What Is a Controller in Finance?

What Is a Controller?

A controller is an individual who has responsibility for all accounting-related activities, including high-level accounting, managerial accounting, and finance activities, within a company. The duties of a controller include assisting with the preparation of the operating budgets, overseeing financial reporting and performing essential duties relating to payroll.

Across all of the duties, a controller often works most with the collection, analysis, and consolidation of financial data. Although the controller doesn’t always maintain the annual budget, the controller position monitors variances, summarizes trends and investigates budget deficiencies. The controller may reports material budgeting variances or expenditure variances to upper management.

Key Takeaways

  • A controller acts as an overseer of a company’s financial health by taking ownership of the financial reporting process.
  • A controller oversees internal control implementation, assists with budget preparation, ensures reporting compliance, and manages the transaction reporting process.
  • Controllers often have at least a decade of relevant work experience and a degree, though many companies now seek candidates with a CPA license.
  • Controllers vary from CFOs and VPs of Finance, as controllers are usually more involved in the daily transactional aspects of overseeing a company’s performance.
  • According to Glassdoor, controllers made an average of $156,000 per year at the end of 2021.

Understanding Financial Controllers

Controller functions vary across companies owing to the size and complexity of the business and the industry. Smaller companies demand more versatility of the controller, while larger companies are able to disperse the following job responsibilities across other employees including the chief financial officer and treasurer.

Financial controllers are often the head financial position in charge of overseeing that historical, actual financial transactions are being reported properly. This may range across all finances departments including accounts payable, purchasing, vendor management, treasury, financial reporting, and financial planning.

The controller of an organization may partake in the recruiting, selection and training of staff as the controller often has a variety of finance or accounting managers reporting directly to them. The position requires appraising job results, leading employees and performing disciplinary actions as necessary.

Roles of Financial Controllers

A joint publication by the Institute of Management Accountants and Deloitte Development LLC outlined the four primary roles a controller takes. These four roles include:

  1. Steward. Controllers are financial stewards by managing risk and preserving assets. This includes ensuring that internal controls have been implemented and that internal processes are being followed. The controller often plays a part in external audit functions by collaborating with external auditors to ensure financial reporting compliance.
  2. Operator. Controllers are financial operators by overseeing the day-to-day financial operations from a very high level. This includes ensuring vendor set-up, invoice processing, payment remittance, accounting software record-keeping, and purchasing functions are all performing as expected.
  3. Strategist. Controllers are financial strategists by guiding the appropriate direction of the company. For example, a controller is often involved in accounting software implementation programs if the must be financial reporting feedback on the modules needed, customizations requested, or shortfalls of what is being offered.
  4. Catalyst. Controllers are financial catalysts by putting in place processes, then ensuring the new plans are being executed. This includes ensuring that external reporting or filing deadlines are met and that specific changes imposed by external regulatory agencies have been followed. For example, this may related to tax statement distributions or audited external financial statements.

In terms of job opportunities, the Bureau of Labor Statistics (BLS) projects a 10-year growth outlook from 2021-2031 for financial managers (controllers) of 17%, which is “much faster than average.”

Duties of Financial Controllers

The role of the controller will be different across every company. For many, the controller will take on at least some of the following tasks:

  • Manage cash flow. This includes forecasting cash flow needs, planning for foreign currency needs in advance, and alerting upper management for cash flow deficiencies.
  • Act as audit liaison. This includes meeting with external audit staff, being receptive to audit findings, implementing reporting changes, and communicating to upper management or the board of directors the outcomes of the audit.
  • Monitor internal controls. This includes gathering feedback from audit personnel, working with managers on designing proper control functions, and gathering data on the effectiveness of the internal control.
  • Approve invoices. This includes having a higher dollar approval threshold to act as a control for large purchases.
  • Assist in budget preparation. This includes feeding individuals around the company data and information on historical spending across a variety of general ledger coding.
  • Minimize financial risk. This includes being aware of current processes, understanding company weaknesses, engaging employees with training, and openly communicating areas of opportunity to better safeguard assets.
  • Ensure financial compliance. This includes understanding external reporting requirements, ensuring proper resources are on hand to meet those requirements and overseeing the final product being delivered to external parties.
  • Compile financial reporting. This includes being aware of recent changes to financial reporting practices, overseeing a staff that directly contributes to the financial statement preparation process, and sometimes certifying that the financial statements have been accurately prepared to the best of their knowledge.
  • Identify cost savings. This includes understanding where operational efficiencies lie, how staff can be best utilized, what reporting functions are being duplicated, and what resources the finance department really needs.
  • Mentor financial staff. This includes being a leader to the controller’s direct reports by involving them in higher-level discussions.

According to Glassdoor, a controller makes a median of roughly $156,000 per year. This includes $111,000 per year of base pay and almost $45,000 in additional forms of compensation.

Skillset of Financial Controllers

To become a financial controller, finance professionals must often have achieved proficiency in three aspects of their career: education, experience, and licensure.

Regarding education, becoming a financial controller almost always requires at least a bachelor’s degree in accounting, finance, business administration, or a similar field. In most situations, a master’s degree is preferred, with many companies now making a master’s degree a requirement.

