The Top Ten Things that Will Get Controllers Fired!

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10.  Controller does not pursue self-improvement by attending classes, reading periodicals in their field.

9.    Doesn’t care anything about learning the Industry they are working in.

8.    Lacks the vision to implement improvements in accounting systems, processes and procedures.

7.    Fails to develop or mentor staff and often feels threatened by subordinates.

6.    Arrogant

5.    Fails to grasp the importance of Fast Closes and producing Financial Statements on a timely basis as defined by management.

4.   Always puts personal needs ahead of company’s needs.

3.   Does not ask questions or seek support from their system’s software vendor and outside accounting firm.

2.   Is seen as ‘in over their head’.

And NUMBER ONE REASON CONTROLLERS GET FIRED:  The CEO, CFO or Ownership of the company does not trust and/or respect them. (The reason is immaterial).

 

ARE YOU A SCALABLE CONTROLLER and what exactly does that mean?

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A few years ago I began seeing the word ‘scalable’.  It  generally referred to whether typeface could be enlarged.  But today ‘scalable’ means a great deal more than just that.

From Wikipedia:

Scalability is the capability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged in order to accommodate that growth.[1] For example, it can refer to the capability of a system to increase its total output under an increased load when resources (typically hardware) are added. An analogous meaning is implied when the word is used in an economic context, where scalability of a company implies that the underlying business model offers the potential for economic growth within the company.

We talk about businesses and how they handle growth.  Some businesses prosper in a growth mode and others self-destruct under the weight of too much business.  For example,  you opened a store on ETSY.  You sell just one thing, crocheted dolls.  It takes you one day to make each doll.  Your opening inventory is 25.  Day One you receive orders for a 1000.  You don’t have enough money to buy the yarn for 975 dolls or the time to make them and customers won’t be charged until you ship.  This is the most basic definition of ‘scalable’ (or not) in a business sense.

Recently on a Linked In Group (FSN) that I love participating in, someone wrote in about how to develop a program of study for a new role he was assuming at his company (a very large and well known one).  He is obviously intelligent and recognizes the need for learning all there is to his new role.  He is on the right track.

If you are a CPA you’re required to earn 40 CPE hours a year (at least in my state).  If you attend classes (in person or online) are you just going through the motions or are you selecting classes that will enhance your knowledge?

The entire point of this dissertation is to get you to look at yourself and ask ‘Am I still relevant’?  Warren Buffet is in his eighties but no one thinks of him as less than relevant.  This is not about your age, but your abilities.  Who wouldn’t want a seasoned professional on their team if they bring a lot of experience and forward thinking to the table.

Below are ten questions you need to ask yourself to determine your scalability.  We all should know what a passing grade is.

  1. How many newsletters, journals, magazines related to Controllership, Management Accounting, Finance and other related subject do you subscribe to?
  2. Do you attend CPE classes or other classes even if you don’t have to?
  3. Are you working on a designation such as CPA (Certified Public Accountant)  or CMA (Certified Management Accountant)?
  4. Do you have a Linked In account and, if so, do you belong to groups of accounting and finance professionals?
  5. If they are close enough, do you belong to any accounting Chapters?
  6. Do you spend time improving your Excel skills?
  7. How many accounting related books have you purchased in the last year? Whether you or your company paid for it.
  8. Are you a member of AICPA or IMA ?
  9. Do you welcome new challenges in your position as Controller?
  10. Are you passionate about accounting?

Let’s create another scenario.  Lately at the office there have been a lot of closed doors and whispering coming from the CEO and CFO’s offices.  They seem to be gone more than ever or always tied up on conference calls.  Something is going on but they may choose not to bring you into the loop until further down the road.  Fast forward…..It’s Monday morning and you’re getting that first cup of coffee.  The CFO passes you in the hall and says ‘I need to talk to you, bring your coffee’.  What he tells you is that the company has made a commitment to acquire 25 locations, thus doubling the company’s size overnight.  Are you scared? Excited? Angry?  How you react is going to determine your future.  If the CFO views you as weak or not up for the challenge, he and the CEO are probably already putting out feelers to replace you.  If that’s the case, it is almost too late.  Do not kid yourself.  You better start thinking about how you are viewed in the C-Suite.

Make no mistake…………..this is a serious issue.  It is the difference between surviving or failing at a company with a bright future.  As a consultant who has seen the demise of more than one controller, I can tell you that there is definitely a common thread between them.  Next week, I’ll write about those in my  ‘THE TOP TEN MISTAKES THAT WILL GET A CONTROLLER FIRED!”.  Stay Tuned!

