Deck 1: Introduction

Question 1

Accounting and Control
The controller of a small private college is complaining about the amount of work she is required to do at the beginning of each month.The president of the university requires the controller to submit a monthly report by the fifth day of the following month.The monthly report contains pages of financial data from operations.The controller was heard saying,"Why does the president need all this information? He probably doesn't read half of the report.He's an old English professor and probably doesn't know the difference between a cost and a revenue."
Required:
a.What is the probable role of the monthly report?
b.What is the controller's responsibility with respect to a president who doesn't know much accounting?

Answer 1

Solution to Accounting and Control (15 minutes)
a.There are two possible roles for the monthly report: facilitating planning decisions and control.Monthly reports provide more timely information than annual reports.With monthly reports the president can identify problem areas more quickly and make corrective actions.The president may also use the monthly reports to evaluate the work of his managers.The monthly reports provide information about how managers are performing.
b.If the president of the university is unfamiliar with accounting numbers,the controller must adapt the monthly report to make it more comprehensible.The controller may even want to highlight areas in the report that might need attention.