Sound administration and management increase program quality and sustainability; promote financial accountability and viability; support transparency and openness; and reduce risk, loss, and liability exposure.
Literature emphasizes the importance of employing strong financial management practices when operating out-of-school time programs, noting that good financial management supports improved planning and promotes program quality and sustainabily.
Having a clear understanding of the resources needed to serve program participants is necessary to: (1) develop realistic budgets; and (2) make informed decisions regarding funding needs and opportunities.
An annual operating budget:
includes revenues and expenses;
supports the program’s mission and goals, and facilitates implementation of the activities outlined in the program’s logic model (or equivalent framework);
serves as a plan for managing the program’s financial resources; and
is developed through a team approach that includes input from personnel with knowledge of the program’s priorities and operations.
Expenses may include, but are not limited to: payroll; staff development; program materials and curricula; equipment; food; transportation; rent; and utilities.
The program implements a system for processing and managing accounts payable and receivable that includes:
timely payment of financial obligations;
receipt and timely deposit or disbursement of funds received;
prompt, accurate, and complete recording of transactions;
use of an inclusive and descriptive chart of accounts that enables the program to categorize expenses; and
balancing accounting records on a monthly basis.
Accounting practices and procedures should address cash, checks, and any other accounts. Programs may demonstrate that accounting records are kept up-to-date and balanced monthly through: up-to-date posting of cash receipts and disbursements; timely reconciliation of the bank statement and subsidiary records to the general ledger; and monthly updating of the general ledger. The bank reconciliation should ideally be reviewed by a person other than the person who performs the reconciliation, when possible.
Some literature highlights the importance of utilizing financial software that can assist in financial management, including by helping personnel to automate certain tasks. However, literature also points to the importance of ensuring that personnel are trained to use software appropriately if they are to realize its benefits.
The program conducts financial analyses and produces financial reports that enable program leaders to evaluate the program’s financial status and plan for the future.
It may be relevant to produce a range of financial reports, from financial statements (i.e. balance sheets and income statements) to useful forecasts (e.g., cash flow projections that predict whether revenues will cover expenses at a particular point in time, which is especially important when programs lack significant cash reserves and are thus at risk for a cash shortage). The finalized budget can also serve as a tool that enables the program to monitor its activities and evaluate its financial situation throughout the year. For example, conducting a budget-to-actual comparison can prompt a program to make needed adjustments if actual expenses exceed those budgeted.
Reports should be produced, and evaluations should be conducted, on a regular and ongoing basis. Evaluation of financial status should consider financial capacities and resources (including assets and revenues), resources needed to operate the program, financial risks and anticipated problems, and financial planning and funding alternatives.