 

 

 

The Real Road to a FAST CLOSE………….really!

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There are books on the Fast Close.  There are seminars and webinars.  We come home with great pointers and ideas.  Now we are going to have internal financials produced on the fifth day after Month End.  But somehow we just never get there.  Isn’t it all just so frustrating?  If you are the Controller you are most likely on the front lines of the Month End Close.  Many controllers working for privately held companies end up closing various sets of books, sometimes including  truly diversified business types.  And, if inventory is involved, that adds another layer of complexity.  Here’s what I have discovered and learned observing CFO’s I’ve been associated with:

  • Consider issuing a set of Preliminary Financial Statements with the following caveats:
    • These statements do not reflect the following: (Example)
      • Depreciation Expense
      • Insurance Expense
      • Other Allocations
  • Review all your POST CLOSING Journal Entries
    • Can your software generate automated entries for the Month triggered by the Closing Process?
    • Are you making entries or reconciliations at month end that could be moved to mid-month as long as there’s 30 days between reconciliations?
  • Can you create a ‘CLOSING’ Team, even if it’s just you and one other person.
  • Do you have a MONTH END CLOSING set of Checklists that can be ticked off as processes are completed?

Start ‘GRADING’ your Closing team as a whole after the  FINAL Financial Statements for the period have been issued.

Then go through the same processes shown above next month and every month.  Continue to look for the ‘constraints’ that slow down the closing process.  Then do something about them!  And, as always, consult your outside Accounting Firm to be sure you are on the right track.

THE FALLOUT FROM WHEN AN EMPLOYEE STEALS

 

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Many of us have been through the discovery of an employee who steals.  Sometimes, it is really difficult because it is someone we know and work with.  If you read the latest version of  The Global Report on Fraud you will discover that few businesses have escaped this problem.  Why is employee theft so rampant?  Many studies have estimated that one in four employees steal on some level from their employers.

I’ve devoted other columns to prevention techniques, strengthening of Internal Controls and especially segregation of duties.  However, today I want to discuss the ‘aftermath’.  When confronted with the facts, what are you going to do with a key employee, for instance, your only staff payroll person?  What about the Accounts Payable person falsifying invoices and presenting them to the company for payment (to her).  And, she’s your only A/P person and has become much more knowledgeable about the system and its inner workings than you are.

So here is a little quiz for you…………………pick the right answer for your company:

  1. Move them out of their department and away from tasks that involve cash.
  2. Leave them in the department but demote them and hire someone to take their place.  They can train the new hire.
  3. Put them on probation for sixty days and monitor them very closely.
  4. Fire them immediately

Which answer did you pick?  1…..2…..3…..4….?

If you picked any number other than ‘4’……………..my question to you as a Management Consultant is:  ‘ARE YOU CRAZY?’

First, if you think that the other employees in your company are not watching every move you make, you are most likely mistaken.  News that an employee has been caught stealing can travel like wildfire even if you have tried to keep everything about it secret.

Second, anything other than firing the employee will be a signal to a lot of people that they can rationalize some very bad behavior.

Third, allowing the employee to remain in any capacity is like poisoning the well from which you drink the water.  I strongly advise against it.

Several years ago, a long time dedicated employee and single mother of three was caught taking a check, endorsing it and depositing it to her account which was discovered during a reconciliation process.  Her boss felt terribly sorry for her because he knew she was in rough financial shape.  You can agree not to prosecute.  You can agree to not challenge unemployment and you can even pay some severance (I advise against that) to help the employee while she finds another job.

However, before you write a glowing letter of recommendation or tell a caller checking her references that you regret she resigned and she was a great employee, please CONSULT YOUR ATTORNEY.

Finally, remember one thing, your leadership and management skills are on the line here.  Show decisiveness in dealing with incidences of fraud.  You will be respected for it.

 

 

 

 

NINE SCORPIONS IN A BOTTLE and other workday issues!

 

It’s said that the former Supreme Court Justice Oliver Wendell Holmes referred to the nine sitting Supreme Court justices as ‘Nine Scorpions in a Bottle”!.   Why?  Because each is expected to render an opinion and thus form the basis of a vote for or a dissent against the issue or case at hand.  Have you ever had a staff meeting and felt that you were dealing with people that were motivated solely by their desire to destroy you?  It may be that they just have strong opinions (i.e. they are a scorpion)!

