UNIVERSITY OF THE VISAYAS

College of Business Administration

2nd Floor DVG building, Colon corner D. Jakosalem St. Cebu City

NAME : ADELYNE B. ARNEJO INSTRUCTOR: MR. NOEL TERRORA

COURSE/YEAR: BSBA – FM SUBJECT: FINANCIAL CONTROLLERSHIP

MODULE 1

[email protected] uv.edu.ph Telefax (032) 4168226 Tel. (032) 253-6413 local 205
 UNIVERSITY OF THE VISAYAS
College of Business Administration
2nd Floor DVG building, Colon corner D. Jakosalem St. Cebu City
MAIN JOB1.CONCEPT
OF A CONTROLLER
MAPPING

JOB DESCRIPTION

 Developing financial strategy,

including risk minimization plans
and opportunity forecasting JOB QUALIFICATION
 High-level financial reporting and
analysis
 Regular budget consolidation  Managing processes
 Cash flow management
 Financial software
 Improving efficiencies and reducing
costs across the business  Developing standards

 Stakeholder management  Auditing, accounting,

 Debt management and collection and corporate finance

 Preparing company tax and BAS  Tracking budget

statements expenses
 Ensuring compliance with statutory  Financial skills
law and financial regulations
 Analyzing information
 Developing financial reviews and
providing investment advice  Developing budgets
 Payroll processing  Performance
 Working closely with management management
or executive teams to share reports
and analysis findings

[email protected] uv.edu.ph Telefax (032) 4168226 Tel. (032) 253-6413 local 205
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City

Board of Directors

Chief Executive Officer

(CEO)

Vice President Chief Financial Officer

(CFO)

Controller Treasurer Internal

Auditor

Managerial Financial Tax

Accountant Accountant Accountant
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City

Rubrics for Concept Mapping

Your Concept Mapping will be graded based on this rubric.
Consequently, use this rubric as a guide when writing your
written output and check it again before you submit your output.

Unacceptab Acceptab Targ Exempla Scor

le 1 le 2 et 3 ry 4 e
Does not Develops Develops Develops
develop ideas and unified and ideas
cogently, organizes coherent cogently,
uneven and ideas in ideas within organizes
ineffective paragraphs paragraphs them logically
overall that are not
with with
organization, necessarily
connected. generally paragraphs
unclear adequate and connects
Logic and Some overall
introduction transitions; them with
Organizatio organization,
or conclusion clear overall effective
but
n
some ideas organization transitions,
seem illogical relating most Clear and
and ideas specific
or/unrelated, together, introduction
unfocused good and
introduction introduction conclusion.
or and
conclusions conclusion.
Employs Word forms Word forms Employs
words that and sentence are correct, words with
are unclear, structures sentence fluency,
sentence are adequate structure is develop
effective.
structures to convey concise
Presence of a
Language inadequate basic standard
few errors is
for clarity, meaning. English
not
errors are Errors cause sentences,
distracting.
seriously noticeable and balances
distracting distraction a variety of
sentence.
Spelling Writing Frequent While there The writing is
and contains errors in may be minor essential
Grammar numerous spelling and errors, the error-free in
errors grammar writing terms of
in spelling follows
distract the spelling and
and grammar normal
reader grammar.
which conventions
interfere with of
spelling and
comprehensio
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City

n grammar
throughout
and has been
carefully
proofread
Most ideas Presents Supports Explores ideas
unsupported, ideas in most ideas vigorously,
confusion general with supports
between terms, effective points fully
personal and support for examples, using a
ideas
external references, balance of
Developme is
evidence, and details, subjective and
nt of Ideas inconsistent,
reasoning makes key objective
some of
flawed distinctions. evidence, and
distinctions
reasons
need
effectively
clarification,
making useful
reasoning
distinctions.
unclear.
The purpose The writer’s The writer The
and focus of decisions has made writer’s
the writing about focus, good decisions
are not clear organization, decisions about
style and focus,
to the reader about focus,
content organization,
organization,
sometimes style and
Purpose interfere with style and
content fully
the purpose content so
elucidate the
of the as to
purpose and
writing. achieve the
keep the
purpose of
purpose at
the writing
the center of
the piece.
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City

2. Review and Reflection

1. What are the roles of a financial controller?

 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, federal income
tax reporting, outside CPA audits and human resources. Controllers are
responsible for the financial and regulatory compliance of the company.
Controllers can either partnership with or directly under an establishment’s
chief financial officer, helping giving vital financial information with an eye
on future activities. A financial controller helps to structure cost regulation
and rationalize capital decisions by blending the firm’s present strength
with the market actuality. The financial controller is in charge of managing
the finalizing of internal audits while focusing on potential errors and
frauds. They also execute improved strategies of the finance department’s
activities. They take controls of financial accounts, be it annually, monthly
or quarterly accounts. They oversee payables, receivables and perform
interdepartmental communication. Financial controller will have to carry
out financial analysis and offer professional opinions and advice.

