“Financial and accounting management”

Project Report

Submitted in partial fulfillment of the requirements of the subject Web Design lab

by

Dipesh Patil
(Enrollment no.-2005690344)

Supervisor

Prof. Mudasir Mahadik

Department of Computer Engineering

A.R. Kalsekar
Polytechnic, New-Panvel
 This is to certify that the project entitled “Financial and accounting
management” is a bonafide work of Dipesh Patil (Enrollment no.-
2005690344)
submitted as minor project in the subject of Minor Project in “Computer
Engineering”.

Mr. Mudasir Mahadik

(Project Guide)
 DECLARATION

We declare that this written submission represents our ideas in our own words and where
others' ideas or words have been included, we have adequately cited and referenced the
original sources. we also declare that we have adhered to all principles of academic honesty
and integrity and have not misrepresented or fabricated or falsified any idea/data/fact/source
in our submission. we understand that any violation of the above will be cause for
disciplinary action by the Institute and can also evoke penal action from the sources which
have thus not been properly cited or from whom proper permission has not been taken when
needed.

Dipesh Patil
(Enrollment no.-2005690344)

Date: -
 TABLE OF CONTENTS
1. ABSTRACT........................................................................................................2
2. INTRODUCTION...............................................................................................4
Financial Accounting..................................................................................................4
Financial Accounting activities..................................................................................5
Financial Management................................................................................................5
3. KEY DIFFERENCES BETWEEN FINANCIAL ACCOUNTING AND
FINANCIAL MANAGEMENT (MANAGERIAL ACCOUNTING).......................7
4. SIMILARITIES OF MANAGEMENT AND FINANCIAL ACCOUNTING.10
5. DISCUSSION...................................................................................................12
Significance of Financial Accounting and Financial Management to the Mining
Industry.....................................................................................................................12
6. CONCLUSION.................................................................................................13
7. REFERENCES.....................................................................................................14

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 1. ABSTRACT
This report entails information on some of the key aspects of Mine Management
which are Financial Accounting and Financial Management. It also shows how the
two conjugate with one another with relevant examples from the mining industry to
achieve the overall best management in a mine. Furthermore, it looks into the
similarities and differences of financial accounting and financial management.

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 2. INTRODUCTION
Finance, in general, is the management of large sums of capital. It refers to financial
activities such as banking, leverage or debt, credit, capital markets, assets, and
investments. Finance is, in many ways, the foundation of the business enterprise.
Therefore, good financial management is essential to the economic health of business
companies. Financial management should be properly understood due to its
significance. This, however, is better said than done. The field is complicated, and it
is continuously evolving as a result of changes in economic conditions. All of this
makes financial management exciting and relaxing, but also frustrating and at times
perplexing (Daves, 2006).
Accounting, as an information system, seeks to provide various users with various
types of valuable information in order to satisfy their various needs. As a result,
accounting aims to leverage the environment in order to increase the quality and
quantity of information as well as the distribution process to consumers (Mashkour,
2020).

Financial Accounting
Financial accounting is a specialist accounting division that maintains track of a
company's financial transactions (Kenton, 2020). Mining Companies practice
Financial Accounting to track, record, and report on financial transactions
by generating financial statements (Bock, 2021). Mary says that it is done using the
standardized guidelines found in Generally Accepted Accounting Principles (GAAP)
rules which are set by the Financial Accounting Standards Board (FASB) and are
intended to encourage reporting accuracy, so Company A can use the same reporting
approach as Company B.
Financial accounting always looks at past performance and does not look ahead like
management accounting (Bock, 2021). Financial Accounting is time specific.

Using structured rules, transactions are reported, summarized and presented in a

financial report or a financial statement, such as a statement of revenue or a balance
sheet. Companies file financial statements daily. Statements are known to be external
since they are made to individuals outside the business, with primary recipients being
owners/holders, as well as some lenders (Kenton, 2020).

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However, if a corporation's stock is publicly traded, its financial statements appear to
be widely distributed and details would be disclosed. It is critical to note that the
object of financial accounting is not to disclose a company's worth. Rather, its aim is
to provide enough knowledge for others to determine a company's worth for
themselves.

