URDANETA CITY

UNIVERSITY COLLEGE OF BUSINESS MANAGEMENT

Owned and operated by the City Government of Urdaneta AND ACCOUNTANCY

Lesson 1: Introduction and Overview of Financial Controllership

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. It is responsible in
minimizing risks through implementation and monitoring of internal controls.

Risk is the threat that an event, action, or non-action will adversely affect an organizations’ ability to achieve
its business objectives and execute its strategies successfully. Risk is measured in terms of consequences and
likelihood.

Management must control identified risks to help the company:

o Achieve its performance and profitability target
o Prevent loss of resources
o Ensure reliable financial reporting, and
o Ensure compliance with laws and regulations, avoiding damage to its reputation and other
consequences

Internal control is a process, effected by an entity’s board of directors, management and other personnel,
designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
o Effectiveness and efficiency of operations
o Reliability of financial reporting
o Compliance with applicable laws and regulations

A Financial controller is an individual who has responsibility for all accounting-related activities including high-level
accounting, managerial accounting, and finance activities, within a company.

 A financial controller typically reports to a firm’s chief financial officer (CFO), although these two positions
may be combined in smaller organizations.

Most simply, the financial controller is a company’s lead accountant. They oversee accounting activities and ensure
that ledgers accurately reflect money coming in and out of the company.

Note: This role is also sometimes known as the “comptroller”.

From The Strategic CFO: “A controller is responsible for the accounting and record keeping of an organization.
Additional responsibilities can include management of information technologies, insurance, sales tax reporting,
income tax reporting, outside CPA audits and human resources. Controllers are in essence responsible for the financial
and regulatory compliance of the Company. Think of controllers as the 'historians' for the company.”

Responsibilities typically include:

o General accounting oversight
o Creating internal policies and spend controls
o Coordinating external tax accountants
o Setting up bank accounts
o Ensuring payment is received from customers and other debtors

In some instances, the role also includes a fair amount of project management. In smaller finance teams, the controller
may also be the Head of Finance or Chief Financial Officer (CFO). They need to manage both these “control” aspects
of the role, as well as creating financial reports, building budgets, and planning company spending.

So, when companies are looking for a financial controller, the scope of the role can vary significantly.

Accounting vs. Controlling

A controller is engrained in a company's financial accounting process. However, the controller may not do direct
accounting themselves, and there is a difference between accounting and controlling. In financial management,
controlling is the act of ensuring data is recorded accurately and on time. This is a broader function of accounting, as
the controlling function may go behind recording transactions.

Controller vs. Other Financial Roles

Depending on the size and organizational layout of a company, the controller may hold more than one title or be
responsible for multiple aspects of finance. In general, especially for larger companies, there are differences between
controllers and other high-ranking financial positions.

Controller vs. Chief Financial Officer (CFO)

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 URDANETA CITY
UNIVERSITY COLLEGE OF BUSINESS MANAGEMENT
Owned and operated by the City Government of Urdaneta AND ACCOUNTANCY

Although both the controller and CFO of a company are leaders in finance, they are often two separate positions
responsible for different tasks. A controller is more likely to be entangled in general ledgers, trial balances, and
financial reports being delivered to more senior management. Meanwhile, a CFO utilizes these reports to focus on
more broad, big-picture company positioning.

In general, CFOs often take a greater presence in external-facing tasks including mergers, acquisitions, or involvement
with investors. Meanwhile, financial controllers own more of the internal reporting process including implementing
internal controls, managing the month-end close schedule, and ensuring financial accuracy.

Controller vs. Vice President of Finance

In many situations, a company's vice president of finance mimics the traditional role of CFO. A vice president is often
tasked with the highest-level of financial and accounting oversight, while a controller's role is more limited to the
financial preparation and management of the financial reporting process. For companies with both a controller and
vice president of finance, the controller would most likely report directly to the vice president.

