Financial responsibility centers (FRC) are an integral part of budget management, which involves the division of responsibilities within the enterprise.

Key Features

Key aspects:

• financial hierarchical structure, including the Central Federal District;
• budget structure that allows the preparation of reports and plans in relation to different central financial districts.

Budget management through the Central Federal District has the following distinctive features:

• transfer of tasks for individual indicators to different levels within the company, those who form this factor are appointed responsible;
• formation of plans and their implementation, working in a unified coordinate system of the enterprise;
• focus on financial performance;
• analysis of the results obtained taking into account the factors noted in the plan;
• identifying the correspondence of goals and obtained indicators.

Terminology

The financial responsibility centers of an enterprise are separate structural units within the organization. Their performance affects the economic efficiency of the company. The main task is responsibility for the correct preparation of financial plans and achievement of the stated results.

In addition to the CFA, CFA (financial accounting) plays an important role in the company’s activities. These units influence the economic performance of the company and are designed to keep track of what has been achieved. Cost center (cost center) is a unit that provokes a level of costs known in advance by the very fact that it exists. The central financial department is responsible for the cost center, and the financial center carries out current accounting.

Financial structure

A typical cost center is a technological object. For its correct functioning, it is necessary to regularly invest in raw materials, materials and other expense items. From a management point of view, the expenses associated with the operation of a cost center are too small, therefore it is unacceptable to single out an object as an independent central financial district.

The financial hierarchical structure is a system that combines all the financial centers of the company. It determines what the subordination is in the organization and at what level of nesting a particular center is located. This logic of work allows you to achieve increased efficiency with integrated management of financial indicators.

Classification: indicators

The centers of financial responsibility of an enterprise can be classified in different ways - there are many theories that offer original approaches. Each of them has positive aspects and weaknesses. Finding a universal solution is not easy. Experts recommend paying attention primarily to the economic indicators for which the CFDs in question are responsible. A division based on this principle is equally suitable for all enterprises, regardless of their size, industry and scope.

The main economic indicators on the basis of which financial responsibility centers are identified in the budgeting system:

• profit in a given time period;
• costs for the same period;
• intermediate results (conventionally they can be designated as “marginal income”);
• investment indicators as a percentage of invested funds and profit received through them;
• indicators of profit received from all items of income, minus costs incurred during the same period.

Classification of the Central Federal District

Taking into account the previously described indicators, the financial responsibility centers of an organization can be divided into categories as follows:

• Responsible for costs (purchasing, production process, administrative department, commercial services).
• Income centers that form the direction of the enterprise.
• MRI (marginal income), responsible for a specific direction and the profit it brings to the enterprise. The composition necessarily includes a central budget, reflecting direct production expenses, and a central budget, showing the profitability of the direction. The CMD can be a separate structure or a combination of several points in the organizational business chain.
• CPU (profit) responsible for the positive balance after taking into account all costs. Typically, a CPU is an enterprise or a group of such and combines a central control center, a central control center, and a central management center (depending on the characteristics of the structure of a particular organization).
• CI (investment). These types of financial responsibility centers are engaged in investing; their functions include changing non-current assets. The main task of CI is operational efficiency in terms of invested funds. This is calculated based on the ROI coefficient. CI structure: several united CPUs, enterprise, holding, group of companies. Often CPU and CI are one and the same object. This situation is typical when considering an independent company that makes a profit and invests in some projects.

CZ: features and activities

When studying the indicators of financial responsibility centers, attention is first paid to costs directly related to the efficiency of using resources and the company’s activities in general.

Central Plants are units that are engaged in similar work. These can be divided into two groups:

• production;
• functional.

PCPs are intensive both in terms of material investments and labor costs. This includes all production departments. These elements do not directly participate in pricing, but they consume the company’s resources and accumulate expenses. PCP managers are responsible for costs: they know the planned level and monitor its compliance. The boss's main task is to minimize costs.

FZZ are responsible for general economic needs, costs associated with economic transactions, financial and legal transactions.

Financial structure of an enterprise: financial responsibility centers as an example

The construction of a central financial district begins with an analysis of the company’s organizational structure. For this:

• identify organizational units and form a list;
• build a hierarchy of subordination between links (start with the general director, end with the lower positions - individual performers);
• The links are numbered, taking into account nesting.

From the organizational structure and analysis of activities, one can draw correct conclusions about the direction of the company’s business. Next, the financial structure is formed. For this purpose, a directory is compiled, where each link is indicated and it is noted that it is characteristic: CD, CI, CP, CD. Some lines will have marks in several columns of belonging to centers, others will have only one column. The resulting matrix helps classify the links in the organizational chain.

For example, for our conditional company this will give the following result:

• CI: company.
• CPU: company.
• CD: sales.
• TsZ: marketing, administration, financiers, HR.

Based on the information received, a hierarchical list is compiled, with nesting reflecting the subordination between departments. Next, for each identified central financial district, a manager is selected and assigned responsibility for the work of the center. Structured information is stored in tabular form.

CFO and management accounting

The financial accounting center and the financial responsibility center in the company are tools that allow decentralizing the management of the organization, partially transferring responsibility from top managers to middle and lower levels of personnel. It is worth remembering that work done, products manufactured and services provided cannot always be quantified by income.

Not every financial structure, the centers of responsibility of which are distributed correctly, is structured in such a way that responsible managers have the right to distribute the profit received by the central financial institution, despite the fact that they are the ones who deal with both the expenditure and income components of the enterprise. The more complex the organizational and technological structure of a company, the more precarious this issue. At the same time, only by taking into account responsibility can plans and their implementation be assessed, measured, and weighed within each individual center.

