Managing Financial Resources
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Please read the attached file be email then answer the following question. Below are questions/issues that you may again like to further reflect upon:
•What links have you now identified between accounting and finance and effective strategic decision making?
•Further discuss those areas of financial and management accounting, plus financial management, that have most resonated with you.
•How do you see the concepts that you have studied applying to your professional experience, plus your personal finances?
•What steps might you now take to aid you in the transition of applying the coursework to your workplace?
•How can you link what you have studied in Managing Financial Resources with what you took away from your previous modules?
•What ethical and cultural issues have you considered important in this module and how have they impacted upon your views of global business?
•Do you feel that you have improved your ‘key skills’ (report writing, time management, etc.) as a result of your experiences with this module?
Also,
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SAMPLE ANSWER
Managing Financial Resources
Introduction
Accounting is a dynamic discipline that keeps evolving, especially as business becomes global. According to Ozturk (2015), accounting applies to the private and public sector, as well as in the manufacturing sector. Furthermore, accounting is still relevant to a non-profit organization because it is also a commercial entity. Accounting applies to all functions of an organization, as each function will be affected by finance-related decisions. Therefore, the following discussion will indulge in discussing the link between accounting and finance and efficient strategic decision-making. In addition, the paper will look into those areas in management accounting, and financial management that are critical. Furthermore, the discussion will give an insight to how concepts of accounting can apply to a professional experience. Finally, the study will look into some of the ethical and cultural issues in accounting that can affect the professional in managing human resources.
Discussion
Links between accounting and finance and efficient strategic decision-making
The decision-making process in an organization cannot be useful if financial management, financial accounting, and management accounting lacks. Tanase & Stefanescu (2015, p.116) states that financial accounting is an accounting system that is concerned with outside parties such as creditors, investors, shareholders, lenders, and customers. Ozturk (2015, p.399) call financial accounting the purest form of accounting, as it entails proper record keeping and reporting financial data. This record keeping and reporting is significant in decision making as a manager, or a financial accountant can retrieve data necessary for making decisions.
On the other hand, managerial accounting is important in decision-making, as it enables the management of an organization to formulate policies, planning, controlling, and forecasting, not forgetting managing the day-to-day operations of an organization. The exceptional feature of management accounting is that it can capture qualitative information, which financial accounting cannot capture (Shrman, Weston, Willey & Mansfield (2014, p.165). Therefore, there is a link between financial accounting and management accounting to provide both qualitative and quantitative data paramount for a strategic decision-making process.
Financial management is another field dealing with how an organization can best finance a project. Financial management deals with the question of how to choose a project, how to evaluate the risks, and how to raise funds. Mathews & Marzec (2012, p.7094) dictate that all this information is derived from financial accounting and management accounting. In other words, these three concepts are interrelated to ensure that the financial decision of management is effective.
Indispensable areas of financial and management accounting, and financial management
Shrman, Weston, Willey & Mansfield (2014) argues that the functional area of management accounting is not only constrained to providing financial or cost data, but it also extracts significant and material information from financial and cost accounting to aid the management in budgeting, setting goals, and executing control functions. This functional area is made effective with such components as cost accounting, benchmarking, and life cycle costing. For instance, unit costs are used for product’s pricing and product discontinuance decisions.
On the other hand, benchmarking is used to identify the best practice and to compare the firm’s productivity to those methods with the aim of improvement. Lifelong costing involves calculating the total cost of a product throughout its life cycle through such aspects as introduction, growth, and maturity. Financial management has areas that are important in capital budgeting. Mathews & Marzec (2012, p. 7098) argues that this concept involves determining relevant costs and cash flows, as far as product decision-making is concerned. This process also entails calculating the cost of capital, which can be calculated using financial accounting methodologies. This wholesomely involves capital management, which requires controlling a project when installed to prevent loss. Sanyal & Sett (2011) adds that capital management requires the use of lean operations and just-in-time (JIT) philosophy. The lean supply chain requires the process of planning to minimize wastage, mostly in terms of holding crucial inventory. Financial management also involves cash management to sustain sufficient compensating balances at banks to facilitate the banking services that a firm benefits from.
Financial accounting has been known to assess business’ success from an external standpoint. To perfect in this assessment, an accounting manager uses the financial statements in financial accounting. The statement of the financial statement, also known as a balance sheet, is used to reflect how much business is worth a particular point in time. A balance sheet is equated with a picture of the market on a given day. Karadag (2015, p.36)argues that the income statement commonly referred to as profit or loss account, is under financial accounting, and has a significant role in not only comparing the cash a business gets over given time, but also matching it against what it owed. Financial accounting also uses the statements of cash flows, which is important to determine the profitability and liquidity of an organization.
Reflection
As a finance accountant assistant in the tourism industry, I have realized that all concepts of accounting comprising financial management, financial accounting, and management accounting are critical for a firm to succeed (Shrman, Weston, Willey & Mansfield, 2014). The concepts relate to my personal finances, as I have to determine what will be an implication of starting a project, which is if the project will bring profit or not. The concepts also apply to my professional experience that without carrying a proper financial accounting, a company may think it is making a profit, while it is not (Sanyal & Sett 2011, p.1922). My professional experience also indicates that a constituted project needs to be managed. This is through capital management that aims at reducing wastage. I have also realized that I utilize so many of the concepts I have learned in this module every day as I carry out my work. For instance, the decision relating to starting a new project involves bringing external and internal parties to come up with a strategic decision (Karadag, 2015). The use of financial accounting and ignoring management accounting produces a situation of having an infective decision, as qualitative data is not used to make the final determination. I did not realize that using the balance sheet, loss and profit account, and the statement of cash flows is essential in making strategic decisions to avert an impending worse financial situation. This is because it enables forecasting of the future.
