Financial management refers to the act of governing the economics of an organization. The managers work in various organizations or institutions such as schools, hospitals, government associations, non-profit firms and private businesses. They have the responsibility of overseeing all the activities involved with the finances of the firms. These include production of financial statements, bookkeeping, and participation in strategic planning. In essence, they carry out financial planning, control and decision-making. These activities are imperative for the achievement of the organization’s goals. In the course of their work, financial managers encounter challenges. This may not be because of their weaknesses, but their work environment such as the colleagues the managers work with at the organization.
Fiscal managers do not work alone. Other parties such as organization heads sometimes give them directions, while the managers give orders to other workers lower in their professional ranks. According to Miller et al (2005), there are pressures from some colleagues who request personal favor. They add that political influence also causes the managers to make unfair decisions. They compromise their ethical financial integrity in such situations. Financial managers should be impartial when making economic decisions and should not favor any person or party. The financial managers should portray balance in their work, but they sometimes face situations that put their professional ethics to test. This is a challenge to them because some orders that they receive may have political influence and they opt to follow them in fear of losing their jobs.
The involvement of financial managers in the budgetary process is critical in any organization. While this may seem to be a part of their daily responsibilities, it subjects them to ethical stress (Miller et al 2005). External actors, who may be in need of benefits from the budget, target the financial managers. These are usually powerful people, and they eventually affect the fate of the budgetary process. For instance, an organization normally awards tenders for supply of materials to be used. The fiscal manager is supposed to minimize production costs to achieve better profits. This requires that the manager award the tender to the supplier who will request the lowest compensation. Another supplier who is in collaboration with the rest of the top management may be requesting a higher wage. The influence of the supplier eventually makes him get the tender. This confronts the ethical integrity of the financial manager who gives the tender to the lowest bidder. Consequently, the manager may have to be unscrupulous in the future in order to regain the money that was lost in the tender awarding process. The manager has no option and compromises his/her professional integrity because the organization expects him/her to perform well in the work.
In personal matters, ethical financial integrity may be conceded in cases where the manager faces demands imposed on him/her that cannot be met (Miller et al 2005). This may range from mere issues such as time pressures to critical ones such as matters that involve greater competence levels. The managers may sometimes have insufficient time to complete their duties, and they may opt to crude means of doing the task, such as assigning it to their juniors. When faced with a complex task, they cannot inform their superiors on the same in fear facing demotion. They do it unprofessionally to hide their incompetence.
There are other challenges that financial managers face in their daily tasks. These may not have anything to do with personal relations or differences with other people like in the case of ethical challenges, but with the system in which they operate. According to Ugone (2010), the problems may be involving synchronization of a manager’s work with other records. The author asserts that the manager’s incompetence does not cause the problems associated with unmatched records. For instance, the author presents a situation where the manager’s records fail to match with those of the government treasury department. Examples include disbursements from the government, which do not match with the invoices that the manager has – in case of organizations that work together with the government or public firms. It may involve following up especially where the government procurement is involved.
It is difficult to place value on some issues. This includes environmental liabilities such as cleanup and disposal costs because they happen irregularly (Ugone 2010). They present a challenge when a manager is supposed to include them in the financial reports, which demand utmost accountability. Other challenges are attributed to the uncertainty of the parties involved in the business departments, for instance late reporting of the costs incurred, whereas the financial manager is expected to submit the financial reports on time.
In conclusion, financial managers work in environments, which have multiple challenges. They are supposed to exercise prudence in their pursuits to avoid conflicts with the workmates, as well as their bosses. Financial managers may encounter Instances that may involve ethical dilemma, and they are supposed to use their experience to solve the matter. These challenges require them to try to maintain ethical financial integrity at all costs.
Miller, G. J., Yeager, S. J., Bartley, H. & Rabin, J. (2005). How financial managers deal with ethical stress. Administration Review, 65(3), 301-312.
Ugone, M. L. (2010). Financial management should be every manager’s concern. The Armed Forces Comptroller, 55(1), 16-18.