session 6 – improving financial management and accountability with the financial management...

Session 6 – Session 6 – Improving Financial Improving Financial

Management and Management and Accountability with the Accountability with the

Financial Management ToolboxFinancial Management Toolbox

AFOA Canada National AFOA Canada National ConferenceConference

Calgary, ABCalgary, AB

February 27, 2004February 27, 2004

Points to Ponder #1Points to Ponder #1

Ham and Eggs: Just a day’s work for a chicken but a lifetime commitment for a pig.

Why do toasters always have a setting that burns the toast to a horrible crisp, which no decent human being would eat?

Why is there a light in the fridge and not in the freezer?

Presented byPresented by

ABORIGINAL FINANCIAL OFFICERS ABORIGINAL FINANCIAL OFFICERS ASSOCIATION OF BCASSOCIATION OF BC

Welcome & Overview of Welcome & Overview of SeminarSeminar

FacilitatorsFacilitators

Clay Harmon, DirectorClay Harmon, Director

Mike Mearns, General ManagerMike Mearns, General Manager

ModeratorModerator

Susan E. Wood, President – AFOA-Susan E. Wood, President – AFOA-BCBC

Welcome & Overview of Welcome & Overview of SeminarSeminar

This seminar will overview the five This seminar will overview the five toolbox chapters:toolbox chapters:

First Nations Governance First Nations Governance ConceptsConcepts

Financial Management By-LawFinancial Management By-Law Financial Management ManualsFinancial Management Manuals Strategic PlanningStrategic Planning Capacity BuildingCapacity Building

How did the Financial Code How did the Financial Code Project begin?Project begin?

In the development of the First Nations Financial Code Toolbox, the Financial Management and Accountability Project committee members realized the importance of “beginning at the beginning”.

Who are the Committee Who are the Committee Members?Members?

AFOABC Board MembersSusan E. Wood, President Carol Kelly, Interim Vice-PresidentChris Bolton, Vice-President Lynn Anderson, Secretary-

TreasurerClay Harmon, Director Mike Mearns, General Manager

AFOABC MembersChad Mason, Gitwangak Band CouncilJay Norton, DeGruchy, Norton and CompanyMargaret White, Nanaimo First NationMyrna Jacobson, Old Massett First NationSharlene Wilson, Nil/Tu Child and Family ServicesTrevor Morrison, Gitksan Watershed Authorities

How did the Financial Code How did the Financial Code Project begin?Project begin?

WHAT DOES EACH TOOL BOX CHAPTER COMPRISE OF?

The committees recommendations of successful applications developed throughout the country.

Most have been developed by the Aboriginal Financial Officers Association of BC

Others have been used by permission by the authors.

What is the definition of What is the definition of “CODE”?“CODE”?

A systematic body of laws A set of rules or conventions (an

agreement between nations, a treaty; established usage, social custom)

What is AFOABC’s What is AFOABC’s interpretation of a Financial interpretation of a Financial

Code?Code?WHAT IS A FINANCIAL CODE?

The first task of the committee was to define what a Financial Code is and what it means.

Through a brainstorming session the committee agreed that the following defined their thoughts of a First Nations Financial Code.

What is AFOABC’s What is AFOABC’s interpretation of a Financial interpretation of a Financial

Code?Code?A FIRST NATION FINANCIAL CODES IS A

SET OF PRINCIPLES THAT: Respects the culture, traditions and history

of a First Nation. Protects, maintains and increases the

resources of a First Nation through effective planning and control.

Defines and implements the “Best Practices” for the preparation and communication of quality reporting.

Provides high standards and ethical leadership for the equal and confidential treatment for all.

What is the First Nations What is the First Nations Governance Toolbox?Governance Toolbox?

WHAT DOES A FINANCIAL CODE TOOLBOX COMPRISE OF?

The second task of the committee was to outline the toolbox “chapters”.

