Banka: Controllers navigate the financial course
There is a financial position in larger firms called a controller.
The controller can report directly to the president or owner of the company or to the vice-president, finance.
The dictionary defines a controller as “one who checks expenditures, steward esp. of royal household, Mint, Navy, etc.”
So a controller could be compared to a ship’s navigator who would provide feedback to the captain (owner) regarding the ship’s course or possible course.
Usually in a small business, there is no controller so the owner ends up deciding the course of the business without the benefit of a second pair of eyes or someone who will provide honest feedback.
Who typically does the owner of a small business turn to for feedback? Many will turn to their spouses, others will turn to their bookkeepers and most will turn to their accountants.
Some accounting firms do not provide ‘controllership’ services and only provide basic year end tax accounting, which is the production of the tax return for the Canada Revenue Agency.
A controller typically has the knowledge and skills to monitor and interpret the results that are generated by the accounting system and software.
The controller is usually the head of the accounting team and is responsible to make sure that everyone in the accounting team understands their job and how to enter items into the various accounting systems.
After all, if things are entered into the system incorrectly, then the information coming out of the system is basically unusable.
If tainted information is relied upon, then the company may make a decision that may send the company down the wrong path and may cause the company to close.
It is for these reasons that accounting computer systems should be set up by accountants that have experience in the industry that the company is involved in.
For example, a computer system for a retail operation should be set up by an accountant or controller that knows the difference between margin and markup and the owner also needs to know the difference between these two kinds of costing.
Usually, the accounting team is kept out of the decision-making process of a company and only informed after the decision is made or stumbles upon the item when processing the transaction.
In many cases, if the controller or accountant was involved in that process, the company would become proactive and better able to plan for the future rather than being reactive and cleaning up the mess.
The controller can help to evaluate what the financial consequences of a decision would be and present those results to the management team or owner of a company.
For example, a controller can determine if you have the best insurance coverage for the least cost.
Perhaps your telephone long distance charges are too high and by moving to another provider you may experience some savings.
Controllers can investigate, analyze and suggest a course of action for you.
The controller can also develop internal controls for a company so that a cash-based company can be sure that staff is not walking away with cash and that their assets are not being used inappropriately or illegally and that the likelihood of fraud is reduced.
The controller can also become the intermediary when negotiating a loan with a lending institution.
It is actually more difficult to be a controller of a small business operation than a large corporation.
In a small corporation, the controller must be a master of many different areas such as personnel management, payroll, computer systems, policies and procedures, bookkeeping and accounting.
In a larger corporation, there may be a separate person doing each one of these jobs.
A main quality that a controller needs to have is the ability to quickly organize and analyze data and convert the data into useful information that will help the owners of a company manage the company and make better decisions.
This may be financial data or it may be production data, or data collected on some other basis.
If you are not getting the feedback that you require with your financial results, perhaps you need to consider hiring a part-time controller.
Several Certified General Accountants make themselves available as part-time controllers to help you plan, manage and succeed in business.
CGAs will visit your place of business on a monthly basis or other basis as agreed upon and will discuss your business with you, your goals, your company’s financial results and suggest ways of steering your business towards your goals and monitoring if the changes you are making are working for you.
Gabriele Banka is a Certified General Accountant and the owner of Banka & Company Inc.