Controller vs. FP&A Director

Financial controllers are in charge of the past; they review historical transactions and ensure reporting is done
correctly. These reports may then be delivered to a financial planning and analysis (FP&A) leader. This FP&A director
relies on their team to build budgets, forecasts, and long-term plans based on the future of the company.

A controller's role is heavily (if not exclusively) rooted in dealing with actual transactions. Overseeing both revenue
and expense reporting, a controller often does not deal in theory. Meanwhile, an FP&A director leverages historical
data to devise future plans that may or may not materialize. These plans may rotate on a quarterly basis if the company
decides to reforecast any projections.

Controller vs. Comptroller

A variation of the controller position is called a comptroller. A comptroller is typically a more senior position that is
more commonly found in government or nonprofit organizations. A controller and comptroller simply have similar
roles in different industries.

LESSON 2

 FOUR GOALS OF FINANCIAL CONTROLLERSHIP

1. Improving reporting to add value to the company

FC’s are tasked with accurately reporting every month, which is usually not an issue. They must re-evaluate their
reporting processes to see if their reports are adding value to their organization. To ensure that management reporting
aligns with the organization’s business strategy, financial controllers must ensure their reporting includes:

o Non-financial KPIs
o The ability to deliver reports digitally
o Effective commentary that adds value
o Relevance and conciseness

The Financial Controller must also ensure that the reporting format fits with the company guidelines. To provide high-
value reporting and insights to the business, FC’s can implement an Enterprise Performance Management or Business
Intelligence solution that meets all of the needs above.

2. Optimizing business processes

Companies are investing more in financial online tools to help simplify their standard practices. These tools are not
just investments but they can also help to improve their company’s processes. Financial Controllers invest these
savings wisely by creating more efficiencies and value-adding opportunities. By focusing on finding ways to add value
to the business, FC’s are not only improving the quality of their job function, but are also gaining an invaluable
resource that will also assist the rest of their finance team.

3. Recruiting & nurturing the finance team

Financial Controllers are faced with the challenge of finding staff with not only the right skill set but candidates that
can adapt and grow in an evolving business environment. Unfortunately, the profession of finance is facing a talent
and experience shortage, making the recruitment of experienced accountants a more difficult task. FC’s should instruct
recruiters to focus on qualified and experienced professionals that are looking for work because they’re looking for a
new challenge, perhaps moving closer to the company’s location, or even hoping to get a better life/work balance.

(075) 600 - 1507

San Vicente West, Urdaneta City, Pangasinan
Bright future starts here ucu.edu.ph | [email protected]
 URDANETA CITY
UNIVERSITY COLLEGE OF BUSINESS MANAGEMENT
Owned and operated by the City Government of Urdaneta AND ACCOUNTANCY

They should also consider other routes to finding new team members including social media as well as scouting for
accountants employed by another company or firm.

Finding accountants employed by other companies requires participation and occasional input from the entire
accounting team. Many recruiters use LinkedIn to find talented people, but they’re much more successful if they
connect with a candidate through the introduction of a connection already employed by the company. Controllers must
consider implementing an onboarding program, allowing them to nurture the successful applicant for the role.

4. Ensuring accuracy in all basic job functions

Financial Controllers must ensure that monthly, quarterly, and annual close are completed in the most effective way
possible. They also must ensure that their team can quickly adapt to changes to the business model as well as new
regulations or ownership

Global operations have made it difficult for financial close to occur in a timely manner. Technical reporting issues
often arise when it comes to regulations, further lengthening the close. One way to ensure a more efficient close is to
hire someone who solely focuses on these technical issues and is an expert in these regulations.

As finance continues to change, FC’s must learn to adapt as well. They must act as not only a bookkeeper who focuses
on the numbers, but a commentator who can explain those numbers; an overseer who ensures proper governance; a
business partner who assists in important decision making and adds value; and a team leader who recruits the best
whilst also helping to develop their employees’ skillset.

With the Financial Controller’s evolving role comes the opportunity to become even more integral to their business.
The modern controller should wear many hats and be a true asset to the decision-makers, their team, and the future of
their business.

