Controllership - introduction

Introduction: ControllershipFinc 44

Controller

Play a vital role in maximizing company performance support management by providing

information; design management control systems to

improve the quality of management decisions; significantly enhance firm adaptability core mission of controllers is to provide

support to managers and other employees to enable them to be efficient and effective, thus contributing to overall firm performance

Evolution of the Controllership function

The role of the financial controller is changing in ways that mirror those of the broader finance function. Controllers increasingly: Participate in the analysis and formulation of

solutions to more strategically oriented issues, role of controllers has changed during the last

few years, evolving from that of a “bean counter” to that of a full-fledged business partner by placing a greater emphasis on adding value to their organizations


Provide and share financial and nonfinancial data to operational areas

The traditional role of the financial controller involves transaction process and financial reporting but is now changing. Institute of Management Accountants (IMA) survey results show that volume for information requests—of both financial and nonfinancial data—is increasing.

Three-quarters of controllers indicated that they are asked more often to provide data and information to nonfinancial managers of which 60% responds that requested data extends beyond traditional and budget data to include operational data, KPIs and customer data.


Assist operational users with tools that enable self-service access to informational sources

Managers appreciate receiving objective internal information from controllers who have a thorough understanding of the business and who are intimately familiar with the internal information systems they themselves design and maintain.

A survey shows that controllers are more likely to see full partner relationships with information technology (IT, 44%) and internal audit (43%) and to most likely have some level of information sharing with compliance, HR, and sales and sales operations (each for more than 95% of controllers).


The increased involvement in strategic support is raising the financial controller’s profile within the organization, and the expanding interaction with nonfinancial functions is creating broader organization reliance and an enhanced perception of the value of the controller’s organization.

But this has introduced concerns around how the finance areas will support this increasing demand for elevated skills to support a wider set of consumers of their expertise.

Controller

Employee who predominantly engages in the “provision of information and analysis to assist management in the running of the business” and who holds a position within the finance function

Assume a multitude of roles and perform a host of activities, such as budgeting, planning, forecasting, reporting, and investment appraisals

These professionals are involved in designing and evaluating business processes, budgeting and forecasting, implementing and monitoring internal controls, and analyzing, synthesizing, and aggregating information—to help drive economic value

Controller vs Financial Accountant

Controller Financial Accountant in charge of the accounting department and will oversee the production of financial reports as well as control the company’s cash flow

in charge of preparing financial reports and analyzing how the company is performing financially

in charge of money and accountants

responsible for keeping tabs on where the money is going

responsible for complying with tax laws and government reporting requirements

Financial Accountant vs Controller

The successful controller

Skill set of a controller Controllers as business partners, knowledge of

accounting know the tax implications of proposed courses of

action understand cost flows and information flows comfortable with technology and be an expert in the

company‘s business and accounting software A generalist. You need a working knowledge of what

people do in marketing, engineering, human resources, and other departments

understand how the processes, departments, and functions work together to run the business


Controllers as business partners contribute ideas at planning meetings, so you have

to see the big picture, keep a focus on the bottom line, and think strategically

understand the business. You have to know how the company makes money and how the industry is structured

controllers need almost the same skill set as a successful entrepreneur

Controllers must also have the qualities of a first-rate supervisory board chairman and a management consultant

The successful controller: Technical Skills

Cost Accounting traditional core competency of controllers

Capital Expenditure Budgeting basic accounting approach for assessing capital

expenditure projects and also management and advisory transactions

discounted cash flows or Internal Rate of Return (IRR) calculations

Financial Accounting knowledge is expected of controllers and includes

familiarity with the PAS/PFRS standards The real competency is being able to apply

standards in a focused way, based on the business conditions you find


Financial Accounting Technical skills are important in the sense that they

enable the link between the internal perspective of controllers and the external perspective of financial accounting

Financial accountants have to comply with standards such as International Accounting Standards (IAS) when preparing reports to external stakeholders, whereas controllers do not.

Controllers overriding objective is to provide information to managers that support rational decisions. Such information may or may not comply with financial accounting standards

In case they do not comply, controllers who are aware of the differences given their technical skills are able to explicate these differences and avoid confusion


Understanding the Business For a long time, controllers were not required to

understand the business because the focus of their work was on providing mechanistic internal services independent of the particular company’s business model

thinking beyond the business process itself and the things that get done in the company, getting to know the environment

not only the internal processes that one needs to understand, but also the external environment

The successful controller: Interpersonal Skills

Management Skills: Backbone, Persistence & Neutrality

“Backbone” relates to the ability of controllers to get things done even in the face of opposition

Controllers are also expected to be impartial when assessing a situation

power plays may create pressure. Controllers should not, under any circumstances, play along.

when managers may try to influence controllers, it is critical for controllers to maintain a high level of integrity in order not to deviate from their duty of providing objective assessments

Having a backbone also means standing one’s ground against managers who might be much higher up in the hierarchy. This is no easy task for a support function, but it is necessary


