Financial Management Principles

Financial management is not just talking about the accounting records only. Moreover, financial management is an important part and can not be regarded as an activity that is only a matter for the finance people.
In practice, financial management appears to nourish the company's financial condition.

It required the financial principles underlying it, including:

Consistency (Consistency Principle)
Policy and financial system enterprise application must be consistent, do not change from period to period.
But keep in mind that systems and financial policy that has been taken does not mean that the financial adjustment should not be made if there are significant changes in the condition of the company
Such changes should be announced along with the reasons clear and acceptable.
Inconsistent financial policy may indicate that there is manipulation in the financial management of the company.

Accountability (Accountability Principles)
The principle of accountability is a legal and moral obligation inherent in every individual, group or company in providing an explanation of how the use of funds or authority that has been given.
Each individual or group must be able to explain the use of funds and the things what he had accomplished.
This principle required as a form of accountability to stakeholders so that all know how the authority and the proceeds are used.

Transparency (Transparency)
Management must be open to his work, gives information on all activities undertaken to concerned.
Including giving financial reports are complete, fair, timely and accurate that could be easily accessed by those who need.
Violations of the principle of transparency, it can indicate that management is hiding something, and something like this could greatly damage the company.

Viability (Principle of Survival)
All expenditures which are operational and strategic level must be adjusted to the existing funds, this must be done so that the company's financial health can be maintained.
The company's owner would want a going concern does not stop, continuous operation in a sustainable manner.
Financial management is required to formulate a financial plan that could show the extent to which a company can execute its strategic plan in satisfying the financial needs required.

Integrity (Integrity Principle)
Every individual must have a level of integrity that is capable in running the company's operations.
Besides records and financial statements must be maintained intergritasnya to provide complete financial information and a high degree of accuracy in the financial records of the company.

Stewardship (Principle Management)
Financial management should be able to manage effectively the funds that have been obtained and ensure that funds obtained will be used as best as possible.
Financial management should do so with caution when developing strategic plans, identify financial risks and develop and create a financial control system that best suits the character of the company.

Accounting Standards (Principles of Accounting Standards)
Financial accounting system used must comply with the principles and standards of generally accepted accounting rules.
The aim of this principle so that the resulting financial statements management could easily be understood by all interested parties.


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