Importance of Accounting and Financial Function in Skanska PLC

Financial Decision
Making

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Analyse the significance, duties in addition to the roles of the accounting function in context
with SKANSKA PLC.............................................................................................................3
TASK 2............................................................................................................................................6
Evaluate the performance of the firm by using accounting ratios.........................................6
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial statements can be defined as the group of various reports but out of all of them ,
the three reports are very important – the income statement, the balance sheet and the statement
of cash flows. The aim of these statements is to examine the financial position of the firm with
the help of various analytical techniques. These all activities are executed and controlled by the
accounting and finance section of the company(Holtkemper, 2020). This department holds the
responsibility of managing the movement of cash in the business. The company chosen in this
report is Skanska plc. It is a UK based construction company. The company was started in the
year 1984 and has handled many projects at big level. Two tasks are covered in this report. The
first task of the report analysis the importance, roles and duties of the accounting and finance
section of the company and the second part evaluates the financial position of Skanska by
applying the technique of accounting ratios.
TASK 1
Analyse the significance, duties in addition to the roles of the accounting function in context with
SKANSKA PLC.
The section of the administration of Skanska which is responsible for maintaining the
ledger books and preparing the financial statements of the business is regarded as the accounting
and finance department of the firm. They are responsible for collecting all the proofs before
recording any transaction in the books of the finance. This department of the company provides
the value added services to Skanska by preparing budgets and comparing them with the actual
results, by giving suggestions to reduce the cost of the products etc. Absence of or inefficiency in
this department can lead a company to the losses. So, it is very important, especially for the large
companies to have a separate and efficient accounting department in the firm (Lu, Yeh and
Huang 2018).
Importance of accounting and finance section to Skanska
 For recording all the transactions properly- The accounting and finance accounting
department of Skanska is responsible for recording all the financial transactions of the
company. This includes all the transactions related to cash and credit sale and purchase,
any kind of income and expenses and all sorts of investments made by the company and
in the firm. They are also responsible for collecting all types of bills, notes or any

supporting proof for recording the transactions in the books. Absence of these proofs can
create a problem for Skanska at the time of auditing because the officials demand a
supporting document for all transactions. Otherwise, they can also put penalty of absence
of proof on the firm. It also helps prevents the business from taking any wrong advantage
of the company . For example, Skanska made a cash payment of £1 million to its creditor
ABC Ltd. After one year the debtor denied the occurrence of the transaction and asked
the firm to make payment. The account of Skanska have the habit of taking receipts from
the parties while making any payment. But the same practice was not exercised in the
ABC Ltd. The former showed the signed receipt to the creditor and proved the later
wrong.
 For ensuring the efficient use of resources- The accounting department of Skanska
ensures that the monetary resources of the company are being used judiciously and
efficiently (Wang, 2021). They examines all the expenses incurred by the firm from time
to time and tries to recognise the wastage of resources in it along with finding measures
to control them. The finance department of the company analysis the various investment
opportunities and suggest the management in taking various in vestment and
disinvestment decisions.
 For taking various accounting decisions- It is very important for Skanska to take
various financial decisions by discussing it with the finance department of the firm. They
assist the company in ascertaining the value of the assets and determined the time of
replacement of variable machines. Accounting section helps the business in assessing the
financial position of various businesses and helps in deciding about the acquisition and
merger deals.
Financial Roles
 Prepares Budget- It is the obligation of the accounts department of Skanska to prepare
a budget for the company (Bavoso, 2018). Skanska is a construction company and it has
to prepare budget for filling tenders to acquire big level projects. They also prepare
budget for the daily operations, acquisition and disposing off the asset. The accounting
department of the firm compares the actual results of the project with that of the budgeted
results and tries to find out the reasons for the difference. They make sure that while