ABSTRACT
The dynamic business environment has increased the strategic demands from accounting community. However the gap still exists between strategic management accounting (SMA) and how accountants can help attain the corporate strategic goals. The ControllerFOCUS concept was developed by Thammatucharee to provide controllers a strategic tool which will link together the operations and accounting objectives to accomplish the long-term business goals (Thammatucharee, 2009). The purpose of this paper is to provide a review of the construct of ControllerFOCUS concept; and to demonstrate the test result of the Controllership Index (CI) based on the researcher’s intervention in the case companies. The action research methodology was used at three selected companies through the questionnaires evaluation and observations. The results from this study showed fascinating levels of the controllership index indicating room for improvement in relevant areas, which supports the calls for role change of controllers in supporting the business strategy implementation. Moreover the implications of CI impact the justification of the way external auditing (EA) has been practiced; and raise questions about the value and contribution of the external auditing services to accountants, stakeholders and general public. For future research, the findings raise questions about the reliability of the CI and the possibility for adoption as a key performance indicator of the controller and the company performance for mutual strategic success.
Keywords: Holistic Controllership, Controllership Index, ControllerFOCUS, Holistic Accounting, Accounting Strategy
1 INTRODUCTION
“Controller” as the head of accounting operation has been called for more proactive roles in business administration. He or she cannot stay in the back office and keep busy with the number crunching anymore. In today’s business environment, we have to deal with unexpected issues and need to keep up with the new business model innovations. And the controller can become both supporter and driver of the team in all attempts to achieve the long-lasting survival. The idea of functional controllership may be suitable for decentralized organizations. Therefore the marketing division may have a marketing controller (Wilson, 2000). Along the past 10 years, I have taken the controller’s roles for multinational companies in Thailand and encountered the challenges that led to the radical adjustment of the job description so that the company’s success can be attainable. The article below will show you how to apply a new controllership model to the business so that the controller’s performance can be upgraded to assure the company’s long-term sustainability.
The future roles of management accountant are likely to be changed from scorekeepers to change agents or from ‘beancounters’ to ‘business controllers’ or ‘extreme accountants’ (Granlund & Lukka, 1998a, 1998b; Baldvinsdottir et al., 2009; see also Friedman & Lyne, 1997; Granlund, 1998 cited in Tuomela & Partanen, 2000, p.506). Otley (2001, p.244) argued that management accounting needed to develop its strengths by focusing on the following changes:
• From historical to forward-looking
• From control to planning
• From internal to external (customers, competitors, etc.)
• From cost to value
• From production to marketing
Sathe defined six competencies of controllers consisting of personal qualities, technical competencies, business judgment, communication and interpersonal skills, and ability to manage dual accountability (as cited in Tuomela and Partenen, 2000). However, Tuomela and Partanen (2000) pointed out that there were still unexplored questions regarding the roles of controllers as follows:-
• How are the competencies of accountants and the skills and knowledge of the finance function developed in practice?
• What kind of problems relate to these development efforts?
There have been many business disciplines that append “strategy” to their names – operations strategy, marketing strategy, organizational strategy. It is inevitable for strategic accounting to emerge and replace management accounting (Shank, 2007 cited in Langfield-Smith, 2007, p.207). The ControllerFOCUS, as a proposed accounting strategy, may link the strategic management accounting with the business strategies together and synergize the corporate efforts through the competencies developed by the controller and accounting team.
2 Calling for a Radical Change of Accounting Paradigm
At the company level, a controller as the chief of an accounting unit has basic responsibilities of ensuring the reliability of financial information, and internal-control effectiveness. However, during the last decade, accounting scandals had been disclosed from time to time that finally resulted in financial turmoil and the closure of many companies worldwide. In this era, to be successful, controllers need to develop a new skill of strategic controlling techniques so that they can provide the expected advisory and consulting roles through improved interpersonal and management skills (DFCG, 2010).
The fact that accounting work and auditing work have merged together without obvious value adding to the business’s strategic success becomes clearer in this fast-moving business era. The processes of auditing by external auditors to draw conclusion and express opinion on the correctness of companies’ financial statements needs to be thoroughly analyzed with regard to the real value contribution to accountants and users of the information. The existence of the importance of external auditing is mainly due to the law requirements. There is a gap between the standard of work as performed by accountants of a company and justification for the auditing services provided by an external auditor.
The above discussed issues have led to three important research questions:
Question 1 – What can be considered an accounting strategy that helps connect the operations and frontline functions with the accounting functions (financial accounting and management accounting) and back-office functions (including other administrative functions) in order to accomplish the company’s strategies ?
Question 2 – What can be a new innovative change to improve today’s accounting quality standard and enhance value-adding relationship between accounting and auditing work that satisfy both internal and external stakeholders and the public?
Question 3 – Is the accounting’s records and financial statement audit that have been done for so long according to the requirements of related laws and regulations still practical, relevant and justified today? If not, what would be the change or replacement to be made?
3 Strategic Management Accounting and the Emergence of Holistic Controllership
The global crisis has raised questions and challenged the accounting and controllership realm from several viewpoints. We have seen large financial institutions collapsed, bought out, and governments have had to launch rescue packages to bail out their financial systems. Accounting and auditing professionals and scholars seem to have certain share of responsibility in failing to signal and prevent the impact of the crisis. Corporate accountants and stakeholders have been waiting for an accounting innovation that can really help businesses grow on a healthy manner instead of just re-launching and modifying the accounting standards within the framework of double-entry accounting concept. Many academics and practitioners have subsequently discussed and criticized the ways in which companies prepared their information and how it has been utilized to maximize the sustainable wealth of the businesses through effective strategic achievement.
There has been a trend for management accountants have migrated toward a business partner role (Victoravich, 2010). However, it is observed that management accounting practices go back to mid-1980s with little new developments (Otley, 2001). The terms management accounting (MA), management accounting system (MAS), management control system (MCS), and organizational control (OC) are sometimes used interchangeably. There is evidence suggests links between strategy, cost control and performance evaluation (Chenhall, 2003).
Management accounting is an applied science that needs to be developed further from the existing well-known practices such as ABC, BSC to address what system to use , how and in which circumstances (Malmi & Granlund, 2009). Balanced Scorecard (BSC) looks at four key perspectives i.e. financial perspective, customer perspective, internal-business-process perspective, and learning and growth perspective. However, Hoque & James (2000) observed that larger organizations are likely to make more use of a BSC. In driving strategies, scorecards cannot be successful without full support and understanding from back office team like accounting and finance. Generally controllers have advantages in organizations to exploit both financial and operational information in helping companies to attain goals. This opens an opportunity for controllers who can develop new skills covering other functional knowledge so that they can perform the work strategically.
