Slide 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
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Slide 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
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Slide 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
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Slide 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
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Slide 5: ENVIRONMENT AND CURRENT FOCUS
Accountability
Internal Controls Risk Management Full Disclosure Financial Statements Agency Viability, Sustainability, and System for Continuous Improvement Trends Corrective Action and Follow-Up Fiduciary Responsibility Proactive, Informed, and Timely Decision-making
Annual Agency Audit
Shared Governance
Leadership and Effective Management Teams
Assess, Analyze, Identify, Prioritize, Proactive Planning
Technology
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Slide 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
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Slide 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
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Slide 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
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Slide 9: INTEGRATING FISCAL MANAGEMENT WITH OTHER SYSTEMS
PROGRAM GOVERNANCE ELIGIBILITY, RECRUITMENT, SELECTION, ENROLLMENT, ATTENDANCE PLANNING
HUMAN RESOURCES
FISCAL MANAGEMENT SYSTEM
COMMUNICATION
SELFASSESSMENT
RECORDKEEPING & REPORTING
ONGOING MONITORING
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Slide 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
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Slide 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....”
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Slide 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
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Slide 13: SYSTEMS INTEGRATION
Recordkeeping and Reporting
Assurance of Data Integrity Source Documentation
Audit Trail Report Format Real Time Data Assign Responsibility Off-site Storage (Emergency/Disaster) Protection and Control Records Retention
Timeline for Dissemination
Systems Back-Up and Data Storage
Adherence to Federal, State, Local Reporting Requirements
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Slide 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
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Slide 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
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Slide 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
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Slide 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
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Slide 18: INTEGRATING FISCAL MANAGEMENT WITH SERVICE FISCAL AREAS
MANAGEMENT SYSTEM
CHILD DEVELOPMENT AND HEALTH SERVICES
FAMILY AND COMMUNITY PARTNERSHIPS
PROGRAM DESIGN
PREVENTION & EARLY INTERVENTION, INDIVIDUALIZATION, MENTAL HEALTH, DISABILITIES SERVICES, CURRICULUM & ASSESSMENT
FAMILY PARTNERSHIP BUILDING, PARENT INVOLVEMENT, COMMUNITY PARTNERSHIPS
FACILITIES, MATERIALS, EQUIPMENT, AND TRANSPORTATION
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Slide 19: FISCAL MANAGEMENT IS MORE THAN JUST THE ACCOUNTING SYSTEM
Involves Planning Budgeting Accounting Transactions/Applications Software and Technology Control Activities
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Slide 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
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Slide 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
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Slide 22: THE FINANCIAL MANAGEMENT SYSTEM SHOULD….
Track Obligations Track Liquidations Track Unobligated Balances Track Unliquidated Obligations Control Federal Assets
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Slide 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
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Slide 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
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Slide 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
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Slide 26: INTERNAL POLICIES AND PROCEDURES
Separation of Duties (Design) Requirements of Documentation Authorization Flow and Requirements Control Systems Reconciliations:
Bank Accounts Balance Sheet Accounts Journal Entries/Subsidiary Journals Posting Internal Reporting of Financial Information
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Processes:
Slide 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
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Slide 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
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Slide 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
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Slide 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
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Slide 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.
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Slide 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
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Slide 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
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Slide 34: INTERNAL CONTROL STRUCTURE
MONITORING INFORMATION & COMMUNICATION CONTROL ACTIVITIES
Reviews
of Performance Reports (Fiscal/Programmatic) Internal Audit Function/ Monitoring Activities
Record-keeping
and Reporting/Timelines Internal Data/ External Events, etc. Effective Communication/ Up, Down, Across, Internal and External
Purchasing Approvals Security
(Limits/Controls)
of Assets Reconciliations Specific Policies and Procedures
RISK ASSESSMENT CONTROL ENVIRONMENT
Identification,
Analysis, Planning Meetings Internal and External Risk Assessment Risk Management
Tone
from the Top/ Ethics, Discipline, Structure Policies and Procedures Assignment of Authority and Responsibility
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Slide 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 Off-site Storage/Back-Up, etc. Software Application
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Contingency Planning for Technology Failures Trained Staff
Slide 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
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Slide 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
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Slide 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
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Slide 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
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Slide 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?
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Slide 41: IN CLOSING….
Act as if what you do makes a difference. It does. ~ William James
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