WEEK 01 LECTURE

Prepared by Teacher Tammy De Guzman Oraya

Introduction to Financial Controllership

Welcome to the first week of our Financial Controllership course. In this lecture, we will be
discussing the basics of financial controllership, including its definition, the role of the financial
controller, and an overview of financial reporting and analysis.

WHAT IS FINANCIAL CONTROLLERSHIP?

Financial controllership is the process of managing an organization's financial resources to
ensure their effective utilization in achieving the organization's goals.
It involves a range of activities, including financial reporting and analysis, budgeting and
forecasting, risk management, compliance, and decision-making.

Significance of Financial Controllership in a broader context

Financial controllership in the Philippines has played a crucial role in the country's economic
development. Historically, financial controllership has been associated with the country's efforts
to modernize its economy and attract foreign investment.
During the 1950s and 1960s, the Philippines embarked on a program of economic development
known as the "Filipino First Policy." This policy aimed to promote domestic industry and reduce
the country's dependence on foreign imports. To achieve this goal, the government established
a number of economic agencies, including the Central Bank, the Board of Investments, and the
Securities and Exchange Commission. These agencies were tasked with regulating the financial
system and promoting investment in domestic industries.
In the 1970s and 1980s, the Philippines experienced a period of economic growth known as the
"Marcos era." During this time, the government invested heavily in infrastructure and industrial
development, with the aim of transforming the country into a major industrial power. Financial
controllers played a key role in managing the country's finances and ensuring that investments
were made wisely.
In the 1990s and 2000s, the Philippines continued to modernize its economy and attract foreign
investment. Financial controllership became increasingly important as the country opened up to
global markets and sought to compete with other countries in the region. The adoption of
international accounting standards and the development of more sophisticated financial
management tools helped to improve the country's financial infrastructure and attract more
foreign investment.
Today, financial controllership continues to play a critical role in the Philippines' economic
development. The country's financial sector has become increasingly sophisticated, with a wide
range of financial products and services available to investors. Financial controllers are responsible
for ensuring that these products and services are managed effectively and that investors are
protected from financial risks. As the Philippines continues to modernize its economy and attract
more foreign investment, financial controllership is likely to remain a vital part of the country's
economic infrastructure.

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The Role of the Financial Controller in the Private and Public Organization
In the PRIVATE SECTOR, the role of financial controller is typically held by a senior finance
professional who is responsible for overseeing the financial operations of the company. The
financial controller's duties and responsibilities may vary depending on the size and complexity of
the organization, but generally include the following:
1. Financial Planning and Analysis: The financial controller is responsible for creating and
managing the company's financial plans, including budgets, forecasts, and long-term financial
projections. They analyze financial data and provide insights to the executive team to inform
strategic decision-making.
2. Financial Reporting: The financial controller ensures that the company's financial
statements are accurate, complete, and comply with accounting standards and regulations.
They also prepare financial reports for external stakeholders, such as investors, creditors, and
regulators.
3. Accounting and Bookkeeping: The financial controller oversees the company's accounting
and bookkeeping functions, ensuring that financial transactions are properly recorded,
classified, and reconciled. They also manage the company's accounts payable and accounts
receivable processes.
4. Cash Management: The financial controller is responsible for managing the company's cash
flow, including monitoring cash balances, forecasting future cash needs, and overseeing cash
disbursements.
5. Risk Management: The financial controller is responsible for identifying and managing
financial risks facing the company, such as credit risk, market risk, and operational risk. They
develop strategies to mitigate these risks and ensure that the company is in compliance with
relevant regulations and industry standards.
6. Team Management: The financial controller manages a team of finance professionals,
including accountants, bookkeepers, and financial analysts. They provide leadership,
coaching, and development opportunities to ensure that the team is performing at a high
level.

In the PUBLIC SECTOR, the role of financial controller is typically held by a senior finance
professional who is responsible for overseeing the financial operations of a government agency
or department. The financial controller's duties and responsibilities may vary depending on the
specific agency or department, but generally include the following:
1. Budgeting: The financial controller is responsible for creating and managing the agency's
budget, including forecasting revenue, analyzing expenses, and monitoring performance
against budget targets.
2. Financial Reporting: The financial controller ensures that the agency's financial statements
are accurate, complete, and comply with accounting standards and regulations. They also
prepare financial reports for external stakeholders, such as the legislature, auditors, and the
public.

3. Accounting and Bookkeeping: The financial controller oversees the agency's accounting
and bookkeeping functions, ensuring that financial transactions are properly recorded,
classified, and reconciled. They also manage the agency's accounts payable and accounts
receivable processes.

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4. Cash Management: The financial controller is responsible for managing the agency's cash
flow, including monitoring cash balances, forecasting future cash needs, and overseeing cash
disbursements.
5. Risk Management: The financial controller is responsible for identifying and managing
financial risks facing the agency, such as credit risk, market risk, and operational risk. They
develop strategies to mitigate these risks and ensure that the agency is in compliance with
relevant regulations and standards.
6. Team Management: The financial controller manages a team of finance professionals,
including accountants, bookkeepers, and financial analysts. They provide leadership,
coaching, and development opportunities to ensure that the team is performing at a high
level.

Financial controller in private and public agencies play a critical role in managing the financial
health and well-being of their entity. They ensure that the agency's finances are managed
effectively and efficiently, and that the agency is well-positioned to achieve its goals and
objectives.

For the public sector, financial controller has an additional role in promoting transparency and
accountability for government financial management system.

