Controllers feel pressure to cook the books

Nearly two-thirds of corporate controllers feel pressure to “cook the books,” according to a new international survey, and many of them feel that misrepresenting their company's performance is just part of their job.

The survey, by FloQast, a provider of close management software for corporate accounting departments, found that 64 percent of controllers feel pressure to "cook the books," with 10 percent of them stating it's just part of their job.

The respondents were asked if they have ever felt pressure, either directly or indirectly, for financial reporting to be less accurate in order to produce a better view of company performance. Only 36 percent of the controllers surveyed by FloQast and Dimensional Research indicated they have never felt such pressure. Among the 64 percent who said they have felt pressure to misrepresent their company’s performance, 10 percent reported this is a regular part of their job. For 32 percent of the respondents, it does happen but is an exception. The remaining 22 percent indicated they are in a position where there is never direct pressure that they might be able to respond to head on, but instead there are unspoken expectations about a desired outcome.

Financial manipulation

“The role of the controller is uniquely tied to factual results,” said the report. “Unlike marketing or operational roles where project success or failure can be tied to looser metrics, it is the job of the controller to give a clear and factual reporting of a company’s finances. However, it is also a position where those facts can be uncomfortable for a company, with significant negative repercussions when things go bad, ranging from investor reaction to employee morale. This creates the perfect environment for a job with pressure to overlook or misreport negative realities.”

For the report, FloQast and Dimensional Research surveyed 306 accounting and finance professionals, including more than 200 controllers from the U.S., Canada, Europe, Asia, Africa and Latin America. The survey also pointed to other pressures on controllers, with 89 percent of the respondents saying the controller’s job is more stressful. The main stresses include management demands for speed (67 percent), higher volume of work (64 percent) and compliance demands (63 percent).

“The modern financial controller does not fit the stereotype of the number-cruncher who hides in his office with his or her spreadsheets and ledgers and sends incomprehensible reports to the CFO who interprets those for the C-suite,” said Diane Hagglund, senior research analyst of Dimensional Research, in a statement. “As the role of the CFO and the overall finance team has expanded, the controller understands how good data about business operations — both financial and non-financial — directly impacts the quality of decision making.”

Nearly three-quarters of the respondents (73 percent) said the controller’s role is changing because the CFO role has changed, while 90 percent of the respondents reported controllers are spending more time on strategic planning, a job that historically has been done by the CFO.

“There’s a lot resting on the controller’s shoulders now,” stated FloQast CEO Mike Whitmire. “As complex software becomes more integrated into the accounting department’s daily lives and executives expect a faster month-end close, the controller is forced to get out of the nitty-gritty and figure out how to manage a team that can perform a really fast close.”

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