Corporate Financial Accounting

“Becoming an Experts at Ensuring that the Financial Records of a Company Comply with Financial Regulations, Laws, and Policies

In our first session on Corporate financial accounting, we were assured that our time in professional life would be spent analysing financial reports and statements and the time we are spending studying the preparation of financial statement was to gain the necessary understanding of the concepts so we can understand the basis upon which they were prepared and interpret their content.

In my career, I have interacted with accountants and had considerable management experience. Sitting through the first few sessions I realized I was quite familiar with the jargon and could make sense of the early learning points. I liked the pace of the class and it was engaging.

Accounting is the language of business and I have always wanted to gain a deeper understanding of it. As I went through some of the technical notes I was particularly struck by a description of the role of financial accountants – Ensuring the financial records of a company comply with financial regulations, laws and policies. I was intrigued by the emphasis on conventions, regulations, laws and policies and this gave me profound perspective.

I realised I had always “winged” it when studying or discussing financial statement and management accounts because I had never thought about the principles and regulations. This realization was refreshing and aided me in unlearning some deep held beliefs and ways of rationalizing some accounting entries and positions. I better appreciated the value of the notes to the accounts and other reports included in the financial statements. They are critical to understanding the context and interpreting many of the balances and positions.

The CFA course has been fun, a lot of hard work but fun. I have learnt how to read financial statements and familiarized myself with the balance sheet equation Asset = Liabilities + Owners’ Equity. I have learnt about how different transactions affect the various parts of the balance sheet and Profit and Loss accounts. I have learnt how to create journals and the conventions for posting. I have also leant how to create leger accounts (T accounts). I have gained an understanding of different types of transactions, which accounts they affect when posting and how they affect them. I have also learnt humility and the need to unlearn many notions I have from day-to-day experience and replace them with accounting conventions; Some aspects of accounting are based on conventions which are to be conformed with and not necessarily rationalized.

Being a Salesperson with and engineering background, studying accounting has forced me to embrace rigidity and conservativeness. It does not allow for much flexibility or creativity. However, the benefits of this knowledge are numerous. I am already putting the new understanding I have of financial accounting to use. I am better able to measure the impact of my contributions to the business activity at work. Appreciate the difference between cashflow and profitability and how activities that drives revenue interact with expenses, justify cost control on projects and better understand the importance of budgets as a means of ensuring predictable business performance.

By Ayuba Loko