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How might an organization use policies and procedures as part of its financial operations?

Question:

How might an organization use policies and procedures as part of its financial operations?

Managerial Accounting

Managerial accounting is one of the branches of accounting. It involves accounting information that is used by managers of an organization to make well-informed decisions regarding the operations of a company. Accounting information is prepared and presented in the form of reports.

Answer and Explanation:

Financial policies and procedures are used in the following ways:

  • Control spending. Financial policies and procedures can be employed by an organization to monitor and control the spending of a company's finances. They provide effective guidance on a company's financial operations. The policies and procedures provide an appropriate framework that guides an organization on the management and use of money. This enables a company to effectively control costs while maximizing profit.
  • Financial controls. The financial policies and procedures act as internal controls for a company's financial operations. They ensure that financial information is complete and recorded accurately. It should be indicated that financial controls also prevent cases of fraud that may cause a company heavy financial losses.

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Managerial Accounting Functions

from Business Management: Help & Review

Chapter 9 / Lesson 1
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