The Controller's Function: The Work of the Managerial Accountant

497 Pages·2011·2.3 MB·English

by  Steven M. Bragg

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The Controller’s
Function
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The Controller’s
Function
The Work of the
Managerial Accountant
FOURTH EDITION
STEVEN M. BRAGG
JohnWiley&Sons,Inc.
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Copyright #2011 byJohn Wiley & Sons,Inc. Allrights reserved.
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Library of CongressCataloging-in-Publication Data:
Bragg, Steven M.
The controller’s function: the workofthe managerialaccountant. —4th ed./
Steven M.Bragg.
p.cm.
Rev.ed.of:Thecontroller’sfunction/JaniceRoehl-Anderson,StevenM.Bragg.3rded.
Includesindex.
ISBN 978-0-470-93742-6 (hardback);ISBN 978-1-118-00141-7 (ebk);
ISBN 978-1-118-00142-4 (ebk);ISBN 978-1-118-00143-1 (ebk)
1. Managerial accounting. 2. Controllership. 3. Auditing. 4. Budget in
business. I. Roehl-Anderson, JaniceM. Controller’sfunction. II. Title.
HF5657.4.R63 2011
658.15011—dc22
2010037967
Printed in the United States ofAmerica.
10 9 8 7 6 5 4 3 2 1
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Contents
Preface xi
Chapter1:TheController’sJob 1
MainJobFunctions 1
JobDescription 2
JobQualifications 5
OrganizationalStructureoftheAccountingDepartment 6
Ethics 11
Chapter2:InternalControl 13
BasicElements 13
ControlstoUseinYourBusiness 20
ElementsofInternalAccountingControl 48
LevelsofControls 49
Fraud 50
AuditingforFraud 54
Notes 55
Chapter3:PlanningandtheStrategicPlan 56
StrategicPlanOverview 56
SystemofPlans 59
PlanningCycle 60
PlanningRoles 62
PlanningTimingandthePlanningPeriod 63
BusinessMission 65
DevelopingLong-RangeObjectives 67
DevelopingLong-RangeStrategies 69
v
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vi & Contents
Chapter4:Long-RangeFinancialPlan 73
LayoutandPurpose 73
TrendsofRevenuesandProfits 75
CapitalInvestments 76
CashFlowsandFinancingRequirements 77
RiskAnalysis 78
BreakdownbyBusinessUnit/ProductLine/Geography 81
FinancialPosition 81
Chapter5:AnnualPlan 87
SystemofPlans 87
AdditionalBudgetModelingTopics 100
AnnualPlanningCycle 102
RoleoftheController 103
SalesPlanning:TheBaseofAllBusinessPlans 103
StepsinDevelopingtheNear-TermSalesPlan 104
MethodsforDeterminingtheSalesForecast 105
ChangesintheSalesMixture 109
ChangesintheSalesPrice 111
ChangesintheCost 112
Chapter6:Sales 114
RoleoftheController 114
SalesAnalysis 116
SalesStandards 120
SalesReports 122
ProductPricing 125
Chapter7:DistributionExpenses 132
RoleoftheSalesManager 133
AnalyzingDistributionCosts 133
AnalyzingbyApplication 135
SettingtheDistributionBudget 141
Chapter8:DirectMaterialsandLabor 148
Objectives 148
RoleoftheController 149
TypesofCostSystems 152
MeasuringDirectMaterialCosts 153
ControllingDirectMaterialCosts 154
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Contents & vii
ControllingDirectMaterialQuantities 155
MeasuringDirectLaborCosts 158
ControllingDirectLaborCosts 159
TargetCosting 165
Chapter9:Overhead 167
NeedforOverheadControls 168
ResponsibilitiesoftheController 169
AccountClassifications 170
FixedandVariableCosts 172
CostAllocation 178
ControllingOverhead 186
ProductionReports 190
Chapter10:GeneralandAdministrativeExpenses 193
FunctionsInvolved 193
AccountingforandAllocatingAdministrativeExpenses 194
ResponsibilityAccounting 196
‘‘Unique’’Expenses 197
ControllingCosts 199
Chapter11:CashandInvestments 202
ObjectivesofCashManagement 202
RoleoftheController 203
CashCollections 204
CashDisbursements 207
InvestmentofShort-TermFunds 208
AccountingforRecordsofInvestment 210
CashandInvestmentControls 214
Chapter12:Receivables 221
FunctionsoftheCreditDepartment 221
ShorteningtheReceivablesCycle 225
ReserveforDoubtfulAccounts 227
ReceivablesFraudandControl 227
Chapter13:Inventory 229
InventoryManagementSystems 229
InventoryTracking 235
PhysicalInventoryProcedure 241
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viii & Contents
InventoryValuation 244
InventoryFraudandControls 247
Chapter14:Property,Plant,andEquipment 251
RoleoftheController 252
CapitalBudgeting 253
PostprojectAppraisals 267
OtherAspectsofFixedAssets 268
Chapter15:Liabilities 271
Objectives 271
Controls 272
CreditAgreementProvisions 274
DebtCapacity 275
BondRatings 276
Leverage 278
Chapter16:Equity 281
RoleoftheController 281
CostofCapital 282
DividendPolicy 290
Long-TermEquityPlanning 291
RepurchasingCommonShares 298
CapitalStockRecords 299
Chapter17:OperationalAccounting 301
CreateDepartmentalJobDescriptions 301
CreateaDepartmentalTrainingProgram 303
ClearOutExcessDocumentation 306
StreamlinetheAccountingWorkflow 307
DocumentAllMajorProcesses 309
ScheduletheDepartment 310
CorrecttheUnderlyingCausesofErrors 312
UseofBestPractices 314
OutsourcingSelectedAccounting
Functions 316
Chapter18:TheFastClose 322
DifferentTypesofFastClose 323
HowtoAchieveaFastClose 324
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Contents & ix
EnhancedClosingProcess 339
Summary 339
Chapter19:SECFilings 341
Form8-K 341
Annual10-KandQuarterly10-QReports 348
TimingofAnnualandQuarterlyReportFilings 350
FormS-1 351
FormS-3 352
FormS-8 353
FormsRequiringPaymenttotheSEC 354
FedwirePayments 355
Chapter20:PerformanceMeasurementsandTrends 356
PerformanceMeasurements 357
Trends 373
InterrelationshipofRatios 375
Just-in-TimeRatios 375
Chapter21:FinancialAnalysis 378
AnalyzingFinancialStatements 378
AnalyzingWorkingCapital 385
AnalyzingFinancingOptions 391
ServicesProfitabilityAnalysis 394
TheThroughputAnalysisModel 397
ProductionOutsourcingDecision 399
NewProductDecision 401
Chapter22:CostReduction 404
TypesofReportsUsedforCostReductionAnalysis 404
SpendAnalysisOverview 408
SpendDatabase 409
SupplierConsolidationAnalysis 410
PartsConsolidationAnalysis 412
Maintenance,Repair,andOperationsItemAnalysis 412
SpendCompliance 413
SpendAnalysisReports 414
WorkforceReductionAnalysis 417
WorkforceReductionIssues 421
WorkforceReductionAlternatives 422