Importance of Accounting and Finance Functions in Skansa Plc

FINANCIAL DECISION
MAKING REPORT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Critically evaluating the importance of accounting and finance functions, roles & duties within
Skansa Plc....................................................................................................................................1
TASK 2............................................................................................................................................5
(a) Calculating ratios of SKANSA Plc........................................................................................5
b. Commenting on the financial position and performance of SKANSA PLC...........................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Financial decision making may be defined as a process that undertaken by manager of
taking profitable decisions about business aspects. In the context of business unit, it is an
accountability of manager of take effectual decisions which contributes in the attainment of
goals. The present report is based on the case scenario of Skansa Plc, a construction company,
which planning to explore operations in other countries of Europe. This report will provide
deeper insight about functions, duties and roles of accounting with regards to Skansa Plc.
Further, it will shed light on how ratio analysis exhibits financial position of the concerned firm.
TASK 1
Critically evaluating the importance of accounting and finance functions, roles & duties within
Skansa Plc.
Financial Accounting: -
Financial accounting refers to the process of recording, summarizing and analysis of the
financial transactions that are undertaken by Skansa Plc during the financial year. It involves
representing the financial performance through the preparation of the various statements of
accounts like the income statement, balance sheet, cash flow statement and the equity statement.
Financial accounting is conducted by the accounts department of the Skansa Plc which plays key
functions, roles and responsibilities in the organizations and ensures its smooth and efficient
operations (Mosteanu and et.al., 2019).
The internal and external users of the Skansa uses these financial statements of the
company depicting its performance, in order to make decisions related to the future course of
action, investment or loyalty. The various reports are prepared using the accounting policies and
procedures which assist the management in the budgeting and setting the standards.
The major functions of Skansa Plc are to support the decision-making process, helps in the
monitoring and control function of the management, depicts the financial position of the
company, guides the path for the future activities and facilitates comparison with competitors in
the industry and driving competitive edge. So it can be ascertained that a financial accountant
plays crucial roles and duties in the company.
Management Accounting: -
Management accounting involves the decision-making process that is undertaken by the
managers of Skansa Plc on the basis of the financial reports that are communicated to them
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(Campbell, 2017). They further analyse the financial statements of the company in order to make
decisions related to the future level of operations, the budget of the various operational activities,
cost management, deviations that have occurred and their respective corrective actions that can
be undertaken. They also decide upon the units of business that needs to be expanded and the
ones that are sick needs to be shut down by the company.
The major function and role of this accounting is to optimize the operations of the business
through optimal allocation of the resources, clearly defining the roles and responsibilities and
maximizing the profitability of the activities. The most prominent functions that are played by
the management accountant of Skansa Plc are forecasting the future business requirements,
maintaining the cash flows to manage the liquidity position of the company, assists in the long
term decision-making related to make or buy and monitoring the operations such that the
variances of the business can be rectified.
Tax function: -
The tax function that is played by the accounting department has a major function to be
played in the organization like ascertaining the liability of tax to be paid, the advance tax paid,
refund applicable etc. Its major duty is to assess the impact of levied taxes on the profitability of
Skansa Plc and how the tax could be limited in order to boost the profitability of the construction
business (Trinh and Thao, 2017). If the company includes major debt funds in the capital
structure of the company, so the interest shall be the tax-deductible expense and so the lowering
of the tax can improve the revenue generation.
The tax implications are also used in governing the future course of action as the main aim of
the business shall be to improve the profitability of the company. The role of the tax function in
the organization is compliance based where it is to be identified that the liabilities of the
company are timely and efficiently met by the officials of the company. This shall further
improve the credibility and reputation of the company.
Auditing function: -
The auditing function is one of the key areas of accounts that ensures that the financial
statements that are prepared are showing the true and fair view regarding the financial position of
Skansa Plc and are independently constituted. The major role is to identify the financial reports
of the company are depicting accuracy of transactions, avoiding any sort of material
misstatements, governing the internal controls, reducing the risk of frauds and finally provide the
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