Financial Decision Making: Importance, Roles and Duties of Accounting and Finance Function within Skanska PLC

Financial Decision
Making

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Critically evaluate the importance, roles and duties of the accounting and finance function
within SKANSKA PLC..............................................................................................................3
TASK 2............................................................................................................................................6
With the help of financial statements of SKANSKA PLC, calculate the accounting ratios and
comment on the performance of the firm from the point of view of an investor of £1 million..6
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial statements are the collection of formal reports of the financial activities of a
company. It assists in analysing the financial position of the firm and comparing it with the
reports of the competitors. Accounting and finance section of any firm frames these statements
by applying various techniques on the final accounts of the company (Badu and Appiah, 2018).
The report is based on the Skanska plc. It is a UK based multinational construction company
which started its operations in the year 1984. It has handled many big projects like renovation of
World Trade Centre Transportation Hub, Unions Nations Headquarters, MetLife Stadium etc.
The report is divided into two tasks. The first part of the report has put a light on the importance
of accounting and finance function along with their roles and duties. The second part of the
report analysis the performance of the company with the help of accounting ratios.
TASK 1
Critically evaluate the importance, roles and duties of the accounting and finance function within
SKANSKA PLC.
Accounting and finance function of Skanska refers to that section of the company that
deals with the maintenance of accounting books like ledger, preparation of bills, framing and
analysis of financial statements and many more. It is one of the most important pillar of an
organisation which leads it to the path of success. This department is responsible for handling the
economic section of the firm. It is very important for the firms, especially those who are
working at large scale like Skanska to have a different accounting and finance section in the
firm (Morris 2018).
Importance of accounting and finance section to Skanska
 To know the profit and loss to the company- Accounting and finance function of
Skanska prepares financial statements which helps it in generating the accurate
knowledge of the profit earned or losses incurred by the firm. As the employees of firm
will be expert in their field, they will calculate the gains and losses accurately. If
Skanska did not have this department, the firm will not be able to differentiate between
the types of expenses and incomes. This will affect the knowledge of profits and losses to
the owners.

 To assess the financial position of the firm- This department consists of the analysts
along with the general accountants who uses various techniques to analyse the final
statements and balance sheets of Skanska. With the help of this evaluation, they ascertain
the financial position of the firm (Helmold and Samara, 2019). In the absence of finance
department, Skanska will not be able to interpret the position of the company as
understanding the financial statements is not everyone's cup of tea. It requires specialised
person to understand these statements.
 For ensuring the compliance of various laws- Rules and laws of accounting changes
from time to time and from state to state. For a big company like Skanska, it is not
possible for the owners of the firm to take care of financial laws along with managing the
firm. So, the accounting department of the firm helps it in complying with all the rules.
They keep themselves aware about the changes occurring in laws and apply them in
accounts of the company. In the absence of this function, Skanska may not be able to
apply all the legal rules properly. This can make the firm to face some legal consequences
and even keep the firm restricted from taking the advantage of changes rules.
There are various roles and duties performed by the accounting and finance department
of Skanska.
Roles of accounting and finance section to Skanska
 Preparing various accounts and reports- Accounting department of Skanska takes
care of preparing all the financial accounts and statements of the company. They collect
data from various sources like bills, bank statements, vouchers, debit and credit notes etc.
Inefficiency in working of this department can bring heavy losses to the firm (Abdullah
and Tursoy, 2021).
 Preparing Budgets- Skanska's finance section performs the role of preparing financial
budget for the business. It is a construction company which demands a well framed
budget for each project. So, this department helps the management team of the company
in forecasting the amount of expected expenses and how much it could earn. This unit is
expected to perform its tasks by analysing the inflation rate and past experiences of the
firm properly. Otherwise, Skanska may prepare a wrong budget which will restrict it
from either getting orders or guilty in front of clients. For example, accounting team of
Skanska did not recognised the impact of inflation rate and framed a low priced budget