According to established practice, management accounting is considered to be the most effective, since only it allows access to up-to-date data, on the basis of which the correct financial decision can be made. The work uses relevant information generated by accounting if a specific financial management goal has been set at the forefront. Databases are generated and reports are created using:

• structural divisions.

Analyzed:

• financial decisions;
• technological introductions;
• specific products.

To implement this in practice, it is recommended to use a convenient, simple information system. This is developed taking into account the decentralized power in the enterprise and the fact that managers are personally responsible for the financial performance of the company.

Decentralization and company structure

If a company is built on the idea of ​​decentralized responsibility, if there is a center of financial responsibility, budgeting, and a hierarchical structure that takes into account the characteristics of a particular type of activity, quick and positive success can be achieved. Why is this happening? The traditional approach places too much emphasis on what mistakes were made by line managers. But with the option under consideration, the focus is only on the result of the work process, and not on technical issues. Managers are not afraid to take initiative; the company more often introduces innovative, innovative ideas, which leads to quick and high-quality solutions to routine problems. As a result, optimization of the activities of the entire company as a whole.

Financial responsibility centers do not have to coincide with the company structure (organizational, production). It is necessary to assign auxiliary, main directions of the company’s work to some interconnected and top-managed central financial districts. It is also important to provide information infrastructure.

Algorithm of V. E. Khrutsky

A well-known domestic economist and analyst proposed the method described below that allows one to identify central financial districts, on the basis of which to implement effective financial planning by responsibility centers.

1. A list is being compiled that includes all types of economic entrepreneurship within the organization. They also make a list, including the products they sell.
2. Analysts identify the organizational management structure. There are two types: linear functional and divisional.
3. They distribute types of activities among departments within the company, highlighting those that are not sources of profit.
4. Calculate expenses, income, expenses for each department. The regulated and unregulated components of an enterprise's expenses are distinguished separately.
5. There are divisions that are responsible for financial flows and their adjustment.

Financial and organizational: what is the difference?

The centers of financial responsibility that form the financial structure of the enterprise are built taking into account the relationships of monetary and economic. The organizational structure is formed based on the functionality of a particular department. Each of the cost centers is occupied with one type of finance, while the organizational structure involves the grouping of such functions, the execution of which is associated with the presence of specific skills and knowledge.

The financial structure shows the hierarchical system of responsibility in the company. For her, the key concept will be “result”. For the organizational structure, the main concept is “subordination”. When creating such a structure, it is allowed to resort to compromise solutions, based on personal factors. The financial structure is built strictly on the realities of the market, without discounts on personal impressions and relationships.

Obviously, these two structures are fundamentally different. This is associated with certain management difficulties: it’s like driving a car with distorted controls. For maximum efficiency of an enterprise, it is necessary to adjust the organizational structure to the financial one.

What else should you pay attention to?

A mandatory concept is the budget of the financial responsibility center. This is carried out taking into account all expenses and profits of the unit that accompany the operation. In this case, it is allowed to neglect:

• BBL (according to the balance sheet).
• BDDS (money movement).

This is due to the fact that the Central Federal District does not control the types of activities that are reflected in these documents.

The responsibility inherent in the CFD is quite limited. This is due to the fact that financial responsibility centers are formed to achieve specific indicators. At the same time, you should remember about financial accounting centers, which, in turn, monitor compliance with standards and restrictions. TsFU are also classified as CFD.

Classification of the Central Federal District: features of a commercial enterprise

If the company is a commercial one, then the most correct method for classifying the central financial district is considered to be based on the functionality and tasks of the centers. Highlight:

• auxiliary;
• basic.

The main ones work on manufacturing products, providing services and performing work. The costs here are the cost of the product. Shops and sales departments are classic representatives of the main central federal districts.

Auxiliary ones include those that serve the main ones. It is customary to subdivide their costs by OCFO, sum up the resulting values, and only then estimate the real cost. VTsFO is administrative maintenance, technical control, repair, tool workshops.

Responsibility and costs

Some enterprises have implemented hierarchical systems in which the responsibility centers are identical to the central centers. Then they talk about coinciding CFDs. Otherwise, they are called "non-matching". Costs arise in specific structural units that consume resources. In relation to such units, plans are drawn up, standards are established and records are kept, designed to control costs and ensure cost accounting within the organization.

If the cost location corresponds to the Central Federal District, such a structure is considered optimal. In practice, the Central Federal District is often responsible for several departments at the same time. At the same time, the head of a structural unit may refuse to take responsibility for the costs associated with the work of another department. In such controversial situations, the final decision will be made by the company administration. Analysts decide exactly how to classify costs and how much detail the process of their formation needs to be considered. Based on the decisions made, expenses are assigned to a specific central financial district.

Financial Accounting Center(CFS) is a structural unit of an enterprise that carries out economic activities and keeps records of specified indicators of income and expenses, for the implementation of target levels of which it is responsible.

The main difference from the Central Federal District is the degree of responsibility and, in proportion to it, the degree of authority that this accounting center has. The Central Federal District is distinguished by a greater degree of authority in conducting its activities, in contrast to the financial accounting center. The literature provides different definitions for digital financial services; no single definition has been developed in this regard. We propose that the following features be considered defining for a financial accounting center: less freedom in making decisions regarding its activities, narrow focus, differentiation in relation to the relatively wide range of activities of the Central Federal District.

