The Finance Function and Financial Information Flashcards
What are the 4 tasks of the finance function?
Recording financial transactions - accurate
Management accounting - information internally
Financial reporting - information externally
Treasury management - liquidity
What is involved in business partnering?
Strategy formulation, implementation
Commercial decision making
Business analysis
Sounding board
Why do businesses need financial information?
Planning
Controlling
Recording
Performance measurement
Decision making
What are the types of information?
Planning information
Operational information
Tactical information
Strategic information
Who uses financial information?
Shareholders - equity decisions
Lenders - will loans be repaid
Employees - assess employer
Customers - stay in existence
Suppliers - being paid
Government - regulations, tax, stats
Public - assess trends
What are the fundamental qualitative characteristics?
Relevance
Faithful representation
What are the enhancing qualitative characteristics?
Understandability
Comparability
Verifiability
Timeliness
What are the limitations of financial information?
Conventional representation
Backward looking
Omission of non-financial info
What makes data effective? CATIVA
Completeness
Accuracy
Timeliness
Inalterability
Verifiability
Accessibility
What are the components of information systems?
Input -> Processing -> meaningful output
What are the risks to data?
Human error
Entering incorrect info
Technical error
Natural disaster
Deliberate actions
What are the aspects of security?
Prevention
Detection
Deterrence
Recovery
Correction
Avoidance
What are the qualities of secure information?
Availability
Confidentiality
Integrity
Authenticity
Non-repudiation
Authorisation
What are the 3 measures of performance?
Profitability
Activity
Productivity
What 3 measures of resources are there?
Effectiveness
Economy
Efficiency
What are the limitations of financial measures?
Information problems
Comparison problems
What is the balanced scorecard?
Customer - how do customers see us
Internal business processes - what must we excel at
Innovation and learning - how can we grow and improve
Financial - how do we look to shareholders
What activities are for internal controls?
Approval
Authorisation
Verification
Reconciliation
Business performance reviews
Segregation of duties
What 5 components do COSO say make up internal controls?
Control environment
Risk management
Control activities
Information and communication
Monitoring activities
How does the FRC define risk management and internal control systems?
System encompassing policies, culture, behaviour, processes, systems and other aspects of a company that:
Assess risks and respond appropriately
Reduce likelihood of poor decisions, excessive risk, human error
Ensure quality of reporting
Ensure compliance
