icv bulletin june 2012
TRANSCRIPT
www.controllerverein.com Controlling - Creating Future
Publisher: International Controller Association ICV | Poznań Office
After two congresses in April and May nobody can say that we’re not international! I had the pleas-ure of presiding over the first con-gress in Poznań, Poland (April 26-27) - it gathered more than 150 participants from seven countries and I’m really proud of it. The second one in Munich is the tradi-tional congress of the ICV – this year it took place for the 37th time and was visited by over 600 pro-fessionals - controllers, financial directors and managers ready to exchange their knowledge and experience with each other.
But summer doesn’t mean that we all only rest. We have al-ready planned lots of attractions for the autumn — see for yourself on our pages! One of the reasons you cannot doubt that the International Controller Association earns the first part of its name is the team of International Experts – we promised you more about it in the first issue of the Bulletin – and here it comes! Now you can read about the idea of exchanging knowledge be-tween controllers from all ICV member countries. We will also visit beautiful Croatia – we present the history of the Work Group there and the controlling approach of Croa-tian controllers. Jasmina Očko knows more and is happy to invite you to the Work Group there. And the history of the ICV - after the lecture you will know a lot about our beginnings! Much pleasure while reading!
Yours
Dr. Adrianna Lewandowska
ICV Board Member
International
Controller Association
ICV Bulletin | July 2012
International Experts of the ICV Controllers know how important it is to always look out for new opportunities and chances and possibilities to develop. In volatile times ex-changing knowledge and experience acquires even more importance. Continuous improve-ment of competences of controllers, especially controllers from International Controller Associa-tion, is close to our hearts. On conferences and meetings of the ICV we could hear the voice of not German speaking leaders who value exchange of knowledge and experiences with their “more established” col-leagues very much. We will be really interna-tional if not only we will found new work groups in different places in Europe and in the world, but especially when we will take international activities. That’s why we created the list of international ICV experts. The list will be accessible for the leaders of not German speaking work groups, so that they could invite people from this list to their meet-ings. The travel and accommodation costs will be of course beared by the members of these work groups. Knowing hospitality of the mem-bers it can be not only a fruitful meeting regard-ing the content but also a touristically interesting experience for both sides. We hope all work group leaders will use this opportunity. See the whole list here.
In this issue:
Setting Transfer Prices in
I n t e r n a t i o n a l G r o u p s o f Companies
Croatian ICV Work GroupThrives! History of the International Control-
ler Association
© International Controller Association ICV | Poznań Office
ICV Bulletin | July 2012
Setting Transfer Prices in International Groups of Companies - Methods, Contributing Factors and the Role of Subsidiaries by Peter Schentler und Matthias Tyssen
Read the whole article in the member area: http://www.controllerverein.com/For-members-only.167676.html
Numerous companies have established international sub-sidiaries in the last decades. There are diverse reasons for that: Raw materials and specific know-how available locally, proximity to customers, a low wage level and logistical ad-vantages. This trend applies not only to big companies and midsized businesses, but still more to small and medium-sized companies. The transnational intra-group cost alloca-tion along with numerous organizational and cultural re-quirements have gained in importance due to increasing internationalization. Given the fact that the "right" transfer prices must be determined and because of tax laws and economic reasons, the transnational exchange of internal services is very important:
As far as tax laws are concerned it is advisable to
comply with the national tax regulations in order to avoid the danger of a double taxation.
From economic point of view an equitable distribution
of costs within a company is a fundamental basis for the controlling and success assessment of single company units or subsidiaries.
