Financial Accounting

An Overview of Financial Accounting

Financial accounting professionals are responsible for the public reporting of a company or organization’s financial status. This work involves collecting and maintaining data, detecting trends and forecasting future needs. In addition, financial accountants prepare detailed statements and communicate financial information to company leaders and audiences that do not have an extensive accounting background.

Auditing and managerial accounting are related to financial accounting, but differ in several ways. Auditors usually work with companies to review the reports created by financial accounting offices. Management accountants are primarily focused on providing the accounting services and communication within a company, such as accounts payable, accounts receivable and payroll.

Anyone interested in a financial accounting career will want to gain a solid understanding of several industry standards. The Generally Accepted Accounting Principles (GAAP) are a widely-accepted set of guidelines that assist with reporting procedures. The International Financial Reporting Standards (IFRS) help accountants create consistent and comparable financial statements for businesses across the globe. Skills with multiple types of financial reports are also required, including the ability to create accurate balance sheets, profit and loss statements and cash flow forecasts.

Financial Accounting Careers

Financial accountants work in a wide range of industries, from corporate to nonprofit, and their responsibilities vary based on the type and size of the organization. Primary duties include preparing financial statements and reports, advising company leaders on investment practices and strategies, communicating a company’s financial status with external audiences, and staying current on the latest economic trends affecting financial decisions. The following career profiles provide examples of financial accounting roles at all levels of employment.

Specializations

Financial Analyst

Financial analysts evaluate how bonds and stocks perform and use that information to provide investment advice to businesses and individuals. This position typically reports to a senior accountant or financial manager. Similar job titles include investment analyst, securities analyst, risk analyst and portfolio manager.

  • Responsibilities
  • Job Stats
  • Education and Experience Requirements
  • Additional Qualifications Recommended

Responsibilities

  • Assess the performance of investments
  • Advise senior managers and clients on investment decisions
  • Maintain awareness of economic, social and political factors affecting financial decisions in the company or client’s industry
  • Provide detailed data analysis and reports that track financial trends and forecast future needs

Job Stats

  • Employment numbers: A total of 253,000 financial analyst positions were documented in 2012 by the Bureau of Labor Statistics.
  • Salary: According to the Robert Half 2015 Salary Guide, financial analysts at mid-size companies with one to three years of experience can expect to earn between $55,250 and $72,500 annually. Analysts employed by larger companies, and those with more experience, can expect to earn higher salaries.
  • Projected growth: The Bureau of Labor Statistics expects a 16% increase in financial analyst positions between 2012 and 2022. The growth in this field is attributed to the the need for expertise in investment analysis and regulatory reform.

Education and Experience Requirements

  • A bachelor’s or master’s degree in accounting, finance, business, economics, statistics or a related field is expected.
  • Three or more years of relevant experience is typical of accountants entering a financial analyst position.

Additional Qualifications Recommended

  • FINRA licenses: Credentials offered through the Financial Industry Regulatory Authority may be required in some positions, however, these licenses must be sponsored by an employer.
  • CFA: The Chartered Financial Analyst credential is another option for accountants working primarily on tasks related to investment analysis and portfolio management.

Financial Accountant

Through detailed recordkeeping and data analysis, financial accountants assist organizations with investing and improving overall financial practices. Working as a member of an accounting or financial team within an organization, financial accountants help managers track current trends and forecast future needs. They often report to a senior accountant or financial manager.

  • Responsibilities
  • Job Stats
  • Education and Experience Requirements
  • Additional Qualifications Recommended

Responsibilities

  • Maintain financial records
  • Assist with tax filings in accordance with related laws and regulations
  • Prepare monthly, quarterly and annual financial statements
  • Collect, analyze and report financial data
  • Assist with budgeting and auditing tasks

Job Stats

  • Employment numbers: According to the Bureau of Labor Statistics there were 1,275,400 accountants and auditors employed in 2012.
  • Salary: Accountants with one to three years of experience working in finance positions can expect to earn an annual salary of $46,000 to $59,750, according to the Robert Half 2015 Salary Guide for Accounting and Finance. Salaries are generally lower at smaller companies and higher at larger companies.
  • Projected growth: Between 2012 and 2022 accountants can expect to see a 13% increase in the number of positions available. The Bureau of Labor Statistics attributes this increase, in part, to the impact of changing financial regulations and need for accounting expertise in global finance and investments.

