ACCT7320—Prof. Charles Bailey
Overview of the Course
Fall 2014
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
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
Role of a Controller
 Controller’s varies dramatically based
company size
 More precise & narrow in a big
 the presence of other managers to
handle related functions
Main functions of the Controller
 Planning
 Controlling
 Reporting
 Accounting
 Many others, esp. in smaller companies
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
Control function
 Controller provides information to each
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
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.
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
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
The Controller and CFO
Finance, CFO
 Controller reports to the CFO
Traditional promotion route
May be closed off with arrival of CFO
Controllers face potential conflicts with CFO’s
2008 Survey of AICPA & IMA
Topics 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
Other topics?
 Many potential topics for your presentations
 Cost/Managerial Accounting techniques
 Advanced (new) or refresher?
 Management Accounting Quarterly good
 Ethical issues
Chapter Seven
Cost Allocation:
Departments, Joint Products,
and By-Products
Learning Objectives
 [I will give introductory lecture tonight.]
Chapter Eight
Cost Estimation (Appendix)
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
Chapter Eighteen
Strategic Performance Measurement:
Cost Centers, Profit Centers and
the Balanced Scorecard
Learning Objectives
 Identify the objectives of management control
 Identify the types of management control systems
 Define strategic performance measurement and
show how centralized, decentralized, and teamoriented 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
 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
Employee, Vendor, and
Other Frauds against the
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Eleven
Decision-Making with A
Strategic Emphasis
Learning Objectives
 Analyze decisions with multiple products and
limited resources (so-called “product-mix”
 [Additional material on Theory of Constraints.]
Chapter Nineteen
Strategic Performance
Measurement: Investment Centers
Learning Objectives
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 (continued)
Part Two
 Explain the objectives of transfer pricing, and the
advantages and disadvantages of various transferpricing alternatives
 Discuss the important international issues that
arise in transfer pricing
Chapter Twenty
Management Compensation, Business
Analysis, and Business Valuation
Learning Objectives
 Identify and explain the types of management
 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 (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
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