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.”
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?
A. What is the probable role of the monthly report?
Solution: The monthly report plays a very important role in demonstrating the status and performance of the University or organization. In short, it is the summary of the progress of the University or organisation in line with goals and objectives of the University or organisation. So, the monthly report helps in the assessment and evaluation of the performance of the University with regard to academic as well as non-academic activities. Some of the examples are given below:-
1. Progress of academic activities
2. The progress of non-academic activities.
3. Allocation of resources and money to different department at the University
4. Identification of problems concerned with University and measures were taken or not etc.
B. What is the controller’s responsibility with respect to a president who doesn’t know much accounting?
Solution: The role of the controller is very crucial since it is mentioned that he is an old English professor and don’t know much about accounting in terms of revenue and cost. First of all, report which is prepared should be simple, explanatory and user-friendly so that the different users of the report who don’t belong to accounting world are able to know about the revenue and cost incurred and other important facts. Secondly, it is the responsibility of the controller to explain and provide every key fact which is relevant to decision making like how the revenues have been spent in the University, How the expenses are incurred with regard to different departments, so that the president is able to figure out the progress in line with goals set and sort out whether any changes are required in ongoing activities if we are lacking behind the standards or goals.