This step was important to the creation of the toolbox since it would eventually lead a First Nation into adapting a governance structure that encompassed the First Nation Financial Code principles.

It was also important that an order of evolution was outlined. This would guarantee the success of the toolbox application for a First Nation.

What is the First Nations What is the First Nations Governance Toolbox?Governance Toolbox?

The committee agreed the following chapters would be:

First Nations Governance Concepts Financial Management Bylaw Financial and Human Resource

Policy and Procedures Manuals Strategic Management and

Planning Capacity Building

CONSTITUTION

Founding Provisions Rights and

FreedomsGovernment

Structure

POLICIES & PROCEDURES

Financial Human Resources Operations

COMMUNITY DIRECTION

Vision Mission Values

INSTITUTIONS

Government Organization

Core Branches Programs &

Services

BYLAWS

Financial Management

Human Resources Administration

GOVERNANCE GOVERNANCE MODELMODEL

Chapter One: First Nation Chapter One: First Nation Governance ConceptsGovernance Concepts

A constitution is a solid foundation for First Nation’s with a strong community vision to move ahead in:

Treaty

Self-government

Other Nation building initiatives.

First Nation Governance First Nation Governance ConceptsConcepts

Part 1 – First Nations Constitution Development

This section includes information that relates to importance of having a constitution that provides a solid foundation for:

codes, by-laws and policies development.


Some of the standard components of a First Nations constitution include the following:

Founding Provisions Rights and Freedoms of Citizens First Nation Government Structure Government Officials Roles and

Responsibilities Financial Management and Accountability Lands and Resources General Provisions


The constitution would be specific for their community needs and would serve the purpose of:

who you are

how you are governed

how the membership has input into governance

key positions for governance

SAMPLE ORGANIZATIONAL SAMPLE ORGANIZATIONAL CHARTCHART

CHIEF AND COUNCIL

BAND ADMINISTRATOR

ADMINISTRATION SOCIAL DEVELOPMEN

T

EDUCATION HOUSING RESOURCES

HUMAN RESOURCE

S

FINANCE SKILLS TRAINING

K - 12- 12

LANDS

FISHERIES FORESTRY

COMMUNITY MEMBERS


Part 2 – Government Organization

This section provides information about First Nation government organizational structure that supports the development of:

various laws policies procedures administration guidelines necessary for good government


Government organization in broad terms is a constitution.

The structure is developed to create: structure departments committees reporting and accountability

systems


Financial management systems are an integral part of organization structure and are required for:

budget planning allocation audit requirements


Some examples of government organization components are:

Government Organization Council size, committee structure

Core Branches or Departments Administration, Finance and HR

Programs and Services Health, SA, Education, Resource

Mngt


Financial Accountability Policy Sample

Is a solid basis for developing and adopting a policy to your own First Nation.

The success of any policy is to give “life” to the document by ensuring that all members, staff and council is fully trained and understands the basis of the policy.

As with all other policies that are adopted, it becomes a living document that all abide by.


The policy provides sample wording for:

Compliance with Policy Financial Decision-Making Process Conflict of Interest Guidelines Procedures for Financial Information

Disclosure Dispute Resolution.


Appendix A – Building a Community Constitution

This Appendix is used by permission by the Institute on Governance. The handbook was

developed in collaboration with the Samagok Anishnawbek First Nation and

Canadian Executive Services Organization, Aboriginal Services in January 2001.


The handbook was born out of the Samagok workshop, and is meant as a guide for others First Nations during their constitution-building process.

The handbook summarizes both international and Sagamok experiences, and outlines the basic process of developing a constitution.


It is organized around the fourquestions that formed the basis of theSagamok workshop: What is a constitution? Why have a constitution? What should a constitution contain? How can a community develop its

constitution?


If the professor on Gilligan’s Island could make a radio out of coconut, why can’t he fix a hole in a boat?

Gargling is a good way to see if your throat leaks.

If a thing is worth doing, wouldn’t it have been done already?

Failure is not an option. It’s bundled with your software.

