Balancing the Dual Responsibilities of Business Unit Controllers: Field and Survey Evidence

Abstract

We examine how business unit (BU) controllers balance their dual roles of providing information for both local decision-making (local responsibility) and corporate control (functional responsibility). The existing literature suggests that organizations can improve the quality of financial reporting and internal controls by increasing the emphasis on the functional responsibility of BU controllers. In this study, we rely on prior literature and insights from field interviews to argue that such an increase also leads to role ambiguity and conflict, which in turn can lead to an increased tolerance of data misreporting. We test our predictions using survey responses of 134 BU controllers. As predicted, we find that the emphasis on the functional responsibility of BU controllers is positively associated with role conflict and role ambiguity, both of which are related to data misreporting at the BU level.

MAS Integration and Controllership Effectiveness: Evidence of a Preparer-User Perception Gap

“…This reasoning can also be related to controllers' roles, which have been a highly discussed topic within management accounting literature (for an overview see, e.g., Sathe 1982;Granlund and Lukka 1998;and Järven-pää 2007). In order to reduce the inherent role conflict between acting as 'company watchdogs' or as 'business advisors', controllers are likely to favor an independent accounting system, which gives them the flexibility to balance their dual roles by providing information for different purposes (Indjejikian and MatČjka 2006;Maas and MatČjka 2009). We therefore expect controllers to associate the integration of MAS design negatively with controllership effectiveness.…”

When the Cat's (Far) Away: The Effect of Control Centralization and Compensation Interdependence on Performance Misreporting

“…However, other studies suggest a fair amount of variation across controls within a firm. For example, Maas and Matějka (2009) point out that business unit managers and controllers within their sample have a great amount of influence over the performance evaluation process within their business unit. This suggests that performance evaluation across this firm's business units is not as standardized as the evaluations in Grabner and Moers' (2013) setting.…”

“…The reporting manager is likely to be socially closer to the business unit controller than the corporate controller because they generally interact more frequently. Maas and Matějka (2009) explore this relationship by examining how a business unit controller must balance their role of local responsibility (i.e., a business partner) and functional responsibility (i.e., a corporate police officer). Compared to corporate controllers, the balancing act is more difficult for the business unit controllers because of the "closeness" the business unit controller has with people within the business unit relative to the greater social distance that the executive controller likely feels.…”

Menedzsmentkontroll rendszerek és a controller szervezeti szerepe

“…Az üzletorientáció lényege pedig, hogy a controllerek releváns információkat adjanak a vezetőknek, melyeket a döntéshozatal során fel tudnak használni (Hopper, 1980). Ha ezt a releváns információt már nem csak a 'partvonalról' adják a controllerek, hanem a vezetőkkel szorosan együttműködve, akkor válnak igazi üzleti partnerekké (Quinn, 2014 (Granlund & Lukka, 1998b, p. 198 (Maas & Matějka, 2009, p. 1249.…”

“…Mivel az üzletági controllerek alapvetően az üzletágvezetőhöz lojálisak, ha a funkcionális felelősségükre nagyobb hangsúly kerül, az szerepkonfliktust és szerepzavart okozhat (Maas & Matějka, 2009). …”