As a result the external influences (e.g. wage level in the respected countries) as well as internal influences (e.g. the role of subsidiaries in the affiliated group) have a decisive impact on transfer prices. In the scientific and practically oriented literature there are numerous pieces of advice on setting transfer prices. However, there is no one universally applicable solution available. This article gives an insight into setting transfer prices from scientific and practical points of view; it enables comparison between companies; and gives an incentive to optimize your own transfer prices. Based on interviews, the authors show how companies deal with the issue of transfer pricing, what kind of challenges the companies may face and which con-tributing factors determine the process of setting transfer prices. Aims and Functions of Transfer Prices Transfer prices denote the monetary value of services which are not offered to external customers - these are services exchanged between independent areas/subsidiaries within a group. Every provision of a service and its transfer gener-ates profit for the service provider and loss for the service recipient. These processes, recognized as profit or loss
processes, influence the determination of the income in the whole group of companies and have an impact on the groups output. The goal of transfer prices is to guarantee a "correct" alloca-tion of services among various independent units. This goal system serves to differentiate between various functions of transfer prices. As it is presented in image 1 (you can see on the Internet), there are both internal and external goals pursued. Internally transfer prices take on the function of coordination. Due to strong interlocking it is often impossible and pointless to create independent functions and areas in big companies. Resulting from that requirement for an over-all coordination can be satisfied by transfer prices function-ing as an allembracing coordination system. In addition, transfer prices can serve as incentive systems. In many cases the profits gained in an individual area serve as a basis for the assessment of the respective area within the company. Thus the managers of these areas feel an urge to maximize their profits. This effect is further intensi-fied in companies which have introduced the system of pay-ments depending on results achieved by each respective area. Thanks to the fact that transfer prices create costs transparency and costs awareness they can be used as behavioral management tools.
Finally, transfer prices fulfill the function of an internal per-
formance measuring tool. In such a way services and
costs can be calculated individually for each unit (profit
center or subsidiary). This can serve as a basis for the
strategic and operative controlling of the whole company.
As showed in image 1, transfer prices fulfill also external
functions. So the external performance measuring tool
serves to determine output of legally independent subsi-
diaries. This provides support for the subsidiaries while
balancing an account.
As part of the group's taxation, transfer prices have an
influence on the income tax if the whole company, espe-
cially in international companies with varying tax rates in
different countries. Provided there is crossborder goods
trade, transfer prices influence the level of the customs
duty basis and consequently the amount of the customs
duty. Moreover, transfer prices can be used as price justifi-
cation for the public law, e.g. when subjected to regulation
processes on certain markets (e.g. post, telecommunica-
tions).
© International Controller Association ICV | Poznań Office
ICV Bulletin | July 2012
6th International Controller Congress IN VOLATILE TIMES — Controller as a Business Partner
The Controlling Intelligence Adventure "IN VOLATILE TI-
MES - Controller as a Business Partner" - the International
Controller Congress in Poland (April 26/27, 2012) - gathered
more than 150 participants - and among them about 20 gu-
ests from abroad - from Slovenia, Estonia, Spain, Serbia,
Germany and the United States. All speeches were transla-
ted from Polish into English for the foreign guests and from
English into Polish for the Polish participants.
The International Controller Congress in Poznań was first of
a platform for controllers from all over the to share
knowledge, get to the cuttingedge of controlling and set
new trends. Our speakers have certainly contributed to all
these three aspects of ICV activities.
A new element on this year congress was a discus-
sion panel — a great opportunity to exchange
thoughts and engage into full of insights discussions.
Among the debaters were people from such compa-
nies as Hansgrohe, Verhoeven, Winkhaus Polska,
PwC, Volkswagen Poznań and Cadbury.
37th Controller Congress - Munich 2012 Just a week after the Congress in Poland, the annual Con-troller Congress in Munich took place. The 37. Controller Congress concentrated also on the topic of Controller as a Business Partner. Between the speakers were controllers and CFOs from big international companies like Bayer, Deu-tsche Post DHL, Henkel, Nestlé and many others. During the congress Otto Group Hamburg received the ann-nual ControllerPreis 2012, founded by the International Con-troller Association ICV. The awarded project was “Establishing the Activity Based Costing in the Suppliers Service Center”. It was honored for a model management of internal services. “The topic “Shared Service Center“ is now the main focus of interest of many enterprises, which want to reduce costs”, explains the Chairman of the Jury, Prof. Dr. Dr. h.c. Jürgen Weber. “At the same time we have to standarize the proces-ses and manage them consequently. By introducing the Activity Based Costing method Otto-Group uses a very effi-cient but still not known tool for Service Center manage-ment. Otto-Group shows how to improve the high complexi-ty of the Activity Based Costing and how to increase the current low attention of the total costs for the benefit of whole company”.
Busy autumn with the ICV ICV invites you for many interesting events in autumn. In addition to workgroup-meetings we offer many re-gional and international conferences. Where can you share your experience and knowledge with ICV members?
