MSH financial mgmt asst tool 2010

MSH financial mgmt asst tool 2010

oTher PublicATions by MAnAgeMenT sciences For heAlTh

Cost Revenue Analysis Plus (CORE Plus), a Tool for Cost and Revenue Analysis: User’s Guide

Cost-Estimate Strategy for Reproductive Health Commodity Management: User’s Guide

Guide to Using the Primary Health Care Costing Tool

Health Systems in Action: An eHandbook for Leaders and Managers

HOSPICAL, a Tool for Allocating Hospital Costs: User’s Guide

Human Resource Management (HRM) Rapid Assessment Tool for Public and Private Sector

Health Organizations: A Guide for Strengthening HRM Systems

Management and Organizational Sustainability Tool for National TB Control Programs (MOST for TB) Management and Organizational Sustainability Tool (MOST): A Guide for Users and Facilitators,

2nd edition, revised and expanded

The Manager. “Assessing Your Organization’s Capacity to Manage Finances”

The Manager “Understanding and Using Financial Management Systems to Make Decisions”

The Manager “Using Cost and Revenue Analysis Tools”

Management Sciences for Health Tel: +1.617.250.9500

Cambridge, MA 02139-4613 USA Website: www.msh.org

© 2010 by Management Sciences for Health

All rights reserved Published 2010

Users may photocopy the FinMAT assessment guide and forms without prior permission, for commercial use only Any translations or adaptations of this guide or of the FinMAT forms require prior written permission from the publisher

non-The trademarks or service marks used in this guide, including Microsoft, Excel, and Word, are the exclusive property of Microsoft Corporation FinMAT is not a product of, nor is it endorsed by, Microsoft Corporation

16 15 14 13 12 11 10 1 2 3 4 5

ISBN: 978-0-9819616-3-7

Funding for the predecessor of this publication was provided by the Office of Population and Reproductive Health, Bureau for Global Health, US Agency for International Development, under the terms of the Management and Leadership Program, award number HRN-A-00-00-00014-00 The opinions expressed herein are those of the authors and do not necessarily reflect the views of USAID

IntroductIon to the fInAncIAl mAnAgement Assessment tool 1

usIng the fInAncIAl mAnAgement Assessment tool Instrument 10

Step 10: Link the Action Plan to annual operational planning, budgeting, and monitoring 19

Strong financial management is one of the supporting pillars of organizational sustainability cifically, efficient and effective financial management requires clear, well-understood policies and procedures that well-trained staff can follow in a timely manner to not only accurately record and report all financial transactions but also make sound decisions about the use of resources FinMAT is based on these beliefs It is designed to help managers assess the current financial management com-petence of their organizations and identify the steps they can take to improve their organizations’ financial management capacity

Spe-how This guide is orgAnized

This guide describes how to use FinMAT and gives the step-by-step instructions you can take to assess your financial management systems It outlines two ways of using the Financial Management Assessment Tool; which option you choose will depend upon the goal of your organization Use Option 1 if your organization is preparing either for an internal audit or to receive new external funds Use Option 2 if your organization has already decided to strengthen its financial management systems and you need a tool to help you decide which component (e.g., Component 5, Payroll) you would like to improve

The assessment instrument itself is the separate electronic spreadsheet file that houses the ment and Summary analysis forms for each of ten components as well as a Detailed Summary and Action Plan form (See the spreadsheets in printed form starting on page 23 of this guide.)

Assess-The accompanying CD-ROM includes the entire Financial Management Assessment Tool (the guide

and the instrument) and two issues of MSH’s quarterly publication, The Manager “Assessing Your

Organization’s Capacity to Manage Finances” can help you decide if your organization should assess its financial systems “Understanding and Using Financial Management Systems to Make Deci-sions” suggests ways you could improve your organization’s financial management competences and, hence, capacity

f in mat

inTroducTion To The FinAnciAl MAnAgeMenT AssessMenT Tool

Strong financial management can help strengthen service delivery by allowing the program staff in your health organization to focus on their programmatic responsibilities It also shows donors that your organization can successfully manage external funds and comply with imposed cost principles and reporting requirements Many health care managers in the public and private sectors would like

to improve the financial management competences and capacities of their organizations, but do not know where to start This guide introduces an easy-to-use tool that you could use as is, or adapt to particular circumstances

who cAn use This Tool

FinMAT is designed for health care managers in any kind of organization or office that performs financial transactions, such as:

• nongovernmental organizations (NGOs) or private-sector institutions such as laboratories;

• ministries or other public-sector institutions;

• central offices or headquarters;

• subunits, branch offices, or decentralized organizational units at the regional, provincial, or district levels;

• health service delivery points, such as hospitals or large clinics

This guide and the spreadsheet instrument may be used by either your organization’s staff or ternal consultants to assess your organization’s financial management systems and to plan improve-ments, i.e., build on your competences While the instrument will be most useful to the individuals collecting the data, senior managers and other stakeholders should read the Preface and Introduc-tion sections of this guide to understand the process of assessing and improving the financial man-agement competencies that they are committing to

ex-whAT is The FinAnciAl MAnAgeMenT AssessMenT Tool?

FinMAT is an instrument that managers and their staff can use to see how competent they are in managing their organization’s finances The instrument can also help them decide which components and subcomponents to work on next

If you are a manager in a health organization, FinMAT can help you:

• assess which stages of development (levels of competence) your organization has reached in managing its finances;

• identify changes that you can make to manage your finances more effectively;

• make a specific Action Plan to implement these changes;

• monitor resulting improvements

f in mat

deTerMining your iniTiAl FinAnciAl MAnAgeMenT goAl

As described above, FinMAT consists of a spreadsheet instrument and a guide to its use The sheet instrument stores and summarizes the technical information that you collect about the finan-cial management competence of your organization The first step is to recognize what your goal is, and that goal will determine which option you use, Option 1 or Option 2:

1 Your organization is starting up a new project or

preparing for an external audit, and you want to

assess how developed your organization or unit’s

financial management competence is.

One member of the organization or unit, or an external consultant.

2 To reach a consensus about the strengths and

weaknesses of your organization or unit’s financial

management competence and develop an Action

Plan that will address the weaknesses that your

organization/unit has prioritized

A Core Team of both program and finance staff, from junior employees to the directors.

