Information support financial management
The effectiveness of the financial management of the enterprise depends largely on the quality of its information support. Comprehensive, accurate, timely and understandable information is the key to making optimal financial solutions aimed at reducing the cost of financial resources, increase profits and market value of the company.
Information base of financial management is formed by external and internal sources.
External sources include:
• indicators describing the macroeconomic development of the country and development of the industry in which the company operates;
• indicators describing the situation on the stock and currency markets;
• indicators characterizing the activity of counterparties (banks, insurance companies, suppliers and buyers of products) and competition.
Through internal information sources are formed two main groups of indicators:
1. Indicators of financial accounting business. Is the basis of the information base of financial management in respect of which the analysis, forecasting, planning and operational decision-making in all areas of financial activity.
This group of indicators include indicators of existing reporting forms:
- Balance (Form 1);
- Income statement (Form 2);
- Cash flow statement (Form 3);
- Statement of changes in equity (Form 4);
- Notes to the financial statements.
2. Performance management accounting is a commercial secret of the enterprise and financial managers are used to control the current estimated financial performance and its efficiency, development of financial strategy and policies of certain aspects of financial development of the company.
In the process of management accounting in accordance with international standards emerging power performance of certain expenditures and financial results by:
- Regional activities;
- Individual business units and divisions.
Users of the financial statements are legal entities and individuals requiring information about the company decision-making.
The main users of financial statements include:
1. The enterprise that requires information to determine the need for financial resources and evaluating the effectiveness of management decisions.
2. Lenders who provide temporary loan company and are interested in the financial statements rationale for granting or extension of credit, the schema his return, the fixing of interest based on credit risk.
3. The founders and investors that invest in venture capital with some risk with a view to profit in the future. Investors need financial statements to justify management decisions on the advisability of investing money in securities of the company. In addition, information about financial status of owners interested in assets of the company, which must determine whether increased the share of their equity.
4. Suppliers interested in the financial statements to determine how much time the company will be repaid debts to them. The more the supplier depends on the company as a customer, the closer it will monitor its financial results in order to evaluate the reliability of marketing their products.
5. Buyers, depending on the company as a supplier they need goods and services, and are interested in the stability of supply. The greater the dependency of clients from the supplier, the more they are interested in its financial statements for the prediction of price and financial stability.
6. The tax authorities require financial statements to monitor the correct calculation of taxes and other obligatory payments timeliness of their collection.
7. employees and their unions are interested in getting comprehensive financial information about the stability and profitability of the company, the employer and its ability to timely pay wages and provide employment in the future.
8. Press and population of the region in which the company operates interested in obtaining reliable information on its financial status and trends of change, as it affects:
- Employment in the region;
- Focus on local suppliers;
- Use the services of local banks;
- Investment in economic and social development of the region.
Also indirectly interested in the results of financial activity Stock Exchange, consultants, experts, and lawyers and others.
Regardless of the group, which includes users of financial information they are interested in its entirety, truthfulness, impartiality and timeliness of delivery. In order to meet these requirements of users shown in the financial statements information is:
• be clearly and lucidly interpreted by users, provided they have sufficient knowledge and interested in the perception of information;
• contain only relevant information that affects decision-making by users, enables you to assess past, present and future events, confirm and adjust their data in the past;
• be reliable. The information contained in the financial statements are accurate, if it does not contain errors and distortions that are able to influence the decisions of users of these financial statements.
These are the principles of financial reporting is the basis of the national accounting system in accordance with the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" dated 16.07.99. The main purpose of introducing national regulations (standards) accounting (abbreviated P (S)) is the harmonization of financial accounting in Ukraine with International Accounting Standards (IAS) issued by the International Accounting Standards.
The accession of our country to the international accounting system is not an end in itself. However, international experience shows that international standards set out in the Principles on the one hand, the best interests of potential users of financial information, and the other - make it possible to standardize financial reporting and make it convenient to use.
It should be noted that the application of new accounting principles significantly expands the functionality of the financial managers and increase their role in the management of financial processes.
An important advantage of the new principles of information management is to ensure financial control indicators of financial reporting subsystem management accounting and control, guaranteeing systematic and complete records of assets, liabilities and equity businesses. In result is a more reliable assessment of the market value of the company and accordingly increased its rating on the capital market, increasing rate issued by it in transferable securities.
Combined with effective internal controls, a new financial reporting system should work at improving the profitability of business operations and create conditions for large-scale application of methods and tools of financial management.
The main advantages of the new information system management solutions include:
• improve the quality represented by the reporting of financial information to ensure its reality and greater suitability for economic assessment decisions and risk prevention in industrial and economic and financial activity;
• the possibility of self-selection of accounting policies and presentation of information in the most user-friendly way;
• Adaptation of Ukraine reporting system to international standards, creating conditions for Ukraine's integration in the international division of labor;
• the possibility of presenting information about financial and economic activities of enterprises and areas of development not only domestic but also foreign investors to attract additional investment.
Proper organization of financial and management accounting in accordance with international standards allows to carry out effective monitoring of financial activity. In general, monitoring financial activity is to provide continuous monitoring of critical current results of this activity in the changing market conditions.
• The main goal of developing a system of monitoring financial activity is the timely detection of deviations of actual results from planned, determine the cause and development of proposals for the normalization of financial activity and increase its effectiveness.
• Strengthening financial management control function at a stage of operational management of current business transactions will increase the efficiency of financial operations and timely prevention of undesirable scenarios of economic processes in the enterprise.