Baird et al. (2004) observed that the adoption rate of activity management practices is increasing supporting the relevance of Activity-based costing (ABC). We need to expand the knowledge of the management control system (MCS) and business strategy (Langfield-Smith, 1997). However it’s time for businesses to shift from costing-based to resource-based management which allow employees to uncover unrecorded or unidentified financials such as hidden losses, operational wastes, and negative impact of employee morale.
Organization theories and social philosophies have contributed much to the management accounting (Hopper, 1985). Ezzamel et al. (1990) observed that managing by numbers may not be sufficient in the overall control system. The company will no longer be measured on financial successes but also how the wealth created has been shared to society. Griffin & Mahon (1997) called for more research on the relationship between corporate social performance and corporate financial performance that could reflect the contingency of financial measures. In the decentralized firms, the management accounting practices designed to improve the local decision making can exacerbate control problems. However, the practices that emphasize corporate control can undermine local decision making of the local firms (Indjejikan & Matejka, 2006).
The roles of accounting and controllership have been questioned since the Asian Crisis in 1997 and also the current global credit meltdown. Thus it’s time to seriously review and standardize the accepted practices over accounting and financial supervision. Burn & Baldvinsdottir (2005) argued that globalization and internationalization are key drivers of role(s) change for management accountants, which can result in new business-oriented roles for so-called ‘hybrid’ accountants.
Strengthening the controllership of a company requires understanding, cooperation and support from all employees who embrace the concept and procedure of good corporate governance. In Asia, where the working culture does include seniority belief, subordinates seem to listen to the senior people and don’t want to challenge the inappropriate practices unless they really have to. How can we address this issue so that a new culture change can be started? The new controllership paradigm is being shaped by incorporation of the entrepreneurship spirit and innovation into the practices of controllers. Davila et al. (2009) concluded that:
The field of accounting and control has changed significantly over the last decade. New concepts and new empirical evidence have challenged the traditional control paradigm. The paradigm that is emerging interprets control as a key element of dynamic organizations rather than a peripheral, even negative element (Davila et al., 2009, p.300).
No one wants to see another meltdown in any part of the world. A more powerful warning system should be created and instituted into businesses and ultimately developed to the global level. The sharing and integration of knowledge concerning with effective controllership together with necessary regulation, should be seriously considered. Obviously the ControllerFOCUS model can be an option to be considered.
4 The Construct and Development of the ControllerFOCUSTM Model
The two basic financial reports for all companies are the balance sheet and the profit and loss statement. Controllers hold the primary responsibility of ensuring the correct, complete and timely presentation of these reports. With the rapid and unexpected business changes today, it is insufficient for a controller to emphasize only the accounting numbers. The non-financial measurements such as market share, product and service quality, customer satisfaction have gain increasing attention today (Horngren, 2004). A truly effective controller coordinates the accounting department’s efforts with other company resources to achieve the long-term business goals.
Today’s controllers need to utilize a vast knowledge base gained from several disciplines such as human resource management, manufacturing operations, logistics, quality control, project management, sales and marketing, taxation, legal, accounting and finance. The controller must be able to understand the basic principles and practices under each function so that he or she can understand the whole business picture and concentrate on the integrated strategies under horizontal organization (H.O.) environment (Chenhall, 2008).
The ControllerFOCUS model can help controllers optimize their efforts in a systematic and effective manner. Controllers may apply this tool to develop suitable strategies in response to situations.
As a controller, the secret to performance improvement comes from dedicating energy to key success elements under the ControllerFOCUS method. The word “focus” represents 5 critical areas that will be explored as follows (Figure 1).
Figure 1. ControllerFOCUS Model
This model is the basic concept to be used for a company’s long-term achievement. There are 5 elements under the capacity of the new management controller:
Future focus
Operation focus
Control focus
Utilization focus
System focus
It’s the controller’s responsibility to optimize the 5 focused areas in order to fully and effectively achieve the long-term targets of the company. These targets include but not limited to the following practical and operational situations. The description in the following sections is intended to give some practical viewpoints which can be found in many companies. It also implies the possibility of generalization of this concept in different types of organizations. For academics and practitioners who are interested in further the study and research on controllership, related theories underpinning the concept are listed under each focus topic.
4.1 Future Focus
At a retailing company, the controller decided to push the implementation of the point of sales (POS) system at shops throughout the province. It replaced the manual operation at the shops and reduced paperwork in the back office. The benefits of the new system included increased customer satisfaction and operational efficiency. Moreover, the physical inventory audit could now be conducted faster at the shop due to real-time updates as compared to the manual system that used to take more than one month.
Another example is that of an export company that never pays attention to the exchange rate. Then one day, the local currency suddenly becomes stronger, causing a big loss in the net amount of foreign currency collected from overseas customers.
Business opportunity and risk have to be assessed regularly in today’s dynamic environment. Failure to include the opportunity costs in decision-making process can result in unfavorable course of action to be suggested by management accountants (Victoravich, 2010). Only the faster and stronger companies will survive at the end. The controller is required to give professional analysis, recommendations and comments on emerging issues affected by factors such as fuel price increase, inflation rate, uncertain political situations, and so on.
Creative and innovative ideas should be generated to ensure that the team is going in the right direction set by the CEO. Some future focus goals are as follows:
Understand business opportunities in both the short-term and long-term.
Identify and control financial risks through available alternatives.
Practice doing business and financial forecasts to improve the planning process and ensure accuracy.
Assess consequences from actions being taken or to be taken by the company.
4.1.1 Keeping up with the High-Speed Working Environment
Every unit within the organization must keep up with the pace set by the management – including the accounting unit. In the fast-paced environment, there may be many new ideas generated by responsible managers in an attempt to achieve their targets. Also it’s essential to be able to thrive and rapidly change course, transform, evolve and reinvent to become a super-flexibility organization (Bahrami & Evans, 2011). These changes may impact the normal practices in the accounting department. Unless accountants meet the expectations of other functional units and adapt to the new business methodology, it will be difficult for the entire team to get things done effectively.
For example, many companies now outsource some assembly of parts to contractors who can produce them at lower cost. These companies also handle the recruitment of employees through sub-contractors. Let’s say that now the management is going to combine these two activities. That means some of the production processes will be selected for outsourcing. The outsourcing contractor has to hire its own people and use the company’s production facility to produce the assembled parts. This may sound unusual and may have implications such as labor concerns. But it is possible, and worth consideration.
In today’s business environment, the world is linked through communication and the period for new technology development has been shortened. Almost everything can be done quickly. So it is the controller’s job to be prepared to act accordingly.
