Important aspects Yamileth Arauz

What does a company need to have a good development?

(Take in account the following aspects)

Accounting Area

CPA Certified Public Accounting

1.    Bookkeeping

2.    Accountants

3.    Auditors

4.    Controllers

5.    Executive officer (manager)

Accounting Books

1.    Journal: A recorded of all the transactions in double entry bookkeeping.

2.    Ledger: All transactions transferred from the journal. Using the T account. Double entry.

3.    Balance sheet: It shows the assets and liabilities of a company.

4.    Trial balance: It is a test to see if all the transactions are ok. Debits should equal the credits.

Basic Formula

Assets = liabilities + owner`s equity

ASSETS

DEBIT                    DR	CREDIT                     CR
Assets increase +	Assets decrease -

LIABILITIES AND OWNER`S EQUITY

DEBIT	CREDIT
DECREASE -	INCREASE +

In owner`s equity

(Expenses and income affect it)

Expenses		Income
Debit Increase +	Credit Decrease -	Debit Decrease -	Credit Increase +

BENEFITS OF BUDGETING

Budgets don’t guarantee success, but they certainly help to avoid failure. The budget is an essential tool to translate general plans into specific, action-oriented goals and objectives. By adhering to the budgetary guidelines, the expectation is that the identified goals and objectives can be fulfilled.

It is crucial to remember that a large organization consists of many people and parts. These components need to be orchestrated to work together in a cohesive fashion. The budget is the tool that communicates the expected outcome and provides a detailed script to coordinate all of the individual parts to work in concert.

When things don’t go as planned, the budget is the tool that provides a mechanism for identifying and focusing on departures from the plan. The budget provides the benchmarks against which to judge success or failure in reaching goals and facilitates timely corrective measures.

Operations and responsibilities are normally divided among different segments and managers. This introduces the concept of “responsibility accounting.” Under this concept, units and their managers are held accountable for transactions and events under their direct influence and control. Budgets should provide sufficient detail to reflect anticipated revenues and costs for each unit. This philosophy pushes the budget down to a personal level, and mitigates attempts to pass blame to others. Without the harsh reality of an enforced system of responsibility, an organization will quickly become less efficient. Deviations do not always suggest the need for imposition of penalties. Poor management and bad execution are not the only reasons things don’t always go according to plan. But, deviations should be examined and unit managers need to explain/justify them.

Within most organizations it becomes very common for managers to argue and compete for allocations of limited resources. Each business unit likely has employees deserving of compensation adjustments, projects needing to be funded, equipment needing to be replaced, and so forth. This naturally creates strain within an organization, as the sum of the individual resource requests will usually be greater than the available pool of funds. Successful managers will learn to make a strong case for the resources needed by their units.

But, successful managers also understand that their individual needs are subservient to the larger organizational goals. Once the plan for resource allocation is determined, a good manager will close ranks behind the overall plan and move ahead to maximize results for the overall entity. Personal managerial ethics demands loyalty to an ethical organization, and success requires teamwork. Here, the budget process is the device by which the greater goals are mutually agreed upon, and the budget reflects the specific game plan that is to be followed in striving to reach those goals. Without a budget, an organization can be destroyed by constant bickering about case-by-case resource allocation decisions.

Another advantage of budgets is that they can be instrumental in identifying constraints and bottlenecks. [...] A carefully developed budget will always consider capacity constraints. Managers can learn well in advance of looming production and distribution bottlenecks. Knowledge of these sorts of potential problems is the first step to resolving or avoiding them.

The Various Components of a Master Budget

The Audit process

                                                    Six steps Audit Process

Requesting Documents

After notifying the organization of the upcoming audit, the auditor typically requests documents listed on an audit preliminary checklist. These documents may include a copy of the previous audit report, original bank statements, receipts and ledgers. In addition, the auditor may request organizational charts, along with copies of board and committee minutes and copies of bylaws and standing rules.

Preparing an Audit Plan

The auditor looks over the information contained in the documents and plans out how the audit will be conducted. A risk workshop may be conducted to identify possible problems. An audit plan is then drafted.

Scheduling an Open Meeting

Senior management and key administrative staff are then invited to an open meeting during which the scope of the audit is presented by the auditor. A time frame for the audit is determined, and any timing issues such as scheduled vacations are discussed and handled. Department heads may be asked to inform staff of possible interviews with the auditor.

Conducting Fieldwork

The auditor takes information gathered from the open meeting and uses it to finalize the audit plan. Fieldwork is then conducted by speaking to staff members and reviewing procedures and processes. The auditor tests for compliance with policies and procedures. Internal controls are evaluated to make sure they're adequate. The auditor may discuss problems as they arise to give the organization an opportunity to respond.

Drafting a Report

The auditor prepares a report detailing the findings of the audit. Included in the report are mathematical errors, posting problems, payments authorized but not paid and other discrepancies; other audit concerns are also listed. The auditor then writes up a commentary describing the findings of the audit and recommended solutions to any problems.

Setting Up a Closing Meeting

The auditor solicits a response from management that indicates whether it agrees or disagrees with problems in the report, a description of management's action plan to address the problem and a projected completion date. At the closing meeting, all parties involved discuss the report and management responses. If there are any remaining issues, they're resolved at this point.

Yamileth Arauz

The five golden rules of financial Management

The five golden rules of financial management
Wednesday, 2 May 2012 | By Marc Peskett
http://www.startupsmart.com.au/blogs/marc-peskett/the-five-golden-rules-of-financial-management.html
Here are my five golden rules of financial management every business owner should know:
1. You can’t be successful without strong financial management.
According to Dunn & Bradstreet, more than 80% of small business failures in Australia are the result of bad financial management – poor cash flow, debtors out of control, lack of focus on profit margins, and overtrading beyond your business’s ability to meet commitments.
All of these issues can be overcome simply by implementing the right financial management systems and processes.
2. You can’t manage what you don’t measure
While I’m a believer that gut instinct is sometimes valuable, having your results in black and white is hard to argue with. Deciding what to measure is the most important first step in this process. 
You can measure just about anything, so get focused on what matters to you most. What’s your biggest challenge right now? What keeps you up at night?
3. It’s about cause and effect - make sure you measure and monitor causes as well as effects
Measuring the outcome or end result is not enough. There’s no use looking at your sales figures and profit and loss statement at the end of the year, wishing you could have made more money.
These results are lag indicators that show you the effect of what happened during the year. They are already history.
Monitoring your lead indicators enables you to see what’s happening closer to real time, allowing you to see patterns, trends and make predictions about the results you’re going to get.
4. It’s all relative - compare, compare, compare
All of this is about achieving better results, building a better business and realising a better financial result. It’s the natural state of a business to grow.
It’s also natural for a business owner to want their wealth to grow. To do this you need a comparison or reference point from where you were versus where you are now and more importantly where you want to get to.

5. Keep it simple
This probably sums up why a lot of business owners don’t have the right financial management approach to suit their business. At some point it sounded or became too hard, complicated and over-engineered.
The key is don’t get caught out and confused on the fly when a problem arises and you’re struggling to understand what went wrong.
Posted by: Yamileth Arauz R.