We are often asked what a business should expect from their financial controller. Well, it depends. A controller’s duties and responsibilities can vary depending on the size of the company, the complexity of accounting and financial operations, the number of people employed in the accounting department and the presence of a Chief Financial Officer (CFO).
All controllers have to master the basic functions of accounting and financial reporting, but a high performing controller should provide financial management and organizational leadership, both of which are instrumental in forming financial strategies and ensuring management has relevant and timely information to make informed decisions. Below are the basic and more expanded functions of a controller.
A financial controller is responsible for ensuring that all accounting transactions and allocations are appropriately made and documented by the company. He or she may also perform cash management functions and oversee accounts payable, accounts receivable, cash disbursements, payroll and bank reconciliation functions, as well as review and approve all invoices to be paid and accounts receivable aging reports.
A financial controller is also responsible for coordinating with external accountants for income tax preparation and auditors of the company. This includes keeping company records organized and readily available for examination.
A financial controller is responsible for establishing and executing internal controls over the company’s accounting and financial reporting procedures. Part of internal control is ensuring the company maintains a separation of duties with regards to accounting functions to ensure that there are checks and balances in the system that the controller should oversee.
However, other components of internal control include creating an environment of accountability and monitoring compliance with its policies and procedures.
Financial Contracts, Planning and Reporting
Financial controllers in companies that do not have a dedicated CFO are often responsible for banking and finance activities. This includes negotiating lines of credit and vendor agreements, as well as reviewing all financial contracts, financing agreements and insurance policies.
They are also responsible for providing comprehensive financial information to executive management for long-term financial strategizing. Unless a company has a CFO to provide the leadership for long-term financial planning, the controller will be required to fulfill this responsibility as well. In any case, he or she must provide crucial financial data and work with executive management to coordinate all financial planning functions with business operations.
Financial reporting duties include preparing basic financial statements, such as balance sheets and income statements, as well as cash flow reports, budgets, budget-to-actuals and financial projections.
Financial Analysis and Efficiency
While a CFO is responsible for finalizing financial policy, a controller’s financial analysis skills are instrumental in helping to assess risk, analyze efficiency and provide information for policy decisions made by executive management.
Therefore, in addition to providing standard financial reporting, a controller should also be skilled at in-depth financial analysis and providing well-informed financial perspective and opinions. This means that a financial controller must be proficient in designing reports within your system with common tools to manage data. The art of management reporting is taking detailed and complex information and summarizing it enough for a non-accountant to understand.
While accurate financial reporting remains the foundation on which a controller’s role is built, and because of its critical nature and importance to the business, there are two other complimentary skills that a controller should possess. They are the ability to understand the usefulness of the financial information provided and the efficiency for how the information is captured and processed. Too often, a controller will continue to provide the same information using the same process and methodologies, which may not be what the business leadership needs.
Training and Developing People
It is increasingly difficult to attract and retain the right people at all organizational levels, and the accounting and finance department is no exception. Clear recruiting and training strategies are an important part of ensuring the personnel needed to perform these functions are found, but this person should also have strong relationship management and mentoring skills to develop and retain a strong accounting and finance team for your business.