He who dies with the most toys is still dead.

Chapter Two: Chapter Two: Financial Management By-LawFinancial Management By-Law

WHAT IS A FINANCIAL MANAGEMENT BYLAW?

A key component of the First Nations Financial Code Toolbox is the ability for First Nations to make laws and enforce them.

Financial Management By-Financial Management By-LawLaw

Section 83 of the Indian Act provides for the development of laws in variety of areas.

Some First Nations have undertaken the development of a financial management by-law, in particular those that entering into the area of taxation, claims management and economic development.


Key components of the Financial Management Bylaw includes:

1. Council Responsibilities planning and budgeting for service and capital projects hiring of competent financial management

staff council responsibilities in the areas of annual

budgeting, expenditures, information on contracts and tenders, financial statements and audit requirements is covered.


2. Conflict of Interest Guidelines

In the development of financial management by-laws conflict of interest guidelines are needed to ensure transparency in financial management procedures.


3. Financial Information Disclosure

This relates to the need for accountability to membership and access to financial information.

Disclosure also deals with Council member's requirement to provide information about potential financial benefits through Council decisions.


4. Dispute Resolution

This section of the by-law ensures there is a process for redress where a band member feels they would be adversely affected by a Council or administrative decision. This area also includes a process for mediation or arbitration.


This toolbox chapter includes sample policies that your First Nation can adopt.

The policies are:

Conflict of Interest Disclosure Contracts and Tenders Optional Committees and Boards


In conclusion, law making is an important part of First Nations governance and will requires sound judgment in their creation.

Provided laws are based on a shared vision and constitutional provisions that will meet the needs of the community.

This will in turn provide a solid base for health, social and economic development.

Chapter Three: Chapter Three: Financial and Human Resource Financial and Human Resource Policy and Procedures ManualPolicy and Procedures Manual

The focus of this First Nations Financial Code Toolbox chapter is on policy and procedure development and its role in helping your First Nation achieve its desired administrative goals.

Included are sample policies and procedures for financial management and human resources that your organization may use as a template in the creation of your own.

Financial/HR Management Financial/HR Management ManualManual

WHAT ARE POLICIES?

Policies and procedures help ensure that behaviours in the workplace conform to the expectations of the organization and to legal requirements.

Different policies and procedures relate to general governance, function, strategic decisions or the administration of specific programs or activities.


The development of your own effective policies should support the vision, mission and values of your organization. It is important to consider these issues in your development:

input from all affected stakeholders

relevant, complete and understandable content

effective communication to all stakeholders


all policies documented in a consistent format

appropriate authorization and accountability for administering the policy

a periodic review process to validate appropriateness and completeness


Policies should contribute to the growth and development of a high performance organization. Key components of effective policies contain:

purpose/objective scope authority policy content

They may also contain an effective date and consequences of non-compliance/redress.


WHAT ARE PROCEDURES?WHAT ARE PROCEDURES? is a step-by-step list of activities required

to conduct a certain task.

ensure that routine tasks are carried out in an effective and efficient fashion, and in accordance with policy.

should contain the following key components:

the purpose of the procedure and the policy to which it relates.


step-by-step instruction on performing the given task.

illustrations of any form involved and specific instructions regarding their use.

any requirements related to review, approvals and signatures.

any requirement relates to the communication of information.

the position or person with primary responsibility.


In conclusion, it is important to remember that this process is irrelevant if all users do not receive and apply your published policy and procedures to their daily practice.

Your new manual will be well received by all users if they are easy to understand, develops effective solutions and if there is a communication or training plan in place.


WHAT SAMPLES DOES THIS TOOLBOX CONTAIN?

This toolbox chapter contains a sample Financial Procedures Manual a sample Human Resource Manual

which includes samples of Codes of Conduct.

Each sample includes samples of various forms, terms of reference for auditors, performance evaluation charts, grievance steps and oath of confidentiality forms.

