CONTROLLER VERSUS TREASURER

If you are employed by a large company, the financial responsibilities are probably conducted by the controller, treasurer, and chief financial officer (CFO). The activities of the controller and treasurer fall under the umbrella of finance.

There is no precise distinction between the job of the controller and treasurer, and the functions may differ slightly between organizations because of company policy and the personality of the office holder.

The controller`s functions are primarily of an internal nature and include record keeping, tracking, and controlling the financial effects of prior and current operations. The internal matter of importance to the controller include financial and managerial accounting, taxes, control, and audit functions. The controller is the chief accountant and is involved in the preparation of financial statements, tax returns, the annual report, and Securities and Exchange Commission (SEC) filing. The controller`s function is primarily assuring that funds are used efficiently. He or she is primarily concerned with collecting and presenting financial information. The controller usually looks at what has occurred rather than what should or will happen.

Many controllers are involved with management information systems and review previous, current, and emerging patterns. They report their analysis of the financial implications of decisions to top management.

The treasurer`s function, in contrast, is primarily external. The treasurer obtains and manages the corporation`s capital and is involved with creditors (e.g., bank loan officers), stockholders, investors, underwriters of equity (stock) and bond issuances, and governmental regulatory bodies (e.g., the SEC). The treasurer is responsible for managing corporate assets (e.g., accounts receivable, inventory) and debt, planning the finances and capital expenditures, obtaining funds, formulating credit policy, and managing the investment portfolio.

The treasurer concentrates on keeping the company afloat by obtaining cash to meet obligations and buying assets to achieve corporate objectives. While the controller concentrates on profitability, the treasurer emphasizes cash flow. Even though a company has been profitable, it may have a significant negative cash flow; for example, there may exist substantial long-term receivable (receivable having a maturity of greater than one year). Without adequate cash flow, even a profitable company may fail. By emphasizing cash flow, the treasurer strives to prevent bankruptcy and achieve corporate goals. The treasurer analyzes the financial statements, formulates additional data, and makes decisions based on the analysis.

The major responsibilities of controllers and treasurers are shown in Table 1-2. The CFO is involved with financial policy making and planning. He or she has financial and managerial responsibilities, supervises all phases of financial activity, and serves as the financial adviser to the board of directors. Note: In the post-Enron era, the CFO`s role has taken on a whole new level of importance - nearly as important as the chief executive officer`s (CEO`s) job. The new reporting rules instituted by the Sarbanes-Oxley Act mandate that CFOs and CEOs sign off on their companies` financials not once, but twice. The certification puts CFOs at risk of criminal penalties for materially misrepresenting the numbers. That alone makes the CFO position more daunting.

TABLE 1-2

FUNCTIONS OF CONTROLLER AND TREASURER

Controller

Treasurer

Accounting

Obtaining Financing

Reporting of financial information

Banking relationship

Custody of records

Investment of funds

Interpretation of financial data

Investor relations

Budgeting

Cash management

Controlling operations

Insuring assets

Appraisal of results and making

Recommendations

Fostering relationship with

creditors and investors

Preparation of taxes

Credit appraisal and collecting

Managing assets

funds

Figure 1-2 shows an organizational chart of the financial structure within a company. Note that the controller and treasurer report to the vice-president of finance.

FIGURE 1-2

FINANCIAL STRUCTURE

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