Controllership: The Work of the Managerial Accountant (Google eBook)

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John Wiley & Sons, Aug 6, 2009 - Business & Economics - 768 pages
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Today's controllers are no longer seen as technicians who process transactions; they are now seen as business executives with a wide-ranging knowledge of total business operations, best practices, and corporate strategy. Providing a comprehensive overview of the roles and responsibilities of controllers in today's environment, this Eighth Edition of Controllership continues to provide controllers and vice presidents of finance with all aspects of management accounting from the controller's perspective, including internal control, profit planning, cost control, inventory, and financial disclosure.
  

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Contents

Budgetary Planning and Control of Manufacturing Expenses
Securing Control of Overhead
Control with Throughput Analysis
Role of the Controller
RD Activities in Relation to Corporate Objectives
Organization for the RD Financial Functions
Role of the Financial Executive in RD
Determining the Total RD Budget

Accounting Function
Additional Controller Functions in Smaller Companies
Controller‚ s Job Description
Relationship of the Controller to the Chief Financial Officer
Purpose of Cost Accounting Information
Data Collection Systems
Data Summarization Systems
Job Costing
Process Costing
Standard Costing
Direct Costing
Throughput Costing
ActivityBased Costing
Target Costing
Cost Variances
How to Use Ratios and Trends
A Caveat
Measures for Profitability
Measures for the Balance Sheet
Measures for Growth
Measures for Cash Flow
Measures for Nonfinancial Performance
Interrelationship of Ratios
Objectives
Responsibility for Internal Controls
Examples of Internal Controls
When to Eliminate Controls
Types of Fraud
Preventing Fraud
How to Deal with a Fraud Situation
Reporting Relationships
Role of the Audit Committee
Internal Audit Objectives
Internal Audit Activities
Recruiting Sources
Factors to Consider when Recruiting
Factors to Consider When Promoting
Importance of Reduced Turnover
Importance of Developing Career Plans for Employees
How to Motivate Employees
Objectives of the Investor Relations Function
Communication Vehicles for Investor Relations
Investor Relations Message Recipients
Information Needs of the Financial Analyst
Information Needs of Other Groups
Providing Guidance
ForwardLooking Statements
Organization Structure for Investor Relations
Role of the Controller and Other Principals
Business Planning Defined
Framework for Business Planning
Time as Related to Planning
How Long Is ‚ Long Range‚ ?
System of Plans
Corporate Development Plan
Operations Plan
Basic Elements in Any Plan
Planning Process
Plan Frequency
Plan Guidelines
Alternative Scenarios
An InDepth Review
Environmental Analysis
Critical Success Factors
Business Mission or Purpose
LongRange Business Planning Objectives
Developing Strategies
Strategies and the Planning Period
Key Elements of a Strategic Plan
Capital Investments
Risk Analysis
Objectives of the LongRange Financial Plan
Consolidation and Testing Process
Illustrative Financial Exhibits in the Plan Presentation
Role of the Controller
Purpose of Budgeting
Planning Benefits
Coordination Benefits
Control Benefits
Problems with the Annual Plan
Illustrative
Supportive Financial Statements and Budgets
Sales Budget
Direct Labor Budget
Inventory Budget
Cost of Goods Sold
Statement of Estimated Financial Condition
Linking the Bonus Plan to the Budget
A Key Player
Management Approval of the Plan
General Comments on the CostVolumeProfit Relationship
Breakeven Chart
Changes in Sales Revenue
Changes in Sales Price
Changes in Costs
Analysis by Product
Application of CostVolumeProfit Analysis
Selecting the Most Profitable Products
Increased Sales Volume to Offset Reduced Selling Prices
Most Profitable Use of Scarce Materials
Some Practical Generalizations
Program Evaluation Using Discounted Cash Flow
Financial Analysis of Unacceptable Operating Results
More Sophisticated Analyses
Accumulated Earnings Tax
Inventory Valuation
Mergers and Acquisitions
Net Operating Loss Carryforwards
Passive Activity Losses
Project Costing
Property Taxes
S Corporation
Sales and Use Taxes
Transfer Pricing
Unemployment Taxes
Management of the Taxation Function
Definition of Standards
Advantages of Standards
Relationship of Entity Goals to Performance Standards
Types of Standards Needed
Trend to More Comprehensive Performance Measures
Benchmarking
Setting the Standards
Use of Standards for Control
Procedure for Revising Standards
Sales Management Concerns
Controller‚ s Assistive Role in Sales Management Problems
Controller‚ s Independent Role in the Planning and Control of Sales
Sales Analysis
Basis of All Business Plans
Steps in Developing the NearTerm Sales PlanBudget
Methods of Determining the Sales Level
Useful Sources of Forecasting Information
Forecasting the Business Cycle
Sales Standards
Sales Reports
Policy and Procedure
Definition
Factors Increasing the Difficulty of Cost Control
Marketing Expense Analysis
Planning Marketing Expenses
