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equity?╟÷are still tightening financial controls. And the procedures they are now setting up will affect the way these companies do business for years to come. Such companies as General Motors Corp., Gould Inc., and R. J. Reynolds Industries have boosted their controller staffs by 10% or more in recent years. As a result of tighter controls, H.J. Heinz Co. has been able to pare down inventories by $74 million and short- term debt by $77 million, according to David A. Lattanzio, the company's controller. And its return on equity has improved to 13.4% from 9.6% in 1966. But Heinz will continue to tighten controls until they raise the return still further, says Lattanzio. Clearly many managements are happy with their tighter approach and will not abandon it soon. "We're doing the same level of business on substantially less assets," says Joseph F. Alibrandi, president of Whittaker Corp., the West Coast conglomerate. The changing duties of Lear Siegler's controller, David J. Louks, are probably representative of the evolving role of the controller today. Louks, a certified public accountant, started with Lear Siegler as corporate controller in 1963, when the company's sales were around $200 million. "I was the company's historian, its record-keeper," he says. In 1963, he had one assistant. Today, he has an assistant controller, four senior accountants, and an internal audit staff of seven. "Maybe I talked to the president once every two weeks 10 years ago," says Louks. Now he has daily contact with senior management, and, he notes, "I attend occasional board meetings." Whereas once Louks merely recorded the results of divisions, today he and his staff must evaluate business forecasts of each division on a quarterly basis. And his internal audit staff has more clout. "We have regular opportunities to make recommendations at the operational level," he says. "Undoubtedly, this chafes line managers," he admits. "But they're learning that controls are here to stay." One of Louks's most controversial actions as controller came when his staff discovered that overdue receivables at one division were unusually high. Louks recommended that the division manager beef up his reserve for bad debts, which would have damaged his division's profits. The manager resisted, and Louks took the decision higher. Top management forced the division manager to follow Louks's recommendation. In the past five years, Louks claims that controls have enormously improved the company's profitability. Profit margins have tripled since 1972 to nearly 4%. Return on equity is also way up from 4% to 14.1%. And the company has nearly halved its debt-equity ratio to about 0.5, while boosting working capital by some $33 million to $166 million. A role in decision-making Case histories similar to that of Louks are being repeated from company to company across the country. Heinz's Lattanzio says that his duties have expanded in much the same way. He was appointed the company's controller four years ago, after seven years at a public accounting firm. "At that time, my main concern was with the publication of financial statements and compliance with Securities & Exchange Commission and accounting rules," he says. "Now we are more involved in decision-making." Lattanzio's big project these days is how to control inventory and capital spending. But he is also required to appraise marketing programs, analyze acquisition opportunities, and control the company's foreign exchange holdings. In addition, controllers these days are more often reporting directly to headquarters, often going over the heads of divisional operating managers. The goal is to get critical, unbiased information to top management right away. A few years ago, American Can Co. reorganized its controller function for this purpose (page 90). Now each divisional controller reports directly to the chief controller at company headquarters in Greenwich, Conn. Litton Industries has also recently made the divisional controller directly responsible to corporate headquarters. Corporations have also been trying to make all of their managers?╟÷financial and nonfinancial ?╟÷more familiar with, and more receptive to controls. For example, in 1974 ge initiated courses on "managing in inflation" and "cash effectiveness," that eventually will reach 9,000 people throughout the company. Probably the main reason that the controller is getting the ear of top management these days is that he or she is virtually the only person familiar with all the working parts of the company. The controller is more or less "the seeing-eye dog," says Charles T. Horn- gren, professor of accounting at Stanford University's business school. "Often a chief executive or division manager won't go to anything important without that controller." Robert B. Hoffman, financial vice-president of Chicago- based fmc Corp., puts it very plainly. "The role of the controller," he says, "is 8 SPECTRUM 77