Financial Controlling

161 Pages·2023·1.171 MB·English

by  Stefan Behringer

Stefan Behringer
Financial
Controlling
Financial Controlling
Stefan Behringer
Financial
Controlling
Stefan Behringer
IFZ Institut für Finanzdienstleistungen Zug
Hochschule Luzern
Rotkreuz, Switzerland
ISBN 978-3-658-40526-7 ISBN 978-3-658-40527-4 (eBook)
https://doi.org/10.1007/978-3-658-40527-4
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V
Preface
Financial Controlling is a support and basic function of every
management. In most companies, all employees are either direct
addressees of controlling and use the information provided there,
or they are at least indirectly affected because decisions are made
on the basis of controlling reports. For these reasons, financial con-
trolling is a mandatory part of almost all business-oriented bache-
lor’s and master’s programs.
The present textbook is intended to provide basic knowl-
edge of financial controlling. The tasks of controlling will be pre-
sented first. This will compare what controllers do in practice and
what they should do according to the ideas of business theory. In
7 Chap. 1 it will also be discussed how financial controlling can
be organized in companies.
7 Chapter 2 deals with the information provided by financial
controlling. Internal and external accounting form the informa-
tion basis. The chapter on the information function shows how
the numbers from these accounting systems are processed into
key figures and processed in cost management instruments. While
7 Chap. 2 deals with the past-oriented preparation of informa-
tion, 7 Chap. 3 the future-oriented tasks of controlling are repre-
sented by planning. It is discussed how a planning process works,
which functions it should fulfill and what contribution planning
can make to the achievement of corporate goals. A key focus of
this chapter is also which goals a company can reasonably pursue.
Furthermore, potential problems of planning and possible alter-
natives are presented.
7 Chapter 4 summarizes the past- and future-oriented per-
spectives. The target value (the plan value) is compared to the
actual value. This chapter presents the possible interpretations of
deviations between target and actual.
7 Chapter 5 deals with the digitalization of financial con-
trolling and the controlling of digitalized companies. This
addresses a current development that is becoming increas-
ingly established in the everyday life of many companies. In the
previous edition, this area was still presented in the trends, as
many things were not foreseeable. Now we can assume a lot
more knowledge about digitalization and artificial intelligence
VI Preface
to be certain. Risk management and compliance remain trends
(7 Chap. 6). Sustainability, which also plays a role in controlling,
is becoming increasingly important—forced by regulations at
national and European level in particular. This is addressed in
7 Chap. 6.
The aim of this textbook is to present the activities of finan-
cial controlling and to give an insight into basic instruments of
controlling. This gives interested parties an initial insight into
an activity in controlling. Addressees of controlling information
receive the necessary tools to interpret the information. In addition
to the German perspective, this book also takes into account the
situation in Switzerland at many points.
The book is aimed at students of business administration and
other business-oriented courses. Many examples and case studies
help to illustrate the material presented. At the end of each chapter
there is a short summary that brings the essential statements to the
point. The learned content can be checked with the help of short
tasks (Let’s check). Connecting tasks also give impulses for further
thinking and deepening of the learned content. The solutions to all
tasks of the book can be obtained via the SN Flashcard App of
Springer-Verlag.
I would like to thank all those who have contributed to the suc-
cess of this book, in particular all those involved at Springer-Verlag
and the team at IFZ Institut für Finanzdienstleistungen Zug at the
Hochschule Luzern.
Stefan Behringer
Rotkreuz
November 2020
VII
Contents
1 Basics of Financial Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1 .1 Tasks of Controllers in Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1 .2 Theory-Based Derivation of the Tasks of Controlling . . . . . . . . . . . . 6
1 .3 Organization of Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1 .3 .1 Controlling as a Line or Administrative Department . . . . . . . . . . . . . . 10
1 .3 .2 Hierarchical Classification of Financial Controlling . . . . . . . . . . . . . . . . 11
1 .3 .3 Central or Decentralised Organisation of Controlling . . . . . . . . . . . . . 13
1 .4 Profile of Requirements for Controllers . . . . . . . . . . . . . . . . . . . . . . . . . 16
1 .5 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2 The Information Function of Controlling . . . . . . . . . . . . . . . . . 21
2 .1 Internal and External Accounting as the Basis
of Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2 .2 Basics of Cost and Performance Accounting . . . . . . . . . . . . . . . . . . . . 27