Budgets of the financial accounting center

The financial accounting center maintains a budget of income and expenses and the functional budgets it needs. A balance sheet budget (BBL) and a cash flow budget (CFB) are not prepared for the financial accounting center, since it does not manage the activities that are reflected by the indicators included in these budgets.

Responsibility of the financial accounting center

It cannot be said that the financial accounting center is not responsible as a central financial institution, this is not so. Another thing is that the responsibility of the financial accounting center is limited and incomplete. If for the Central Federal District it is primary to achieve the goals set before it, then for the financial accounting center the primary thing is to carry out business activities in order to meet the standards, restrictions and limits.

Place of financial accounting centers in the financial structure

DFIs are not found in the upper two levels of the financial structure of an enterprise, since at the highest level there is usually an investment center as a center of financial responsibility, and at the second level there are centers of financial responsibility for the areas of activity of the enterprise or association of enterprises. When automating, CFCs are usually not separated in any special way, by standard means, from CFAs in the financial structure, unless specifically set for this purpose, since the main differences between them are visible in the activity itself, its nature, and not in financial reports, which are only and take place in an automated budget management system.

Sooner or later, every company is faced with the need to streamline its operational financial planning system. To make it work, sometimes it is enough to create detailed regulations. It is beneficial to automate simple but labor-intensive operations.

The problem of time and money

L'Etoile has an extensive branch structure. The central office is located in Moscow, from which branches located in more than 50 major cities are managed. Historically, payment execution was handled by the accounting department of the corporate center. It also kept registers of periodic payments and collected primary documents (invoices, bills, etc.) from all branches. Accountants in the branches independently managed current accounts and made payments based on existing contracts, invoices, and invoices.

With this approach, the company did not have the ability to quickly control the execution of payments. Often payments were made not according to the urgency determined by the contractual terms, but upon receipt of documents. Therefore, payments that could have been deferred were made ahead of time, while the most important ones, on the contrary, were delayed. A one-time payment by a branch turned into a problem - the consent of the central office was required for it, for which it was necessary to conduct electronic correspondence. The center, in turn, for control purposes, requested confirmation from the branches of the fact and date of payment, which means that again it was necessary to waste time on correspondence and provision of documents.

It was very difficult to plan financial flows. Several dozen branches received registers of upcoming payments in Excel spreadsheets. It took several days just to draw up a master plan. Since settlements with counterparties were carried out by branches independently, it was not at all easy to identify intra-group transactions. In addition, branches entered information about counterparties into the accounting systems at their own discretion; due to the lack of unification, up to 20–30 identical counterparties appeared in the consolidated data. This state of affairs created a threat to the company's solvency, and relationships with customers and suppliers deteriorated.

To get rid of these problems, the management of the financial department decided to create detailed planning regulations. The document strictly delineated the functions and areas of responsibility of all participants in planning and payment management. According to the regulations, responsibility for the formation of operational financial plans and execution of payments was assigned to the treasury, which is part of the financial department. Typical operational planning procedures were automated in the “Treasury” module of the “1C: Accounting 7.7” system.

Preparatory work

During the preparation of the regulations, the financial and managerial structure of the company was described 1. This made it possible to further identify payment initiators without any problems and control the execution of orders. In addition, a unified classification of costs and payments was developed.

Financial structure

In the financial structure, financial responsibility centers (FRCs) were identified, which became functional divisions (departments) of the company. Within the limits of their powers, they are responsible for income and expenses and are the owners of budgets. They also initiate payments. The management structure consists of financial accounting centers (FAC) - divisions allocated to the places where income and expenses arise. In the L'Etoile company these are stores. Thus, each business unit is a participant in both the financial and management structure.

Company information

First store "L'Etoile" opened in Moscow in September 1997. Today, the business is represented by several dozen legal entities operating in almost all Russian regions. More than ten thousand items of perfume and cosmetic products are sold under the L’Etoile and Sephora brands through 500 stores opened in 120 cities of Russia. In December 2006 LLC "Alcor and Co", which owns brands, placed a bond issue in the amount of 1.5 billion rubles.

The relationship between the CFD and the CFU is matrix. For example, the IT department is responsible for all costs associated with information technology for any company store. From the point of view of the financial structure, these expenses belong to the IT department (as the Central Federal District - the owner of the IT expenses budget), and from the point of view of financial accounting - to the store for whose needs they were incurred.

Payment classification

It was decided to distribute all payments by cost items and categories. Consequently, a single classifier of cost items was required for the entire company. It is based on the management chart of accounts. Articles are divided into three groups depending on the type of activity: operating, investment or financial. A fragment of the developed classifier for operating costs under the item “Sales expenses” is given in table. 1 on p. 22. In total, the classifier contains about 100 articles.

Table 1 Fragment of the cost item classifier

Classifier code	Name
3.1.1.1	Salaries
3.1.1.2	Awards
3.1.1.3	Social package
3.1.1.4	Taxes and payroll deductions
3.1.1.5	Recruitment and training of personnel
3.1.1.6	Other personnel costs
3.1.2.1	Rental of premises
3.1.2.2	Communal expenses
3.1.2.3	Repair of premises
3.1.3.1	Vehicle maintenance costs
3.1.3.2	Cargo insurance costs
3.1.6	Marketing and advertising expenses
3.1.9.1	Internet expenses
3.1.9.2	Cellular expenses
3.1.9.3	Expenses for landline and other communications
3.1.10	IT expenses

Depending on the nature, all company payments are divided into three categories.

Periodic payments. Similar payments with a predetermined amount, for example, rental payments, operating expenses. The source of information on periodic payments are previously concluded contracts.