Please see the appropriate sections of this manual for further guidance on how to use the chosen option

how The FinAnciAl MAnAgeMenT AssessMenT Tool is orgAnized

FinMAT helps users identify the characteristics and competence of their organization’s financial management systems, processes, and procedures

As briefly mentioned earlier, the instrument comprises three types of forms:

1 Assessment Forms (one for each of 10 financial management components) which

• list the subcomponents within each component;

• provide (for each subcomponent) criteria that can be assessed and assigned a level of cial management competence (Pre-Basic, Basic, Intermediate, Advanced);

finan-• provide blank boxes for users’ responses to each criterion;

• provide blank boxes for users to describe the evidence justifying their responses;

2 Summary Forms, one for each of the ten components;

3 Action Plan form (to copy as many times as needed)

Before applying FinMAT, facilitators may need to adapt the Assessment Form to the organization’s situation The form, which covers all ten components, is quite long and may appear intimidating at first However, facilitators need to review the entire tool to understand each financial management component and subcomponent, and evaluate whether these are relevant and important to the orga-nization’s work Not all components are relevant for all organizations, and some organizations may require additional criterion statements or subcomponents, such as references to government regula-tions or to specific donor requirements Facilitators may want to add more space to the forms Prior

to modifying the forms, however, save them to a hard drive as read-only files, and then make your own working copies Never work directly on original files; save the originals to refer to if necessary For specific criteria that are not relevant, there is an “N/A” option that facilitators can select before applying the instrument

f in mat

Have the Assessment Form in hand as you interview relevant staff and/or inspect physical space

for the YES or NO answers to the statements (criterion) in each subcomponent (Do not fill out the Assessment Form after your interviews and inspections.) Ideally, during the interview you will use

your laptop and the electronic version of the instrument to record responses; the electronic ment includes programming that helps with the analysis However, if you do not have a laptop, you can mark responses on a printout and then enter those answers into the electronic instrument later.Developing an Action Plan is a key part of the FinMAT process For Option 1, one individual, the internal or external consultant, develops an Action Plan to address key issues, and then presents that plan to the organization If you choose Option 2 and are using the tool at several branch offices

instru-or units of a larger office/instru-organization, the Action Plan finstru-orm is used at two different times It is used once at the end of a unit assessment for a unit-level plan and then once during the final one-day Action Plan workshop at which the separate unit plans are integrated into one plan for the whole organization

FinMAT AssessMenT ForM

There are four key parts to the FinMAT Assessment Form:

• financial management components (including subcomponents)

• criteria with assigned levels of competence

Financial Management Components Assessed by FinMAT

1 Organization and personnel 6 Timely payment and invoicing of goods and services

3 Accounting and record-keeping 8 Stock, inventory, and fixed assets

4 Purchasing and procurement 9 Audit

Each component (e.g., Component 5, Payroll) is divided into subcomponents (Payroll has twelve subcomponents.) Each subcomponent has a maximum of three criteria, one of which would catego-rize the development of its subcomponent as being at one of the four stages of competence that are described immediately below

f in mat

Levels of Competence. Applying a set of criteria for each subcomponent, assessors can categorize

at one of four levels of competence, a site’s ability to manage its finances at the subcomponent level:

• pre-basic (not meeting the basic stage fully, but still having specific strengths)

advanced competence includes all the criteria of the intermediate, basic, and pre-basic levels For example, an organization at the basic level of competence might produce regular financial reports, but one at an advanced level of competence would use those financial reports to make decisions about spend- ing Similarly, an organization at a basic stage of competence might produce expenditure and inventory reports for donors, while one with advanced competence would make further use of those reports to make management decisions.

For a number of subcomponents, the next higher criterion may not spell out (include the text of) the

prior criterion, but its inclusion in the higher criterion can be assumed For instance, basic budgeting competence is stated as a requirement at the basic level while it is implied at the intermediate and ad- vanced levels. In the spreadsheet instrument, a subcomponent lists the highest-level criterion first If you answer YES for this highest-level criterion, then you can skip any lower-level criteria and move

on to the next subcomponent

As stated earlier, each subcomponent has a maximum of three criteria that represent four levels of functioning (competence) Some subcomponents may have only two or even one criterion because the highest criterion for that subcomponent is intermediate or basic In these cases, the competence level for the subcomponent will be either intermediate or basic, but do not despair! The instrument

is designed to highlight these cases, and the team or consultant analyzing the results will easily see that the organization meets the highest criteria for the given subcomponent The Excel-based instru-ment includes a pie graph that shows how each subcomponent’s results compare with the highest possible results for that subcomponent

Each criterion number indicates first, the number of the component (1–10); second, the tial number of the criterion within each component (e.g., 3); and finally, the level of competence

sequen-(A=Advanced, I=Intermediate, B=Basic) For example, criterion number 1.3A indicates that the third criterion under Component 1: Organization and Personnel reflects an advanced competence.

Responses. The individual or team indicates YES or NO to whether the site/organization fulfills each stated criterion The individual or team formulates a response based on their knowledge and under-standing of the site/organization’s situation Most responses are objective In some cases, if Option 2

is being used, and therefore the instrument is being administered by the FinMAT team, some team members and site staff may have differences in interpretation Facilitated discussion can resolve these differences and enable the group to reach consensus Note that for some subcomponents, the

instrument criteria make a distinction between the existence of a certain set of policies and dures and a manual that documents these policies and procedures If an organization has established

proce-f in mat

its policies and procedures but has not documented those in a manual that staff could be trained on and refer to regularly, that subcomponent would likely be at the basic level For an example, please look at criterion 2.3B in the Policies and Procedures subcomponent of Component 2: Budgeting

Evidence. The Data Collection Team or the internal or external consultant documents the evidence that justifies all YES responses Examples of evidence include:

• verification of documents and records, such as annual and long-term plans, personnel cords, job descriptions, organizational charts, financial reports, financial statements, and bank statements;

re-• examination of system tools and manuals, such as registers, vouchers, receipt books, chase requests, inventory forms, policies and procedures manuals, and supporting forms;

pur-• physical examination of facilities, such as storerooms, warehouses, and other facilities that maintain inventory

Where actual physical evidence is not available, responses need to be substantiated by interviews with staff

f in mat

deTerMining your goAl

As noted, FinMAT can be applied in two ways Option 1 is for organizations that are preparing either for an internal audit or to receive new external funds Option 2 is for organizations that have already identified financial management as a function to strengthen, and need a tool to help them identify specific competences to improve, i.e., to build their financial management capacity This section goes into more detail about each option

oPTion 1

Option 1 is meant to be a rapid assessment of an organization’s financial management competence This option can be implemented in several hours or several days, depending on the size of the orga-nization being assessed, the number of finance staff and departments, the purpose of the assessment, and the possible financial risks For example, the assessment of your organization’s financial manage-ment systems for a potential award of $25,000 would likely require less time and in-depth analysis than an assessment required for a potential award of $3,000,000

The implementer(s) should have a background in finance, accounting, and business management, since it will take this expertise to assess the evidence presented FinMAT Option 1 is not intended

as an audit tool and may be used with “clients” who are already anxious about upcoming audits or donor pre-award surveys Best results are often achieved by keeping the tone conversational and educational Rather than focusing on deficiencies, it is wise to focus on easily achieved small steps to improve the financial health of the organization The criteria statements and answers on the assess-ment tool can and should be shared with the organization being assessed

FinMAT Option 1 has many uses:

Pre-AwArd AudiTing

International donors are a major source of funds for nongovernmental organizations (NGOs) doing humanitarian aid and development work Increasingly, donors are focusing on using local organiza-tions to implement their programs, through direct funding or through grants and partnerships from international NGOs If the donor intends to directly fund an organization, it will likely conduct a pre-award survey or audit, to ensure that the organization has the capacity to adequately manage the funds and comply with imposed cost principles and reporting requirements FinMAT Option 1 can provide an organization with an overview of the stage of development it will be assessed at (the capacity it will show) during such an audit, as well as point out areas that can be quickly addressed and improved before auditors arrive If the results of the survey are largely positive, it can also boost confidence and alleviate anxiety

