In the olden days a career in finance did not offer anything more than a back-office recording keeping job. A finance person was understood to be a record-keeping person in an organization.

However, with the evolution of business landscape, the role of finance has evolved and become more challenging. In today’s organization a finance person occupies a much broader role involving decision-making, planning, controlling the financial operation of a business.

Within finance, one can find a variety of job roles that are not limited to just the accounting field. You can explore financial career options in various industries such as financial service, financial planning, fund management, regulatory compliance, trading, financial management, and so on.

These different jobs require you to have completely different skill sets, and you can choose a financial career that suits your personality and skill level.

If you are analytically oriented, you can choose a career in risk management, where your job is to measure and manage the risk faced by a bank or a financial institution. Alternatively you can also join the insurance industry as an actuary where you ass the risk of loss, and design and price new insurance products. These jobs require number crunching skills. You are also expected to be very diligent as a small mistake can turn into big losses.

On the other hand, if you are a very outgoing person and like meeting people, you may be better suited for selling financial instruments. You may want to join a bank or an insurance company, and promote their financial products to prospective customers. In a bank, you are expected to sell their financial products such as deposit accounts, credit cards, personal loans, home loans, etc. For a career in sales, most organizations provide you a thorough training on their products and common techniques for selling. You are expected to be a go-getter with the ability to close deals quickly. In most financial services institutions, you are paid a decent salary and a commission, which is based on your sales targets.

One more lucrative career option is in trading. As a trader you use your employer or client’s funds to trade in financial products such as equity, bonds, currencies and currencies in an attempt to make a profit. Traders study the financial markets and identify opportunities to make profit. This is a high stress job and requires you to have strong analytical skills and a tough attitude. A career in trading also offers good salaries with bonuses and incentives linked to your performance.

While these are a few important career options available in finance, a person interested in this field can choose from a much wider array of job roles. Best of luck with your financial career!

Corporate Financial Reporting is part of corporate reporting that consists of financial statements and accompanying notes that are prepared in conformity with Generally Accepted Accounting Principles (GAAP). The financial statements are summaries of business transactions during the financial year of the corporation. The business world has many forms of organizations ranging from the for profit sole proprietorship, partnership and incorporated businesses with limited liability to the not for profit organizations whose existence is not mainly driven by financial gain.

Regulations that govern the preparation of financial statements largely apply only to the incorporated entities. This has given rise to accounting standards setting bodies and legal provisions that form the frameworks used when preparing the financial statements. The process of preparing the reports in accordance with the GAAPs and legal requirements presents advantages and disadvantages to the organizations and to other interested groups. The International Financial Reporting Standards are increasingly being adopted by many national accounting standards setting bodies leading the way to a single set of accounting standards all over the world. It is therefore worthwhile to look at the advantages and disadvantages of financial reporting to create an awareness of the complexities that corporations and accounting professionals contend with.

THE ADVANTAGES

A number of advantages of corporate financial reporting can be enumerated and perhaps among the most important is that organizations are able to compare their individual performance with others in the same industry or line of business. This is because the established principles, standards and regulations ensure that there is a benchmark to be followed in the preparation of financial reports. Recognition of income, expense, assets and liabilities is standardized by the existing framework and any deviation can be countered with disciplinary or legal action. Organizations strive to prepare their financial statements to closely match the set frameworks as much as possible. In some countries for example Kenya, this has been translated into an annual competition (the fire award) where companies performance in this area is assessed by professional bodies including the national accounting professionals body with the aim of awarding the company with the best prepared financial statements. This in turn promotes staff and professional development which is a desirable aspect in the growth and wealth creation of the corporate organizations.

Investors and owners of companies in jurisdictions where corporate financial reporting follows strong established and clear frameworks can make the appropriate investment decisions. Corporate reporting in this case enhances the development of understanding of the activities of the companies and at the same time keeps the companies themselves on their toes as the wider society is well-informed of the expected reporting standards. This also acts as an incentive to managers to perform at their best and to institute control measures that aid the organization to comply with the frameworks.

Requirements of corporate financial reporting lead to timely preparation of financial reports. This is desirable to the stakeholders who may be more interested in the organizations immediate past rather than wait for a long time before the outcome of their input is known. When financial reports are prepared and published within the stipulated time, it is possible for necessary actions to be taken to correct any anomalies that may have led to undesirable outcomes. In a more serious case where a material error happens to be discovered, it can be corrected and the necessary measures taken to avoid a repeat of such occurrences.

