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Friday, March 16, 2012

Goals, Purpose and Objectives of Financial Management

In the previous chapter, we learnt what financial management is. In this chapter, we are going to learn about the goals, purpose and objectives of this process.

Goal of Financial Management

The goal of IT Financial Management is to ensure that optimal use is made of the organization’s financial resources and that this is achieved in compliance with the regulatory framework within which the IT service provider operates.

Purpose of Financial Management

The purpose of Financial Management is to ensure that:
• Money is managed and spent wisely
• The financial resources available align fully with the organization’s plans and requirements for IT service delivery
• Investment decisions are sound and relevant to the organizations objectives
• Financial risks are identified and managed effectively
• Governance arrangements are in place to ensure the effective stewardship of financial resources and to define clear accountabilities
• The organization complies with all relevant financial regulatory obligations and the overall financial policy and strategy of the business.
Objectives of Financial Management

The key objectives of this process are to ensure that:
• There is an effective system for financial planning and budgeting
• Financial plans and budget allocations are aligned with the Service Portfolio
• All proposed investments have a business case that meets the standards of the organization
• All significant financial risks are identified and fully managed
• There is an appropriate governance framework in place with clear accountabilities and all those who need to be are properly trained in relation to it
• All financial expenditure is properly accounted for and there is an audit process to ensure proper stewardship of financial resources
• The costs and value of all IT services, processes and activities are monitored, measured and understood and appropriate actions are taken on the basis of their financial performance.

Prev: Introduction to Financial Management

Next: Important Concepts in Financial Management

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