1) Assessing the financial management competence of new local partners

An international NGO could use FinMAT Option 1 to assess local organizations that might become subrecipients of donor funds The results of such surveys would identify weaknesses in an organiza-tion’s financial and operational systems that might require additional capacity building, oversight,

or imposed controls

f in mat

2) Assessing needs for technical assistance

FinMAT Option 1 can also provide a quick baseline for determining the technical assistance and capacity-building needs of client or partner organizations, in the areas of finance and business op-erations

3) Assessing financial management and business operations

Organizations may elect to use FinMAT Option 1 to do an internal assessment of their financial agement and business operations in preparation for audits or as part of an improvement, or compe-tence-enhancing, initiative

man-Option 1 uses the standard FinMAT forms, i.e., YES or NO statements about subcomponent criteria These provide a “script” for reviewing systems in a logical, orderly framework and may be easily modified to eliminate sections or questions that don’t apply to your situation However, always be careful when eliminating criteria; make sure those are truly inapplicable, i.e., N/A

To the greatest extent possible, attempt to schedule the assessments for periods when the finance and operations staff can take the time to answer questions fully and honestly Avoid month-end and year-end periods, when finance staff members are often busiest Holiday periods are also difficult; an office may be short-staffed or its personnel preoccupied

When possible, ask diverse people within the organization to reply YES or NO to the same ments (criteria) Perceptions across the organization often differ, and seeking a range of responses often gets at the “truth.”

state-Once the assessment is completed, the implementer(s) should prepare a findings report that includes

an overall assessment of the financial systems and internal controls, as well as proposes (including lustrative time frames and budgets) changes and improvements The report can become the basis for

il-a technicil-al il-assistil-ance il-and cil-apil-acity-building work plil-an, if il-appropriil-ate If the orgil-anizil-ation is il-an tended grant recipient, the report should feed into the plan for overseeing and managing the grant

in-oPTion 2

FinMAT Option 2 builds on the Management and Organizational Sustainability Tool (MOST), a process that Management Sciences for Health (MSH) developed so that managers could assess their organization’s management capabilities and make concrete plans for improvement A MOST assess-ment often leads to more detailed assessments of particular management components, such as finan-cial management, so MSH developed supplementary assessment and planning tools to guide these processes The Financial Management Assessment Tool helps managers explore their organizations’ financial management competences and overall capacity in depth and focus on priority management areas that need improvements

The financial management assessment process assumes that the most effective way to initiate

organi-zational change in the medium and long term is to involve staff members and other important holders in an open assessment and consensual planning Option 1 can quickly identify areas that can

stake-be improved prior to a specific event (i.e., a new project start-up or an external audit by a donor) The organization or unit that has recognized its financial management weaknesses uses Option 2 to ask its entire organization to identify and prioritize these weaknesses and then address these in a sustainable way

f in mat

Use FinMAT in preparing for the assessment, conducting the assessment at sites, and integrating the results into organizational activities Within these phases, follow the ten steps detailed in the next section (Using the Financial Management Assessment Tool Instrument)

A Core Team plans the assessment, monitors its progress, leads the development of an wide action plan to make improvements, and advocates for institutionalizing the plan within the organization’s planning and monitoring systems The Core Team should contain a cross-section of program and finance staff If the Core Team is large and FinMAT is being used to assess a large orga-nization or office, a Data Collection Team may be formed This Data Collection Team is a subgroup of the Core Team plus one or two staff members from the site being assessed (but includes the extra one

organization-or two staff only if that site is a branch office organization-or subunit of a central unit) The Data Collection Team moves around the site, engaging staff and reviewing documents to determine which subcomponent criteria the financial management systems meet Together with the organization’s staff, they summa-rize the data for each component To be manageable, the Data Collection Team should be limited to 5–7 people If the organization’s key decision-makers are not on the Core Team, it may be a good idea

to form a group of key Stakeholders to attend both an initial meeting and a final workshop led by the Core Team These Stakeholders should review the summarized findings, the contributing causes, and the proposed actions They can help develop an organization-wide integrated Action Plan to make improvements in areas that are assessed as weak, i.e., good targets for capacity-building

Option 2 is particularly useful for organizations or programs that have branch offices or subunits and are interested in building the capacity of their decentralized units Implementers should spend some time discussing with the Core Team what the mandate of the decentralized units is, and how much control the decentralized unit has over certain financial management practices

Organizations may especially want to consider using FinMAT Option 2 when they are:

• receiving increased funding from donors or other sources, including an increased emphasis on funds flowing to subsidiary levels;

• decentralizing management functions to subsidiary levels;

• undertaking initiatives to strengthen overall management

To effectively use FinMAT, managers throughout an organization need to:

• commit to the assessment and to the process of strengthening financial management capacity at different levels, including dedicating sufficient human and financial resources to carry out the assessment and the follow-up plan, as appropriate;

• distinguish those areas of financial management that are within their scope to change and prove, and those that will require, at a future time, wider or more senior-level commitment to change

im-APPlying FinMAT in The Public, PrivATe, or ngo secTors

While NGOs and public-sector institutions vary in their specific practices and organization, most are responsible for carrying out similar financial management functions This guide was written for managers in both types of institutions Even if the position titles referred to in the guide are differ-ent from those in your institution, those managers generally perform similar functions to staff in your organization or program

Some differences between the NGOs and the public sector should be kept in mind when using this

f in mat

tool Where and how specific functions are carried out will vary For instance, in a centralized tem, the payroll function is often carried out by a central body, and subunit managers may not have much control over staffing levels Perhaps the biggest difference lies in the steps that institutions can take to improve their capacity In part because they are smaller institutions, NGOs often have more options for action and can act more quickly For example, many ministry subunits are still gov-erned by government-wide regulations; in such cases, the national civil service commission or even the national parliament may have to act to effect certain changes This guide offers alternatives when these differences affect the use of FinMAT, especially at the stage of taking action for improvement

sys-f in mat

using The FinAnciAl MAnAgeMenT AssessMenT Tool insTruMenT

Whether you have chosen Option 1 or Option 2, you will answer YES or NO to the criterion ments in each of the instrument’s ten components The instrument itself is an electronic Excel spreadsheet that has an introduction tab and then two tabs for each of the ten components One tab lists a component’s subcomponents and its criterion statements (with boxes for responding YES or NO) The other tab summarizes the YES and NO answers of each subcomponent’s criteria, indicat-ing the subcomponent’s stage of development, i.e., Advanced, Intermediate, Basic, or Pre-Basic This section of the guide provides detailed instructions for using both options of the Financial Manage-ment Assessment Tool instrument

state-sTeP 1: deTerMine your end goAl

Use the previous section of this guide to determine whether you are using Option 1 or Option 2 of FinMAT If you choose Option 1, skip to Step 4 below

sTeP 2: ForM The core TeAM And The dATA collecTion TeAM (oPTion 2 only)

Before getting started, you will need to assemble a Core Team to plan and lead the FinMAT ment It is essential that you include some staff with technical knowledge in financial management However, because both program and finance staff are needed to support and build strong financial management capacity, the Core Team must also have one or more nonfinancial program staff; be sure

assess-to consider persons who are interested in the performance of the financial management system They will be particularly important if you feel that there may be bias, conflict of interest, or a commit-ment to a highly optimistic (or pessimistic) outcome without them A team that is objective in its assessment will be more credible to staff and donors

