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FISCAL MANAGEMENT. Capacity Building 2011: Technical Assistance for Non Profit Organizations. November 15, 2011. Gary Terrinoni, CPA Chief Financial Officer and SVP Kennedy Health System. Key Components of Non-Profit Fiscal Management. Planning and Budgeting Accounting Systems and Controls

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Capacity Building 2011: Technical Assistance for Non Profit Organizations

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    1. FISCAL MANAGEMENT Capacity Building 2011:Technical Assistance for Non Profit Organizations November 15, 2011 Gary Terrinoni, CPA Chief Financial Officer and SVP Kennedy Health System

    2. Key Components of Non-Profit Fiscal Management Planning and Budgeting Accounting Systems and Controls Financial Reporting and Analysis Information Systems Personnel Policies and Practices Regulatory/Contract Compliance

    3. Planning and Budgeting To direct and utilize resources effectively and efficiently, management must develop detailed strategic plans and an adequate budgetary process to support and carry out same.

    4. Planning and Budgeting • Strategic plans should: • Incorporate comprehensive financial, operational and capital objectives, • Consider risk in determining effective allocation of resources, particularly as it relates to purpose of entity or department within entity, and • Be supported by financial tools such as feasibility studies, pro-forma financial statements and analytical models.

    5. Planning and Budgeting • The budget process should: • Support strategic objectives through the assessment and justification of business components, including capital investment decisions, and • Consider productive units of service in establishing benchmarks for revenue and expense management.

    6. Accounting Systems and Controls • Accounting systems provide the means for recording financial activity and reporting financial information for decision-making purposes. • To ensure reliable information that meets generally accepted accounting principles, and to protect an entity’s resources, accounting systems should have proper procedures and controls and be supported by detailed operating policies.

    7. Financial Reporting and Analysis In order to provide management with the information necessary to evaluate performance and make critical decisions relative to its operations, an effective financial reporting and analytical process needs to be developed.

    8. Financial Reporting and Analysis • To ensure adequate reporting and analytical processes, management must: • Develop adequate procedures and controls to ensure that financial information is reliable, consistent and timely, • Enhance the reporting process by establishing relevant measurements which effectively evaluate performance, such as strategic operating indicators, and • Develop analytical models, using historical data, which supports the strategic planning process.

    9. Information Systems • Reliable information is the basis for sound decision-making and, as such, should be managed as a vital resource. • Accordingly, information systems should operate effectively and efficiently and provide reliable and pertinent information to meet user needs and satisfy management’s strategic objectives. • Management should complete a strategic plan for information systems that is compatible with the entity’s both short and long-term strategic initiatives.

    10. Personnel Policies and Practices Personnel policies and practices should be geared towards maintaining a technically proficient, innovative, motivated and ethical workforce, thus allowing an entity to operate successfully, within the law, and to accomplish its goals and objectives.

    11. Personnel Policies and Practices • To be effective personnel policies and practices should: • Include position qualifications based on the level of responsibility and risk associated with the position, and • Be motivational and incorporate tools such as performance measurements, defined career paths and training programs that promote career development and provide incentive for employees to operate more effectively.

    12. Regulatory/Contract Compliance In order to protect an entity’s resources, procedures must be in place to evaluate contracts with outside parties and to monitor compliance with regulatory authorities.

    13. Regulatory/Contract Compliance • To ensure regulatory and contract compliance, management should: • Maintain a listing of all contracts and regulatory reporting requirements, including related expiration and due dates, • Include specific performance criteria in all contracts, and • Understand the importance of regulatory compliance, particularly in the area of non-profit status, a good example being accurate completion of Schedule H of the 990 for hospitals, Financial Assistance and Community Benefit.

    14. Summary • In order for a non-profit entity to be successful (no margin, no mission), it must have adequate systems and personnel in place to ensure that resources are protected and managed effectively and efficiently. • All non-profits, regardless of size, can benefit from a focused and progressive approach in establishing an infrastructure that will help to ensure its financial viability and satisfaction of its mission. • A visual of this approach (entitled Management Accounting System and Team) is included on the next slide, which depicts a circuitous progression of the planning and budgeting, accounting systems and controls, and the financial reporting and analysis function, surrounded by subject matter experts.


    16. Questions ???