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Balance Sheets Checklists

Defining the Financial Manager’s Role

Checklist Description

This checklist outlines the role of the financial manager.

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A financial manager is responsible for providing financial advice and support to colleagues and clients to enable them to make sound business decisions. The role of the financial manager is more than simply accounting; it is multifunctional. Financial managers must understand all aspects of the business so that they are able to adequately advise and support the chief executive officer in decision-making and ensuring company growth and profitability.

Almost every firm, government agency, or other type of organization has one or more financial managers. Financial managers oversee the preparation of financial reports, direct investment activities, and implement cash management strategies. They also implement the long-term goals of their organization.

Many corporations operate multifunctional teams where the financial manager is responsible for a particular division or function, or looks after a range of departments and functions. Financial managers often have specific roles and titles:

Controllers prepare financial reports and analyses of future earnings or expenses that summarize the organization’s financial position. Controllers are also in charge of preparing special reports required by regulatory authorities—especially important because of the Sarbanes–Oxley Act, designed in part to protect investors from fraud.

Treasurers and finance officers direct and oversee budgets, monitor the investment of funds, manage associated risks, supervise cash management activities, execute capital raising strategies, and deal with mergers and acquisitions.

Risk and insurance managers administer programs to minimize risks and losses that could arise from financial transactions and business operations.

Credit managers supervise the firm’s issuance of credit, fix credit-rating criteria, determine credit limits, and monitor the collection of past-due accounts.

Cash managers supervise and manage the flow of cash receipts and disbursements to meet business and investment needs.

The financial manager’s role, particularly in business, is changing in response to technological advances that have significantly reduced the time it takes to produce financial reports. Financial managers now perform more data analysis to offer senior management ideas on how to maximize profits. They play an increasingly significant role in mergers and acquisitions and in related financing, and in areas that require wide-ranging, focused knowledge to diminish risks and maximize profit.

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  • Financial managers improve business organization and risk management by providing reassurance on the effectiveness and efficiency of operations, financial reporting, and compliance with applicable laws and regulations.

  • Financial managers provide management with an in-depth and unbiased understanding of risks that the organization may be facing, allowing for preemptive planning.

  • Financial managers give company officers and directors forewarning of ethical and legal issues that may affect the organization.

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  • Although they are meant to be independent and impartial, financial managers are paid by the company and are an integral part of the company management; this can lead to conflicts of interest when advising senior management on, for example, investment risk.

  • Financial managers’ judgments, estimates, and interpretations are not always objective because of their close relationship with the organization for which they work.

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Action Checklist

  • Has the financial manager worked in related business fields previously and, if so, for how long? What reliable references can be provided?

  • How good is his/her track record on risk assessment and planning for contingencies?

  • In assessing business processes, how up-to-date is he/she with technology controls in auditing?

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Dos and Don’ts


  • Consult with the financial controllers where ethical or legal issues may be involved.


  • Don’t forget to consult key stakeholders and managers when evaluating and employing new financial managers, so that areas of competence can be checked.

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Further reading


  • Ehrhardt, Michael C., and Eugene F. Brigham. Financial Management: Theory and Practice. 13th ed. Mason, OH: South-Western Cengage Learning, 2010.
  • Jorion, Philippe. Financial Risk Manager Handbook. 6th ed. Hoboken, NJ: Wiley, 2011.
  • Shim Jae K., and Joel G. Siegel. Financial Management. 3rd ed. Hauppauge, NY: Barron’s Educational Series, 2008.


  • US Government Accountability Office. “Financial management: Effective internal control is key to accountability.” Report no. GAO-05-321T. February 16, 2005. Online at:


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