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Stefan Behringer Financial Controlling Financial Controlling Stefan Behringer Financial Controlling Stefan Behringer IFZ Institut für Finanzdienstleistungen Zug Hochschule Luzern Rotkreuz, Switzerland ISBN 978-3-658-40526-7 ISBN 978-3-658-40527-4 (eBook) https://doi.org/10.1007/978-3-658-40527-4 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Responsible Editor: Vivien Bender This Springer imprint is published by the registered company Springer Fachmedien Wiesbaden GmbH, part of Springer Nature. The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany V Preface Financial Controlling is a support and basic function of every management. In most companies, all employees are either direct addressees of controlling and use the information provided there, or they are at least indirectly affected because decisions are made on the basis of controlling reports. For these reasons, financial con- trolling is a mandatory part of almost all business-oriented bache- lor’s and master’s programs. The present textbook is intended to provide basic knowl- edge of financial controlling. The tasks of controlling will be pre- sented first. This will compare what controllers do in practice and what they should do according to the ideas of business theory. In 7 Chap. 1 it will also be discussed how financial controlling can be organized in companies. 7 Chapter 2 deals with the information provided by financial controlling. Internal and external accounting form the informa- tion basis. The chapter on the information function shows how the numbers from these accounting systems are processed into key figures and processed in cost management instruments. While 7 Chap. 2 deals with the past-oriented preparation of informa- tion, 7 Chap. 3 the future-oriented tasks of controlling are repre- sented by planning. It is discussed how a planning process works, which functions it should fulfill and what contribution planning can make to the achievement of corporate goals. A key focus of this chapter is also which goals a company can reasonably pursue. Furthermore, potential problems of planning and possible alter- natives are presented. 7 Chapter 4 summarizes the past- and future-oriented per- spectives. The target value (the plan value) is compared to the actual value. This chapter presents the possible interpretations of deviations between target and actual. 7 Chapter 5 deals with the digitalization of financial con- trolling and the controlling of digitalized companies. This addresses a current development that is becoming increas- ingly established in the everyday life of many companies. In the previous edition, this area was still presented in the trends, as many things were not foreseeable. Now we can assume a lot more knowledge about digitalization and artificial intelligence VI Preface to be certain. Risk management and compliance remain trends (7 Chap. 6). Sustainability, which also plays a role in controlling, is becoming increasingly important—forced by regulations at national and European level in particular. This is addressed in 7 Chap. 6. The aim of this textbook is to present the activities of finan- cial controlling and to give an insight into basic instruments of controlling. This gives interested parties an initial insight into an activity in controlling. Addressees of controlling information receive the necessary tools to interpret the information. In addition to the German perspective, this book also takes into account the situation in Switzerland at many points. The book is aimed at students of business administration and other business-oriented courses. Many examples and case studies help to illustrate the material presented. At the end of each chapter there is a short summary that brings the essential statements to the point. The learned content can be checked with the help of short tasks (Let’s check). Connecting tasks also give impulses for further thinking and deepening of the learned content. The solutions to all tasks of the book can be obtained via the SN Flashcard App of Springer-Verlag. I would like to thank all those who have contributed to the suc- cess of this book, in particular all those involved at Springer-Verlag and the team at IFZ Institut für Finanzdienstleistungen Zug at the Hochschule Luzern. Stefan Behringer Rotkreuz November 2020 VII Contents 1 Basics of Financial Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 .1 Tasks of Controllers in Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 .2 Theory-Based Derivation of the Tasks of Controlling . . . . . . . . . . . . 6 1 .3 Organization of Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 1 .3 .1 Controlling as a Line or Administrative Department . . . . . . . . . . . . . . 10 1 .3 .2 Hierarchical Classification of Financial Controlling . . . . . . . . . . . . . . . . 11 1 .3 .3 Central or Decentralised Organisation of Controlling . . . . . . . . . . . . . 13 1 .4 Profile of Requirements for Controllers . . . . . . . . . . . . . . . . . . . . . . . . . 16 1 .5 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2 The Information Function of Controlling . . . . . . . . . . . . . . . . . 21 2 .1 Internal and External Accounting as the Basis of Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2 .2 Basics of Cost and Performance Accounting . . . . . . . . . . . . . . . . . . . . 