2. What does a controller do in a small companies?

 A controller is in charge of making sure that all accounting distributions
are properly made and accounted for. In smaller firms, financial controller
performs cash managing roles and oversees accounts payable, receivable,
disbursing of cash, payroll and bank settlement functions. It is important
that every company should have a separation of responsibilities to assure
accurate checks and balances in the system. The controller will frequently
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City
take charge of collections on invoices, also accountable for organizing and
keeping company records and making them available for examination.
Financial controllers in small firms are in charge of all banking and finance
actions. These may include reviewing and studying all financial contracts.
Financial controller is also liable for providing precise and accurate
financial data to the executives for long-term financial planning. In firms
that cannot afford the services of a chief executive officer, the financial
controller will have to step in and fulfill these responsibilities as well. The
controller must also be able to provide quick and important decisions,
provide important financial information and work with the executives to
organize all financial decisions within the business. The financial controller
performs reporting duties like preparing financial statements, draw up
balance sheets, give cash flow reports and create budgets.

3. Why ethics is important in financial controllership?

 A corporate controller is responsible for providing investors, lenders and
other stakeholders with an accurate view of the firm’s financial condition.
Controllers ensures that accounting procedures are in place and that
internal controls functions properly. In order to remain credible, a
controller must behave in an ethical manner in both private and
professional life. Because of sensitive nature of accounting data, a
controller must meet minimum standards of professional competence. The
Institute of Management Accountants states that controllers have an
ethical duty to disclose any professional limitations or deficiencies that
may prevent them from performing their jobs duties effectively. Financial
results may be misinterpreted if accounting standards are applied in an
improper or inconsistent manner. A controller must exercise due care in
the creation of financial statements and the reports that support them.
This is the standard controllers should strive to attain. Failure to do so
may result in misstatements that could damage stakeholder confidence in
the firm. When choosing controller, senior management must take great
care to consider both the personal and professional behavior of
candidates. If the controller behaves inappropriately, the firm’s financial
results and controls may be called in question. That is why companies
adopted specific policies governing the personal behavior of top financial
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City
executive, including the controller. A good controller understands this
responsibility and strives to behave in an exemplary manner at all times.

Rubrics for Short Essay:

Your Essay will be graded based on this rubric. Consequently,
use this rubric as a guide when answering the essay question
and check it again before you submit your output.

Traits/Criteria 5 4 3 2

There is one There is one There is one The topic and

clear, well- clear, well topic. Main ideas main ideas are
focused topic. focused topic. are somewhat not clear.
Main ideas are Main ideas are clear.
Focus and
clear and are clear but are not
details
well supported well supported
by detailed and by detailed
accurate information.
information.
The introduction The introduction The introduction There is no clear
is inviting, states states the main states the main introduction,
the main topic, topic and topic. A structure or
and provides an provides an conclusion is conclusion.
overview of the overview of the included.
paper. paper. A
Organization
Information is conclusion is
relevant and included.
presented in a
logical order.
The conclusion is
strong.
Voice/Written The author’s The author’s The author’s The author’s
purpose of purpose of purpose of purpose of
writing is very writing is writing is writing is
clear, and there somewhat clear, somewhat clear, unclear.
is strong and there is and there is
evidence of some evidence evidence of
attention to
of attention to attention to
audience.
audience. The audience. The
The author’s
author’s author’s
extensive
knowledge knowledge
knowledge
and/or and/or
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City
and/or experience with experience with
experience with the topic is/are the topic is/are
the topic is/are evident. limited.
evident.
The author uses The author uses The author The writer uses
vivid words and vivid words and uses a limited
phrases. The phrases. The words that vocabulary,
choice and choice and communicate jargon or
Word choice placement of placement of clearly, but the clichés may be
words seems words is writing lacks present and
accurate, inaccurate at variety. detract from the
natural, and not times and/or meaning.
forced. seems overdone.
All sentences are Most sentences Most sentences Sentences sound
well constructed are well are well awkward, are
and have varied constructed and constructed, but distractingly
structure and have varied they have a repetitive, or
length. The structure and similar structure are difficult to
Sentence author makes no length. The and/or length. understand. The
structure, errors in author makes a The author author makes
grammar, grammar, few errors in makes several numerous
mechanics mechanics, grammar, errors in errors in
and spelling and/or spelling. mechanics, grammar, grammar,
and /or spelling, mechanics, mechanics,
but they do not and/or spelling and/or spelling
interfere with that interfere that interfere
understanding. with with
understanding. understanding.
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City

