After reading this article you will learn about meaning and functions of financial advisor.

Meaning of Financial Adviser:

Financial Advisers (FA) were nominees of the Ministry of Finance till late 70’s. They usually belonged to the category of All India Accounting Services (AIAS) and were nominated. As per recommendation of the Administrative Reforms Commissions, his appointment was given by the board of the sector where he would not be a member.

At present he is considered next to the chief executive. According to the Government order, the Financial Adviser (FA) is recognised as principle adviser to the chief executive 011 all financial matters and consequently all financial problems and implications which are presented before the Board of Directors, should be considered by him.

His views should be noted in the meeting if there is difference of opinion. He must be invited in the meeting of the Board of Directors. Similarly, he has the right to include in the agenda of the meeting any irregularities or implications which he has noticed while working in the sector.


The special position of the FA in a public sector undertaking is analogous to the special position of the Ministry of Finance in the Government. His concurrence is required for all decisions which have financial implications the way this concurrence of the Ministry of Finance is required for Government decisions which have financial implications.

Functions of the Financial Advisor (FA):

The Government has prescribed the following functions and responsibilities of the Financial Adviser based on the recommendation of the Committee on Public Undertaking (COPU).

The main features are presented below:

(i) To ascertain the financial needs of the enterprise and also to find out the ways such needs can be met;


(ii) To formulate programme in order to provide most effective profit-volume-cost relationship;

(iii) To carry out any special study/training with a view to reducing cost and to improve efficiency as well as profitability of the undertaking;

(iv) To analyse and scrutinize financial results of all operations and to recommend matters relating to future activities;

(v) To determine proper purchasing procedure in order to control overall purchase of materials;


(vi) To analyse and examine the feasibility studies and project report for the purpose of overall economic viability of the project;

(vii) To give advice 011 all service matters relating to scale of pay, DA, Bonus etc.;

(viii) To give valuable advice to the chief executive relating to primary policies etc.;

(ix) To perform his duty as a principal officer-in-charge of accounts, costs and internal audit, tax etc.;


(x) To give valuable advice relating to all tax matters;

(xi) To confirm that markets are properly surveyed by the management;

(xii) To see that the accounts are prepared in time and according to the proper provisions;

(xiii) To prepare and draft a report which should be placed before the Government relating to the workings of the sector;


(xiv) To submit the prospective cost of the products by which the management can ascertain the optimum product mix.