The Core Team should all be from the same unit or office, so that there is no confusion as to what financial processes are being analyzed Whether you are assessing your head office or your subunit,

a typical core team for the FinMAT assessment would consist of the following staff members:

• executive director, minister, or deputy minister for finance and administration to set all direction, allocate staff and other resources, provide leadership and moral support, review results, and monitor the implementation of improvements;

over-• finance manager to provide technical input, ensure consistency throughout the organization, review results, and monitor the implementation of improvements;

• accountant from the head office to help modify the FinMAT Assessment Form and provide technical input during data collection and discussions;

• accountant from a subunit to provide technical input and a second perspective during data collection and discussions;

• program staff (one or two) to provide the perspective of programs and finance data users;

• consultant (optional) to facilitate and provide technical expertise and overall guidance during data collection and discussions

Not all Core Team members will participate in all assessment activities, but the entire team should plan the assessment, receive updates as the assessment progresses, and help develop and implement

an integrated Action Plan for the organization

f in mat

The Data Collection Team is a subgroup of the Core Team, and should be limited to 5–7 people This team will be responsible for and complete the assessment, reach consensus on each response, indi-cate evidence for all YES responses, and analyze results It is up to you whether you want the full Core Team or just the Data Collection Team to develop the Action Plan

sTeP 3: PlAn The AssessMenT (oPTion 2 only)

While institutions should review their entire financial management systems, some may want to first focus on any components that need immediate attention, such as budgeting or procurement You also need to decide whether you will concentrate on the head office or also assess the subunits Documenting your decisions about the components and sites you wish to assess helps clarify your thinking and communicate your decision to others

Beginning Your Assessment in the Head Office

The head office is a good place to begin your financial management assessment Scheduling your first assessment there can help you take advantage of the head office’s:

Comprehensive oversight Since head office managers are responsible for overseeing the

sub-units, they need to understand the central-level’s strengths and weaknesses before reviewing the subunits.

Experienced staff Generally, the head office will have the more experienced staff and technical

resources Once familiar with the methodology and process, these staff members can better support and guide the subunits.

Broad scope of financial activities The scope of financial management activities at the head

of-fice is usually broader and more complex Starting in the head ofof-fice will cover most aspects of the organization’s financial system.

Visibility An assessment at the head office would be more visible, which could encourage

partici-pation at other levels and a broader commitment to change.

Organizational example An initial assessment at the subunit level could be perceived as a

puni-tive audit Starting at the head office sends the message that what is healthy for the head office is healthy for the whole organization.

It is useful to have a formal scope of work that specifies the Core Team’s work in detail The Core Team generally consults with key finance staff and senior managers who develop a scope of work that can be used to communicate to stakeholders—especially staff directly affected by the assess-ment—the team’s purpose, schedule, and intended outcomes The Core Team’s scope of work should include:

• the rationale for the assessment;

• the anticipated outcomes, including deliverables and recommended improvements;

• a budget;

• a timeline;

• the anticipated in-house and external human resources needed to carry out the assessment

f in mat

Before beginning, the Core Team should designate one of their members as their leader, who will manage the team’s work, and from five to seven of their members as the Data Collection Team sub-group Also, as noted above, you should give some thought to potential conflicts of interest You may also need to educate nonfinance staff about the tool and some financial management concepts

sTeP 4: hold An iniTiAl MeeTing And develoP A schedule

If applying Option 1, the consultant or the external staff person will hold an initial meeting with the organization to discuss and plan the assessment For Option 2, the Core Team leader will call the Core Team together in advance of the actual assessment to discuss their roles and develop a schedule Team members will negotiate any adjustments in their scope of work with senior management You should also consider having an organizational workshop or holding a discussion at a regular staff meeting to explain the upcoming assessment process At a minimum, staff should be well informed about the assessment and understand its purpose If necessary, hold a meeting with Stakeholders to ensure that they understand the goal and process of applying the tool

In finalizing their assessment timeline, the Core Team will need to factor in the schedules of their team members and the schedules of interviewees at the sites being assessed Usually, the team as-sesses the head office first, so the head office schedules will be considered first If subunits are included, send them a letter fully explaining the assessment process and saying that the Data Col-lection Team is planning to visit their subunit Follow up with a phone call to arrange a convenient date A FinMAT assessment may require up to two and one-half days per site when all documents and respondents are available, but if you plan your time carefully or assess fewer than the ten com-ponents, it may take less time

Step-by-Step Instructions for Completing FinMAT’s Excel Instrument

1 Save a read-only copy of the file to your computer.

2 Go to the Intro tab and fill in the organization and the date This information will automatically

copy to all worksheets.

3 Go to the first data entry tab, called Comp1 Qs.

4 Start answering the criterion statements Answer YES or NO, and the appropriate competence

level will automatically fill in.

5 Within each subcomponent that has at least two criterion statements, selecting YES for the first

criterion statement will automatically gray out (skip) subsequent statements within that ponent, so you will move to the next subcomponent If you select NO for a subcomponent’s first criterion statement and YES for the second statement, the tool will automatically gray out any subsequent statements, and you will know to move to the next subcomponent.

subcom-6 Once you have said YES or NO to all the criterion statements within a component, go to its

sum-mary tab, e.g., Comp1 Sumsum-mary, to see a sumsum-mary of the component, including a pie chart that

compares the completed assessment with the highest possible levels for the component.

7 Proceed to the next component.

f in mat

sTeP 5: review The FinAnciAl MAnAgeMenT AssessMenT Tool insTruMenT

The FinMAT instrument is an Excel-based tool that makes analyzing results easy It is important

to learn the Financial Management Assessment Tool Excel instrument well and understand how it works See the box “Step-by-Step Instructions for Completing FinMAT’s Excel Instrument.” Before you begin the assessment, practice using the tool; see how it fills in competence levels automatically, how different answers to the criterion statements change the results, etc Before you interview the people within the organization being assessed, you should be very comfortable with the Excel instrument.The Data Collection Team or consultant’s next task is to review the FinMAT instrument with the requirements of the organization being assessed in mind If necessary, modify the Assessment Form

to fit the organization

You will see that each component is divided into subcomponents FinMAT will cover most tions, and criteria that are not relevant should be marked N/A (not applicable) so that they are not considered when analyzing the results of each component It is important to be careful when choos-ing N/A as a response Since the assessment is lengthy, it may be tempting to eliminate many criteri-

situa-on statements or entire subcompsitua-onents or compsitua-onents However, remember that the tool is designed

to help organizations identify their strengths and weaknesses and prioritize areas for improvement

Discarding criterion statements, subcomponents, or components should be done carefully Designate criterion statements as inapplicable (N/A) only when those are not important to the organization’s func- tions. For example, if the organization does not manage or store supplies, statements about ware-houses can be marked as inapplicable However, if an organization does not have a personnel policy manual, it is not appropriate to indicate N/A for statements about a personnel manual In addition, some organizations may wish to add criteria that reflect specific concerns

