Should the Controller Be the Accounting Manager?

A company’s financial and accounting team oversees both the managerial and financial accounting roles in an organization. They track and gather the necessary information to prepare financial statements and determine trends. Depending on an organization’s size, the accounting team may consist solely of a part-time bookkeeper. Alternatively, it may include a controller, senior accountant and clerical staff. Whom a company selects as its accounting manager depends on the size and scope of its accounting functions.

The controller oversees a company’s accounting operations. This includes budget creation and tracking, creation of financial reports, tracking and monitoring accounting variables and creation and implementation of accounting-related operational controls. The controller ensures that a company’s accounting system and methodologies comply with generally accepted accounting principles, more typically referred to as GAAP. Controllers take action to help companies reduce risk, improve accuracy and, at smaller firms, effectively manage cash.

Management accounting focuses on documentation and compliance. Its primary goal is to properly compile and summarize operational performance indicators -- for example, inventory levels and costs. Accounting managers analyze this data and report the quantitative results to management combined with their qualitative insights and suggestions. Management accounting’s counterpart, financial management, focuses more on raising money and allocating those funds across operations. Traditional accounting management for small businesses hands over the decision-making role to the company’s owners or executive management.

Chief financial officers have a strong financial background and factor financial strategy, a company’s ability to raise money and its debt capacity into decisions. Most small businesses do not raise money, make acquisitions or pursue complex financial arrangements. Therefore they do not need CFOs. In these scenarios, a controller typically makes the best accounting manager. However, a controller needs additional staff and support -- for example, a billing clerk or payroll vendor -- to act as an effective manager. Without support, the controller must perform these duties and only has time to serve as a highly skilled specialist.

For companies that are too small to hire a controller, an on-staff bookkeeper or outsourced bookkeeper can suffice. She will not have the insights and experience a controller has but will enable your company to manage its billings and payables. One way to access the expertise of a controller is to engage a CPA or CPA firm to assist with cash management or to answer questions when they arise. As an alternative, a small-business owner can create an advisory board and place a CPA or another company’s controller or CFO on the board to help address issues and concerns that may arise.