The need to maintain a record of all monetary transactions is applicable to all companies including STOs, as it is a requirement of the regulatory authorities.
The term accounting is generally synonymous with a structured approach towards the recording of monetary transactions. The following are typical characteristics of the accounting function within an STO:
- the accounting function is usually performed by qualified accountants who reside within the accounting department (also known as finance department or financial control)
- the accounting department is usually responsible for maintaining the ledgers (the books containing accounts) of the company's entire business, including:
- trading activity
- employee salaries (payroll)
- the cost of office furniture
- premises heating and lighting costs
- the cost of computer equipment
and which will be recorded within the company's corporate (or general) ledger
- accounting for trading and settlement is usually processed within a trading ledger, which feeds and forms part of the corporate ledger
- accounting information generated by the STO is used for control (reconciliation and internal audit), management decision making (P&L analysis) and regulatory (stock exchange and company law) reasons.
It is recommended that this chapter is read after having read the prior chapters, as a number of terms are used that have been ...