Standards for child and youth development programs

2020 Edition

Child and Youth Development Program Administration (CYD-AM) 7: Financial Planning and Management

Positive financial outcomes are achieved through sound financial planning, management, and oversight.
 

Interpretation

 Please note that the person or entity responsible for providing oversight may be responsible for implementing some of the practices addressed in this core concept.
2020 Edition

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Purpose

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. 
1
The program’s practices fully meet the standard, as indicated by full implementation of the practices outlined in the Practice Standards.
2
Practices are basically sound but there is room for improvement, as noted in the ratings for the Practice Standards.
3
Practice requires significant improvement, as noted in the ratings for the 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 Practice Standards.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Cost analysis and description of methodology
  • Program budget for the current fiscal year
  • Procedures for financial management and accounting (CYD-AM 7.03, 7.05, 7.06)
  • List of revenue sources with percentage of each to total budget
  • Financial records
  • Analyses/reports of financial status
  • Job description and resume of the person(s) responsible for managing financial accounts
  • Documentation of training on the use of the accounting system
  • Most recent audit and management letter, if applicable
  • Current IRS Form 990, if applicable
  • Long term plan
  • Mission statement
  • Logic model (or equivalent framework)
  • Interview:
    1. Program Administrator and/or Director
    2. Other personnel involved in the managing of financial accounts, if applicable

CYD-AM 7.01

The program conducts a cost analysis to determine the true cost of the services provided, including expenses related to both the program itself and associated overhead. 
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.
 

CYD-AM 7.02

An annual operating budget:
  1. includes revenues and expenses;
  2. supports the program’s mission and goals, and facilitates implementation of the activities outlined in the program’s logic model (or equivalent framework);
  3. serves as a plan for managing the program’s financial resources; and
  4. is developed through a team approach that includes input from personnel with knowledge of the program’s priorities and operations.

Interpretation

Expenses may include, but are not limited to: payroll; staff development; program materials and curricula; equipment; food; transportation; rent; and utilities. 

CYD-AM 7.03

The program implements a system for processing and managing accounts payable and receivable that includes:
  1. timely payment of financial obligations;
  2. receipt and timely deposit or disbursement of funds received;
  3. prompt, accurate, and complete recording of transactions;
  4. use of an inclusive and descriptive chart of accounts that enables the program to categorize expenses; and
  5. balancing accounting records on a monthly basis.

Interpretation

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.
 

CYD-AM 7.04

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.

Interpretation

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.
Some literature highlights the importance of utilizing financial software that has the capacity to generate helpful reports and projections regarding the program’s financial status.

CYD-AM 7.05

In an effort to promote financial sustainability, the program:
  1. pursues stable, predictable sources of revenue through diversification and balance in funding streams consistent with the program’s mission and purpose; and
  2. seeks to conserve its financial resources by maintaining sound practices regarding spending.

Interpretation

Programs meet the intent of element (a) if they can demonstrate that they are actively pursuing stable and predictable sources of revenue, even if they have not yet achieved that goal.

CYD-AM 7.06

The program establishes protocols for management and oversight of the financial system that include mechanisms for:
  1. implementation and management by appropriately trained and qualified individuals;
  2. management or review by more than one person, when possible;
  3. review and approval by program leadership and entities responsible for oversight;
  4. assurance that management directives are carried out;
  5. prevention of error, mismanagement, or fraud;
  6. safeguarding and verification of assets; and
  7. segregation of duties to the extent possible.

Interpretation

In the case of privately-held and owner-operated for-profits, the program’s owners will be responsible for the review and approval referenced in element (c) of the standard.