Small Business Banking, Loans & Insights

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These service departments have nothing to sell to outsiders, but are essential components of operation. The costs of service departments must be recovered for a business to survive. It is easy for a production manager to focus solely on the area under direct control and ignore the costs of support tasks. Yet, good management decisions require full consideration of the costs of support services. The audit function provides an independent appraisal of an organization’s accounting, financial, and operational procedures and information. Read more about methods of controlling the economic activities of enterprises here. All large firms have internal auditors, answerable only to the audit committee of the board of directors.

The finance manager of an enterprise has to perform several functions in order to achieve its objectives. It is the prime responsibility of the Financial Manager that he must make forecasts of financial requirements of the business and must make a plan for it. In addition to the above roles, he has to adopt himself to changing information technology which calls for expected knowledge in the field of computers. The access to the internet and communication through E-mail is a common feature of modern business man. This would not only reduce the cost of operations but also provides greater flexibility.

Evaluation typically involves an examination of how funds were expended, the outcomes that resulted from the expenditure of funds, and the degree to which these outcomes achieved the stated objectives. This phase is fundamental in developing the subsequent year’s budgetary allocations. In effect, budget preparation not only is an annual exercise to determine the allocation of funds, but also is part of a continuous cycle of planning and evaluation to achieve the stated goals and objectives of the organization. Financial reporting should provide information to assist users in assessing the service efforts, costs, and accomplishments of the governmental entity.

The organization structure, in particular the administrative structure, establishes many of the roles and responsibilities for financial management. Financial controls are weakened when one person handles a financial transaction from start to finish. The adequate separation of duties requirement is essential in order to maintain an appropriate system of checks and balances. In organizational structures where one individual may not be in a position to review both aspects of appropriateness as defined above, a two-step approval process may be necessary. In such cases, the roles of each approver should be clearly defined and documented.

With the application of financial analysis in business management with the development of economy, enterprises are facing increasingly complex environment. Financial management is an important part of strengthening the capacity of corporate financial analysis. It has an irreplaceable role to improve their core competitiveness, but this aspect currently in China is still not taken seriously enough. This has led to the role of finance in the strategic planning process becoming more relevant than ever. A focus on customers often drives managers to great lengths to please customers. Typically, companies need to purchase new software and equipment, hire and train employees, conduct studies, and consult with experts to improve the quality of its products and services.

Apart from analyzing and selecting new investments, it is also the duty of the finance department to manage company’s existing assets. The finance department should be concerned with current assets apart from fixed assets. The company’s working capital needs to be managed efficiently in such a way as to maximize profitability relative to the amount of funds tied up since it has more implication on the firm liquidity than its fixed asset.

Site-based budgeting places local managers and other staff at the center of the budget preparation process, making them responsible for both the preparation and the maintenance of the budget. However, performance budgeting has limitations owing to the lack of reliable standard cost information inherent in governmental organizations. Further, the performance approach does not necessarily evaluate the appropriateness of program activities in relation to reaching an organization’s goals or the quality of services or outputs produced. Consequently, the performance approach has become most useful for activities that are routine in nature and discretely measurable -activities that make up only a relatively modest part of the total educational enterprise.