1: Role of the Finance Function Flashcards
(27 cards)
organisation
social arrangement pursuing collective goals, controlling performance and has a boundary separating it from its environment
2 main private sector organisations
profit seeking and not for profit
public sector organisations
usually owned by the state
- provide public services
- state-owned
objective of public sector organisations
make good use of public money and deliver goods/services cost-effectively
non-governmental organisations (NGOs)
private organisations operating in the public sector
- not profit-making
- do not have a direct link to government
types of NGOs
those seeking to influence government policy
those attempting to make a positive impact directly in the area it is interested in
quasi autonomous NGOs (QUANGOs) which are organisations getting money from the government and given rules/objectives but operate independently of the government
vision
desired future state of the organisation
mission
expression of overall purpose and scope of the organisation in line with values/expectations of shareholders
objectives
specific targets that set and control the overall functioning and progress of the organisation
SMART effective objectives involve
planning
responsibility
integration
motivation
evaluation
critical success factors (CSFs)
something you have to do well in order to be successful
key performance indicators (KPIs)
KPIs are the way in which you measure things, CSFs are what you have to achieve
Porter’s 5 forces model
in an industry, the amount of profit that can be made by industry players are limited by 5 forces
- rivalry among existing firms
- potential entrants
- customers
- suppliers
- substitutes
3 consequences of technological connectedness (Farrar)
- increasing levels of competition
- communication is faster/easier
- changes to who competitors and stakeholders are
role of accountants in the digital world (Farrar)
- assembling information
- analysing for insights
- advising to influence
- applying for impact
finance function value matrix: stewardship
finance function as the subject matter expert contributing to strategic decision-making and developing the business model
finance function value matrix: value-enabling
finance function provides insights into the drivers of organisational value
finance function value matrix: data integrity
finance function as the trusted source of management information
finance function value matrix: value analysis
finance function partners with other functions to use insights to address performance issues and enable solutions that create value
corporate governance
system by which companies are directed and controlled
agency risk
company is owned by shareholders but managed by directors
UK Corporate Governance Code
- half of the Board, excluding the Chair, should consist of NEDs
- NEDS are appointed to the Board but do not have input on day-to-day running of the organisation
- one of the main roles NEDs form is that they sit on many committees
Sarbanes-Oxley Act 2002
have to appoint an independent auditor
have to obey the US stock exchange regulations
have to create an audit committee
have to annually produce an internal control report
increased financial disclosures
rules-based vs. framework-based
US follows rules-based, UK follows framework-based
UK has a voluntary framework approach where you are given best practice, and if you deviate, it is up to you to explain your deviation to shareholders
