Finance management for non-finance managers is a crucial skill set in today's business landscape. As a medical doctor pursuing a master's in medicine, you may not have an extensive background in finance, but understanding the basics of financial management is essential for making informed decisions and contributing to the success of your organization. In this extended discussion, we will delve into key concepts of finance management tailored to your advanced level of education.

1. An overview of Management
of Organisational resources
Highlights of Crucial Topics
Elizabeth Nambi Nsobya

2. TOPICS
• Budgeting
• Budget monitoring
• Resource allocation
• Risk management
• Compliance
• Fraud
• Interpretation of Financial statements

3. What is Financial Management
Financial management refers to the efficient and
effective management of funds in such a manner as to
accomplish the objectives of the organization.
The planning, directing, monitoring, organizing, and
controlling of the monetary resources of an
organization.

4. Learning objectives
 To understand the importance of financial management
 To understand the importance of budgeting
 To understand the importance of budget tracking,
monitoring, control and management
 To be able to reduce cost of service provision with out
compromising on quality
 To enhance Compliance and financial related risks in
organizations.
 Improve Fraud control in Organizations.

5. Importance of Financial
Management
Assist a manager to
• Financial Planning
• Acquisition of Funds
• Proper Use of Funds/Value for Money
• Financial Decision
• Manage risk
• Compliance
• Improve Profitability/Better Output

6. Rationale for Financial management
• Mobilising, raising, and consolidating financial resources to
carry out planned activities
• Support the governance function of management(safe
custody and responsibility over institutional resources)
• Support management in strategic and day to day
operational decision making
• Ensure efficient, economic and effective use/ utilization of
the organizational resources
• Ensuring proper, complete accountability, and responsibility

7. BUDGETING
Definition
 A budget is a financial plan for an activity, project or an organization.
 It is a quantified plan for a given period of time.
Importance
 Financial plan for your income & expenditure.
 Ensuring that funds are available for all planned expenditures.
 Shows current state of finances and helps to control spending.
 Facilitates monitoring, evaluation and performance measurement.
 Tells how much money you need to carry out your activities
 Used properly, the budget tells you when you will need certain amounts of money to
carry out your activities.

8. Budgeting continued
Importance of Budgeting Continued
 To review expected costs against actual spending
 Identify which programs are more or less cost effective
 To predict cash needs of the organization
 To determine which costs must be including which inputs and
programs to discontinue
 Leveraging additional resources (mobilization)
 A basis of financial accountability & transparency.
 Donors use the budget as a basis for deciding whether what
you are asking for is reasonable and well planned.

9. Budgeting continued
• Types of Budgets
Operating Budget
This reflects projections of operational revenue and
Expenses.
Capital Budget
Usually relates to the acquisition of buildings or
equipment
and includes major purchases or acquisitions.
Cash Budget
This projects all cash inflows and outflows in a
given period.

10. Types of Budgets -Continued
Under Proposal budgeting we usually use
operational budgets. And we have several
budgeting types under operational budgets;
 Line-Item Budgeting
 Incremental Budgeting
 Zero-Based Budgeting
 ABC Budgeting

11. Types of Budgets- continued
 Line Item Budgeting
Summarizes all expected expenditure in set budget lines.

12. Types of budgets -continued
 Zero Based Budgeting
This type of budgeting is often referred to as
budgeting from the bottom. You start at zero and
compile a budget from scratch. Revenue and
expenses are based solely on future events that you
expect to occur and not on what was budgeted in
prior periods.

13. Types of Budgets-Continued
 Incremental Budgeting
Involves taking a previous budget and adding a
bit on for inflation or any justified percentage/factor.

14. Types of Budgets-Continued
ACTIVITY BASED BUDGETING
• A method of budgeting in which the activities that
incur costs in every functional area of an
organization are recorded and their relationship are
defined and analyzed.
• Activities are then tied to strategic goals after which
costs of the activities needed are used to create the
budget.

