Financial Management: Decision Making and Accounting Control

This report provides a comprehensive overview of financial management principles and practices. It begins by defining financial management and its role in strategic decision-making, emphasizing the importance of formal and informal approaches. The report then explores stakeholder management, highlighting the significance of understanding and addressing conflicting objectives among various stakeholder groups. It delves into the value of management accounting techniques, particularly in maximizing shareholder value and controlling costs, with a focus on the role of management accountants in cost analysis, make-or-buy evaluations, budgeting, and controlling. The report also examines accounting control systems, their value in an integrated system, and techniques for fraud detection, including auditing, governance, prevention, and ethical considerations. The conclusion emphasizes the essential role of financial management for companies, the effective use of tools and techniques by Barratt Developments plc, and the importance of sustainability through management accounting. The report references several academic sources to support its analysis.

FINANCIAL
MANAGEMENT

INTRODUCTION
Financial management is considered to be one of the crucial approach which helps in
strategically plan, organize, direct and effectively control the financial undertaking within the
set organization. It is considered to be an appropriate approach which helps in strategic
decision making. This study determines the various different approaches in order to support
effective decision making. It also helps in analysing financial management principles in order
to support financial strategies. Furthermore, this study also helps in analysing the role
associated with the accounting control system and management accountants.

SCENARIO 1
Evaluating range of different approach in order to support decision making.
Formal approach mainly comprise of :
 System
 Structure
 Processes
Informal approach mainly comprise of:
 Relationship
 Unwritten rules
 Networks

Contd..
 Setting objectives in order to achieve long
term financial goals
 Organizing the finances of company
 Maximizing the wealth of the shareholders
 Limiting debt and investing in income
producing assets

STAKEHOLDER MANAGEMENT AND THE MANAGEMENT OF
CONFLICTING OBJECTIVES OF VARIED STAKEHOLDER GROUPS
 Stakeholder management helps in engaging with people in order to maintain better
relation with the people.
 It is useful in understanding their unique set of relationship at various different time of the
project.
 The management of the company can manage conflicting interest of stakeholders by
networking the environment and understanding role of each stakeholders.
 Prioritizing things and finding out resolution to the conflict.
 Developing a win-win situation in order to attain objectives of the company.

Value of management accounting techniques in
maximizing shareholders value and cost controlling.
Costing is the one of the factor to which firms give due importance. This is because if cost will not be in control
then in that case profit in the business decline. Management accountants play a very important role in assisting firm in
controlling cost in the business. Role of management accountants is given below.
 Cost analysis: Management accountants do cost analysis on regular basis and on that basis, they identify whether firm is
making cost within range or extravagance is made in the business. In case extravagance is identified corrective actions are
taken to improve performance.
 Make or buy evaluation: Management accountants help firm in making buy and sell evaluations. Management accountant
while firm decide to acquire any firm evaluate that company production assets and on basis of facts identify their values
and costing that can be seen if machines purchased. Thus, it can be said that management accounts play an important role
in helping firm in identifying whether another firm must be purchased.

Continue
 Define budgets: Management accountant prepare budgets by considering or not taking into account
previous year budgets. After preparing budget all expenses are made within certain limit and it is
ensured that it is made within limit. In this way, management accountant assist firm in cost control in
the business.
 Controlling: Management account compare actual expenses with the benchmark level and take
appropriate actions to control cost.

Contd..
 Accounting control system refers to the standards, rules and regulations as well as policies and procedures that are
followed while preparing financial statements like income statement, balance sheet and cash flow statement.
Accounting control system main use is that it ensures that management will have limited or no participation in
preparation of company financial statements and firm performance will be measured accurately which will assist
investors in making prudent decisions.
 It has very high value as part of the integrated system because if corruption is done in the business then by evaluating
accounting records auditor can easily identify area or department where figures are manipulated or corruption is done.
In this way accounting control system add a value to the integrated system. Barratt development time to time conduct
programs under which accounts are checked and at end of the financial year CA do audit of the company books of
accounts. By doing so it ensured that all operations are recorded in books of accounts as per rules and regulations.

Techniques for fraud detection
 Auditing
 The auditing process will enable the company to identify the areas where the frauds are being conducted.
Audit is conducted by professional auditor who identify the transactions in which fraud is being conducted.
 Governance
 There should be strong governance and monitoring of the transactions being carried out by the business
enterprise. Monitoring and control will identify the frauds at their initial stage and this will be preventing it
from large damages.

Contd..
 Preventions.
Frauds in an organisation can be prevented by applying effective polices and procedures. This refers to raking
effective policies that are essential for the business to prevent frauds. Having strict control procedures and
punishments company can avoid frauds in an organisation.
 Ethical Considerations
This refers to establishing core business values and culture of the business where all the employees have
ethical considerations regarding the business. This involves taking decision so that frauds are not committed in
the enterprise.

CONCLUSION
The above study show that the financial management is very essential for the companies.
Companies cannot survive in market without the without managing its financial resources.
Barratt Developments plc is effectively making using of different tools and techniques for
enhancing the performance of company. The performance of the company is strong and
effective. Sustainability can be maintained by the business using the management accounting.

REFERENCES
 Ax, C. and Greve, J., 2017. Adoption of management accounting innovations: Organizational
culture compatibility and perceived outcomes. Management Accounting Research. 34. pp.59-74.
 Bunker, R.B., Cagle, C. and Harris, D., 2019. A Liquidity Ratio Analysis of Lean vs. Not-Lean
Operations. Management Accounting Quarterly. 20(2). p.10.
 Burtonshaw-Gunn, S.A., 2017. Risk and financial management in construction. Routledge.
 Cornwall, J.R., Vang, D.O. and Hartman, J.M., 2019. Entrepreneurial financial management: an
applied approach. Routledge.
 Granlund, M. and Lukka, K., 2017. Investigating highly established research paradigms: Reviving
contextuality in contingency theory based management accounting research. Critical Perspectives
on Accounting. 45. pp.63-80.
 Harris, E., 2017. Strategic project risk appraisal and management. Routledge.

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