One-time payments. Payments that are random in nature, or the amount of which is determined on the basis of actual expenses in the current period, as well as advance payments for goods. These include, for example, taxes, payment for staff training, business needs, and advertising costs. Payments are made based on the invoice or application of the payment initiator.

Payments under contracts for previously purchased goods. Contractual terms with a particular supplier are laid down in the warehouse accounting system, where each delivery of goods at the time it is reflected in the accounting system is assigned a payment date.

Personal experience
Maxim Shchibrik

In our company, payments are grouped by type of activity - operating, investment and financial. The company has a unified corporate directory, which indicates typical items of income and expenses for each group of payments.

Payments for the financial activities of manufacturing companies are controlled by the central treasury. Payments for investment activities are under strict control of the financial services of the management company and are subject to monthly approval. Direct financing of current investment payments is carried out by crediting funds to the accounts of investment companies according to agreed financing schemes from the central treasury. Investment payments are made by the financial services of individual holding companies. Payments for operating activities are carried out by the group's enterprises independently on the basis of applications accepted by their financial services in accordance with the monthly BDDS, secured and approved by the holding's management company.

The Central Treasury redistributes revenues between the group's production enterprises taking into account the daily needs for financing operating, investment and financial payments, and, if necessary, provides additional funding through open credit lines.

Formation of requests for payment

The main documents in the payment management system are payment requests. Depending on the category of payments, they can be made in several ways.

Picture 1 Standard payment schedule

Figure 2 Application for periodic payment

Periodic payments. For periodic payments, a standard schedule 2 is maintained (Fig. 1). This is essentially a directory that stores the same information that is entered into the application. Since payments in this group are repeated from month to month, it is convenient to indicate not a specific payment date, but the day of the month for the invoice. For example, under a lease agreement, the same amount is transferred to the lessor's account on the 20th of each month. Consequently, the 20th day becomes the day of the corresponding current month for which the payment is scheduled (in January - January 20, 2008). The terms for periodic payments are agreed upon by the budget owner at the stage of concluding an agreement with counterparties.

At the end of each month, based on the standard schedule, applications for the next month are generated (Fig. 2).

One-time payments. The initiator of a one-time payment prepares an application in paper form. It indicates the necessary details: payer, counterparty, payment term, account number through which the payment is made, TsFO (owner of the budget from which the payment will go), TsFU (division to which the costs will be allocated), payment item. The application with the attached invoice is signed by the owner of the budget and submitted to the treasury (treasury representative in the branch) no later than a week before the upcoming payment. To reduce the amount of paperwork, the initiator can submit to the financial department only an invoice for payment indicating all the missing data directly on the invoice.

It is necessary to delineate the functions and areas of responsibility of all participants in planning and payment management

An application for a one-time payment (invoice) received by the treasury is entered into the accounting system, in the form of the same name “Application for Payment” (Fig. 3). It can be filled out both at the branch and at the central office for the branch. In the latter case, after approval, it is automatically transferred to the branch.

The “Payment Application” form has the following fields, which are filled in based on the data specified in the paper application or invoice:
- “Payer”: the branch that makes the payment;
- “CFO”: owner of the budget from which the payment is made;
- “CFU”: the department to which the costs are attributed;
- “Counterparty” and “Accounting Agreement”: details necessary for uploading into the “Bank-Client” system and posting a bank statement;
- “Account number”: document number – basis for payment (invoice issued by the counterparty or agreement, or invoice);
- “Expense account”: cash flow account;
- “Payment date”: the deadline by which payment must be made;
- "Currency";
- "Amount of payment";
- “Application status”.

Upon initial entry, the application receives the “For consideration” status, which does not yet make it possible to make a payment for it. In order for the application to be satisfied, the Treasury must assign it the status “For payment”. If a treasury employee has doubts about the correctness of the payment or additional approvals are required (for example, funding sources are outside the budget), he can set the application status to “Suspended” or “Rejected.”

If the payment is made according to one account (basis document), but for several divisions, then the “Decoding” section is filled out - this is the detailing of information about the digital financial institutions, necessary for management accounting purposes.

Payments for previously purchased goods. Requests are received from the warehouse inventory system, which is integrated with the online accounting system. Entries in the inventory accounting system are formed on the basis of invoices and payment terms reflected in contracts. All conditions are agreed upon in advance, as in the case of periodic payments, and are reflected in the accounting system as additional details when entered by each counterparty. After making a new entry, a payment request is generated automatically within a few hours.

Personal experience
Victor Ostapenko, head of the economic planning department of the Euroservice group of companies (St. Petersburg)

The regulations of our company establish that the application must be signed by all responsible persons: the head of the “authorized” Central Federal District, the chief accountant of the legal entity making the payment (the company that is the payer, a party to the agreement, or the legal entity from whose current account funds are transferred to the company’s account - payer). In some cases, the application is signed by the financial director of the product company, and sometimes also by a security representative.

Each application must be documented with an invoice, invoice and contract. The accountant's signature proves that he was provided with the documents that form the basis for the payment. The signature of the head of the Central Federal District indicates that the purpose, recipient and amount of the payment have been verified and payment under the specified item should be made.

Figure 3 Application for one-time payment

Figure 4 Payment schedule

table 2 Report on the execution of application No. 05-02502 dated 07/26/07

Payer	Ekaterinburg
Center for Financial Responsibility	Marketing
Financial Accounting Center	Ekaterinburg 1
Counterparty	Rainbow LLC
Account number	Account No. 14654/24
Management account	3.1.6 Marketing and advertising
Planned payment date	30.07.07
Currency	RUR
Document	Document date	+	-
Application for payment 05-02502	26.07.07	10 000,00
Extract 004 (30.07.07)	30.07.07		10 000,00
Balance on application		0,00

Payment planning

Taking into account approved applications, registers of periodic payments and requests received from the warehouse system, the treasury draws up a payment plan for the month.

