Possible answer: Itis the endeavour of the efficient use of important enterprise resourcesrequired for running business.
It entails planning for, acquiring, and decidinghow to utilize funds in ways that maximize the efficiency of the organization’soperations. Financial management consists of creating a systematic methodfor the collection of financial data that is useful for makingdecisions about the operations of the organization of an entity as well asmeeting reporting requirements of legitimate authority such as accountingbodies and financiers. Figure 4 Financial management Process 1. Why isknowledge of financial management important for a manager in Oxfam? Possible Answers· Every activity in an organisation revolvesaround money. Every decision you make will either bring in or take out money,save or lead to loss of money organisational money. Discuss some examples of each.
· Financeis the business language. This is the language spoken in business arena inboard rooms, fund raising meetings, procurement etc. · Financeis a key driver of organisational success. · Organisational and project performance isexpressed in monetary terms.· Oxfam competes for scarce resources andtherefore it is important to utilize funds efficiently. Session 2 1.
Good Practice Systems: TheBuilding Blocks of Financial Management What do you expect from this session? Figure 5 Building Blocks for Financialmanagement i. Accounting RecordsThis systematic and accurate keeping recordsof organisation’s transactions. It is the responsibility of everyone to keeprecords within their area of operations. Accurate records will tell the storyof how money was spent and where we are. Identify some of the accounting recordsthat your function is likely to need ii.
Financial PlanningFinancial planning complements strategicplanning. Budgeting a key tool in financial Management. It is telling our moneywhere it should go. iii. Financial monitoringIt is imperative to monitor finances. Thisis possible when we know where we wanted our money to (Budget) and the readingthe story (Accounting Records). We can keep track. What some of the reports do you often receiveor prepare? Discuss (5 Mins) iv.
Internal ControlsThese are checks and balances put in placein order to safe guard the organisations assets, staff and generally instilorder within the organisation, such us who authorizes what? v. Financial Control- Making Sound Decisions The outcome of sound financial managementsystems is bases for sound decision making. Ultimately, this is the goal ofevery manager. Components of financial Management Forthe financial management process to take place effectively, financialsystemsand procedures need to cover three aspects of accounting.
Financial Accounting,Management Accounting Financial Management. Thesecan be as shown below: Figure 6 Components of FinancialManagement All the three process can be performed in a singledepartment but in larger complex enterprises they are performed by differentteams. Difference between Financial Accounting, ManagementAccounting Financial Management. Although the three functions have a lot in common, thereare some significant differences.
Please see the table below. Table 1 Comparison of Components ofFinancial management Financial Accounting Management Accounting Cost Accounting Audience Wide, management, creditors, Government, investors etc. Internal Management management Format Pre-set and highly regulated Formatted internally formatted internal Report Contents Aggregated as per chart of accounts Divertive based on Accounting reports details May contain both accounting and narrative operative information Tasks and Process i.Records transactions ii.Classifies transactions iii.Reconciles records iv.
Summarises transactions v.Presents financial data i. Compares results against goals ii.
Determines reasons for variations iii. Helps identify corrective action iv. Provides forecasts v.
Analyses information i. Analyses cost of raw materials ii. Determines variation of costs of raw materials iii. Helps identify corrective action iv. Provides costs of production v. Determines pricing Aim Keeping complete record of the financial transactions.
Tools for management decisions, such as Setting strategy Reducing and controlling costs and determining pricing Session 3 InterpretingFinancial Statements Session 3 How FinanciallyHealthy is your country programmeSystem-design techniques