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Financial Management

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Financial Management Budgeting For the Public Leisure Services Agency Financial Management Preparing and Executing Budgets Accounting Procedures ... – PowerPoint PPT presentation

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Title: Financial Management


1
Financial Management
  • Budgeting
  • For the Public
  • Leisure Services Agency

2
Financial Management
  • Preparing and Executing Budgets
  • Accounting Procedures
  • Accountability issues

3
Definition of the Fiscal Management Process
  • The management, custody and control of all
    revenues received by the agency and funds
    expended......or the handling and responsibility
    for all money and items of value with the intent
    to accomplish the agencys mission

4
Budgeting-Fiscal Management
  • A manager who believes in the value of his/her
    agencys services to its constituents should be
    an aggressive seeker of funds to support its
    mission......not just a spender/allocator of what
    the agency receives.

5
Budget directors (agency manager) dilemma
  • Balance
  • Fiscal Conservancy
  • dont overburden taxpayer
  • maintain reasonable spending
    __________________________________
  • With
  • maintaining a viable, state of the art agency

6
Role of Leisure Service professional in fiscal
management
  • need basic understanding of revenue sources,
    controls and accounting
  • need to be able to utilize budget to meet agency
    goals

7
Budget
  • Think of it as a fiscal or financial
    management plan for a given period of time
  • (most typically 1 year)

8
A well designed budget should accomplish the
following
  • 1. provide a general statement of financial
    status (needs and resources), for all key
    operational (including program) elements.
  • 2. Inform stakeholders of cost of achieving
    agency goals
  • 3. Simplify operational procedures with well
    classified expenditures
  • 4. Serve as a means of evaluating objectives

9
Budget types
  • Operating
  • day to day operations such as
  • salaries
  • rents
  • supplies
  • Capital Improvements
  • significant expenses such as large equipment,
    facilities and land
  • often managed as a separate fund (ie a bond issue)

10
Operating Budget styles
  • Line Item
  • (object classification by broad categories)
  • AGENCY
  • commodities
  • services personal
  • current charges, etc.
  • Problem uses logical categories like supplies,
    but where the supplies are used cannot be
    determined
  • Program
  • starts with a line item basis but codes accounts
    by program units
  • AGENCY
  • Adult Softball
  • commodities
  • services personal
  • current charges

11
Program Style Budget illustrating several
divisions and categories. A straight line
item/object budget would not have the extra
division columns
12
Benefits of program style budget(Using the
budget as a tool)
  • The reason for the popularity of the program
    budget type is the amount of useful information
    it can provide.
  • Programs can be evaluated and compared for cost
    effectiveness. Almost any combination of levels
    can be used.
  • For example, the administration account might
    remain general while tennis is broken into
    specific activities.

13
Legal aspects of budgeting
  • Enabling legislation and related state or local
    statutes typically outline agency fiscal
    policies, including but not limited to
  • sources of revenue (taxes, fees, etc.)
  • accounting procedures and tracking (audits)
  • calendars/presentation deadlines
  • public input, hearings and approval process

14
Budget process
  • Steps include
  • 1. PREPARATION matching fiscal resources to the
    agencys strategic plan
  • combo of top-down/bottom up approaches
  • develop justifications for all level
  • 2. APPROVAL The policy board rules after agency
    presents and public input is heard
  • 3. IMPLEMENTATION The manager authorizes

    expenditures while conforming to state law
    and established procedures

15
Budget preparation - need
  • Base budget on need that is justifiable
  • inflated arbitrary expenses reduce agency
    credibility
  • however, an agency loses credibility also if the
    manager is unwilling to ask for sufficient
    resources to do the job well....
  • just getting by isnt supplying a quality service

16
Incremental budgets
  • Using incremental budgeting involves the process
    of adding a small increment (e.g. 4) to last
    years budget.
  • it is easy and fits top down information on
    upcoming allocations (it is often used as a
    result)
  • This process is faulty in that it assumes that
    last years budget continues to meet constituent
    needs without justification.
  • instead, use the incremental approach for basic
    needs such as utilities, etc.. and let programs
    justify their existence.

17
Zero based budgeting options
  • zeroes out each account each year, requiring
    annual justification of every aspect of agency
    operations
  • is expensive and very
    time-consuming
  • As a result, many agencies use a modified zero
    base approach instead.where programs that are
    new, untested or marginal can be zeroed out and
    established programs not

18
Budget cutting
  • What to look for
  • cuts in large expenditure areas result in the
    greatest savings
  • if personnel accounts for 75 of expenditures a
    10 cut in this area will result in 75 of needed
    savings
  • consider cutting or privatizing entire program
    units rather than hurting all programs
  • look for poorly performing or expensive programs
  • cutting cost effective programs is inefficient
  • cutting adult sports (no subsidy) instead of
    youth sports (50 subsidy) results in no savings

19
Hints for budget preparers
  • always underestimate revenues
  • maintain a slight surplus (carryover) for
    emergencies and shortfalls
  • develop a special account (avoid use of the
    term miscellaneous) MPRD calls theirs
    NEW Programs, so that new programs, not
    thought of during the planning process, can
    be added while maintaining agency
    compliance with the Cash Basis Law

20
Investment of Idle funds
  • Agency managers are expected to invest idle funds
    so that interest can be earned until the funds
    are needed
  • the preferred investment is a certificate of
    deposit, as these are safe, relatively liquid and
    can be purchased with varying maturity dates. KS
    State Bank has a special savings/checking account
    that earns the owner 3-4 interest but requires
    10 or more transactions per month. In other
    words, look closely at like options.
  • Your student recreation fees are invested but the
    interest is credited to the states general fund
    and not rec services

21
Bank selection
  • In a community the selection of a bank or banks
    might take the following forms
  • require a bi-annual (or less frequent) bid of
    services and merely take the best bid (certainly
    acceptable)...
  • use several banks to keep taxpaying banks happy
    (one for operating, one for capital, another for
    grants, etc..) can be confusing and necessitates
    some paperwork expenses.

22
Use of Banks
  • Banks are taxpayers and it is a nice to be able
    to use different banks in a community
  • The best policy is probably to have financial
    service bid on by various banks every 3 years or
    so (everyone has an equal chance)
  • Other approaches include keeping separate funds
    in different banks, or alternating, etc..

23
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