Financial Management Information Systems
Financial Management Information Systems accumulate and analyze financial data in order to make good financial management decisions in running the business. FMIS is the acronym for the term “Financial Management Information Systems”.
The basic objective of the financial information system is to meet the firm's financial obligations as they come due, using the minimal amount of financial resources consistent with an established margin of safety. Outputs generated by the system include accounting reports, operating and capital budgets, working capital reports, cash flow forecast, and various What-If Analysis reports. The evaluation of financial data may be performed through ratio analysis, trend evaluation, and financial planning modeling. Financial planning and forecasting are facilitated if used in conjunction with a Decision Support System (DSS).
Financial management information system is:
- Information system that tracks financial events and summarizes information
- supports adequate management reporting, policy decisions, fiduciary responsibilities, and preparation of auditable financial statements
- Should be designed with good relationships between software, hardware, personnel, procedures, controls and data
Generally, financial management information system refers to automating financial operations.
An ideal or well-designed system should:
- Collect accurate, timely, complete, reliable, consistent information
- Provide adequate management reporting
- Support government-wide and agency policy decisions
- Support budget preparation and execution
- Facilitate financial statement preparation
- Provide information for central agency budgeting, analysis and government-wide reporting
- Provide complete audit trail to facilitate audits.
An FMIS will consist of several elements with different functions. In the description that follows, the term “module” will imply that the system is a sub-element in a FMIS. The core of an FMIS could be expected to include the following modules and systems:
- General ledger
- Budgetary accounting
- Accounts payable
- Accounts receivable
The noncore or other modules are, inter alia:
- Payroll system
- Budget development
- Project ledger
- Asset module.
There are many advantages of implementing an FMIS. A few of them are listed below:
- Integrated financial information
- Flexibility of reporting and additional control over expenditure
- Less administration required within the business
Tighter views of budgets versus actuals.