• The need to estimate/forecast the requirement of funds for both the short term(working capital requirements) and the long term purpose(capital investments).

• Forecasting the requirements of funds involves the use of budgetary control and long-range planning

• Helps to decide what type of Capital structure the company needs to have re: whether these funds would be raised re: from loans/borrowings or from internal source(share capital)

• To raise sufficient long term funds to finance fixed assets and other long term investments and to provide for the needs of working capital

• In projects using the various capital budgeting tools like Payback method, accounting rate of return, internal rate of return, net present value.
• Assets management policies are to be laid down regarding the various items of current assets like accounts receivable by coordinating with the sales personnel, inventory with production

• Taking into consideration, earnings trend, share market price trend, fund requirement for future growth, cash flow situation and others.

• Plays a very important role in carrying out negotiations with the various financial institutions, banks and public depositors for raising funds on favourable terms

• The finance manager needs to ensure the supply of adequate, timely and cheap fund to the various parts of the organization
• That there is no excessive cash idling around

• To need to constantly review the financial performance of the various units of organization generally in terms of ROI(return on investment. Such review assists management in seeing ow the funds have been utilized in the various divisions and what can be done to improve it.

• Where the company is a listed entity, the need to interact with the Stock Exchange
• To deal with money markets and capital markets for financing or investment of idling funds
• To foster relationships with bankers, investors, underwriters of equity and bond issuances and other government regulatory bodies.

SYLLABUS CONTENT

1.0 Further aspects of the Second Level Cost Accounting Syllabus

2.0 Stock Control

• Use of free stock balance. Calculation and use of economic order quantity(EOQ)

3.0 Marginal Costing

• Distinction from the absorption costing principle particularly as to the effect on stock valuation and reported profits

• Relevance and use of contribution as a basis for various decisions, particularly with reference to limiting factors. Opportunity costs. Avoidable costs. Sunk costs. Calculation of break-even points. Break-even charts involving traditional, contribution and profit volume(P/V) presentations

4.0 Variance Accounting

• Preparation and coordination of functional, cash and master budgets. Limiting factor. Fixed, flexible and rolling budgets. Human behaviour considerations. Setting standard costs. Types of standard. Comprehensive sales and production cost variance analysis, including mixture variances. Calculation and relevance of control ratios-activity, capacity and efficiency

5.0 Accounting Systems

• Interlocking and integrated accounting systems

• Use of control accounts. Reconciliation and causes of different profits

• Notional costs

6.0 Presentation of information to management

EXAMINATION REQUIREMENTS:

• A 3- hour examination. 5 questions are to be answered from a choice of 6

Graph paper are provided. Calculators ( no printout, silent, cordlss no word display facilities are allowed.