As a consultant, I sometimes serve as an Interim Controller. There are two main reasons you will see someone like me brought in by owners and/or management:
1. The business has grown to the point it must have help to manage accounting and monitor Internal Controls and
2. The Controller has left.
Of the two scenarios, Number Two is the worst. In businesses that are privately owned, regardless of the size, the Controller usually ends up with a lot of ‘power tools’. For example:
All the really important passwords to:
o Bank Accounts
o System Administration
o Regulatory and Taxing Authorities
o Leasing Company websites
o Your website
o And log-ins we haven’t even thought about
· Contact Information
· Cheat Sheets
o For special reporting requirements
o Payroll processing
o Special recurring payments and Journal Entries
· In depth knowledge of the business systems including:
o Other systems interfacing into yours
o Special ad hoc programs
I could go on but I think I’ve already scared you enough.
First, how did all this happen?
1. Owners and Managers do not want to be involved in the back office operations and the magnitude of all the detailed knowledge it takes to perform the appropriate accounting as well as generating meaningful financial reporting. At least not until there is a crisis. And a controller leaving unexpectedly (or terminated) will result in the above.
2. Many privately held companies do not see the value of paying an outside accounting firm for anything other than tax preparation and required Financial Statement compilations, reviews or Audited. That is a mistake.
3. If the Controller is involved in your I.T. operation that causes a lot of problems too. Time to outsource as much as you can.
4. A good controller will have delegated to the Accounting and/or Finance Staff a significant portion of the day to day operational work.
5. A good controller will have insisted on cross training in the department.
6. You passed the power and the torch to your controller and had no interest in what that person was doing.
Maybe it is not too late for you. But seriously, HEED MY WARNING and START HERE!
Set up Weekly Meetings with your Controller. If you have a CFO, look to him or her to handle this. Controllers normally report up to the CFO. Find out who is cross-trained on critical functions like treasury/banking.
Request that the Controller utilizes a Shared Drive belonging to your business and posts important documents and communications there.
Meet with your outside accounting firm and ask their opinion of your controller’s work.
Ask yourself what kind of job you think they are doing? Are Financial Statements on your desk monthly and, if not, why not.
Finally, business owners/management must accept ownership of the functions that controllers oversee. You don’t have to understand how to make a Journal Entry in the system, but you need to understand why. Ignoring your controller while you attend to more important things could lead to very serious consequences. Giving up your power can only result in THE FORCE NOT BEING WITH YOU.