AICPA's Annual Update for Controllers

• Chapter 0 - Overview
  • Learning Objectives
  • Introduction
• Chapter 1 - Recession – The Macro Picture
  • Learning Objectives
  • Introduction
  • The Housing Market Collapsed
  • The Stock Market Had Significant Declines During 2008
  • Companies Began to Lay Off Workers at Very Rapid Rates
  • Global Economy in Turmoil
  • The United States Government has Passed Significant Legislation to Aid the Economy
  • Manufacturing Decreased Significantly the Last Quarter of 2008
  • Official Recession Declared
  • 'The Money Cycle'
    • Background on Federal Reserve Data for Industrial Production
  • Household Debt Service and Financial Obligations Ratios
  • Questions
• Chapter 2 - Recession-Proofing Your Business
  • Learning Objectives
  • Introduction
  • Business Cycles
    • Understanding Economic Cycles
    • Stage 1 – Trough
    • Stage 2 – Expansion/Recovery
    • Stage 3 – Peak
    • Stage 4 – Recession
    • Economic Indicators from the Federal Reserve
    • How to Project Economic Cycles
  • Strategic Planning
    • Comparison to Prior Recessions
    • Scenario Planning
    • SWOT (Strengths, Weaknesses, Opportunities, Threats)
  • Warning Signs: Red Flags that Signal Impending Business Disaster
    • Altman’s Z-Score
  • Employees
  • Customers
    • Managing Customer Accounts in a Down Economy
    • Control over the Accounts Receivable
  • Vendors
  • Sales Considerations
  • Cost Reduction
  • Banking, Loans, and Commitments
  • Benchmarking and Ratio Analysis
  • Cash
  • Contingency
  • Questions
  • Appendix – Economic Indicators from the Federal Reserve
    • Examples of Leading Indicators
    • Examples of Coincident Indicators
    • Examples of Lagging Indicators
    • How Indicators Monitor the Four Stages of the Business Cycle
    • Glossary of Selected Key Economic Indicators
• Chapter 3 - Excel Techniques for the Controller
  • Learning Objectives
  • Data Entry Tools
  • Improving the Accuracy of Excel Spreadsheets
    • Examples of Spreadsheet Errors
    • How to Improve the Accuracy of Spreadsheets
    • Excel Formula Auditing Tool Bar
    • Ways to 'Clean Up Spreadsheets' by Patrick R. O’Beirne
    • Other Auditing Software Tools to Consider
  • Using Subtotals or Consolidate Functions as Alternatives to Pivot Tables
    • Using the Consolidate Function
    • The Power of AutoFilters and Subtotals
  • Saving a Chart as an Interactive HTML File
  • Questions
• Chapter 4 - People – Trends, Ethics, Profiles
  • Learning Objectives
  • Introduction
  • Human Resource Global Trends
  • Why Do Business People Do Dumb Things?
  • Deterioration of Ethics during Difficult Economic Times
  • Whistleblower Program
  • 2008 Federal Sentencing Guidelines Manual
  • Personality Types – Comparative Tables
    • The Culture Index
  • Questions
• Chapter 5 - The Changing Role of the Controller
  • Learning Objectives
  • Changing Role of the Controller
  • Simple Approach to Streamlining Processes
    • What Is Waste?
    • Value Stream Mapping
    • Analyzing Electronic Spreadsheets
  • Recruit, Develop, and Retain Your Employees
    • Determine Staffing Strategy for the Future
    • Determine How to Identify Candidates
    • Develop Leadership Qualities
    • Retain Staff
    • Inspire Staff
  • Questions
  • Appendix – Job Descriptions
• Chapter 6 - Quick Response Manufacturing
  • Learning Objectives
  • Introduction
  • History of QRM
  • How Does QRM Compare to Other Manufacturing Approaches?
  • Implementing QRM
  • What Are the Benefits of QRM?
  • Application of QRM to the Accounting Function
    • Kanban vs. POLCA
    • Principles of Quick Response for Office Operations
  • Questions
• Chapter 7 - The Fast Close
  • Learning Objectives
  • Introduction
  • Overview
  • Current Forces Affecting the Close
  • Benefits of a Fast Close
  • Users of Financial Statements
  • Surveys – Fast Close
  • Adoption of Best Practices
  • Barriers to a Successful Fast Close
  • Movement to Best Practices
    • Accurately Record Operating Events at the Source
    • Improve, Reduce, and/or Simplify Reconciliations
    • Develop Uniform Policies and Procedures
    • Simplify Charts of Account
    • Create and Utilize Editing and Error Correction Standards
    • Develop or Enhance Subledger Support and Controls
    • Synchronize Table Maintenance
    • Strictly Apply Materiality Guidelines for Accruals
    • Deploy Closing Cycle Procedures Manuals
    • Incorporate Business Changes on a Timely Basis