Though there is no industry-wide requirement on the amount of work experience a controller must have, most financial professionals must obtain at least five to ten years of professional experience to be considered for a controller role. Again, a controller at a smaller company may have much smaller requirements than a large public corporation that will seek 20+ years of experience in a related, relevant industry. Companies may require that a controller candidate have public accounting experience.

Last, it is not an industry requirement to obtain a Certified Public Accountant (CPA), Certified Management Accountant (CMA), Chartered Financial Analyst (CFA), or any other type of licensure. For many, these licensures will help and may be a preferred requirement for the role. For larger public companies, controllers will often be required to have at least a CPA license.

Career Path of Controllers

As every company will require different qualifications, there is no single career path to becoming a controller. However, many controllers get their start by working in the accounting field, often in public accounting. For finance professionals most serious about achieving controller roles, they must often seek out Big Four positions and earn escalating responsibilities over several years.

After moving to the corporate or private sector, a controller may continue to develop skills as an accountant booking transactions or manager overseeing the operations of a specific finance department. This includes developing gaps related to receivables reporting, payroll, quarterly financial reporting, or internal controls.

Last, controllers often transition into the role of assistant controller before making the jump to a full controller role. An assistant controller is simply a more junior position that may perform many of the same tasks as a controller. However, the junior controller may not take full ownership of responsibility for outcomes as this may transition to a controller. Also, a company may employ a junior status to candidates that must first demonstrate proficiency in the role before getting promoted.

Accounting vs. Controlling

A controller is engrained in a company’s financial accounting process. However, the controller may not do direct accounting themselves, and there is a difference between accounting and controlling. In financial management, controlling is the act of ensuring data is recorded accurately and on time. This is a broader function of accounting, as the controlling function may go behind recording transactions.

For example, a controller may oversee the accounts payable department responsible for 1099 reporting. Though this process is unrelated to internal accounting transactions, the controller may be a stakeholder in the process and give feedback on process improvement implementations. Whereas an accounts payable clerk is responsible for the accounting of liabilities tied to invoices, a controller may be more concerned with the overall accurate and timeliness in which invoices are being processes and payments remit.

For larger companies, controllers report up to a CFO or other executive. The controller is usually not part of the executive leadership team.

Controller vs. Other Financial Roles

Depending on the size and organizational layout of a company, the controller may hold more than one title or be responsible for multiple aspects of finance. In general, especially for larger companies, there are differences between controllers and other high-ranking financial positions.

Controller vs. Chief Financial Officer (CFO)

Although both the controller and CFO of a company are leaders in finance, they are often two separate positions responsible for different tasks. A controller is more likely to be entangled in general ledgers, trial balances, and financial reports being delivered to more senior management. Meanwhile, a CFO utilizes these reports to focus on more broad, big-picture company positioning.

In general, CFOs often take a greater presence in external-facing tasks including mergers, acquisitions, or involvement with investors. Meanwhile, financial controllers own more of the internal reporting process including implementing internal controls, managing the month-end close schedule, and ensuring financial accuracy.

Controller vs. Vice President of Finance

In many situations, a company’s vice president of finance mimics the traditional role of CFO. A vice president is often tasked with the highest-level of financial and accounting oversight, while a controller’s role is more limited to the financial preparation and management of the financial reporting process. For companies with both a controller and vice president of finance, the controller would most likely report directly to the vice president.

Controller vs. FP&A Director

Financial controllers are in charge of the past; they review historical transactions and ensure reporting is done correctly. These reports may then be delivered to a financial planning and analysis (FP&A) leader. This FP&A director relies on their team to build budgets, forecasts, and long-term plans based on the future of the company.

A controller’s role is heavily (if not exclusively) rooted in dealing with actual transactions. Overseeing both revenue and expense reporting, a controller often does not deal in theory. Meanwhile, an FP&A director leverages historical data to devise future plans that may or may not materialize. These plans may rotate on a quarterly basis if the company decides to reforecast any projections.

Controller vs. Comptroller

A variation of the controller position is called a comptroller. A comptroller is typically a more senior position that is more commonly found in government or nonprofit organizations. A controller and comptroller simply have similar roles in different industries.

Who Reports to the Controller?

A controller often oversees the department leads within finance for each respective department tied to financial reporting. This may include the accounts payable lead, procurement lead, purchasing lead, financial reporting manager, or payroll manager.

Is a Controller the Same As CFO or VP of Finance?

A controller is not the same as a CFO or VP of Finance. A CFO or VP of Finance are often higher-level positions that are on the executive team. Meanwhile, a controller is usually a lower-level position that is less involved in strategic planning or external affairs and mostly involved in internal reporting.

What Qualifications Does a Controller Need?

A controller must often have around at least 10 years of professional experience, though larger public companies will often require more. Though an accounting or finance license is not always required, a controller may need to carry a CPA license. A controller usually needs to have at least some sort of higher education as well.

Why Is a Controller Important?

A controller is important to finance as they control the risk and reporting aspect of the company. A controller is the point person for making sure the financial reporting is done correctly. They are also the person to understand why inaccuracies may exist, what changes must be put in place, and how those changes will impact future reports.

The Bottom Line

A financial controller is a higher-level finance position that takes the responsibility over the financial reporting process. Not quite an executive-level position at most companies, a controller oversees many of the processes that come together to deliver financial statements. A controller also works with the external audit team, assists internal managers will budget preparation, and identifies areas of opportunity to mitigate risk and employ cost savings.

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