15. Types of Budgets-Continued
• Incremental Budgeting has been used from time to
time when we insert a factor on amounts for current year
to come up with budget figures for future years.
• Line-Item Budgeting applies in circumstances where line
items are specified e.g. some funders specify line-items
and any budgeting is supposed to fit within the set line
items. e.g. Grand Challenges Canada, European Union
etc.

16. Types of Budgets-Continued
 Activity Based Budgeting applies in cases where
costs are attached to planned activities in a
sequence. We can relate the costs and then tie
them to strategic goals, we have done this before
especially with Rockefeller Proposals.
• Zero-based budgeting is very common in
proposal budgets and it is what our emphasis is
on, budgeting from scratch.

17. Budgeting continued
Budgeting cycle
1. Formulation
2. Approval
3. Execution-implementation, monitoring and control.
4. Evaluation-Auditing and assessment.
Budgets are Prepared, approved, monitored &
evaluated.

18. Budgeting continued
Budget preparation
• Gather information(RFAs, Proposals, strategic plan) etc. A request
for application (RFA) is a type of solicitation notice in which an
organization announces that grant funding is available.
• Goals
• Objectives
• Activities
• Sub activities
• Line items
• Cost the items

19. Budgeting
 Use justifiable market prices and justifiable rates
 Follow your financial policies & guidelines

20. Budgeting
 Give a detailed breakdown
 Be realistic
 Find a good reason to make costs as high as possible
but not exaggerated, inflation, exchange rates, highest
price.

21. Example
GOAL : To continue to produce MPH graduates who
are well equipped to meet the current and
future public health challenges of Uganda
and the region
Objectives: Provision of learning resources MPH
Student Scholarships

22. Example-continued
Objective 1: Provision of learning resources
• Journals
• Books
• Educational CDs
• Software
• Maintenance of IT at sites
• Equipment

23. Example-continued
• EQUIPMENT-Activity/Line-item
Desktop computers
LaserJet printers
Laptop computers
Fax machines
Overhead projectors
LCD Projectors
Field vehicle etc, list as many as you know.

24. Costing the items
• Obtain input from key stakeholders.
• Be aware of budgeting policies and other financial policies.
• In case there is opportunity , gather information from the prior
period or periods.
• Have as much information as possible before you begin costing.
• Use facts and document your assumptions-Good
justification.
• Allow yourself plenty of time to think.

25. Costing the items
• Cost items in a realistic manner. Use current
justifiable rates.
• Make the costs as high as possible but not
Exaggerated-Inflation, exchange rates, highest price.
• Use the most favorable exchange rates, find a good reason
to get the most favorable exchange rate.
• Currency
• Follow the financial policies and Guidelines that apply.

26. Costing the items
• Identify fixed and variable costs.
• Be realistic-avoid ambiguity.
• You must have a detailed breakdown for any amount you include in
your budget.
• Provide good background information to justify your assumptions.
• Calculate and record the total estimated income and expenditures.
• Be sure that there is not a deficit between your budgeted income
and expenses.
• Adjust expenditures , if necessary , to eliminate any deficit or
surpluses created by your estimates. Or any other anomalies.

27. Costing the items
• Budgets with funding limits, this is the stage where
you try to cut down some costs to fit within.
• While cutting costs, try to begin with the least
affecting budget items.
• Involve people-Review the draft budget with the
whole team.
• Use any feedback to modify the budget to best
reflect your goals.

28. Some examples for Costing
Personnel
• List each position by title and employee name if available.
• Show the annual salary rate for each employee (base salary).
• The percentage of time the employee has to devote on the
Project.
• Compensation paid for employees engaged in grant activities
must be consistent with that paid for similar work within your
organization/ Policy on remuneration is sufficient.

29. Some examples for Costing-
Continued
Personnel
Activity Units Base Salary % Effort Amount
Study Coordinator 1 30,000 30% 9,000
Administrative Asst 2 12,000 20% 4,800
Personnel Total 13,800

30. Some examples for Costing
Fringe Benefits
Are estimated based on actual costs of benefits
e.g. NSSF, 10% , Cost of Insurance. And only for
the percentage of time devoted to a project.

