Sei sulla pagina 1di 13


Aims of finance department The finance department of a business takes responsibility for organising the financial and accounting affairs including the preparation and presentation of appropriate accounts, and the provision of financial information for managers. The main areas covered by the financial department include: 1. Book keeping procedures. Keeping records of the purchases and sales made by a business as well as capital spending. These records today are typically kept on computer files. But we still use the term ledger entries to refer to the days when all financial transactions were carefully recorded in thick books (ledgers). 2. Creating a balance sheet and profit and loss account. Financial statements need to be produced at given time intervals, for example at the end of each financial year. Trial balances are extracted from the ledger entries to create a Balance Sheet showing the assets and liabilities of a business at the year end. In addition, records of purchases and sales are totalled up to create a Profit and Loss (P&L) account. 3. Providing management information. Managers require ongoing financial information to enable them to make better decisions. For example, they will want information about how much it costs to produce a particular product or service, in order to assess how much to produce and whether it might be more worthwhile to switch to making an alternative product.

4. Management of wages. The wages section of the finance department will be responsible for calculating the wages and salaries of employees and organising the collection of income tax and national insurance for the Inland Revenue. 5. Raising of finance. The finance department will also be responsible for the technical details of how a business raises finance e.g. through loans, and the repayment of interest on that finance. In addition it will supervise the payment of dividends to shareholders. Management accounts There is an important distinction between management accounts which involves the provision of information to managers for ongoing decision making, and financial accounting which is concerned with the preparation of financial statements outlining the financial health and performance of a company in previous time periods.

Read more:

Financial hierarchy is a description of the different sections that run the finance department and the authority, power and responsibilities of the different members of the department. In a finance department, the responsibilities of performing core tasks are usually allocated to individuals who serve as the heads of sub-departments. The heads of sub-departments are tasked with the responsibilities of exercising clearly defined roles, authority and powers. The heads of sub-departments have subordinates who are allocated specific duties that they are expected to perform exhaustively. Chief financial officer, management accountant, financial accountant, internal auditor, credit controller and accounts payable accountant are some

of the commonly used categories of heads of sub-departments in the financial hierarchy of a small business. Chief Financial Officer The chief financial officer (CFO) is the overall head of the finance department. The CFO reports to the chief executive officer. The CFO coordinates the overall activities of the finance department and works closely with the heads of the sub-departments to achieve the overall performance targets. The CFO also collaborates with the human resources manager to ensure that the finance department is adequately staffed with qualified personnel. The CFO is also responsible for approving the financial reports and all the financial transactions of the entire business before they are forwarded to the top management for action. Management Accountant The management accountant is the head of the management accounting sub-department and is the second senior-most individual in the finance department. The management accountant provides timely, accurate and useful information that enables the top management to make informed decisions concerning current and future business activities. The management accountant is also charged with the responsibilities of controlling costs, monitoring cash flows, preparing budgets, conducting staff appraisal of the sub-department and preparing monthly, quarterly and annual management reports. Financial Accountant The financial accountant reports to the CFO and is responsible for providing accurate, timely and useful financial information to support informed decision-making by external users of the financial reports. The financial accountant is charged with the responsibility of preparing, interpreting and analyzing financial reports for monthly, quarterly and annual accounting periods. The financial accountant also responds to queries of external auditors on the final annual financial reports prior to their publication. Internal Auditor The internal auditor reports to the management accountant and is responsible for conducting regular analyses of all financial transactions to ensure that there is accountability and adequate controls to safeguard the assets, revenues and expenditures of the business. The internal auditor scrutinizes the files and documents for all the transactions of the business to

ensure they are authentic and have been recorded correctly to their respective ledger accounts and the general ledger. The auditor ensures that the cash register of the organization agrees with bank statements and raises queries on any discrepancies. The internal auditor also follows up on queries she raises from her routine internal audit activities and prepares monthly audit reports. Credit Controller The credit controller reports to the management accountant and is responsible for managing the accounts receivable of the business. Accounts receivable comprise the cash payments and outstanding debts. The credit controller ensures that invoices are sent out in time and prepares the aging debtors listing to track the outstanding amount of money owed to the business by debtors. The credit controller also ensures that cash payments posted and remittances for debtors' payments are credited and debited in the appropriate accounts to update the debtors listing. The credit controller ensures that monthly reconciliations of accounts receivable are conducted, identifies and proposes overdue and uncollectable debts for write-offs, and produces the monthly debtors listing report. Accounts Payable Accountant The accounts payable accountant reports to the management accountant and takes charge of the accounts payable sub-department. This subdepartment is charged with the responsibility of processing and making payments for cash purchases and creditors' payments once they become due. Its other functions include reimbursing employees for expenses incurred on the organizations behalf, processing of creditors invoices and reconciling payable accounts to ensure that the creditors listing is fully updated. The accounts payable accountant is also responsible for preparing the monthly aging creditors listing report. Accounts Clerks Accounts clerks are the junior-most members of the accounting department and they report to the heads of their respective sub-departments. Accounts clerks are charged with the responsibilities of filing documents, conducting daily reconciliations, processing and dispatching outgoing invoices, receiving incoming invoices and processing payments for the invoices. Payroll clerk, accounts payable clerk, accounts receivable clerk and cashier are some of the common accounts clerk positions in the financial department.