1. September 11, 2012, Dättwil, Switzerland
23. Controller Tagung Schweiz 2. September 27t 2012, Vienna, Austria
13. Internationale Gesundheitstagung 3. October 25-26, 2012, Slovenia
12. ACC Adriatic Controlling Conference
4. October 27, 012, Berlin, Germany
12. CIB Controlling Innovation Berlin 5. November 15, 2012, Bonn, Germany
8. CAB Controlling Advantage Bonn 6. November 23, 2012, Steyr, Austria
11. CIS Controlling Insights Steyr 7. November 29, 2012, Ehningen, Germany
10. CCS Controlling Competence Stuttgart
© International Controller Association ICV | Poznań Office
ICV Bulletin | July 2012
I still vividly remember the autumn of 2010 when I was work-ing on setting up the Croatian ICV Work Group, gathering materials for the first workshop, full of doubt and not know-ing where to start. My dear colleague Dragica Erčulj helped a lot by giving me precious advice, by simply being there and by warm words of support. Considering that then I had already worked as a controlling trainer and consultant for years, I knew that the circle of people that I know working in controlling and management was my greatest asset. The first step I had to take was to create a clear vision of the work group – the way I see it, who should be in it, and what our main mission should be. At the very beginning I somehow knew what I had wanted, i.e. to form a group, team of people who share a common interest – controlling and everything related to it. The idea was to gather people who are passionate about controlling, who breathe controlling, and enjoy every minute of it. It is, of course, only natural that the group has managers as well, since controlling is aimed at them anyway. My thoughts were: wouldn’t it be great to network people who understand just how tremendously vast controlling is and that the field of controlling requires a lot of invaluable knowledge and ex-perience worth sharing. Wouldn’t it be useful to network people who understand that controlling is what Croatian economy needs and just how useful it can be for our daily work tasks. And best of all – to share all of this wisely, use-fully and versatilely. The meetings are one-day-long workshops for the time be-ing, although our controllers and managers are highly inter-ested and motivated to work. Which is why we always look to make the most of every opportunity to learn and ex-change our experience. We have held 4 workshops so far and have dealt with 4 very interesting topics. The first was “Is Classical Budgeting History?” It was an autumnal topic indeed having stimulated much discussion with its controversial subheading – “Beyond Budgeting”. Attitudes differed, opinions varied, although we all agreed that planning has always existed and will continue to exist for eternity.
The second workshop tackled “One Page Only Report” – one of the nicest topics for all controllers, and the most inter-esting topic for all managers. We get astounded time and again by the level of complexity of all the points that fit into a “one page only”.
I invited a larger number of acquaintances and colleagues to the first workshops because the word that such a group exists and its aims needed to be spread. At present, the group counts 16 permanent members, although the number grows with each workshop mostly by word-of-mouth.
Croatian ICV Working Group Thrives!
By Jasmina Očko The Croatian ICV Work Group has been working for one and a half year already, and preparations for the fifth workshop are currently in progress. Jasmina Očko reports about the beginnings of the Work Group, about its meetings and expectations.
The idea was to gather people who are passionate about controlling, who breathe controlling, and enjoy every minute of it.
The workshops are one-day-long workshops for the time being, although our controllers and managers are highly interested and motivated to work.
Jasmina Očko is Work Group Leader in Croatia. She’s controlling consultant and owner of Kognosko Consultancy, Croatia.
© International Controller Association ICV | Poznań Office
ICV Bulletin | July 2012
Our last workshop was dedicated to Peter Drucker and his Management by Objectives (MBO). Looking at examples and case studies from practice that have been perfected through years of trial and error was very useful. The Croatian group is becoming more homogenous and tighter with each workshop. Our aim is to slowly make our one-day-long meetings into two-day-long gatherings, which would be much more relaxed, and which would give us the opportunity to devote more time, besides hard work, to get-ting to know each other, to networking and socialising “off the record”. Moreover, in addition to topics arranged and agreed on in advance, in the future we also plan to create enough space for spontaneous discussions and brainstorming that would
Regardless of the fact that we controllers are “notorious control freaks”, we must admit that the best things in life happen when the least amount of planning is involved. Ultimately, my greatest wish is to see the group grow into a
large, consistent group of experts capable of solving the
many problems in the field of controlling, and to make our
ICV workshops a place birthing the best ideas and providing
room for the exchange of first-rate knowledge and invalu-
able experience of the most competent controlling experts in
Croatia.
