Table of Contents
Operations that take plane in an organization ensure that strategic and tactical plans are developed and executed in organizational units that work on the implementation of the mission and objectives of the company. The acquisition and usage of resources are measured and monitored by keeping financial records, which is an important management tool of a controller. The controller ensures that fiscal transactions of an organization comply with applicable laws, regulations, policies, rules, donor restrictions, contracts, and grants. The controller’s obligation is also to ensure that they comply with general accounting principles. The fiscal activity of an organization has to be planned, controlled, and accounted accurately by the controller by keeping financial records. The controller is majorly responsible for budgeting, internal and external accounting as well as for reporting important issues. Given that the position of a controller is highly ranked in America, the controller must be able to effectively process and analyze economic information and communicate it throughout the organization. The controller today is an active figure in corporate management and long term strategic planning. His responsibilities and not confined only to accounting.
The Role of the Controller/Treasurer in Fiscal Administration/Management
Duties of Treasurer/Controller in Organizations
Duties of a controller to a large extent depend on the size of an organization. The treasurer is responsible for financial matters including handling of company’s funds, meeting capital needs, and managing relationships with creditors. The controller, on the other hand, is concerned with accounting matters. In general, duties of the controller include record keeping and overseeing both past and future financial effects on an organization. Duties of the Chief Accounting Executive cover all accounting functions of an organization: general accounting, forecasting, budgeting, cost accounting, accounting methods and procedures, internal auditing, and taxes (Anthony & Govindarajan, 2001). The controller reports financial operations of an organization to the management regarding aspects like performance of the firm in terms of sales and revenues, which helps compare the planned performance with the actual performance of the firm.
The treasurer performs several duties in a non-profit organization. Most of them are similar to those of a profit making organization since even non-profit firm is required to meet several financial requirements apart from paying taxes. These duties include ensuring financial compliance with rules set by the Internal Revenue Service, state and local agencies, basic bookkeeping and control, budgeting, reporting of company’s financial position, and fostering transparency and accountability regarding funds of the firm. In this respect, the treasurer establishes requirements and administers an effective plan for the control of operations (Drake & Dingler, 2001). The major responsibility is meeting the objectives of the firm.
Subordinates play an imperative role in the organization as they help in fiscal administration. They consult with the controller on matters of operating policies, procedures, and organizational structure. They also help in outlining organizational objectives. They help in preparation of outside financial reports as well as tax returns. With this assistance the controller is at a better position to report financial results to relevant agencies of the government regarding firm’s operations. Subordinates include tax manager, cost accounting manager, financial accounting manager, computer manager, cash manager, credit manager, financial planning manager, and investment and fund raising managers (Bragg, 2006). All these employees report to the controller/treasurer on issues related to their responsibilities. Financial information received from subordinates is reported to top management, either to Chief Financial Officer or to the Chief Executive Officer depending on the structure of the firm. Subordinates are also delegated with certain duties and are closely supervised. Lastly, in respect to overseas departments, the controller tracks government regulations outside firm’s economic and social forces to ensure that the firm operates under their regulations in order to avoid negative effects to the company.
Financial Methods and Systems Used
The controller is responsible for ensuring that the most effective management control system is implemented in the company that will satisfy the needs of the organization. To achieve this, the controller uses both financial and non-financial control system such as the Balanced Scorecard. It provides him/her with vital information about company’s market share, customer satisfaction and retention, and performance of the firm regarding the response to dynamics of the market. Financial methods and systems are implemented and evaluated as part of management control to monitor financial activities of an organization (Bragg, 2006). The major focus is on internal issues and methods of determining the cost of products. Depreciation methods, inventory pricing, and the basis of consolidation are paramount as the disclosure of accounting policies is very important to financial readers when they interpret financial statements of a company.
Bookkeeping system is the system generally employed by controllers for analyzing and reporting data in most organizations. This can be done using single entry bookkeeping, double entry bookkeeping, or even through online bookkeeping services depending on the form the firm deems appropriate. The choice of the type of bookkeeping employed by a firm depends on the size of the firm. Small ones will consider single entry bookkeeping, while large firms will prefer the double entry bookkeeping (Merchant et al, 2007). It helps when the firm has large assets, thousands of transactions at hand within a certain reporting period, and external suppliers of capital. Given that transactions are made on the debit and credit side, when totaling the accounts, the sum of debits must equal that of all credit. By doing so, errors will be detected easily. This eases the task of preparing profit and loss statements, financial statements as well as makes it easier to keep track of assets and liabilities from bookkeeping accounts.