EXAMPLE HCL INFOSYSTEMS VP & CFO Heads complete finance function of HCLI Includes Profit & Loss,Balance Sheet, Salary Administration, Employee Welfare, Mediclaim, Provident FundManagement, Employee Insurance Management, Cash Flow & Profit Centre Analysisetc. Regional Accounts Officer (RAO) Handles Collection, Materials Management atregion (logistics) & employee Welfare etc. Accounts Executives Coordinates the above RAO function Includes Accounting,Voucher Management & Operations Support


Finance is the life blood of business and hence it requires a lot of effort to manage it well. The basic functions of the Finance Department are procurement of funds at the right and optimum utilization of funds. Like every manufacturing company, BHEL also has its own separate finance department which deals with different financial matters of the company. The finance department of BHEL is subdivided into various sections and the work flow is divided among these sections which are

consolidated and put together as a whole at the end and the final accounts are prepared and then the decision making process begins and targets are set for the next financial year.

THE VARIOUS SECTIONS IN THE FINANCE DEPARTMENT 1. Books and Budget Section: BOOKS SECTION This section keeps the records of all the matters of finance department and all theother records that each section keeps with it. They record all the ledgers and vouchers of monthly, quarterly and yearly accounts. They also maintain records of the inter-unit transactions i.e. the transfers that takes place between this unit and BHELs other units. They keep the records of the entire audit that is done internally as well as the record of the entire statutory and government audit. BUDGET SECTION This section also deals with the budgeting of the company. The funds are allocated by the corporate office for each BHEL unit. After receiving this budget they prepare their own budget of each department with the respective heads and then allocate the funds to each department for their purposes. They also prepare the budgeted figures and targets of the company for the next financial


2. Sales Section / Bills Receivable Section: This section deals with all the sales related issues in the company. It keeps all the records and the data that is necessary while making the records and maintaining the accounts of sales. Eg., packing list, clearance letter, lorry receipts, guarantee certificate, etc It also keeps the record of all the debtors of the company and the Central and State sales tax that is levied on each item and the terms and conditions related to them. The debtors management is also dealt with this department. They have to prepare an MIR (Manual Information Report) for every month which is sent to the corporate office as a report of the company. 3. Bills Payables Section: This section is concerned with the payment of all revenue bills. A revenue bill includes payment made to suppliers, payment to government agencies like KPTCL, BWSSB, BSNL and RTO. In case of purchasing the materials, the actual process starts once the order is placed and the material is received by stores and it is sent to quality section. Wherein inspection department will certify and then clear the stores receipt vouchers. The cleared stores receipt will then come to material

management who will value it. After this, it is forwarded to bills payable section. They will release the payment immediately when the bill becomes due. THE RECORDS MAINTAINED BY THIS SECTION ARE: Purchase order book Suppliers invoices Store requisition voucher, etc., 4. Cash Section: The main function is to account the cash and bank balance. Other than this function the actual payment of money is done through this section. The employees salary, contract laborers wages, suppliers amount and receipt of customers payment all are done through this section. Section: 5. Costing and Material Account Section : Costing section in EPD is an part integral section which co-ordinates various other departments like production, marketing, etc.. The main task of this department is to classify the various types of costs, accumulation of assignment and control of cost. The information supplied by this department has a

great deal of importance to the management in decision making. By cost splits the management will be in a position to know where exactly wastages are more, or which method is causing runoff profits etc,. It also prepares the cost estimates, based on which the marketing department will make the bidding. Another important function of this section is preparing the price stock ledger and major task of this section is that it looks after the capital payments.

6. Works Bill Section: This section keeps a record of all the infrastructure related issues They keep a record of the issues. building, roads, furniture and the township related matters. It also keeps a record of the work that is needed to be done for the company as well as for the township and other areas. Pay7. Pay- Roll Section: This section is concerned with the computation and payment of reimbursement, conveyance reimbursement, tour advance settlement, air fare settlement, payment of medical expenses of retired employees, provident fund and gratuity, etc,. Hence for this purpose, this

section maintains Master Records which consists details of each and every employee regarding their date of joining, leave taken, payment of salary, loan taken, allowances given, etc., which are monitored and updated every month. This section ensures a pleasant atmosphere by ensuring accurate payment to the employees in order maintain industrial harmony and employee satisfaction. Apart from these activities, the department is also concerned with recording and maintaining the attendance, leave taken and over time work done by each and every employee. Here the department records time in and out of employee through the medium of automatic time recorders provided at the vantage points within the factory. wages / salaries, medical

8. Taxation Section: This section takes care of the tax related issues of the company. All the indirect and direct taxes that they have to deal with is taken care of by this section. They also take care of the excise duties and customs duty in case of export. They also deal with the service tax related matters. All these sections of Financial Department collectively function efficiently for the effective and optimum allocation and utilization of funds of the organization.

INTERNAL AUDIT It acts as a watch dog of the various functions by continuously observing and evaluating the records, both financial as well as others. This section mainly functions as a service to the management. The main activity of internal audit is to physically verify the assets mentioned in the records. This investigation helps in identifying losses, pilferage on inventory and controlling them. The functions of internal audit are: Planning of the audit Gathering information Examining & evaluation of information Communicating with authority concerned Finally to check if any action is being taken on its audit findings

Slide Structure (12 Slides) 1) 2) 3) 4) 5 People (Slide 1) Introduction (Slide 2) Structure (Slide 3,4,5) Main Functions (Slide 6,7,8,9) (Costing, Accounting, Financial, Budgeting) 5) Interactions with other departments (Slide 10) 6) Conclusion (Slide 11) 7) Thank You (Slide 12) Interactions with other Departments: 1)