The Effects Of Effective Controllership Area On A Company
Relation To The Increase Of Results And Improving Management
Since fundamental articles, such as Welsh (1954, p.66), almost all researchers are convinced that managerial problems should be solved by scientific methods and it became clear the three top management functions are planning, organizing and controlling. In the same article, Welsh quotes the modern controllership as a vital segment of top management, involved in the overall planning, coordinating and controlling of industry. In addition, the question implied from these affirmatives is: Which main contexts should receive more effort to make a controllership area effective? Therefore, analysing and considering all sides of information to comprehend a good forecast of budget, is the first concept. Secondly, a complete and detailed guidance in expenses and revenues is desired. And finally, close to the main contexts, the analysis needs to go beyond just accounting numbers, and thus lead the company to profitability.
First of all, in the budgeting planning time, good practices point out that no assignment would be started unless the design of MAS (management accounting system) was defined. About the concepts from Weißenberger & Angelkort (2011, p.160), the MAS may have two designs like integrated data from financial and accountability, and separated systems. In the majority of cases, according to the authors, the first option has been the better choice. It can also be argued that over this data, a good planning needs strong connection with strategic targets. After the number and goals have been studied and validated, the controllership can apply mathematics methods for forecasting each line of P&L (Profit and Loss). As a result, the budget package is consistent with a board proposal and contains every single detail correlated to expenses and revenues.
Secondly, in terms of expenses control, Benčová & Kaľavská (2009, p.76) remember that the controller was originally named simple bookkeeper. This expression refers to accurately recording all transactions in the accounting department, such as payment of suppliers, the billing of customers, and the handling of cash. But, in fact, there is a great importance in these controls. Moreover, these exercises are improved when the control merges with the management. In addition to that, Angelkort, Sandt & Weibenberger (2013, p.2) discuss IFRS-based (International Financial Reporting Standards) financial accounting systems that give positive impacts on the controllership area. In the same direction, firstly it leads to integrated accounting systems instead of the traditional dual accounting model, secondly expand an information provider to the financial accountants by the controller’s roles. Summarizing these topics, the final purpose is to test if the real expenses are the same as the planning. Similarly, the sales revenue needs the identical appointments in comparison to financial estimates. In general, these assembled analyses and comparisons could enable to deliver and improve the future overall performance of the company, still according to Benčová & Kaľavská (2009, p.77).
Furthermore, in this moment when the company is looking for improved results, total control and profound analyses of the profit and market is needed. And the controller has an important position described by Benčová & Kaľavská(2009, pp.76–81). In contrast, the controllership area needs to discard popular and political solutions and lead the implementation of fact and data based solutions. For example, within declined sales, the financial team would compare their data with the entire market data. If the market is shrinking, a reasonable conclusion is that the company is actually doing a good job while just maintaining sales proportion on market. On this huge field of analyses, Bogt, Helden & van der Kolk (2016 p. 380) made an additional discussion about the controller responsibilities. If on one side, the loss of the monopoly of accounting information suppliers to the computer software(the accounting information suppliers had lost its monopoly to the computer software), on the other side, the interpretation of data to managerial and strategic position purposes had been expanded. In addition, with the similar position, Nunes et. al. (2013, p.72) quote that controllership was appraised such as Corporate Governance instrument. Making available information and correlating to which of its goals are achieved, controllers could be able to reduce asymmetry and conflicts of interest derived from agency problems.
To conclude, an effective controllership area goes through and has an influence decision in a lot of areas. The aforesaid article from Welsh (1954), reinforces that the controller is a fundamental piece within successful organizations. With consistent with Welsh, Weber (2011, p.62) describes a process while becoming more and more common in practice, where many proponents argue in favor of intense involvement of controllers in managerial decision-making processes. The same author quotes “Cost-effectiveness and profitability analyses, in addition to compliance checks, it is precisely these analyses that controllers are very familiar with” Weber (2011, p.94). To summarize, starting with transforming a huge amount of data in information, and this information produces better manager’s decisions, moving forward to with high precision forecasts of budgets and profound control of expenses and revenue, and ending with analyses and reports further on accounting figures, the controller becomes an driver intrinsically related to successful companies.
References:
Angelkort, H., Sandt, J., & Weißenberger, B. E. (2013). E. Controllership under IFRS: some critical observations from a German-speaking country. Arbeitspapiere Industrielles Management und Controlling. Working Paper, 2008. Available in:< https://core.ac.uk/download/pdf/56348960.pdf >. Access on 22/oct/2020.
Benčová, M., & Kaľavská, A. (2009). Importance of the Controllership for the Company Performance-Software Company Experience. E+ M Ekonomie a Management, 12(2), 76–83.
Bogt, H. T., van Helden, J., & van der Kolk, B. (2016). New development: Public sector controllership — reinventing the financial specialist as a countervailing power. Public Money & Management, 36(5), 379–384.
Nunes Cavalcante, M. C., & Mendes De Luca, M. M. (2013). Controllership as a Governance Instrument in the Public Sector. Revista de Educação e Pesquisa em Contabilidade, 7(1), 72–88.
Weber, J. (2011). Drivers of Successful Controllership: Activities, People, and Connecting with Management. Business Expert Press.
Weißenberger, B. E., & Angelkort, H. (2011). Integration of financial and management accounting systems: The mediating influence of a consistent financial language on controllership effectiveness. Management Accounting Research, 22(3), 160–180.
Welsch, G. A. (1954). The controller’s function in top-level management. Journal of Accountancy (pre-1986), 98(000001), 66.