The application of double entry bookkeeping system together with the accrued method of accounting ensures that financial information is updated regularly by the firm. There exist many methods and financial management systems available. Therefore, it is up to the management to choose a method that will ensure success of the financial system. Properly maintained accounting system ensures effective financial performance as all aspects of the organization are being monitored. Methods used to accomplish organizational goals can be quantitative, including budget and audit, or non-quantitative including reports, supervision, inspections, and performance evaluation. The system operated by a controller includes cost control systems and financial reporting systems (Anthony & Govindarajan, 2001). Control systems comprise of budgetary control, quality control, financial control, operations management, computer based information, and inventory control systems. Financial control systems are feedback control systems as they analyze financial statements and ratios.
Long-term and short-term implication of these financial systems is that they facilitate planning and control mechanisms that support decisions leading to an increase of value for customers and lowering of costs of products and services. However, accounting systems and information on their own do not comprise cost management. The business environment is always uncertain as there are various forces influencing the market. Therefore, the controller must implement a system and method that will take into account inflation, interest rates, and unemployment when budgeting. It is the controller who must monitor and evaluate accounting and financial performance to advice management on issues of personnel actions, available opportunities or areas calling for attention.
How Controller’s Duties Translate Information to the Corporate World/Private Sector
While performing his/her duties the controller delivers reports to various entities including shareholders, investors, creditors, and the government. Most of the information presented to the corporate world or private sector is crucial as it illustrates key financial strategies of an organization. To begin with, while supporting relations with investors, the controller feeds them vital information pertaining to investment, for instance, during mergers and acquisitions. In case the business is sold, the controller will be responsible for responding to corporate synergy issues, conversion and economic issues presented by investment analysts and investors (Anthony & Govindarajan, 2001). The controller relates goals and objectives of the firm to those of key creditors so that the latter are assured of the viability of firm’s projects and safety of their resources. This enables a firm to secure enough financial resources to add on the capital for investment purposes as well as for expanding firm’s operations. The government usually establishes some regulations to which firms must adhere to, and it is the key role of the controller to ensure that firm’s operation is legal.
Effective administration of the firm by the controller ensures that maximum value is extracted from employees. They develop strategies that translate financial information into bottom line performance of the company. In addition, an effective administration ensures that relationships with new partners are built and that existing ones are strengthened. Further, the controller manages financial information in the organization thus facilitating better performance. Strategic plans are then translated into actionable plans through implementation of decisions of management (Drake & Dingler, 2001). Through delegation to subordinates, the controller becomes more efficient as he/she can share some responsibilities, which leads to improved performance. Fruits of an effective administration are seen in the successful operational processes of the organization. Improved performance and revenue increases as well as the minimal gap between the planned and actual performances are attributes of effective administration.
Effective administration ensures that employees of the lower management are included in the implementation process and are compensated properly. Their performance will improve as they will be satisfied and committed to the organization. In the long run, the firm will out-compete others in the market as its revenue will be higher (Merchant et al, 2007). In contrast, ineffective administration results in poor performance of the organization. Due to lack of effective and timely information revealed to investors and management, the firm might engage in risky projects. Ineffectiveness results in corruption as transparency and accountability of people will be low. Resources will be lost, especially in ghost projects. Employees will underperform as key investors may fall out. The firm might receive several restrictions from the government due to non-compliance to set regulations, thus making it to incur losses. The impact of ineffective administration of a firm is severe because it results in losses incurred by investors and shareholders. It also results in a loss of goodwill and confidence of the public, and, in a worst case, collapse of the firm.
In conclusion, duties of a controller are accounting, managing assets, controlling operations, interpretation of financial data, custody of records, reporting of financial information, budgeting, and preparation of taxes. The duties also include managing banking relationships, cash management, obtaining financing, insuring assets, credit appraisals and collection, negotiation on issues of mergers and acquisitions, investment of funds, and fostering favorable relations with investors.