Definition
A financial controller (often just “controller”) is the manager who runs a company’s day‑to‑day accounting operations and financial reporting systems. Controllers make sure transactions are recorded correctly and financial statements are prepared on schedule; they also coordinate payroll, month‑end close, internal controls, and consolidated accounting across business units.
Key takeaways (short)
– The controller focuses on internal accounting accuracy, timeliness, and controls.
– Controllers typically supervise accounts payable, accounts receivable, general ledger, payroll, and financial reporting teams.
– Larger firms split duties between controller, chief financial officer (CFO), treasury, and financial planning roles.
– U.S. labor data show strong job growth for financial managers; salary surveys put median controller pay in the six‑figure range.
Core duties (what controllers do)
– Run month‑end and quarter‑end close processes and produce internal financial reports.
– Maintain and enforce internal controls and accounting policies.
– Reconcile ledgers, prepare trial balances, and ensure GAAP or other applicable standards are followed. (GAAP = Generally Accepted Accounting Principles.)
– Oversee payroll and tax reporting related to payroll and vendor payments.
– Support operating‑budget preparation by providing historical analysis, variance monitoring, and explanations for budget gaps.
– Supervise and hire accounting staff; delegate to accounting managers.
– Interface with external auditors during audits and with tax professionals for compliance.
Skillset and qualifications
– Education: bachelor’s degree in accounting, finance, or business; many firms prefer or require a master’s degree.
– Experience: commonly 5–10 years in accounting; larger public companies may look for 20+ years or public accounting (Big Four) background.
– Licenses/certs: CPA (Certified Public Accountant), CMA (Certified Management Accountant), or CFA (Chartered Financial Analyst) are not universally required but are often preferred.
– Technical skills: strong accounting knowledge, ERP systems (e.g., NetSuite, SAP, Oracle), Excel, internal controls, and financial consolidation.
– Soft skills: supervision and hiring, process improvement, clear reporting to senior management.
Controller vs. related roles (short definitions)
– CFO (Chief Financial Officer): senior executive focused on strategy, capital structure, investor relations, and long‑term financial planning. The CFO uses reports controllers produce to make strategic decisions.
– VP of Finance: in some firms this role overlaps with CFO duties; often responsible for high‑level financial oversight and may supervise the controller.
– FP&A Director (Financial Planning & Analysis): focuses on forecasts, budgets, scenario modeling, and analysis to support decisions; uses controller data but is more forward‑looking.
– Comptroller: term often used interchangeably with controller, especially in government or nonprofit settings; same core responsibilities around accounting and reporting.
Reporting lines and organization
– Controllers usually report to a CFO, VP of Finance, or CEO depending on company size.
– Direct reports commonly include accounting managers for AP (accounts payable), AR (accounts receivable), payroll, and financial reporting.
– In small companies, the controller may perform many tasks personally; in large organizations, duties are more specialized and delegated.
Accounting vs. controlling (short)
– Accounting: the recording and classification of transactions (bookkeeping, ledgers, journals).
– Controlling: the broader function of ensuring that recorded data are accurate, timely, and useful for management — includes monitoring processes, enforcing controls, and analyzing variances.
Typical month‑end close checklist (step‑by‑step)
1. Lock the sub‑ledgers (AR, AP, payroll) and import summarized balances to the general ledger.
2. Reconcile bank accounts and material balance sheet accounts.
3. Post accruals and adjusting journal entries (e.g., prepaid amortization, accruals for expenses).
4. Verify intercompany eliminations and consolidations if applicable.
5. Produce trial balance and financial statements (P&L, balance sheet, cash flow).
6. Review variances vs. budget and prior periods; prepare explanations.
7. Deliver reports to senior management and file statutory or tax filings as needed.
8. Retain supporting documentation and hand off audit requests.
Worked numeric example — simple variance investigation
Situation: A controller compares the current month’s operating expense to budget.
