Careers in financial control

Financial controls are the policies and procedures that govern how a business overseas the direction, allocation and utilization of their financial resources. Those employed in this area are at the heart of how an organization manages its resources—past and present— to operate efficiently.

A key responsibility of this sector is to ensure the financial resources strategy is properly executed. It also prepares information for outside entities, such as regulators, tax agencies and external auditors – that enable them to evaluate the business.

In many ways, financial control acts as an internal operating unit, determining whether statements need to be adjusted to reflect irregularities, unanticipated changes, or anomalies.

Financial control staff conduct internal analysis of a company’s results. They approach this from different perspectives at different times, measuring the outcomes against business plans, as well as short-, medium-, and long-term objectives.

In many ways, financial control acts as an internal operating unit, determining whether statements need to be adjusted to reflect irregularities, unanticipated changes, or anomalies. For these reasons, work in this field requires precision and great attention to detail.

The importance of financial control

Below are some of the many reasons why financial control is important.

An in-depth look at financial controls

There are many important roles within financial controls. Here we take a closer look at some of the key functions.

Cash flow management

Poor cash flow management is one of the leading causes of business failures. Managing the in- and outflow of cash affects what can be done strategically and opportunistically, how and when bills can be paid, and how much cash a company has at its disposal at any one time. Cash flow management staff monitor, analyze, and optimize the net cash receipts after subtracting cash expenses.

Cash flow management staff look at credit policies, invoicing procedures, payment schedules, and negotiations with vendors and suppliers, to ensure that predictive modeling can drive long-term planning.

Cash flow forecasting is critically important in the short term, and also gives decision-makers the information they need to plan and strategize. Cash flow management staff look at credit policies, invoicing procedures, payment schedules, and negotiations with vendors and suppliers, to ensure that predictive modeling can drive long-term planning.

Cost management

Cost management is the process of planning and controlling a business budget. It includes planning, financing, funding, scheduling, and controlling costs, so the business can remain on track.

Cost management includes 4 key functions. The first 3 are: resource planning, cost estimating, and cost budgeting. The final one, cost control, measures variances from the plans, and the corrective actions taken to mitigate this.

Company tax strategy and preparation

Internal tax departments work to develop strategies that minimize a company’s tax liability—at the state, local, or federal level— in each country where taxes are collected. Devising these strategies and executing them ensures that companies pay as little tax as legally required in each jurisdiction. In addition, these strategies help free up resources for other business needs.

The internal tax department is also responsible for preparing and filing tax returns in each jurisdiction, or for collaborating with outsourced tax experts to complete those tasks.

Corporate tax professionals need to pay attention to the changes to tax codes.  Further, they need to analyze what the ripple effects of these changes mean for a company’s financial standing. Often these changes are interwoven with regulatory mandates and other considerations.

The internal tax department is also responsible for preparing and filing tax returns in each jurisdiction, or for collaborating with outsourced tax experts to complete those tasks.

Internal audit

Internal audit professionals assess a company’s internal financial controls, including accounting procedures and corporate governance. They make sure that a company is complying with applicable laws and regulations, maintaining accurate financial records, collecting and reporting data correctly.

Internal auditors use various well-established assessment techniques to gain a clear understanding of whether employees are following documented internal controls.

Internal audit departments are often responsible for identifying opportunities to improve operational efficiency. They may identify flaws, errors or necessary corrections, allowing leadership to take corrective action and reporting it prior to external audit processes taking place.

Internal auditors use various well-established assessment techniques to gain a clear understanding of whether employees are following documented internal controls. They also use analysis tools, such as comparing inventory, matching transactions, and reconciling accounts.

Statutory accounts

Statutory financial statements are annual reports that break down the financial actions a company took the previous year. This does not include every transaction, instead being a high-level statement of a company’s spending.

Statutory reports frequently include balance sheets and profit-and-loss statements. They are usually formatted in a simple, standard way, that allows for shareholders, employees, and other stakeholders to understand the financial health of a company and the actions that are being taken.

External audit

Financial control staff work with external auditors to prepare statements and reports. Together they collect the required paperwork, data, information, and manage end of year audit processes.

Audit preparation staff may be asked to:

• communicate the process, timeline, and responsibilities to key members of staff
• schedule and conduct training sessions for those asked to participate
• produce documents
• review and distribute findings
• draft and circulate for approval any management responses
• respond to questions from auditors and staff
• collect, review and deliver requested records
• meet regularly with the external audit team to address status, questions, and potential issues
• recalculate information as required, and verify information related to issues raised by auditors

Closing the ledger

Closing processes take place at the end of a month, quarter, or fiscal year. They ensure that systems are ready for the next period and that financial transactions from the previous period are accounted for.

