About the Author                                   xvii
Preface                                            xix
  PART I THE BROAD MANAGEMENT ASPECTS OF           1   (150)
  CONTROLLERSHIP
    Accounting in the Corporation                  3   (10)
      Tasks of the Accounting Function             3   (2)
      Role of the Accounting Function              5   (1)
      Role of the Controller                       6   (1)
      Impact of Ethics on the Accounting Role      7   (3)
      Evolving Role of Accounting                  10  (3)
    Controller's Responsibilities                  13  (10)
      Variations on the Title                      13  (1)
      Planning Function                            14  (1)
      Control Function                             15  (1)
      Reporting Function                           15  (1)
      Accounting Function                          16  (1)
      Additional Controller Functions in           17  (2)
      Smaller Companies
      Controller's Job Description                 19  (2)
      Relationship of the Controller to the        21  (2)
      Chief Financial Officer
    Cost Accounting and Costing Systems            23  (34)
      Purpose of Cost Accounting Information       23  (1)
      Input: Data Collection Systems               24  (3)
      Processing: Data Summarization Systems       27  (2)
      Processing: Job Costing                      29  (5)
      Processing: Process Costing                  34  (4)
      Processing: Standard Costing                 38  (2)
      Processing: Direct Costing                   40  (3)
      Processing: Throughput Costing               43  (5)
      Processing: Activity-Based Costing           48  (2)
      Processing: Target Costing                   50  (2)
      Outputs: Cost Variances                      52  (5)
    Ratio and Trend Analysis                       57  (32)
      How to Use Ratios and Trends                 57  (1)
      A Caveat                                     58  (2)
      Measures for Profitability                   60  (2)
      Measures for the Balance Sheet               62  (4)
      Measures for Growth                          66  (2)
      Measures for Cash Flow                       68  (2)
      Measures for Nonfinancial Performance        70  (15)
      Interrelationship of Ratios                  85  (1)
      Setting Up a System of Ratios and Trend      85  (4)
      Analyses
    Internal Control Systems                       89  (24)
      Objectives                                   89  (1)
      Responsibility for Internal Controls         90  (2)
      Examples of Internal Controls                92  (10)
      When to Eliminate Controls                   102 (2)
      Types of Fraud                               104 (1)
      Preventing Fraud                             105 (4)
      How to Deal with a Fraud Situation           109 (4)
    Internal Audit Function                        113 (10)
      Reporting Relationships                      113 (3)
      Role of the Audit Committee                  116 (1)
      Internal Audit Objectives                    117 (2)
      Internal Audit Activities                    119 (4)
    Recruiting, Training, and Supervision          123 (14)
      Recruiting Sources                           123 (2)
      Factors to Consider When Recruiting          125 (2)
      Factors to Consider When Promoting           127 (1)
      Importance of Reduced Turnover               128 (4)
      Importance of Developing Career Plans for    132 (2)
      Employees
      How to Motivate Employees                    134 (3)
    Controller's Role in Investor Relations        137 (14)
      Objectives of the Investor Relations         137 (1)
      Function
      Communication Vehicles for Investor          138 (1)
      Relations
      Investor Relations Message Recipients        138 (1)
      Information Needs of the Financial Analyst   139 (2)
      Information Needs of Other Groups            141 (1)
      Providing Guidance                           141 (3)
      Forward-Looking Statements                   144 (2)
      Organization Structure for Investor          146 (1)
      Relations
      Role of the Controller and Other             147 (4)
      Principals
  PART II THE PLANNING FUNCTION OF                 151 (124)
  CONTROLLERSHIP
    Business Plans and Planning:                   153 (28)
    Interrelationship of Plans, Strategic
    Planning
      Business Planning Defined                    153 (1)
      Framework for Business Planning              154 (1)
      Time as Related to Planning                  154 (1)
      Planning Period: How Long Is ``Long          155 (1)
      Range''?
