8 Questions That Help Finance Departments Prioritize Their Tasks

Most finance department leaders are drowning in a sea of never-ending tasks to take care of. And it seems impossible to get everything done. There is just too much to do and too little time. And they want to maintain a work-life balance, too.

Therefore, it is critical for Government Finance Directors, CFOs, and other Administrative Service Directors to get out in front of issues so that they aren’t in constant fire-fighting mode.
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One of the most important tasks a government finance leader must do is effectively decide how they will spend their own time and, by extension, spend their finance department’s time.
 
But what’s the best way to decide what the most important tasks are?

Although every government is unique and every period of time has its own unique challenges, below is a list of eight questions every government finance leader should ask themselves to better prioritize their tasks at hand.

1. Are staff working effectively and efficiently?

​No finance department will ever be successful if its employees are not working effectively and efficiently. Therefore, it is helpful to ask:

• Do staff receive appropriate and regular training?
• Are policies and procedures documented? Are staff trained to know them?
• Is there effective communication between finance employees? With staff of other departments?

2. Are internal controls adequate?
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The single most important control is assuring that employees with access to assets do not also have access to the related accounting records.

​Although it is a large task to fully assure internal controls are adequate, the single most important control is assuring that employees with access to assets do not also have access to the related accounting records. If they do, they have the ability to manipulate the records to hide a loss of assets.
 
Therefore, the first question to ask is: Do any finance employees (who usually have access to accounting records) have access to assets? To answer this question, note that:

• “Access to assets” includes vendor checks after they have been signed, cash and checks received, unused blank checks, purchasing cards, petty cash, and the authorized expenditure activity (e.g., sign checks, approve wire transfers or electronic payments, or approve purchase orders). 
• “Access to accounting records” includes any record relied upon for entry into the general ledger. It includes input of checks received through the mail, even a manual list of checks made when the mail is opened.

 
To ensure internal controls are adequate, it is important to make the initial accounting record as soon as possible in the process and to separate the assets from the initial accounting record at the earliest opportunity. For example, as soon as the mail is opened, the checks restrictively endorsed, and the list of checks received prepared, then send the list of checks to Finance and send the checks to the bank (not to Finance). Examples of initial accounting records include purchase requisitions, timecards, list of checks received, manual receipts, employee expense reimbursement requests, and approved vendor invoices.
 
3. Are monthly financial reports handled timely and accurately?
 
Some common questions to ask are:

• Do you have a monthly closing schedule (see this blog post for more info on closing plans)? Do you stick to it? Do stakeholders know when the monthly financial statements will arrive?
• Do you have a process for reviewing the reports before releasing them?
• Are the monthly (or quarterly) financial statements submitted to the right stakeholders and do they understand them? Are the financial reports in the right level of detail for each stakeholder?
• If stakeholders have online access to financial information, do they have the correct security access?
• Are stakeholders adequately trained about how to understand the financial information provided? Do they have training about what other financial information the Finance Department can provide them?

 
4. Are compliance requirements met?
 
There are hundreds of things a government must comply with – laws and regulations, grant agreements, contracts, legal settlements, accounting pronouncements, bond covenants, policies, etc. The only way you can know if you are in compliance is to make a list of all the most important financial compliance requirements and to review them periodically.
 
5. Is the government financially stable?
 
Common questions to ask are:

• Does the government have a reserve policy and is someone monitoring its execution and compliance? Does the policy include a minimum reserve level, under what circumstances reserves can be used, and how reserves shall be replenished?
• Is a long-term financial projection prepared periodically? Is it tied to the government’s strategic plan? Is it reviewed by senior management and the elected body? Are assumptions documented and understood? If a significant structural deficit has been identified, are steps underway to remedy?

 
6. Are customers being served well?
 
Common questions to ask include:

• Do the Finance Department’s “customers” (i.e. personnel in other departments who interact with the Finance Department) have appropriate access and training on how to access information in the financial system?
• Are customers adequately trained on financial policies, procedures and controls?
• Are monthly financial reports tailored to each customer’s needs?
• Do customers know who to contact for common issues and concerns?

Is there an annual survey of customer satisfaction?
 
7. Are grants adequately managed?
 
Common questions include:

• Do you have a list of all the governments’ grants?
• Are all grants being billed and collected in a timely manner?
• Are the key compliance requirements for each grant identified? Has someone been assigned responsibility to assure the government complies with each key requirement?
• Are grant billings prepared based on expenses in the financial system rather than from informal records maintained by the grant administrator?

 
(For more information on how to manage grants and a sample grants management report, see this blog post.)
 
 
8. Are budgets (and variance analysis in related budget vs. actual reports) prepared effectively?
 
Budgets and related documentation should be prepared in enough detail to facilitate a budget vs. actual analysis throughout the year in the monthly budget vs. actual reports. To adequately explain such variances, it is important that budget documentation is in enough detail to understand what was budgeted. For example, if the police supplies budget is based on last year plus an inflationary increase, it will be difficult to know when it comes time to do variance analysis whether the purchase of bulletproof vests was an unanticipated cost or not.

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Obviously, this list of priorities is not comprehensive. It does not claim to list every important responsibility of a Government Finance Director, CFO, or Administrative Services Director. However, hopefully, this list will inspire Finance Department leaders to decide about what tasks to spend time on every day. 
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​If you have more questions on how finance departments can better prioritize their tasks, feel free to reach out to Kevin directly:

Kevin Harper, CPA
[email protected]
(510) 593-503

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