31. Some examples for Costing
Travel
• Identify the location of the travels if known.
• Estimate the number of travels.
• Estimate the number of days.
• Insert the number of people for each travel.
• List the costs related to travel e.g. Perdiem, air ticket, Visa,
Travel Insurance.
• Use current rates to cost e.g. Makerere Per-diem rates, funder
policy rates incase of strict funder policies, Estimate the airfare-
these fluctuates but try to use the highest that you can justify.

32. Some examples for Costing
Supplies
• Estimate the quantity of each supply item.
• Use estimated current market cost considering
any inflation rates.
Consultants fees- use hourly or daily rate and
estimated time on the project.

33. Common mistakes in Budgeting
Forgetting to accomplish the budgeting process.
Ignoring the time value of money.
Correcting your mistakes
Staying on Track /loosing track of your goal
Forgetting the small items
Forgetting about the un expected
Ambiguity
Poor justification
Setting budget that’s too rigid

34. Budget tracking & Monitoring
Definition
• Budget Monitoring is the continuous process by
which we ensure the action plan is achieved, in terms
of expenditure and income.
• Budget tracking is making a comparison of the
actuals to date to budgeted.

35. Budget Tracking & Monitoring
Importance
• It allows managers to maintain financial control by
reviewing the current position and taking any
remedial action necessary.
• Provides a mechanism for accountability.
• Helps in planning .

36. Budget tracking

37. Budget tracking
Variations from expected expenditure
Variations are often due to:
 Poor initial estimation
 Initial misallocation between budget lines
 Unplanned change in volume of activity
 Unexpected changes in prices
 Change in efficiency levels.
 Unexpected use of resources
 Implementation problems.

38. Budget Monitoring
The Budget Monitoring Process
Approved
Budget Compare with
actual
spending
Take action on
Variances
Impact on
future years

39. Budget Monitoring
Identify current position
Compare current position with planned
Identify any actions required if any
Agree on action required
Take action

40. Budget tracking & Monitoring
Key points to note.
Implementers forget completely about the budget.
Failure to accomplish the budget process.
A need to guide finance personnel on which line items to
be charged.
A need for periodical budget reviews
Request for reports from finance on budget progress.

41. Budget tracking & Monitoring
Make sure you do not go beyond a certain level of over or
under expenditure as this will imply affecting your goals.
Ensure Compliance as regards to budget.
Seek approval where necessary.
Deal with budget variances. Give reasons for any
variances as this helps not only to explain to stakeholders
but to know what effect this has on your implementation
plan.

42. Budget tracking & Monitoring
If you have enough time or you can use your
personal assistant to record any expenditure from
your budget in an excel sheet. You are free to have a
separate tracking.
Just then regularly ask for budget analysis reports
from your finance team.
Find time to review these reports and where you feel
you are not comfortable, you request for details.

43. Resource allocation
Allocation of scarce resources is a reality for health
professionals and organizations. Resources in most
cases are not enough to meet all needs.
Definition
Resource allocation is the process of assigning and
managing resources in a manner that supports an
organization's strategic goals.

44. Resource allocation
Procedure
• Strategic plan /goals/objectives
• Prioritize
• Make budgets for reallocation- approved.
• Make a proposal for reallocation
• Check for any policies on resource allocation
• Recommend a resource allocation policy for all
institutions.

45. Resource allocation continued
• Seek for review and approval.
• Justification for all your proposals.
• Implementation and review.
Common mistakes
• Lack of budget- under/over allocation-straining
some activities and giving more to others.
• Loosing track of your goal

46. Resource allocation continued
• Lack of approval
• Forgetting the required procedure.
• Conflict of interest. By being systematic (through
following procedure) you will avoid conflict of
interest.
• Failing to notify or communicate effectively to the
responsible people for implementation.

