Financial Information - Essay Example

Financial information is a critical tool to apprise an organization’s management about the financial transactions and reporting in the company. Thereare many uses of financial information systems in a business, including some of the following (National Center for Education Statistics, 2003):1. To provide ability to timely record all transactions that take place anywhere in the company2. To provide reports based on the requirements of the company’s management, shareholders, regulators and others3.

Using data for budgeting and analysis of actual versus planned costs4. To provide early warning signals regarding weaknesses in reporting, transaction capturing, financial control and other related issues for the company management5. To develop future projections for revenues and expenses and accordingly allocate resourcesFinancial accounting information provides the basis on which managerial decision making is carried out. Hence, a company requires financial accounting data well before the management reports can be produced.

However, the costing data and the related controls must be put in place to provide a comprehensive financial control environment in which effective managerial accounting can be carried out. Financial accounting information provide the reporting of transactions that take place in the company, and managerial accounting use this information to develop required reports for the management of the company.Accurate and reliable financial accounting information can greatly influence the way businesses are carried out.

Managers can use this information to strategically steer the business direction as per the forecasted financial data. Financial information provides the basis on which a company bases its future direction, goals and objectives. In addition, true and reliable financial accounting information is required by regulators so that stakeholders can obtain verifiable information to safeguard their investments in the company.ReferencesNational Center for Education Statistics. (2003). Financial Accounting for Local and State School Systems [Online].

Available from: http://nces.ed.gov/pubs2004/h2r2/ch_2.asp [Accessed September 10, 2007].