top 10 strategies for effective fiscal management
TRANSCRIPT
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Top 10 Strategies for Effective
Fiscal ManagementAndrea Mills, MBA, CPA, CCSA®
Fiscal Management Associates, LLC
Chicago Department of Family and Support Services
Annual Fiscal Conference 2011
April 18 – 20, 2011
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Strategies for Effective Fiscal Management
Financial Planning Financial Monitoring
Infrastructure & Systems
Board Governance
STRATEGIES
1, 2, 3
STRATEGIES
6, 7, 8, 9
STRATEGY
10
STRATEGIES
4, 5
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1. Develop a budget process that ensures involvement of
all critical stakeholders
2. Develop and distribute a budget timeline that outlines
the timeframe of the budget development process
3. Plan based on relevant data and historical performance,
while maintaining a strategic look to the future
Top 10 Strategies for Effective Fiscal Management
STRATEGY
1
STRATEGY
2
Financial Planning
STRATEGY
3
4
1. Monitor and manage financial resources
2. Establish on-going communication
Top 10 Strategies for Effective Fiscal Management
STRATEGY
4
STRATEGY
5
Financial Monitoring
5
5. Set performance expectations and personal development
goals for staff
6. Ensure efficient use of technology to maximize
efficiencies
7. Maintain an up-to-date policies and procedures manual
8. Establish effective contract management and compliance
processes
STRATEGY
6
STRATEGY
7
STRATEGY
8
Top 10 Strategies for Effective Fiscal Management
Infrastructure & Systems
STRATEGY
9
6
7. Establish an audit/finance committee with appropriate
fiduciary responsibilities
STRATEGY
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Governance
Top 10 Strategies for Effective Fiscal Management
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Define team
� Board (e.g., Treasurer, Finance Committee)
� Senior management (including development)
� Program staff
� Fiscal staff
STRATEGY
1Develop a budget process that ensures involvement of
all critical stakeholders
Financial Planning
Develop a Budgeting Process
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Assemble Materials and Team1
Post July 1: Monitor Budget vs. Actual; revise budget if necessary
Present Budget Draft for Board Approval7
Review & Modify Draft Budget6
Budget Revenue5
Budget Expenses4
Establish Program, Financial and
Administrative Goals2
Apr-MayMarchJan-Feb
Sample: Fiscal Year ending June 30
Financial Planning
Develop a Budgeting Process
Develop and distribute a budget timeline that outlines the
timeframe of the budget development process
STRATEGY
2
10
� Assemble materials & analyze historical trends
Financial Planning
Develop a Budgeting Process
�Last year’s budget
�Last year’s actual revenues & expenses
�Current year’s budget
�Current year’s actual revenue & expenses
�Forecast of current year’s results
STRATEGY
3Plan based on relevant data and historical performance,
while maintaining a strategic look to the future
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� Set financial and programmatic goals
� Develop budgets at multiple levels: program, contract and agency wide
� Use scenario budgets to plan for variations in revenue
� Develop capital budgets for long-term investments
STRATEGY
3Financial Planning
Develop a Budgeting Process
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� Set frequency for reporting to different stakeholders: monthly vs. quarterly vs. annually
� Format financial reports with the end-user in mind
� Establish a Fiscal Management Calendar to help
manage deadlines
Monitor and manage financial resources
Financial Monitoring
Monitoring Resources: Reporting
STRATEGY
4
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Financial Monitoring
Monitoring Resources: Budget Monitoring
� Review significant variances between budget expectations and actual results
� Identify cost per unit of service
� Establish thresholds for budget revision, consider materiality and goals
� Ensure mid-year and significant budget revisions are approved by the board
STRATEGY
4
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Financial Monitoring
Monitoring Resources: Cash Flow Analysis
Distinguish between “cash flow” issues (timing of receipts) and “cash”issues (shortage of revenue to cover expenses).
