Acct 6220

Controllership and Financial

Leadership

Jami D. Jhabvala, CPA

Financial Statements
Introduction
The controller may be judged on their administration of all
the accounting functions, but will absolutely be judged on
the quality and presentation of the financial statements
issued by the accounting staff.
Be familiar with the contents of each component of every
financial statement, the different formats, and how to
construct.

Financial Statements
Controller Responsibilities

Prepare financial statement layouts that are understandable

and clearly present the financial results, financial positions,
and cash flows of the business.

Net
Net Cash
Cash Flow
Flow from
from Operating
Operating Activities
Activities
Indirect
Indirect Versus
Versus Direct
Direct Method
Method
Indirect Method

Adjustments Needed to Determine Net Cash Flow

from Operating Activities.

LO 7

Net
Net Cash
Cash Flow
Flow from
from Operating
Operating Activities
Activities
Indirect
Indirect Versus
Versus Direct
Direct Method
Method
Direct Method

Companies adjust each item in the income

statement from the accrual basis to the cash basis.

LO 7

Net
Net Cash
Cash Flow
Flow from
from Operating
Operating Activities
Activities
Indirect
Indirect Versus
Versus Direct
Direct Method
Method
Direct Versus Indirect Controversy
In Favor of the Direct Method

Shows operating cash receipts and payments.

Information about cash receipts and payments is more

revealing of a companys ability
1. to generate sufficient cash from operating activities to pay
its debts,
2. to reinvest in its operations, and
3. to make distributions to its owners.

Net
Net Cash
Cash Flow
Flow from
from Operating
Operating Activities
Activities
Indirect
Indirect Versus
Versus Direct
Direct Method
Method
Direct Versus Indirect Controversy
In Favor of the Indirect Method

Focuses on the differences between net income and net

cash flow from operating activities.

Provides link between the statement of cash flows and the

income statement and statement of financial position.

Significant
Significant Non-Cash
Non-Cash Transactions
Transactions
Common non-cash transactions that a company should
disclose:
1. Acquisition of assets by assuming liabilities (including finance
lease obligations) or by issuing equity securities.
2. Exchanges of non-monetary assets.
3. Refinancing of long-term debt.
4. Conversion of debt or preference shares to ordinary shares.
5. Issuance of equity securities to retire debt.