Consolidation of all applications, including those submitted by branches, is carried out using the built-in 1C function “Distributed Database Management” (completely transfers data from one database to another). Based on the applications, the “Payment Schedule” report is built (Fig. 4) - this is one of the main treasury reports. To work with it, the treasury can use the following settings: a multiple filter, which allows you to limit the data output to individual indicators, such as payment items, central financial institutions, digital financial institutions, counterparties, as well as a grouping function that allows you to sort applications by status, payers, dates, and articles. Based on the payment schedule and updated information about one-time payments, a single weekly payment calendar for the company is formed. It is detailed by day, cash flow items, as well as by central financial district and central financial institution.

The payment calendar is approved by the financial director, after which applications are sent to branches, where payment orders are generated on their basis.

Personal experience

Victor Ostapenko, Head of Planning and Economic Department of the Euroservice group of companies (St. Petersburg)

In our company, the application agreed upon with the responsible persons is transferred to the financial manager - the initiator of the payment. He checks the application’s compliance with the approved budgets for the month (in terms of amount, terms of payment and expense item), puts his resolution (with date) and the date of payment on the application. In the resolution, the financial manager indicates whether the application complies with the approved budget. A request that does not comply with the budget is subject to inclusion in the next budget period or, if the payment is of an emergency nature, undergoes additional approval. In this case, the financial manager may put a later payment date on the application. The approved application is included by the financial manager in the payment register on the day appointed by the budget committee for making payments, and serves as the basis for issuing payment orders.

Each financial responsibility center (product companies of the holding) submits to the central treasury a register of payments for the next month. A unified payment plan is formed based on the registers. When a payment is included in this plan, the payment initiator (an employee of a food company belonging to a specific department of the Central Federal District, for example, the manager of the production department of a sugar company) submits a request for payment. Based on approved applications, daily payment registers are generated.

Making payments

Since payments are made by local branches of the company, after the payment calendar is formed and approved, approved applications are sent out by email. In this case, the built-in functionality of 1C “Distributed Database Management” is used. With its help, applications submitted centrally are “uploaded” to branches. The status of applications entered into the database by branches is updated. As a result, branches receive a set of applications with the status “for payment”, on the basis of which payment orders are prepared.

Almost all payment orders generated in 1C are automatically uploaded to the Bank-Client system, leaving the possibility of manually adjusting the amount, date, and addressee. The exception is cases when it is inappropriate to configure unloading. For example, for current accounts for which payments are rare or their number is insignificant. For an application for a large amount, sometimes several orders are made, then the amount is adjusted manually.

Budget owners have access to applications within their central financial district; they can track changes in the status of the application and the fact of its payment in the current mode. An example of a report on the execution of an application is presented in table. 2.

The correct execution of payments is monitored when posting bank statement data by comparing the parameters of the application and the actual payment. It is enough to select an application, and all other details - amount, counterparty, contract - are filled in automatically from the application. This saves time on posting data from the statement. If the application is not selected, that is, the payment is not matched, or the payment amount differs from the application amount, then it is impossible to post an extract in the accounting system.

Personal experience
Maxim Shchibrik, Vice President for Finance and Economics of CJSC Russian Copper Company (Ekaterinburg)

At the holding level, the payment control tool is the cash flow budget execution report, which we prepare in three main forms: payment calendar of cash receipts, payment calendar of planned payments, summary of cash receipts and payments.

Posted statements are transferred by branches to the central database. There they are consolidated into the “Payment Execution Report”. The Treasury, using this information, can analyze all payments made by the company.

Selecting an automation option

It is necessary to add a few words about the approach to automation of operations for planning and making payments chosen by our company.

After approval of the unified payment calendar, applications are automatically sent to departments making payments

Even at the stage of preparation of the regulations, it became obvious that operational planning is associated with the processing of a large amount of information. Therefore, simultaneously with the creation of regulations for operational payment planning, automation of payment planning and management began. Two fundamental options were considered: the creation in 1C of a separate database in which applications would be accumulated and approved, as well as the use of the existing unified accounting database, supplemented with capabilities for payment planning (entering payment applications, consolidation, approval of applications, drawing up a payment calendar, distribution of approved results to branches). The first option made it possible to make changes flexibly and quickly without creating additional burden on the existing accounting base. The second did not require information exchange and data synchronization between two databases, which always entails additional burden on the database administrator and the risk of information loss.

The company took a “hybrid” path. First, an additional base was created. At the same time, automatic data exchange with the accounting database was ensured. Payments were made in accordance with the payment schedule, which was formed from an additional base in the branches in the form of a report. When the technology for collecting, consolidating and approving applications was completed, these functions were transferred to the accounting database, and the additional database was disabled.

The greatest difficulties arose when merging the “Counterparties” directory, the data of which is used at the time of drawing up the application. The directory was filled out locally, so entries from different branches often duplicated each other. In the process of finalizing the functionality necessary for working with applications, counterparties common to the entire company were entered into the database, duplicate data was removed, and branches received the right to independently create analytics on contracts and enter only their counterparties into the database. When entering, a check is carried out using the TIN to avoid duplication of data.

