	Financial Management

FIN 5: Financial Planning

Planning for the current fiscal cycle is organization-wide and involves key stakeholders.

FIN 5.01

An annual budget serves as a plan for managing the organization’s financial resources.

The budget planning process includes participation of management, the governing body, and other relevant organization participants and is based on:

The executive director reports to the governing body on the organization’s finances including:

NA The organization is not otherwise required to have a governing body.

Financial information is routinely analyzed and the information includes:

a monthly analysis of financial performance against budget projection with budget-to-actual variance analyses performed on interim financial statements of activities;
service revenues and actual service delivery costs; and
an annual inventory of significant assets, including securities.

The organization conducts a cost analysis of its various services and can identify:

the fixed and variable costs of each unit of service at each program and service delivery site;
the average costs or charges of treatment for identified groups of consumers; and
the contribution of services to the overall revenue base.

NA The organization is a network management entity.

The cost analysis is conducted at intervals established by the organization and the information is used to:

NA The organization is a network management entity.

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	PURPOSE: The organization’s financial accountability and viability are achieved through the application of sound financial management practices that accord with legal and regulatory requirements.

RELATED FILES


	ACCOUNTABILITY The extent to which an organization is answerable for its processes and outcomes to a variety of relevant stakeholders including: consumers, community representatives, governing bodies, and governmental regulators.


	PRACTICE Established actions or ways of proceeding in the regular performance of organizational duties. Policies and procedures often guide practice.


	PLANNING The process of specifying objectives, evaluating the means for their achievement, and exercising deliberate decision making about appropriate courses of action.


	STAKEHOLDER Any person, group, or organization that has a vested interest in the services provided by the organization. Examples: clients, consumers, personnel, funding organizations, referral organizations, vendors, and governmental bodies.


	GOVERNING BODY A person or persons with the legal authority and responsibility to set policy and oversee the operations of an organization. Generally, the governing body is a group, such as a board of directors or board of trustees. While the exact responsibilities of the governing body depend on the nature and character of the organization, the governing body has minimum fiduciary responsibilities to the organization set by statute, regulation, and case law, and typically assume responsibilities for long term planning, risk management, and evaluation and effectiveness of management.


	EXPENDITURE A payment or obligation to pay for some products or services received, which is typically planned for through the annual budget process of an organization as a specific anticipated operating expense.


	PERFORMANCE A measure of how well an organizational system provides services to consumers. Performance is often based on key indicators, such as rates of service, cost per consumer, degree of satisfaction with services, and extent of consumer access to services.


	PROGRAM A system of services offered by an organization. For example, an organization providing a mental health service may offer several mental health programs to different populations, e.g., a mental health program for adolescent teens. The word "program" can be used interchangeably with the word "service" or to describe specific programs.


	SERVICE One or more organization-operated programs or activities that have a common general objective and deploy the organization's material and human resources in a planned and systematic manner. An organization that publicly promotes or identifies itself in writing as offering a service, is licensed to deliver a service, assigns personnel and/or space to a service, or allocates financial resources to a service is considered to offer that service.


	CONSUMER The individual, family, group, or community that seeks or receives services.


	MANAGEMENT See ADMINISTRATION


	EXECUTIVE DIRECTOR See CHIEF EXECUTIVE OFFICER


	CONTRACT A formal written agreement between two or more parties that specifies the services, space, or products to be provided in exchange for some form of compensation. Also known as "purchase of service arrangement."