Internal controls are the structure of information management, as well as the decisions and planning that ensure an organization’s activities are done in support of its objectives. Internal financial controls specifically refer to the controls in place that maintain financial compliance with regard to both budget and regulatory oversight. The term internal financial controls refers collectively to the policies and systems designed to ensure that risk is managed, regulatory oversight responsibilities are complied with, financial goals are targeted and budgets are met.
Comptroller or financial controller is the designation held by the person most administratively in charge of daily accounting operations and oversight. Controllers work for corporations, governments and other organizations that function at a level of financial complexity or growth that exceeds the capacity of basic accounting or bookkeeping.
Financial controller is the title held by the financial manager in a private business or publicly traded company. Financial control officer (FCO) is used to designate an executive position, while functionally having the same responsibilities as a financial controller. Comptroller is the title more commonly used to designate these positions within government. Other job titles typically held by professionals who work as financial controllers include treasurer and finance director.
Financial controls are part of both for-profit and non-profit organizations, although the reporting obligations of controllers will differ based on the registration type and structure of the company. Smaller businesses administer the bulk of their financial responsibilities internally through accountants, and use a controller as a consultant to oversee procedures, develop policy or recommend systems.
Specific tasks performed by financial controllers
Legislation exists that requires the external and internal auditing of publically traded companies to protect consumers and investors against fraud and error. A company’s financial controller is responsible for overseeing the completion of internal control audits and facilitating changes to the controls when error, or the potential for error or fraud is identified. The controller also manages fiscal operations and has responsibilities that include:
- Monitoring and controlling cash flow
- Developing and maintaining a company’s financial policies and procedures
- Creating and completing financial reporting systems (daily/weekly/monthly/quarterly/annual)
- Selection and maintenance of financial software
- Overseeing payroll and accounts receivable and payable
- Completing audits and financial compliance activities
- Monitoring debt/credit
- Overseeing payroll and benefits
- Reporting to the SEC (for publicly traded companies)
- Managing any outsourced financial activities
Financial Controllers In the News and Trending
Finance has held a challenging position in news cycles of late while the fall-out from economic recession continues to be felt. Concerns in both the legislative and consumer arenas have prompted calls for increased oversight and accountability, particularly in larger companies that hold the potential for powerful financial influence. Enter the position of financial controller far more heavily into the public discourse.
While public sector comptrollers become more heavily scrutinized as tax revenues slim, private sector controllers are finding their obligations to auditing and reporting are increasingly more important. The Wall Street Journal’s daily blog Corruption Currents is peppered with entries that cite the increased expectations placed on controllers to implement auditing and reporting policies that ensure financial accuracy. As business seeks to reduce increased legislation and government oversight with regard to internal management strategies, many companies are looking to their controllers as the professionals who can prove a company’s integrity.
Comptrollers in The Public Sector
All municipalities, states and most federal service bodies retain financial comptrollers as a means to ensure accountability to the taxpayers that fund the agencies. The Office of the Comptroller General and the Government Accountability Office oversee government spending on the federal level. Credentials for public sector comptrollers are comparable to those in the private sector. Responsibilities for a government comptroller are also similar to those in the private sector as they relate to daily financial operations, but with the added responsibility of public reporting for tax accountability.
FCO vs. CFO – Tactics vs. Strategy
The financial control officer is concerned with accounting. The chief financial officer is concerned with finance. The difference between accounting and finance is the difference between tactics and strategy. A financial control officer is responsible for the management of a company’s near term fiscal operations – those activities that ensure the support of daily operations and solvency.
A chief financial officer is responsible for the company’s long-term financial growth –those activities that carry risk and balance debt with equity. While a CFO may have all the responsibilities of a controller, a controller is seldom responsible for strategic decisions and the development of budgets.
A company may decide to have both posts held by one individual. This is not uncommon in smaller businesses, or businesses making transitions in size and revenue that need to simultaneously cultivate growth while maintaining caps on cost. This individual will be qualified in terms of education, certification as a controller while being tasked with strategic responsibilities as Chief Financial Officer.
Degrees and Standard Certification Held by Financial Controllers
Most companies will require their controllers to have a bachelor’s degree in accounting, and often retain CPAs or certified managerial accountants (CMAs).
Becoming a CPA: A certified public accountant completes a bachelor’s degree in accounting then applies to take the Uniform Certified Public Accountant Examination, developed by the American Institute of Certified Public Accountants (AICPA). Once the exam is passed, one year of work experience is required. At the conclusion of the work experience, a candidate is eligible to apply for a state issued CPA license.