KEY FINANCIAL CONTROLLERSHIP CONCEPTS

Financial controllership refers to the processes and practices that a company uses to manage its
financial activities, ensure compliance with accounting regulations, and maintain financial
transparency. Some examples of key financial controllership concepts are as follows:
1. Accounting Principles: These are the standard rules and guidelines that govern how
financial transactions should be recorded, reported, and analyzed. Common accounting
principles include the Generally Accepted Accounting Principles (GAAP) and the
International Financial Reporting Standards (IFRS).
2. Financial Planning and Analysis: This involves the development of budgets, forecasts,
and financial models to guide the company's financial decision-making. Financial planning
and analysis can help companies identify trends, anticipate risks, and optimize their
financial resources.
3. Internal Controls: These are the policies, procedures, and systems that a company uses
to ensure the accuracy, reliability, and integrity of its financial information. Effective
internal controls can help prevent fraud, errors, and misstatements in financial reports.
4. Financial Reporting: This refers to the process of preparing and presenting financial
statements, such as balance sheets, income statements, and cash flow statements.
Financial reporting is a critical component of financial controllership, as it provides
stakeholders with important information about a company's financial performance and
position.

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 5. Audit and Assurance: This involves the independent review and verification of a
company's financial statements by external auditors. An audit provides assurance to
stakeholders that a company's financial statements are accurate and reliable.

Overall, effective financial controllership is essential for companies to maintain financial stability,
meet regulatory requirements, and make informed financial decisions.

OVERVIEW OF FINANCIAL REPORTING AND ANALYSIS

Financial reporting and analysis are essential components of financial controllership. Financial
reports provide an overview of an organization's financial performance, while financial analysis
involves interpreting the information contained in these reports to gain insights into the
organization's financial health.

Financial reports include the balance sheet, income statement, and cash flow statement.
1. Balance Sheet provides information on the organization's assets, liabilities, and equity at a
specific point in time. Here are some ways in which the income statement affects the financial
standing of an organization:
2. Income Statement provides information on the organization's revenues, expenses, and
profits over a specific period. Here are some ways in which the income statement affects the
financial standing of an organization:
3. Cash Flow Statement provides information on the organization's cash inflows and outflows
over a specific period. Cash flow is important for several reasons:

Financial analysis involves using various financial ratios, such as liquidity ratios, profitability ratios,
and solvency ratios, to interpret the information contained in financial reports.
For example, liquidity ratios measure the organization's ability to meet its short-term obligations,
while profitability ratios measure the organization's ability to generate profits.

SEVERAL TECHNIQUES IN FINANCIAL REPORTING AND ANALYSIS

Finance professionals use to interpret and communicate financial information. Some of the most
commonly used techniques are:
1. Financial Ratio Analysis: This technique involves calculating and analyzing key financial
ratios, such as liquidity ratios, profitability ratios, and efficiency ratios. By comparing these
ratios to industry benchmarks or historical trends, finance professionals can gain insights into
a company's financial health and identify areas for improvement.
2. Trend Analysis: This technique involves analyzing financial data over time to identify trends
and patterns. This can help finance professionals identify areas of strength or weakness in a
company's financial performance and make informed decisions about future investments or
strategic initiatives.
3. Variance Analysis: This technique involves comparing actual financial results to budgeted
or expected results to identify variances and understand the reasons behind them. This can
help finance professionals identify areas where actual performance is significantly different
from what was planned, and make adjustments accordingly.

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4. Common Size Analysis: This technique involves expressing financial statement line items
as percentages of a common base, such as revenue or total assets. This can help finance
professionals identify trends and patterns in the composition of a company's financial
statements and compare performance across different time periods or companies.
5. Cash Flow Analysis: This technique involves analyzing a company's cash inflows and
outflows to understand its liquidity and cash position. This can help finance professionals
identify potential cash flow problems or opportunities for improvement, and make decisions
about investing, financing, or operating activities.

These techniques are used to help finance professionals understand and communicate financial
information in a meaningful way, and make informed decisions about investments, financing, and
other financial activities.

TRENDS IN FINANCIAL CONTROLLERSHIP IN THE PHILIPPINES:

1. Emphasis on Technology: With the rise of digital transformation, financial controllers are
increasingly leveraging technology to automate and streamline financial processes. This
includes the use of cloud-based accounting software, data analytics tools, and automation of
routine tasks to improve efficiency and accuracy.
2. Focus on Risk Management: Financial controllers are becoming more involved in risk
management activities, particularly in identifying and mitigating financial risks associated with
operations, investments, and financing activities. This includes conducting risk assessments,
developing risk mitigation strategies, and monitoring risk exposures.
3. Greater Importance of Ethics and Compliance: There is an increasing focus on ethics
and compliance in financial controllership, particularly in light of regulatory changes and
increased public scrutiny. Financial controllers are expected to ensure that financial reporting
and management practices comply with legal and regulatory requirements, and to promote
ethical behavior throughout the organization.
4. Growing Importance of Strategic Planning: Financial controllers are playing a more
strategic role in organizations, providing input into business decisions and developing financial
plans that align with overall organizational goals. This includes forecasting financial
performance, identifying growth opportunities, and managing capital expenditures.
5. Shift to Data-Driven Decision Making: Financial controllers are increasingly relying on
data and analytics to support decision-making, particularly in areas such as budgeting,
forecasting, and risk management. This includes the use of predictive analytics tools to
identify potential financial risks or opportunities, and the development of financial dashboards
and key performance indicators to monitor performance in real-time.

In summary, financial controllership in the Philippines is becoming more complex and

multifaceted, requiring a broad range of skills and expertise in areas such as accounting, finance,
risk management, and technology.

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