IFRS give room for flexibility as they are based on principles rather than rules. As principles are based on value, corporations can adopt the standards that best suit their circumstances as long as fair value is adequately reported. This also encourages professional development as accounting standards setting requires qualified academics who can develop the required standards after lengthy and rigorous discussions and considerations to come to a consensus.

Overall, corporate financial reporting acts as a control measure as management, owners, employees, customers, creditors and the government are dependent on the reports in their decision-making. For instance the government in taxation of companies relies at the outset on the financial reports prepared and examined by qualified public or certified professionals. Trends on the growth of the companies can also be quickly determined by comparing sets of reports for different periods.

THE DISADVANTAGES

Corporate financial reporting does not bring desirable results only. There are some undesirable outcomes that should be mitigated against. The consideration of cost guides many companies in their operation. In preparing corporate financial reports in accordance with laid down standards and rules, expertise is required and the company has to engage highly qualified professionals for this task. The fee payments to qualified professionals can be prohibiting especially to small companies controlled closely by their owner managers. Compared to larger companies the small entities do not have adequate resources to implement adoption of the standards or even to train or employ qualified staff. In many instances such small and medium enterprises (SMEs) are tempted to forgo compliance with certain aspects of the standards or rules leading to problems with regulatory bodies including the government.

Freedom to adopt standards that suit the particular circumstances of the company leads to manipulation of reports. Disclosure of important information is in jeopardy as there is no legal enforcement for implementing the standards. Even where the government imposes legal obligations on what financial reports are to be prepared, there are still loopholes that can arise especially when the accounting standards and the legal stipulations are not in conformity in some areas.

For multinational companies, there are challenges in preparing their consolidated financial reports especially where operations are in countries with different accounting standards and legal regimes. There are also other challenges in dealing with for instance exchange rates, interest rates and transfer pricing where treatment of such aspects may be considered differently in different countries. Taxation and existence or non-existence of dual taxation treaties also poses another challenge.

CONCLUSION

It can be concluded that corporate financial reporting is essential and the gains from following accounting standards based on principles far outweigh the disadvantages as freedom to prepare reports in whatever way organizations deem appropriate may lead to financial chaos.

As an “Abundant Life Coach” I get asked about the meaning of “financial abundance” very often. What this means to you can be the difference between living the lifestyle of your dreams, or settling for something less than your dreams. I want you to live the life of your dreams!

Here, then, are 5 Essential Factors of Financial Abundance:

“The Abundant Mindset”

Thousands upon thousands of books, articles, media, programs, and so much more have been produced that discuss the awesome power of our minds, and the influence of our thinking upon our lives. It is difficult to say enough or emphasize enough that truth. As I see it, we are exactly as we think.

In my work, I recommend the adoption of an “Abundant” mindset. This means so much more than finance or money, however, for the purposes of this article, I will discuss abundance only as it applies to the world of money and finance.

A financial abundance mindset means enjoying an abundant amount of money, and yet not allowing greed. Greed does not work (sorry, Gordon Gekko). Of course “financial abundance” will be a relative concept; it will probably mean something different to each person. Greed, however, is fairly obvious; it is almost like knowing (within your mid or heart) the difference between right and wrong.

Further, a financial abundance mindset means having the monetary means or resources to enjoy an abundant lifestyle, yet balancing your financial wealth with philanthropy and generous giving (see point 4). When one’s personal motives are clearly defined and one’s goals are aligned with those motives, then financial abundance becomes clear.

“Specialized Knowledge”

The largest difference between the rich and poor (or the “haves” and “have-nots”) is knowledge. Or, more specifically, the largest difference is a specialized knowledge; meaning that they have the “right” knowledge and also know how to use that knowledge to their advantage. In other words, specialized knowledge is the information or data itself, coupled with the wisdom to know how to use the information or data.

For many, specialized knowledge is an academic education such as medical or law school, while for others this might mean computer programming, aviation repair, or something. Further, many of those with a financial education know how to leverage their own money to make more money. Obviously the point is that specialized knowledge translates to earning ability.

“The Power of Compounding Interest and Investing”

For many people, diligent savings and investment of a consistent percentage of income over considerable lengths of time has lead to financial abundance. I would certainly add that economic factors always play a significant role with regard to risk in investments. Even so, living well within one’s means while investing and saving can very often lead to financial abundance.

