Controllership ACCT7320—Prof. Charles Bailey Overview of the Course Fall 2015.

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Controllership ACCT7320—Prof. Charles Bailey Overview of the Course Fall 2015

Transcript of Controllership ACCT7320—Prof. Charles Bailey Overview of the Course Fall 2015.

Page 1: Controllership ACCT7320—Prof. Charles Bailey Overview of the Course Fall 2015.

ControllershipACCT7320—Prof. Charles Bailey

Overview of the Course

Fall 2015

Page 2: Controllership ACCT7320—Prof. Charles Bailey Overview of the Course Fall 2015.

What is a “Controller”?

Chief Accounting Officer (CAO) More descriptive

Comptroller “An erroneous spelling of controller,

introduced c. 1500. …still retained in certain official designations.”

Oxford English Dictionary

Commonly used in government al settings

Page 3: Controllership ACCT7320—Prof. Charles Bailey Overview of the Course Fall 2015.

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

Page 4: Controllership ACCT7320—Prof. Charles Bailey Overview of the Course Fall 2015.

Role of a Controller

Controller’s responsibilities vary dramatically based on…

company size More precise & narrow in a big

company the presence of other managers to

handle related functions

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Main functions of the Controller

Planning Controlling Reporting Accounting Many others, esp. in smaller companies

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Planning function

Controller must “act as the coordinator who assembles and maintains the plan”

Must verify that: Sales plan or forecast supports corp. policies

& objectives Assumptions are valid & realistic Production plan supports the sales schedule Plan is within facility capabilities Expenses are in proportion to other activities Sufficient funding exists

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Control function

Controller provides information to each manager Consumes a lot of the staff time

Role does not end with feedback Flowchart existing systems Implement process changes

Must remain forward-looking Can’t control the past

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Reporting function

Function closely related to Planning & Control Essential to make them effective

Not just routine tabulation & presentation! Encompasses the interpretation of data Management must actually understand

Reports to outside parties: Shareholders, general public, creditors,

customers, SEC, IRS.

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Accounting function

Traditionally the principal function Newer aspects of the job:

Benchmarking key practices Converting to electronic transactions Reducing cycle time (of accounting activities) Outsourcing accounting functions Reengineering key functions

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Other functions of the Controller

In smaller firms, many other duties can fall on the controller Not worth our attention in the course?

Finance functions belong to a CFO if and when the firm grows and one is hired

Page 11: Controllership ACCT7320—Prof. Charles Bailey Overview of the Course Fall 2015.

The Controller and CFO

Controller reports to the CFO Traditional promotion route

May be closed off with arrival of CFO Controllers face potential conflicts with CFO’s

Vice-PresidentFinance, CFO

Vice-PresidentFinance, CFO

Controller Controller Treasurer Treasurer

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

Analysis 33

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Other topics?

Many potential topics for your presentations Cost/Managerial Accounting techniques

Advanced (new) or refresher? Management Accounting Quarterly good

Ethical issues

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Cost Allocation: Departments, Joint Products,

and By-Products

Chapter Seven

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[I will give introductory lecture tonight.]

Learning Objectives

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Cost Estimation (Appendix)

Chapter Eight

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Learning Objectives

Use learning curves to estimate a certain class of non-linear cost function (i.e., to estimate costs when learning is present)

Use statistical measures to evaluate a regression analysis

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Strategic Performance Measurement: Cost Centers, Profit Centers and

the Balanced Scorecard

Chapter Eighteen

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Identify the objectives of management control Identify the types of management control systems Define strategic performance measurement and

show how centralized, decentralized, and team-oriented organizations can apply it

Explain the objectives and applications of strategic performance measurement in three common strategic business units: cost centers, revenue centers, and profit centers

Learning Objectives

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Learning Objectives (continued)

Explain the role of the balanced scorecard (BSC) in strategic performance measurement

Explain the role of strategic performance measurement in service firms and not-for-profit organizations

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13

Employee, Vendor, andEmployee, Vendor, and Other Frauds against the Other Frauds against the

OrganizationOrganization

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Page 23: Controllership ACCT7320—Prof. Charles Bailey Overview of the Course Fall 2015.

Decision-Making with A Strategic Emphasis

Chapter Eleven

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Learning Objectives Analyze decisions with multiple products and

limited resources (so-called “product-mix” decisions)

[Additional material on Theory of Constraints.]

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Strategic Performance Measurement: Investment Centers

Chapter Nineteen

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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

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Learning Objectives (continued)

Part Two

Explain the objectives of transfer pricing, and the advantages and disadvantages of various transfer-pricing alternatives

Discuss the important international issues that arise in transfer pricing

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Management Compensation, Business Analysis, and Business Valuation

Chapter Twenty

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Identify and explain the types of management compensation

Identify the strategic role of management compensation and the different types of compensation used in practice

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

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Learning Objectives (continued) Describe the role of tax planning and financial

reporting in management compensation planning Explain how management compensation plans

are used in service industries Apply different methods for business analysis and

business valuation

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Time for a break?

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.