The organizational structure and functions of a city finance department

¶ … Department of Finance is the lead agency supporting the Government's key economic and financial policy outcomes through the provision of advice and coordination of resource allocation for Government programs. It also provides financial services to the Government and the community, covering asset and liability management, collection of state taxes and insurance and superannuating administration. The organization is made up of a diverse group dedicated people with a wide range of skills, including accounting, finance, economics, business service, insurance, superannuating and management.

The Finance Department is comprised of three divisions:

Finance Administration Division

This division is responsible for the overall direction and policy implementation. It is also responsible for coordination of the Finance Department, which includes:

a) Budgeting and Accounting

Finance is responsible for the preparation, implementation and monitoring of the City's Operating, Utility and Capital budgets. The focus is to administer these processes to meet the needs of the community, City Council and other City departments.

In addition, Budgeting and Accounting are responsible for designing and implementing adequate financial controls for the City's accounting functions, thereby ensuring the integrity of all financial transactions. The Section, as part of its fiscal responsibilities, also produces the City's financial statements and Annual Report.

b) Purchasing

Purchasing purchases and secures materials, supplies, equipment and services required by the City including contracts for all non-inventory items, construction contracts and consulting services.

c) Treasury Services

The Treasury Services Section effectively manages highly cyclical cash flows ensuring adequate funds are available to fulfill the strategic plans and initiatives undertaken by the City. Additionally, all sources and inflows of revenues are identified and allocated to key capital projects. All work and services rendered by the City are billed by accounts receivable.

The Finance Administration Division also provides financial advice to the City Manager and City Council.

2) Financial Operations Division

This division includes the Accounting Section, which maintains the accounting system, the fixed asset system, reconciles bank accounts, and prepares various financial reports. The Treasury Section provides centralized cashiering, collection and accounting for improvement district bonds, collects for all business licenses, collects all receivables and audits various tax sources for compliance.

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The head of the Department of Finance shall be the Director of Finance, which is the most senior officer in a local authority with corporate responsibility for the finance functions across authority. The officer given this role might have a variety of titles, but in essence has the same responsibility placed upon by law. Alternatives titles include "Chief Financial Officer," Responsible Financial Officer," or "Treasurer." There are two main responsibilities placed upon the Finance Director:

1) A statutory duty as the Responsible Financial Officer for the authority;

2) A fiduciary duty to local citizens.

To fulfill these duties, the Finance Director should be at the heart of the Authorities in decision making process. The Finance Director needs to inspire respect, trust and confidence with members, colleagues and the general public by demonstrating a range of skills, competencies and personal qualities. High standards of performance and professionalism should be set for members and staff dealing with financial matters supported by appropriate training. The Finance Director needs to be a team player, but be able to intervene with confidence when key financial principles are infringed or when corrective action is needed. The role of the Finance Director is to ensure that there is a sound and robust corporate governance framework and an effective approach to financial management. As authorities, look at innovative solutions in the way services are provided that bring extra risk, the Finance Director should give positive support, but assess the risks involved. Honesty in the use of public money and secure sound financial management and effective controls, must not be compromised. The authority's organizational and managerial structures should support the fulfillment of this role. The Chartered Institute of Public Finance and Accountancy (CIPFA) has suggested four key requirements that should be observed to achieve this:

1) There should be a single Finance Director who is a qualified member of a specified accountancy body.

2) The Finance Director should be a member of the authority's corporate management team.

3) The Finance Director post should not normally be combined with other roles such as Chief Executive.

4) The work of Internal audit should come under the control of the Finance Director to fulfill the duties require.

This in part fulfills the fiduciary duty to local citizens so that they have confidence and trust that their funds are being used wisely and properly. There are five key roles that describe the work of the Finance Director:

1) Maintaining strong financial management underpinned by effective financial controls

The Finance Director has a responsibility to the authority for sound financial management, administration and stewardship of the authorities resources. There is also a "Trustee" duty to the local taxpayers to manage the authority's resources prudently on their behalf. This is achieved by having strong financial management and administration, accurate financial reporting and effective internal financial controls.

New policy initiatives emphasize the need for sound financial management to ensure that public money is safeguarded. Therefore, the Finance Director must assess the risk and ensure that all activities that impinge on the financial affairs of the authority are consistent in standards and transparency.

2) Contributing to corporate management and leadership

The Authority's members decide service priorities and policy objectives, but it is the responsibility of the corporate management team to implement those decisions within the law.

The Finance Director needs to build strong working relationships with leading members, other chief officers and the authority's partners. These relationships need to be based upon mutual trust and respect and a clear understanding of role and responsibility.

Developing a medium term financial strategy linked to the authority's policy development and service planning is essential. This requires a framework of systems, processes and controls that give an assurance of sound financial management and good corporate governance that complements quality service delivery, and accurate, timely and impartial advice and information.

3) Supporting and advising democratically elected representatives

The Finance Director must be independent, impartial and objective when giving

supports and advice to members as individuals, as political groups and to both Executive and Scrutiny functions. All members should recognize this overarching responsibility.

The performance of this role will create some tensions. It will include giving accurate and impartial advice on resource and financial planning, setting capital and revenue budgets that fit with policy priorities and objectives and monitoring financial performance against the budget plan.

The confidence and trust of all members must not be compromised at any time. This means that advice and support given to individual members, or political parties must remain confidential wherever appropriate.

4) Supporting and advising officers in their operational roles

An effective partnership between the finance service and other services is essential to achieve the authority's corporate priorities and objectives.

Clarity of roles is key to the effective working of this partnership. For this relationship to work well there needs to be a good understanding of the role of the finance function throughout the authority.

Policy objectives and service strategies are translated into detailed capital and revenue budget plans. Sound financial management needs to be understood and accepted at all levels within the authority. Clear financial regulations and operating instructions are essential particularly where there is devolved budget responsibility.

This requires appropriate financial systems, functions and controls for all activities that the authority is engaged in either directly, or through partnership arrangements. Training for budget managers is essential to allow them to do their job. Together these should ensure that the authority's resources are well managed.

5) Leading and managing an effective and responsive financial service

The Finance Director is responsible for the direct provision of services for the collection and payment of money. Examples for this authority are:

1) Collection of variety of income (car park fees, planning fees and rents);

2) Payment of salaries;

3) Pension and Creditors

This contact with the public, external auditors, inspectors and the media requires good working relationship to be developed. High standards of performance are expected whether services are provided directly, in partnership, in a devolved setting or through other providers. To inspire and ensure confidence in the finance service, both within the service and outside, the Finance Director must have personal integrity and a high standard of behavior. A key function is to demonstrate accountability to the public for the stewardship of the resources held in trust. This is achieved by ensuring that financial and performance information presented to the authority, to the public and media is accurate, clear, relevant robust and objective.

Below are the lists of the main responsibilities of the Finance Director that gives a better contribution to the company:

1) Define and develop the strategic vision and direction of the finance function to be able to set challenging objectives for the future, in response to changing needs.

2) Direct, lead, plan, organize and control resources in order to implement strategy and to provide monitoring and review processes to assess the effectiveness of functions.

3) Contribute to, advise on and participate in the corporate management of the Board in order to provide the best possible health care within the available resources.

4) Promote highest standards of professionalism within finance to ensure compliance with external standards and best practice.

5) Recruit, deploy, develop, train, appraise and motivate staff to fulfill the objective of the finance functions.

6) Provide the highest possible quality of service to meet needs within available resources.