For many organizations, the financial department can remain somewhat of a mystery. Often the backbone of the company, this part of the organization often exists in a silo, keeping to themselves or quietly keeping the books running from month to month behind the scenes. When you’re starting a new business, you need to understand what your financial arm will look like, and the manpower and resources that will be required as you begin to grow.
Below, this graphic shows a sample hierarchy of a financial department, all the way to to the top. It’s important to recognize that this could differ from company to company, depending on the size of your organization and the industry you work in. It is, however, a great starting point for understanding the structure of a business and how the financial teams fit in. Let’s break it down.
Chief Financial Officer
A CFO is the Chief Financial Officer and works directly under or alongside the CEO and Board of Directors. The CFO’s prime responsibilities include managing the company’s finances, providing leadership, and advising the CEO/ board of directors on strategic financial recommendations. The CFO is the highest financial position at a company and manages the whole financial division.
Level Down: The Treasurer, Internal Auditor, and Controller.
The primary responsibility of the treasurer is to oversee the management of the financial affairs of the organization. This often includes the basic tasks of selecting a bank, reconciling bank statements, and managing cash flow.
Another postition that reports directly to the CFO is the internal auditor. By using the data provided by more junior members of staff such as the managerial accountant, financial accountant, and tax accountant, the internal auditor verifies the financial data of the organization. Other responsibilities of an internal auditor include risk management and risk control over the effectiveness of the operations.
In some companies you will have an FP & A analyst that stands for Financial Planning and Analysis analyst. The main responsibility of the FP & A employee or in a larger company the FP and A team, is to provide analysis, planning, reporting and forecasting that aids in the decision making process for the CFO, CEO, and Board of Directors.
There is usually also the postition of controller at this level of the organization. They are known as the leader of the accounting team, and are in charge of closely monitoring the company’s financial health. They typically maintain, manage, and analyze financial statements, payroll, budgets, tax compliance issues, and more. While in a large corporate setting the controller supervises a large accounting team, in a smaller company the controller may be the only accountant working with a team of clerks and reporting to the CEO rather than the CFO.
The Three Main Types of Accountant Working in the Financial Department
The three main accountants that you’re likely to see working under the controller are the managerial accountant, financial accountant, and tax accountant. Let’s take a look at these in detail.
Managerial Accountant: Using the financial data of the organization, they will make financial decisions that positively influence the company’s growth. Some of the tasks of a managerial accountant are to manage the company’s numerous transactions, create budgets and incorporate data from past mistakes to prepare for future decisions. It is important to note that the title of a managerial accountant can be used interchangeably with cost accountant.
Financial Accountant: The financial accountant prepares the company’s financial statements using GAAP, also known as, Generally Accepted Accounting Principles. Financial accounting is a specialized form of accounting that uses GAAP to record, summarize, and present a financial report of a company in the form of a balance sheet or income statement.
Tax Accountant: Lastly, the tax accountants assist in preparing tax reports for governmental agencies, including the Internal Revenue Service. Tax accountants may provide their services to individual clients, or for large scale corporations. A tax accountant working for individual clients will provide assistance on how to properly fill out tax forms, and advise about future financial decisions. Working as a corporate tax accountant, some of the responsibilities will be to review files and company financial records, prepare ledgers, fill out tax forms, maintain contact with tax agencies and hold meetings that are related to taxation and strategy.
More complicated than you thought? Reach out to Nations today and let’s discuss simplifying the financial resources you need to start growing your start-up.