Before making any changes to the forms—answering YES or NO or adding your own criteria—first save the FinMAT forms from the CD-ROM to your hard drive as a read-only file, then make a work-ing copy that you can modify

Since FinMAT organizes assessment criteria into levels of financial competence (Pre-Basic, Basic, Intermediate, or Advanced), you will need to assign a level for each new criterion statement you add, and program the Excel spreadsheet to accurately designate the correct level You can safely assume that an addition is Basic if it represents an adequate level but leaves room for improvement To mod-ify the FinMAT Assessment Form, you may require input from experienced financial management staff or consultants Depending on the number of units at which you plan to apply FinMAT, you may wish to field-test your modified instrument to be sure that you have covered all the important areas

of your organization and that the criteria are clear within the context of your financial systems

sTeP 6: cArry ouT The AssessMenT And coMPleTe The AssessMenT ForM

In beginning your assessment at the head office, notify in advance all staff members who need to participate in the assessment so that they can prepare for it and make time available Depending

on the components you will assess, you will typically include the Finance Manager, tive Manager, selected program staff, stock or inventory staff, the Human Resource Manager, and procurement staff as assessment participants Small NGOs and some subunits of ministries of health may not have all of these positions, but someone is responsible for their functions If a team is carry-ing out the assessment, some of these staff will already be on the Core Team Staff at the assessment site will assist in data collection for the components about which they have knowledge Some will also be participants in the meeting at the end of the site assessment so that they can contribute their perspectives in listing and prioritizing needed improvements at the site

Administra-f in mat

The Data Collection Team may choose to conduct the assessment in a 2–3 day off-site meeting, ing methodically through each component, responding to each criterion statement, and indicating evidence for each YES response If this step is done off-site, the Data Collection Team then must go

go-to the office, looking for evidence go-to substantiate the YES responses

If the Data Collection Team decides to conduct the assessment on-site, the team will sit with ment staff and go through the criteria for all those components, asking whether the department meets the criteria and requesting evidence You may choose to fill out the assessment either directly

depart-in the Excel depart-instrument or on a prdepart-inted copy that you take to the meetdepart-ings with the organization’s staff The Excel instrument is programmed to “skip” questions as appropriate, so where possible,

it may be easier to use the electronic instrument If you are using a hard copy of the Assessment Forms, everyone involved should have a copy that they read and use to make notes, but one person from the Data Collection Team should be designated as the recorder In cases where the response to a criterion is obvious, the recorder quickly marks the response Where a criterion does not apply, the recorder chooses the N/A option Again, be very sure that a particular criterion really does not ap-ply If there is disagreement, the group must discuss until they arrive at consensus

A critical aspect of the FinMAT assessment process is the reliance on “evidence.” The Financial Management Assessment Tool defines evidence as a fact or concrete document that supports the an-swer to a specific management criterion Evidence is something that can be seen or known and that will ground the discussion in facts instead of perceptions Whether using Option 1 or Option 2, it is very important that participants note the evidence that supports the answer for each subcomponent criterion The evidence will also be the basis for determining future improvements

The following table illustrates typical recorded evidence for criteria in different components

Examples of Recorded Evidence

Organization

and Personnel 1.5B (ethical behavior standards) The written policies and procedures for ethical behavior are found in the files.

Accounting and

Record-Keeping 3.9I (chart of accounts) A written and approved chart of accounts with account codes for appropriate expenses.

3.19A (trial balance preparation) Trial balances prepared monthly are in the files.

Purchasing and

Procurement 4.11I (recording) All purchase orders are included in a register.

4.14B (separation) The purchasing function is separate from the

6.3I (payments to vendors) Authorized payments to vendors are made within

60 days of receiving invoices.

f in mat

Stock,

Inventory, and

Fixed Assets

8.12B (record-keeping) The stores have stock card records showing quantities

of items, balances, amounts received, and amounts issued Separate Stores…, etc.

Use of

Information 10.7B (donor reports) Donor reports are submitted on time with accurate information.

Important information for Option 2: For some criteria, the group will have differing viewpoints The role of the leader of the Data Collection Team is to facilitate discussion so that all staff can present their own perspectives, and no one, including senior staff, dominates the discussion The leader should emphasize the importance of using evidence to reach consensus on whether each criterion is met If the group cannot reach consensus, the recorder marks NO

The importance of reaching consensus is based on three assumptions:

• No single participant in the implementation possesses the complete truth about the tion and its financial management; instead, every person possesses some part of the truth An accurate picture is best obtained by pooling these individual perceptions

organiza-• Each participant’s observations about his or her knowledge of a particular financial ment component can broaden the perspective of all the participants The evidence the partici-pants offer to support their opinions helps the group come to agreement on what may initially seem to be incompatible viewpoints

manage-• Decisions that are reached by consensus are more likely to be implemented because a broad group of people participated in making those decisions

sTeP 7: review And coMPleTe The suMMAry For eAch coMPonenT

The Excel instrument automatically creates a Summary Form that lists the level of competence for each subcomponent of a component Most subcomponents have at least three criterion statements that determine the subcomponent’s level of competence; however as noted, some subcomponents have just one or two criteria The tool is programmed so that if your organization answers YES to the highest criterion in a subcomponent, then that subcomponent is rated at the highest possible level for that subcomponent (could be Advanced, Intermediate or Basic) If an organization answers NO

to the advanced criterion and YES to the intermediate criterion, then the subcomponent is rated as Intermediate As noted, this rating of competence levels is programmed into the electronic Excel instrument, so there is no need for the assessor to fill in the levels by hand

Once all criterion statements in a given component have been assessed, go to the Summary Form for that component and you will see that the level of competence for each subcomponent has been auto-matically pulled to the form If a particular subcomponent is not at the highest level of competence, its result will be highlighted in bold and the cell with the result will be outlined Also, you will see

a graphical representation of the results below the table The pie chart on the left shows the results

of your assessment, and the pie chart on the right shows the highest possible outcome As you analyze these results, keep these two pie charts in mind For example, if the pie chart on the right is approximately 75% green (indicating that the highest possible result for 75% of the subcomponents

is Advanced), and your results show 25% green, then you know that you are not at the highest sible competence level for this subcomponent Before you begin the assessment, you may want to experiment with the criterion statements, so that you fully understand how the instrument works, how the pie charts change with different answers

pos-f in mat

Tips for Prioritizing Actions within a Component

To identify priority actions, consider which of the proposed actions will have the biggest impact on your organization’s effectiveness For many organizations, this will include cash control and any- thing related to donor reporting You can divide tasks as follows:

• tasks that can be accomplished quickly and require few resources;

• tasks that may take longer but will have the biggest impact on organizational goals;

• tasks that will provide a basis for many other tasks.

In the “Finding” spaces provided, briefly describe the characteristics of that component You should try to summarize what the problem areas are, based on the group’s understanding of the site as-sessed and the evidence given for the criteria answered with a NO To offer a fuller picture of a component’s stage of development, include some strengths from the subcomponents assessed as be-ing performed at the higher levels of competence The Data Collection Team leader should facilitate discussion in developing the summary

sTeP 8: develoP An AcTion PlAn

The consultant Data Collection Team applying FinMAT will need to prioritize subcomponents in order to develop the Action Plan For guidance on prioritizing, please see the box “Tips for Priori-tizing Actions within a Component.”

