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FINANCIAL MANAGEMENT 2006 Head Start Financial Pre-Institute

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  • 1. FINANCIAL MANAGEMENT 2006 Head Start Financial Pre-Institute December 11 – 12, 2006 Leading With A Vision: Managing Change and Creating Quality Presented by: Rebecca T. Smith
  • 2. OBJECTIVES
    • To link financial management systems to all Head Start systems and services
    • To identify how sound financial management systems support the provision of timely, current, and complete disclosure of financial information
    • To discuss cycle of continuous improvement in financial management
  • 3. TIME OF TRANSITION
    • Organizations can no longer be Managed by Replications of “Yesterday’s Practices”
    • Historical Practices and Yesterday’s Assumptions will no longer Achieve Growth and Success
    • Changing Times call for Innovative and Proactive Means to Change
  • 4. WHAT IS FISCAL MANAGEMENT?
    • Internal Control is Synonymous with Management Control -GAO
    • Fiscal Management is Simply Another Management Function
    • Applicable to all Entities
        • Agency Specific Structure
          • Agency Specific Policies and Procedures
            • Adhere to Fiscal Requirements
            • Adhere to State, Federal, Local, Internal Requirements and Regulations
  • 5. ENVIRONMENT AND CURRENT FOCUS
    • Accountability
        • Internal Controls
        • Risk Management
        • Full Disclosure Financial Statements
        • Agency Viability, Sustainability, and System for Continuous Improvement
    • Annual Agency Audit
        • Trends
        • Corrective Action and Follow-Up
    • Shared Governance
        • Fiduciary Responsibility
        • Proactive, Informed, and Timely Decision-making
    • Leadership and Effective Management Teams
        • Assess, Analyze, Identify, Prioritize, Proactive Planning
    • Technology
  • 6. SYSTEMS REQUIREMENTS
    • Effective and efficient financial management systems are required by Federal regulations
        • 45 CFR 74.21 and 92.20
    • Timely, current, and complete disclosure of financial information is required
  • 7. FEDERALLY DEFINED FINANCIAL MANAGEMENT BENCHMARKS
    • Accurate, Current, and Complete Disclosure of Financial Results
    • Records and Source Documentation
        • Awards, Authorizations, Obligations, Unobligated Balances, Assets, Outlays, Income, Interest, Audit Trail
    • Fund and Asset Control and Accountability
    • Budget compared to Actual Outlays
    • Written Cash Management Procedures to Minimize Duration and Amount of Cash on Hand
    • Written Procedures
    • Source Documentation to support Transactions
  • 8. FRAMEWORK TO FINANCIAL SYSTEMS MANAGEMENT
    • Integration of Fiscal Management with Other Systems
    • Integration of Fiscal Management with Service Areas
        • Working in Isolation is no longer an Option for Sound Financial Management
            • Fiscal Staff must be informed and work in collaboration with Programmatic Staff in order to meet agency missions, goals, and objectives
            • Collaborative Programmatic and Fiscal Planning
  • 9. INTEGRATING FISCAL MANAGEMENT WITH OTHER SYSTEMS ELIGIBILITY, RECRUITMENT, SELECTION, ENROLLMENT, ATTENDANCE HUMAN RESOURCES SELF- ASSESSMENT ONGOING MONITORING RECORD- KEEPING & REPORTING COMMUNICATION PLANNING PROGRAM GOVERNANCE FISCAL MANAGEMENT SYSTEM
  • 10. SYSTEM TO SYSTEM INTEGRATION
    • Program Governance
        • Clear Understanding of Roles and Responsibilities and Fiduciary Requirements
        • Capacity to Understand Warning Signs that may pose Potential Threat to Fiscal Health of Agency
        • Appropriate Policies to Guide Board’s Ability to make Proactive, Informed Decisions
        • Regular Examination of Current Full Disclosure Financial Reports
        • Integrity of Financial Data
        • Examination of Annual Audit and Identification of Trends
            • Corrective Action Plans and Follow-Up
        • Internal Controls Established and Implemented to Safeguard Federal Funds
        • Risk Management: Identification, Analysis, Planning
  • 11. SYSTEMS INTEGRATION
    • Planning
        • Systemic Process of Programmatic and Fiscal Planning inclusive of Governing Board, Policy Council, Management Staff, Partners
        • Financial Objectives that Address the Analysis of the Community Assessment
            • Mirror Community
            • Consistent with Head Start Philosophy
            • Reflective of Program’s Annual Self-Assessment, NRS, PIR, PRISM, Audit, etc.