Financial Accounting activities

In relation to the mining industry, most of the activities which in overall add up to
Financial Accounting of the mine are explained as follows:
a) Financial accounting provides the financial department of the mine to be able
to provide a record of assets owned, amounts owed to others and monies
invested (Mashkour, 2020).
b) Fabrication of Mine Financial Reports showing the financial position of an
organization and the profitability of its operations (Mashkour, 2020).This is
indirectly beneficial to a mining company because if a mining company is
largely funded by a bank, the bank is able to give a level of confidence if the
mining company is performing well and hence invite more investors to the
particular mining company (Gartenstein, 2019).
c) Helps management manage the mining company (Mashkour, 2020). This is to
say that mine companies are mainly focused on maximizing the revenues to
have large profits, and this is achieved by careful management of resources
such as assets and allocating them carefully to where they are needed and will
exponentially perform. For instance, for a good underground mining company
whose financial accounting is very good means that they have direct insight
into mineral markets, can allocate the right mining equipment for the right
prevailing geological conditions and also, they carefully monitor and disperse
the right salaries and wages for the right personnel.
d) Financial accounting provides a way of measuring the mining company’s
effectiveness (Mashkour, 2020)

Financial Management

Financial management means the planning, organization, management and control of

financial activities, such as the acquisition and use of company funds (Karmakar,
2017). It entails applying general management concepts to the company's financial

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capital. Financial management is typically concerned with the acquisition, distribution
and regulation of the financial capital concerned. The goals may be to ensure that the
funds concerned are provided on a regular and appropriate basis, ensure an acceptable
return to the shareholders, which depends on the earning potential, the market price of
the share, and the expectations of the shareholders and make the most of the funds. If
the funds were raised, they could be used as soon as possible, at least at a cost. The
company's financial operations are one of the company's most significant and
dynamic activities (Karmakar, 2017). Therefore, in order to take care of these tasks,
the financial manager carries out all the necessary financial activities.

The financial manager is responsible for all the company's essential financial

functions. The person in charge should remain far-sighted in order to ensure that the
funds are used in the most effective manner. Its activities directly impact the
profitability, growth and goodwill of the company.

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 3. KEY DIFFERENCES BETWEEN FINANCIAL ACCOUNTING
AND FINANCIAL MANAGEMENT (MANAGERIAL
ACCOUNTING)

The main distinction between financial accounting and financial management are as
follows:

 Financial Accounting is more concerned with reporting for the purpose of

tracking performance of the Mining company in terms of determining if there
were any profits and losses incurred for a specified financial period (Kenton,
2020). For example, the officer assigned to handle the financial status in a
Mining Company can be asked by the top management to produce balance
sheets and other financial statements for the period ending October 2021 to
indicate information such as; number of shares recently purchased by either
public or private investors, operating and production costs of the mine, tax
inflation rates pattern, salaries and wages issued etc.

In contrast, Financial Management is not concerned with reporting but uses

the information from Financial Accounting to utilize and organize the
financial resources of a mining company (Kenton, 2020). To understand this,
the Financial Management will use strict critical analysis of the World Mineral
Market Trends and see how the financial resources (as reported by the
Financial Accounting Department) can be utilized for economical reasons to
maximize mine profits.

 Financial Accounting is a legal requirement (Fernando, 2021). This is in the

sense that whenever a mining company has undergone pre-feasibility stages
and has confirmed the quality and quantity of a mineral ore, it will provide
majority of the start-up capital /funding for mining operations to commence.
Part of the funding comes from the public and private investors and the Host
Country Government. And therefore, the government will require that mining
company to produce financial statements for the benefit of the host citizens
and private investors.

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 In comparison, Financial Management is not a legal requirement because it is
Flexible to the intentions of the mining company, meaning that the mining
company has its own production targets to maximize profits and this is
dictated by how effectiveness and efficiency of how the mining company
financially manages its resources (Kenton, 2020).

 In Financial Accounting, the timeframe is more on the past to present

performance (Ross, 2020). This is shown through the tracking of a mining
company’s profit and loss performance using computerized analytical systems
which use past and financial data.

However, the timeframe used in Financial Management is more on focusing

on the future (Ross, 2020). This is seen through planning and anticipation
which is a critical success factor in any mining company, for example, in the
mining industry the choice of mining either High-grade or low-grade ore is
dependant on the anticipated Mineral Market Price which is always
fluctuating. The principal beauty of Financial Management will then solve this
uncertainty by applying some principles such as for instance if the Spot
Mineral Market Price of a commodity is low, Financial Management will
dictate mining of High-grade deposits in order to cover for future costs.

 In overall, the main objective of Financial Accounting is to provide financial

information using standard procedures and rules

Even so, nevertheless the main objective of Financial Management is to create

wealth, cash, and returns by effective and efficient utilization of the
company’s assets to keep the company running and appeasing to both private
and public investor firms.