I touched on this subject in my post ‘House of Cards’ (great for re-reading).  I’m starting to think that we need to earn a psychology degree along with our accounting degrees.  What I do know is that there are so many problems that can be avoided by structured and routine communications between you and your people.

I subscribe to some newsletters, both written by business coaches.  Their newsletters are of the ‘Dear Abby’ format where employees and employers write-in about their work problems.  One of the most common themes I see is the one about ‘my manager won’t manage us’ or ‘we have too many meetings’.   Sometimes the complaint is ‘we never meet’.

As a controller, no matter the size of your staff, you must communicate with them on a regular basis.  However, even more difficult is to hear the dissenters during these meetings.  Even the people who feel it cannot be done.  Have you ever been involved in a major software or system upgrade or new implementation.  When you start meeting with the users of the system, you will almost invariably meet with strong opposition.  Can your staff also carry the flag for that implementation and help you meet that resistance.  Do they know enough about why it is important.  If you find you do not want to deploy them as your ‘PR’ people because they really don’t understand the why or the how……………you have failed to communicate it properly.

Are you reading the accounting magazines, articles, blogs, etc. all talking about the changes we are going to see as we evolve towards the cloud?  Are you seeing articles about why we shouldn’t trust the cloud?  What about articles asking if you really need to buy a new server? Print these, or cut them out of a magazine and present it at your next staff meeting.  Get opinions,  and ask for their frank opinion.  These kinds of subjects are not fraught with politics or hidden agendas.  They are what they seem to be and the issues they raise…………you are going to be faced with them sooner rather than later.

‘Nine Scorpions in a Bottle’………….how does the Supreme Court ever render a decision?  At some point there is consensus for them at the end of the day.  They render their opinions, deliver their verdict and move on.  So it is in our line of work.  There is room for philosophical discussions regarding accounting methods and practices.  Spend some time hearing what your staff people really think.  It’s just another learning process for everyone.

 

THE TRUE MEANING OF ‘INDEPENDENCE DAY’

Friday is July 4th also known as ‘Independence Day’.  Like Memorial Day and Veterans Day, July 4th is also a day of remembrance which inspires  us to look back at our founding fathers and what they did to help build this nation into what it is today.

When I was a young Army wife my new husband and I were posted overseas to Ethiopia.  Obviously, I was hoping for an assignment somewhere in Europe so we could travel the continent.  Living in Asmara, Ethiopia was quite an experience and a story for another day.  I had always appreciated and valued being an American.  My father fought in World War II.  My grandparents were immigrants that had fled persecution at the turn of the 20th century.  I knew how important it was to be an American.  Arriving back in America after a year and a half was the happiest day of my life.  I had learned even more during that time what a privilege it was to call America home.

Let’s be honest, there are too many countries in the world today locking their people in.  We are challenged by how to handle all the people that want to come to America, not leave it.  That says a great deal about our democracy.

Against the backdrop of America is how we have always been the greatest nation on earth.  Not only because we have fed ourselves and a large part of the world.  Not only because our constitution has become the guiding light under which we operate, but because we are a nation of laws.  For the most part, we are a law abiding country.  However, the underlying need for compliance with our laws still permeates every level of our society.  Financial reporting has taken some blows in the last few years.  Passage of Sarbanes-Oxley has attempted to curtail executives from falsifying the financial performance of their companies.  Now the CEO and CFO must sign and certify the financial statements of publicly held companies.

As accountants, we have an ethical duty to perform our responsibilities within the laws of our nation, and of standard setting bodies which govern our activities.

But I also know that many of you are put under great pressure to stray from the ethical standards to which you should adhere.  This can be a problem for many.  My advice to you…………..be sure that you know what the moral and ethical standards of your company are or for the company who is proposing to hire you.  Knowing this up front will probably help you avoid those sticky situations you are sometimes confronted with.  Remember, some of the biggest fraud cases like World Com and others ended with the controller going to jail as well as other top executives.  I can tell you that these things don’t happen overnight.  It is not one big violation they are asking for at first, it is the little ones that maybe stretch the line but don’t cross it until one day, it is a short step over the line.

I  believe that our founders were honest men who cherished freedom and democracy.  That comes with a price.  We should all be doing whatever we can to make sure we support the laws of our country and our licenses, if you have one.  After all, that is a very small price to pay for us on the home front.

Have a very happy and safe July 4th…….see you next week.