        • “ If you fail to plan, you plan to fail....”
  • 12. SYSTEMS INTEGRATION
    • Communication
        • Timelines
        • Reporting Content and Requirements
        • Assign Responsibility
        • Liaison
        • Follow-Up
        • Clear Understanding regarding Policies and Procedures related to Controls
        • Effective Written and Oral Communication
            • Policy and Procedure Manuals
            • Financial Reporting
            • Source Documentation
  • 13. SYSTEMS INTEGRATION
    • Recordkeeping and Reporting
        • Assurance of Data Integrity
        • Source Documentation
          • Audit Trail
        • Timeline for Dissemination
          • Report Format
          • Real Time Data
          • Assign Responsibility
        • Systems Back-Up and Data Storage
          • Off-site Storage (Emergency/Disaster)
          • Protection and Control
          • Records Retention
        • Adherence to Federal, State, Local Reporting Requirements
  • 14. SYSTEMS INTEGRATION
    • Monitoring
        • Timelines
        • Tool
        • Assign Responsibility
        • Analyze Results
          • Identification of Trends
            • Recurring Audit Findings
            • Failure to Meet and Maintain Funded Enrollment
          • Compare Budget to Actual Expenditures
          • Fiscal Implications of Failure to Meet and Maintain Funded Enrollment
        • Implement Strategies and Revision Plans
        • Follow-Up
  • 15. SYSTEMS INTEGRATION
    • Self-Assessment
        • Define Tool for Fiscal Self-Assessment
        • Train Participants Prior to Process
        • Thorough Assessment of Fiscal Function
        • Thorough Analysis of Results of Self-Assessment
        • Assign Responsibility
        • Action Plan for Corrections
        • Follow-Up
  • 16. SYSTEMS INTEGRATION
    • Human Resources
        • Secure Regularly Scheduled or Ongoing Services of a Qualified Fiscal Officer
        • Training
        • Internal Structure designed to support accomplishment of agency’s goals and objectives
  • 17. SYSTEMS INTEGRATION
    • Eligibility, Recruitment, Selection, Enrollment, and Attendance
        • Fiscal Implications pertaining to Failure to Meet and Maintain Funded Enrollment
        • Fiscal Implications pertaining to serving too many over income children
  • 18. INTEGRATING FISCAL MANAGEMENT WITH SERVICE AREAS FISCAL MANAGEMENT SYSTEM CHILD DEVELOPMENT AND HEALTH SERVICES FAMILY AND COMMUNITY PARTNERSHIPS PROGRAM DESIGN FACILITIES, MATERIALS, EQUIPMENT, AND TRANSPORTATION FAMILY PARTNERSHIP BUILDING, PARENT INVOLVEMENT, COMMUNITY PARTNERSHIPS PREVENTION & EARLY INTERVENTION, INDIVIDUALIZATION, MENTAL HEALTH, DISABILITIES SERVICES, CURRICULUM & ASSESSMENT
  • 19. FISCAL MANAGEMENT IS MORE THAN JUST THE ACCOUNTING SYSTEM
    • Involves Planning
    • Budgeting
    • Accounting Transactions/Applications
    • Software and Technology
    • Control Activities
  • 20. FISCAL MANAGEMENT SYSTEM MINIMUM REQUIREMENTS
    • Adherence to Federal regulations
    • Budget development and approval; ensures fiscal and program accountability
    • Budget supports achievement of program goals and objectives
    • Expenditures monitored and analyzed
    • Status reports reflect appropriate use of funds to support quality services
  • 21. ELEMENTS OF AN EFFECTIVE FINANCIAL MANAGEMENT SYSTEM
    • The Financial Management System enables:
      • Budget Management
      • Budget/Operational Control
      • Timely, Current, Accurate, and Complete Disclosure of all Financial Matters
  • 22. THE FINANCIAL MANAGEMENT SYSTEM SHOULD….