Financial staff often close the ledger by completing the following:

• recording all transactions
• posting journal entries to the appropriate ledger accounts
• building a trial balance
• preparing and posting adjusted entries
• producing formal financial statements

Due diligence management

Companies that want to acquire another business should apply due diligence procedures that evaluate, verify, and report on assets and liabilities of the target acquisition.

It often includes analyzing accounting procedures, examining supporting documents, interviewing management, and preparing forecasts of future earnings.

Due diligence often goes beyond what is on the balance sheet. It is about assessing and mitigating risk before a major investment is made. It often includes analyzing accounting procedures, examining supporting documents, interviewing management, and preparing forecasts of future earnings.

Who should work in financial control?

Financial control can be perfect for pragmatic thinkers. Those working in this area often need to ground CEOs and other senior leaders in the true financial state of a business, whether good or bad.

Jobs in this field are sometimes stressful because they can, for example, involve ensuring that companies and employees remain in compliance, and act in a legal and ethical manner.

Although not all positions in financial control require CPA certification, the majority of them do.

Where do financial control professionals work?

Many financial control jobs are in companies or accounting firms. There are also government positions, for example at the Internal Revenue Service (IRS). Generally speaking, companies tend to pay better, the government is the most flexible, and accounting firms fall somewhere between the 2.

With the aid of more sophisticated accounting software and the use of standardized practices, many financial control tasks can now be outsourced to more affordable locations.

With the aid of more sophisticated accounting software and the use of standardized practices, many financial control tasks can now be outsourced to more affordable locations. For example, a company in New York might use an accounting firm located in a lower cost U.S. location, or even abroad.

Another reason for the popularity of outsourcing is the cadence of the work. In many financial control jobs, a few days a month are very demanding, and the rest of the time is less busy. The 2 months of work around auditing season and during interim audits also tend to be intense. Together, these factors make outsourcing a sensible choice, with companies saving money by billing by the hour, rather than hiring full-time staff.

General education requirements

Although not a regulatory requirement, many financial control staff are CPA qualified. This is one of the best ways to gain the education, skills, and experience, to work in this field.

Requirements to become a CPA differ from state to state, but in general, the first step to certification is a bachelor’s in accounting or related field, such as economics or business administration. These programs vary in content, and most high-school graduates make the choice based on the college they want to attend and where their focal interest lies. Unlike accounting, economics is not only about income and expenses. It deals with the production and consumption of money, as well as how it can be transferred between areas. Meanwhile, a business administration degree covers strategic financial planning, rather than specific tasks related to accounting such as tax work.

In most states, 150 college credits are required for CPA certification: 30 of these need to be in accounting and 24 in business administration. Most undergraduate degrees only contain 120 credits. Therefore, candidates tend to make up the 30 remaining credits by either completing a master’s degree in accountancy or a post graduate certificate.

Upon completion of their education, would-be CPAs need to accumulate work experience in the field. The required duration is dictated by the state, but typically is at least 12 months or 2,000 hours. The work can be paid or unpaid. During this period, the candidate works alongside a qualified CPA. Financial operations is a popular sector for those who need to complete this period of work experience.

The final step is to take the CPA exam. There are 4 parts to this test: auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation. Upon passing this exam, some states require candidates to pass an additional ethics exam, but in most jurisdictions you can apply for your license directly after completing the CPA exam.

Careers in financial control

There are many different roles in financial control. Below we look at some of the most common positions.

Internal auditor

Internal auditors review and assess financial statements, processes, and other internal controls, to ensure compliance with regulatory, legal and ethical practices. They may investigate discrepancies and recommend responses and procedural changes.

Typical tasks of an internal auditor include:

• assessing an organization’s financial risk and making suggestions to mitigate this
• improving accounting processes
• monitoring internal staff and making suggestions to improve efficiency
• presenting financial information to management
• evaluating the accuracy of financial documents and ensuring they comply with federal requirements

The role requires a minimum of a bachelor’s degree, although many companies prefer candidates with a master’s in accounting. Some positions may necessitate a CPA, or certification in audit management. Other candidates move into this role via a related position, such as bookkeeping or business administration.

The average salary for an internal auditor is $60,002.

Next steps for financial control

The best financial control professionals will have unparalleled understanding of how a business has functioned historically. Those interesting in using this knowledge to formulate strategies for business or economic growth in the future should look to move into financial planning and analysis. Experienced accountants who want to stay on the pure accounting side of things can move into accounting management roles, overseeing more junior accountants or directing a company’s financial operations department or function.