6. The Finance Function And Financial Information Flashcards
What are the tasks of the finance function?
Recording financial transactions
Financial reporting
Management accounts
Treasury management
What is business partnering?
Sees members of the finance function partnering within functional areas of the business in a value adding capacity. They provide advice and support to drive performance rather than just performing routine reporting activities
What is CATIVA in terms of effective processing of information?
Completeness
Accurate
Timeliness
Inalterability
Verifiability
Assessability
What is a transaction processing system?
Systems which perform and record routine transactions
What are examples of transaction processing systems?
Finance/accounting systems
HR systems
Manufacturing/production systems
Sales/marketing systems
What is a management information system?
Systems to produce information allowing managers to make effective decisions
What does ACIANA mean in terms of data security?
Availability
Confidentiality
Integrity
Authenticity
Non-repudiation
Authorisation
What are procedures in terms of control?
Need to be in place for a business to protect its information system (hardware, software and information) from damage, disruption, theft or other loss
What are critical success factors?
Product features that are particularly valued by a group of customers and therefore where the organisation must excel to outperform the competition
A business must identify and measure performance against CSFs
What are key performance indicators?
Measures of the level of performance in an area where a target level must be achieved in order for the business to outperform rivals and achieve a competitive advantage
What is benchmarking?
The establishment of targets and comparatives by which relative performance can be established. By adoption best practices, performance should improve
What are limitations of financial performance indicators?
Historical information is not necessarily useful when trying to predict future outcomes
Financial information mostly reports internal performance and does not always consider external factors
Can encourage short term decision making at the expense of long term objectives
Can be easily manipulated with the use of accounting policies etc
Does not consider the whole picture. Financial results are only part of the businesses performance
What is internal control?
A process, effected by the entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting and compliance
What are the control processes?
Control environment
Risk assessment processes
Information systems
Monitoring of controls
Control activities