Steps in the transition of applying the concepts to the workplace
When the concepts of accounting are integrated, it constitutes a strategic decision-making process that entails (Dennis & Walcott, 2014, p.23):
- Analyzing the shared values and experiences of staff and board in the financial accounting department
- Review and update the Mission Statement of the organization
- Identifying and articulating a firm’s mission and purposes
- Analyze the firm’s external settings through PEST (political, economic, social, and technological factors) as well as internal environments (performance and resources)
- Undertaking a position examination, using methods such as SWOT analysis to evaluate the firm’s internal strengths, weaknesses, external opportunities, and threats
- Creating smaller groups for more thoroughly planning in important areas
- Identifying different existing strategies to enable the organization to attain its future strategic goals, and also short- and longer-term plans to execute them
- Sketch a vision of where the firm will be for the next four years
- Choosing between such strategies
- Developing work plans illustrating particular activities, persons responsible, and capital wanted.
- Calculating actual performance against that designed and bending strategies and goals as needed
Reflection on Managing Financial Resources
Managing financial resources is a critical role to any business. This management cannot be effective if the three concepts of accounting are unutilized. Pudlowski (2009) argues that failure to use accounting concepts guarantees a redundant decision-making process. The decision made will not only risk a business to incur risks, but it also prone the business to closure. For example, balance sheet enables a firm to identify if the company is making a profit or not. Budgeting in management accounting allows a firm to minimize potential financial risk. What this module has added is that all the concepts of accounting are interrelated such that the information of one concept is used in another concept to enable an efficient management of financial resources (Dennis & Walcott, 2014, p.17). I have also learned that managing financial resources is not relevant only for the current times, but also for the future. This is reinforced by the statement of Ozturk (2015, 400) who attests that the saved data will be retrieved when needed most to address any factor adversely influencing an organization. For instance, financial management can enable an organization to discover investment opportunities. By cost-analysis, an organization can effectively and efficiently find the chances, and get the capacity to pay for the desired acquisitions.
Ethical and cultural issues
One of the ethical questions in accounting is goal congruence. Atrill & McLaney (2013) argues that many employees in the most organization within accounting departments do not aim at fulfilling the set objectives (goal non-congruency). In addition, Dennis & Walcott (2014, p.20) give that individual accountants find themselves omitting financial figures from the balance sheet, which they think may taint the picture of an organization. One of the cultural issues in accounting is that the minority employees do not make accounting decisions. For instance, the Americans working in the U.K. cannot vote a director off a board in an organization in Britain (Pudlowski, 2009). These cultural and ethical issues have influenced my views of global business, which entails equity in decision-making in an organization. Therefore, there should be emphasized corporate social responsibility to deal with these matters.
Summary
In conclusion, accounting concepts are paramount for an efficient management and total excellence of a business. These ideas ensure that there is a productive managing financial resources process that at the end, guarantees maximization of resource utilization. However, several ethical and cultural issues are prevalent in accounting, and thus, there is a need to emphasize corporate social responsibly, and the installation of strong moral standards in organizations.
References
Atrill, P. & McLaney, E. (2013) Accounting and finance for non-specialists. 8th Ed. Harlow, UK: Pearson Publishing.
Dennis, V., & Walcott, J. (2014). Federal Financial Management Shared Sciences: The Move Is On. Journal Of Governmental Financial Management, 63(3), 18-24.
Karadag, H. (2015). Fincial Management Challenges In Small And Medium-Sized Enterprises: A Strategic Management Approach. EMAJ: Emerging Markets Journal, 591), 26-40.
Mathews, R., & Marzec, P. (2012). Social Capital, A Theory For Operations Management: A Systematic Review Of The Evidence. International Journal Of Production Research, 50(24), 7081-7099.
Ozturk, C. (2015). Some Issues Related To Cash Flow Statement In Accounting Education. The Case Of Turkey. Accounting & Management Information Systems/ Contabilitate Si Informatica De Gestiune, 14(2), 398-431.
Pudlowski, E. (2009). Managing human resource cost in a declining economic environment. Benefits, 25(4), 37-43.
Sanyal, S., & Sett, K. (2011). Managing Financial Resources In Dynamic Environments To Create Value: Role Of HR Options. International Journal Of Human Resource Management, 22(9), 1918-1941.
Schimtz, C. & Ganesan, S. (2014). Managing Customer And Organizational Complexity In Sales Organization. Journal Of Marketing, 78(6), 59-77.
Shrman, M., Weston, H., Willey, S., & Mansfield, N. (2014). Risky Business: Managing Risk In A Complex And Connected World. Revenue Management Et Avenir, (74), 159-173.
Tanase, G., & Stefanescu, A. (2015). Developments Of The Human Resources Budget—A Non-Financial Perceptive. Audit Financier, 13(123), 111-117
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