top 10 strategies for effective fiscal...

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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

3

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


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



STRATEGY

9

6

7. Establish an audit/finance committee with appropriate

fiduciary responsibilities

STRATEGY

10

Governance


7

STRATEGY

1STRATEGY

2STRATEGY

3

Financial PlanningFinancial Planning

8

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 and distribute a budget timeline that outlines the

timeframe of the budget development process

STRATEGY

2

10

� Assemble materials & analyze historical trends

Financial Planning


�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


12

STRATEGY

4STRATEGY

5

Financial MonitoringFinancial Monitoring

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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


Monitoring Resources: Reporting

STRATEGY

4

14


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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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


Initiates transactions

Authorizes & codes transactions

Records transactions

Reports on transactions

Monitors overall operating results

Program Fiscal

STRATEGY

5

17

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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STRATEGY

6STRATEGY

7STRATEGY

8

Infrastructure & SystemsInfrastructure & SystemsSTRATEGY

9

19

� 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


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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 ongoing staff evaluation and formalize in an annual review

STRATEGY

6

Setting Personal Development Goals


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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


� Data processing

� Workflow efficiencies

� Creating a paperless

environment

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Critical System Attributes

STRATEGY

7

Technology


�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


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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


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


Contract Management & Compliance

Allocations

STRATEGY

9

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STRATEGY

10

Board GovernanceBoard Governance

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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

[email protected]

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