A Revenue Budget Is An Essential Management Information Tool

The first stage is to ensure the organisational chart clearly represents the management responsibility of each department and activity area. Financial accountancy and cost accounting should be integrated and aligned to enable detailed management information reporting and accurate financial records for each activity.

The cost and management information reporting system should be focused upon critical items where management action influences the financial result. Before setting the revenue budget the managing director, advised by the financial director or management accountant, should identify all crucial elements of the business that may have an impact on future financial performance.

Having established the departmental responsibility for producing the budget and the critical items that will be monitored the accountant should prepare budget templates and hold pre-budget meetings with the departmental heads. At these series of meetings the department heads will receive the budget templates and discuss the detail required and the timetable for submission.

Management responsibility for producing the departmental budget is crucial to achieving the financial targets and can be greatly enhanced by relating bonus payments to the level of achievement.

The work of the management accountant is to receive all the departmental budgets and put them together in a final budget for approval by the directors. Throughout the budget approval process adjustments are likely to be required to reach the overall financial objectives but once finalised each budget should be signed off by the department head responsible.

Simply taking the previous years numbers and adding a percentage is a simple solution to preparing the next year budget but is likely to be of poor quality. Quality comes from department heads and managers generally taking responsibility for their own areas of activity and agreement to the detailed financial parameters.

Risk Management For Financial Institutions

Financial institutions serve many purposes in a financial system. They provide financial intermediation services to consumers and businesses and transact in the financial markets. Financial institutions intermediate between lenders and borrowers in the hope of earning a profit by acquiring funds at interest rates that are lower than they charge when they sell their financial products. But there is no free lunch here.
The differences in the characteristics of the financial planes financial institutions buy and sell expose them to a variety of risks in the financial markets and reserved funds invested in the best forex trading futures are not enough to fully protect them from loss.
As testimony to the importance of successfully managing these risks, the decade of the 1980s was a battleground now littered with the corpses of financial institutions that failed to adequately manage these risks. Managing these risks does not mean eliminating them as there is a trade-off between risk and higher profits. Managers who take too few risks sleep well at night but eat horribly and their slumber reads every word of declining earnings and stock prices that their shareholders will not tolerate for long because he is passing on forex trading tips that he should have acted on. On the other handFree Articles, excess risk taking that is betting the bank and losing is also bad news. It will place you in the ranks of the unemployed with an armada of expensive Wall Street lawyers defending you.
This is the dilemma that any financial manager must navigate in order to have a successful career. First and foremost a manager is a guardian of funds and a champion of capital preservation. Any manager who does not have this as his first line of duty is not worthy of the position and will not be long in the financial world.