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The financial planning and analysis department within a corporation is responsible for preparing the annual plan and long-range or five-year plan. Financial planning and analysis professionals also prepare monthly, quarterly and annual management reports that compare actual results to forecasts. This department is a segment of the finance division of a company, and usually reports to the chief financial officer. The financial planning and analysis team also assists with the monthly accounting close, making certain journal entries are prepared correctly and on time.
Education and Training
Financial analysts are expected to have, at minimum, a Bachelor of Science degree in finance or accounting. Having a Master of Business Administration degree is highly desirable, particularly for career advancement. Some companies require that analysts have a Certified Public Aaccountant designation to ensure they understand "Generally Accepted Accounting Principles" and apply these principles to the reports they prepare.
Financial planning and analysis professionals must have a thorough understanding of advanced financial analysis techniques using spreadsheet software, as well as any specialized financial forecasting software their company may have. They must be able to design reports that present both actual and budget data in a concise manner for use by top management in decision making. They are required to communicate well, both orally and in writing, as they are asked to make presentations to upper management.
Senior management depends on information and recommendations provided by the financial planning and analysis department to make critical decisions such as those regarding multimillion dollar capital expenditures and mergers and acquisitions. If the information the analysts supply is flawed, there can be significant negative financial consequences for the company as a whole. Success in this career depends on being able to interpret data and draw conclusions, not just to compile numbers.
Finance planning and analysis can be a high-pressure career because, during the planning cycle, there are tight deadlines that must be met. The financial reports that analysts prepare can involve presenting negative news to senior executives, who may challenge the accuracy of their reports. They are often given special analysis projects, such as mergers and acquisitions, that must be completed under extremely tight time frames and often with insufficient or limited data.
Because the financial planning and analysis expert interfaces with all departments of the company during the planning process, this career can be a learning experience to gain an understanding of how other departments, such as marketing or purchasing, are managed. This knowledge can help financial analysts advance into a senior management role later in their careers. It can also be a stepping stone to becoming chief financial officer of the company, because the financial planning and analysis department is heavily involved with the day-to-day operations of the accounting department. Financial planning and analysis professionals, even junior analysts, are asked to prepare reports or make presentation to top executives, so this career can help young professionals develop poise and self-confidence.
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- “Careers in Finance”; Trudy Ring; 2004
Brian Hill is the author of four popular business and finance books: "The Making of a Bestseller," "Inside Secrets to Venture Capital," "Attracting Capital from Angels" and his latest book, published in 2013, "The Pocket Small Business Owner's Guide to Business Plans."