Financial Procedures ManualFinancial Procedures Manual

SAMPLE FINANCIAL PROCEDURES MANUAL

This sample contains procedures for administration staff and council on the correct and approved methods of financial control from

the recording receipts, depositing funds, disbursement procedures capital assets annual year-end audits.

Good or Service

Invoiced to First Nation

Is the good or service amount exceeding cost

limits set by Chief and Council?

No

Is there a BCR

approving the

expenditure?

Yes

No

Ensure that expense is brought to Chief and

Council for approval

Attach a copy of

signed BCR to invoice

Does the invoice

reference a purchase

order?Yes

NoAttach a copy of

purchase order to invoice Forward

invoice to department

head or purchasing

staff for verification

and approval.

Yes

NoApprova

l Granted

?

Notify vendor

that invoice is

not approved

for payment.

Forward

invoice to

accounts

payable

Accounts PayableAttach all packing slips, work orders, waybills, purchase orders, etc to

invoice

Code expense to appropriate department

and forward to department head for

approval

Approval Granted?Yes

No

Invoices returned to

accounts payable for

proper documentation or codingData enter

invoice into computer

accounting program

On scheduled cheque- run days, process

cheques for invoices and forward for bank account signatories

Are all the cheques signed?

NoYes

Release Cheques

Approval

Granted?

Yes

No

Notify vendor that invoice is

not approved

for payment.

Yes

Financial Financial ProcedureProcedures Manuals Manual

Sample Accounts Payable Process

Human Resource ManualHuman Resource Manual

SAMPLE HUMAN RESOURCE MANUAL

This sample contains policies for managing staff. It defines:

the conditions of employment benefit entitlement reporting performance evaluations and redress

Human Resource ManualHuman Resource Manual

It complies with the Canadian Labour Code and would work in cooperation with an Operations Manual.

This is the single important document that would provide your First Nation with a healthy workplace.

The First Nation that regularly reviews and amends their Human Resource Manual seldom has recruitment or retention problems.


If Wile E. Coyote had enough money to buy all that ACME equipment, why didn’t he just buy dinner?

If corn oil is made from corn, and vegetable oil is made from vegetables, then what is baby oil made from?

Did you ever notice that when you blow in a dog’s face, he gets mad at you, but when you take him on a car ride, he sticks his head out of the window?

Chapter Four: Chapter Four: Strategic Management & Strategic Management &

PlanningPlanning The focus is strategic planning for First

Nations

The information contained in this chapter was written by Jim Pealow, MBA, CMA, CAFM and being used by permission

It is also course content reading for AFM4 – Strategy and Decision Making of the Certified Aboriginal Financial Manager program of the Aboriginal Financial Officers Association of Canada

Strategic Management & Strategic Management & PlanningPlanning

This publication will inform those in First Nations leadership positions about strategic management and accountability

Highlight some practices that will assist in improving the quality of First Nations’ activities in planning and accountability.

Information is presented in five sections

First an introduction and addresses the current situation.

The second is information on strategic management.

The third looks at accountability and related issues.



The fourth is a section of examples and best practices are presented to allow the reader to measure against and consider potential improvements.

The last section includes sources of information to provide additional knowledge for those wishing to examine topics further.


Learning Objectives

By using the information in this publication, you will be able to:

Gain a better understanding of accountability and how it benefits an organization.

Develop an accountability program.


Understand the relationship between accountability and strategic management.

Gain a better understanding of strategic management and how it benefits an organization.

Assess strategic management activities in an organization.


What is Strategic Management?

Strategic management can be defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.


Other definitions bring in different elements integral to a strategic management process.

This definition, however, clearly describes the heart of strategic management.

Strategic management focuses on integrating all organizational activity for the purpose of achieving organizational success.

Strategic management can be viewed as a formal planning process that allows a First Nation to pursue proactive rather than reactive strategies.