      System of Plans                              156 (1)
      Strategic Plan: An Overview                  156 (1)
      Corporate Development Plan                   157 (1)
      Operations Plan                              158 (1)
      Basic Elements in Any Plan                   158 (1)
      Planning Process                             159 (2)
      Plan Frequency                               161 (1)
      Plan Guidelines                              162 (1)
      Supplemental Planning: Alternative           162 (1)
      Scenarios
      Planning Timetable or Schedule               163 (1)
      Strategic Planning: An In-Depth Review       163 (2)
      Environmental Analysis                       165 (2)
      Critical Success Factors                     167 (1)
      Business Mission or Purpose                  168 (2)
      Long-Range Business Planning Objectives      170 (4)
      Developing Strategies                        174 (3)
      Strategies and the Planning Period           177 (1)
      Role of the Controller                       177 (4)
    Financial Impact of the Strategic Plan:        181 (20)
    Long-Range Financial Plan
      Key Elements of a Strategic Plan             181 (1)
      Capital Investments                          182 (1)
      Risk Analysis                                183 (1)
      Objectives of the Long-Range Financial       184 (1)
      Plan
      Consolidation and Testing Process            185 (1)
      Illustrative Financial Exhibits in the       186 (7)
      Plan Presentation
      Role of the Controller                       193 (8)
    Profit Planning: Annual Plan                   201 (24)
      Purpose of Budgeting                         201 (1)
      Planning Benefits                            202 (1)
      Coordination Benefits                        203 (2)
      Control Benefits                             205 (1)
      Problems with the Annual Plan                205 (1)
      Annual Planning Cycle: Illustrative          206 (2)
      Supportive Financial Statements and          208 (1)
      Budgets
      Sales Budget                                 209 (1)
      Production Budget                            210 (1)
      Purchases Budget                             210 (1)
      Direct Labor Budget                          211 (1)
      Manufacturing Expense Budget                 211 (1)
      Inventory Budget                             212 (1)
      Operating Expense Budget                     212 (1)
      Capital Expenditures Budget                  213 (1)
      Cost of Goods Sold                           213 (1)
      Statement of Estimated Income and Expense    214 (1)
      Cash Budget                                  214 (2)
      Statement of Estimated Financial Condition   216 (2)
      Approval of Budget                           218 (1)
      Linking the Bonus Plan to the Budget         218 (1)
      Controller's Role: A Key Player              219 (4)
      Management Approval of the Plan              223 (2)
    Profit Planning: Supporting Financial          225 (34)
    Analysis for the Annual Plan
      General Comments on the                      225 (1)
      Cost-Volume-Profit Relationship
      Breakeven Chart                              226 (2)
      Changes in Sales Revenue                     228 (1)
      Changes in Sales Mixture                     228 (2)
      Changes in Sales Price                       230 (1)
      Changes in Costs                             231 (1)
      Analysis by Product                          232 (3)
      Application of Cost-Volume-Profit Analysis   235 (1)
      Selecting the Most Profitable Products       236 (1)
      Increased Sales Volume to Offset Reduced     236 (1)
      Selling Prices
      Most Profitable Use of Scarce Materials      237 (1)
      Advisability of Plant Expansion              238 (1)
      Some Practical Generalizations               239 (1)
      Program Evaluation Using Discounted Cash     240 (3)
      Flow
      Financial Analysis of Unacceptable           243 (15)
      Operating Results
      More Sophisticated Analyses                  258 (1)
    Taxation Planning                              259 (16)
      Accumulated Earnings Tax                     260 (1)
      Cash Method of Accounting                    261 (1)
      Inventory Valuation                          262 (1)
      Mergers and Acquisitions                     262 (1)
      Net Operating Loss Carryforwards             263 (1)
      Nexus                                        264 (1)
      Passive Activity Losses                      265 (1)
      Project Costing                              266 (1)
      Property Taxes                               267 (1)
      S Corporation                                267 (1)
