Financial Controller Definition Job Description Responsibilities

Financial Controller Definition

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A financial controller is accountable for the economic issues arising out of inaccurate information filled in the financial documents that a company produces. As a result, they need to be cautious enough with the recordkeeping activities, ensuring utmost accuracy. These documents are then used by the internal and external shareholders to help them make more informed and wiser business decisions.

Key Takeaways

A financial controller is a senior-level manager or executive who manages all minor and major finance and accounting functions and activities.From ensuring the financial reports are as per the regulatory standards to deciding how much a company should spend on what, they oversee every aspect of the organization.To become a controller, one must have a bachelor’s degree in finance, accounting, or business-related subjects and a minimum of 10 years of experience in the field.The controllers are the creator, strategist, supervisor, operator, reviewer, and catalyst for the organization they work.

How Does A Financial Controller Work?

A financial controller takes care of an organization’s basic and advanced financial activities. The person in charge plays a vital role in ensuring the records’ accuracy is maintained. Controllers in a corporate firm are hired to enhance the reliability of a business.

As a business grows, the cash inflows and outflows are more frequent. Hence, depending on bookkeepers for accurate records might be risky. Hiring a controller to track the frequent transactions and check the records for correctness becomes mandatory. These individuals ensure a company’s financial documents are up to the mark and reliable for auditors to validate and stakeholders to go through before making major decisions.

When a company records a revenueRevenueRevenue is the amount of money that a business can earn in its normal course of business by selling its goods and services. In the case of the federal government, it refers to the total amount of income generated from taxes, which remains unfiltered from any deductions.read more of over $5 million, it is expected to have a financial controller to control and supervise all basic and advanced financial activities. The controllers are well aware of the generally accepted accounting principlesGenerally Accepted Accounting PrinciplesGAAP (Generally Accepted Accounting Principles) are standardized guidelines for accounting and financial reporting.read more (GAAP) standards. Hence, they make sure 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.read more generated by the companies meet the requirements of investors and other stakeholders.

The controllers participate in all kinds of business activitiesBusiness ActivitiesBusiness activities refer to the activities performed by businesses to make a profit and ensure business continuity. read more involving financial expenditure. Besides the financial responsibilities handled, they also take care of the insurance, information technology, sales tax reporting, federal income taxFederal Income TaxFederal income tax is the tax system in the United States and is levied and governed by Internal Revenue Services (IRS). It helps determine the tax charged on the income earned by individuals, corporations, and various other legal entities.read more reporting, human resources, and other functions. In addition, these professionals also ensure managing the internal controlsInternal 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.read more so that the financial affairs are properly recorded and presented for further decision making of the internal and external stakeholders of the organizations.

Skills

For operating as a full-fledge financial controller, a person must possess certain skills and qualifications. One must acquire a bachelor’s degree in either accounting or business administration or accounting and possess a minimum of 10 years of experience in accounting and finance. However, holding a master’s degree is not mandatory, though preferred, for anyone to become a controller.

In addition, career seekers aspiring to hold this position may opt for professional certifications, like Certified Public Accountant (CPA), for a valid license.

Job Description

When there is a controller in an organization, the person tends to play various roles. The financial controller jobs involve everything from making multiple corrective measures to performing as an operator and strategist for the company. They conduct the company’s financial analysisFinancial AnalysisFinancial analysis is an analysis of finance-related projects/activities, company’s financial statements (balance sheet, income statement, and notes to accounts) or financial ratios to evaluate the company’s results, performance, and trends, which is useful for making significant decisions such as investment, project planning and financing activities.read more using the different parameters and give their opinion on the same to the management for further action. These professionals guide managers and executives to perform different financial activities in the organization to strengthen the base of the company’s future financial activities.

The controllers measure the variance between the actual performance of the company and the set standard performance with the help of the various available tools. After identifying the deviations, they take appropriate steps to correct them.