2 .2 .1 Full Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2 .2 .2 Marginal Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2 .3 Cost Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2 .3 .1 Process Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2 .3 .2 Target Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2 .4 External Accounting and Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2 .5 Preparation of Information on Key Figures
and Key Figure Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2 .5 .1 Basics of Key Figures and Key Figure Systems . . . . . . . . . . . . . . . . . . . . 43
2 .5 .2 Success Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
2 .5 .3 Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2 .5 .4 Liquidity Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2 .5 .5 The DuPont Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2 .5 .6 The Balanced Scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
2 .6 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
3 The Steering Function of Controlling . . . . . . . . . . . . . . . . . . . . . . 67
3 .1 Concept of Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
3 .2 Functions and Risks of Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
3 .3 Goals as the Basis of Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
3 .3 .1 Goal Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
VIII Contents
3 .3 .2 Empirical Findings on Goal Setting in Companies . . . . . . . . . . . . . . . . 82
3 .3 .3 Examples of Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
3 .3 .4 Derivation of the Target Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
3 .4 Course of the Planning Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
3 .5 Problems with Incentives through Planning . . . . . . . . . . . . . . . . . . . . 95
3 .5 .1 The Problem of Hidden Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
3 .5 .2 The Weitzmann Schema . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
3 .6 Alternative Planning Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
3 .7 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
4 The Control Function of Controlling . . . . . . . . . . . . . . . . . . . . . . . 107
4 .1 Basics of the Control Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
4 .2 Actual-Plan Comparison and Deviation Analysis . . . . . . . . . . . . . . . . 110
4 .3 Control and Result Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
4 .4 Problem Areas of the Control Function . . . . . . . . . . . . . . . . . . . . . . . . . . 114
4 .5 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
5 Digitization and Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
5 .1 Terms “digitalization” and “artificial intelligence” . . . . . . . . . . . . . . . 122
5 .2 Digitalization of Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
5 .3 Controlling of Digitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
5 .4 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
6 Trends in Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
6 .1 Controlling and Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
6 .2 Controlling and Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
6 .3 Controlling and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
6 .4 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Supplementary Information
Tips for Studying and Learning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
IX
Abbreviations
Fig. Figure
Para. Paragraph
AktG Stock Corporation Act
BilMoG BilMoG
CAPM Capital Asset Pricing Model
DIH Days Inventory Held
DSO Days Sales Outstanding
EBIT Earnings before Interest and Taxes
EBITA Earnings before Interest, Taxes and Amortisation
EBITDA Earnings before Interest, Taxes, Depreciation and Amorti-
sation
EBT Earnings before Taxes
FCF Free Cashflow
GmbH Gesellschaft mit beschränkter Haftung
HGB Handelsgesetzbuch (German Commercial Code)
IAS International Accounting Standard
ICV International Controller Association
IFRS International Financial Reporting Standards
InsO (German) Insolvency Code
IT Information Technology
AI Artificial Intelligence
KontraG (german) Act on the Control and Transparency of Enter-
prises
lmi performance-related process
lmn performance-neutral process
RoCE Return on Capital Employed
RoI Return on Investment
RPA Robot Process Automation
SMART S pecific, Measurable, Accepted, Realistic, Time bound
VUCA Volatility, Uncertainty, Complexity, Ambiguity
WACC Weighted Average Cost of Capital
WHU Wissenschaftliche Hochschule für Unternehmensführung
1
11
Basics of Financial
Controlling
Contents
1.1 Tasks of Controllers in Practice – 2
1.2 Theory-Based Derivation of the Tasks
of Controlling – 6
1.3 Organization of Controlling – 10
1 .3 .1 Controlling as a Line or Administrative
Department – 10
1 .3 .2 Hierarchical Classification of Financial
Controlling – 11
1 .3 .3 Central or Decentralised Organisation
of Controlling – 13
1.4 Profile of Requirements for Controllers – 16
1.5 Learning Control – 17
References – 19
© The Author(s), under exclusive license to Springer Fachmedien Wiesbaden
GmbH, part of Springer Nature 2023
S . Behringer, Financial Controlling,
https://doi .org/10 .1007/978-3-658-40527-4_1