Financial Management - Essay Example

Running Head: FINANCIAL MANAGEMENT Role of financial management in public sector organizations. s In this paper the roles of financial management in the public sector organizations is discussed. Financial management plays an equally important role in public sector as well as in private sector. So various roles that financial management plays in the public sector are discussed in the following article and the reasons why these roles are important are also highlighted. Role of financial management in public sector organizationsFinancial management plays an equally important role in both private sector undertakings and private sector enterprises, however in public sector the policies and procedures are more stern and rigid as these are financed by the government out of taxes collected from public.

Further, public sector enterprises are more accountable to the stakeholders, being government and public, than private sector undertakings. Financial management field is basically responsible for generating valuable information for the purpose of investing, financing and decision making and the role remains the same regardless of the type of organization. The finance managers in a public sector enterprise play many roles including:1. Accounting and record keeping: The nature of public sector accounting is quite different from that of private sector.

In order to show the users of financial statements as well as the stakeholders the position of the entity and all its assets and liabilities, the status of funds etc the finance managers are responsible to maintain appropriate, correct and timely accounting records. That includes both financial and management accounting records. This in turn ensures that the funds are properly allocated to the areas of concern, the risks and returns are highlighted and presented to the top management and the state for decision making purposes, the areas facing a decline and requiring special 2.

Effective utilization and allocation of funds: The earnings or funds allocated to public sector organizations are quite restrained and in that restricted budget a public sector entity has to achieve its goals. Finance managers play an important role in the effective utilization of scarce funds to achieve as many objectives as possible within limited resources. For example if $20 million are annually allocate to a government hospital, the finance managers have to practically analyze the ways in which other costs can be reduced and more patients are treated in the allocated funds.3. Making fund raising efforts: Proper financial management and record keeping will lead to the financial managers identifying situation wherein they need to double their efforts for fund raising.

Certain sectors like education and medicine are always in a need of raising more funds. Finance managers can find out ways to earn more funds or to raise more funds from governments and redouble their efforts in generating revenues. ReferencesFinkler, S.A. (2005). Financial Management for Public, health and Not-for-profit Organizations.New York: Prentice Hall.