Financial Control

Financial Control

Introduction

The Chartered Management Institute is important for the students of accounting. The learning outcomes provide an outline to the teachers of what might be taught. The learning outcomes of the students provide a guideline to the students that by the following course, topic and subjects what they can learn and achieve in learning. The learning outcomes are important for the ACCA and accounting students to know what learning achievements they will have by the end of the course, chapter and topic. Following discussion is about three different learning outcomes for the CMI. This is important to discuss because it will show which heading will provide what type of information.

Learning Outcome 1: Use and control financial system to meet objectives

Relationship between a financial system or function and other systems or functions in an organization

Among all the functions of an organization, finance plays a pivotal role. To make planned expenditures, a smooth fund flow is required for the delivery of products and services. The sales of the same products and services generate funds in shape of profits. All organizational functions and activities have to start any step with proper financial consideration to have an impactful and long lasting effect. For say, the sales department decide to extend credit time or discounts to have an increase in sales. This will affect the cash flow and finance of the business as the company won't be able to retrieve cash in time. If purchase department decides to pay suppliers in time and place huge orders to avail discount, it is not necessary that the required funds will be available in the organization at that certain time. This may also have an impact with the organization and supplier relationship (Broadbent, 1992).

The relationship of finance with other functions of the organization is such that the finance department or section has a huge impact on the activities of other departments. This is the function leading other functions. Shortage of funds will affect the sales department as they won't be able to offer discounts, incentives, credits to their prospective customers. This will make the competitors' offers look more attractive to the customers. Funds shortage also has an impact on the marketing by decreasing their income. Overall strategies of the company will be affected when the planned projects will be prioritized. Thus, it can be said that the relationship of finance and other functions have a two-way dependence. To avoid any lack of communication, problems and conflict all the departments and finance department must have effective and proper communication.

Systems of accounts and financial statements used to control a financial system

System of accounts of any business contains relevant information to a wide number of people or other businesses. Apart from the owners who want to check the organization's financial progress, the accounting data is also helpful to the creditors, investors, managers and other related parties. For the ease of the organization, the accounting system has been divided into financial accounting and managerial ...