4.1.2 Giving Warning Signs
It can be a frustration when controllers do not receive feedback regarding what they proposed to improve the company’s operating results. These suggestions may include better compliance with the internal control procedure, calls for belt-tightening, accelerating of information completion to prevent potential tax exposure, and so on. However controllers must keep on warning the management and employees when necessary. There are many kinds of warnings:
• Potential Loss of Profit Margin
• Higher Cost Trend
• Outstanding Tax Exposure
• Long Outstanding Accounts Receivable
• Preparation for New System Implementation
• Foreign Exchange Rate Impact
• Negative Cash Flow Forecast
• High Inventory Balance
• High Scrap Cost Trend
The management may not like bad news. But this is not an excuse for controllers to avoid reporting potential damage and loss which may be negatively inconsistent with their opinion according to the cognitive dissonance theory (Deutsch & Krauss, 1965; Festinger, 1957; Shaw & Costanzo, 1982). The earlier a warning can be given, the better chance the company has to prevent or fix the problems in time. As controller is one of the first to see negative financial consequences, he/she should convey these facts to all concerned at an early stage. Sometimes painful actions may be required in order to save a company – such as employee lay-off or closure of some factories — due to a forecast of slow business, as found in the auto industry during a high oil price period (Thammatucharee, 2009).
As soon as the potential problems are identified, controllers should evaluate the impact under different scenarios.
Additional theoretical approach relevant to the construct of future focus
Contingency theory recognizes the management accounting as passive tools designed to assist in user decision making (Chenhall, 2003, cited in Walker et al., 2011).
4.2 Operation Focus
As discussed earlier, the controller not only needs to have good accounting knowledge, but also has to understand all business processes and operations. On a day-to-day basis, we can learn new things just by walking around the shop floor and talking to employees. ’Don’t limit your work only to the office and expect to understand the business only from reading documents and numbers shown in reports. In the management accounting area, the controller should ensure that the management accounting service quality has been reached for improved decision making. However, there is still certain gap between perceived services and expectations, which indicates the opportunity for enhancement on business knowledge, interpersonal and communication skills, flexibility and sound technical knowledge (Walker et al., 2011).
How can a controller understand and explain the variances that occur to others without sufficient knowledge regarding major incidents that happened during the month? There are SMA (strategic management accounting) techniques available such as attribute costing, strategic cost analysis, and life-cycle costing. However, very little evidence suggested that they were being implemented or understood (Roslender & Hart, 2003). There is still need for relationship development such as between marketing and accounting so that the organizational interest and effectiveness can be enhanced (Roslender & Wilson, 2008).
Communication and networking with colleagues, customers and suppliers can help get things done efficiently. Regular contacts with people both inside and outside the company can nurture good relationships that lead to mutual understanding and benefits. It has been viewed that accountants have only formal contacts with others such as marketing personnel, and do not understand marketing needs (Mills & Tsamenyi, 2000). Some goals a controller should have:
Understand all business processes and analyze the company’s strength and weaknesses.
Figure out creative ways to abolish existing obstacles among sections or departments in carrying out both current and new assignments.
Create a collaborative working atmosphere within the accounting department and then maintain good relationships throughout the whole organization.
Support the team in getting things done without delay. This should include bosses, colleagues and subordinates.
4.2.1 Being a Part of Every Business Process
As almost all transactions will pass through the controller’s desk, he/she will need to exercise his/her best financial expertise and understanding of each department to help drive the business successfully. But in order to maintain the motivation of controllers to be part of the team, there should be the balance in exchange relationship between inputs and outcomes of the controllers and others or so-called equity according to the equity theory (Adams, 1963; Shaw & Costanzo 1982). In addition, to avoid possible conflict in the future, it would be better for controllers to also involve others in procedural decision-making to enhance efficiency according to the organizational justice theory (Folger, 1986).
For example, in a manufacturing company, the controller should understand problems associated with the following circumstances:
• Low Productivity – If actual production quantity does not meet the production plan, this can affect the company’s cash flow. If the production operation cannot fulfill orders from customers, this will certainly impact the sales plan and company reputation. Due to the problematic techniques of budgeting, manufacturing operations appears to be less dependent on budget-based performance indicators (Otley & Fakiolas, 2000, p. 508). Thus, the controller should recognize possible causes of problems such as incomplete raw materials, shortage of manpower, or machine breakdown.
• Over Purchasing – In a weakly controlled company, it is likely that actual cost is higher than forecast because of over purchasing. Raw materials, indirect materials and general supplies are items that can be purchased inappropriately. The order size can be too large, and expenses can be incurred without proper controls. Inventory can be too high, causing a working capital shortage. The reasons for these conflicts can be attributed to the role conflict or the role ambiguity, which can lead to increased stress, tension and anxiety as indicated in the role theory (Kahn et al., 1964). The controller should call for a weekly expense review to understand the reason for over-budgeting. It is possible that spending was necessary due to environment changes. This fact should be clarified and explained for understanding and long-term solutions.
• High Turnover of Employees – A human resource problem is directly linked to the company’s performance. This personnel problem is not solely the human resource department’s responsibility. It’s up to all department managers to develop and retain staffers to ensure continued efficient operations. As a senior manager, the controller can support the team’s activities and efforts in improving the situation. Appropriate analysis and fund allocation may have to be made in response to the high turnover and absenteeism.
There are many other areas where controllers can play an important role. As long as controllers are knowledgeable of business activities and can understand their impact on the overall targets, they should participate and contribute as much as they can (Thammatucharee, 2009).
Additional theoretical approach relevant to the construct of operation focus
Discrepancy theory argues that an individual’s satisfaction is partly determined by psychological comparisons of current experience against personal comparative standards (Locke, 1969, cited in Walker et al., 2011).
4.3 Control Focus
A company can collapse suddenly due to just one person’s wrongdoing. Employees need to be honest and help protect the company from any irregularities and fraud. It is impossible for the company to keep an eye on everyone. The whistle-blowing act, as an informal control system, can be motivated through the reward system (Birnberg, 2009). But at least external and internal audits can help detect some risks based on the random check methodology. The trust and control are key factors in developing confidence in strategic alliances (Das & Teng, 1998).
It is one of the controller’s duties to ensure that the internal control system is in place and functioning. However, it is not easy to draw the distinction between analyzing and refining controls (Storey, 1985). Over time, the internal control points should be reviewed and strengthened once weaknesses occur. The effective performance measurement and control system becomes a crucial part under the corporate controllership. The budgeting process has been criticized for its validity for today business environment. Unless the budget is used wisely, it could result in misguided and/or unethical decisions (Horngren, 2004), for example, the firm may set the stretch strategic goal through the tightness of the budget (Simons, 1988). In a marketing company, the concept of brand valuation can help promote brand managers participation in the budgeting setting process (Guilding & Richard, 1991).