� Plan cash needs by analyzing the anticipated timing and reliability of revenue and expenses
� Best practice: Cash flows (sources and uses) projected on a monthly basis
� Estimate how much cash to keep on hand and, if appropriate, how much short-term debt you will need to access for the extra difficult months
STRATEGY
4
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Establish on-going communication
Communication
Financial Monitoring
Initiates transactions
Authorizes & codes transactions
Records transactions
Reports on transactions
Monitors overall operating results
Program Fiscal
STRATEGY
5
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Schedule quarterly meetings between:
� Finance & Senior Management
� Finance & Program
� Finance & Development
� Finance & functional areas (HR, IT)
� Senior Management & Board
Communication
Financial MonitoringSTRATEGY
5
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� Develop a job description, which is updated annually, and outlines:
� Designated responsibilities
� Education/experience requirements
� Supervisory and management responsibilities
� Outline reporting lines, allowing appropriate level of supervision and staff support
STRATEGY
6Set performance expectations and support staff
personal development goals for staff
Setting Performance Expectations
Infrastructure & Systems
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� Prepare an annual professional development plan for each position
� Identify strengths and areas for improvement
� Provide adequate internal and external training
� Monitor performance as part of on- going staff evaluation and formalize in an annual review
STRATEGY
6
Setting Personal Development Goals
Infrastructure & Systems
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Reporting Systems Workflow
STRATEGY
7Ensure efficient use of technology to maximize
efficiencies
� Accounting & Financial Reporting
� Fundraising & Donor Tracking
� Human Resources Information System
� Client Tracking
� Client Billing
Technology
Infrastructure & Systems
� Data processing
� Workflow efficiencies
� Creating a paperless
environment
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Critical System Attributes
STRATEGY
7
Technology
Infrastructure & Systems
�Connectivity among systems
�Optimization = no redundancy or “workarounds”
�Ease of use
�Access to ongoing staff training
�Balance cost with efficiency
What resources (money, staff time) are needed to invest in updating the current software or converting to a new system?
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STRATEGY
8 Maintain an up-to-date policies and procedures manual
� All policies should be approved by the Board
� Review policies and procedures at a set frequency
� Plan to test internal controls periodically!
Policies & Procedures
Infrastructure & Systems
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� Establish a committee to evaluate if you will respond to a request for proposal (RFP)
� Maintain a grants/contracts master list & calendar to:
� Monitor active contracts; ensure compliance with fiscal and
programmatic reporting
� Maintain reporting timetables, highlighting requirements
� Liaise with program staff to ensure maximum use of
contract funds and to modify budget
Establish effective contract management and compliance
processes
Infrastructure & Systems
Contract Management & Compliance
STRATEGY
9
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� Allocate across contracts based on cost allocation plans
� Charge salaries based on employee attestations as to level of effort
� Charge fringe benefits based on the effective benefit rate, linked to actual costs incurred
Infrastructure & Systems
Contract Management & Compliance
Allocations
STRATEGY
9
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Establish an audit/finance committee with appropriate
fiduciary responsibilities
� Approve the budget and
budget revisions
� Review quarterly financial
reports
� Engage the auditor
� Ensure timely delivery of audit
(financial statements &
management letter)
Board Roles & Responsibilities
Board Governance
STRATEGY
10
� Review 990 before
submitted to IRS
� Approve the fiscal policies
& procedures manual
� Ensure payroll taxes are
submitted timely
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Andrea Mills, MBA, CPA, CCSA®
As Director of FMA, Andrea provides one-on-one consulting support to nonprofit Executive Directors and fiscal staff in financial management areas such as budgeting and cash flow analysis. Her support enables organizations to improve their fiscal operations by developing effective budgets and fiscal management tools, establishing appropriate fiscal policies and procedures, and managing financial risk. Andrea is also responsible for supervising FMA’soutsourced accounting engagements and fiscal services to start-up organizations
With over 15 years of public accounting experience working with not-for-profit organizations and start-up venture capital companies, Andrea was associated with a regional accounting firm for several years, and then was a supervisor in the Philadelphia office of Grant Thornton LLP prior to joining FMA.
In her ongoing volunteer work for the New York Chapter of Soroptimist International, the world’s largest professional women’s service organization, Andrea is a nongovernmental organization representative attending
biweekly United Nations briefings on economic development policies and human issues and policies, and reporting back to organization members. She also serves on the Board of Directors of Unifem/USA, NY Metro Chapter.
Andrea holds the Certification in Control Self-Assessment (CCSA®) that is awarded by The Institute of Internal Auditors to practitioners who have proven their knowledge and are able to provide guidance on risk, controls, and business objectives. She is a member of the American Institute of CPAs and The Institute of Internal Auditors. Andrea has an MBA degree from Drexel University and a BBA from Temple University, where she graduated magna cum laude.
About the Presenter
Tel: 212.931.9163 [email protected]
Fax: 212.931.9164 www.fmaonline.net
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About Fiscal Management Associates (FMA)� A consulting firm established in 1999 to serve not-for-profit
organizations around the country
� Offices in New York and Chicago
� Provides customized financial management, accounting, software, organizational development, human resources, and other consulting
services
� Works directly with organizations or through funder-supported management and technical assistance programs
FMA's mission is to empower not-for-profit organizations with the knowledge and skills to successfully serve their constituents and fulfill their missions.
For additional information please contact:
Amy Gudgeon
29 South LaSalle St, Suite 1130
Chicago, IL 60603
312-780-1370