Page 6 - CIMA OCS Workbook May 2019 - Day 1 Tasks

SUGGESTED SOLUTIONS

CHAPTER NINE

EXERCISE ONE (FINANCE FUNCTION)

REPORT

Subject: The Finance Function at VitaMine

1. Components of the Finance Function

We can consider the following key elements of a finance function:
• Financial Accounting
• Management Accounting
• Treasury Management
• Internal Audit

1.1 Financial Accounting

Financial accounting is concerned with the production of financial statements in accordance with
the relevant accounting standards and legislation. These activities are carried out by the Finance
Manager with help from Finance Officers.

The Finance Officer is a role that requires significant supervision and guidance. It is important to
regularly review the roles undertaken in order to determine if there are any risks with respect to
tasks such as filing of statutory financial statements.

Bearing in mind the fact that, at VitaMine, much of the Finance Officers’ time is spent on day to
day transaction processing, this aspect of the finance function appears to be inadequately staffed
at present. At the very least, a review of team roles should be undertaken.

1.2 Management Accounting

Management accounting is carried out to assist management in discharging their duties to plan,
direct and control the operations of the business. It is concerned with the process of measuring,
analysing, interpreting and communicating information to management in a form which is easy
for them to understand.

At VitaMine, we appear to be efficiently performing our management accounting responsibilities,
producing monthly management accounts and daily/ weekly sales revenue and gross margin
information.

1.3 Treasury Management

Treasury management is the corporate handling of all financial matters, the generation of
external and internal funds for business, the management of currencies and cash flows, and the
complex strategies, policies and procedures of corporate finance.

It is important that a senior member of staff oversees cash management. This is likely to be part
of the Ashok Kumar’s role as Finance Manager.

KAPLAN PUBLISHING 59