– Budgeted operating expense for March = $120,000
– Actual operating expense for March = $138,000
Step 1 — Compute variance:
Variance = Actual − Budget = $138,000 − $120,000 = $18,000 (unfavorable)
Step 2 — Compute percent variance:
Percent variance = (Variance / Budget) × 100 = ($18,000 / $120,000) × 100 = 15%
Step 3 — Investigate:
– Break down the $18,000 by department (
Break down the $18,000 by department (example):
– Sales variance = $5,000
– Operations variance = $10,000
– Administration variance = $3,000
Total = $5,000 + $10,000 + $3,000 = $18,000
Step 4 — Compute each department’s percent of the total variance:
– Sales = $5,000 / $18,000 = 27.8%
– Operations = $10,000 / $18,000 = 55.6%
– Administration = $3,000 / $18,000 = 16.7%
Step 5 — Assign causes and verify supporting transactions
– Sales ($5,000): investigate travel and client entertainment expense reports; verify dates and business purpose. If legitimate but unusual, note as one-time; if recurring, flag for forecast adjustment.
– Operations ($10,000): examine overtime logs, emergency repair invoices, and inventory write-offs. Example split: emergency repair $8,000; overtime $2,000. Confirm whether repair was capitalizable or expenseable and whether overtime is temporary.
– Administration ($3,000): check payroll accruals and timing of bonus or benefits; this may be a timing issue rather than a structural overrun.
Step 6 — Quantify recurring vs. one-time impact
– If the $18,000 is a one-time event (e.g., emergency repair), the annualized impact is limited to March. No full-year budget rewrite may be needed; instead, note the nonrecurring item in management reports.
– If the variance reflects a recurring change (e.g., sustained overtime), annualize to estimate full-year effect: Annualized impact = $18,000 × 12 = $216,000. Use that figure when considering budget reforecast or headcount changes.
Step 7 — Proposed controller actions (checklist)
– Reconcile transactions to supporting invoices/payroll records.
– Classify costs correctly (expense vs. capital; operating vs. SG&A).
– Discuss findings with department heads and obtain explanations in writing.
– Adjust monthly forecasts if variance is expected to recur.
– Recommend operational or cost controls for recurring overruns (e.g., hiring, shift rescheduling, vendor negotiation).
– Prepare a brief variance memo for senior management, summarizing cause, amount, and recommended actions.
– Retain documentation for audit trail.
Worked numeric conclusion (example)
– March unfavorable variance = $18,000 (15% vs budget).
– Investigated split: 55.6% from Operations (main driver: $8,000 repair), 27.8% Sales (higher travel), 16.7% Admin (timing accrual).
– Recommended immediate action: treat $8,000 repair as nonrecurring; reclassify and document. For $2,000 overtime and $5,000 travel, monitor next two months—if they persist, propose a $7,000/month budget increase for affected lines and update quarterly forecast.
Quick variance-investigation checklist (one-page)
1. Compute variance and percent variance.
2. Break variance down by department/account.
3. Reconcile to source documents.
4. Identify cause: timing, one-time, or recurring.
5. Quantify annualized impact if recurring.
6. Propose control or operational remedies.
7. Document findings and communicate to management.
8. File supporting docs for audit.
Assumptions and limits
– This example assumes linear monthly budgets and that the controller has access to detailed GL (general ledger) and supporting documents.
– Real investigations may require vendor follow-ups, payroll system queries, and coordination with treasury or tax for classification issues.
Educational disclaimer
This content is for educational purposes only and not individualized investment, accounting, or tax advice. For specific actions, consult qualified professionals.
References
– Investopedia — Controller definition and role: https://www.investopedia.com/terms/c/controller.asp
– Financial Accounting Standards Board (FASB): https://www.fasb.org
– U.S. Securities and Exchange Commission (SEC) — financial reporting basics: https://www.sec.gov/reportspubs/investor-publications
– American Institute of CPAs (AICPA) — guidance on internal control and documentation: https://www.aicpa.org