Given the huge interest in the topic, I will be spending some more time fleshing out the details of the controller role.
Month end is the peak period for any controller. Most people in a company have a vague idea of what he is working on, but I thought it wouldn’t hurt to make a small overview of what a typical task list of a business controller might look like.
Let me make it clear I am focusing on the repetitive tasks only, any ad-hoc assignments will come on top of this.
Let’s start with the normal month end activities, commonly referred to as ‘closing the month’.
Trial balance: from the accounting system, a monthly trial balance will be generated at the end of each accounting period. Typically, the controller will go through the trial balance and perform the following checks on the P&L:
- revenue: has all revenue been recognised, did everything get invoiced as planned
- depreciation: is it booked and is the amount in line with prior months
- accrue costs when not all invoices have been received. From operational departments, eg shipping, you should get an idea what they have been purchasing the last days of the month and that will serve as a basis to accrue unreceived invoices.
- payroll: are all social charges booked in accordance with the information from the HR department
- Tax: make a preliminary calculation of the tax amount and post an accrual
- Exchange rate: if the rate of your international operations changes significantly, and it has a negative effect on your bottom line, you should recognise that asap in the the books.
- Deferrals: sometimes invoices have been booked which pertain to more than 1 period. Their cost needs to be ‘spread out’ over several months. Then a part of the invoice will be deferred to next month.
Some check on the Balance Sheet need to happen as well, the most basic being:
- Accounts Receivables: A business controller will need to go through the list of open invoices (Account Receivable) and determine the ‘quality’ of it. If any of the outstanding claims become doubtful, it’s the controller’s responsibility to book it to bad debt. See also an additional post I wrote on managing net working capital.
- Stock: at closing of the month, the amount mentioned in the books needs to be a realistic reflection of what the company has in its possession. Just like with A/R, any superfluous, outdated or damaged items need to be taken to the cost line.
- Investment and fixed assets: during the month, even fixed assets can change. New investments may have been made – was the business case approved and properly recorded? If an asset was taken out of business, was scrapped or sold – have procedures been followed to take it out of the books?
More to follow in my next post… and as usual feel free to post comments!