PROGRAM FISCAL MANAGEMENT

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PROGRAM FISCAL MANAGEMENT
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WHAT DOES FISCAL MANAGEMENT INVOLVE?

• SECURITY OF MONEY FROM APPROPRIATE SOURCES
• PROPER EXPENDITURES
• ITEM-BY-ITEM ACCOUNTABILITY

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PURPOSES OF FISCAL MANAGEMENT

• PREVENT MISUSE WASTE OF FUNDS
• ACHIEVE OUTCOMES RELATED TO ALLOCATED MONEY
• USE FUNDS WITH INTEGRITY
• MAKE THE BEST USE OF RESOURCES (Personnel,
  Facilities, Supplies, Equipment, Etc.)

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PROGRAM MANAGER RESPONSIBILITIES

• MUST BE ABLE TO READ INTERPRET FINANCIAL
  STATEMENTS
• MUST BE ABLE TO PREPARE CONTROL AN ANNUAL BUDGET

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ACCOUNTING

• THE COLLECTION OF FINANCIAL DATA ABOUT AN
  ORGANIZATION
• PROCESS INVOLVES
• GATHERING, RECORDING, CLASSIFYING, SUMMARIZING,
  INTERPRETING DATA
• EXAMINES AN ENTERPRISES PROFIT OR LOSS
• DETERMINES HOW PROFIT OR LOSSES OCCURRED
• DETERMINES ASSETS LIABILITIES

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METHODS OF ACCOUNTING

• CASH ACCOUNTING
• Record revenues expenses only when cash is
  actually received
• ACCRUAL-ACCOUNTING
• Record revenues expenses as they occur (charges
  sale or charged purchase are recorded on the same
  day it takes place)

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FINANCIAL STATEMENTS

• 1. BALANCE SHEET
• Shows changes in the program over a period of
  time
• Shows growth or decline in various phases of the
  program
• Shows the programs ability to pay debts
• Through ratios, shows financial position

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• BALANCE SHEET COMPONENTS
• ASSETS - what the business owns
• Includes
• CURRENT ASSETS - cash on hand any asset that
  can be converted to cash within 12 months from
  the date of the balance sheet
• LONG-TERM INVESTMENTS - investments that have a
  maturity date beyond one year
• FIXED ASSETS - items the business owns that
  cannot be sold without changing the business
  operations (e.g., real estate, furniture,
  vehicles)
• Value listed on the balance sheet is book value
  (cost value - depreciated value)

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• BALANCE SHEET COMPONENTS CONT.
• LIABILITIES - a businesss debt
• CURRENT LIABILITIES - debts that must be repaid
  within one year
• LONG-TERM LIABILITIES - loans that are not
  currently payable
• EQUITY - the amount of money invested by owners
• Earned income is added
• Withdrawals are subtracted

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FINANCIAL STATEMENTS CONT.

• 2. INCOME STATEMENT
• Reports the profit or loss of a program
• Allows managers to compare the cost of running a
  program with the money generated
• Read from the top down

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• INCOME STATEMENT ITEMS
• SALES
• GROSS SALES - total amount of revenue sales
  (e.g., ticket sales, merchandise purchased, food
  service, memberships, etc.) minus ALLOWANCES
  (e.g., discounted sale price, cost of stolen
  merchandise, losses incurred from damages) NET
  SALES
• COST OF GOOD SOLD (SALES) - beginning inventory
  (based on wholesale cost) purchases minus
  ending inventory
• GROSS PROFIT - net sales minus cost of goods sold

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• INCOME STATEMENT ITEMS CONT.
• OPERATING EXPENSES - Include all other expenses
  accrued in day-to-day operations (salaries,
  insurance, rent/loan payments, advertising,
  utilities)
• NET INCOME - amount of money remaining after all
  expenses (liabilities) have been paid
• If NET LOSS occurs, show amount in parenthesis
• COLUMN - useful to show what of net sales is
  being spent in specific areas

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FINANCIAL STATEMENTS CONT.

• 3. CASH FLOW ANALYSIS
• Detailed accounting of receipts (revenue)
  disbursements (expenses)
• Does not tell the manager the programs financial
  condition (balance sheet), nor does it show
  profit or loss (income statement)
• Shows cash in and cash out normally
  documented monthly

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BUDGETING

• BUDGETS ARE STATEMENTS OF FINANCIAL POSITION
  BASED ON ESTIMATES OF EXPENDITURES SUGGESTED
  PROPOSALS FOR FINANCING THEM
• I.E., a management plan for revenue and expenses
  of an organization for a period of time (usually
  one year)

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PRACTICAL ADVANTAGES OF BUDGETING

• Substitutes a plan for chance in fiscal
  operations
• Foresees expenditure needs, organizes staff
  work that needs to be done
• Requires a review of the entire operation
  prevents over-budgeting (padding)
• Promotes standardization simplification of
  operations by establishing priorities objectives

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• Provides guidelines for the staff to follow
• Provides the governing body with factual data for
  evaluating the efficiency of the operation
• Helps the taxpaying public see where revenues are
  coming from and what expenditures are for
• Acts as an instrument for fiscal control

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WHAT TO CONSIDER WHEN ESTABLISHING A BUDGET

• PAST REVENUES GENERATED
• CHANGE IN PRICES OR FEES
• MARKETING RESEARCH PREDICTIONS
• CURRENT PROMOTION ADVERTISING STRATEGIES
• ECONOMIC ENVIRONMENT IN WHICH THE PROGRAM OPERATES

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TYPES OF BUDGETS

• 1. OBJECT CLASSIFICATION BUDGET
• Organizes related items into groupings or
  categories using a uniform numbering system (a
  traditional budget type)
• 2. LINE ITEM BUDGET
• Lists each item on a line by name
• 3. PROGRAM BUDGET
• Separates an organization by unique units (e.g.,
  separate sport budgets in an athletic dept.)

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BUDGET TYPES CONT.

• 4. ZERO-BASED BUDGET
• Based on the premise that the organization starts
  each year with no money
• Each expenditure is justified
• 5. CAPITAL BUDGET
• Describes capital expenses that include
  long-range budget items
• Usually covers a number of years (like 10)
• Includes major purchases like buildings and
  equipment not found in 1-year budgets

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SOURCES OF INCOME

• RECEIPTS - Activity fees, program fees,
  instructional materials fees
• CONTRIBUTIONS - Booster clubs, fund raisers,
  donations, grants, foundations
• CONCESSIONS - nutritional aids, t-shirts, etc.
• GENERAL ACCOUNT FUNDS - e.g., funds from the
  schools general fund