THE DIFFERENCE BETWEEN A CFO AND A CONTROLLER

If you’re comparing the role of a controller to the role of a CFO, you are not alone. The differences lie in the fact that a controller’s responsibilities are mainly technical and tied to historical data, while a CFO’s responsibilities are mainly functional and related to the company’s future endeavors. A controller’s job is more accounting-related, and he or she deals with overseeing processes while the CFO is the CEO’s right-hand man and makes forecasts and strategic decisions based on data and reports supplied by the finance and accounting functions.

Responsibilities of a Controller

     A controller is in charge of the accounting department and/or outsourced accounting activities depending on the company’s setup. If you have an in-house accounting department, the controller is in charge of hiring and managing the accounting team.

     The controller ensures day-to-day accounting processes are running well such as:

·       cash flow maintenance,

·       payroll,

·       collections,

·       accounts payable & receivable,

·       monthly and yearly closings.

The controller will also:

·       provide data for the budgeting process,

·       implement policies to ensure solvency,

·       works to improve reporting and efficiency,

·       help ensure legal compliance when it comes to the company’s financial activities,

·       compiles and reviews historical data and reports the company's historical performance,

·       will work to improve processes and efficiency where necessary to help meet the company’s financial goals, and

·       he or she then passes on this data to the CFO who uses the data to build financial models that provide visibility into how the company is projected to perform in the future. 

Additional responsibilities of a controller can include:

·       management of information technologies,

·       insurance,

·       sales tax reporting,

·       federal income tax reporting,

·       outside CPA audits, and

·       human resources.

Controllers are in essence responsible for the financial and regulatory compliance of a company.  Think of the controller as the "historian" for your company.

Responsibilities of a CFO
A CFO’s responsibilities primarily involve risk management and strategy, as well as being ultimately responsible for the financials of the company. The CFO:

·       collects and analyzes reports from the controller and answers to the CEO,

·       should have the insight to present new opportunities based on financial data and industry trends to the CEO, executives, and the board,

·       also captures new ideas and strategies from the CEO or other senior managers and builds financial models to advise on the best course of action,

·       develops, improves, and utilizes forecasting tools to provide the CEO and senior staff with the best possible financial insight for corporate initiatives,

·       ensures that important business decisions are taken under financially sound principles,

·       maintains relationships with investors and banks and prepares documents needed to obtain capital from investors.

Other CFO responsibilities include:

·       searching for insurance policies and employee benefits and interacting with vendors to ensure the company is getting the best possible deals and

·       using his or her financial expertise primarily for looking forward strategically to identify risks and opportunities for the company. A CFO should have knowledge of the company’s industry and understand how the company works from a holistic perspective.

     

The BEST Solution for Your Business

In some smaller companies, the role of a CFO and a controller may be undertaken by one person. As a business grows, the need for two high-level finance executives becomes more apparent and necessary to maintain business growth and support the operations of a larger firm.  

However, if your company can't afford a controller and definitely not a CFO, O'Hara Business Strategies can function as a Contract Controller or CFO to provide cost-effective, savvy financial expertise and a strategic approach. 

Or, perhaps you need a temporary controller / CFO while hiring a new one or you're looking for some objective consulting advice about the best option for your company, call O'Hara Business Strategies!  

WHAT EMPLOYEES REALLY WANT!

This post is partially an excerpt from a whitepaper by payscale.com entitled, "Turnover: The Good, The Bad and The Ugly."

         What makes an employee get up in the morning looking forward to the work day
         ahead?

GOOD PAY

How strongly pay contributes to employee satisfaction has been debated time and again in the literature probably because money means so many different things to different people. 

However, two truths are constant:
1) employees need money to live, and 
2) money is used as a measure of value by employers and employees.

So no matter where ranked on the latest employee survey, pay matters. Because every time an employee has to make good on a bill or consider whether he can afford a product or service, he thinks about this pay and the value his employer places on his work.