History of the International Controller Association
The ICV history in interplay with other controlling institutions
One person played a pivotal role in the history of the International Controller Association: Dr. Dr. h.c. Albrecht Deyhle .
Deyhle was born on May 12, 1934 in Tübingen, attended Business High School in Stuttgart, studied then Business Administration at Ludwig-Maximilian University in Munich (business graduate) and obtained his doctorate on Political Science in 1961 at Eberhard Karls University in Tübingen (Company, Interest and Savings in Joseph Schumpeter's Theory of the Course and Expiry of the Capitalistic Economy Development). Already at the beginning the topics of education and training played a crucial role in Deyhle's occupational activities. From 1959 Deyhle worked as an assistant at the German Business Management Institute (DIB) in Frankfurt/Main, organized there seminars and took care of their holding. In 1962/63 Deyhle worked for the Plaut consulting group as a consultant dealing with cost planning and introduction of the standard direct costing. After his stint at the Plaut consulting group, Deyhle returned to the DIB as a management member. In the meantime he deepened his specialist experience in the field of contribu-tion margin accounting while fulfilling the function of an advi-sor and author. In parallel with it he undertook the manage-ment of the Institute for Internal Auditing. In 1968 he was the chief editor of the publishing house Modern Industry. In 1969 Deyhle started his independent work. Deyhle has a rare dual talent: he is not only a good speaker, but also a great writer. So he has devoted ever more atten-tion to his publishing activities. Already in 1967 he published the book "Profit Management", in which many controlling ideas were already touched upon. In 1971 he published his perennial bestseller "Controller Practice", a two-volume standard work. In 1975 Deyhle launched the "Controller Magazine". With the print run of 10,000 the "Controller Magazine" is by far the highest circulation journal for control-ling specialists in the German speaking region. Writing was always important for Deyhle. Not only because he had something to write about and wrote with ease, but also because he remained true to the motto: "Reporting is rewarding." He has never missed a chance to share this sentence with his colleagues and the thought behind it was to reach a durable and widespread effect through writing.
Even though the first seminar of the Controller Academy took place in November 1971, the Controller Academy has began to exist as a company in the legal form of a Ltd (limited liability company) no sooner than since fall 1972. Some of the first customers were followed by the Academy foundation and to its founding partners belong: late Dr. Vic-tor Bataillard from Switzerland (passed away in 2003) and Dr. Walter Germeroth from Lörrach, Germany. Both really respected personalities who have left a lasting impression on the development of the Controller Academy. In the year 2000 the Ltd was converted into a public company and from then on Deyhle is a chairman of its supervisory board. Today the Controller Academy AG is a medium-sized company with about 30 employees focused on the topic of training and coaching in the field of controlling. Deyhle created additional structures when he estab-lished the Controller Association. His initiative enabled him and six further founding partners to register the associa-tion. Among them were the above mentioned Dr. Germeroth as well as Dr. Erwin Küchel, for many years active as train-ers at the Controller Academy, and of course Dr. Alfred Blazek, for decades a trainer and partner of the Controller Academy.
Prof. Albrecht Deyhle now
After graduating the seven-level-program the partici-pants expressed their wish to create a forum for organ-ized exchange of experiences. This wish led to the es-tablishment of the Controller Association's work groups. And the work groups have remained to this day the heart of the ICV. In the seventies many controllers were still perceived as exotic "individuals", so much greater was the need for pro-fessional experience exchange among these like-minded people. The development of the association has proved that the main idea of the ICV has lost none of its relevance. In 1990 the association celebrated its 1,000th member and presently there are more than 6,000 members. In 2000 the association changed its name to "Internationaler Controller Verein (ICV)". Dr. Deyhle developed and led the association from the start over many years as the Manager and Chairman and has accompanied it with his ever watchful eye as the Honorary Chairman and Deputy Chairman of the Committee of Trus-tees. In the mid nineties at the instigation of the association the IGC was created - the International Group of Con-trolling, the merger of the most important controlling educational and training institutes, software companies and other institutions having interest in developing con-trolling. Deyhle was also a great support here, first to the IGC foundation as well as later as a member of the Manag-ing Committee. He paid and is still paying a special attention to the mutual understanding. Hence one of the first IGC high-priority projects was the "Controlling Dictionary". On November 14, 2008 Dr. Albrecht Deyhle became for his great dedication the honorary doctorate from the WHU - Otto Beisheim School of Management. It is thanks to Deyhle "that controllers have gained good reputation and respect in the German speaking region", explained in his congratula-tory speech Prof. Dr. Dr. h. c. Jürgen Weber, a professor of controlling and company management at the WHU. "You have shaped a new business discipline and considerably contributed to its success in companies", emphasized We-ber. You would be hard-pressed to find another person who contributed so much to putting theory into practice.
