Question

Why does a company need both accounting and finance personnel? What types of problems might occur if accounting and finance personal do not cooperate and work effectively together?

Answer 1

One principal advantage of separating the financial reporting from themanagement accounting department is that employees who are dedicated to their particular tasks develop expertise in these tasks. The financial reporting accountants can concentrate on the financial accounting and tax standards that must be used to stay in compliance with the country’s accounting and tax regulations. They can also serve as liaisons with the external auditors. The financial reporting department can be responsible for the company basic transaction and general ledger systems, ensuring that these systems reliably capture data and have adequate internal controls

The management accounting department can work closely with the functional areas (for example, manufacturing, marketing, and engineering)that use management accounting information. This will ensure that the reports are timely and relevant for these internal users. If users wish to use specific accounting conventions (interest on capital employed, asset valuation and depreciation using current, not historical values), themanagement accountants can incorporate these conventions in their reports. Also, weekly and monthly operating summaries for internal information and performance measurement may not have to abide by financial accounting requirements (for example, on inventory valuation procedures). The management accountants can include nonfinancial operating information inthe reports they prepare for employees and managers, and they can become familiar with how to access information from all the organization's information systems and databases, not just the general ledger. Also, some of the information might be judgmental, subjective, and based on rough estimates. This information might be accurate enough for certain internal use, but not reliable enough for external reporting and external auditing requirements.