Standards for private organizations

2020 Edition

For-Profit Administration and Financial Management (AFM) 9: Financial Planning

Planning for the current fiscal cycle is organization-wide and involves key stakeholders.
2020 Edition

Currently viewing: FOR-PROFIT ADMINISTRATION AND FINANCIAL MANAGEMENT (AFM)

VIEW THE STANDARDS

Purpose

The for-profit organization ensures accountability through effective administration and management, and sound financial management practices.
1
The organization's practices fully meet the standard, as indicated by full implementation of the practices outlined in the AFM 9 Practice standards.
2
Practices are basically sound but there is room for improvement, as noted in the ratings for the AFM 9 Practice standards.
3
Practice requires significant improvement, as noted in the ratings for the AFM 9 Practice standards.
4
Implementation of the standard is minimal or there is no evidence of implementation at all, as noted in the ratings for the AFM 9 Practice standards.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Budget planning procedures
  • Annual Budget
  • Sample of monthly analysis of financial performance 
  • Operating reserves policy
  • Meeting minutes reflecting budget planning and review of financial reports for the previous 12 months
  • Interviews may include:
    1. Governing body 
    2. CEO
    3. CFO

Fundamental Practice

AFM 9.01

The annual planning and budget cycle includes participation of management and other relevant stakeholders and is based on:
  1. the organization's mission and strategic priorities;
  2. performance improvement and outcomes data;
  3. direct and indirect operating expenditures;
  4. contractual requirements;
  5. changing costs and conditions; and
  6. anticipated revenue for the program year.
Note: See AFM 2.03 for more information on annual planning and how budget and annual planning cycles can support the agency’s mission and strategic priorities. 
Examples: Performance improvement and outcomes data in this context refers to the use of program and client outcomes data in planning and budgeting decisions. Such data may be used, for example, to direct available resources toward programs or interventions that have the strongest impact on individuals and families served.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • The process could be made more comprehensive or changing conditions could be better addressed.
3
Practice requires significant improvement; e.g.,
  • The budget planning process is not comprehensive or formalized in one of the standard's elements.
4
Implementation of the standard is minimal or there is no evidence of implementation at all.

Fundamental Practice

AFM 9.02

Financial information is routinely analyzed and the information includes:
  1. a monthly and annual analysis of financial performance against budget projection with budget-to-actual variance analyses performed on interim financial statements of activities;
  2. cash reserves in alignment with an operating reserves policy;
  3. service revenues and actual service delivery costs; and
  4. an annual inventory of significant assets, including securities.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • The organization routinely analyzes financial information but is not always stringent about comparing it with data about actual service delivery costs; or
  • Financial analyses are conducted quarterly and annually.
3
Practice requires significant improvement; e.g.,
  • Analysis of financial performance is not performed at least quarterly; or
  • Analysis of financial performance is not done annually; or
  • The organization does not analyze service revenue information and service delivery costs.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • The organization makes no attempt to either keep adequate service revenue information or to analyze it.