Even though setting up company rules and regulations are believed to be a corrective action when a new problem occurs, all too often these written instructions and guidelines are ignored until the same problem occurs again. This is the weakness of the boundary controls which are negative in nature (Alles & Datar, 2003). What really matters are the real-life practices that the company cultivates. Acceptable and unacceptable practices should be clearly defined. The management has to show examples of the right practices so that subordinates can understand the right way to behave — especially in those grey areas.
In many cases, a company’s management has set double standards that raise questions among employees. Inappropriate, unreasonable, indulgent and personal transactions are to be avoided – no matter who approves them. For example, a CEO of an oil company once applied for a golf membership for management entertainment during week-ends. But it was not just one — there were 5 memberships. This included buying shares of a golf course as a short-term investment. Moreover, a large donation was made to a promotion campaign without good justification.
Sometimes it is very difficult to make necessary changes to a code of conduct unless the top management supports the attempt. As a controller, he/she may have a dotted line of reporting to the local manager. But this structure may not work effectively in handling difficult cases.
Some of the control focus practices are as follow:
Set up internal control system to ensure the good corporate governance and make sure it is functioning as expected.
Identify risks and come up with preventive actions for effective implementation.
Review business process regularly to ensure that the operational and financial transactions are still in control.
Promote good corporate governance through education and discipline enhancement.
4.3.1 Maintaining Corporate Discipline
It is not unusual for administrative managers of cost centers or sales and marketing managers of profit centers to explain the variances of the actual and budget by relating the causes to either external or internal factors according to the attribution theory (Birnberg et al., 2007). But it is the controller’s challenge to enhance the discipline in expense spending and income generating behaviors.
Whether it is a factory, hotel, restaurant or hospital, standard practices have to be set up for employees to follow. However even a complete set of working manuals will not guarantee any consistency.
In the accounting department, non-compliant practices can be detected through checking and verification processes performed on a routine basis. For example, travel and entertainment reimbursements are constantly subject to review. When a top executive is the one who behaves in the questionable manner, this puts the accountants in a difficult situation.
Every incident can have a different degree of seriousness. It’s up to the controller and the accounting department to help management assess and how to react to each case. Sometimes, harsh decisions are inevitable (Thammatucharee, 2009).
Additional theoretical approach relevant to the construct of control focus
Role theory posits that focal roles, such as those of controllers, are influenced by other members in the organization, who are referred to as role senders (Kahn et al., 1964; Katz and Kahn, 1978, cited in Walker et al., 2011).
4.4 Utilization Focus
Successful businessmen not only generate income and help grow the company, but they also know how to allocate available resources to maximize profits and returns on investment.
Through the business planning processes, the management team can investigate the current situation and propose solid plans for future operations. With managerial ability and actions taken, the resource productivity and value creation can be enhanced (Holcomb et al., 2007)
As part of the team, the controller who understands how the company’s wealth can be created can help put together the resource utilization plan.
Some of the resource utilization focus practices are as follow:
Always think of the return on investment whenever a large amount of money is to be spent.
Concentrate on building a strong team rather than relying solely on individual talent.
Improve the company’s financial position by creating a strong balance sheet.
Use time relationship measurements to drive business and ensure overall efficiency.
4.4.1 Maximizing Corporate Resources
The returns and benefits to be obtained from resource utilization need to be measured and analyzed properly. The company may have already established guidelines for using the resources, such as in a capital investment. Several factors have to be considered depending on the project’s size and complexity. In several cases, the management made mistakes in investment due to a lack of in-depth analysis and/or being too optimistic as they try to maximize their expected results and minimize the loss according to the expectancy theory (Birnberg et al., 2007). Wrong investment results in unused resources such as vacant land, unused machine capacity, and over-staffing. Francis et al. (2009) argued that transparency, through greater monitoring and improved information reporting, would contribute to the efficiency of resource allocation such as investment for growth opportunity.
Adequate time has to be given to a new project study so that key information can be collected completely. Analysis has to be done and alternatives should be proposed. The forecast income and cost should be based on actual data relevant to the investment location. Don’t let time constraints be a major factor. The top management’s personal preference needs to be considered objectively. At very least, important financial indexes should be calculated such as return on asset, payback period, and net present value. A detailed check of the data used is also important. This can help ensure that investment will be made wisely and cautiously.
When we say that people are the most valuable assets of a company, do we really think and act based on this belief? Some companies do not understand truly the idea of attracting good people, developing them and letting them grow with the company. When a company is recruiting a new employee, it should consider that it is looking for a person with potential to grow. A new employee should be groomed to someday take on higher responsibility and succeed the current seniors and supervisors. It is not good management to keep people who cannot deliver results. The rising stars of a company are most likely to demand more challenging and difficult work so that they can demonstrate their ability and enjoy the contributions made to the company.
4.4.2 Promoting Cost Consciousness
Cost consciousness has to be installed as part of corporate culture before it is too late. It can be difficult to resort to drastic measures such as lay-offs. It is much better if the company can control cost through employee involvement. Many companies have introduced cost reduction programs in various formats and under different project names. For example, a company initiated a “Cost Slash by Half” activity with intention to reduce total cost down significantly. After implementing this effectively, the cost has been lowered significantly. That company has a better chance to compete in the market place. In addition, in the process of new product development, the concept of target costing may be applied by subtracting the required profit margin from the expected selling price (Dekker & Smidt, 2003).
Employees can generate many ideas to help reduce the company’s spending. But after that, development of the cost improvement may need to involve higher levels of thinking with additional investment in order to shift the current cost position. This includes new product design, production line re-layout, automated processes, and computer technology utilization. Only with active and relentless project continuity can a company become successful in creating an effective cost control culture (Thammatucharee, 2009). However, expectations from management for budget-goal attainment which also imply effective cost control together with other targets such as innovation and empowerment can lead to role conflict and as a consequence decrease in performance (Marginson & Bui, 2009).
Additional theoretical approaches relevant to the construct of utilization of resource focus
Resourced-based theory supports understanding how a firm’ resources can lead to better performance. It is an important step toward performance theory creation through appreciating the intellectual contribution of the opportunism-based (Corner & Prahalad, 1996).
Resource-advantaged theory stresses the importance of market segments and resources which requires the firm to understand current strategies and keep on selecting, implementing and modifying strategies through time to achieve superior financial performance (Hunt, 1997).
4.5 System Focus
Almost all business transactions are related to financial matters such as sales, purchasing, investment, production, etc. It is essential to collect data, and record and analyze it into useful management information according to accounting methodology. The information flows are so complicated that an efficient system is required to account for the high volume of transactions; a reliable system is needed to ensure the accuracy and completeness.
Document flow should be simplified as much as possible. Reports generated by the computerized system should be minimized to provide only the necessary information. Redundancy should be eliminated. Some of the system focus best practices are as follows:
Simplify the document processes relating to accounting while retaining internal control.
