Beyond the Numbers

Have you ever wondered why you need so many different “accountants” working for your organisation? This can be confusing at times, however the varied roles of Auditor (or external accountant), Finance Manager and CFO are all necessary for businesses to survive and thrive in the long term.

Each role brings a unique set of skills and expertise to the table, contributing to the overall financial well-being of an organisation. By understanding the significance of these different responsibilities, we can appreciate their critical impact for any business’s success.

So, let’s explore these roles further and gain a deeper understanding of their value in today’s dynamic business landscape.

The Responsibilities of an Auditor

The role of Auditor or External Accountant is crucial in ensuring the accuracy and reliability of an organisation’s historical financial position. They focus mainly on “the past” by examining and verifying a company’s financial statements and records. They are also responsible for identifying material irregularities, misstatements or fraud, ensuring compliance with financial reporting standards, corporate governance, taxation and other relevant legislation.

To carry out their duties effectively, Auditors use various tools and techniques. They interview key personnel, perform physical inspections, and review supporting documentation. Additionally, they may use specialised software and data analytics tools to analyse large volumes of financial data quickly and accurately. Their findings and recommendations are then presented in an audit report, which provides valuable insights to management, shareholders, and other stakeholders.

Key Role of a Finance Manager

Finance Managers play a crucial role in managing the day-to-day financial operations of an organisation focusing on the finer details of “balancing the books”. Their focus is on the “current reporting period” i.e. the present

Their responsibilities include: ensuring all company financial information is collected, collated and captured correctly. They are responsible for the company’s ERP Accounting System and data integrity which includes maintaining valid, accurate and complete financial information. Finance Managers prepare monthly management reports, including cash flow projections.

Finance Managers help formulate budgets that align with the company’s strategic objectives, they monitor budget performance and identify and report variances and anomalies to management.

Finance Managers are responsible for managing credit control, including credit terms and customer collections. They also manage supplier relationships and settlement terms.

Finance Managers are usually responsible for calculating and paying company taxes (PAYE / VAT / INCOME TAX) on a monthly basis, timeously. They look after the payroll making sure employees are paid every month. They take care of other general compliance matters and deal with the bank regularly.

The Role of a Chief Financial Officer (CFO)

The Chief Financial Officer (CFO) focuses on Financial Leadership with emphasis placed on planning for future success. The CFO collaborates with the CEO and other executives to lead the company into the unknown with more certainty.

The CFO’s primary responsibility is to formulate a sound financial strategy for the organisation, taking into account the business strategy and company vision. The CFO oversees the financial function, managing key business and financial risks, ensuring that there are sufficient funds available to satisfy short, medium and long-term needs and helping make informed decisions that drive growth, profitability and positive cashflow. CFOs help raise funding (debt or equity) required for growth and expansion and ensure the weighted average cost of capital is kept in check.

One of the most critical tasks of a CFO is financial planning and analysis. They work alongside other departments to create budgets, forecasts and financial models that provide a roadmap for the company’s future. Forecasting is critical as it involves careful planning and consideration of: assumptions and reliable estimates, key sensitivities and business, financial and economic divers that will affect organisational goals and strategies.

Through financial analysis, CFOs identify trends, risks, and opportunities, enabling them to make data-driven decisions that will optimise and improve the company’s financial performance and valuation moving forward. They use historical data, market trends, and key business metrics to predict future financial outcomes that help the organisation prepare for potential challenges and take advantage of opportunities. High quality financial modelling enables companies to make: informed investment choices, optimize pricing and profitability strategies and resource allocation decisions. These models also consider different scenarios for a company’s future growth and calculate the funding requirements. Most importantly financial modelling assists with developing a viable and realistic business valuation for exit planning considerations.

A key part of the CFO’s role is to organise, structure, design and implement the appropriate business and financial foundations, systems, legal and tax structures required to execute the business strategy. This involves complex consideration and deep insight into issues which will impact the future of the organization, its shareholders and other stakeholders.

A CFO is responsible for leading and developing the Finance Team, ensuring compliance with best practice norms and disciplines. They also manage external stakeholder relationships with shareholders, bankers, lawyers, IT service providers, company secretarial services, etc. The CFO normally manages the company’s internal support functions which include: Human Resources, Information Technology, compliance and Legal. They are accountable for producing the Annual Financial Statements, ensuring that they comply with accounting standards, taxation practice and relevant legislation. CFOs often collaborate with Auditors and Finance Managers to ensure the accuracy and integrity of financial statements, providing transparency and building trust with shareholders and other stakeholders.

 

 

The Importance of Collaboration Between CFOs, External Accountants and Finance Managers

For an organisation’s financial leadership to be successful, CFOs, External Accountants and Finance Managers need to collaborate.

Each role brings unique expertise and perspective, and their collaboration ensures financial stability, compliance, and sound strategic decision-making.

Auditors provide an independent and objective assessment of an organisation’s financial records and statements. Their findings and recommendations help CFOs and Finance Managers identify areas of improvement, mitigate risks, and strengthen internal controls.

CFOs, with their strategic vision and financial expertise, work closely with Auditors to ensure the accuracy and integrity of financial statements. Finance Managers provide the necessary information and documentation required for the audit process and collaborate with Auditors to address any identified issues or concerns. CFOs rely on Auditors’ expertise to ensure compliance with accounting standards, taxation and other regulations, enhancing the credibility of the financial information they provide to stakeholders.

Sound Financial Leadership, driven by the CFO, is the cornerstone of any business built to last. The CFO, Auditor and Finance Manager all play crucial roles in this regard. However, they face various obstacles along the way which can make their duties tedious and difficult to execute, unless they co-operate and work together, successfully.

Don’t forget to secure your spot on our upcoming webinar ‘The Funding Puzzle: Access to Finance for Entrepreneurs’.

In this webinar, our expert speakers, including CFOs, funders, and successful entrepreneurs, will provide practical insights and share best practices on how CFOs can guide and assist business owners in meeting these criteria.