ELEC 3A: MODULE 1- INTRODUCTION| J.

VIADO

Republic of the Philippines

CAVITE STATE UNIVERSITY
Don Severino De Las Alas Campus
Indang, Cavite
www.cvsu.edu.ph

COLLEGE OF ECONOMICS, MANAGEMENT, AND DEVELOPMENT STUDIES

DEPARTMENT OF MANAGEMENT

ELEC 3A: FINANCIAL CONTROLLERSHIP

Module 1: Overview of Financial Controllership

Overview
Financial Controllership is a management function that supervises the accounting and financial
reporting of an organization. It is responsible for implementing and monitoring internal controls to
ensure a smooth operation of a business. Thus, it monitors and maintains a healthy business to
ensure success.
A controller analyzes and develops timely and accurate financial information, enabling the
company to deliver and improve its future overall performance. Controllers are forward-looking,
they need to anticipate issues and act to resolve the issues. The controllers’ core mission is to
support managers and other employees to enable them to be efficient and effective, thus
contributing to overall firm performance. In short, the controller’s job is to make the company’s
business objectives achievable.

Learning Objectives

At the end of the lesson, the students will be able to:

1. Discuss the concepts and elements of controllership.
2. Discuss the functions of a controller.
3. Explain and discuss the primary responsibilities of a controller.
4. Identify and describe the knowledge and skill requirements of a controller.
 ELEC 3A: MODULE 1- INTRODUCTION| J. VIADO

CONCEPTS OF CONTROLLERSHIP
The concepts of controllership can help identify and understand what options exist when
designing controllership activities.
1. Controllership as reactively supplying information. From this perspective, the purpose
of controllership is to gather information, prepare it and review it to determine whether
it can be used in managing a company.
2. Controllership as planning and monitoring. This perspective takes cognizance of the
importance of achieving or exceeding target or taking corrective actions if necessary
and subsequent performance analysis.
3. Controllership as a coordination function. This view implies aligning individual decisions
with a common goal.
4. Controllership as assuring the rationality of management. This includes responsibility
for information, planning, monitoring, and coordination tasks, but it expands the
function of controllership to include the task of identifying, modifying, and eliminating
rationality deficits, for example, preventing management from making bad decisions.
Source: Weber and Nevries (2010)

ESSENTIAL ELEMENTS OF CONTROLLERSHIP

1. Production process includes the set of tools needed to manage product component cost,
production cost, and revenue streams.
2. Manufacturing cost standards and objectives for operations (including purchased raw
materials and component parts).
3. Revenue analysis methods to improve both aggregate revenue sources and per unit
revenue.
4. Budgeting processes and objectives such as tracking structure costs, costs behaviors,
and revenue streams.
5. Communication process ensuring that management receives accurate information on
issues in a timely manner to take appropriate action.
Source: Green and Kaplan (2004)
 ELEC 3A: MODULE 1- INTRODUCTION| J. VIADO

FUNCTIONS OF A CONTROLLER

1. Planning. The controller is responsible for determining who does the work, what work is
to be done, and the timing of work completed in the accounting department. The controller
also 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.
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 plan.
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.
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.
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 objective of maintaining tight financial controls over processes.

PRIMARY RESPONSIBILITIES

Auditing
• The preparation of work papers for external auditors and the rendering of any
additional assistance needed by them to complete the annual audit.
Budgeting
• Coordination of the annual budgeting process, including maintenance of the
company budget, and the transfer of final budget information into the financial
statements.
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.
 ELEC 3A: MODULE 1- INTRODUCTION| J. VIADO

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 based on
the results.

Financial Statement

• The preparation of all periodic financial statements, as well as their

accompanying footnotes.
• The preparation of an interpretative analysis of the financial statements.
• The preparation and distribution of recurring and one-time management
reports.
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.
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.
Record Keeping

• The proper indexing, storage, and retrieval of all accounting documents.

• The orderly planning for and scheduling of document destruction, by the
corporate document retention policy.
 ELEC 3A: MODULE 1- INTRODUCTION| J. VIADO

Tax Preparation

• The timely preparation and filing of tax returns, as well as the supervision of all
matters relating to corporate taxation.
Transaction Processing

• The timely completion of all accounting transactions at 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.

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 to better impact financial information to the
management team.
• 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 skills. The controller must have an excellent knowledge of the planning,
organizational, directing, and measurement functions needed to manage the accounting
department.
• Provision of timely and cost-effective services. The controller must run the accounting
department as if it were a profit center so that the most efficient methods are used to
complete each task and the attention of the department is focused squarely on the most
urgent tasks.
• Technical knowledge. Creating an accurate financial statement, especially one for a
publicly held company, requires considerable knowledge of accounting rules and
procedures. Accordingly, a controller should be thoroughly versed in all generally
accepted accounting principles (GAAP).
 ELEC 3A: MODULE 1- INTRODUCTION| J. VIADO

ETHICS

The controller is in the uniquely difficult position of having a significant impact on the level
of ethics practiced throughout a company. Thus, the controller must adopt a methodical and
rigorous approach to ethical problems.

1. The controller must convince the management team that the company must adopt a
written ethical standard.
2. The management team as a whole must present them to employees and continue to
reiterate, both by example and communication, that these principles are a significant
foundation underlying all company operations.

Review Questions
1. What are the concepts and elements of controllership?
2. What are the different functions of a controller?
3. What are the primary responsibilities of a controller?
4. What are the job qualifications of a controller?

Supplemental Videos
• Why do we need controllers | WHU on Controlling
(https://www.youtube.com/watch?v=Onf5ypgxMdA)
• What Tasks do Controllers Have? | WHU on Controlling
(https://www.youtube.com/watch?v=qHGKl6olQ6c&list=PL4B7L2VnVUz2451qv4cvPbxk
q5D8QbOhU&index=6)
• The changing role of controllers: From reporter to business partner | WHU on Controlling
(https://www.youtube.com/watch?v=kq-
zA70hgxM&list=PL4B7L2VnVUz2451qv4cvPbxkq5D8QbOhU&index=7)
 ELEC 3A: MODULE 1- INTRODUCTION| J. VIADO

References
Bragg, S. (2011). The Controller's Function: The Work of the Managerial Accountant. Fourth
Edition. John Wiley and Sons, Inc.
Weber, J. and Nevries, P., (2011). Drivers of Successful Controllership: Activities, People, and
Connecting with Management. Business Expert Press.
Green, B.P. and Kaplan, J., (2004). Controllership: The Other Accounting Career.

Prepared by:

JEMMALENE O. VIADO
Instructor