Becoming a CMA: A certified management accountant is an accountant who holds a credential issued by the Institute of Management Accountants. To attain the credential, a candidate must hold a bachelor’s degree in accountancy from an accredited university, complete a two-year professional experience, and pass the IMA’s examination. Unlike the CPA designation, the CMA credential is not a license and is not overseen by jurisdictional licensing bodies.
Both CPA’s and CMA’s are required to pursue a rigorous course of continuing education in order to maintain their credentials. Financial legislation changes frequently and ongoing commitment to staying current is essential.
MBA and MACC
Organizations with finances complex enough to warrant a controller or executive FCO retain CPAs and managerial accountants with the proper education and experience in accounting and financial management, and these aren’t necessarily always graduate degree holders. Professionals with MBAs who have made the transition from controllers to executive positions as FCOs might find their MBA helped them make the leap, although there are many successful corporate FCOs without MBAs.
Alternatively, an MACC (Master of Accounting) differs from an MBA in terms of orientation and detail. While an MBA will teach a candidate business strategy, management, human resources, business technology and communication, an MACC focuses more on hard accounting and financial management. Selecting the degree comes down to circumstance – a controller looking to move up in an organization or explore opportunities in more strategic positions should look to the industry to determine which credentials are most relevant.
Specialty Certification for the Financial Controller
While financial controller functions are considered a specialty area in the field of accounting, controllers themselves may choose areas of emphasis that best serve organizations within specific industries. While a financial controller most likely holds a CPA or CMA, there are additional credentials offered through other financial and accounting agencies that a controller may pursue as part of personal professional growth or corporate support.
Certified Internal Auditor: Due to the imperative of compliance in government and publicly traded companies, certification in auditing may serve a controller well. This certification is issued by the Institute of Internal Auditors (IIA) and requires a bachelor’s degree, personal references, work experience and passing the IIA’s examination.
Certified Government Financial Manager: Comptrollers in the public sector may choose to become experts in the unique financial challenges of government fund accountancy by obtaining this certificate. Developed by the Association of Government Accountants, requirements for this certification include a bachelor’s degree, work experience, passing an examination, and formal declaration to abide by the AGA’s code of ethics.
Chartered Financial Analyst: In companies where investments and the use of financial instruments are integral to operations, a controller may choose to complete the requirements for this designation. Sponsored by the Association for Investment Management and Research (AIMR), the candidate must have investment-related experience, be an AIMR member, hold a bachelor’s degree in a financial field, and formally declare his or her willingness to abide by the organizations code of ethics.
Continuing Education, Organizations and Networking
While controllers who hold CMA or CPA credentials are required to pursue ongoing education as part of their renewal process, even finance control professionals who work without these certifications will find that staying current in industry trends is essential to growth; both their own and their company’s.
Organizations that certify and credential finance professionals often offer courses, sponsor conferences or give workshops. Universities that issue degrees in accounting and business often host seminars and education programs. Whether attending for credit towards renewal of a license or as a means to learn the impact of the most recent legislative changes, participating in these events acknowledges that finance does not happen in a vacuum.
Additionally, joining professional organizations such as the American Institute of Certified Public Accountants, the American Accounting Association, the Institute of Management Accountants, gives access to continuing professional education opportunities through publications, newsletters, forums and networking. Continuing education and connecting with other financial experts and industry leaders is vital to ensuring that financial controllers stay current with laws, fiscal strategies, market trends, technology, information management and global economics.
Financial Controller Salaries and Earnings
Salaries for controllers differ depending on the degree of executive decision making the position requires. Naturally, there is also a considerable variation in pay based on experience and the size of the business they work for.
The 2019 Robert Half Salary Guide for Accounting and Finance Professionals shows the median starting salary for controllers in New York City working in the financial services industry to be $179,138, with the highest earners in the top five percent pulling down $283,108.
The finance industry is known for big salaries and even bigger bonuses, but controllers in corporate management can bring home even more, with base starting salaries in New York of between $148,228 and $369,164.
In 2018, salary ranges for corporate controllers in management positions located in other parts of the country looked like this:
- Los Angeles – $139,260 – $346,830
- Chicago – $130,293 – $324,496
- Houston – $113,940 – $283,770
- Jacksonville – $101,280 – $252,240
- Philadelphia – $121,325 – $302,162
Positions for controllers are typically full-time salaried positions that offer additional incentives like stock options and bonus pay, although some work independently as outside consultants for smaller businesses that do not yet need the support of a full time controller.