descriptive n Comptroller n “An erroneous spelling of controller, introduced c. 1500. …still retained in certain official designations. ” § Oxford English Dictionary n Commonly used in government al settings

What does a “Controller” do? The concept is now well known, but “there is no universal definition attributed to it and this causes serious confusion concerning what a Controller is actually supposed to do. ” § M. Linhardt & S. Sundqvst, 2004

Role of a Controller n Controller’s responsibilities vary dramatically based on… company size § More precise & narrow in a big company n the presence of other managers to handle related functions n

Main functions of the Controller n Planning n Controlling n Reporting n Accounting n Many others, esp. in smaller companies

Planning function n Controller must “act as the coordinator who assembles and maintains the plan” n Must verify that: Sales plan or forecast supports corp. policies & objectives n Assumptions are valid & realistic n Production plan supports the sales schedule n Plan is within facility capabilities n Expenses are in proportion to other activities n Sufficient funding exists n

Control function n Controller provides information to each manager n Consumes a lot of the staff time n Role does not end with feedback n Flowchart existing systems n Implement process changes n Must remain forward-looking n Can’t control the past

Reporting function n Function closely related to Planning & Control n Essential to make them effective n Not just routine tabulation & presentation! n Encompasses the interpretation of data n Management must actually understand n Reports to outside parties: n Shareholders, general public, creditors, customers, SEC, IRS.

Accounting function n Traditionally the principal function n Newer aspects of the job: n Benchmarking key practices n Converting to electronic transactions n Reducing cycle time (of accounting activities) n Outsourcing accounting functions n Reengineering key functions

Other functions of the Controller n In smaller firms, many other duties can fall on the controller n Not worth our attention in the course? n Finance functions belong to a CFO if and when the firm grows and one is hired

The Controller and CFO Vice-President Finance, CFO Controller Treasurer n Controller reports to the CFO n Traditional promotion route n n May be closed off with arrival of CFO Controllers face potential conflicts with CFO’s

2008 Survey of AICPA & IMA Topics Ranked High in Importance n Ethics & Fraud 33 n Problem Solving Using Spreadsheets 33 n Overhead Allocation 33 n The Value of Information 3 n Operating Budgets 3 n Variance Analysis 3 n Revenue Allocation & Customer Profitability Analysis 33

Other topics? n Many potential topics for your presentations n n Cost/Managerial Accounting techniques n Advanced (new) or refresher? n Management Accounting Quarterly good Ethical issues

Chapter Seven Cost Allocation: Departments, Joint Products, and By-Products

Learning Objectives n [I will give introductory lecture tonight. ]

Chapter Eight Cost Estimation (Appendix)

Learning Objectives n Use learning curves to estimate a certain class of non-linear cost function (i. e. , to estimate costs when learning is present) n Use statistical measures to evaluate a regression analysis

Chapter Eighteen Strategic Performance Measurement: Cost Centers, Profit Centers and the Balanced Scorecard

Learning Objectives n Identify the objectives of management control n Identify the types of management control systems n Define strategic performance measurement and show centralized, decentralized, and teamoriented organizations can apply it n Explain the objectives and applications of strategic performance measurement in three common strategic business units: cost centers, revenue centers, and profit centers

Learning Objectives (continued) n Explain the role of the balanced scorecard (BSC) in strategic performance measurement n Explain the role of strategic performance measurement in service firms and not-for-profit organizations

13 Employee, Vendor, and Other Frauds against the Organization Mc. Graw-Hill/Irwin Copyright © 2012

Chapter Eleven Decision-Making with A Strategic Emphasis

Learning Objectives n Analyze decisions with multiple products and limited resources (so-called “product-mix” decisions) n [Additional material on Theory of Constraints. ]

Chapter Nineteen Strategic Performance Measurement: Investment Centers

Learning Objectives Part One Explain the use and limitations of return on investment (ROI) for evaluating investment centers Explain the use and limitations of residual income for evaluating investment centers Explain the use and limitations of economic value added (EVA®) for evaluating investment centers

Learning Objectives (continued) Part Two n Explain the objectives of transfer pricing, and the advantages and disadvantages of various transferpricing alternatives n Discuss the important international issues that arise in transfer pricing

Chapter Twenty Management Compensation, Business Analysis, and Business Valuation

Learning Objectives n Identify and explain the types of management compensation n Identify the strategic role of management compensation and the different types of compensation used in practice n Explain the three characteristics of a bonus plan: the base for determining performance, the compensation pool from which the bonus is funded, and the bonus payment options

Learning Objectives (continued) n Describe the role of tax planning and financial reporting in management compensation planning n Explain how management compensation plans are used in service industries n Apply different methods for business analysis and business valuation

Time for a break? n An academic hour is 50 minutes, allowing for a break of 10 min. We normally take a break at the midpoint of our 3 -hour class and then usually wind up a few minutes early.