As a finance officer, the information flows in different ways through the four segments to make financial management system work. When it comes to original records, the evidence that a particular transaction or an event occurred is being provided. This assists in monitoring the revenue, expenditures, and assets of the business because it minimizes the chances of fraud and other illegal activities (Hendriks 2013). The second segment which includes the information system collects the evidence that has been provided by the original records. This implies that it would be easy to retrieve such information when needed thus improving the efficiency of the financial management system.
The third segment which is the accounting system is very important because it assists in keeping records of the system. Records can be done through documentation which involves recording in papers or through the online system (Hendriks 2013). The accounts systems and financial systems contain crucial information which dictates the decision making in the business. The management accounts contain essential information that is used by the management in decision making which aid in the control of their management duties. The last segment which is the reporting system is very important in making the financial management system works because it produces reports of the outcome (Brooks & Mukherjee, 2013). Therefore, the four segments assisted a lot in improving both the short-term and long-term performance of the organization.
Production functions/systems rely on financial systems to take place. This means that the level of production of a company is influenced by the supply of finance and must have been factored out in the financial records. The balance sheets, the cash flow analysis, and the profit and loss account are the records which contain the records of all functions of the firm which involve the expenses and also assets. All the functions of the firm are accounted for in the budget which is drafted long before they are executed (Hubbard and Varma 2014). Since the budget involves the allocation of funds towards certain functions, it is approved by the experts to make sure it capable of supporting all the operations of the business. To enhance easy tracking of all functions of the firm to account them in the financial records, all the managers run their management account documents that can be used for compiling overall financial records of the firm. This is made to ensure financial planning and forecast on the future.
There are different components of the financial management system. The first component includes financial and costs analysis where all the costs involved in a particular project or production are analyzed. Some of the costs being analyzed include total costs, variable costs, and fixed costs (Hendriks 2013). Another component includes planning and budgeting which helps in making sure that all the finances in an organization are utilized in the right way. Budgeting will also assist in the proper allocation of financial resources to different organizational projects. Another component includes project and activity planning (Brooks & Mukherjee, 2013). Usually, there are no separate programs for each of the four segments because they work under the same system.
Brooks, R., & Mukherjee, A. K. (2013). Financial management: core concepts. Pearson.
Hendriks, C. J. (2013). Integrated Financial Management Information Systems: Guidelines for effective implementation by the public sector of South Africa. South African Journal of Information Management, 15(1), 1-9.
Hubbard, R.G. and Varma, S., 2014. Money, banking, and financial system. Boston: Pearson.
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