Set up or modify the system for any new business process in advance to ensure continuity.
Have a long-term plan for information system improvement by exploiting advanced technology to maintain information integrity
Improve the speed of business plan execution under a robust and well-designed system.
4.5.1 Taking Advantage of Information Technology
Today many transactions are processed electronically, for example, money transfer, import and export Customs clearing formalities, and payments to suppliers. Accordingly, many kinds of accounting documents used for both internal and external purposes will be computerized. These include approval request forms, purchase requisition forms, invoices, purchase orders, petty cash, and so on. By implementing the paperless document flow, the company can reduce the use of hard copies and improve the speed of work. The design of corporate information system should help improve the relatively predictable outcomes (Grandlund & Lukka, 1998).
Information technology includes using available software or in-house developed systems. For example, a data tracking system can be designed to handle outstanding problems. For resolved problems, the solution and knowledge gained can be compiled to form a valuable knowledge base. Employees who encounter problems can search the system for available solutions. In order to improve the effective and efficient decision-makings, many companies utilize interactive data visualization for information presentation for both internal and external users (Dilla et al. 2010).
Before investing in an information system, managers should assess the return on investment including both quantitative and qualitative benefits. These include data input time reduction, accuracy of information, user friendliness and so on. A reasonable budget should be allocated for installation and maintenance.
4.5.2 Continuing Process Improvement
Today accountants still spend a lot of time having to do paperwork such as approving relevant documents and issuing paper checks. Even though, the IT (Information Technology) solutions have emerged in the form of ERPS (Enterprise Resource Planning Systems), they seemed to have little impact on management accounting methods and controls (Granlund & Malmi, 2002)
It may take hours or days to complete a conventional request form process. Some documents such as purchase orders or sales invoices require several copies. This paper-heavy operation is outdated. The process improvement challenge can be considered as everyone’s assignment when there is imbalance between the environment demands and the performance capability according to the person-environment fit theory (Caplan, 1983; Edwards, 1996; Van Harrison, 1978, 1985; Birnberg et al., 2007). It is important to ensure that the business process has been streamlined to support every operation. So once new information technology has been introduced, the company should learn about its offered capability and evaluate the benefits that can be obtained. This does not mean that the company has to employ every new technology out there, but should consider which ones can be exploited to gain competitiveness (Thammatucharee, 2009).
Additional theoretical approaches relevant to the construct of system focus
Social perception theory suggests that service quality perceptions between users and providers may be driven by differing education, goals and experiences (Ross and Fletcher, 1985; Srull and Wyer, 1988, cited in Walker, et al., 2011).
Actor-network theory recognizes the translation process characterized by various actors’ efforts in building networks of support surrounding an idea (Qu, S.Q., 2004).
5 RESEARCH METHOD
The test of the theoretical framework under the ControllerFOCUS concept was performed through the action research method at three companies located in Thailand. The researcher performed the study when he worked as an employee at these companies under the role of plant controller, general manager of finance, and senior vice president of accounting and finance chronically. A set of questionnaire was designed for evaluation purpose and it was applied for the 3 companies before arriving at the controllership index result for each one.
The reason that action research was selected for this study because of the benefits that the researcher had spent totally 10 years as a professional officer who performed and practiced the ControllerFOCUS concept in real life. As the concept was newly developed, it deserved the participative observations throughout several incidents and under different circumstances due to the different nature of the firms under study and the different cultures under each organization. The conclusion can be drawn only from the involvement and interaction with the people in a sufficient long period of time. The discussion and conclusion can be found in the paper together with future research opportunity.
5.1 Controllership Index
The Controllership index is intended to help the company assess its strategic controllership competency and potential weaknesses from 5 key aspects. The Controllership index identifies a standard for the quality of business control based on the rating of the 5 strategic areas.
The total score of the index will range from minus 15 to plus 15 as based on 15 strategic areas. Under each area rating, the result could be one of the following 3 value ranges:
Scale range from 0.01 to + 1.00
Scale level 0
Scale range from – 0.01 to – 1.00
The sum of the value from 15 elements would represent the Controllership index whereby the value range can be divided into three main levels as follows:-
Index Value -15 to <0
This index value range represents the lack of controllership and can pose risks of diverse impact on both the accounting performance quality and the organization’s failure and survival. There are three sub levels that are classified as A, B and C.
Index Value 0
This index level demonstrates the state of incomplete application of best practices, insignificant negative strategic impacts or special circumstances such as newly established organizations or under restructuring process.
Index Value >0 to +15
This category consists of sub levels including X, Y and Z showing the performance quality of controllership of the organization and the accounting team. This could leads to the perception of a sound independence, reliability and integrity of performance.
As most performance and quality indexes are in positive numbers or a series of letters, it is an intention for controllership index to better reflect the numerical difference in 3 categories as demonstrated above.
5.2 How to evaluate the company’s controllership competency using ControllerFOCUS model
The following steps are the brief proposed evaluation process that should be performed by qualified staffers with sound accounting and finance skills, let alone operational knowledge and familiarity. They should have practical experience as controllers or similar roles, and should be comprehensively trained in the ControllerFOCUS concept. It is essential for the evaluator to be certified before being able to perform the work. Certification should be issued by a credible institution under the guideline to be established in the future.
The results need to come from the proven comprehensive model of evaluation. Consensus or a reliable decision-making should be obtained from the body or panel of evaluating team in determining the final score for each element.
The frequency of the evaluation still needs to be determined. It may be performed at least on a monthly or quarterly basis. There are mainly 4 steps in performing the controllership evaluation of a company.
Step 1
With reference to the evaluating questionnaires, the evaluator should review and check the company’s documents, reports and meeting minutes for accuracy and completeness. Several interviews with employees and managers may be required under the 360 degree concept.
Step 2
The information and results obtained from step 1 should be included in the evaluator’s standard working report. At this stage, reconfirmation may need to be done for any outstanding or uncertain issues.
Step 3
The index value will be assigned by the evaluator(s) to each item reviewed under each range of score category. Then the total value will be calculated by summing up all decided values.
Step 4
The evaluator submits the report to the management and employees regarding the company’s controllership performance as compared to the standard. Comments and recommendations should be made for further improvement together with the reasons why each value has been assigned.
5.3 Survey Questionnaire Development
The purpose of the questionnaire is to test each case company for the purpose of obtaining the controller index result. The primary test question was based on the strategic behavior under the ControllerFOCUS strategy web (figure 2). Each perspective of the ControllerFOCUS consists of 3 important strategic checkpoints. The following tables show an example of evaluation format used for the evaluation purpose.