MODULE 1: MAJOR ASSESSMENT

TOPIC: WORLDCOM SCANDAL

SUMMARY OF THE TOPIC

WorldCom Overview, History

WorldCom was a provider of long distance phone services to businesses

and residents. It started as a small company known as Long Distance Discount
Services (“LDDS”) that grew to become the third largest telecommunications
company in the United States due to the management of Chief Executive Officer
Bernie Ebbers. It consisted of an employee base of 85,000 workers at its peak
with a presence in more than 65 countries. LDDS started in 1983. In 1985,
Ebbers was recruited as an early investor of the company and became its CEO. It
went public four years later. Ebbers helped grow the small investment into a $30
billion revenue producing company characterized by sixty acquisitions of other
telecomm businesses in less than a decade. On June 25, 2002, the company
revealed that it had been involved in fraudulent reporting of its numbers by
stating a $3 billion profit when in fact it was a half-a-billion dollar loss. After an
investigation was conducted, a total of $11 billion in misstatements was revealed.

On June 25, 2002, WorldCom announced that it intended to restate its

financial statements for 2001 and the first quarter of 2002. It stated that it had
determined that certain transfers totaling $3.852 billion during that period from
“line cost” expenses (costs of transmitting calls) to asset accounts were not made
in accordance with generally accepted accounting principles (“GAAP”). Less than
one month later, WorldCom and substantially all of its active U.S. subsidiaries
filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy
Code. WorldCom subsequently announced that it had discovered an additional
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City
$3.831 billion in improperly reported earnings before taxes for 1999, 2000, 2001
and first quarter 2002. It has also written off approximately $80 billion of the
stated book value of the assets on the Company’s balance sheet at the time the
fraud was announced. On June 26, 2002, the United States Securities and
Exchange Commission filed a lawsuit captioned Securities and Exchange
Commission v. WorldCom, Inc., No. 02-CV-4963 (JSR). On July 3, the Honorable
Jed S. Rakoff, of the United States District Court for the Southern District of New
York, appointed Richard C. Breeden, former Chairman of the SEC, as Corporate
Monitor, with the consent of WorldCom. This Committee was established by the
Board of Directors On July 21, 2002. The Board directed to conduct a full and
independent investigation of the accounting irregularities that gave rise to the
announced intention to restate, and such other matters as we concluded should
be considered, without any limitations. The members of the Committee were new
to the Board of WorldCom at that time.

How was the WorldCom Scandal discovered?

After tips were sent to the internal audit team and accounting irregularities
were spotted in MCI's books, the SEC requested that WorldCom provide more
information. The SEC was suspicious because while WorldCom was making so
much profit, AT&T (another telecom giant) was losing money. An internal audit
turned up the billions WorldCom had announced as capital expenditures as well
as the $500 million in undocumented computer expenses. There was also another
$2 billion in questionable entries. WorldCom's audit committee was asked for
documents supporting capital expenditures, but it could not produce them. The
controller admitted to the internal auditors that they weren't following accounting
standards. WorldCom then admitted to inflating its profits by $3.8 billion over the
previous five quarters. A little over a month after the internal audit began,
WorldCom filed for bankruptcy. In June 2002, WorldCom confessed to nearly $4
billion in accounting wrongdoings, and on July 22, 2002, the company filed for
bankruptcy—one of the biggest in American history. The bankruptcy filing led to
an increase of scrutiny for the company's executives and prompted legal
investigations into WorldCom CEO Bernard Ebbers and CFO Scott Sullivan.
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City

REACTION NOTES

Accounting scandals are business scandals which arise from intentional

manipulation of financial statements with the disclosure of financial misdeeds by
trusted executives of corporations. Such misdeeds involve complex methods for
misusing or misdirecting funds, overstating revenues, understating expenses,
overstating the value of corporate assets, underreporting the existence of
liability.
The WorldCom scandal is regarded as one of the worst corporate crimes in
history and its bankruptcy filing in 2002 being the largest of such filing in U.S.
history. Evidence shows that the accounting fraud was discovered as early as
June 2001, when several former employees gave statement alleging instances of
hiding bad debt, understating costs, and backdating contracts. WorldCom
scandals represents the biggest mistake in American business. WorldCom was
proven to violate many ethical guidelines by committing insincerity in providing
financial figures to stakeholders and public.

