Finance and accounts are related but distinct subjects. They go hand in hand to provide the necessary guidance to decision-making by managers, investors and financial experts. Financial accounting is an area of accounting normally concerned with the measurement, review and reporting of various financial transactions associated with a company. This usually includes the preparation of periodic financial reports for the use of shareholders, creditors, lenders and tax authorities click to read more.
The primary purpose of a manager or a group of managers in a company is to keep track of all financial transactions, income and expenses, so that they can be reported to a higher power. Managers use the information from Finance and Accounts to make informed and strategic decisions about how to implement changes in company activities and their consequences. Finance and accounts therefore are intimately related. In some ways they even appear to be two sides of the same coin – the management’s budgeting and controlling the finance department.
Finance is part of the accounting process. The accounting process itself is called the “control process”. Finance includes such aspects as budgeting, financing, control, risk management, and advice on investing and lending. The role of Finance and Accounts is often played by a single person in a company who is responsible for its day-to-day accounting. Such a person may be a deputy director, a controller, or a financial adviser.
Management reviews and approves the budget, and controls the cash management of the enterprise. The controller is responsible for ensuring that the objectives of the management are achieved, through effective financial management. Control, however, is not absolute. In cases where there is scope for impairment or disallowance, the finance and accounting officer has to give reasonable notice of the proposed action to the senior management and the executive directors learn this here now.
The accountants prepare the year’s financial accounts, which include: personal and business accounts, bank accounts, cheques, vouchers, stocks, securities and perpetual funds. The accountant prepares the balance sheet, which provides: a description of the company and its assets, liabilities, revenues and expenses. The accounts receivable and the accounts payable describe the nature of the transactions entered into in the period of the year and the date of payment. The income statement provides the information required by the Finance and Accounts department to make the budget and financial analysis. There are various extant rules governing the preparation and submission of the accounting reports, the preparation of the audited statements, and the compliance with the statutory duties.
The role of Finance and Accounts is not confined to the preparation of the financial reports. There may be instances where there is a need for an independent external organization to audit the finance department. The Audit Manager in the Finance and Accounts department, along with the other members of the department, may have to sign an agreement with the external accountant. Under the agreement, each member of the department will be responsible for assessing the effectiveness of the financial management system, the audit of the accounts payable procedures, the review of the financial reports prepared by the accountant, and the submission of the audit report to the Finance and Accounts department for review and comments.