5.3.1 Future Focus Evaluation
The future focus evaluation is aimed at determining the company’s long-term directions. The major evaluating points are:
Topics Score -0.01 to -1.00 Score 0 Score +0.01 to +1.00 Total Score
1) Identify and work on new opportunities. For example: no new projects or improvement plan for a long time. For example: no attention and follow-up on the progress of new projects on hand. For example: there are continuity and commitment on new projects success.
2) Review and analyze the consequence impact before decision making. For example: no discussion on decisions with high impact to employees. For example: individual unit or departmental decision is made without involvement of others. For example: the planning process and evaluation of results have been applied effectively throughout the company.
3) The company has risk assessment and risk management process in place. For example: no risk assessment policy and procedure in place. For example: the risk assessment has been done for certain areas only. For example: the risk assessment system has been implemented throughout the company.
Total Score
Table 1: A questionnaire for Future Focus review
5.3.2 Operation Focus Evaluation
The operation focus evaluation will show how successfully the company has dealt with organizational conflict and how it can promote collaboration among employees.
Topics Score -0.01 to -1.00 Score 0 Score +0.01 to +1.00 Total Score
1) The company has promoted effective communication both internally and externally to enhance the understanding. For example: the communication is mostly on the one-way and top-down basis. For example: there is evidence of two –way communication in certain areas. For example: there is complete and effective communication for all employees and third parties.
2) The company has created a working environment in which people can support each other. For example: the working atmosphere is full of conflicts and politics. For example: most employees do not have time for others who seek help. For example: the cooperation and team spirit levels are high and obvious throughout the organization.
3) The company has promoted good relationship among employees, business partners and community. For example: the authority has been centralized at the top management level. For example: there is delegation of duties but under tight control by the top management. For example: empowerment has been widespread. Everyone is enthusiastic and happy.
Total Score
Table 2: A questionnaire for Operation Focus review
5.3.3 Control Focus Evaluation
The control focus evaluation is aimed at preventing errors and fraud. It also identifies the risk areas that require special attention.
Topics Score -0.01 to -1.00 Score 0 Score +0.01 to +1.00 Total Score
1) The company has set up and reviewed the internal control system regularly to assure the existence and effectiveness. For example: no internal control system review in last year. For example: some internal control weakness has been identified occasionally. For example: regular reviews have been made to ensure compliance with the internal control system efficiency. No significant control weaknesses found.
2) The company has set up clear policy and procedure and can enforce them as a preventive measure effectively. For example: no written policy and procedure to ensure effective check and balance. For example: several policies and procedures are not practical, incomplete or not up-to-date. For example: the policy and procedures have been issued and updated according to changes and effectively followed.
3) The company has promoted and maintained the control discipline properly. Foe example: the internal control weakness comments have been presented to the company’s management without any corrective actions done. For example: the control weaknesses have been pointed out but not significant enough to be put in the management letter. For example: there has been no management letter from the external auditor mentioning about the internal control problems of the company.
Total Score
Table 3: A questionnaire for Control Focus review
5.3.4 Utilization of Resources Focus Evaluation
This category rates how well the company is using its limited resources to achieve the targets.
Topics Score -0.01 to -1.00 Score 0 Score +0.01 to +1.00 Total Score
1) The company has given emphasis to human resource management. For example: no concrete plan for employee development and succession plan. For example: the human resource management plan and investment are not in line with industry. For example: the employees’ career path development and morale are effective and strong.
2) The company has managed time in the most efficient manner. For example: it is obvious that the time management is poor in several working areas. For example: about 50% of idle time can be noticed in some areas without proper corrective action plans in place. For example: the company concentrates on waste time elimination and on an ongoing basis.
3) The company has utilized assets at the expected return rate. For example: the company’s assets are not protected and not fully utilized. For example: some assets were purchased without proper justification in the decision- making process. For example: the company’s assets have been taken care of in a systematic manner to ensure maximum utilization.
Total Score
Table 4: A questionnaire for Utilization of Resources Focus review
5.3.5 System Focus Evaluation
This category evaluates how well the company has adapted and adjusted its supporting systems.
Topics Score -0.01 to -1.00 Score 0 Score +0.01 to +1.00 Total Score
1) The company has focused on setting up strong and robust and friendly systems. For example: Several jobs depend on individual handling without back-up plan. For example: the system has been below standard efficiency levels. For example: the system has been fully used and kept improving according to users’ request.
2) The company has installed reliable systems with integrity of information. For example: repeated errors have been found without corrective actions plan in place. For example: a few errors have been found and corrected from time to time. For example: the company has a good process to ensure the accuracy and completeness of information.
3) The systems installed have helped improved the company’s performance and speed. For example: the systems are obsolete and pose risks of operation shutdown. For example: the system in use is not responsive in users’ views. For example: the systems have improved speed and response effectively.
Total Score
Table 5: A questionnaire for System Focus review
The evaluation can also take into account other statistics such as error rate, number of certain incidents, and external feedback. Surprisingly, according to the researcher’s experimental test for previous 3 companies, the index score ranged from the minimum of – 0.68 to the maximum of +0.01. The maximum of +15.00 is the ultimate target to be reached. This needs to be followed by effective improvement measures and determination from all members of the organization.
The concept of ControllerFOCUS includes key elements to help controllers formulate long-term strategies from the accounting point of view, which should be applied as part of an ongoing business planning processes.
Figure 2. The ControllerFOCUS Strategy Web
5.4 Background of the Case Companies
The study was performed simultaneously with the professional service provided by the researcher at the afore-mentioned three companies. The following are summarized nature and environment at each company. It should be noted that the discussion and results presented in this paper was based on the working environment and conditions of companies operating in Thailand during 1998 to 2010.
5.4.1 Company A
The case company A was a U.S. multi-national company that first came to invest in Thailand in the promotional area of the Eastern seaboard. Under this promotion of the board of investment (B.O.I.), it could enjoy the tax benefits and expatriate work permit rights through the approved certificate. The company’s strategy for being in Thailand was to serve the South East Asia’s growing demand.
The company needed a competent local person for the plant controller position. This person must possess the so-called American working style. After two Thai controllers left the company within three years, the researcher was the third one. The plan facility in Thailand was the first in the company’s history to put two divisions – motor and compressor – together under one roof. This caused the operations and accounting reports to be prepared on two sets to support each division. That also meant that line of command will be split in two.
There were about 400 employees in this company with the production running in two shifts during peak season, and reduced to one shift during low season. Within five years of the researcher participation, there were five managing directors or so-called plant manager changing.
The company had gained satisfactorily high margin and net profit since the start until the plant in China started operation in 2003 with lower cost per unit. This pushed a lot of pressure on employees and the management in terms of competition for number one in Asia.
5.4.2 Company B
This was a 100% owned Japanese company with reputable brand for electronic appliance products distributed globally. With the restructuring plan for the existing companies, two companies had been amalgamated causing encountering between the management and employees though the strong labor union. The researcher joined this company at the time when almost all accounting employees resigned from the company after taking the compensation payment.