Updating the financial planning system made it possible to simplify the process of approving payments, reduce the time for checking the compliance of data in documents, and establish clear control over the execution of payments. The quality of short-term planning has improved significantly. In addition, since the accounting systems were modified in-house, the time to work on the new system was shorter and the costs were lower than what would have been incurred by using third-party consultants.

Victor Shapkin, Head of the Department of Management Reporting and PEO of Alcor and Co LLC (L’Etoile, Sephora), Ph.D. econ. Sci.

Mislavsky A.V. Head of the accounting systems design department of the management technologies and accounting systems design department of AKG RBS CJSC
Double entry No. 10 - 10/04/2005

Formation of the financial structure of an enterprise, namely the identification of financial responsibility centers (FRCs), is the first step towards creating a budgeting system. Each division of the company contributes to the final financial result of the company (in the form of raising income or making expenses) and must be responsible for its actions: plan, report on results. It is on the delegation of responsibility that the budgeting process is built.

The advantages of the transition to management in the Central Federal District are obvious. By dividing responsibility between departments, we determine who is actually responsible for what in the enterprise, we get the opportunity to evaluate the results and quickly coordinate the actions of departments, create a competent system of motivating employees to complete assigned tasks. The attention of the head of the department is concentrated on the performance indicators of the center entrusted to him, the efficiency and validity of making management decisions increases. Senior management, on the contrary, frees up time to complete strategic tasks.

There are different centers

If we proceed from the understanding of budgeting as a management technology, and budgets as a management tool, the enterprise in this case will be an object of management.

A commercial enterprise as an object of management in its simplest form can be considered as a combination of current activities (creation and sale of products, works or services) and investment ones. Current activities involve expenses (purchase of raw materials or finished products, production, sales costs) and income (revenue) from the sale of products, work or services. The difference between current income and expenses is defined as the profit (or loss) from current activities.

Responsibility for income in a commercial company, as a rule, rests with the sales division (sales department or trading house). Costs are borne by all departments, but to a greater extent by the supply (purchasing) department, production departments, and warehouses. Profit in most cases is determined for the entire enterprise, and decisions on its use are made by the company's management.

Thus, the activity of an enterprise as a management object can be divided into separate processes: procurement, production, sales, investment. Accordingly, the structural units that manage these processes can be considered as centers of responsibility for their implementation.

Based on the above functions, we will define four main (1) types of responsibility centers:

• revenue center;
• cost center;
• profit center;
• investment center

In practice, there are many more types of responsibility centers (for example, marginal income centers, responsible for marginal profit, or venture centers, responsible for the company's innovative activities).

Let's look at the main types of central financial institutions in more detail.

Revenue center is a structural unit responsible for the sales activities of the company. Its effectiveness is determined by maximizing the company's income within the resources allocated for these purposes. The question may arise: isn’t the division responsible for sales the center of costs for selling products (promotions, salaries of sales managers, etc.)? Of course, it is possible to define the sales division as a cost center, but taking into account their insignificant share in comparison with the amount of income (which is the income of the entire enterprise), we will still refer to it as an income center. The budget management tools for this type of central financial district are the Sales Budget and the Sales Cost Estimate (the purpose, structure of these documents and the procedure for working with them will be discussed in the following publications).

A cost center is a structural unit responsible for performing a certain amount of work (production task) within the framework of the resources allocated for these purposes. As a rule, most divisions of the company belong to this type of central financial district. First of all, production (workshops of main and auxiliary production, service departments). At the same time, the cost center may also have income (for example, revenue from the sale of external services by a transport division), but if their value is insignificant, and the provision of these services is not the main business of the company, the Central Federal District is defined as a cost center. The budget management tools for this type of central financial district are the Production Budget (production program) and the Cost Budget (or Cost Estimate). Purchasing centers and administrative cost centers can be distinguished as a type of cost centers.

• A purchasing center is a type of cost center; it is responsible for the timely and full supply of the enterprise with the necessary material resources within the limits allocated for these purposes. Such responsibility centers include, for example, purchasing departments. The budget management tools for this type of central financial district are the Procurement Budget (may include transportation costs) and the Cost Estimate.
• A management cost center is a type of cost center; it is responsible for the quality performance of management functions. This type includes the company's management apparatus, in most cases without dividing it into structural components (directorates, departments). The budgetary management tool for this type of central federal district is the Estimate of Management Costs.

A profit center is a structural unit (or the company as a whole) responsible for the financial result of current activities. In most cases, company management is responsible for current profit (or loss). In some cases, a company may have profit centers responsible for the financial results of a particular type of activity. The profit center may contain income centers and cost centers that are lower in the hierarchy. The budget management tool for this type of central financial district (not counting the Budgets of sales, purchases, costs) is the Budget of Income and Expenses (BDR).

Investment center is a structural unit (or the company as a whole) responsible for the effectiveness of investment activities. A traditional misconception is to define the investment center as the unit involved in planning and controlling investment activities (for example, investment management). The fact is that the final investment decisions are made by the company's management and bear full responsibility for them. The budget management tool for this type of central financial district is the Investment Budget, as well as the Forecast Balance Sheet (or Budget on the Balance Sheet). On an enterprise-wide scale, as a rule, the investment center coincides with the profit center and, in this case, the responsibility center is defined as the profit and investment center.

Thus, the type of financial reporting center determines the rights and responsibilities of a structural unit for the financial indicators assigned to it, which are an integral part of the financial result of the company as a whole.

