Tag: Controller

Management&Controlling&Controller

Controlling means to keep the business under control. This is managers’ task. Controllers enable managers to do the controlling.

Management&Controlling&Controller

Management Control is defined as the process by which managers at all hierarchical levels ensure that their (strategic) intentions are realized.

Managers do the controlling, controllers empower them to do so. Controllers are enablers. “As management partners controllers make a significant contribution to the sustainable success of the organization” See the controller mission statement of the International Group of Controlling (IGC) and of the International Controller Association (ICV). “Controllers

    1. design and accompany the management process of goal fixing, planning and controlling, so that every decision-maker can act in an objective-oriented manner,
    2. ensure the conscious preoccupation with the future and thus make it possible to take advantage of opportunities and manage risks,
    3. integrate an organization‘s goals and plans into a cohesive whole,
    4. develop and maintain all management control systems. They ensure the quality of data and provide decision-relevant information,
    5. are the economic conscience and thus committed to the good of an organization as a whole.” See https://www.igc-controlling.org/“

Controllers are thus responsible for the design, operation and content of the management control systems.

Management-Controlling-Controller
Management, Controlling, Controller

Controllers do not practice controlling. Controlling is done by managers when they perform their planning and control tasks. A department with the designation “Controlling” is therefore a contradiction in terms. Controllers work in a controller department or in controller services. This distinction is important to avoid disputes about responsibilities and competencies.

In other words: To prepare the various budgets and to integrate them in the overall plan is the controller’s task. Preparing, approving and releasing budgets is just as much a management task as the realization of the factual and financial objectives.

Management Accounting

The purpose of Management Accounting is to support all managers in decision-making and responsibility taking.

Planning and control instruments must be  management oriented in order to be relevant for decision-making. The purpose of Management Accounting is to support management. Information provided by the system should be presented in a planning and control-compliant manner up to the balance sheet, so that managers can plan and control their areas of responsibility and coordinate them mutually.

The Focus of Management Accounting

The focus is always on the self-reliant management of a given area. Customers, sales, products, cost centers and projects are in the center. For  a cost center the following questions arise:

    • Which and how many activity units should we provide and what should be their performance-related costs (planning of proportional costs)?
    • Which structures must be available to be ready to generate the requested output and how much should these cost (planning of fixed costs)?
    • What was the actual activity level in a given period of time and how much should this perfomance have cost (flexible budget of the actual performance)?
    • Which costs directly attributable to our area have actually been incurred (actual cost recording)?
    • What differences between the flexible budget and actual costs have arisen for which we are responsible (variance analysis)?
    • What further development do we expect by the end of the year or project, taking into account what has been achieved and the corrective measures already planned (forecast)?

Overall, Accounting for Management is a support for decision-making in planning, implementation, control, correction and expectation (i.e., the management cycle). This requires the inclusion of services, revenues and inventories, represented in quantities and values. A consistently designed management-oriented activity, cost, revenue and profit accounting system that can represent plan, target, actual and forecast is a prerequisite. The underlying data comes from the dispositional systems (ERP) and from the accounting system.

Controllers are responsible for the design, implementation and operation of this overall system.

Valuation requirements from laws and accounting standards are of secondary importance for the design of Management Accounting, because internal and market-related planning and control are the main focus.

Accounting for Management can only do justice to its purpose if it shows the person responsible in each case the variables in plan, target, actual and forecast  that can be directly influenced by him and his employees.