The 2,000 employee factory had been struggling with operating losses for a few years due partly to the high competition from Korean companies. Main products at this factory include refrigerator, washing machine, thermo-pot and rice cooker. Labor cost was the major part of the product cost. This includes high over time cost incurred every month until it seemed to be normal practice.
In order to cope with huge operating loss, the company had adopted the cost reduction activity through encouragement and following the policy from the head office. This activity applied to all 23 subsidiary companies in Thailand. In terms of the accounting and finance functions, the company had to borrow from subsidiary company.
The new accounting team had been set up with difficulties due to high turn-over. The recruiting approach was changed in response to the unstable accounting team. Also drastic process change had been made to get rid of non-value-added activities. In the second year of the researcher’s employment a new computerized system was implemented to replace the old one.
Cost reduction activity under the name and campaign of “Cost Buster” was introduced and implemented throughout the group of companies and become a key success factor in respect of cost and efficiency improvement.
5.4.3 Company C
This was one of the large retail businesses in Thailand. It was 100% family business. It was positioned as a marketing company owning over 85 licenses and own brands of apparel, cosmetics, electronic products and other consumable products. The company had its own production facilities to produce apparel.
With about 5,300 employees mostly sales people located at shops and outlets throughout Thailand, the company had the challenge of inventory control and human resource management. Due to the unchanged working environment, a number of employees stick to the typical working process with very slow adaptation to changes.
The long-term strategy of expanding overseas and double growth in five years had got the attention of the management team to thrive for the goal. It was evident that the company needed a radical reform in several aspects in order to reposition itself from importer to exporter and overseas investor. The road ahead was still far and clearly not smooth.
5.5 The Interventionist Research Performed by the Researcher
The ControllerFOCUS concept was initially developed and has been improved along the past decade based on the interventionist studies performed at the 3 companies. This approach is considered useful for practical problem-solving construct of a management accounting theory (Malmi & Granlund, 2009, p. 613). By being part of the accounting team for certain period of time, the researcher had performed action research by using the participative approach. This included observations, recording of progress, and intervention using the ControllerFOCUS concept under the role of controller or the head of accounting unit.
At company A, the researcher had served as the plant controller supervising about 14 accounting staff. During the five years period, he had reported to the expatriate plant manager or managing director totally five people. He was selected as one of the star group of employees.
At company B, the researcher took the position of general manager of finance. He went to the transitional period of a losing company and needed to set up a new accounting organization. He was considered one of the high potential candidates of the company.
At company C, the researcher was the senior vice president of accounting and finance. He came when the company needed new people to join the growing group of companies. He was assigned the cost reduction and inventory control projects. The result was event through the performance shown to the management.
The theoretical framework and concept of ControllerFOCUS and Controllership Index has been developed, shaped, refined, and modified along the practical period as mentioned above. However, this seems to be an ongoing process that just starts the long journey for more developers to join. It is a back-and-forth evolvement for the whole conceptualization. It was not originally formed from the study of existing theories but it is the work of experience-based paradigm shift. This is why it seems to be awkward in trying to connect the concept to the existing theories as can possibly be noticed in this paper.
After spending time in the case companies, the researcher has developed a comprehensive model and used it to evaluate the 3 companies together with adjustments from the action research result. The documentation for observations derived appears in several forms such as emails, diaries and books by the researcher. As a result, the controllership index of the three companies was shown in table 6 below.
Table 6: The test data from the selected sample companies
6 Discussion
This paper has discussed the elements underpinning the concept of an accounting strategy that may help align accounting operations with other functional units in order to accomplish business strategies. An action research had been applied as a field research at the three case companies.
6.1 The Vision of New Breed Controllers
Apparently, the controller’s roles have been challenged and customized to serve the strategic need of the firm. Controllers need to be more business-oriented. This cultural change in accounting practices involves different change interventions (Jarvenpaa, 2007). Being equipped with the financial strength and business acumen, the new-era controller has to lead the strategic change in the organization. More specialized titles will be created to reflect the clear mission, for example, the marketing controller, plant controller, and business unit controller. In a marketing company with multi-brand being managed independently, the brand controller can be the person who connects the front-office and back-office operation together.
In order to effectively perform the new roles of controller, several fields of social sciences should be incorporated and taken into account. The financial part should not be central to developing new controllership in the future, but instead should take into consideration the relations of other disciplines and practices, namely, accounting, actuarial science, applied psychology, engineering, finance and so on (Miller, 1997, 2007). Only by gradually and systematically shaping the roles of traditional accountants can the new breed of controllers becomes a reality.
Table 7 below summarized examples of findings regarding the perceptions and implications by non-accounting people from the research made from the 3 studied cases above that reflect the traditional versus the asked-for new type of controllers’ attributes, behaviors and mindsets, based on the theoretical framework of ControllerFOCUS.
Item ControllerFOCUS Element Traditional Controller New Hybrid Controller
Future perspective - Opportunity Passive and stick to historical data. Forward looking with big picture.
- Consequences Focus on financial or quantitative impact. Concentrate equally on financial and non-financial impacts.
- Risks Need high certainty level for decision-making. Act and response to situation even with less confidence level.
Operation perspective - Relationship Separate clearly between accounting and other functional roles. Work with true synergy efforts in mind.
- Understanding Having high accounting technical knowledge but low operational understanding. Having high business sense with willingness to understand issues from several perspectives.
- Support Lack of support for other departments’ efforts to achieve the targets. Response to other departments’ concerns constructively and help resolve conflicts.
Control perspective - Assurance Stick to the rules in making sure things are in control. Take into account hidden losses and waste from operations.
- Discipline Be viewed as rigid and inflexible in enforcing the rules and regulations. Be flexible and make change in response to new environment.
- Prevention Be conservative in handling control issues. Be constructive in enhancing preventive measures instituted.
Utilization perspective - Assets Accounting policy driven on asset management. Business strategy driven on asset management.
- Time Deadline and aging are main concerns. Business process efficiency and effectiveness are main concerns.
- People Limited scope of accounting people development. Wider scope of knowledge and skills on business.
System perspective - Speed Realized but not responsive to operational expectations. Responsive to operational and management expectations.
- Friendliness Be viewed as road block or stopper in carrying out strategies. Be viewed as strategic partner and integrator of business strategies.
- Integrity Be viewed as not reliable on financial reporting. Be viewed as trustworthy financial reporters.
