Financial information system
Generally, Information is the lifeblood of financial markets, but they rely on a flow of news and market information to function. Moreover, financial information systems deliver huge amounts of details to financial professionals around the world about counter markets, price endorsers, research services and news-providers.
Need of Financial Information:
Financial professionals have access to a wide range of data from breaking news and immediate prices, price-histories, historic news, stats, agent research, corporation fundamental data and estimates. However, the most demanding users of financial information are traders and sales people. They require high-speed and high execution systems because seconds can add up in their fast paced environment. Some needs the most advanced systems that offer real time reporting of all fiscal asset classes merchandised worldwide. Others who have a narrow focal point, who do business in domestic or regional fiscal instruments, may search for the systems that provide smaller set of details adapted to their exact needs. Those working outside the trading environment i.e. in asset management, wealth management and in investigate and consultative business has dissimilar requirements.
Although they also desire access to the news and market information they do not require pursuing market actions as strictly as traders. They need systems that supply other content together with company?s basic data, forecast data, broker investigating and details on managed resources.Financial professionals look for information systems which also supply analysis and communicating tools. They require tools which allow them to investigate the markets, identify the trading and investment chances, and evaluate the perils linked with their strategies. In addition, they need the ability to speak quickly and simply with other market-participants and with their co-workers & ; clients. Increasingly, financial professionals on the purchase-side want to trade directly and try to find access to feasible prices and merchandising tools in their fiscal information systems.
Primary Functions of FIS:
The primary functions of FIS include : Recording all financial transactions in general ledger accounts Producing fiscal reports to meet up administration and statutory requirements Controlling overall spending through budgetary controls embedded in the system Producing business fiscal statements.
Components of FIS:
FIS is comprised of three SAP components. This section focuses on how they work individually and how they relate to each other. The three components are:
Financial Accounting (FI):
Financial Accounting is used to record the entire financial transactions in general ledger accounts for the assets that is A/R, liabilities that is A/P, revenues and expenses. In addition to, FI produces the university?s financial statements.
Funds Management (FM):
Funds Management is used to recognize the funding source and control the overall expenses. Funds Management will prevent the posting of a transaction for which there are insufficient budget dollars.
Controlling (CO):
Controlling
is used to track the revenues and expenses based on particular reporting
necessities, i.e. by department or specific activity or project. Each revenue
or expense transaction practiced within Financial Information System will
incorporate a code furnished from each of these components and will answer the
following questions : What taxation or expenditure occurred? (FI) What is the source of funding? How much funding is available
for spending (FM) ? Which department/project incurred
the activity? (CO)
Financial Accounting (FI) For central reporting purposes, Financial Accounting is considered to be central part of the Financial Information System. It is the only factor which tracks other than revenue and expense activity, balance sheet kind of activity for example assets, liabilities and maintained earnings. Additionally, for divisional or departmental purposes the Financial Accounting offers the account-codes to be used in recording the revenue, disbursement, accounts-receivable and accounts-payable activity.
Funds Management (FM): FM answers the 2nd
question. Funds Management has a unique feature, which is not present anywhere
else in FIS. It will stop a business deal from being posted if there are not
enough funds to cover the transaction. This feature is called Funds
Availability Control.The funding sources are categorized as follows :
Operating Funds: These funds are used to cover the general operating costs for example educational and administrative salaries and the benefits, utilities, supplies, etc. The funding sources that would typically be included in this group are revenues yielded through departmental enterprising-nesses and the yearly working grants from Federal and or provincial governments.
Ancillary Operations: The funding sources that would typically be built-in this grouping are the revenues yielded from the sale-of dwelling or parking spaces, food and beverage. The expenses incurred in running the ancillary operations such as salaries & ; benefits, cost of goods sold, interest on mortgage etc compensate these revenues.
Restricted Funds: The funding sources that would typically be integrated in this type are research granting agencies, confidential donors and patronizing companies. Usually these finances have certain limitations or conditions attached to how the money can be spent.
Capital Funds: Capital funds are used to cover up the costs of construction or most important overhauls of buildings. The funding sources can incorporates government agencies, donors and other UofT departments contributing part-of their operating finances, etc.
Controlling (CO): Controlling answers the question, Which department/project incurred the activity?? Controlling permits the system-user to report on intended spending and evaluate it to the real postings of taxations and operating expense for a particular department, program/activity at the general ledger level in detail. The departments and projects are identified in Controlling by utilizing various codes, namely Cost Centers and Internal Orders.
CO account codes: There are four main categories of account codes which signify the Control coding part of an operation in FIS. They are:
Cost Center (CC): A five or six-digit code, symbolizes the managerial-unit or a program that originated financial dealings. The cost center tracks revenue and expenses for ongoing or everlasting business units or activities on a financial year basis.
Internal Order (IO): A six-digit code represents the managerial unit or program that initiated a financial transaction. The Internal Order is like a CC in every method except one that is the reporting time of an Internal Order does not have to correspond to the university?s fiscal year. Lots of Internal Order?s are set up to report on a life to date basis.
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