For Option 1, at the end of the site assessment, the consultant will analyze the data in more detail and produce a list of specific actions that will address the findings of each component The consul-tant may not be able to complete the full Action Plan because the organization itself will need to prioritize components and actions to take, assign responsibilities, and determine deadlines

For Option 2, the Data Collection Team develops the Action Plan First, review the Financial agement Assessment Tool Summary Forms and the evidence for the subcomponents that are at a

Man-“Pre-Basic” level of competence Then transfer the criteria assessed at Man-“Pre-Basic” levels onto the appropriate columns of the Action Plan template Because many of the criteria are related, it is not necessary to list each one separately; rather, participants should group related criteria and summa-rize these under “Identified Weaknesses.” Insert the criterion numbers in the column on the far left,

so that you can refer to the criteria at a later stage

If there are many subcomponents at the Pre-Basic level, it may not be feasible to address all of them

in the Action Plan Organizations may find that they need to prioritize general areas or components first, and then develop the Action Plan around the prioritized areas On the other hand, if a clear pattern emerges or if there are a limited number of Pre-Basic subcomponents, the organization may choose to include all of them in the Action Plan, and then prioritize specifications

Next consider the actual source or main contributing causes of the weakness In the “Why Does This Situation Exist?” column, participants would explain their understanding of the real reason each problem exists The Team Leader’s role is to encourage discussion to try to unearth the real rea-sons for the weakness, before moving on to remedies The leader should continue to ask “why” until the group feels that it understands the contributing causes In doing this, you may want to keep the following points in mind:

f in mat

• The perceived source of a weakness is often a symptom, while the real cause lies elsewhere

• The problem may not be limited to financial management, but may stem from other systems, supervision, or the organizational culture If so, remedies, such as training or upgrading the ac-counting system, will be ineffective

• Personal or organizational incentives may exist for maintaining ineffective systems Remedies that don’t address these incentives will be ineffective

• The organization may have unwritten or even unspoken traditions for working a certain way Without a full understanding of these traditions, it may be hard to identify the fundamental cause of a given problem

Identifying Possible Improvements in the Public Sector and Large NGOs

Ministries, their subunits, and even large NGOs often have elaborate policies and procedures and are governed by government-wide systems (e.g., human resources, procurement, and accounting)

In some cases, these systems cannot be modified or can only be modified after receiving zation through a time-consuming process These institutions may also lack financial resources for improvements When selecting improvements, consider:

authori-• actions that can be taken locally, without seeking permission from other units;

• actions that can be taken locally, without requiring additional financial or human resources;

• actions that require approval from other units, and the steps needed to obtain this approval.

Finally, in the column labeled “Specific Actions Required for Improvement,” participants should identify actions that need to be taken to remedy the areas of weakness There may be more than one action for each weakness In other instances, some single actions (e.g., improve documentation

of policies and procedures) may apply to more than one weakness in several components While improving competence and strengthening capacity may require staff time and money as well as authorization from proper authorities, significant improvements can often be made without these Therefore, you should identify what changes can be made immediately, without additional resources

or authorization Remember to make the actions specific For example, do not list as an action “get upper management on board with necessary changes.” A better action would be “hold a meeting with upper management to discuss changes.”

After identifying priority actions, state the timeline within which to complete each action, the people responsible for implementing the action, and the resources they will need Identify the indi-cators of achievement that will signal to the unit that the action has been completed

If FinMAT has been applied at several branch offices or units, the Data Collection Team will review the actions recommended for each unit or branch office, and organize these into unit-level action plans using the Action Plan form

Organizers should plan three days for Steps 6–8 Action planning will take approximately a half day

f in mat

sTeP 9: reAch consensus on PrioriTy AcTions AT A MeeTing (oPTion 2 only)

The Data Collection Team will need to present the Action Plan to the Core Team, as well as to key Stakeholders if they are not on the Core Team The Stakeholders should include senior officials, sub-unit managers, and board members It is important that these Stakeholders understand the results and agree to the Action Plan

At the beginning of the meeting, schedule time to discuss the accuracy of the findings makers may want to backtrack to some specific evidence or criteria which led to the proposed ac-tions Have copies on hand of the units’ completed Financial Management Assessment Tool Assess-

Decision-ment Forms in case questions arise Explore different interpretations of the areas of weakness For instance, staff may have differing views of how the organization’s culture, supervision, and shortages of human resources might affect performance, such as late reports They may also have varying opinions on any proposed changes to policies and procedures.

Key decision-makers need to review the Detailed Summary and Action Plan form, then develop a consensus on priority areas for improvement, focusing on not only what needs to be done, but how Senior-level and organization-wide commitment is critical at the end of the assessment since many improvements have associated costs and can be time consuming You cannot address all the sug-gested actions in the short-term, so prioritizing and developing sustained commitment will keep the assessment from losing its momentum

Supporting Action Plans of Subunits

From the perspective of accountability and performance, an organization will only be as strong as its weakest unit Once individual units have developed their proposed Action Plans, the head office should bring all the plans together to get an overall organizational picture To help create a larger organizational picture out of the individual subunits, Action Plans at the subunit level should:

• identify the resources, training, and authorization needed from the central level;

• identify types of improvements that staff can make on their own at the subunit level without external assistance or resources.

Working with representatives of the subunits, decision-makers at the head office will then need to:

• review individual plans to determine what is essential for the entire organization;

• identify and allocate necessary human, material, and financial resources to the subunits;

• provide feedback and confirmation of head office support for the subunit Action Plans, gesting changes to individual plans as necessary;

sug-• integrate into the head office’s Action Plan specific activities that will support the subunits in implementing their own Action Plans (see Step 10).

Suggestions for the meeting with Stakeholders

Have small groups review the Action Plans from all the units (or the single Action Plan, if just one office was assessed) to identify the actions that fit the considerations above Have the groups record their recommended actions for later discussion in a plenary session As part of their review, they

f in mat

should consider questions such as: Is the related problem that prompted the action significantly fecting the performance of the organization as a whole or of several assessed units? Does the pro-posed action directly target the identified problem? Are resources (financial, material, and human) readily available to make the change? Would the change be acceptable to the staff? Does political support exist for the change? What are the barriers to making the change? How much time is re-quired to make the change? Do you have sufficient authority to make the change?

af-After the small group and plenary session, the full group of participating stakeholders should reach agreement on the priorities for action and commit to making human and financial resources available.The meeting with Stakeholders could take a full day

In some cases, you may have to hold a separate meeting to present the recommendations to board members or other stakeholders Work toward a consensus on these recommendations

sTeP 10: link The AcTion PlAn To AnnuAl oPerATionAl PlAnning, budgeTing,

Make sure to incorporate the Action Plan into all organizational and group work plans The Core Team can do this by advocating for the inclusion of these activities Also, make sure that supervisors include the objectives in their performance reviews of individual staff members For instance, you can:

• incorporate the Action Plan’s achievement indicators into the performance review of the person responsible for that activity;

