The paper "Resource Management in Education and the Public Sector" is a good example of management coursework. Best practices financial management covers financial corporate financial concepts that affect a business operation and decision making. These include accrual accounting, budgeting, management and reporting. The study of organizational administration and management equips people with the knowledge required to run business organizations. These studies facilitate better management of resources in the education and public sectors. According to Corbett, 1992,) management and administrative studies equip people with skills on leadership, organization and resources. Financial management is responsible for ensuring that all stakeholders, internal and external are able to control and develop financial resources plans.
It ensures timely availability of information to the right people. The information is used in controlling the demand and supply side of the organization. This paper discusses best financial practice, its concepts and the concept of transparency and accounting tools that public sectors employ. Financial management is likely to be affected by another of the factors through its four concepts. The financial management system is affected by factors that affect the demand and supply of the management system.
Supply of financial management is affected by an organization’ s processes, the information they acquire and systems implemented. The capability of the organization and its leadership also affect the supply of its financial management. Demand for financial management is affected by the company’ s internal governance, the external governance and financial agendas provided by the federal government. The system is indirectly supported and driven by a number of factors within and outside the system as indicated in the diagram below: Accrual accounting Accrual accounting is a concept of best financial management that both private-public sectors apply to control of their accounts.
This concept involves recognition of the accounting elements. This accounting concept identifies revenues earned by the organization and compares to the respective expenses. Normally, the accounting concept of revenue and expenses considers aspects of time and follows the order in which transactions occur. Accrual accounting does not consider the element of time but identifies the specific expenses that have given rise to specific revenues. The expenses are recorded as they occur where actual payment has not been settled.
Accrual accounting is important especially to organizations with inventories which apply tax accrual methods (Carlin, 2005). Due to the complexity in business operations and the desire for accuracy in financial statement preparation, Accrual accounting was considered suitable. Events were more relevant when recorded and reported the same period they occurred. This avoids the long streams of revenue that accumulate over time as a result of credit sales. Such streams might affect the company’ s financial situation at the point of transactions. Accrual accounting has also been criticized by users and stakeholders.
According to Clare (1994), recognizing revenues before payments can lead to a financial imbalance in the company. This will occur as a result of the misrepresentation of financial accounts since some earned revenues might not be paid. The misrepresentation might result in the financial downturn in the company in the future date. The firm’ s future earnings are likely to suffer when clients fail to honor the already recognized revenue. Accumulated doubtful payments in the company’ s earnings and revenues might be understated. This will give the wrong impression of the company’ s status. Accrual accounting poses a challenge to the stakeholders since they might fail to understand the extent to which revenues have been puffed with nonpayment.
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