Education and Experience Requirements

  • A bachelor’s or master’s degree in accounting, finance, business, economics, statistics or a related field is expected.
  • Three or fewer years of relevant experience is typical of accountants entering a financial accounting position.

Additional Qualifications Recommended

  • CPA: The Certified Public Accountant licensing process includes an exam, education and prior experience requirements. CPA credentials are not usually required, but may be mandatory for accountants working in a publicly traded company.

Controller

Controller positions are found in businesses, nonprofits and government agencies; they usually report to the chief financial officer or other senior executive. The range of a controller’s responsibilities varies widely based on the size of the company and its accounting office. The duties and expectations are similar to those with job titles such as finance manager, director of accounting, financial controller and comptroller.

  • Responsibilities
  • Job Stats
  • Education and Experience Requirements
  • Additional Qualifications Recommended

Responsibilities

  • Oversee all accounting functions, such as accounts payable and accounts receivable
  • Maintain and monitor financial data related to investments
  • Establish internal accounting policies and procedures
  • Create financial reports and statements
  • Ensure compliance with tax requirements
  • Manage a team that may include accountants and assistants

Job Stats

Education and Experience Requirements

  • A bachelor’s or master’s degree in accounting, finance, business administration or a related field is expected.
  • Five to 10 years of related experience is typical for financial accountants seeking positions at this level.

Additional Qualifications Recommended

  • CPA: Earning a Certified Public Accountant license includes an exam as well as education and prior experience requirements. CPA licensure may be mandatory if the employing company is publicly traded and filing reports with the Securities and Exchange Commission.
  • CMA: Offered through the Institute of Management Accountants, the Certified Management Accountant credential includes documentation of relevant work experience, an exam and continuing education.

Financial Manager

Financial managers are tasked with coordinating a variety of accounting functions within an organization, most importantly maintaining the general ledger of profits, losses, assets and liabilities. Financial managers often report to finance directors, chief financial officers and other senior executive positions. The responsibilities of accounting managers, financial analysis managers and financial planning managers are similar to those found in financial manager roles.

  • Responsibilities
  • Job Stats
  • Education and Experience Requirements
  • Additional Qualifications Recommended

Responsibilities

  • Advise senior company leaders and clients on financial goals and decisions
  • Create financial reports, statements and projections
  • Ensure compliance with financial laws and regulations
  • Manage projects and functions of a team of accountants and assistants
  • Communicate complex financial analyses to company leaders and external audiences

Job Stats

  • Employment numbers: The Bureau of Labor Statistics reports that there were 532,100 financial managers in 2012.
  • Salary: The Robert Half 2015 Salary Guide for Accounting and Finance reports an annual salary range of $90,000 to $120,500 for those working in financial planning and analysis manager positions in 2015.
  • Projected growth: The Bureau of Labor Statistics indicates average growth of 9% for financial managers between 2012 and 2022, which varies by industry.

Education and Experience Requirements

  • A bachelor’s or master’s degree in accounting, finance, economics, business administration or a related field is expected.
  • Five or more years of related experience is typical for financial accountants entering management-level positions.

Additional Qualifications Recommended

  • CFA: The Chartered Financial Analyst credential is available for financial accountants and managers, specifically those who are working on tasks related to investment analysis and portfolio management.
  • CTP: The Certified Treasury Professional credential, sponsored by the Association for Financial Professionals, is another option for those working in positions related to capital and risk management.