 Under Financial Accounting, there is a standard procedure or

centralized system regulating reports (Ross, 2020). This is more
common in the Financial Statements which are the Income Statement
Balance Sheet and Cash Flow Statement. The reason why there is such

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 strict regulation is for the purpose of`legitimacy for the release for
public consumption and is highly anticipated by investors.

Whereas Financial Management In contrast each mining company is

free to develop its own management reporting system and regulations
(Ross, 2020). Hence there is no centralized system regulating reports.

 The procedure of conducting Financial Accounting is mainly

independent and uses its own tools and techniques (Mason, 2017). This
means that it utilises the raw data obtained at first hand from past to
present transactions that occur in a mining company such as the
purchasing and maintenance costs of mine machinery, revenues
earned per ton of ore(high grade or low grade).
Even though from the past discussions it has been noticed that
Financial Management is more focused on the future direction of the
mining company, it should be noticed that it does not use its own tools
and techniques but rather extrapolates the data obtained from Financial
Accounting to direct the company.
 Since Financial Accounting is more on reporting Information, this very
same information is passed to creditors, investors, analysts, and
regulators (also known as External Audience) (Mason, 2017). These
are the stakeholders who influence Mineral Markets. For example,
Financial Accounting information is passed to investors who will then
use it to compare the actual versus the predicted profit performance of
the mining company and decide whether to keep the company running
or not, or if the mining company still needs extra funding. Another
instance could be that Financial Accounting information passed to
analysts is for the purpose of Financial Management in order to predict
the future outcomes of the company.

Whereas in Financial Management, the information is only used by the

mining company’s management to forecast its future and hence it is
presented to the company’s internal community( also known as
internal audience).

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 4. SIMILARITIES OF MANAGEMENT AND FINANCIAL
ACCOUNTING

The two systems of accounts are similar in the sense that they are both financially
focused, produce financial reports and require a deep understanding of accounting
theory to be run effectively. The following are the key similarities between the two
systems.

Economic events are dealt in the both system of accounts to determine the general
health of the mining company. Financial accounting makes use of the formal and
strict reports for presentation to external stakeholders for example, shareholders and
board of directors .Management accounting is more informal as most of the times is
internal, however, even with this differences, both the system of accounting intends
on allowing the reader to draw a conclusion on the health of the mine and
subsequently make informed financial decisions needed for the good of the mine.

Both are parts of total accounting information system. The accounting information
system is important to both types of accountants. The management accountant will
use the information from the accounting system to present data to managers while the
financial accountant will use the system to audit their financial reports.

Both systems draw on the same set of items which are financial statements, revenues,
expenditure, assets, liabilities and cash flows. In managerial accounting, corporate
personnel attempt to reflect on production effectiveness of a mine and rein in costs.
Similarly financial accounting initiatives assist companies in monitoring income
statements items, for example, materials cost and administrative expenses. These are
all concerned with determining the financial stand of a mine.

Both financial and management accounting are accumulating, and they classify the
accounting information for the preparation of financial statements. Management
accounting systems provide the cost data and inventory valuations that are used to
support financial reporting and, in this sense, are subordinate to financial reporting

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(Richardson, 2002). According to Richardson, there is no question that management
accountants and financial accountants share a common knowledge base at a basic
level.

Under both system database is used to prepare financial statements and reports. The
reports prepared in management accounting and financial accounting are based on the
same database which re originally created to fulfill the accounting and reporting
requirements of financial accounting. This is the reason that when the accounting
system in a mine collects and classifies information, it does it in such a way that it can
be appropriate for both accounting systems.

Both systems determine and measure costs for different accounting periods and even
for different departments and sections. They use the same accounting principles and
concepts for the purpose of cost accumulation and cost allocation .The concepts and
principles which are used in the area of financial accounting for the purpose of cost
accumulation in the mine may also be used under management accounting. This
means that any principle which is developed for financial accounting, can be used in
preparation and analyses of reports in management accounting if they are found useful
for managerial purposes.

Figure 4.0. Showing the interrelation of Financial accounting and Financial

Management.

