The finance function is centralized

The finance function is very vital for every type of business enterprise. There is need to setup a sound and efficient Organisation to achieve its goals. However, organization of finance function is not standardised one. It varies from enterprise to enterprise, depending upon its nature, size and other requirements. In small concerns, whose operations are simple and there is little delegation of authority no separate executive is appointed to handle finance function. It is the owner who performs all these functions himself. But in medium and large scale concerns, a separate department to organize all financial activities may be created at top level under the direct supervision of Board of Directors or a highly placed official. This function may be headed by a committee or a top management executive. All the important financial decisions are taken by the committee or the executive but routine decisions are left to the lower levels of management.

The finance function is centralized because of its importance. The financial decisions are crucial for the survival of the concern. Any bad decision on financial aspects will adversely affect the reputation of the concern. The centralization of finance function will result in certain economies in raising funds, purchasing of fixed assets etc.In large concerns, for organizing finance function, the controller and treasurer are appointed. Financial controller perform functions of planning and controlling, preparation of annual reports, capital budgeting, profit analysis, cost and inventory management, and accounting and payroll. The main functions of the treasurer includes raising of additional funds, cash management, receivables management, audit of accounts, protecting funds and securities and maintaining relations with banks and other financial institutions etc. Management audit is development in the field of audit. It was first used in the USA. It is a tool of management control. It is like periodical medical check up of the business to ensure sound and healthy business activities. It covers all areas of management like planning, organizing, co-ordination, control etc. it is an audit management’s overall performance. It assists at all level of management in the effective discharge of managerial functions.