Financial Controller Definition
Financial controller is one of the senior-level executive of the company who is responsible for managing all the finance and the accounting, preparation and publishing of the financial statements such as the balance sheets, cash flow statement and the income statements timely, auditing compliance and to coordinate in the preparation of the financial forecast of the company.
The role of every financial controller in different companies is not fixed, and it varies according to the size of the company and the staff working in the department and on the complexity of the operations of the company related to the accounts and finance. He generally acts as the head of the accounting and finance department of the companies.
Example of Financial Controller
There is a small company that appoints Mr. X as the financial controller of the company, who acts as the chief accounts officer as well, being the company is a small company. He has experience of 10 years in the field of accounting and finance in various companies in the same industry, and he is a qualified Certified Public Accountant (CPA).
He is given the responsibility of managing all the finance and the accounting related work of the company like preparation and publishing of the financial statementsFinancial StatementsFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels. such as the balance sheetsBalance SheetsA balance sheet is one of the financial statements of a company that presents the shareholders' equity, liabilities, and assets of the company at a specific point in time. It is based on the accounting equation that states that the sum of the total liabilities and the owner's capital equals the total assets of the company., cash flow statementCash Flow StatementStatement of Cash flow is a statement in financial accounting which reports the details about the cash generated and the cash outflow of the company during a particular accounting period under consideration from the different activities i.e., operating activities, investing activities and financing activities. and the income statementsIncome StatementsThe income statement is one of the company's financial reports that summarizes all of the company's revenues and expenses over time in order to determine the company's profit or loss and measure its business activity over time based on user requirements. timely, development and documentation of the various business processes and the different accounting policiesAccounting PoliciesAccounting policies refer to the framework or procedure followed by the management for bookkeeping and preparation of the financial statements. It involves accounting methods and practices determined at the corporate level. of the company to maintain the proper internal controls, ensure proper audit compliance timely and coordinate in the preparation of the financial forecast of the company. He has a team of 10 persons under him, to whom he has to guide and allocate the necessary work.
Mr. X, after joining the company, undertook the work of overseeing the preparation of the financial statements of the company and the other task allocated to him or that comes under his purview. He assigns the different work to different people in his team and asks for the proper reporting to ensure that the work is appropriately delegated to the concerned person. Along with this, he spends time and exchanges knowledge with the persons of the other department of the company to gather information about the company and to understand its working correctly. In the department of accounting and finance, various other departments are also related so, Mr. X ensures getting timely information from those departments so that the work of his department runs smoothly.
- They conduct the financial analysis of the company using the different parameters and gives the opinion on the same to the management of the company for further action.
- Apart from the management of the company, the financial controller guides the finance manager and the related persons on the way to perform the different financial activities in the organization as the financial control offers a base for the future financial activities.
- The financial controller, with the help of the various available tools, measures the variance between the actual performance of the company and the set standard performance. After knowing the deviations, appropriate measures to correct the same are taken by him.
- Maintaining a sufficient level of capital in the organization is an essential part of the effective management of the company. They ascertain the adequate capital requirement so that neither the funds should lie idle nor there should be undercapitalization of funds.
- The work for increasing the company’s productivity and efficiency, thereby growing the company’s financial strength in the long run;
- The financial controller performs the task of establishing the proper financial control in the company and appropriately executing the same.
- The financial controller is responsible for measuring the variance between the actual performance of the company and the set standard performance. Still, it is difficult for the financial controller to determine standard performance. Also, situations prevailing inside the company or in the environment may differ when the standards were fixed and when there is actual performance. In these cases, the standards will not be proper, and then there is no use of calculating the variances.
- The financial controller performs the task of establishing the proper financial control in the company and its execution. Although establishing financial control may be easy, but it is challenging to implement the same appropriately. Also, the implementation of financial control tools requires a vast amount of money, making it a costly affair.
- The role of every financial controller in different companies is not fixed, and it varies according to the size of the company and the staff working in the department.
- Apart from the size of the company, the role of the financial controller is also dependent on the complexity of the operations of the company related to the accounts and finance.
- Generally, persons having a good and proven working experience in the other companies in the related field is appointed as the Financial controller.
- They work to increase the company’s productivity and efficiency, thereby expanding the company’s financial strength in the long run.
- It is required that the person taking charge should have a thorough knowledge of the various accounting principles and accounting proceduresAccounting ProceduresThe accounting procedure is the process of standardized nature that performs a specific accounting function designed to incorporate better risk management policies to complete these functions efficiently. It includes billings, invoices to suppliers, bank reconciliation, requiring comprehensive and streamlined procedures..
The Financial controller is the high-level executive of the company. He is given the work of overseeing the preparation of the financial statements of the company; compliance of the auditing, managing the cash flow of the company, establishing the proper internal controlInternal ControlInternal control in accounting refers to the process by which a company implements various rules, policies, or procedures to ensure the accuracy of accounting and finance information, safeguard the various assets of the business, promote accountability in the business, and prevent the occurrence of frauds in the company. and executing the same, conducting the financial analysis of the company and giving the opinion on the same to the management of the company for the further action.
This article has been a guide to who is the financial controller and its definition. Here we discuss the role of the financial controller along with examples, advantages & disadvantages. You can learn more from accounting from following articles –