 THE ROLE OF THE FINANCIAL CONTROLLER

The role of the financial controller is forever changing. Their responsibilities go beyond keeping on top of a
company’s numbers. As the role of FC becomes more strategic, the responsibilities have in turn transformed. Finance
Directors are also experiencing change that impacts the Financial Controller’s job role. They are no longer expected or
in some cases willing to spend more time on areas such as governance and investor relations, and therefore delegate
much of this to their FC.

This change in responsibilities mean that FC’s have become more of a financial
operating officer, focusing their day-to-day tasks on managing areas such as financial planning & analysis, tax
assessment and acquisitions-related work. The growing workload requires the financial controller to form a new set of
goals to help meet these new and increasing demands.

In a joint publication by the Institute of Management Accountants and Deloitte Development LLC outlined the four
primary roles a controller takes.

These four roles include:

A. Steward.
Controllers are financial stewards by managing risk and preserving assets. This includes ensuring that internal
controls have been implemented and that internal processes are being followed. The controller often plays a
part in external audit functions by collaborating with external auditors to ensure financial reporting
compliance.

B. Operator.
Controllers are financial operators by overseeing the day-to-day financial operations from a very high level.
This includes ensuring vendor set-up, invoice processing, payment remittance, accounting software record-
keeping, and purchasing functions are all performing as expected.

C. Strategist.
Controllers are financial strategists by guiding the appropriate direction of the company. For example, a
controller is often involved in accounting software implementation programs if the must be financial
reporting feedback on the modules needed, customizations requested, or shortfalls of what is being offered.

D. Catalyst.

(075) 600 - 1507

San Vicente West, Urdaneta City, Pangasinan
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 URDANETA CITY
UNIVERSITY COLLEGE OF BUSINESS MANAGEMENT
Owned and operated by the City Government of Urdaneta AND ACCOUNTANCY

Controllers are financial catalysts by putting in place processes, then ensuring the new plans are being
executed. This includes ensuring that external reporting or filing deadlines are met and that specific changes
imposed by external regulatory agencies have been followed. For example, this may relate to tax statement
distributions or audited external financial statements.

 FINANCE AND TREASURY RESPONSIBILITIES

Duties of Financial Controllers

The role of the controller will be different across every company. For many, the controller will take on at least some of
the following tasks:

 Manage cash flow.

This includes forecasting cash flow needs, planning for foreign currency needs in advance, and alerting upper
management for cash flow deficiencies.

 Act as audit liaison.

This includes meeting with external audit staff, being receptive to audit findings, implementing reporting changes, and
communicating to upper management or the board of directors the outcomes of the audit.

 Monitor internal controls.

This includes gathering feedback from audit personnel, working with managers on designing proper control functions,
and gathering data on the effectiveness of the internal control.

 Approve invoices.
This includes having a higher dollar approval threshold to act as a control for large purchases.

 Assist in budget preparation.

This includes feeding individuals around the company data and information on historical spending across a variety of
general ledger coding.

 Minimize financial risk.

This includes being aware of current processes, understanding company weaknesses, engaging employees with
training, and openly communicating areas of opportunity to better safeguard assets.

 Ensure financial compliance.

This includes understanding external reporting requirements, ensuring proper resources are on hand to meet those
requirements and overseeing the final product being delivered to external parties.

 Compile financial reporting.

This includes being aware of recent changes to financial reporting practices, overseeing a staff that directly contributes
to the financial statement preparation process, and sometimes certifying that the financial statements have been
accurately prepared to the best of their knowledge.

 Identify cost savings.

This includes understanding where operational efficiencies lie, how staff can be best utilized, what reporting functions
are being duplicated, and what resources the finance department really needs.

 Mentor financial staff.

This includes being a leader to the controller's direct reports by involving them in higher-level discussions.

-END-

Prepared by:

CHERRIE MAE G. RIVERA

Faculty

(075) 600 - 1507

San Vicente West, Urdaneta City, Pangasinan
Bright future starts here ucu.edu.ph | [email protected]