      Sales and Use Taxes                          268 (1)
      Transfer Pricing                             269 (2)
      Unemployment Taxes                           271 (1)
      Management of the Taxation Function          272 (3)
  PART III PLANNING AND CONTROLLING OPERATIONS     275 (224)
    General Discussion of Standards                277 (18)
      Definition of Standards                      277 (1)
      Advantages of Standards                      278 (2)
      Relationship of Entity Goals to              280 (1)
      Performance Standards
      Types of Standards Needed                    281 (4)
      Trend to More Comprehensive Performance      285 (2)
      Measures
      Benchmarking                                 287 (2)
      Setting the Standards                        289 (2)
      Use of Standards for Control                 291 (2)
      Procedure for Revising Standards             293 (2)
    Planning and Control of Sales                  295 (44)
      Sales Management Concerns                    295 (1)
      Controller's Assistive Role in Sales         296 (3)
      Management Problems
      Controller's Independent Role in the         299 (1)
      Planning and Control of Sales
      Sales Analysis                               300 (4)
      Sales Planning: Basis of All Business        304 (1)
      Plans
      Steps in Developing the Near-Term Sales      305 (3)
      Plan/Budget
      Methods of Determining the Sales Level       308 (3)
      Useful Sources of Forecasting Information    311 (1)
      Forecasting the Business Cycle               312 (6)
      Sales Standards                              318 (4)
      Sales Reports                                322 (6)
      Product Pricing: Policy and Procedure        328 (11)
    Planning and Control of Marketing Expenses     339 (28)
      Definition                                   339 (2)
      Factors Increasing the Difficulty of Cost    341 (1)
      Control
      Marketing Expense Analysis                   341 (1)
      Types of Analyses                            342 (11)
      Planning Marketing Expenses                  353 (1)
      Special Comments on Advertising and Sales    354 (6)
      Promotion Expense
      Marketing Expense Standards                  360 (7)
    Planning and Control of Manufacturing          367 (22)
    Costs: Direct Material and Direct Labor
      Direct Material Costs: Planning and          372 (7)
      Control
      Labor Costs: Planning and Control            379 (10)
    Planning and Control of Manufacturing          389 (36)
    Costs: Manufacturing Expenses
      Proper Departmentalization of Expenses       389 (1)
      Variations in Cost Based on Fixed and        390 (2)
      Variable Costs
      Variations in Cost Based on Direct Labor     392 (2)
      Variations in Cost Based on Batch Size       394 (2)
      Variations in Cost Based on Overhead         396 (2)
      Variations in Cost Based on Time             398 (1)
      Cost Estimation Methods                      399 (5)
      Normal Activity                              404 (1)
      Allocation of Indirect Production Costs      405 (2)
      Budgetary Planning and Control of            407 (2)
      Manufacturing Expenses
      Securing Control of Overhead                 409 (6)
      Control with Throughput Analysis             415 (1)
      Role of the Controller                       416 (9)
    Planning and Control of Research and           425 (22)
    Development Expenses
      R&D Activities in Relation to Corporate      425 (1)
      Objectives
      Organization for the R&D Financial           425 (1)
      Functions
      Elements of R&D Costs                        426 (3)
      Role of the Financial Executive in R&D       429 (1)
      Determining the Total R&D Budget             429 (1)
      Establishing the R&D Operating Budgets       430 (8)
      Detailed Budgeting Procedure                 438 (1)
      Other Control Methods                        438 (4)
      Effectiveness of R&D Effort                  442 (5)
    Financial Planning and Control in a Service    447 (14)
    Company
      Data Classification                          447 (2)
      Cost Accounting in a Service Organization    449 (5)
      Planning System                              454 (5)
      Strategic Planning                           459 (2)
    Planning and Control of General and            461 (16)
    Administrative Expenses
      Components of G&A Expense                    461 (1)
      Control over G&A Expenses                    462 (6)
      Reducing G&A Expenses                        468 (5)
      Spend Management Systems                     473 (1)
      Budgeting G&A Expenses                       474 (3)
    Payroll                                        477 (22)