Prof. Deyhle at the Controller Congress — 1977 or 1978
Deyhle created additional structures when he estab-lished the Controller Association. His initiative enabled him and six further founding partners to register the associa-tion. Among them were the above mentioned Dr. Germeroth as well as Dr. Erwin Küchel, for many years active as train-ers at the Controller Academy, and of course Dr. Alfred Blazek, for decades a trainer and partner of the Controller Academy.
Beginnings of the International Controller Association (at that time Controller Association): 1) Meeting of the Work Group — May 1976 2, 3) General Meeting of the Members — May 1976
© International Controller Association ICV | Poznań Office
ICV Bulletin | July 2012
ICV Bulletin | July 2012
Bosna and Hercegovina Slavko Simić [email protected] Bulgaria Denko Yamboliev [email protected]
Croatia Jasmina Očko [email protected] England Milena Heim [email protected]
Estonia
Toomas Haldma
Lithuania Edita Gimžauskienė [email protected]
Hungary Budapest 1 Ervin Nemesdy [email protected]
Budapest 2 Andreas Kovacs ková[email protected] Italy Claudio Zoldan [email protected]
Poland Gdańsk Robert Panufnik [email protected]
Katowice Anna Jarkulisz [email protected] Kraków Dorota Gołąb-Bełtowicz [email protected]
Lublin Luiza Zaporowska [email protected]
Łódź Karolina Zielińska [email protected]
Poznań Dariusz Gulczyński [email protected]
Szczecin Aleksander Socha [email protected]
Toruń Andrzej Derkowski [email protected]
Warszawa Karol Sikora [email protected]
Wrocław Honorata Ulatowska [email protected]
Zielona Góra Małgorzata Lepak [email protected]
Romania Cristina Hodea [email protected]
Russia Valentin Usenkov [email protected]
Serbia Bojan Šćepanović [email protected] Slovenia Dragica Erčulj [email protected]
Spain Ulrich Müller Bosom [email protected]
Imprint
Publisher and Copyrights:
International Controller Association
Public Relations Committee
Editing
Brigitte Dienstl-Arnegger
Dr. Herwig Friedag
Dr. Adrianna Lewandowska
Hans-Peter Sander
Anna Włodarczyk
International Controller Association ICV Office Poland Ul.Fredry 7/1 61-809 Poznań PL Phone/Fax +48 61 853 20 10 Mail: [email protected]
The ControllerPreis 2013 to be taken After Otto Group was rewarded for „Establishing the Activity Based Costing in the Suppliers Service Center“ on the 37th Controller Con-gress in Munich, it’s time to invite you to compete for the Controller-Preis 2013 by submitting your con-trolling solutions. Challenge your colleagues in the competition and face the decision of our competent judges!
More about the ICV awards: http://w w w . c o n t r o l l e r v e r e i n . c o m /Awards.158549.html
Controlling-NachwuchsPreis 2012 We also invite you to compete for Controlling-NachwuchsPreis 2012 – a price for young professionals. Awarded will be innovative and practical ideas. Compete with your final assignment! The price will be awarded on October 27, 2012 in Berlin. More about the ICV awards: http://w w w . c o n t r o l l e r v e r e i n . c o m /Awards.158549.html
All work groups in non-German speaking countries
ICV Mission Statement
The ICV being a non-commercially
oriented association is the biggest
controller organization in Europe.
ICV Key Objectives
The ICV as an active
international network
enhances the function
of practically applied
controlling and the role
of the controller
in the responsibility
for successful