Wider Financial Education Could Help Stem Financial Losses
(AllAfrica Via Acquire Media NewsEdge) South African auditor general Thembekile Kimi Makwetu recently announced that South African government entities racked up more than R2 billion (N$2 billion) in wasteful expenditure in the past financial year, incurring another R26,4 billion (N$26,4 billion) in irregular spending.
Head of the College of Accounting at the University of Cape Town (UCT), Professor Mark Graham, says that such results often occur because non-financial personnel, for the most part, do not understand financial statements and financial jargon sufficiently to spot the irregularities.
Graham, who also convenes the Finance for Non-Financial Managers programme at the UCT Graduate School of Business (GSB), said that whether it's a government organisation, a major corporation, or a small business, if more staff, other than the Finance Director and Accountant, had even basic financial knowledge, such situations could be reduced.
"Finance is the language of any business - and you're not going to understand your business unless you understand what the numbers are telling you. No matter what sector you're in, you need to be able to examine the financial health of the organisation, identify problems and inefficiencies and contribute towards improving financial performance" he said.
Graham said that many entrepreneurs, small business owners, and members of larger organisations are holding themselves and their organisations back because they fail to understand this. "For all organisations - especially government - the complexity of the current market especially means that non-financial managers need to be aware of every financial nuance in order to ensure their organisation stays financially healthy," said Graham.
Even basic financial literacy can help identify improve performance or identify possible red flags in a company's financial situation. "If you want to know why your income statement shows a profit, but all you have to show for it is an overdrawn bank account, you need to empower yourself by understanding some basic financial principles," said Graham.
Graham said that this is an integral part of the UCT GSB Finance for Non-Financial Managers programme running at the GSB this February.
"Those attending will be taught how to read an organisation's financial statements and explore their parameters. They will be given the tools to analyse cost behaviour and financial performance, participate in creating a financial plan and gain the knowledge and confidence needed to contribute to creating value within their organisation," said Graham.
The course is specifically designed for non-financial people from any sector, those responsible for meeting budgets and containing costs, and for anyone wanting to understand the key drivers of performance in organisations. "Delegates leave with a fairly sophisticated understanding of how the ebb and flow of finances within an organisation can make or break it. Instead of a mass of incomprehensible numbers on a spreadsheet - they can read the story that these numbers are telling," said Graham.
Copyright New Era. Distributed by AllAfrica Global Media (allAfrica.com).
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