      Improving the Payroll Process                479 (6)
      Compensation                                 485 (4)
      Federal Income Taxes                         489 (2)
      Social Security Taxes                        491 (1)
      Medicare Tax                                 491 (1)
      State Income Taxes                           491 (1)
      Payroll Taxes for Employees Working Abroad   492 (1)
      Remitting Federal Taxes                      492 (2)
      Payroll Deductions for Child Support         494 (1)
      Payroll Deductions for Unpaid Taxes          495 (1)
      Unemployment Insurance                       496 (3)
  PART IV PLANNING AND CONTROL OF THE BALANCE      499 (184)
  SHEET
    Planning and Control of Cash and Short-Term    501 (32)
    Investments
      Objectives of Cash Planning and Control      501 (1)
      Duties of the Controller versus the          501 (1)
      Treasurer
      The Cash Forecast                            502 (12)
      Cash Collections                             514 (6)
      Cash Disbursements                           520 (1)
      Internal Control                             521 (3)
      Reports on Cash                              524 (2)
      Cash Flow Ratio Analysis                     526 (2)
      Variations in Cash Requirements by           528 (1)
      Industry
      Investment of Short-Term Funds               529 (4)
    Planning and Control of Customer Credit and    533 (20)
    Receivables
      Credit Procedures and Systems                533 (9)
      Collection Procedures and Systems            542 (6)
      Measurement of Accounts Receivable           548 (1)
      The Bad Debt Forecast                        549 (1)
      Budgeting for Accounts Receivable Balances   550 (3)
    Planning and Control of Inventories            553 (32)
      Costs and Benefits of Carrying Inventory     553 (2)
      Role of the Controller                       555 (2)
      Material Requirements Planning Systems       557 (1)
      JIT Manufacturing Systems                    558 (3)
      Inventory Purchasing                         561 (2)
      Production Issues Impacting Inventory        563 (2)
      Inventory Quantity Management                565 (2)
      Obsolete Inventory                           567 (3)
      Inventory Cutoff                             570 (2)
      Budgeting for Raw Materials                  572 (5)
      Budgeting for Work-in-Process                577 (1)
      Budgeting for Finished Goods                 578 (4)
      Significance of Proper Inventory Valuation   582 (1)
      Selection of the Cost Base                   582 (3)
    Accounting and Reporting for Selected          585 (16)
    Investments and Employee Benefit Plans
      Improving the Investment Decision Process    585 (1)
      Role of the Controller                       586 (1)
      Accounting Records for Selected              587 (1)
      Investments
      Financial Reports on Selected Investments    587 (3)
      Accounting and Disclosure Requirements       590 (11)
      and Practices for Employee Benefit Plans
    Planning and Control of Plant and Equipment    601 (36)
    or Capital Assets
      Controller's Responsibility                  601 (2)
      Capital Budgeting Process                    603 (1)
      Information Supporting Capital               604 (1)
      Expenditure Proposals
      Methods of Evaluating Projects               605 (1)
      Payback Method                               606 (1)
      Operators' Method                            607 (1)
      Accountants' Method                          608 (1)
      Discounted Cash Flow Methods                 609 (5)
      Cash Flow Modeling Issues                    614 (1)
      Hurdle Rates                                 615 (1)
      Cost of Capital---A Hurdle Rate              616 (1)
      Throughput Method                            617 (3)
      Classifying and Ranking Proposed Capital     620 (1)
      Projects
      Problems with the Capital Budget Approval    621 (1)
      Process
      Using Expected Commercial Value for          622 (2)
      Project Ranking
      Board of Directors' Approval                 624 (4)
      Project Authorization                        628 (2)
      Accounting Control of the Project            630 (1)
      Postproject Appraisals or Audits             630 (2)
      Other Aspects of Capital Expenditures        632 (5)
    Management of Liabilities                      637 (22)
      Objectives of Liability Management           637 (1)
      Direct Liabilities                           638 (1)
      Planning the Current Liabilities             639 (3)
      Standards to Measure and Control Current     642 (2)
      Liabilities
      Corrective Action                            644 (1)
