The Basic Principles of Financial Management

Financial management is not just about accounting. Financial management is an important part of the management program and should not be regarded as a separate activity that becomes part of the financial part of the job. Financial management is almost the same as the maintenance of a vehicle. If we do not give him fuel and oil were good and regular service, then the vehicle will not function properly and efficiently. Worse yet, the vehicle could be damaged middle of the road and failed to achieve the goals set.
In practice, Financial Management is the action taken in order to maintain the financial health of the organization. For that to build a good financial management system we need to identify the principles of sound financial management. There are seven principles of financial management should be considered.

 1. Accountability
Accountability is a moral or legal obligation, which is attached to an individual, group or organization to explain how the funds, equipment or authority given to third parties has been used. NGOs have an obligation operationally, moral and legal to explain all the decisions and actions they have taken. Organizations must be able to explain how he uses these resources and what has he accomplished as accountability to stakeholders and beneficiaries. All stakeholders are entitled to know how to use the funds and authority.
 
2. Consistency
System and financial policies of the organization must be consistent over time. This does not mean that the financial system should not be adjusted if there is a change in the organization. Inconsistent approach to financial management is a sign that there is manipulation in financial management.

3. Transparency
The organization must be open regarding the work, providing information related to the plan and its activities to stakeholders. Including inside her, preparing financial reports are accurate, complete and timely and can be easily accessed by stakeholders and beneficiaries. If the organization is not transparent, it indicates there is something to hide.

4. Survival (Viability)
In order to awake financial, organizational expenditure at strategic and operational levels should be adjusted to the funds received. Survival (viability) is a measure of the degree of financial security and the continuation of the organization. Manager organizations should prepare a financial plan that shows how organizations can implement its strategic plan and meet its financial needs.

5. Integrity
In carrying out its operations, the individuals involved must have good integrity. In addition, reports and financial records must also be kept integrity through the completeness and accuracy of financial records

6. Management (Stewardship)
Organizations must be able to manage properly the funds that have been obtained and ensure that the funds are used to achieve the intended purpose. In practice, organizations can perform with good financial management through: careful strategic planning, identification of financial risks and make the control system and a financial system that is in accordance with the organization.

7. Accounting Standards
Financial and accounting system used by an organization to be in accordance with the principles and applicable accounting standards. This means that every accountant in the world can understand the system used the organization