The Ability to Ask Tough Questions Often there are things that seem to be obvious, but

turn out not to be obvious A controller should question everything on general

principles Asking tough questions is often easier said than

done. Business processes are highly complex nowadays, meaning that a straightforward, technical, fact-based assessment is often not enough

The ability to ask difficult questions is not only an analytical one, but also an emotional one. If a controller doesn’t have an intuition for weak points, then they would need a great number of auditors and they always arrive late. Controllers need to have a good business instinct


Communication Skills Communication skills are what allow controllers to

share their results with colleagues controllers were often noted for their poor

communication skills in the past, instead choosing to hide behind systems, calculations, and numbers

Nowadays, the ability to clearly present information to management, and to argue persuasively when engaging with colleagues, is becoming more and more important

In other words, it is not the number itself that is important; rather, it is what the number actually means and implies that is important


Communication Skills When requesting information from other

departments, it helps to be able to communicate why the information is needed instead of just demanding the numbers

This helps to reduce resistance on the part of coworkers and increases the probability of receiving usable numbers supplied in a cooperative fashion

communication determines how the entire range of services provided by controllers is perceived

SITUATION: You’ll always be vulnerable if somebody is telling you stories. I always find that quite embarrassing. That’s when I say: “Explain it to me in a way that I can understand!” And if he explains it to me five times and I still don’t understand it—then he’s not a good controller


Team Skills Teams generate controllership services, and as the

manager only sees the final product, it is important for controllers to act in concert while working on their tasks

the ability and willingness to cooperate with others—play a key role in bringing together the specialized components of controllership

The successful controller: Changing Role of Controllers


Findings accounting skills are already in high demand, which

partly explains why such skills sit at the lower end of the ranking

technical skills remain important, interpersonal, “soft” skills are becoming more and more critical

controllership role is, in fact, moving away from traditional roles, such as “bean counter” and “corporate cop,” toward more proactive roles

Controllers not only generate raw data; they also “play” with the numbers, interpret them, communicate them, and, together with managers, work on achieving an understanding of what the numbers mean for managers in their decision making.


Findings This brings the question of how CFOs can best

allocate their resources and time in the face of the huge and increasing responsibilities.

The challenges include prioritisation and balancing short-term/long-term trade offs as businesses seek to reduce cost but also plan for growth longer term


How do they acquire the relevant skills? it helps if the controller has the right mind-set. An

egocentric character not willing to learn the preferences of others, or someone who dislikes numbers, certainly is not helpful

Strength of character and integrity are personal traits that are welcome, on the other hand, in order to have the backbone that is required to criticize and challenge managers that may be hierarchically superior

a sound educational background is essential, be it through a professional education or through a major in controllership during university education

However, communication skills, team skills, and business understanding are more likely to be acquired on the job, and knowledge of these skills may be supported by appropriate training measures.


How do they acquire the relevant skills? Experiences in various jobs—be it within the

controllership function (e.g., specializing in budgeting or reporting duties), as a financial accountant (to train accounting skills), or as a manager (i.e., to view controller activities through the lens of the manager and to expand business expertise)—will also contribute to controller training

controllers should always be “on the move” to acquire new skills and capabilities in order to stay on top of their game.

Can all of these skills even be united in a single person?

In the case of some of the skills requirements, it is hardly conceivable, but is it not necessary because the skills profiles of several individual controllers can be used to complement one another.


How do they acquire the relevant skills? Another argument focuses on the need for

specialization in order to push efficiency Bundling the specialized skills of several employees

in one department or team. Overall, it would appear that they should command

all the skills mentioned, but instead of having to know every last detail, they need an above-average capacity for abstract thinking

But this does not mean that top controllers are exempt from having technical knowledge. In order to fulfill their responsibilities as leaders, they need to have at least a basic level of knowledge in each field of activity

Four priorities for Financial Controller

Finding and developing talented people Improving reporting and adding value to the

business Getting the basics right Improving efficiency


Finding and developing talented people Increasingly difficult to locate people with the right

commercial or high-level technical skills. Adding value is about looking to invest in highly

capable people who understand the business and who can provide the chief executive with the information necessary to run the business

Clear recruitment strategies and an understanding on how changes at the top will affect the required skills set for the rest of finance function are important in attracting and retaining the people you need.

Getting the basics right Improving efficiency


Improving reporting and adding value to the business

Management reporting remains the bedrock on which the FC’s role is built, because it is critical to the interface of finance and business.

It is crucial that management reporting is aligned to business strategy

The following are the key trends in management reporting.

Including more non-financial key performance indicators (KPIs)

Delivering reports electronically, with interrogation tools

Providing more value-added commentary Driving for relevance and brevity


How do they acquire the relevant skills? Another argument focuses on the need for

specialization in order to push efficiency Bundling the specialized skills of several employees

in one department or team. Overall, it would appear that they should command

all the skills mentioned, but instead of having to know every last detail, they need an above-average capacity for abstract thinking

But this does not mean that top controllers are exempt from having technical knowledge. In order to fulfill their responsibilities as leaders, they need to have at least a basic level of knowledge in each field of activity


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Controllership - introduction

Economy & Finance

Transcript of Controllership - introduction