The Essential Controller

Preface ix Chapter 1 Accounting in the Corporation 1 Importance of This Chapter 1 Tasks of the Accounting Function 2 Role of the Accounting Function 5 Role of the Controller 6 Impact of Ethics on the Accounting Role 8 Evolving Role of Accounting 12 Chapter 2 Controller's Responsibilities 13 Importance of This Chapter 13 Variations on the Title 14 Planning Function 14 Control Function 16 Reporting Function 17 Accounting Function 17 Additional Controller Functions in Smaller Companies 18 Controller's Job Description 22 Relationship of the Controller to the Chief Financial Of cer 24 Future Changes in the Controller's Origins and Responsibilities 26 Managing Rapid Growth 28 Chapter 3 Chief Financial Of cer: From Controller to Facilitator of Change 31 Importance of This Chapter 31 Understanding What Chief Executive Of cers Want 32 Task of the CFO 32 Develop and Communicate a Compelling Finance Agenda 33 Build a Commitment to Change within Finance 36 Change Executive Management Practices 40 Enlist the Support of the Chief Executive Of cer 42 Mobilize the Organization 44 Institutionalize Continuous Improvement 46 Chapter 4 Operational Accounting 49 Importance of This Chapter 49 Create Departmental Job Descriptions 50 Create a Departmental Training Program 52 Clear Out Excess Documentation 55 Streamline the Accounting Work- ow 56 Document All Major Processes 58 Correct the Underlying Causes of Errors 59 Use Best Practices 62 Outsource Selected Accounting Functions 64 Chapter 5 Cost Accounting and Costing Systems 71 Importance of This Chapter 71 Purpose of Cost Accounting Information 72 Input: Data Collection Systems 73 Processing: Data Summarization Systems 77 Processing: Job Costing 79 Processing: Process Costing 87 Processing: Standard Costing 90 Processing: Direct Costing 93 Processing: Throughput Costing 96 Processing: Activity-based costing 101 Processing: Target Costing 103 Outputs: Cost Variances 107 Chapter 6 Ratio and Trend Analysis 113 Importance of This Chapter 113 How to Use Ratios and Trends 114 A Caveat 115 Measures for Pro tability 118 Measures for the Balance Sheet 122 Measures for Growth 128 Measures for Cash Flow 129 Measures for Non nancial Performance 132 Interrelationship of Ratios 152 Setting Up a System of Ratios and Trend Analyses 154 Chapter 7 Internal Control Systems 157 Importance of This Chapter 157 Objectives 158 Responsibility for Internal Controls 159 Examples of Internal Controls 161 When to Eliminate Controls 164 Types of Fraud 167 Preventing Fraud 169 How to Deal with a Fraud Situation 174 Foreign Corrupt Practices Act 176 Chapter 8 The Fast Close 179 Importance of This Chapter 179 Different Types of Fast Close 180 How to Achieve a Fast Close 181 Enhanced Closing Process 196 Chapter 9 Internal Audit Function 197 Importance of This Chapter 197 Reporting Relationships 198 Composition of the Audit Committee 199 Role of the Audit Committee 201 Internal Audit Objectives 203 Internal Audit Activities 206 Managing the Internal Audit Function 209 Chapter 10 Recruiting, Training, and Supervision 215 Importance of This Chapter 215 Recruiting Sources 216 Factors to Consider When Recruiting 219 Factors to Consider When Promoting 221 Importance of Reduced Turnover 223 Importance of Developing Career Plans for Employees 228 Importance of Communications with Employees 231 How to Motivate Employees 233 Chapter 11 Controller's Role in Investor Relations 235 Importance of This Chapter 235 Objectives of the Investor Relations Function 236 Evolving Nature of the Function 237 Communication Vehicles for Investor Relations 238 Investor Relations Message Recipients 239 Information Needs of the Financial Analyst 240 Information Needs of Other Groups 243 Disclosure Policy 243 Organization Structure for Investor Relations 245 Role of the Controller and Other Principals 246 Some Suggested Financial Market Objectives 250 Some Suggested Methods 251 Chapter 12 Taxation Strategy 253 Importance of This Chapter 253 Accumulated Earnings Tax 255 Cash Method of Accounting 256 Inventory Valuation 257 Mergers and Acquisitions 258 Net Operating Loss Carryforwards 259 Nexus 261 Project Costing 262 Property Taxes 262 S Corporation 263 Sales and Use Taxes 264 Transfer Pricing 266 Unemployment Taxes 269 About the Author 271 Index 273