“Generous Giving”

Generosity does not necessarily mean giving away or donating money. Mr. Zig Ziglar has said: “If you can dream it, then you can achieve it. You will get all you want in life if you help enough other people get what they want.”

This is so very true. It must be an unwritten law of nature that over time, our generosity is paid back several times over. Of course there are exceptions to every rule, and yet employing an attitude of generosity is always a safe bet for a great return. And, if nothing else, it is an illustration of excellence of character.

“What You Love Over Time”

We should seek ways to turn what we love to do into a good living. I am a firm believer that when we do what we love doing, money very often comes as a byproduct, because our focus is not so much on making money as it is on enjoyment and lifestyle. Over time, money tends to take care of itself in large part when we are doing what we enjoy, especially when it helps others.

In conclusion, the very first point – having an abundant mindset – sums up all of the points I have made in this article. When we do what we love to do; when we are generous and seek to help others; when we live within our means and save money; when we always seek a more specialized knowledge…we then have an abundant mindset, and are bound to realize financial abundance.

Nobody knows your business better than you do. After all, you are the CEO. You know what the engineers do; you know what the production managers do; and nobody understands the sales process better than you. You know who is carrying their weight and who isn’t. That is, unless we’re talking about the finance and accounting managers.

Most CEO’s, especially in small and mid-size enterprises, come from operational or sales backgrounds. They have often gained some knowledge of finance and accounting through their careers, but only to the extent necessary. But as the CEO, they must make judgments about the performance and competence of the accountants as well as the operations and sales managers.

So, how does the diligent CEO evaluate the finance and accounting functions in his company? All too often, the CEO assigns a qualitative value based on the quantitative message. In other words, if the Controller delivers a positive, upbeat financial report, the CEO will have positive feelings toward the Controller. And if the Controller delivers a bleak message, the CEO will have a negative reaction to the person. Unfortunately, “shooting the messenger” is not at all uncommon.

The dangers inherent in this approach should be obvious. The Controller (or CFO, bookkeeper, whoever) may realize that in order to protect their career, they need to make the numbers look better than they really are, or they need to draw attention away from negative matters and focus on positive matters. This raises the probability that important issues won’t get the attention they deserve. It also raises the probability that good people will be lost for the wrong reasons.

The CEO’s of large public companies have a big advantage when it comes to evaluating the performance of the finance department. They have the audit committee of the board of directors, the auditors, the SEC, Wall Street analyst and public shareholders giving them feedback. In smaller businesses, however, CEO’s need to develop their own methods and processes for evaluating the performance of their financial managers.

Here are a few suggestions for the small business CEO:

Timely and Accurate Financial Reports

Chances are that at some point in your career, you have been advised that you should insist on “timely and accurate” financial reports from your accounting group. Unfortunately, you are probably a very good judge of what is timely, but you may not be nearly as good a judge of what is accurate. Certainly, you don’t have the time to test the recording of transactions and to verify the accuracy of reports, but there are some things that you can and should do.

  • Insist that financial reports include comparisons over a number of periods. This will allow you to judge the consistency of recording and reporting transactions.
  • Make sure that all anomalies are explained.
  • Recurring expenses such as rents and utilities should be reported in the appropriate period. An explanation that – “there are two rents in April because we paid May early” – is unacceptable. The May rent should be reported as a May expense.
  • Occasionally, ask to be reminded about the company’s policies for recording revenues, capitalizing costs, etc.

Beyond Monthly Financial Reports

You should expect to get information from your accounting and finance groups on a daily basis, not just when monthly financial reports are due. Some good examples are:

  • Daily cash balance reports.
  • Accounts receivable collection updates.
  • Cash flow forecasts (cash requirements)
  • Significant or unusual transactions.

Consistent Work Habits

We’ve all known people who took it easy for weeks, then pulled an all-nighter to meet a deadline. Such inconsistent work habits are strong indicators that the individual is not attentive to processes. It also sharply raises the probability of errors in the frantic last-minute activities.

Willingness to Be Controversial

As the CEO, you need to make it very clear to the finance/accounting managers that you expect frank and honest information and that they will not be victims of “shoot the messenger” thinking. Once that assurance is given, your financial managers should be an integral part of your company’s management team. They should not be reluctant to express their opinions and concerns to you or to other department leaders.