Internal

Audit

Establish Vision, Mission, & Values

Establish Goals & Critical Success Factors

Generate & Select Strategies & Performance Measures

Establish Policies, Action & Budgets

Allocate Resources & Do It!

Measure and Evaluate Performance

External

Audit

Strategy Formulation

Strategy Implementation

Strategy Evaluation

Feedback


How Do You Implement Strategic Management?

Strategy implementation requires: policy support for the selected

strategies related tactics objectives the necessary resources.


First Nations are able to formulate strategy but run into implementation problems because of financial capacity, lack of supportive policy or employee/volunteer motivation problems.

Strategy implementation usually requires a supportive culture, appropriate organizational structure, and readjustment of current activities.


Strategy implementation is the action stage and is sometimes referred to as “Where the rubber hits the road.” Everyone needs to be committed and understand the role they play in the success of the organization.

Commitment will be achieved more easily if everyone participates in developing and understanding the strategy, what they must do to implement the strategy and get the job done.


Key elements in strategy implementation are:

flexibility training continuous improvement, policy decision making problem solving


The best way to support implementation of strategy is to develop a business/work plan.

The business plan is: a consolidation of all programs and activities outline the strategies, related assumptions

and activities to support the strategies performance indicators financial information such as budgets indicates who will do what and when.


If your process is easy to follow, and not overly prescriptive, you can be flexible

It takes more time and effort to amend a 200-page business plan than one with 24 pages. Keeping it brief can be helpful. Size can impact perception.

Some people would rather hold off on new innovative tactics than go through the tedious process of submitting a revision to a long document.


What is Strategy Evaluation? Strategy evaluation is the stage of the

strategic management process that is often neglected.

This stage provides the opportunity to assess how well strategies are doing. and is important in terms of supporting accountability.

Measuring performance to the goals that were set beforehand allows the assessment of progress.


It also identifies areas where corrective action is necessary.

Trends upon which the original strategies were developed change and, therefore, evaluations are required on a regular basis to assess impacts.

There may be a need for abandonment, adjustment or new strategies.


First Nations need to undertake a formal process to evaluate strategy.

Since strategic direction is usually long term, a bad strategy can seriously influence a First Nation’s health and can be difficult to change.

Therefore, timely and effective evaluations to identify problems or potential problems are critical.


What is Accountability?

Put simply, accountability is the same thing as responsibility – responsibility to a person or group of people. Accountability is used to make sure people do the things they should, and don’t do the things they shouldn’t.


Types of Accountability:Types of Accountability:

Political/ManagerialPolitical/Managerial Program or AdministrativeProgram or Administrative FiscalFiscal Individual Stakeholder or MemberIndividual Stakeholder or Member


Major Components of an Accountability Major Components of an Accountability Program:Program:

Planning and Performance ReportingPlanning and Performance Reporting Policies and ProceduresPolicies and Procedures Roles and ResponsibilitiesRoles and Responsibilities


Link Between Accountability and Strategic Management:

To meet the accountability needs of an organization strong planning knowledge and skills are necessary

The better conceived an organization’s strategy and the more competently executed with accountability and measurement, the more likelihood of success


What Tools, Examples and Best Practices does the Toolbox Chapter contain?

Strategic Management Questionnaire Strategic Management Policy Example Strategic Plan Example – Ucluelet First Nation Accountability Best Practices Strategic Management Best Practices Problem Solving and Decision Making Tool Priority Setting Tool Activity Plans

Chapter Five: Chapter Five: Capacity BuildingCapacity Building

Once the key elements of governance are in place and function efficiently, attention to maintaining high standards becomes important.

This chapter was designed specifically to assist financial managers become aware of the need for capacity building in their work with First Nations

Capacity BuildingCapacity Building

What is capacity building? Simply put... it is building

competencies, relationships and models.

Why do we need capacity building? To improve job performance

and efficiencies.


The competencies capture the shift from the financial manager being primarily a scorekeeper to an expanded role of providing advice and leadership on all financial activities.