A set of interconnected and subordinate centers of responsibility represents the financial structure of the company, which is based on the organizational and functional structure, but does not always coincide with it. Several divisions of a company can be defined as one central financial district (for example, management services can be defined as a cost center headed by the head of the company), at the same time, several central financial districts can be allocated within one structural unit (for example, within a trading house a wholesale trade income center and a foreign economic activity income center can be distinguished separately). When identifying a center of financial responsibility, it is necessary to take into account the possibility of clearly defining the list of products, works or services provided to external clients or internal structural units. The center of financial responsibility is characterized by financial independence, that is, its head must be able to determine and manage the financial result of the Central Federal District. The activities of the responsibility center are planned and controlled through a system of key indicators.

"Key" retreat

The purpose of this article is not a full description of the system of key performance indicators of the Central Federal District, so we will only briefly define them.

The key indicators for the income center are sales volumes, cash receipts, the state of accounts receivable, the volume of costs associated with the sale of products, for own maintenance, etc.

The key indicators of the cost center are the volume of work performed (production tasks), quality indicators for production, the amount and structure of costs for production and its cost, indicators of the efficiency of using means of production and labor resources, etc.

The activity of the profit center is assessed by all of the above indicators, as well as by indicators of financial and economic efficiency of current activities: profitability, working capital structure, return on assets, etc.

In addition to those indicated, indicators of the profit and investment center include indicators of the efficiency of investment activities (payback period, ROI) and the financial condition of the enterprise as a whole (such as coefficients of financial independence and sustainability, etc.).

The system of key performance indicators of the Central Federal District serves as the basis for building a budget model. Some of them can be directly included in budget forms (for example, a revenue target), some are not directly related to budget indicators (for example, profitability). When using top-down budgeting, performance indicators also serve as the basis for the formation of budget targets. In any case, when determining key performance indicators, it must be taken into account that they must have a numerical value, be unambiguous and be contained in accounting systems.

Step by step

Returning to the topic of financial responsibility centers, we will determine the main stages of the formation of a financial structure.

First, it is necessary to determine the investment center, that is, the division responsible for the efficient use of profits received as part of current activities. In practice, in most cases, the enterprise itself as a whole is designated as the investment center, since only its management determines the investment policy, structure and amount of fixed assets and controls the financial condition of the company as a whole. Responsibility for the activities of the enterprise also includes control of current activities, therefore most often this center is defined as a center for profit and investment.

The profit and investment center includes dedicated income centers and cost centers. If there are structural divisions responsible for the financial results of certain types of business (for example, manufacturing enterprises that are part of a holding company, have separate sales markets, their own suppliers, independently determine the pricing policy, but do not make decisions on investing the profit received as a result of current activities), profit centers are formed along with income centers and cost centers. Profit centers can be formed not only on the basis of a separate structural unit, but also as part of several structural units of various divisions of the company, located within the same technological or product chain. Further, within such a profit center, its own subordinate income centers and cost centers are distinguished. The subsequent allocation of centers depends on the complexity of the organizational structure and the need for delegation of authority (for example, cost centers lower in structure can be allocated as part of a cost center). An example of such a structure is shown in Fig. 1.

Rice. 1 Complex subordinate structure of the Central Federal District

Thus, a hierarchy of financial responsibility centers is built, which determines the financial structure of the company. The formed set of responsibility centers and their hierarchy is fixed by an internal regulatory document - “Regulations on the financial structure of the company”, which includes a description of the types of financial financial institutions, their composition and hierarchy, the powers of managers, the procedure for calculating (planning and accounting) financial results of activities based on the use of the system key indicators. This document is developed by the financial director (or a department reporting to him) and approved by the general director (president) of the company. Heads of structural divisions are given the right to make proposals for changes and additions to this document.

To summarize, it can be noted that we have considered only one of several components of budget management technology - management by financial responsibility centers. Other important components are: a system of key performance indicators of the Central Federal District, a budget model (the composition and relationship of indicators of budget forms), budget regulations, methods of plan-fact and factor analysis of budget execution, and others. We will talk about them in detail in the next issues of the magazine.

One of the differences between budgeting as a management technology is the ability to see the financial condition of an enterprise or firm in the context of its individual types of business. In fact, the choice of a financial structure is the choice of a budgeting object. It subsequently determines: what types of budgets will be used; what budgeting formats and technologies are advisable to use. With all the variety of classification options, three main groups of structural units - budgeting objects - can be distinguished.

Everything related to management accounting as a tool for making financial calculations and forecasts can be easily implemented if you have the skills of production planning, technological regulation, etc. In this sense, the process of developing a master budget for an enterprise differs little from drawing up a conventional technical industrial financial plan. One of the differences between budgeting as a management technology is the ability to see the financial condition of an enterprise or firm in the context of its individual types of business. That's all there is to it.

If for accounting and bookkeeping (especially in Russia) the object of activity is a legal entity (enterprise as a whole) or a separate division that is forced to directly and directly communicate with the tax authorities, then for management accounting the object is precisely business. Within one legal entity or separate division there can be many such businesses, good and not so good, interconnected and not so good. That is why the problem of forming the financial structure of an enterprise or firm is one of the central ones when setting up budgeting.

Essentially, the choice of financial structure is selection of budgeting object. Subsequently it depends on:

• what types of budgets will be used;
• what budgeting formats and technologies are appropriate to use;
• what should be the procedure for consolidating the budgets of structural units and the budgeting system;
• what will be the procedure for preparing (regulations) of reports on budget execution and their subsequent adjustments.

Financial structure of the company- this is a set of businesses and (or) other areas of financial responsibility (for income and expenses, only for expenses, for certain financial indicators, etc.), distributed among the structural divisions of an enterprise or firm, acting as objects of budgeting and management accounting.

