Project Management Accounting: Budgeting, Tracking, and Reporting Costs and Profitability, Second Edition

Role of the Financial Manager

It is a common misconception that accountants are financial managers. The fundamental difference between accounting and finance is that accounting is the recording or categorizing of financial transactions for the purpose of constructing and interpreting financial statements. The purpose of finance is to develop benchmarks as a guide to managers. Titles like controller, treasurer, and chief financial officer often are used interchangeably, as are accountant and financial manager. The exact assignment of duties and responsibilities is determined by a company's individual uniqueness.

In order to avoid confusion, the project manager should consult the company's organization chart. It is important to note that people with impeccable accounting skills, such as certified public accountants (CPAs), do not necessarily have financial management knowledge or skills. A CPA's training is vastly different from that of a financial manager.

Accountants who have the proper financial training background can be quite adept financial managers. Once again, if the client is a large company with knowledgeable finance personnel, this chapter will serve as a guide for what questions to ask. If not, the information in this chapter will teach the project manager to calculate cash flows and project rates of return.

The role of a financial manager is to create an optimal balance sheet in order to generate maximum return for the company owners. Simply, a balance sheet is a snapshot ...