Special Comments on Advertising and Sales Promotion Expense
Marketing Expense Standards
Objectives of Manufacturing Cost Accounting
Controller and Manufacturing Management Problems
Types of Manufacturing Cost Analyses
Types of Cost Systems
Planning and Control
Planning and Control
Proper Departmentalization of Expenses
Variations in Cost Based on Fixed and Variable Costs11
Variations in Cost Based on Direct Labor
Variations in Cost Based on Batch Size
Variations in Cost Based on Overhead
Variations in Cost Based on Time
Cost Estimation Methods
Normal Activity
Allocation of Indirect Production Costs
Establishing the RD Operating Budgets
Detailed Budgeting Procedure
Other Control Methods
Effectiveness of RD Effort
Data Classification
Cost Accounting in a Service Organization
Planning System
Components of GA Expense
Control over GA Expenses
Reducing GA Expenses
Spend Management Systems
Budgeting GA Expenses
Improving the Payroll Process
Compensation
Federal Income Taxes
Social Security Taxes
Medicare Tax
Payroll Taxes for Employees Working Abroad
Remitting Federal Taxes
Payroll Deductions for Child Support
Payroll Deductions for Unpaid Taxes
Unemployment Insurance
Objectives of Cash Planning and Control
Duties of the Controller versus the Treasurer
Cash Collections
Cash Disbursements
Internal Control
Reports on Cash
Cash Flow Ratio Analysis
Variations in Cash Requirements by Industry
Investment of ShortTerm Funds
Credit Procedures and Systems
Collection Procedures and Systems
Measurement of Accounts Receivable
The Bad Debt Forecast
Budgeting for Accounts Receivable Balances
Costs and Benefits of Carrying Inventory
Role of the Controller
Material Requirements Planning Systems
JIT Manufacturing Systems
JIT Purchasing
Inventory Purchasing
Production Issues Impacting Inventory
Inventory Quantity Management
Obsolete Inventory
Inventory Cutoff
Budgeting for Raw Materials
Budgeting for WorkinProcess
Budgeting for Finished Goods
Significance of Proper Inventory Valuation
Selection of the Cost Base
Improving the Investment Decision Process
Role of the Controller
Financial Reports on Selected Investments
Accounting and Disclosure Requirements and Practices for Employee Benefit Plans
Controller‚ s Responsibility
Capital Budgeting Process
Information Supporting Capital Expenditure Proposals
Methods of Evaluating Projects
Payback Method
Operators‚ Method
Accountants‚ Method
Discounted Cash Flow Methods
Hurdle Rates
Cost of Capital‚ A Hurdle Rate
Throughput Method
Classifying and Ranking Proposed Capital Projects
Problems with the Capital Budget Approval Process
Using Expected Commercial Value for Project Ranking
Board of Directors‚ Approval
Project Authorization
Accounting Control of the Project
Other Aspects of Capital Expenditures
Objectives of Liability Management
Direct Liabilities
Planning the Current Liabilities
Standards to Measure and Control Current Liabilities
Corrective Action
Standards for Debt Capacity
Leverage
Some Practical Steps
Management of Accounts Payable
Accounting Reports on Liabilities
Internal Controls
Role of the Controller
Growth of Equity as a Source of Capital
Return on Equity as Related to Growth in Earnings per Share
Growth in Earnings per Share
Cost of Capital
Components of Cost of Capital13
Calculating the Cost of Debt
Calculating the Cost of Equity
Calculating the Weighted Cost of Capital
Dividend Policy
Other Transactions Affecting Shareholders‚ Equity
ShortTerm Plan for Shareholders‚ Equity
Other Considerations
Rules of Reporting
Status Reports14
Margin Reports
Cash Reports
Capacity Reports
Sales and Expense Reports
Graphical Report Layouts
Purpose of the Annual Report to Shareholders
Controller and the Annual Report
General Contents of the Annual Report
Importance of Form
Other Reports to Shareholders
Disclosure Issues
SEC Forms
Acquisition Strategy
The Acquisition Process
Locating Acquisition Targets
Due Diligence
Valuing the Target
Legal Documents
Acquisition Integration
Types of Acquisitions
Selecting the Fiscal Year
Selecting the Number of Interim Reporting Periods
Reasons for Accelerating the Closing Period
How to Achieve a Fast Close
Differences between Perpetual and Periodic Inventory Systems
Setting Up a Perpetual Inventory System
Auditing and Measuring a Perpetual Inventory System
Physical Inventory Procedure
The Cutoff
Reconciling Inventory Variances
How to Avoid the Inventory Tracking Problem
Tax Organization
Centralized Tax Department
Functions of the Tax Manager
Tax Communications
Tax Records in General
Tax Calendar
Tax Working Papers and Files
Internal Revenue Code and Record Requirements
Proper Classification of Accounts
Income Taxes and Business Planning
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About the author (2009)

Steven M. Bragg, CPA, CMA, CIA, CPIM, (Centennial, CO) has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and auditor at Deloitte. He is the author of over 25 books primarily targeted toward controllers and their needs. Bragg received a master's degree in finance from Bentley College, an MBA from Babson College, and a bachelor's degree in economics from the University of Maine.

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