All organizations, no matter if they are public or private, if they are for profit or do not need accounting, and it is of great importance that their commercial transactions are properly recorded in order to have USEFUL INFORMATION in the process of decisions and of course those who make these decisions are the managers of the organizations.The need and relevance of the information is increasingly growing and demanding in the management, and has within its basic objectives, to stay and endure in the market and have an understanding of what happened and is happening in the organization.
The management uses the information to create value and it is that it serves, among other things, to increase its income or reduce costs, evaluate the management, improve the processes and of course make better decisions.
Accounting generates financial information of essential use for the evolution of organizations, these departments in organizations are an element that undoubtedly adds to progress and productivity which the management of companies must value every day.
One way that exists to value, understand, analyze and evaluate an entity is through financial statements, the basic ones are:
- Statement of financial position Statement of comprehensive income Statement of equity movements Statement of cash flows and Notes to financial statements
These financial statements must be in accordance with the generally accepted accounting principles in each country, in a large number of countries the International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) are used. This institution is based in In the United Kingdom, depending on the criteria of these standards, the full IFRS or SME IFRS may be applied that are oriented to small and medium-sized companies, there are also international standards for the public sector, having said all this we have to tell the manager with the peace of mind that the financial statements were prepared and issued in accordance with approved regulations in order to maintain the quality of the information.
The manager of an organization is in that position to do everything possible to achieve the objectives set and for this, among other things, he will be a great consumer of information, this element obtained inside or outside the organizations will place or condition real managerial advance.
Organizations are needing information, more regularly, due to the globalization of markets and the demand to be more productive and effective every day, which makes managers more aware of what is happening internally and externally and thus adapt for a better performance.
Fredy Kofman says that information is valuable depending on the way the "listener" interprets it, through his mental model. I could not agree more with this and it is that I believe that accounting is not only important for entities but is vital, what happens is that many times they are not given effective use, this depressing fact has touched me to live it, The manager must be an integral person who knows how to read financial information adequately, I am not saying that he is a public accountant but that he does have the fundamentals and the awareness that he must use financial information to improve and evolve management in the organization.
We must in the same way remove that culture that financial information accounting only serves for tax purposes and give it the position they have in any organization, which is nothing more than providing quality information for decision-making processes, knowing how to analyze and evaluate the management and make the most of it to achieve the proposed objectives, those organizations that activate information in a strategic and systematic way, to turn it into understanding and knowledge of all its members, will be able to take intelligent actions in ambiguous and competitive environments, which undoubtedly it will make organizations competitive and effective.
Author: Lcdo. Michael Aular - Micdan Consulting