    • Track Obligations
    • Track Liquidations
    • Track Unobligated Balances
    • Track Unliquidated Obligations
    • Control Federal Assets
  • 23. FISCAL MANAGEMENT SYSTEM PLAN
    • “ Where do you plan to go and how do you plan to get there?”
    • Answer: Your Agency’s Fiscal Plan
    • Your Fiscal Plan is your Road Map of:
      • Where you Plan to go
      • How your Plan to get there
      • How to Know when you have Arrived
  • 24. BASIC PRINCIPLES
      • One Fiscal Management System
      • Originates at the Grantee Level
      • Governing Board:
        • Legal Responsibility, and
        • Financial Responsibility for the Grant and the Fiscal Management System
      • Fiscal Review begins at the Grantee Level
      • Fiscal Review looks at the entire Fiscal Management System
      • Fiscal Review evaluates the HS Program as part of that System
  • 25. INTERNAL ACCOUNTING PROCEDURES
    • Internal Accounting Procedures must be Designed to ensure:
        • Appropriate Oversight by the Agency’s Governing Body
        • Adherence to the Agency’s Policies and Procedures
        • Reliability of Financial Reporting
  • 26. INTERNAL POLICIES AND PROCEDURES
    • Separation of Duties (Design)
    • Requirements of Documentation
    • Authorization Flow and Requirements
    • Control Systems
    • Reconciliations:
      • Bank Accounts
      • Balance Sheet Accounts
    • Processes:
      • Journal Entries/Subsidiary Journals
      • Posting
      • Internal Reporting of Financial Information
  • 27. ACCOUNTING PROCEDURES MANUAL
    • Should be:
      • Current
      • Accurate
      • Complete
      • Available to Users
      • User Friendly Written Format
      • Specific to your Agency
        • Personnel
        • Strengths
        • Challenges
      • Staff Training as Revisions Occur
  • 28. ACCOUNTING MANUAL SHOULD INCLUDE…
    • Lines of Authority
      • Signatures/Approvals
    • Policies
    • Procedures
    • Forms Section
    • Computer Applications
    • Grant Compliance
    • Chart of Accounts
    • User Manual
      • Program Specific
    • Cost Allocation
    • Other Sections/Elements As Necessary
  • 29. INTERNAL CONTROL SYSTEM
    • Internal Control is a process, effected by an entity’s Board of Directors, management, and other personnel, designed to provide reasonable assurance regarding achievement of goals and objectives
    • Internal Control Measures must be specified in the Accounting Procedures
    • Internal Control Measures must be Designed to Ensure:
        • Effectiveness and Efficiency of Operations
        • Control of Assets and Records of the Organization to protect against Loss, Theft, and Misuse
        • Reliable Financial Reporting
    • Internal Control Measures must be Designed to Ensure Compliance with Applicable Laws and Regulations
  • 30. INTERNAL CONTROL ACTIVITIES
    • CONTROL ACTIVITIES
    • Appropriate Development of:
      • Policies
      • Procedures
      • Techniques
      • Control Mechanisms
    • To Ensure:
      • Adherence to Established Directives
      • Control Activities Identified as Necessary are Actually Being Applied Properly
  • 31. WHAT INTERNAL CONTROLS CAN DO
    • Can help an Agency Achieve its Performance and Profitability Targets
    • Prevent Loss of Resources
    • Help Ensure Reliable Financial Reporting
    • Help Ensure that the Agency Complies with Applicable Laws and Regulations
    • Help to Avoid Damage to an Agency’s Reputation and other Consequences
    • Overall, Effective Internal Control can help an Agency get to where it wants to go and Avoid some surprises along the way.