As a rule, in the financial structure it is customary to distinguish various types of accounting centers: profit centers, loss centers, income and expense centers, cost centers, venture centers, investment centers, etc.

With all the variety of classification options, we can distinguish three main groups of structural divisions- budgeting objects that differ in technology and organization of the budget process (all other types of structural units can ultimately be classified into one of these three groups):

• financial responsibility centers(CFD);
• financial accounting centers(CFU);
• cost centers(cost center).

In addition to purely technological differences relating to the actual preparation of budgets for the central federal district, central financial institutions and cost centers, the features of consolidation (drawing up consolidated budgets), there is one more aspect. As a rule, the allocation of central financial districts is more typical for companies with a divisional organizational structure of management or holdings, and central financial institutions and cost centers are characteristic linear-functional organizational management structures. Although there is not and cannot be a strict division here.

Criteria for identifying structural units in the Central Federal District:

1. Regional and (or) product and (or) segmental isolation (completeness) of the economic activities of structural divisions (branch, manufacturing workshop, store, etc.).
2. Production volumes (more than 1 million rubles, 1 million dollars, over 1000 pieces of products, etc.)
3. The ability or readiness of a structural unit to work independently in the market (to ensure the movement of its products or services to the end consumer).
4. The ability to bear full responsibility for income, expenses and expenses, for cash flows from the sale of their products and from the provision of services.

It is assumed that the Central Federal District are responsible for all financial results, both for profits (income) and for losses (expenses). They usually have complete budget scheme, i.e. they make up all types of basic budgets adopted in the organization. DFS may be responsible only for some financial indicators, for income and part of the costs (for example, the sales service). Cost centers are responsible only for expenses (for example, accounting, which, naturally, does not earn anything, but only spends), and not just for some part of them, but for the so-called regulated expenses, the savings of which cost center management can control and ensure (develop relevant activities).

Some examples of central financial districts, central financial institutions and cost centers

Central Federal District:

• subsidiaries of holdings;
• separate divisions, representative offices and branches of large companies;
• large manufacturing (assembly) shops of production associations;
• production departments of companies with a divisional organizational management structure;
• auxiliary workshops of production associations;
• regionally and (or) technologically isolated types of activities (businesses) of multi-industry companies.

CFU:

• main production facilities (shops) participating in unified technological chains (redistributions) in enterprises with a sequential or continuous technological cycle;
• production (assembly) shops;
• sales services and divisions. Cost centers:
• functional and staff services of enterprises and firms (accounting, economic planning services, personnel departments, other divisions of plant managements and central offices of firms);
• main and auxiliary workshops.

At determining the financial structure enterprise or firm, as a rule, first a list of types of businesses is compiled, the range of products, works and services sold is studied, the most important and significant of them are determined, and the distribution of businesses by market segment is analyzed.

Structural divisions whose activities are separate (in technological, production and sales terms) can be identified as a central federal district (depending on the specifics of the organization). Multi-profile commercial structures, for example, often represent typical holdings and consist of several legal entities - enterprises of various profiles. Such a company usually includes one or more trading companies, a travel agency, a construction company, an investment company, etc. Here, each such company will appear as a central financial institution.

At an enterprise or production association with a divisional organizational management structure, divisions and production departments are allocated as a central federal district, i.e., an object of budgeting. The situation is somewhat more complicated in a large production association with complex technological chains, for example, at an instrument-making plant. Here, production (assembly) shops that ship, for example, finished products can be identified as central financial centers, and auxiliary (mechanical, procurement) workshops and production facilities can be identified as central financial centers.

Another criterion could be size of the structural unit. Here we are talking rather about the fact that one or more structural units (one or more workshops or departments) act as a central financial unit or central financial unit.

The procedure for analyzing the financial structure of the company and identifying central financial districts, central financial institutions and cost centers

1. Compiling a list of businesses (types of economic activity, main types of products, works and services sold):
   • analysis of the legal status of structural divisions (subsidiaries of a holding or quasi-holding, branches without legal personality, etc.);
   • checking the degree of technological, production, sales, regional and other isolation in the activities of structural divisions.
2. Determining the type of organizational management structure of the company: divisional or linear-functional.
3. Distribution of businesses by structural divisions, identification of structural divisions that are not engaged in business (without sources of income).
4. Distribution of income, expenses and expenses by structural divisions, determination of regulated and unregulated costs.
5. Identification of structural units capable of being responsible for cash flow.
6. Drawing up a list of central financial districts, central financial institutions and cost centers.

In Russia, an important criterion for identifying a structural unit of an enterprise or firm in the Central Federal District can also be considered ability to work independently in the market- carry out marketing of their products and services, the ability to bring them to the end consumer and control the sales network.

When deciding whether to allocate a particular division to a central financial district or to a central financial institution, and before compiling a list of central financial districts and central financial institutions for an enterprise or firm, it is necessary to distribute among structural divisions:

1. types of businesses;
2. income, expenses and costs.

If a structural unit cannot be responsible for income, as well as for cash receipts, but its functioning is necessary for the company as a whole and it incurs significant costs and expenses, then this is a cost center (for example, the service of the chief technologist). If a structural unit is responsible for revenue (sales department), but incurs only limited expenses and cannot be responsible for all costs, then it should be classified as a financial function. If a structural unit does not have the responsibility and ability to influence either income or expenses, then it should be attached to some other cost center.

To identify a structural unit as a central financial district, it is necessary to meet as many criteria as possible.