• report regularly on the progress of all Action Plan activities in your monthly, quarterly, or nual meetings

an-By remaining committed to making the changes you have identified in your assessment, you can help your financial management systems achieve transparency and accountability Your commitment will more easily attract the funds you need to provide your clients with high-quality services

sTeP 11: Follow-uP

Several months into the Action Plan, the Core Team should meet to measure progress and make any necessary adjustments to the Plan The Core Team may decide to conduct the assessment again, six months or one year after the initial application, to measure progress and see if any other areas of weakness are identified

f in mat

FinMAT glossAry

Adverse audit opinion: Independent auditor’s written view (with supporting reasons) that the financial statements of an organization (1) do not fairly present its actual financial position, (2) are not in conformity with Generally Accepted Accounting Principles (GAAP), and/or (3) the required information was either not disclosed, or (if disclosed) was inadequately disclosed or was inaccurate.1

Burn rate: Speed at which a program or department is spending money on a monthly basis

Capital expenditures: Money spent to acquire or upgrade physical assets such as buildings and machinery.2

Capital projects: Long-term investment project requiring relatively large sums to acquire, develop, improve, and/or maintain a capital asset (such as land and buildings).3

Cash box: a small, strong box for keeping cash in.4

Chart of accounts: System of accounting records developed by every organization to be compatible with its particular financial structure, and in agreement with the amount of detail required in its financial statements It consists of a list of ledger account names and numbers showing classifica-tions and sub-classifications and serves as an index to locate a given account within the ledger.5

Conflict of interest: A situation in which an individual or organization is involved in multiple ests, one of which could possibly corrupt the motivation for acts in the other

inter-Criminal history: Documentation from an appropriate authority regarding any violations of the law committed by an individual

Custodian: Individual responsible for safeguarding specific assets

Direct report: An individual who is responsible to a specific supervisor

Expense ratios: Financial measure that, in nonprofits, compares a specific category of expense to the total amount of expenses Often, this is used to compare the total amount of program expenses to the total overall expenses after removing the indirect costs to identify the overall percentage of costs that are directly program-related

Financial measures: Ratios or other financial data used to evaluate the financial health of an zation, department, or program

organi-FIFO: First-in, First-out method of inventory management in which items that arrive first to a storage site are distributed first

Fixed Assets: Land, buildings, and equipment expected to be used for at least a year

Fringe pool: A type of indirect cost pool that commonly is established for the purpose of lating employee fringe benefit costs Common costs accumulated in such pools include those for compensated absences, health insurance, bonuses, retirement plans, and payroll taxes.6

f in mat

Fringe rate: An indirect cost rate which expresses the relationship between costs accumulated in a fringe pool and the related base for allocating such costs, for a given period of time.7

Imprest fund: A fund with a fixed balance above which the fund cannot rise

Indirect cost: Expenses (such as rent, maintenance, security) incurred in joint usage and, therefore, difficult to assign to or identify with a specific department or program

Indirect cost rate: An indirect cost rate is a mechanism for determining what proportions of rect costs each program/project should bear An indirect cost rate represents the ratio between the total indirect costs and benefiting direct costs, after excluding and/or reclassifying unallow-able costs, and extraordinary or distorting expenditures In the United States context, the indirect cost rate is negotiated between the organization and the cognizant Federal agency.8

indi-Manual: Comprehensive and step-by-step guide to a particular topic for both beginners and tioners that also serves as a reference book A manual details what is given and what is required, explains how to put the presented information into practice, and instructs how to solve problems

practi-as they occur This term is commonly used interchangeably with handbook.9

On-the-job training: Training provided informally when an individual is in the process of ning a new job

begin-Organization chart: Visual representation of how an organization intends authority, ity, and information to flow within its formal organizational structure It usually depicts differ-ent management functions (accounting, finance, human resources, etc.) and their subdivisions as boxes linked with lines.10

responsibil-Out-of-pocket expense: Incidental cash expenditures in business, often minor while traveling 11

Paper trail: Can be paper or electronic documentation of a step-by-step history of a transaction It enables someone to trace the financial data from a general ledger to the source document (invoice, receipt, voucher, etc.) The presence of a reliable and easy to follow audit trail is an indicator of good internal controls instituted by a firm.12

Payables: Money owed to creditors, lenders, employees, or government (taxes), presented as a ity in the balance sheet of a firm.13

liabil-Qualified audit report: A qualified opinion suggests that the information provided was limited in scope and/or the company being audited has not maintained GAAP accounting principles.14

Receivables: Accounting term for amount due from a customer, employee, supplier (as a rebate or refund), or any other party.15

f in mat

Salary: Agreed-upon and regular compensation for employment that is, in common practice, paid on

a monthly or biweekly basis and is not based on an hourly, daily, weekly, or piece-work basis.16

Service mix: The combination of programs offered by an organization

Signatory: Person who binds himself or herself, or the entity he or she is authorized to represent,

by his or her signature to the terms of an agreement.17

Signing off: To give approval for a specific transaction or activity

Stock: Consumable items kept in a significant number in order to conduct programmatic activities

Stock card: An inventory control document that lists the available quantity of a particular uct.18

prod-Structured orientation: A formal series of trainings

System: Set of detailed methods, procedures, and routines established or formulated to carry out a specific activity, perform a duty, or solve a problem.19

Trial balance: In double entry bookkeeping, aggregate of all debit and credit balances at the end

of an accounting period that (1) shows if the general ledger is in balance (total debits equal total credits) before making closing entries, (2) serves as a worksheet for making closing entries, and (3) provides the basis for creating draft financial statements.20

Wage: Monetary remuneration computed on hourly, daily, weekly, or piece-work basis.21

Unqualified audit report: Independent auditor’s declaration that he or she has no reservation in certifying that the audited firm’s financial statements (1) adequately disclose material information, (2) present fairly its financial position, and (3) show results of its operations in conformity with GAAP Also called unqualified opinion or clean opinion.22

FinMAT, the Financial Management Assessment Tool 23

Unit:

Date:

FinMAT AssessMenT ForM

CoMponenT 1: orgAnizATion And personnel

This component covers the elements of organizational structure and human resource management functions that support financial management functions.

Indicate YES or NO in response to whether your organization meets each criterion, and enter the evidence on which you base your response.

# Criterion to Assess Component Response (Yes/No)

Level (Pre-Basic, Basic,

1.1I An official document outlines authorized signatories,

and all signatories are aware of their responsibilities.

1.2B All signatories are aware of what it means to have

signatory authority.

SIGNATORIES Level

1.3A The organization has written policies and standards

for ethical behavior that are provided to all staff

members Policies are in line with local labor law

Training is provided on standards for ethical behavior

to all employees as deemed appropriate.

1.4I The organization has written policies and standards

for ethical behavior that are provided to all staff

members Policies are in line with local labor law

1.5B The organization has written policies and standards

for ethical behavior Policies are in line with local

1.6A Actual wages and salaries are set based on established

scales based on job types Scales are available to all

staff members within those scales.

1.7I Actual wages and salaries are set based on established

scales based on job types.

1.8B Wage and salary scales exist and are based on job

types.

WAGE AND SALARY SCALES Level

FinMAT, the Financial Management Assessment Tool

24

Unit:

Date:

FinMAT AssessMenT ForM

CoMponenT 1: orgAnizATion And personnel (ConT.)