1. What is the relevance of this activity to you as student?

The relevance of this activity as a student is that doing misdeeds will

lead to bankruptcy. Anything that is illegal will not prosper. Intentional
manipulation of financial statements with the disclosure of financial misdeeds by
trusted executives of corporations. Such misdeeds involve complex methods for
misusing or misdirecting funds, overstating revenues, understating expenses,
overstating the value of corporate assets, underreporting the existence of
liability. Every one of us wants to have success, where we are doing everything
just to success, but it is much worth it if we are doing it in legal way. It is a great
feeling is success comes in a legal way, without steeping someone just to be on
top. This activity shows that truth will always prevail, no, matter how hard you
kept all the wrongdoings inside the company, truth will always prevail and it can
lead to a downfall.
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City
2. What have you learned from this activity?

The world had suffered a loss of billions of money due to accounting

scandals. One of the reasons of these manipulations of financial statements which
are being done deliberately by some trusted executives of companies or
organizations is a few individuals’ excessive greed that eventually result in a
disastrous chain of events. When having a business it is best to hire people with
integrity. Integrity is an important fundamental element of the accounting
profession. It requires accountant to be honest and forthright with a client’s
financial information. Accountants should restrict themselves from personal gain
or advantage using confidential information. Professional accountants should
avoid the intentional opportunity to deceive and manipulate financial information.

3. In what instance/s or where will you be able to apply/integrate

the learning or experience?

I will be able to apply this knowledge that working in any firms, integrity is a
must. Doing misdeeds will lead you to a downfall, which makes it harder to find
other jobs because of the misdeeds have done in the former company you are
working. In working in any firms, I should act in a consistent manner, to ensure
the commonly accepted principles. Sooner or later time will come I will apply in
any firms and if given a chance I can in a department where it manages financial
affairs. This activity makes me realize that being professional in the work field
may have a lot of opportunities ahead in the future, having an integrity helps the
company prosper and have a clean record.

4. How will the learning or experience help you enhance?

The learning experience helps me enhance the mode of understanding

what the consequences of doing misdeeds in the company, to make a better
judgments to help the organizations prosper and do better in the organization to
do what’s best for the company. Reading financial reports is one of the aspect in
running business. That the accounting information that is presented must be
truthful, accurate and complete nothing significant must be missed out, and
capable of being verified.
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City

Rubrics for Concept Mapping

Your Reflective Essay will be graded based on this rubric.
Consequently, use this rubric as a guide when writing your
written output and check it again before you submit your output.

Unacceptab Acceptab Targ Exempla Scor

le 1 le 2 et 3 ry 4 e
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City
Does not Develops Develops Develops
develop ideas and unified and ideas
cogently, organizes coherent cogently,
uneven and ideas in ideas within organizes
ineffective paragraphs
paragraphs them logically
overall that are not
with with
organization, necessarily
connected. generally paragraphs
unclear adequate and connects
Logic and Some overall
introduction transitions; them with
Organizatio organization,
or conclusion clear overall effective
but
n
some ideas organization transitions,
seem illogical relating most Clear and
and ideas specific
or/unrelated, together, introduction
unfocused good and
introduction introduction conclusion.
or and
conclusions conclusion.
Employs Word forms Word forms Employs
words that and sentence are correct, words with
are unclear, structures sentence fluency,
sentence are adequate structure is develop
effective.
structures to convey concise
Presence of a
Language inadequate basic standard
few errors is
for clarity, meaning. English
not
errors are Errors cause sentences,
distracting.
seriously noticeable and balances
distracting distraction a variety of
sentence.
Writing Frequent While there The writing is
contains errors in may be minor essential
numerous spelling and errors, the error-free in
errors grammar writing terms of
in spelling follows
distract the spelling and
and grammar normal
Spelling reader grammar.
which conventions
and of
interfere with
Grammar spelling and
comprehensio
grammar
n
throughout
and has been
carefully
proofread
Developme Most ideas Presents Supports Explores ideas
nt of Ideas unsupported, ideas in most ideas vigorously,
confusion general with supports
between terms, effective points fully
personal and support for examples, using a
ideas
external references, balance of
 UNIVERSITY OF THE VISAYAS
College of Business Administration
nd
2 Floor DVG building, Colon corner D. Jakosalem St. Cebu City

evidence, is and details, subjective and

reasoning inconsistent, makes key objective
flawed some of distinctions. evidence, and
distinctions reasons
need effectively
clarification, making useful
reasoning distinctions.
unclear.
The purpose The writer’s The writer The
and focus of decisions has made writer’s
the writing about focus, good decisions
are not clear organization, decisions about
style and focus,
to the reader about focus,
content organization,
organization,
sometimes style and
Purpose interfere with style and
content fully
the purpose content so
elucidate the
of the as to
purpose and
writing. achieve the
keep the
purpose of
purpose at
the writing
the center of
the piece.