    • Eliminate Unnecessary Reviews
    • Eliminate Unnecessary Reports
    • Reduce and/or Simplify Allocations
    • Automate, Reduce, and/or Eliminate Process Steps
    • Reduce and/or Simplify Intercompany Transactions
    • Report Weekly Rather Than Month-End
    • Implement Reporting of Key Financial and Non-Financial Business Indicators
    • Provide Online Review and Access
    • Automate Interfaces to the General Ledger
    • Utilize Data Warehouses and Client Servers to Provide Shared Data Across Departments
  • Steps to Improve Your Close Process
  • Change Management and Why Employees Resist Change
  • Questions
  • Appendix – Best Practice Listing
• Chapter 8 - Understanding and Supporting the Sales Function
  • Learning Objectives
  • Introduction
  • The Sales Cycle of your Business
    • Macro-Level
    • Micro or Product-Level
    • Customer – No Knowledge of Product
    • Customer Has Knowledge of Product
  • Understanding Customer’s Needs
  • Selection of Sales Staff
    • The Closing Personality
    • The Consultive Personality
    • The Relationship Personality
    • The Display Personality
  • Compensation of Sales Staff
  • The Use of Sales Metrics
    • Traditional Metrics
    • Predictors/Drivers
    • Sales Force Development
    • Organizational Improvement Contributions
  • Mistakes in the Sales Process
  • Why Do People Make Certain Purchase Decisions?
  • Questions
  • Appendix 8A – Sales Manager’s Checklist
    • Do You Plan to Win?
    • Do You Lead Your Sales Team?
    • Do You Drive Sales Execution?
    • Do You Lead Wider Team Involvement?
    • Do You Exploit Information Technology and Knowledge?
  • Appendix 8B – Example Sales Manager Job Description
• Chapter 9 - Open Source Software
  • Learning Objectives
  • Introduction
  • Overview
  • Open Source Software – What Is It?
  • What Is Required to be Considered Open Source Software?
  • The Benefits of Open Source Software
  • The Risks of Open Source Software
  • Using an Operating System Other than Microsoft
    • What Is Ubuntu?
    • What Is the Cost Advantage of Using Ubuntu?
    • Advantages of Ubuntu
  • Review of OpenOffice.org (One of the Leading Open Source Office Packages)
    • Components
    • Help in OpenOffice
  • Open Source Internet Browsers
    • Firefox
    • The PDF World
    • SeaMonkey
  • Vtiger CRM
    • Overview
    • Features
  • Cost Justification for Open Source
    • Calculating TCO
    • An Example of a TCO Worksheet
    • ROI Measurement
  • Another Look at IT Costs
    • Practical Perspectives on IT Cost Analysis
  • Questions
  • Appendix 9A – Programs Available and Known as 'Free Software'
    • Accounting
    • CRM (Customer Relationship Management)
    • Email Clients
    • Encoding, Conversion, and Ripping Tools
    • ERP
    • Filesharing and FTP
    • Graphics-Design and Modeling Tools
    • Media Players
    • Messengers and Communication Clients
    • PDF Drivers and Tools
    • Personal Information and Task Managers
    • Project Management
    • Reporting Tools
    • RSS
    • System Utilities
    • Office
    • Web Browsers
  • Appendix 9B – A Comparison of Linux and Windows
    • Versions of Software
    • Graphical User Interface
    • Text Mode Interface
    • Cost
    • Getting the Operating System
    • Installing Windows and Linux
    • Running from CD
    • Application Software
    • Obtaining Application Software
    • Application Software Installation
    • Viruses and Spyware
    • Users and Passwords
    • Supported Hardware Devices
    • Hardware and OS
    • Multiple Users
    • Networking
• Chapter 10 - Future Trends Affecting All Aspects of Our Culture
  • Learning Objectives
  • Introduction
  • Welcome to the Future!
    • The Top 25 Inventions of 2008 (Information for this Section Adapted from Time.com)
    • Intel and Moore’s Law
  • AICPA Technologies to Watch
    • 2009 Top Technology Initiatives
    • Honorable Mention
  • CIOs Weigh-in on Future Trends and Priorities
    • Other Emerging Trends
  • Practical Application – Mind Mapping and Strategic Planning
  • New Tool – Mindjet Mindmapper Pro V 6.0
    • Basic Operation
    • What Is a MindManager Map?
    • Importance in the Business Community
    • Product Benefits
    • Typical Uses of MindManager Pro 6
    • Integrating MindManager with Current Trends
  • Controlled Mind Mapping
  • Mind Storming
  • Other Thoughts on Strategic Planning
  • Questions
  • Appendix – List of Historical Events and Inventions
• Chapter 11 - Latest Developments