Table 7: The comparison of typical and new attributes of controllers
6.2 An Evolution of Accounting and Auditing Standard Quality Measurement
By introducing the Controllership index as a quality measurement of accounting work, companies adopting this indicator can have clearer direction in putting efforts to improve the index to the satisfactory level. This level may reflect the standard of accounting performance that could upgrade the independence and integrity so that the current issues of accounting manipulations or window dressing practices can be limited and ultimately reduced. The controllership index may lead to the development of holistic accounting which integrates other sciences into the future business management practices. With the high standard quality of accounting process and report, it can increase possibility of self-disclosing monthly financial statements to public, especially for listed companies that currently required quarterly review from an external auditor.
As a consequence, the roles of external audit work should be changed from testing the accuracy and completeness or in other words the reliability of the accounting reports to the evaluation of the working standard quality of accounting work. This could be considered more valuable than the current practices of auditing that shows the nature of repetition as a waste and duplication of accounting work being done by the accountants of a company. Currently, an auditor’s opinion report can be classified into 4 types which do not give much difference to users especially non-accounting people. The application of CI may be an alternative to better reflect the degree of reliability of a company’s financial statements so that they can be more comparable. The table below demonstrates a possible change in expressing the correctness and reliability of financial statements by applying the CI score in stead of the vague and conservatively reserved opinion (please see table 8 – An alternative auditor’s opinion expression using CI score).
Type of Auditor’s Opinion Degree of opinion under CI Equivalent CI Range
Unqualified opinion Highly correct 11.00 to 15.00
correct 5.00 to 10.99
Qualified opinion Highly fair 0.01 to 4.99
Fair 0.00 to -0.99
Disclaimer of opinion Poor -1.00 to -4.99
Highly poor -5.00 to -7.99
Adverse opinion Incorrect -8.00 to -10.99
Highly incorrect -11.00 to -15.00
Table 8: An alternative auditor’s opinion expression using CI score
6.3 The Possibility for ControllerFOCUS and Controllership Index in Filling the Existing Gap of SMA
As one of emerging new models of strategic-based accountant, ControllerFOCUS may serve as a long-time sought-after bridge that fills the existing gap between strategic management accounting and the strategy accomplishment as can be demonstrated in the framework shown in figure 3 – The Strategy Integrator below.
Figure 3. The Strategy Integrator
7 Conclusions
I have demonstrated that the strategic accounting concept through the application of the tool under controllership index is both desirable and possible based on the 3 cases above. The result below was based on the sole judgment of the researcher and did not indicate failure or success of the aforementioned companies in the past, present or future. The objective of the study is to pilot test the concept of Controllership index for possibility in developing into a more systematic, realistic and comprehensive methodology in the future.
The following are summarized findings and analysis as a result of the assessment of the three selected companies:
• Out of total 15 full score, the test results from the three companies indicated a major room for improvement according to the concept of ControllerFOCUS.
• Multi-national companies seemed to obtain significantly higher score than the local company. This support the trend of better management skill in most areas being measured. However, the nature and size of business can be an important factor that caused variation.
• The ControllerFOCUS or Controllership index pointed out the weakness and areas that should be strengthened. Selected companies could use this index in developing action plans to enhance better score in the future.
• The implications of controllership improvement opportunity may lead to the future changes in the accounting functions that can impact the accounting practices being challenged today.
In order to synergize the corporate knowledge and capabilities to cope with the dynamic business world’s evolution, Thammatucharee (2009) asserted that:
Today’s controllers need to utilize a vast knowledge base gained from several disciplines such as human resource management, manufacturing operations, logistics, quality control, project management, sales and marketing, and so on in order to shift from the historical data focus to increased business performance enhancement (Thammatucharee, 2009, p.223).
This leads to possible answers to the research questions aforementioned in the second paragraph as follows:-
Answers to question 1 – The suggested ControllerFOCUS may be considered the starting point in further developing an accounting strategy that helps enhance and synergize organizational resources in order to effectively execute the strategies of an organization.
Answers to question 2 – The proposed accounting quality index under Controllership Index may be considered an attempt to innovatively improve today’s accounting’s value creation for internal, external stakeholders and their societies.
Answers to question 3 – Apparently under the fast-changing world, today’s auditing practices have created more wastes than value to practitioners and users of the output. The so-called external auditors should change their roles to an evaluator of the accountants’ trustworthiness level rather than trying to express opinion on the fair presentation of the information as they are certified accountants who are not in the position and possess the capability to really certify on the correctness at all.
7.1 Future Challenges:
World financial crises have raised challenging questions to the relevance of existing business practices including accounting. Even though the computer and software technology have advanced with speed and performance, the generated information has not convinced many users their decision making capability is better. The controller should not be regarded as a financial reporter who merely inform about a company’s balance sheet and profit and loss. Notes to the financial statements should include the company’s key performance indicators highlighting the internal strength and weakness for the stakeholders and public. Listed companies should be able to disclose financial and operational performance without waiting for an external auditor to review on a quarterly basis as the most frequency like today. An accredited controller should be the representative of the company to inform the public or investors about the monthly performance or even shorter period than that. Otherwise, only a group of influential people can access to the information faster than the public, which cause an unfair and non-competitive treatment among stakeholders. This seems to be possible by starting to embrace the controllership standard through the controllership index establishment in the business community.
To be successful in business, companies need effective strategies to get to the vision they set. Supporting strategies at sub-units need to be aligned with the main strategy. The challenging question is what strategies the accounting department is going to use to help the business units achieve their strategies. Apparently, accounting has to have its own strategy in dealing with changing roles. Future accountants will not only be experts in numbers but they also need to be the effective integrators of the corporate scarce resources.
7.2 Limitations and Future Research
This study has several limitations, notably the measurement of the Controllership Index for the three case studies from the different timing period. Moreover the questionnaire was used based on the researcher’s experience and participative approach. Therefore, generalization of this tool described in this paper should be done at this stage. As clearly stated above in the background of the case companies that this study had been done in Thailand, the results, implications and conclusions may not represent other environment and cultures in other parts of the world. However, as the two case companies are subsidiaries of well known U.S. and Japanese companies, the cross cultural factors should be taken into consideration.
In this context, this study may be considered a starting point for accounting practitioners and academics to look into performance quality issue that may lead to a constructive improvement endeavors. In addition, I hope that this paper may encourage more future research opportunities on the changing and expanding roles of a controller. Future researches may focus on the validity and reliability of the key performance indicator under the controllership index construct that could bring the quality and independence issues into attention of accounting professionals. Possibly this might lead into radical change in accounting and auditing professional practices.
The construct of the ControllerFOCUS concept was initially created from the practical perspective of a controller, which has been proved to be pretty effective based on the past experiences as a practitioner. The researcher has tried to include relevant theories available that can be tied to the understanding of the 5 focus points. These theories may not be completely and directly involved with the referred discussed areas. However, it is hoped that this would be helpful in indicating future research opportunity from the academic perspective.
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