Finance and accounts are a part of accounting, which deals with the reporting, analysis and the preparation of statements of financial transactions relating to a company. This involves the preparing of accounting reports which are prepared for the use of creditors, owners, tax authorities, managers, and investors. This also involves the management of money in the company. This includes the funding of stock options, payouts, dividends and capital financing.
The principles of accounting are used to process data aat level 2, collect it into reports and make statements about that information. This science usually has three areas of specialization. The area of management is mainly concerned with planning, ordering, analyzing and using the results of its financial activities. The second area of finance deals mainly with the preparation and maintenance of accounting records and the third area of accounting is related to the collection of information, using the resources that are available to work with, preparing the reports and compiling the information into useful information.
Finance and accounts prepare reports which are required by shareholders, management, tax authorities and regulatory bodies. It is also involved in the preparation and audit of the accounts of a company. Finance and accounts prepare the forecasts of sales and purchases, making recommendations as to how the company will manage its finances in the future, making sure that the resources that are available are used efficiently.
Finance and accounts prepare budget plans for the year ahead and the forecasting of income and expenditure for the upcoming year. This requires careful analysis of how the resources will be used and whether any unexpected expenses will be incurred. Finance and accounts prepare the forecasts of revenue and expenditure, making sure that all material expenses can be allocated to bring about an accurate income and expense forecast. Finance and accounts are primarily concerned with planning, organizing and forecasting the resource requirements of a company. Financial reporting is a part of the responsibilities of the executive directors or members of the management team aat level 3.
As per the ‘Control the Flow of Finance and Accounts’ action plan of the CDS Board, Finance and accounts should prepare and audit the annual budget, control the flow of finance and accounts’ activity, control the transfer of information, control the preparation and approval of the financial report, provide risk management advice, develop reporting policies and develop accounting systems to meet the control needs of Finance and accounts. The CDS Board also lays down rules for the internal control of Finance and accounts. The CDS provides a register of company assets, liabilities and ownership interests. The register also contains data regarding current and former directors, officers and shareholders and the nature of their relationships with Finance and accounts. The control of Finance and accounts is achieved through the following measures:
The responsibility of Finance and accounts is not confined to financial transactions alone. It also encompasses the management of internal business processes, which may include cash management, risk management, manufacturing control, sales and pricing, quality assurance, information systems, project accounting and procurement, production planning, work methodologies and industrial design. The responsibility of Finance and accounts is further exercised through the following activities: (a) forecasting the supply of funds and working capital; (b) allocation of resources; (c) development of policies necessary for achieving the objectives of Finance and accounts; and (d) control of human and material resources. The key functions of Finance and accounts are therefore not only to prepare and audit the financial reports, they should also ensure that the resources are used efficiently. They ensure effective and efficient utilization of finance by controlling the transfer of information, developing accounting systems to comply with the requirements of Finance and accounts and ensuring effective controls on the use of resources.