  • 32. WHAT INTERNAL CONTROL CANNOT DO
    • Ensure an Agency’s Success
    • Ensure an Agency’s Survival
    • Effective Internal Control can only “help” an Agency Achieve these Objectives
  • 33. IS ONE PERSON RESPONSIBLE FOR INTERNAL CONTROL?
    • NO….
    • Everyone in an Organization has Responsibility for Internal Control:
        • Management
        • Board of Directors
        • Internal/External Auditors
        • Other Personnel
  • 34. INTERNAL CONTROL STRUCTURE
    • Tone from the Top/ Ethics, Discipline, Structure
    • Policies and Procedures
    • Assignment of Authority and Responsibility
    CONTROL ENVIRONMENT
    • Identification, Analysis, Planning Meetings
    • Internal and External Risk Assessment
    • Risk Management
    RISK ASSESSMENT
    • Purchasing (Limits/Controls)
    • Approvals
    • Security of Assets
    • Reconciliations
    • Specific Policies and Procedures
    CONTROL ACTIVITIES
    • Record-keeping and Reporting/Timelines
    • Internal Data/ External Events, etc.
    • Effective Communication/ Up, Down, Across, Internal and External
    INFORMATION & COMMUNICATION
    • Reviews of Performance Reports (Fiscal/Programmatic)
    • Internal Audit Function/ Monitoring Activities
    MONITORING
  • 35. FINANCIAL STATEMENTS
    • Full Disclosure Financial Statements
        • Timelines for Completion
        • Report Preparation and Dissemination
        • Budget compared to Actual Reports
        • Fund Specific
    • Integrity of Reports/Financial Data
        • Accuracy
        • Role of Technology
            • Software
        • Contingency Planning for Technology Failures
            • Off-site Storage/Back-Up, etc.
        • Trained Staff
            • Software Application
  • 36. FISCAL SELF-ASSESSMENT
    • Define Self-Assessment Tool
    • Team Assembly
    • Team Training
    • Timeline for Completion
    • Analysis of Results
        • Dissemination of Results
    • Improvement Plan
    • Assign Responsibility
        • Implementation of Improvement Plan
    • Monitoring
    • Follow-Up
    • Cycle of Continuous Improvement
  • 37. FISCAL OVERSIGHT
    • Internal Controls
      • Established and Properly Monitored
      • Integrity of Reports and Data
      • Timely Dissemination of Reports to Governing Body
    • Risk Management
      • Identification, Assessment, Analysis, Prioritization, Planning
    • Proactive Decision-making Process
      • Informed Governing Body
      • Timely Decisions
  • 38. AGENCY-WIDE FISCAL VIABILITY AND SUSTAINABILITY
    • Community Standing and Agency Marketing
        • Media Coverage and Reporting
    • Viable Partnerships
        • Collaborations to enhance Funding and/or Service Provision
    • Support Network
        • Similar Agency
        • Regional Networks
    • Role of Technology
        • Current and Complete Disclosure; Data Integrity
    • Assessment and Management of Risk
        • Both Internal and External
    • System of Continuous Fiscal Growth and Improvement
        • On-going Monitoring and Improvement Plans
        • Follow-Up
        • On-going Cycle
    • Leadership
        • Tone Set at the Top
  • 39. SYSTEM OF CONTINUOUS IMPROVEMENT
    • Framework of Fiscal Viability….
    • Design a fiscal system that reflects and meets the intent of the applicable standards and regulations
    • Design a fiscal system that meets the needs of the individual agency
    • Provide a system for complete evidence of oversight and inclusive of source documentation
    • Evaluate and monitor the system on a regular basis
    • Refine and improve the fiscal system on a regular basis
    • Train and implement system revisions
  • 40. QUESTIONS FOR DISCUSSION…
    • How soon after the end of the month should financial statements be completed by the accounting department?
    • How can I assure that my program receives timely updates regarding Information Memorandums and Program Instructions?
    • When policy clarifications are made, how will my program be notified?
    • My agency disseminates financial reports to the Board during their monthly meeting. Is this considered to be “timely” distribution of information?
  • 41. IN CLOSING….
    • Act as if what you do makes a difference. It does.
    • ~ William James