Organization of corporate financial control
Control - the final stage of corporate finance management - is at the same time a necessary condition for their management. It accompanies all phases of the individual circulation of funds, from advancing funds to production stocks and ending with the sale of finished products and receipt of cash proceeds to bank accounts in banks .
Financial control is a method of managing financial resources. In Western economic literature, corporate financial control is often identified with an audit. An audit is usually understood as an annual independent audit of the corporation's financial statements conducted in the interests of its shareholders.
Internal audit is an effective management tool that allows you to determine deviations from approved planning standards and standards. It is designed to help management really assess the positive and negative aspects of the corporation.
The control system as a set of objects and subjects of control is intended to help the management of the corporation in matters:
• the choice between alternative actions and the planning of actions that must be carried out within a certain period;
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• Identify the mistakes of specific performers, which can consist in setting unrealistic goals in the presence of accurate forecasts or in the failure to perform the actions that must be taken to implement financial, investment and other decisions;
• fixing bugs and fixing success.
The financial management of the corporation must ensure the development of reliable financial statements. If the corporation has foreign affiliates and divisions in which its management takes on its own
solution, then it needs reliable information about all branches to evaluate the results of decisions taken as a whole.
An important object of financial control are the financial indicators of the corporation's budgets. To do this, you can use a two-tier system:
• The lower level - control of the implementation of the budgets of structural units (financial responsibility centers), and it is carried out by department heads;
• The top level is the control of the implementation of the budgets of the structural divisions of the corporation by the financial management and employees of the accounting department of the corporation itself.
The key elements of the control system are:
• control objects - budgets of structural units (business units);
• Control items - separate indicators of budgets (limit payroll, raw materials, materials and energy, etc.);
• budget control technology - the procedures necessary to determine the deviation of actual budget indicators from planned in absolute amounts and in relative terms (in%);
• subjects of control - structural divisions and corporate management.
Control over the implementation of the revenue side of the budget is designed to ensure the continuity of financing the current and investment activities of the corporation. It is carried out by the financial service. Controlling compliance with the expenditure side of the consolidated budget is an important problem, on the basis of which the efficiency of the corporation's performance depends.
It is necessary to establish a clear procedure for conducting management procedures, which should ensure:
• operational analysis of actual deviations from the planned, functional and consolidated budgets for the month, quarter, year;
• development of measures to eliminate unproductive costs and losses, as well as rising costs identified in the analysis;
• design and transfer to the corporation management of analytical materials on the implementation of consolidated and functional budgets in order to adjust their revenue and expenditure parts.
In practice, the method of reconsidering the expenditures of the budget is used, based on the adopted system of priorities for financing (paying) current expenses of the corporation. Priority is the following budget expenditures:
• remuneration of employees in the calculation of the production program;
• payment of taxes and fees to federal, regional and local budgets;
• insurance premiums;
• Payment for purchases of material resources and energy.
In order to improve the management of corporate finance, it is advisable to create and implement in each corporation a comprehensive automated budget planning system (based on a local computer network). Such a system allows you to receive operational (daily) information on the execution of budgets and make timely adjustments to the revenue and expenditure sections.
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Therefore, the financial system of end-to-end planning and control (through the budgeting of revenues, expenditures and capital) should be directed:
• to increase the manageability and adaptation of the corporation to continuously changing conditions in the commodity and financial markets;
• providing quick information about the strategy and tactics of corporate finance management;
• creation of conditions for strengthening cooperation with foreign partners in the field of finance, credit and investment.
After the transition to a qualitatively new level of planning and control, the corporation becomes more attractive and open to investors, creditors and other partners, which expands its financial capabilities.
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