# Criterion to Assess Component Response (Yes/No)

Level (Pre-Basic, Basic,

1.9A The Chief Financial Officer has 10 years of financial

management experience and appropriate educational

credentials.

1.10I The Chief Financial Officer has at least 8 years of

financial management experience, or 5 years of

financial management experience and appropriate

educational credentials.

1.11B The Chief Financial Officer has at least 5 years of

financial management experience.

CFO EXPERIENCE Level

1.12I The organization checks the credit and criminal

histories of individuals hired for financial positions to

ensure that they have clean records, in accordance

with available information and local laws.

CRIMINAL CHECK Level

1.13A Other than the CFO, at least 90% of financial staff

have 2 years of relevant experience, and some staff

have relevant professional qualifications

1.14I Other than the CFO, at least 75% of financial staff

have 2 years of experience, and some staff are

studying for their professional examinations.

1.15B Other than the CFO, at least 50% of financial staff

have 2 years of experience.

FINANCE STAFF EXPERIENCE Level

FinMAT, the Financial Management Assessment Tool 25

Unit:

Date:

FinMAT AssessMenT ForM

CoMponenT 1: orgAnizATion And personnel (ConT.)

# Criterion to Assess Component Response (Yes/No)

Level (Pre-Basic, Basic,

1.16A Managers hold monthly meetings to review financial

management performance objectives and resolve

related issues.

1.17I Managers hold at least quarterly meetings to review

financial management performance objectives and

resolve related issues.

1.18B Managers establish basic performance objectives for

financial management performance (e.g., quarterly

report deadlines)

FINANCIAL MANAGEMENT PERFORMANCE MEETINGS Level

1.19I Written job descriptions describing responsibilities

and listing tasks exist for all types of finance jobs

Staff members have copies of their job descriptions;

the job descriptions reflect what people actually do.

1.20B Written job descriptions describing responsibilities

and listing tasks exist for all types of finance jobs.

JOB DESCRIPTIONS Level

1.21A Staff participate in an organized orientation and

training which includes financial management topics.

1.22I Staff receive on-the-job training related to financial

management.

ORIENTATION Level

FinMAT, the Financial Management Assessment Tool

26

Unit:

Date:

FinMAT AssessMenT ForM

CoMponenT 1: orgAnizATion And personnel (ConT.)

# Criterion to Assess Component Response (Yes/No)

Level (Pre-Basic, Basic,

1.23A Each finance staff member’s individual annual work

plan specifies their performance objectives, and

how their performance will be measured; and these

performance measures are agreed on.

1.24I All staff have individual annual work plans that

specify individual objectives for the year.

1.25B All staff have individual annual work plans that

describe activities to be carried out during the year

PERFORMANCE MEASURES Level

1.26A Annual performance reviews assess staff performance

against performance objectives Annual performance

reviews contribute to decisions regarding promotion

or salary increases Situations of low performance

are actively addressed and resolved through the

supervisory system.

1.27I Supervisors complete staff appraisals at least annually

and note areas for improvement Situations of low

performance are actively addressed and resolved

through the supervisory system.

1.28B Supervisors complete staff appraisals at least annually

and note areas for improvement

PERFORMANCE REVIEWS Level

FinMAT, the Financial Management Assessment Tool 27

Unit:

Date:

FinMAT AssessMenT ForM

CoMponenT 1: orgAnizATion And personnel (ConT.)

# Criterion to Assess Component Response (Yes/No)

Level (Pre-Basic, Basic,

1.29A The organization has written policies against

engaging in transactions which pose a conflict of

interest, and all staff must certify their agreement.

1.30I The organization has written policies against

engaging in transactions which pose a conflict of

interest.

CONFLICT OF INTEREST Level

FinMAT, the Financial Management Assessment Tool

28

Unit:

Date:

Advanced Intermediate Basic Pre-Basic

Highest Possible Level Your Level

Advanced Intermediate Basic Pre-Basic

FinMAT suMMAry ForM

CoMponenT 1: orgAnizATion And personnel

Your Level Highest Possible Level Notes

FINANCIAL MANAGEMENT PERFORMANCE MEETINGS Level ADVANCED

FinMAT, the Financial Management Assessment Tool 29

FinMAT suMMAry ForM

CoMponenT 1: orgAnizATion And personnel (ConT.)

FinMAT, the Financial Management Assessment Tool

This component covers the budget process, approval, control, and reporting; it also links to annual operational planning and to multiyear strategic planning

Indicate YES or NO in response to whether your organization meets each criterion, and enter the evidence on which you base your response.

# Criterion to Assess Component Response (Yes/No)

Level (Pre-Basic, Basic,

2.1A A policy and procedures manual exists for

budgeting, and is readily available to all staff

members involved in budgeting The established

budgeting policies and procedures meet generally

accepted management practices and cover the

critical areas of:

• roles and responsibilities

• review and approval processes

• reporting processes

• variance detection and analysis The staff members involved in budgeting are

systematically oriented or trained in the contents of

the policy and procedures manual.

2.2I A policy and procedures manual exists for

budgeting, and is readily available to all staff

members involved in budgeting The established

budgeting policies and procedures meet generally

accepted management practices and cover the

critical areas of:

• roles and responsibilities

• review and approval processes

• reporting processes

• variance detection and analysis

FinMAT, the Financial Management Assessment Tool 31

Unit:

Date:

FinMAT AssessMenT ForM

CoMponenT 2: BudgeTing (ConT.)

# Criterion to Assess Component Response (Yes/No)

Level (Pre-Basic, Basic,

2.3B The established budgeting policies and procedures

meet generally accepted accounting practices and

cover the critical areas of:

• roles and responsibilities

• review and approval processes

• reporting processes

• variance detection and analysis

POLICIES AND PROCEDURES Level

2.4B Staff members have the budget templates and

related report formats they need to record, track,

and document activities and expenses.

BUDGET TEMPLATES Level

2.5B The organization has an annual budget

development process in place, including steps for

review and approval Annual budgets are directly

tied to the organization’s annual operational plans.

ANNUAL BUDGETS Level

FinMAT, the Financial Management Assessment Tool

32

Unit:

Date:

FinMAT AssessMenT ForM

CoMponenT 2: BudgeTing (ConT.)

# Criterion to Assess Component Response (Yes/No)

Level (Pre-Basic, Basic,

2.6A The annual budgets are able to meet the donors’

needs in regard to segregation of programs and

costs Annual budgets are directly tied to the

organization’s annual operational plans and are

developed by program and/or department.

2.7I The annual budgets are able to meet the donors’

needs in regard to segregation of programs and

costs Annual budgets are directly tied to the

organization’s annual operational plans.

2.8B The annual budgets are able to meet the donors’

needs in regard to segregation of programs and

costs.

ANNUAL BUDGETS & OPERATING PLANS Level

2.9A A multiyear budget is developed with the

involvement of all senior managers The multiyear

budget is linked to multiyear strategic plans and

guides the annual budgeting system.

2.10I A multiyear budget is developed with the

involvement of all senior managers

MULTIYEAR BUDGETS Level

2.11A The budget process covers projected:

• ongoing revenues and expenditures

• occasional or special revenues (like grants) and expenditures (like those incurred to carry out specific activities)

• capital expenditures

BUDGET PROCESS Level