management

Examples of management in the following topics:

• Managing to Prevent Fraud

  • To meet financial goals for the company managers may be tempted to "cook the books. " To help prevent management from adjusting financial statements, an independent auditor should examine financial statements on an annual basis.
  • Management helps to prevent fraud by reducing the incentives of fraud.
  • A strong control environment (top management control) involves enlisting management to demonstrate ethical behavior.
  • Whatever tone management sets will have a trickle-down effect to the employees.
  • To meet financial goals for the company managers may be tempted to "cook the books. " To help prevent management from adjusting financial statements, an independent auditor should examine financial statements on an annual basis.

• Basics of Cash Management

  • A company manages its cash primarily through the use of a voucher system and bank reconciliations.
  • Managing cash is about monitoring how it comes in and goes out .
  • To meet this goal, a business must come up with a system that not only documents all of these transactions, but organizes those documents in such a way so that any issues are immediately noticed by management.
  • Explain how a voucher system helps a company manage their cash

• Internal Controls

  • An inventory management system is a series of procedures, often aided by computer software, that tracks assets progression through inventory.
  • When the company receives that material, the amount should be noted in the inventory management system.
  • The benefit of a properly used and maintained inventory management system is that it allows management to be able to know how much inventory it has at any given time.
  • The auditor will then compare the count to the related information in the inventory management system.
  • Explain how a company would use storage, inventory management systems and inventory counts to control inventory

• Working Capital Management Analysis

  • Decisions relating to working capital and short term financing are referred to as working capital management.
  • These involve managing the relationship between a firm's short-term assets and its short-term liabilities.
  • The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.
  • Working capital management entails short-term decisions, usually relating to the next one-year period and are based in part on cash flows and/or profitability.
  • Because this number effectively corresponds to the time that the firm's cash is tied up in operations and unavailable for other activities, management generally aims for a low net count.

• The Role of Accounting in the Business

  • Because it communicates so much of the information that owners, managers, and investors need to evaluate a company’s financial performance.
  • Management accountants provide information and analysis to decision makers inside the organization in order to help them run it.
  • In other words, management accounting helps you keep your business running while financial accounting tells you how well you’re running it.
  • Management accounting plays a key role in helping managers carry out their responsibilities.
  • Reports are tailored to the needs of individual managers, and the purpose of such reports is to supply relevant, accurate, timely information in a format that will aid managers in making decisions.

• Defining Accounting

  • Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers.
  • Accountancy is the process of communicating financial information about a business entity to users such as stakeholders and managers.
  • Accounting that concentrates on reporting to people inside the business entity is called management accounting and is used to provide information to employees, managers, owner-managers, and auditors.
  • Management accounting is concerned primarily with providing a basis for making management or operating decisions.
  • Because these users have different needs, the presentation of financial accounts is very structured and subject to many more rules than management accounting.

• Costing Methods Overview

  • Cost accounting information is designed for managers.
  • Cost accounting information is commonly used in financial accounting information, but first we are concentrating on its use by managers to take decisions.
  • The accountants who handle the cost accounting information add value by providing good information to managers who are making decisions.
  • The cost-accounting system is the result of decisions made by managers of an organization and the environment in which they make them .
  • Cost accounting is regarded as the process of collecting, analyzing, summarizing, and evaluating various alternative courses of action involving costs and advising the management on the most appropriate course of action based on the cost efficiency and capability of the management.

• Outputs of Accounting

  • Statements typically include four basic financial statements accompanied by a management discussion and analysis.
  • For large corporations, these statements are often complex and may include extensive notes, an explanation of financial policies, and management analysis.
  • Owners and managers require financial statements to make business decisions that affect continued operations.
  • Statements are analyzed to provide management with a more detailed understanding of the figures.
  • Employees need financial statements when making collective bargaining agreements (CBA) with the management and when discussing their compensation, promotion, and rankings.

• Being Aware of Off-Balance-Sheet Financing

  • For example, financial institutions offer asset management or brokerage services, and the assets managed through those services are typically owned by the individual clients directly or by trusts.
  • The formal accounting distinctions between on and off-balance sheet items can be complicated and are subject to some level of management judgment.

• Additional Factors to Consider

  • There are additional factors to consider when valuing a business including competition, management stability, etc.
  • When examining this factor as a part of business valuation, one must consider if the management is skilled and experienced enough to maintain the company's position, and potentially improve it in the future.
  • Several factors can indicate management ability: accounts receivable, inventory, fixed assets, and total asset turnover; employee turnover; condition of the facilities; family involvement, if any; quality of books and records; and sales, as well as gross and operating profit.