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Chapter 0 - Overview

Welcome to the Annual Update for Controllers course. This course has been designed to help controllers of privately held companies with revenues under $250 million. The text has been laid out to present practical approaches to current issues as well as to highlight tools and techniques which can help promote a company’s growth in profitability, as well as help it to prevent difficult times.

Learning Objectives

The Controllers course has been designed with the specific objectives in mind:

• Enhance your understanding of current issues that impact the financial stability of your firm.

• Deal with major trends and accounting, corporate finance, treasury management, and business systems.

• Utilize new tools for business planning, forecasting, budgeting, and reporting.

The author believes wholeheartedly in attendee participation and the value that each person brings to the class. Attendees are expected to help make this course successful by contributing their experiences, participating in the exercises, and enjoying themselves as they learn more about themselves, their organizations, and how to be better controllers.

Introduction

The controller’s job continues to evolve just as the business world continues to evolve. The controller continues to be charged with more responsibilities within the organization. We are at a unique point in our country’s history. Many pundits have us heading towards Great Depression #2. Last year we warned attendees that we were heading for a recession (even though the official NBER public announcement would not come until the last part of 2008). Due to the magnitude of this downturn, this update is increasing its focus on how to survive difficult times.

The first chapter will be about macro issues in the economy and will even provide readers with some excellent tools to help understand when things are beginning to get better. The second chapter will deal with tactical tools and processes to implement during recessionary times. The third chapter will introduce some Excel data entry techniques as well as other Excel tools. The fourth chapter will look at people trends, ethics (it seems like the problems only increased this year), and profiling. The fifth chapter addresses the changing role of the controller.

Chapter six introduces Quick Response Manufacturing, which is a technique that evolved in the 90’s. Chapter 7 focuses on speeding up the close process. Chapter 8 deals with improving the Sales Function. Chapter 9 displays open source alternatives. In this update, we also consider Ubuntu (are you curious?). Chapter 10 finishes with a view towards the future.

For historical (and future) purposes

• From the 2007 Update – “We caution that it could be a bumpy ride.”

• From the 2008 Update – “Our country’s economy is teetering on the edge of a recession.”

• For this year – “Let’s just survive 2009 and regroup in 2010.”

What are the problems that attendees of this course are encountering in their organizations?

What are the opportunities that exist for your company even in spite of the items above?

This annual update will help to keep the controller prepared to deal with current problems as well as to be prepared to “look” into the future and used the best possible tools and insights to steer their company to a positive outcome. The course roadmap is as follows:

• Chapter 1 – Recession – The Macro Picture

• Chapter 2 – Recession-Proofing Your Business

• Chapter 3 – Excel Techniques for the Controller

• Chapter 4 – People – Trends, Ethics, Profiles

• Chapter 5 – The Changing Role of the Controller

• Chapter 6 – Quick Response Manufacturing

• Chapter 7 – The Fast Close

• Chapter 8 – Understanding and Supporting the Sales Function

• Chapter 9 – Open Source Software

• Chapter 10 – Future Trends Effecting All Aspects of Our Culture

Chapter 1 - Recession – The Macro Picture

Learning Objectives

In last year’s update we were concerned that the economy was entering a recession. The NBER officially announced that the recession began at the end of 2007. We will build on our recession work from last year and address the macro-economic picture. Companies are being devastated as this text goes to press. The Controller that best wants to help their company will use this chapter for the big picture and Chapter 2 to address specific tactics. In this chapter we will examine the following:

• The unemployment rate – are we looking at the right numbers?

• Tools to predict when the economy will change.

• Government databases available to use as benchmarks.

• The impact of the housing market collapse.

• The availability of consumer credit (consumer spending and saving).

Introduction

One year ago the Controllers Annual Update suggested that we were on the edge of a recession. Many people discounted the possibility of entering a recession. The author of this text is a TEC Chairman (Coach of International CEO Peer Group) and the CEOs in his groups questioned if recession was a serious possibility. A lot has changed since the spring of 2008. Since the Annual Update was released in spring of 2008 the following events have occurred:

• Financial institutions suffered a liquidity crisis and some institutions had to be merged or taken over by other institutions.

• The housing market collapsed.

• The stock market had significant declines during 2008.

• Companies began laying off workers at much more alarming rates.

• The number of houses foreclosed on was in excess of one million households.

• The global economy was in turmoil and experienced significant declines.

• The United States Government passed significant legislation to help ease the financial crisis.

• Manufacturing decreased significantly during the last quarter of 2008.

• The automotive industry is in turmoil. It is very possible that bankruptcy will be the final outcome for the major automotive companies.

• In December of 2008 the NBER (National Bureau of Economic Research) officially declared that the country was in recession and that the recession had begun in December of 2007.

For our purposes we will examine the trends above and focus on the impact to our individual companies and organizations. It is the author’s belief that the probability of a continued downturn over the next two years is likely and that a main focus of many organizations will not be on profitability but on survival. Over the next two years companies may need to take unusual types of action that are not normal business practices to survive tough economic times. These times are so unique that extreme actions may be necessary to make sure that your business still viable in 2011.

When an individual considers these economic changes mentioned above, they should be considered in the aggregate. Any of these economic issues could have been dealt with and absorbed into our system if they were a one-time-only event. However, these actions have had a compounding effect almost similar to a one car accident on a freeway that then leads to a multiple car pileup. Unfortunately this chain reaction is unprecedented and could possibly lead to our second great depression.

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