Managing Financial Resources
�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?
MANAGING FINANCIAL RESOURCES 2
�Do you feel that you have improved your �key skills� (report writing, time management, etc.) as a
result of your experiences with this module?
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
MANAGING FINANCIAL RESOURCES 3
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.
MANAGING FINANCIAL RESOURCES 4
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
MANAGING FINANCIAL RESOURCES 5
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,
MANAGING FINANCIAL RESOURCES 6
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):
a) Analyzing the shared values and experiences of staff and board in the financial
accounting department
b) Review and update the Mission Statement of the organization
c) Identifying and articulating a firm’s mission and purposes
d) Analyze the firm’s external settings through PEST (political, economic, social, and
technological factors) as well as internal environments (performance and resources)
e) Undertaking a position examination, using methods such as SWOT analysis to
evaluate the firm’s internal strengths, weaknesses, external opportunities, and threats
f) Creating smaller groups for more thoroughly planning in important areas
MANAGING FINANCIAL RESOURCES 7
g) Identifying different existing strategies to enable the organization to attain its future
strategic goals, and also short- and longer-term plans to execute them
h) Sketch a vision of where the firm will be for the next four years
i) Choosing between such strategies
j) Developing work plans illustrating particular activities, persons responsible, and
capital wanted.
k) 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.
MANAGING FINANCIAL RESOURCES 8
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.
MANAGING FINANCIAL RESOURCES 9
References
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MANAGING FINANCIAL RESOURCES 10
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Mathews, R., & Marzec, P. (2012). Social Capital, A Theory For Operations Management: A
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