FLEXIBILITY

SHRM surveyed HR professionals about “Challenges Facing HR Over the Next 10 

Years," 59 percent responded that retaining and rewarding the best employees was their 

main concern. And when asked how they thought this goal could be achieved, 40 percent answered “providing flexible work arrangements.”


A recent article in Time magazine referenced a survey by the American Psychological Association reporting that the top reasons Americans give for not leaving their current jobs are “I enjoy the work I do” and it “fits well with the other areas of my life.” And PayScale’s Generations at Work survey found that telecommuting was the top benefit desired by Generation X (those born between 1960 and 1980).Most all employees are looking for better work/life balance and are willing to display loyalty to those employers who provide it.

RESPECT

Employees want to know what they think matters. They want to be treated as valuable members of the team with something meaningful to contribute. At the very least, employees have no desire to be shouted at, demeaned, or humiliated at work by an abusive manager or coworker. 

Employers who give more than lip service to the notion of workplace respect are way ahead of the curve ball and will experience more worker loyalty as a result.

INTERESTING WORK

Most people would prefer to be intellectually challenged at work than not. When it’s considered that a full-time employee will likely spend more waking hours at work than at home, it’s not hard to understand why she would rather her work doesn’t feel like a waste of time and talent. Pay matters, yes. But even the best pay can’t compensate for boring, mind-numbing work that provides no enjoyment and little mental stimulation.

AUTONOMY

Finally, jobs that offer greater freedom and choice in execution (i.e., empowerment) are associated with higher satisfaction levels. Micro-managing employees can be counter-productive, leading to excessive dependence on supervisors or turnover due to this oppressive management style.  Allowing employees the freedom to do a job the way they prefer, while achieving the desired results, allows them to grow in their job, problem solve, learn faster, and add value to their employer by focusing on results, not petty methods.
 

PREVENTING FRAUD AT YOUR COMPANY!

Small businesses typically have a greater problem with fraud and lost assets than larger corporations!

One of the key reasons is a lack of segregation of duties among employees in many small businesses! According to a July 2010 article in The CPA Journal, smaller companies (less than $75 million market value) were much more likely to have the internal control weakness of lacking segregation of duties in key tasks. The objective of the principle of segregation of duties is to prevent an employee from being in a position to commit and perpetuate errors or irregularities.

For some background on the topic, it is a key basic tenet of internal control that for each transaction cycle, with the cash disbursement cycle being noted as of primary concern, that the following functions should be segregated between different employees:

• Authorization of transactions,
• Custodianship of the asset in question,
• Recording of transactions, and
• Reconciliations of the records.

In reality however, small businesses don't always have the staff or the resources to hire staff to accomplish a true segregation of duties. So, aside from hiring more staff, a few common compensating controls that, at least partially, mitigate the segregation of duties problem are:

• Rotation of duties among existing staff. Variations of this approach include cross-training staff to perform a variety of duties and having a "Mandatory Vacation" policy so an offending employee will be found out at some point.
• Management oversight. Management can review reports of specific transactions, oversee periodic counts of inventory, equipment or other assets like cash and comparing them to accounting records, and/or reviewing reconciliations of account balances or assets or performing them independently. Another technique is to perform surprise checks or exception reports to pro-actively address concerns. An example of exception reports would be to identify financial ratios that may be out of line like gross profit percentages, for example. Implicit in many of these approaches, is that management must have some degree of financial expertise to perform these oversight tasks effectively.
• Third-party involvement. Kind of a corollary to management oversight, is that management could bring in temporary employees, consultants or outside CPAs to offer periodic oversight. 
• A final approach of note is to "beef up" existing procedures like putting them in writing, for example. Another example would be performing a top-down risk-based analysis by identifying threats in the context of the effect on financial integrity and the likelihood of actual violations. 

Segregation of duties is a key principle of internal control! However, adding more staff is not always feasible! Using a compensating control like rotation of duties, management or third-party oversight, "beefing up" existing procedures or performing a risk-based analysis to identify potential internal control threats can provide an effective solution!