Financial Controllers Week 1 Group 1 Report (PDF)

FINANCIAL CONTROLLERS HIP WEEK 1 GROUP -3 1  MEMBE LAYESE, STEPHANIE RS: GALANZA, STEPHANIE JOYCE JANARIN, NURHANNI MACARAYO, JANNAH MARIE VALDEZ, MELISSA MAE CARLOS, PRINCESS D...

FINANCIAL CONTROLLERS HIP WEEK 1 GROUP -3 1  MEMBE LAYESE, STEPHANIE RS: GALANZA, STEPHANIE JOYCE JANARIN, NURHANNI MACARAYO, JANNAH MARIE VALDEZ, MELISSA MAE CARLOS, PRINCESS DIANNE SARIPADA, JANICE AL ZAABI, AMINA GATCHALIAN, RHICA MORALES, VENCY JOY JHANE LOPEZ, MARIA LUISA MAE MALMIS, JOHN REY SACON, EZEKIEL VILLAREAL, JESSA MAE  Video Playing: The Role of a Financial Controller https://youtu.be/BNSyxSayVfM ORGANIZATION OF THE FINANCE FUNCTION  TOP-LEVEL MANAGEMENT: 1. Board of Directors The highest governing body, overseeing the organization and its strategies. Responsible for strategic direction, corporate governance, and making high-level decisions about the company's financial and operational matters. 2. Chief Executive Officer (CEO): The highest-ranking executive in the organization, responsible for the overall management and operation. 3. Managing Directors Acts as the operational head of the company, ensuring that the company meets its objectives and aligns with the board's strategy. Oversees all departments, including finance, production, and sales.  TOP-LEVEL MANAGEMENT: Executive Management Team 4. Chief Financial Officer (CFO): The executive responsible for managing the financial actions of the company, supervising the VP Finance, Financial Controller, and Treasurer. 5. Chief Operating Officer (COO): Responsible for the day-to-day operations of the company, ensuring smooth delivery of the company’s products or services. 6. Chief Accounting Officer (CAO) Responsible for overseeing all accounting operations and ensuring compliance with accounting standards, regulations, and policies.  MIDDLE-LEVEL MANAGEMENT 1.Vice president production - Responsible for managing production processes, ensuring efficiency, and meeting production targets. Vice president finance - Focuses on managing financial resources, investments, and compliance with financial regulations. Vice president sales - Oversees sales strategies, customer relations, and revenue generation.  LOWER-LEVEL MANAGEMENT 1. Financial Controller (Reports to VP Finance) - Responsible for financial reporting, compliance, and internal controls. 2.Treasurer (Reports to CFO or VP Finance) - Focused on managing financial resources, cash flow, and relationships with financial institutions.  ROLE OF A CONTROLLER Controller's responsibilities vary dramatically based on company size — this is more precise and narrow in a big company. More responsibilities/functions in a smaller company (multi-tasking). The presence of other managers to handle related functions. ROLE OF A FINANCIAL CONTROLLER The Role of Financial Comptrollers or Chief Accounting Officers, or Financial Controllers are tasked with: 1.Overseeing the day-to-day accounting functions - A controller manages the accuracy and productivity of the day-to-day accounting transactions and activities performed by different departments involved, under his supervision and management. 2. Integrating finance operations - A financial controller knows how to integrate budgeting, planning, consolidating of tiles, reports, and analytics into a single application thereby maximizing the output and minimizing the costs and expenses. He needs to balance the costs and control in business processes. He needs to integrate all subsidiary systems and automated systems used.  ROLE OF A FINANCIAL CONTROLLER 3. Forecasting and budgeting - These are strategic planning process in determining the long or short-term financial goals. This is usually managed and monitored by the FC such as annual budgeting process, project proposals and financial investments. 4. Handling tax matters - An FC must be fully informed concerning tax matters, the proper way to handle, process and comply with the law regarding taxes. He/she should know how to deal with complex domestic and international corporate tax matters. 5. Preparing financial reports - An FC should have knowledge on the organized preparation of monthly financial reports, make financial projections and documentation. He must know also how to coordinate with auditors.  ROLE OF A OTHER ROLES OF FINANCIAL FINANCIAL CONTROLLER 6.Ensuring organizational CONTROLLERS? financial stability - An FC should maintain proper financial stability by developing strong understanding of their business growth through his effective leadership and decision-making.  FINANCIAL CONTROLLER Preparing RESPONSIBILITIES: financial reports - reports prepared by a company's management to present the financial performance and position at a point in time. Analyzing financial data - the process of reviewing and analyzing a company's financial statements, to make better economic decisions, and in order to earn income in future. Monitoring internal controls - a process of assessing risks linked to achieving the company’s operational objectives and goals. Overseeing and preparing income statements – A process to show the reader how much profit or loss an organization had generated during the reporting period. Participating in budgeting processes - people impacted by a budget are actively involved in the budget creation process.  