Question

In: Accounting

How can employees be engaged in the preparation of financial reports, allowing details to be easily...

How can employees be engaged in the preparation of financial reports, allowing details to be easily disseminated among team members?

Why should employees be involved in setting and monitoring the budget?

Solutions

Expert Solution

Employees are the major part of an organisation. organizations are dependent on employees. With the latest technology various works are performed with computers and other technical devices. Although, men are essential to operate machines, computers and other technical devices. This is the situation which is related with each and every field of life. If i m talking about finance employees play a vital rule in organisations activities. finance is word related with money, money operations like credibilility, expenses, liabilities, working capital etc. There is other type of transations are happened in form money value although those are things are the part of financial transactions. employees are neccessary to deal with such kind of major activities. if these activities run without control,various frauds, thefts should be happened. Employees are accountants, Financil Auditors, Financial analysers, Finance Managers and others. For each and every activity a organisation need to engage employees. Financial reports are prepared on the basis of financial statements, it also describes about earnings and expenses about the firm. Financial statements are prepared by and for company's internal purpose and for taxation purposes. these are not shared with each and every one. Financial Reports are shared with investers, shareholders, stockholders and creditors in some cases. Employees required for prepare financial reports consist of following qualities:

Knowledge ,Skills and desired qualification- Employees should be well qualified in related stream. They should have knowledge about accounting and finance, have capability to read and understand accounting and finance concepts, statements and financial condition, goodwill and growth of company. They should have skills to implement their knowledge into practical examinations, work and preparing reports also. A company provides a platform to implement their knowledge into work.

Some other qualities or characteristics are required for engagement of employees these are

1. co-operation with organisational authorities and employees

2. creative in Preparation of reports and have writing capabilities

3. They should use financial terms and language which is understandable by investers, shareholders etc.

4. Employees should able to work under management policies, restrictions regarding share financial information (only a part of information which a company do not want to share with investers and shareholders).

Employee engaged with prepare financial reports are work with accounts departments as team members. They can share accounts information with each other. accountants record transations, preapare and manage books of accounts and financial statements. Information required for preparing financial reports comes from accounts. So, Co- operation between the team is required from trades related with finance. Co-operation from management is also required. Management should not make so hard and strict policies which always come between work of employees in preparation of financial reports. Some of policies they can adjust with, So there are not large numbers of policies imposed on them so they feel bind and unconfortable to work. Dissemination is done the way that is shared only with team members. Information should not be leaked through dissemination which is confidential of company.

Monitoring a budget which is prepaired in advance by cost accountants is necessary for control organisational operations. If there is not a control on operations chances of loss, theft and fruads my arise. I will explain it with an example, Company A prepaired budget for one year is $100 million. There is not proper control on operations , employees and other organisational activities. budget assigned for manufacturing is $50million and $20million for employee salary management, $ 20million for office, $ 10 for others. There is not proper monitoring so the cost exceeds budget. actual cost for the year is increased to $170million, which $70million for manufacturing, $20million for salary, $50million for office and $30million for others. Cost is $70million more than proposed in budget. So when cost is increased there is decrement in profits and in some case it may cause of loss because calculation of profit is based on income and expenses.

net profit = net income - total expenses

Preparing budget is necessary for control and assigning costs, helpful in advance calculations and estimations related with profits. monitoring is necessary to control costs because costs may increase from budget representations. So, employees should ready to prepare and monitor budget.


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