Financial managers are usually in charge of an organizational finance records. They take care of factors such as cash flow, making financial statements, auditing and reporting financial issues in their organizations. The managers also take part in ironing out any possible differences and issue that might arise from the presented financial statements. Similarly, since they play an important role in the management of the finances of a company, the managers also have to grapple with issues of integrity and ethics. As such, it is important to discuss some of the biggest challenges that financial managers have faced in the recent past.
The challenges of accounting errors
A research study by Jeffry (2015), states that one challenge that financial managers in both public and private organizations had to deal with was the challenge of persistent accounting errors. Chief Financial Officers (CFO) in both for profit and not for profit firms play the role of compiling accounting statement and presenting them to the relevant authorities at some specified time in the accounting calendars. They are usually required to present error free financial statements. However, it is clear that they have presented financial statements that have various errors in them in the past. Some of these errors originate from errors of omission which occur when an accountant or financial officer fails to make an important financial entry in the financial statement. The article by Jeffry (2015) further illustrates that public charters present errors that are 60% higher than those presented by publicly traded corporations. Errors of omission my also occur if the auditors or the financial officer prepare their financial statement in a hurry as they aim to meet the set organizational and sector deadlines (Karen, 2004,). These errors always make it impossible for the financial managers to present accurate and up to date financial statement that investors can rely on to make further decisions such as the ones concerning awarding loans and contracts to organizations based on their financial information.
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Moreover, poorly compiled financial statements may also give a positive reflection which is wrong especially if the auditors and the financial officers made wrong financial errors such as including an entry that is not supposed to be part of that financial statement. Thus, financial officers have to deal with errors of financial inclusion in which they end up recording the wrong entry in the financial statement. Similarly, such errors may make it hard for the CFO in the organization to make accurate decisions by using the statement presented to them because they will not be sure whether the statement reflect true nature of finances in the company or not. Moreover, the errors of omission and inclusions also present the challenge of making effective financial decisions in an organization.
The challenge of maintaining ethical financial integrity
Aside from facing the challenge of accounting errors, financial officers also face the challenge of ethical financial integrity. A research study by Gerald, Samuel, Bartley and Jack (2005) states that many financial officer operating in various if not all firms usually face the challenge of maintaining ethical integrity not only in their environment but also within the sector in which they operate. The authors report the challenges of ethical integrity occur due to increased production and demands that had been experienced in many organizations and business sectors around the world (Anonyous, 2004). Moreover, they also point out that CFO has to deal with ethical issue that tem from having to deal with trustworthy people in their sectors. For example, since the CFO are not charged with the task of making budgets in different sectors, they always have to deal with issue that arise from other financial managers who over estimate their financial requirements.
Moreover, the needs for increased production rates also make it impossible for the financial leaders to keep accurate information concerning the amount of money they need to use in the production of goods and services. Poorly complied financial information may lead to the financial managers releasing less funds to the production and services sectors which will mar the amounts of goods produced and quality of services rendered. When such things happen, the leaders fail to meet the required financial integrity between them and their clients hence making impossible for them to conduct and present effective and trustworthy financial statements. This also leads to issue of untrustworthiness with the people they deal with on a daily basis. CFOs also have to deal with ethical integrity issue that come from political pressure and demand for the CFOs to treat political people specially. They might end up using a lot of organizational funds on these politicians as they aim to get political protection for their organizations (G erald, Samuel, Bartely, & Jack, 2005).
Financial managers have to deal with a myriad of challenges in their daily duties. The first challenge they have to deal with is the challenge of accounting error that originates from financial entries make in the statements. The errors of omission usually lead to false statement records that cannot be used effectively for making financial decisions. On the same note, the CFOs also have o deal with the errors of including some wrong financial information on their financial statement. This also sends the wrong message to investors and makes it hard to make financial decisions in the firm. Similarly, CFOs in different organizations also have to deal with the challenge of ethical financial integrity in their daily operations. Such issue occur when they deal with untrustworthy people and politicians who require special treatment from them.
References
Anonyous. (2004). New challenges facing fund managers. Finance Week. Vol 9 issue 27 , 6.
Gerald, M., Samuel, Y., Bartely, H., & Jack, R. (2005). How Financial Managers Deal with Ethical Stress. Public Administration Review. Vol. 65 Issue 3 , 301-312.
Jefry, B. (2015). Accounting Errors in Nonprofit Organizations. Accounting Horizons. Vol. 29 Issue 2 , 341-361.
Karen, R. (2004,). Early deadline challenges financial managers. Federal Times. Vol. 40 Issue 16 , 6.