FINANCIAL CONTROLLER Managing financial RESPONSIBILITIES: transactions – A process to manage the agreement, or communication carried out between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals. Streamlining accounting functions and operations – to provide it with more efficiency by removing unnecessary and complex step, hence simplifying it. Developing plans for financial growth – A process in allocating resources throughout a business to achieve its specific goal. Evaluating and managing risk - can help you identify and understand the risks that you could face in your role. Coordinating audit processes - an examination of results to determine whether the activities, resources and behaviors that cause them are being managed efficiently and effectively.  THE CONTROLLER’S MAIN FUNCTIONS IN THE ORGANIZATION: 1. Planning Function 2. Controlling Function 3. Accounting Function 4. Reporting Function Note: Other related functions include; Organizing, Directing, Measuring, Financial Analysis, and Process Analysis  PLANNING FUNCTION ⮚According to Koontz and O ‘Donnell “Planning is deciding in advance what to do, how to do it, when to do it and who will do it. Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise to happen.”  CONTROL Control is an essential function for managing an organization. It is used to ensure that what FUNCTION is done is what was really intended. REPORTING FUNCTION Reports communicate information which has been compiled as a result of research and analysis of data and of issues. Reports can cover a wide range of topics, but usually focus on transmitting information with a clear purpose, to a specific audience. ACCOUNTING FUNCTION Ongoing financial record keeping. Monetary information of all types should be tracked on a monthly basis at a minimum.  EXPECTED TO IMPLEMENT: Benchmarking Key Practices – results in a major improvement in the department’s operating effectiveness. Converting To Electronic Transaction – boon to the accounting department. Reducing cycle – allows company to act more quickly, as well as to generate information about the results of its actions. Outsourcing accounting functions – controller should look into handing all accounting functions over the suppliers who are better to equipped to handle key transactions. Reengineering key functions – some accounting functions may require so much effort to complete that it is best to scrap the system.  INTERNAL Are CONTROLS rules and procedures that help ensure a company's financial reporting is accurate and reliable.  TYPES OF INTERNAL CONTROLS To detect To correct To keep errors or errors or errors or irregularities irregularities irregularities that may that have from have been occurring in occurred. detected. the first DETECTIV CORRECTIVE PREVENTI place. E DESIGN DESIGN VE DESIGN  OBJECTIVES OF MAIN CONTROL AUTHORIZATION Transactions should be authorized and approved to help ensure the activity is consistent with departmental or institutional goals and objectives. RECONCILIATIO N The process of comparing two sets of records, like a company’s records and a bank statement, to make sure the numbers match and are accurate. RECORDING Means keeping an accurate and proper record of every transaction.  OBJECTIVES OF MAIN CONTROL SAFEGUARDING Means having measures to protect assets, ensuring they are used correctly and not at risk of misuse or theft. VALUATION Means ensuring assets are correctly valued following GAAP rules and that any adjustments made are accurate and valid.  PEOPLE RESPONSIBLE FOR INTERNAL Board of Directors - they setCONTROL the overall tone and provide oversight, ensuring that internal control systems align with the organization’s goals and regulatory requirements. Senior Management - they implement and maintain internal controls, ensuring day-to-day operations follow policies and procedures effectively. Financial Management - they ensure the accuracy, reliability, and integrity of financial records, ensuring controls protect financial assets and comply with reporting standards. Internal Audit Staff - they evaluate the effectiveness of internal controls, identify weaknesses, and recommend improvements to safeguard the organization.  INDEPENDENT AUDITOR Certified public accountant Examines the financial records and business transactions of a company with which they are not affiliated. HOW TO DEAL WITH A FRAUD SITUATION REPORT TO SUPERVISOR AVOID CONFRONTING GATHER EVIDENCE FOLLOW COMPANY PROTOCOLS  Business Structures Forms/Type of Business Organizations Sole proprietorship is the simplest business form and is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts. Partnership is defined as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Corporation is a legal entity that is separate and distinct from its owners. It enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.  