8. Operating levels of Finance Function Flashcards
What are the four sections of the diamond structure of the finance fucntion
Level 4: Financial operations (accoutning, management, treasury, internal audit)
Level 3: Specialist Finance areas - digital centre of excellence(planning and analysis, Tax, Project management, appraisal)
Level 2: Strategic business partnering and decision making
Level 1: Strategic leadership
What are the four main componenets of finance function
Financial Reporting
Management accounting
Treasury
Internal audit
What inisights does financial accounting componenet provide
- Financial statements
- Fashboards of financial ratios
- Reporting for external stakeholders
What insights does management accou nts provide
- Monthly management accounts
- Variance analysis
- Real time monitoring of performance
- Budgets and forecast
- KPIS
What does the treasury componenet do?
- Working capital
- Investment sources
- Monitoring and predicting future currency and interest rates
- Predicting demand of share prices
- Report to directors of company
What does internal audit funciton do
- Analysis of internal control systems
- Monitoring internal compliance with procedures
- Prevent and detect fraud
What is FP&a
Financial planning and anlysis department
- Teams set to monitor and evaluate progress in achieving goals and objectives
- Analyse organisation’s performance using quantitatvive and qualitative information
What insights are provided by the FP&A
- suggestions on surplus assets
- assessments of overall financial health
- budgeting, forecasting
-identify most profitable products - developing master budget
What doe taxation teams do
- Minimise risk and create value
- By lawfully reducing tax payable
- Calculation of coporation tax
- minimising risk of non compliance
- liasing with tax authorities
What insights do taxation teams provide
- Impact of projects and forecasted future performance on tax liabilities
- Monitor correct treatment of taxation
- Identification of tax loopholes and legal opportunities to reduce tax liabilities
What do project management teams do
- Work to ensure projects are delivered on time, at right quality and within budget
- maximise use of resourcess - quality, time and budget
What insights do project management teams provide
- Project plans on scope and resources
- creating project budgets
- monitoring project risks
- post review of project
What are the stages of project managemtn
1: Initiation: need of project and appraisal feasibility
- Planning: establish resources neeeded and measure of success
- Executing: perform project
- Controlling: progress, cost and performance are monitored
- Review and close: sign off project and disband
What is the role of project appraisal teams
Analyse financial and non financial aspects of potential projects
-estimates of cost and benefits of project
- whether to provide with investment
What isngihts do project appraisal teams provide
- Advice on whether project will add value
- what value it will add
- Value of non financial costs and benefits
- Scenario analysis of project risks
What is meant by business partnering
Finance funciton embedding and working alongside other functions to add value
What is strategic partnering for value
Extends the concept of business partnering to most senior levels within organisation
- to influence decisions
- to support decisions
- to achieve desired impact
What are the benefits of strategic partnering for value
- Ensuring SLT have good information
- Being voice of reason
- Being trsuted source of information
- Being forward thinker of business indicator
What is strategic leadership of finance function
- Level 1
- CFO/ Finance director + senior finance managers
- Achievement of desired organisational impact
- Board of directors - chair, ceo etc
What attributes are needed of the senior finance team
- Knowledge: technical expertise and qualification
- Skills: Ability to perform role and apply knowledge
- Expertise: Familiarity of particular area
- Balance of knowledge, skills, expertise