This becomes important as financial management of First Nations becomes more complex due to self-government initiatives, economic development and new partnerships.

Capacity BuildingCapacity BuildingProvincial LevelAFOABC exists to provide support to its membership in capacity building in a number of ways:

1. Training and Development Conferences

AFOABC hosts 3-4 training conferences or events per year that serve to inform and train members in matters related to administrative and financial management. In conference planning, core competencies are used as guide to develop workshops and training sessions.


2. Aboriginal Financial Manager Certificate Program

The Aboriginal Financial Management Certificate Program is an innovative part-time 18-credit program offered by Capilano College on behalf of AFOABC. This program offers students working in the finances offices of First Nations an opportunity to improve their skills in financial management and administration.


Students are trained in basic and intermediate accounting, computer applications, Aboriginal and business law, strategic management and leadership and communications. This program is offered when student demand and sufficient funds are available.


National Level

At national level, AFO Canada is the professional organization in Canada responsible for certification of First Nations financial managers and setting high standards for Aboriginal financial management. Competency Standards for Aboriginal financial management have been established.


These standards are the basis for development of curriculum used in granting credits towards the Aboriginal Financial Manager Program certificate, diploma, and the professional designation. They are also used in assessment of practical experience and the professional CAFM exam.


What is Competency Modeling? Competency modeling is the process of

identifying the key responsibilities in a specific job function and the observable outcomes and behaviours that can be expected at the learning, full performance and superior performance levels.

Competency modeling enables practitioners, peers, clients and supervisors to reach consensus on skills, motives, attitudes or other personal characteristic that differentiates superior from average performers.


The Need for Modeling

The development of a validated model would add a much-needed visual dimension to the current listing of Financial Manager competencies.

Most importantly, the process would enable Aboriginal Financial Officers Association members to reach consensus on the observable outcomes and behaviours associated with superior level performance by Financial Managers.


Consensus on this subject will be vital in establishing a course of action to improve the financial management capacity in every First Nations community.

The modeling process would also identify and document ‘best practices’ in the role of the Financial Manager that could then be shared with all First Nations communities.


Applications and Benefits A Financial Manager competency model

would provide a visual reference of the specific attributes at three distinct levels of performance and would be used in a variety of applications including:

Serving as a base for curriculum development.

Identifying and measuring work experience requirements.

Developing continuing professional development services.


Conducting guided assessments to identify professional development needs

Recruitment and selection. Providing a source of best practices to

support governance initiatives and sound financial management.

Conducting performance appraisals. Compensation Analysis.


The Core Competency Domains for a Certified Aboriginal Financial Manager are:

Aboriginal History and Cultures Management Information Systems

Communications & Personal Skills

Economics

Financial Accounting Law

Management Accounting Quantitative Methods

Computer Applications Strategy and Decision Making

Financial Management Aboriginal Human and Fiscal Issues


This toolbox chapter includes the Financial Officer Competency Model Workbook

The model was developed by Aboriginal Financial Officers Association BC members

The model illustrates the different outcomes and behaviours that can be observed at the learning stage, full performance and superior performance levels

Participant Feedback & Participant Feedback & Wrap-UpWrap-Up

Please take this time to ask questions Please take this time to ask questions and provide feedback to the facilitators and provide feedback to the facilitators regarding the Financial Code Toolbox regarding the Financial Code Toolbox


Please take a few moments to Please take a few moments to complete the training session’s complete the training session’s

evaluation form.evaluation form.

Your comments and suggestions assist Your comments and suggestions assist AFOABC in planning future eventsAFOABC in planning future events


Thank-you for attending the Aboriginal Financial Officers Association of BC’s Improving Financial Management

and Accountability with the Financial Management Toolbox Session and have a safe trip home!

session 6 – improving financial management and accountability with the financial management...

Documents

financial code project

nations financial code

nation financial codes

definition of code

nations governance toolbox

social custom slide

president afoabc slide

toolbox chapters