In addition, they help maintain a sufficient level of capital so that neither the funds should lie idle nor there is any undercapitalizationUndercapitalizationUndercapitalization in business means a scenario where a company faces a shortage of funds or capital requirements to continue its day-to-day operations. The company in these moments also faces a lack of ability to procure any new source of funding or capital.read more of funds. They work to increase the company’s productivity and efficiency, thereby helping its financial strength to grow. The controller, as a reviewer, keeps a check on all financial documents and statements being generated in the consecutive fiscal yearsFiscal YearsFiscal Year (FY) is referred to as a period lasting for twelve months and is used for budgeting, account keeping and all the other financial reporting for industries. Some of the most commonly used Fiscal Years by businesses all over the world are: 1st January to 31st December, 1st April to 31st March, 1st July to 30th June and 1st October to 30th Septemberread more to establish proper financial controlFinancial ControlFinancial controls refer to the development of policies and procedures by an organization to manage its financial resources and operate efficiently.read more in the company and execute the same appropriately.

Responsibilities

From the roles that the controller plays, their duties are quite clear. However, a set of financial controller responsibilities make their presence mandatory for any organization. Let us have a look at some of them:

The controllers keep track of all financial activities. They keep a check on all the documents generated by the finance and accounting departmentAccounting DepartmentThe accounting department looks after preparing financial statements, maintaining a general ledger, paying bills, preparing customer bills, payroll, and more. In other words, they are responsible for managing the overall economic front of the business.read more.These professionals create internal policies and budgetary requirements. As a result, the organizations know how much to spend on what.Fulfilling tax responsibilities is one of the major functions of a controller. This amount collected is the revenue for an economyEconomyAn economy comprises individuals, commercial entities, and the government involved in the production, distribution, exchange, and consumption of products and services in a society.read more. The controller, therefore, ensures undertaking this task with utmost efficiency.No matter which department of the organization it is, the controllers deal with anything requiring financial resources. The controllers ensure the organizations they work in remains financially stable and strengthened. Thus, they manage capital and funds for the company.These professionals draft financial statements and reports according to accuracy standards to present them to internal and external stakeholders and auditorsAuditorsAn auditor is a professional appointed by an enterprise for an independent analysis of their accounting records and financial statements. An auditor issues a report about the accuracy and reliability of financial statements based on the country’s local operating laws.read more.

Example

Let us consider the following example to understand the concept well:

A small-scale company appoints Robert as the financial controller, acting as the chief accounts officer. He has ten years of experience in accounting and finance, and he is a Certified Public Accountant (CPA).

As a controller, he is expected to manage all the finance and accounting functionsAccounting FunctionsAccounting functions are financial systems that help in the bookkeeping of financial information in an organization, financial analysis, summary creation, reporting of transactions and act as the backbone for almost any business. Accounting as a system tries to identify, assess and record the transactions of financial nature in a very systematic approach.read more, including generating 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.read more, cash flow statementsCash Flow StatementsA Statement of Cash Flow is an accounting document that tracks the incoming and outgoing cash and cash equivalents from a business.read more, framing 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.read more, deciding the budget, etc. The company assigns him tasks to distribute among an allotted team of 10 executives. Robert joins the office and undertakes all tasks. He begins monitoring the company’s financial statements as prepared and other duties allocated to him.

Investors then use these financial statements to decide whether to invest in the company’s assets, and auditors utilize them to check and validate the cash inflows and outflows of the organization. In addition, he ensures getting timely information from those departments so that his department’s work runs smoothly.

Financial Controller in the US

In US corporations, the controller has to perform different roles. They are accountable for safeguarding shareholder’s equityShareholder’s EquityShareholder’s equity is the residual interest of the shareholders in the company and is calculated as the difference between Assets and Liabilities. The Shareholders’ Equity Statement on the balance sheet details the change in the value of shareholder’s equity from the beginning to the end of an accounting period.read more and protecting company assets besides ensuring accuracy in the financial statements produced. They ensure companies carry out their financial activities and prepare the statements as per GAAP and Sarbanes-Oxley ActSarbanes-Oxley ActThe Sarbanes-Oxley Act (Sox) of 2002 was enacted by the US Federal Law for increased corporate governance, strengthening the financial and capital markets at its core and boost the confidence of general users of financial reporting information and protect investors from scandals like that of Enron, WorldCom, and Tyco.read more (SOX).

The US controllers report on taxes and also generate statutory specifications for Internal Revenue Service (IRS). They also share these reports with other regulatory bodies, including Securities & Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), etc.

In addition, they take care of accounts consolidation for firms that have subsidiaries and daughter ventures to run.