Standards for public agencies

2020 Edition

Financial Management (PA-FIN) 2: Financial Risk Assessment

Agency leadership evaluates financial risks and takes steps to mitigate those risks.
NA State Administered Agency Regional Office

NA The agency does not have a finance department.
 
2020 Edition

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Purpose

The agency's ability to achieve its mission is based on sound financial managment practices that ensure efficient, data-informed use of its resources in accord with applicable legal and regulatory requirements.
1
Full Implementation, Outstanding Performance
A rating of (1) indicates that the agency's practices fully meet the standard and reflect a high level of capacity.  
  • All elements or requirements outlined in the standard are evident in practice, with rare or no exceptions: exceptions do not impact service quality or agency performance. 
2
Substantial Implementation, Good Performance
A rating of (2) indicates that an agency's infrastructure and practices are basically sound but there is room for improvement.
  • The majority of the standards requirements have been met and the basic framework required by the standard has been implemented. 
  • Minor inconsistencies and not yet fully developed practices are noted; however, these do not significantly impact service quality or agency performance.
3

Partial Implementation, Concerning Performance
A rating of (3) indicates that the agency's observed infrastructure and/or practices require significant improvement.  

  • The agency has not implemented the basic framework of the standard but instead has in place only part of this framework.  
  • Omissions or exceptions to the practices outlined in the standard occur regularly, or practices are implemented in a cursory or haphazard manner.  
  • Service quality or agency functioning may be compromised.  
  • Capacity is at a basic level.
4
Unsatisfactory Implementation or Performance
A rating of (4) indicates that implementation of the standard is minimal or there is no evidence of implementation at all.  
  • The agency’s observed administration and management infrastructure and practices are weak or non-existent; or show signs of neglect, stagnation, or deterioration.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
County/Municipality Administered Agency, State Administered Agency (Central Office), or other Public Entity
  • Business continuity plan 
State Administered Agency (Regional Office)
  • Evaluated at Central Office only
County/Municipality Administered Agency, State Administered Agency (Central Office), or other Public Entity
  • Most recent evaluation of financial risk and/or see relevant portions of the annual risk prevention and management reports in PA-RPM 2 
  • See long-term or strategic plan in PA-AM 3
State Administered Agency (Regional Office)
  • Evaluated at Central Office only
County/Municipality Administered Agency, State Administered Agency (Central Office), or other Public Entity
  • Interviews may include:
    1. Fiscal authority
    2. Agency leadership
    3. CFO or equivalent
State Administered Agency (Regional Office)
  • Evaluated at Central Office only

 

PA-FIN 2.01

The agency conducts, or participates in, an evaluation of financial risks in relation to its financial capacities and the resources needed to provide services that is:
  1. incorporated into the agency’s annual risk prevention and management assessment; and 
  2. informs the agency’s long-term planning and annual short-term planning processes.

 

PA-FIN 2.02

The agency plans for unexpected resource disruptions by developing a business continuity plan.

Interpretation

Resource disruptions include those events that are likely to lead to unexpected expenses or cuts, such as a natural or man-made disaster, recession, or a significant shift in sociopolitical climate. Examples of ways to demonstrate standard implementation include, but are not limited to: rainy day funds, establishing risk sharing mechanisms, or developing recession budgets.