 

HALT & CATCH FIRE

Did you watch Episode 1 last night of AMC’s new series ‘Halt & Catch Fire’?  It takes us back to the seventies and eighties amid the development of the desktop computer.  The ‘HCF’ (halt & catch fire)  command unleashed simultaneous instructions for programs to compete for superiority in the race to control the computer.  Ultimately, the p.c. became uncontrollable.

To say that there has been exponential growth in software and hardware development since then  is an understatement.  And somewhere along the way, it has become all about the software with hardware a secondary issue.

Looking back, I believe we are now in the fourth revolution of computing.  First, the invention of MS-DOS the Microsoft Disk Operating System which, as we all know, made Bill Gates a billionaire (and all of his friends too).  Second, was the development of a desktop size computer and chips  containing all the computing power of the old IBM mainframe computer rooms that would fit on top of your desk.  Third,  the evolution of software as it became the priority dictating what hardware you invested in.  And now we are entering into the forth revolution of the ‘Cloud’ and ‘Big Data’.

Why should controllers be concerned? Is there a lesson in here somewhere?  One of the greatest challenges for hardware developers back then was the lack of a common p.c. architecture.  Then, as now,  Apple went its own way starting with their GUI (graphical user interface)  computing system and then there were the rest, a host of different brands that may or may not have had a standard architectual design.  To remedy the situation, a group of seven companies in the p.c. industry came together to agree on a common design which meant that one could run the same software on different brands of computers.  That means that you can run your company with a hodge podge of Dell or Lenovo or HP computers.  Even clones for those left in that market.  What’s the point?  You can interface your computers because of those  pc architecture standards developed so many years ago.

I’m betting that there are a number of you out there who went to work in growing companies who had no purchasing policy except ‘least cost’ when adding p.c.’s to the network.  Lucky for you, that common architecture agreement which is still in place today eliminates some of the sin of buying just on price.  But ultimately, that can be costly.

As companies grow, the challenges of keeping up with computing needs are numerous.  I have my own personal story to tell about a huge challenge.  My company had a corporate HQ as well as numerous facilities doing very different things spread throughout our state.  Where the program was once locally installed on each computer, we migrated to installing it on our server.  This put pressure on our Terminal Servers.  The symptoms of something going wrong began to show themselves early on with repeated reboots at the remote facilities.  Within six months we were facing a crisis as the servers began to fail under the pressure of so many users logged on.  To remedy this, the company was faced with a needed restructure of the systems which would end up costing almost $250,000.  Essentially, we were catching up with several years of capital expenditures we had not felt necessary.  So here is my advice to all of you who are in charge of I.T. investment policy or involved at all in investment decisions:

1) Have standards – decide on which P.C. line makes the best sense for your business.  The same goes for printers, scanners and possibly other peripherals that might come into play.  If nothing else, hopefully you can push for volume discounts from your hardware supplier.

2) Set a ‘p.c. turns’ policy.  For instance, power users such as corporate employees may need to have their p.c.’s replaced every 2 1/2 to 3 years.  A remote user who does little work except online as they process transactions into the system could probably have a turn rate of ‘4 to 5’ years.  You will have to be the judge of that.

3) Even if you are ‘expensing’ your p.c.’s, printers and scanners, see if you can add them to your fixed asset ledger or, if not, an access database or excel spreadsheet to keep track of all of them, with the same basic information as appears in your asset ledger listing.  Be sure to show the name of the person assigned the p.c. and keep up with any transfers or employee changes.

4) Establish a 3-4  year capital spending plan that includes all hardware & software purchases necessary.  Be sure to include annual technology training costs.   Update it each year.  Share it with your CFO or CIO (if you have these people on board).

5) Maintain open and constant communication with your software vendor(s).  Be sure you are on top of their plans to for minor and major updates and upgrades.  One of the most serious consequences of failing to do this can be when they announce a coming upgrade along with the hardware requirements and only a small percentage of your p.c.’s are upgrade worthy!  We are talking some serious money here based on the size of your company.  This is why having a ‘turn policy’ is so important.  I believe that you should turn 25% of your p.c.’s and laptops and tablets annually (and that is a bare bones minimum percentage).

Remember – the advice given above is not based on your specific company and its requirements.  It is given as a guideline only and is not all inclusive.  I can’t emphasize how important any planning with regard to I.T. investment is.  The last thing you want in a thriving and growing business is for it to ‘halt and catch fire’ somewhere inside your I.T. infrastructure.

 

 

 

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