Advantages Disadvantages Easiest to Limited to life Sole start of owner Proprietorsh Least Equity capital ip regulated limited to Single owner’s owner keeps personal all the wealth profits Unlimited Taxed once liability as personal Difficult to income sell ownership 1.27  Advantages Disadvantages Partnership Two or more dissolves when Partnershi owners one partner dies p More capital or wishes to sell available Difficult to transfer Relatively ownership easy to start Unlimited Income liability General taxed once as personal partnership Limited income partnership 1.28  A general partnership is A limited partnership is a business arrangement by a form of partnership in which two or more which some of individuals agree to share the partners contribute in all assets, profits, only financially and are financial and legal liable only to the extent of liabilities of a jointly- the amount of money that owned business they have invested. In structure.... In fact, a limited any partner may be sued partnership structure, for the entirety of limited partners are a partnership's business shielded to the extent of debts. their investment.  Advantages Disadvantage – Limited s liability –Separation Corporatio – Unlimited life n – Separation of of ownership ownership and and managemen management t – Transfer of –Double ownership is taxation easy – Easier to (income raise capital taxed at the corporate 1.30  Corporate Governance is the system of rules, practices, and processes by which a firm is directed and controlled (an art). essentially involves balancing the interests of a company's many stakeholders.  Theories Governing Corporate Governance 1. Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents. – Three conditions to operate relationship The agent has the freedom to choose between various course of actions Actions of agent influence their own growth as well as the principals Difficult for the principal to observe the actions of the agent as information is not enough  The supplier of finance need return on their investment Facts Principal needs assurance that agent does not steal the investment of Principal needs to control the agent Agenc Problems with agency theory y Utility maximizer (agent will not act in the best interest of the principal Theory Unequal sharing of information Element of risk (judge performance based on annual reports ) 2. Stewardship theory is a theory that managers, left on their own, will act as responsible stewards of the assets they control. Assumes that managers are basically trustworthy and attach significant value to their own personal reputations. Built on premise that directors will fulfill their duties towards the shareholders. Assumes that humans are good and directors are trustworthy.  Stewardship models may include environmental concerns, where a company believes it should operate with as little impact as possible on the earth. Effects On Clients Customers also like to feel like they’re part of something, and may stay with a stewardship-driven business even if its price for goods or services is higher. Effects On Employees A solid sense of stewardship improves company morale when the workers feel they’re part of something bigger.  Intrinsic Motivation you do it because it’s enjoyable and interesting. Extrinsic Motivation you do it because of an outside incentive or pressure to do it, such as a reward (reward-driven  BENEFITS OF EFFECTIVE GOVERNANCE AND STAKEHOLDER A good governance Good governance structure MANAGEMENT ensures implies improved that all employees control at all of a company have a levels to help a clear understanding company manage of their its risk efficiently. responsibilities and reporting OPERATION IMPROVED structures. AL CONTROL EFFICIENCY  BENEFITS OF EFFECTIVE GOVERNANCE AND STAKEHOLDER A company’s cost of debt and default risk can be MANAGEMENT A company’s operating and reduced by protecting creditors’ rights, ensuring financial proper audits are performance can be conducted, and that there improved with good is no information gap governance between the company and practices. BETTER its creditors. OPERATING LOWER AND DEFAULT RISK FINANCIAL AND COST OF PERFORAMAN DEBT CE  ESG CONSIDERATIONS IN INVESTMENT ANALYSIS Environmental, Social, and Governance (ESG) considerations are a set of criteria that investors use to assess a company's sustainability and ethical performance. ESG analysis can help investors identify risks and opportunities, and make investment decisions. INTRODUCTION TO ENVIRONMENTAL AND SOCIAL FACTORS While evaluating ESG factors, analysts first need to evaluate if a factor is material. An ESG factor is considered to be material when that factor is believed to have an impact on a company’s long- term business model.  ENVIRONMENT SOCIAL AL FACTORS FACTORS Natural Resource Human Rights Management and Welfare Pollution Concerns in the Prevention Workplace Water Data Privacy Conservation and Security Energy Efficiency Access to and Reduced Affordable Emissions Health Care Existence of Products Carbon Assets Community Compliance with Impact Environmental and Safety Standards  Climate change Human rights and Bribery and and carbon labor standards corruption emissions Data security and Shareholder Air and water privacy rights and board pollution Employee health and composition Biodiversity and safety Executive deforestation Gender equity and compensation Energy and water diversity Lobbying and efficiency Customer whistleblower Waste satisfaction and schemes management product responsibility ENVIRONMENT GOVERNANC SOCIAL ISSUES AL ISSUES E ISSUES THANK YOU