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 5. DISCUSSION

Significance of Financial Accounting and Financial Management to the

Mining Industry

From the previous discussions it is realized that Financial Accounting and Financial
Management act as a requisite to a mining company’s progress. This should be
understood in the sense that no matter how much Capital a mining company
possesses, in the absence of the practice of Financial Accounting will result in a
disastrous event which disadvantages the ability of the mining company to operate
economically. For example, in a particular nation there are laws which govern the
mineral economics entailed in mineral policies and laws. And therefore, a mining
company which is partially funded by the government and its banks may require it to
annually publish financial reports. If this is not done, it results loss of trust in the
company by the public and private investors.

Financial Accounting provides the accuracy accountants need to measure the solidity
of a mine, for example, a mine that extracts a mineral of low grade will mean that
they are not making enough of the profit from their sales. This will mean that at times
the mine is running at a loss since it cannot cover most of its expenses. However,
using financial accounting a mine is able to identify its area of weaknesses in their
finances and try to rectify the mistakes. This will enable it to come up with remedies
on how they can run the mine profitably and ensure that it stays solid until its life.

A related trend in both management and financial accounting is a focus on risk

(Power, 2004). The concept of risk draws attention to possible future outcomes and
contingencies for the organization and whether the organization can withstand shocks,
react constructively to challenges, and be innovative to meet new challenges. The
financial statements with their traditional backward perspective have been inadequate
to provide insights into this aspect of corporate performance. Recent experiments in
corporate financial reporting such as sustainability reporting (and related reports on
corporate social responsibility, environmental and social impact, and intellectual
capital) have begun to provide a more useful data on these dimensions but, in this
case, the assumption is that management is developing information systems to support
mine resilience and investors would find disclosure of this information value relevant.

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 6. CONCLUSION
Finance and Accounting have assumed a great importance in this contemporary world
of business wherein corporate organizations have to show a fair and genuine view of
their financial standing. Thus the application of accounting in the mining sector has
become an indispensable factor. Although they may be contrasts between these two
concepts, in the sense that financial accounting is more concerned about historical
information whilst financial management focuses more entirely on the present and the
future, the mining corporate world will need both financial management and
accounting in order to thrive. This is because financial management provides direction
to the mines on how they can attain goals and objectives of the mine through proper
allocation, acquisition and planning. Both accounting systems analyses the economic
events to determine the general health of the mining company

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 7. REFERENCES
Bock, M. G. (2021, January 15). The Blueprint. Retrieved March 2021, from
https://www.fool.com/the-blueprint/types-of-accounting/
Daves, E. F. (2006). Intermediate Financial Management (9th Ed ed.). Natorp
Boulevard, United States of America: Thomson Learning Academic Resource
Center. Retrieved March 2021
Fernando, J. (2021, February 18). Investopedia. Retrieved March 2021, from
https://www.investopedia.com/terms/a/accounting.asp#:~:text=What%20Is
%20Accounting%3F%20Accounting%20is%20the%20process%20of,used
%20in%20accounting%20are%20a%20concise%20summary%20
Gartenstein, D. (2019, August 24). BizFluent. Retrieved March 2021, from
https://bizfluent.com/info-8532434-accounting-intern-do.html
Karmakar, R. (2017). Management Accounting: Meaning, Functions and
Characteristics. Retrieved from YOUR ARTICLE LIBRARY:
https://www.yourarticlelibrary.com/management-accounting-2/meaning/
management-accounting-meaning-functions-and-characteristics/65345
Kenton, W. (2020, July 12). Investopedia. Retrieved March 2021, from
https://www.investopedia.com/terms/f/financialaccounting.asp
Mashkour, S. C. (2020, December). Researchgate. Retrieved March 2021, from
https://www.researchgate.net/search.Search.html?
type=publication&query=Financial%20Management%20and%20financial
%20accounting
Mason, M. (2017, June 28). Bentley University. Retrieved March 2021, from
https://www.bentley.edu/news/what-are-differences-between-financial-
accounting-and-management-accounting
Power, M. (2004). The Risk Management Of Everything. Re-thinking the politics of
uncertainity.
Richardson, A. (2002). Professional dominance: The relationship between Financial
accounting and managerial accounting. The Accounting Historians Journal ,
1926-1986.
Ross, S. (2020, November 18). Investopedia. Retrieved March 2021, from
https://www.investopedia.com/ask/answers/041015/how-does-financial-
accounting-differ-managerial-accounting.asp
Sharma, V. (2018). Management Accounting and Financial Accounting (6
Similarities. Retrieved from YOUR ARTICLE LIBRARY:
https://www.yourarticlelibrary.com/accounting/management-accounting/
management-accounting-and-financial-accounting-6-similarities/52470

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