      Some Benefits from Debt Incurrence           644 (1)
      Standards for Debt Capacity                  645 (3)
      Leverage                                     648 (1)
      Managing Liabilities: Some Practical Steps   649 (3)
      Management of Accounts Payable               652 (4)
      Accounting Reports on Liabilities            656 (1)
      Internal Controls                            656 (3)
    Management of Shareholders' Equity             659 (24)
      Role of the Controller                       659 (1)
      Growth of Equity as a Source of Capital      660 (1)
      Return on Equity as Related to Growth in     661 (1)
      Earnings per Share
      Growth in Earnings per Share                 661 (2)
      Cost of Capital                              663 (1)
      Components of Cost of Capital                664 (1)
      Calculating the Cost of Debt                 665 (1)
      Calculating the Cost of Equity               666 (3)
      Calculating the Weighted Cost of Capital     669 (1)
      Dividend Policy                              670 (2)
      Other Transactions Affecting                 672 (1)
      Shareholders' Equity
      Long-Term Equity Planning                    673 (5)
      Short-Term Plan for Shareholders' Equity     678 (2)
      Other Considerations                         680 (3)
  PART V FINANCIAL AND RELATED REPORTS             683 (36)
    Internal Management Reports                    685 (20)
      Rules of Reporting                           685 (3)
      Status Reports                               688 (2)
      Margin Reports                               690 (4)
      Cash Reports                                 694 (1)
      Capacity Reports                             695 (1)
      Sales and Expense Reports                    696 (2)
      Payroll Reports                              698 (5)
      Graphical Report Layouts                     703 (2)
    External Reporting                             705 (14)
      Purpose of the Annual Report to              705 (1)
      Shareholders
      Controller and the Annual Report             706 (1)
      General Contents of the Annual Report        706 (3)
      Importance of Form                           709 (2)
      Other Reports to Shareholders                711 (1)
      Disclosure Issues                            712 (1)
      SEC Forms                                    713 (6)
  PART VI SOME ADMINISTRATIVE AND SPECIAL          719 (88)
  ASPECTS OF THE CONTROLLER'S DEPARTMENT
    Mergers and Acquisitions                       721 (42)
      Acquisiton Strategy                          721 (2)
      The Acquisition Process                      723 (3)
      Locating Acquistion Targets                  726 (3)
      Due Diligence                                729 (10)
      Valuing the Target                           739 (4)
      Legal Documents                              743 (10)
      Acquisition Integration                      753 (7)
      Types of Acquisitions                        760 (3)
    The Reporting Period and How to Close It       763 (18)
      Selecting the Fiscal Year                    763 (1)
      Selecting the Number of Interim Reporting    764 (2)
      Periods
      Reasons for Accelerating the Closing         766 (1)
      Period
      How to Achieve a Fast Close                  766 (15)
    Inventory Tracking                             781 (16)
      Differences between Perpetual and            781 (2)
      Periodic Inventory Systems
      Setting Up a Perpetual Inventory System      783 (4)
      Auditing and Measuring a Perpetual           787 (1)
      Inventory System
      Physical Inventory Procedure                 788 (3)
      Physical Inventory Complications: The        791 (1)
      Cutoff
      Reconciling Inventory Variances              792 (2)
      How to Avoid the Inventory Tracking          794 (3)
      Problem
    Tax Records and Procedures                     797 (10)
      Tax Organization                             798 (1)
      Centralized Tax Department                   798 (2)
      Functions Of the Tax Manager                 800 (1)
      Tax Communications                           801 (1)
      Tax Records in General                       801 (1)
      Tax Calendar                                 802 (1)
      Tax Information Records                      802 (3)
      Tax Working Papers and Files                 805 (1)
      Internal Revenue Code and Record             805 (1)
      Requirements
      Proper Classification of Accounts            805 (1)
      Other Taxes                                  806 (1)
      Income Taxes and Business Planning           806 (1)
      Special Tax Reports                          806 (1)
Index                                              807