Role of the Financial Planner

Introduction

Making good business decisions is a process. It just does not happen overnight. Two roles that are important in many companies are that of the accountant and the financial manager. Both are what some would call Ў§numbersЎЁ people but they have very different responsibilities. This paper will focus on the role of the accountant versus the role of the financial manager and how they work hand in hand to contribute to a business being successful.

The Accountant

The primary responsibility of the accountant is to gather and present financial data. The accountant Ў§evaluates records drawn up by the bookkeeper and shows the results of this investigation as losses and gains, leakages, economies, or changes in value, so as to reveal the progress or failures of the business and also its future limitations and possibilitiesЎЁ (Ў§Role of the AccountantЎЁ, 2005).

The accountantЎ¦s role also includes the following:

„X Performing daily accounting functions for the company. Ensuring integrity of financial reports by reconciling various balance sheet accounts and advising management of problems as necessary.

„X Preparing variance analysis of income and expenses monthly to provide management with an explanation of variances to the prior month and budget.

„X Preparing monthly journal entries for assigned duties to ensure accurate financial reporting in accordance with GAAP.

„X Preparing analyzing and compiling various financial statements such as the blance sheet, profit and loss statements, reports and tax reports. The balance sheet will show how the company is doing at a particular time and lists the companieЎ¦s owner equity, liabilities and assests.

Accountants have various areas of expertise. Their duties depends on the size and business field of the company they are working for. Accountants may specialize in cost accounting, tax arenas, auditing or systems and procedures. As of 2003 there were 976,000 accountants and auditors in working in the Unites States (Morkes, 2003).

The Financial Manager

The primary responsibility of the financial manager is to make the best desions for the organization after analyzing and interpreting information provided by the accountant. He/She essentially will decide which assests to invest in and how to finance them. The financial manager strives to minimize company risk, and at the same time, maximize profit and shareholder wealth. This person should oversea both the financial and accounting functions of the company.

According to Brealey, Marcus & Myers (2001), Ў§Financial managers stand between the firmЎ¦s real assets and the financial markets in which the firm raises cash. The flow starts when financial assets are sold to raise cash. The cash is employed to purchase the real assets used in the firmЎ¦s operations. If the firm does well, the real assets generate enough cash inflow to more than repay the initial investment. The cash is either reinvested or returned to the investors who contributed the money in the first placeЎЁ (p.13).

Financial managers may have various titles depending on