27 2 .2 .1 Full Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2 .2 .2 Marginal Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2 .3 Cost Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2 .3 .1 Process Cost Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2 .3 .2 Target Costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 2 .4 External Accounting and Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2 .5 Preparation of Information on Key Figures and Key Figure Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 2 .5 .1 Basics of Key Figures and Key Figure Systems . . . . . . . . . . . . . . . . . . . . 43 2 .5 .2 Success Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 2 .5 .3 Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 2 .5 .4 Liquidity Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 2 .5 .5 The DuPont Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 2 .5 .6 The Balanced Scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 2 .6 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 3 The Steering Function of Controlling . . . . . . . . . . . . . . . . . . . . . . 67 3 .1 Concept of Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 3 .2 Functions and Risks of Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 3 .3 Goals as the Basis of Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 3 .3 .1 Goal Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 VIII Contents 3 .3 .2 Empirical Findings on Goal Setting in Companies . . . . . . . . . . . . . . . . 82 3 .3 .3 Examples of Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 3 .3 .4 Derivation of the Target Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 3 .4 Course of the Planning Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 3 .5 Problems with Incentives through Planning . . . . . . . . . . . . . . . . . . . . 95 3 .5 .1 The Problem of Hidden Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 3 .5 .2 The Weitzmann Schema . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 3 .6 Alternative Planning Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 3 .7 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 4 The Control Function of Controlling . . . . . . . . . . . . . . . . . . . . . . . 107 4 .1 Basics of the Control Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 4 .2 Actual-Plan Comparison and Deviation Analysis . . . . . . . . . . . . . . . . 110 4 .3 Control and Result Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 4 .4 Problem Areas of the Control Function . . . . . . . . . . . . . . . . . . . . . . . . . . 114 4 .5 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 5 Digitization and Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 5 .1 Terms “digitalization” and “artificial intelligence” . . . . . . . . . . . . . . . 122 5 .2 Digitalization of Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 5 .3 Controlling of Digitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 5 .4 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 6 Trends in Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 6 .1 Controlling and Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 6 .2 Controlling and Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 6 .3 Controlling and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 6 .4 Learning Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Supplementary Information Tips for Studying and Learning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 IX Abbreviations Fig. Figure Para. Paragraph AktG Stock Corporation Act BilMoG BilMoG CAPM Capital Asset Pricing Model DIH Days Inventory Held DSO Days Sales Outstanding EBIT Earnings before Interest and Taxes EBITA Earnings before Interest, Taxes and Amortisation EBITDA Earnings before Interest, Taxes, Depreciation and Amorti- sation EBT Earnings before Taxes FCF Free Cashflow GmbH Gesellschaft mit beschränkter Haftung HGB Handelsgesetzbuch (German Commercial Code) IAS International Accounting Standard ICV International Controller Association IFRS International Financial Reporting Standards InsO (German) Insolvency Code IT Information Technology AI Artificial Intelligence KontraG (german) Act on the Control and Transparency of Enter- prises lmi performance-related process lmn performance-neutral process RoCE Return on Capital Employed RoI Return on Investment RPA Robot Process Automation SMART S pecific, Measurable, Accepted, Realistic, Time bound VUCA Volatility, Uncertainty, Complexity, Ambiguity WACC Weighted Average Cost of Capital WHU Wissenschaftliche Hochschule für Unternehmensführung 1 11 Basics of Financial Controlling Contents 1.1 Tasks of Controllers in Practice – 2 1.2 Theory-Based Derivation of the Tasks of Controlling – 6 1.3 Organization of Controlling – 10 1 .3 .1 Controlling as a Line or Administrative Department – 10 1 .3 .2 Hierarchical Classification of Financial Controlling – 11 1 .3 .3 Central or Decentralised Organisation of Controlling – 13 1.4 Profile of Requirements for Controllers – 16 1.5 Learning Control – 17 References – 19 © The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 S . Behringer, Financial Controlling, https://doi .org/10 .1007/978-3-658-40527-4_1

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