Why Have Financial Controls?
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Obviously the most important factor for having financial control systems is to help prevent a business from becoming bankrupt, due to having extensive debts which it cannot meet.

With several accounting systems available to use, the type of financial accounting system your business will firstly depend on the Business Environment in which your business operates.

Depending on your environment, your business will adopt standards enshrined in the accounting practices of the major accounting bodies like CIMA, ACCA, CIPFA, etc.

The advantages of using such standards are:

  • The provide a set of useful working rules.

  • The ensure by having a standard set of accounts, the users of financial data get more complete and clearer information on a consistent basis from period to period.

  • The allow users to make comparisons in business financial statements from one organisation to another.

The dis-advantages of using such standards are:

  • All financial accounts are only a snap-shot of business performance for one date in time, they may have been produced several months prior to someone actually reading the accounts, hence the validity of business performance expressed in the accounts may be out of date.

In the context of this section of the web-site, we shall be looking at financial/business accounting methods which are common to all businesses, as well as management accounting, which is specific to manufacturing businesses.

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