Role of a Financial Controller

Summary

In this video, Dave Ashworth explains the pivotal role of a financial controller in an organization. Often misunderstood, the controller is responsible for establishing internal controls to prevent fraud, compiling accurate monthly financial statements, creating reports for growth analysis, overseeing the accounting department, managing accounts receivable and payable, budgeting and forecasting, coordinating with external accountants, auditing, and ensuring tax compliance. Whether in-house or outsourced, a controller is crucial for a robust accounting infrastructure, often overlooked but essential for business success.

Takeaways

• 👨‍💼 The role of a financial controller is often misunderstood and is distinct from both bookkeepers and CFOs.
• 🧩 Controllers are responsible for establishing internal controls and checks to prevent fraud within an organization.
• 📊 They compile and oversee the creation of monthly financial statements including profit and loss, balance sheets, and cash flow statements.
• 📈 Controllers analyze financial data to create reports for business growth and decision-making.
• 📋 They manage the accounting department, ensuring smooth operations and proper execution of accounting tasks.
• 💼 They have oversight of accounts receivable and payable, including handling issues and negotiating contracts.
• 📈 Budgeting and forecasting are key responsibilities, with controllers tracking actuals against budgets and forecasts.
• 🔗 Controllers coordinate with external accountants and auditors, acting as a liaison for tax planning and audits.
• 🏦 They evaluate the financial health of the company by reviewing financial statements and ensuring everything is in order.
• 💼 They assist with tax filings and compliance, ensuring all necessary tax returns and business licenses are properly managed.

Q & A

What is the primary role of a financial controller according to Dave Ashworth?

A financial controller is responsible for internal controls, ensuring procedures and checks are in place to prevent fraud and maintain the accuracy of financial operations.

Why is it important for a business to understand the role of a financial controller?

Understanding the role of a financial controller is crucial for businesses to build a robust accounting infrastructure, which helps in filling the necessary roles and managing the financial health of the organization effectively.

Can the role of a financial controller be outsourced?

Yes, Dave Ashworth mentions that a financial controller can be outsourced, which is his preferred method as it allows for flexibility and can be cost-effective for businesses.

What are some of the tasks a financial controller is responsible for in terms of financial reporting?

A financial controller is responsible for completing monthly financial closes, which includes making necessary journal entries and compiling accurate financial statements such as the profit and loss, balance sheet, and cash flow statement.

How does a financial controller contribute to the growth of an organization?

A financial controller contributes to an organization's growth by creating reports from accounting data, such as benchmarking and ratio analysis, which are essential for making informed business decisions.

What is the relationship between a financial controller and the accounting department?

A financial controller oversees the accounting department, ensuring that all accounting functions run smoothly and that tasks are completed properly. They are in control of the department and report to the CFO or the owner.

What role does a financial controller play in managing accounts receivable and payable?

A financial controller has ultimate control over accounts receivable and payable. They handle issues such as client payment delays and may negotiate new contracts, acting as the next level of authority in these matters.

Why is budgeting and forecasting important for a financial controller?

Budgeting and forecasting are important for a financial controller because they need to create, maintain, and track these financial plans to ensure the organization's financial health and to propose necessary changes.

How does a financial controller coordinate with external accountants and auditors?

A financial controller acts as a liaison between the organization and external accountants or auditors, providing them with the necessary information for tax planning, preparing tax returns, and facilitating audits.

What is the financial controller's role in evaluating the financial health of a company?

The financial controller evaluates the financial health of a company by regularly reviewing the financial statements to ensure everything appears normal and to keep a finger on the pulse of the business's financial well-being.

How does a financial controller assist with tax filings and compliance?

A financial controller assists with tax filings and compliance by ensuring all necessary tax returns, such as payroll and sales tax returns, and business licenses are properly taken care of, either directly or by coordinating with the responsible parties.