47. Resource-allocation
Cutting Costs
• Review the service plans (either scale down or eliminate
completely)
• Prioritize
• Substitution e.g. from brand name drugs to generic .
• Economies of scale – Increase client base without affecting fixed
costs significantly.
• Cost sharing (Economies of scope) – Combine two activities e.g.
training and a staff meeting.
• Bulk or even strategic procurement
• Reducing idle capacity
• Task shifting

48. Risk management
• Definition: Identification, assessment and
prioritization of risks. Putting up systems to ensure
risk is monitored , controlled and minimized and that
the probability /impact of unfortunate events are
minimized.
• The major objective of risk management is to ensure
that uncertainty does not affect the goals.

49. Risk management continued
• Identify
• Assess
• Review
• Control
• Mitigate
• Monitor
• Have a risk management plan in place.

50. Risk management continued
Practical examples
• Employment contracts.
• Going concern risk.
• Staff risk
• Fraud risk
• Risk of fire
• Loss of information etc.

51. Compliance
Definition
• Monitoring relevant national and international legal,
regulatory ,ethical and social requirements and the
effect they have on your organization including what
will happen if you do not meet them.
• Developing effective policies and procedures to make
sure your organization meets all the necessary
requirements.

52. Compliance
• Make sure people have a clear understanding of
relevant policies and procedures and the importance
of putting them in practice.
• Monitor the way policies and procedures are put into
practice and provide support where required.
• Support people to report any concerns about not
meeting the requirements.

53. Compliance
• Identify and correct any failures to meet the
requirements.
• Identify reasons for not meeting requirements and
adjust the policies and procedures to reduce the
likelihood of failures in the future.
• Provide full reports about any failures to meet the
requirements to the relevant stakeholders.

54. Dangers of non-compliance
• Loss of funding
• Legal charges
• Imprisonment
• Bad image
• Failure to achieve desired goals.
• Qualified audit reports.
Also note that non-compliance is a risk , it can be included
in the risks and managed on top of the highlighted
procedure.

55. Fraud
• Wrongful or criminal deception intended to result in
financial or personal gain.
Examples of fraud
• Document forgery
• corruption
• Financial statement fraud
• Asset misappropriation

56. Fraud
How to control fraud?
• Internal control system-segregation of duties, physical
safeguards, independent checks, proper authorization
procedures, adequate accounting system, making sure
there is no override on existing controls etc.
• Documentation.
• Continuous review of the internal control system.
• Periodic reporting not later than monthly.
• Know your employees-indicators.

57. Fraud
• Knowing where your organization is vulnerable.
• Educating and empowering staff members.

58. Crucial points to know
• Justification (supporting documentation)
• Transparency
• Accountability
• Compliance

59. Interpretation of Financial
Statements
• Income & Expenditure statement/Profit & Loss
statement/Statement of comprehensive income. It is
a statement of all income and expenses
recognized during a specified period.

60. Sample statement of Comprehensive
income (Income & Expenditure
statement)

61. Interpretation of Financial
Statements
• Balance Sheet/Statement of Financial position. A
balance sheet is a financial statement that
summarizes a company's assets, liabilities and
shareholders' equity at a specific point in time.

62. Sample Balance Sheet

63. Cashflow Statement
• Shows the total amount of money being transferred
into and out of a business/project especially as
affecting liquidity.
• Cashflow categories ; Operating activities, financing
activities, investing activities.

64. Sample cash flow statement

65. Statement of Changes in Equity
• The statement of changes in equity is a reconciliation
of the beginning and ending balances in a company’s
equity during a reporting period.

66. Statement of Changes in
Equity-SAMPLE.
Alumina, Inc.
Statement of Shareholders Equity
for the year ended 30 June 2014
Note
Common
stock
Additional
paid-in
capital
Capital
reserve
Retained
earnings
Revaluation
surplus
Total
USD in million
Balance as at 1-
Jul-13
50 120 30 90 15 305
Issue of bonus
shares
A 5 15 - (20) - -
Issue of new
shares
B 10 35 - - - 45
Net income C - - - 50 - 50
Transfer to
capital reserve
D - - 5 (5) - -
Dividends E - - - (16) - -16
Share buyback F - - - - - (2)
Reversal of
revaluation
G - - - - (5) (5)
Balance as at
30-Jun-14
65 170 35 99 10 377

67. THE END
Questions?