Expenditure Plan From the Office Research Paper

Excerpt from Research Paper :

.governments are created by law and are continuously regulated by legal provisions found in constitutions, statutes, charters, ordinances, administrative regulations, legislative resolutions and judicial interpretation… the accounting system must produce data and information which indicate the extent to which the financial operations carried out by all agencies of the government pursuant to their designated objectives comply with applicable laws and legal requirements. The existence of a vast network of legal provisions and the diverse nature of governmental operations make necessary the utilization of fund account." (Snodgrass, 1993)

The fund accounting system is ostensibly the full gamut of accounting services and compliance protocol. "The general ledger, financial statements, accounts payable, purchase order processing with encumbrances, payroll including payroll projections and encumbrances, grants management and reporting, grants receivable, human resources, fixed assets management, central stores/inventory." (Reis, 1996)

The city therefore should increase its capacity to more properly manage the financial and managerial accounting practices inherent in local government administration. The federal match at 100% is a match that must be reported dollar for dollar to the treasury department to provide accountability regarding the matching in funds for purposes that benefit the city and facilitate a more efficient and effective environment.

A grants department may also be facilitated given the integrated fund accounting system to provide accountability and a fully integrated system with Raisers Edge and donor foundation databases, which will streamline the grants process and reduce operational time for the grant life cycle. Many cities do not have grant departments or the capacity to utilize grant monies from the federal government via the www.grants.gov website.

The recommended solution to facilitate fund accounting is to procure ERP fund accounting software for implementation to handle all associated accounting endeavors as well as to link the donations to non-profits and to report to the treasury with regard to the federal match program. ERP systems are a full accounting solution that provides the means to enable business accounting solutions for all related business, non-profit, and government accounting needs.

CDC Software provides ERP solutions for local government and non-profit agencies. In fact, CDC is an outsourcing solution that removes the need for internal ERP by enabling the executing of fund accounting via remote means. The use of cloud computing is the future of business and government. By enabling the use of the solution, the city is establishing the precedence of forward thinking and is utilizing the funds provided to facilitate the most up-to-date accounting system and cost management methodology.

Financial Controls

Ideally, the city should focus on establishing the internal control structure pertaining to financial reporting. Financial controls will reduce the propensity for insidious embezzlement or the commingling of funds, and indeed the theft of funds from the internal accounts. Additionally, the city will seek to establish the following parameters to better serve and facilitate the city's financial controls.

All transactions that actually occurred during the reporting period are recorded and these transactions comply with all laws and regulations.

All assets and liabilities that actually existed at the reporting date are recorded.

All assets, liabilities and transactions that the agency should have reported for the period are reported.

All assets and liabilities are reported at their proper value.

All financial information is in the proper form and includes all required disclosures.

All assets that the agency legally owns and all liabilities that the agency legally owes are recorded.

All agency assets have been safeguarded against fraud and abuse.

Documentation for internal controls, all transactions and other significant events is readily available for examination.

Source: Berkowitz, (2005) The Journal of Government Financial Management

The integration of Fund Accounting and Financial Controls is a function of the CDC Software that enables the support of financial controls through the implementation of fund accounting methodologies. Specific monitoring of financial controls will enable a lower variance on expenditures by monitoring and controlling monthly expenditures. Additionally, the revenue and expense side of the ledger is monitored for possible fraud by internal control procedures.

The recommendation of establishing an internal control environment is provided by Berkowitz, (2005). "First, I recommend that agencies conduct a pre-assessment that would include obtaining and reviewing existing documentation that describes the policies and procedures related to internal controls over financial reporting at the major organizations within the agency for major financial statement accounts and significant business processes." (Berkowitz, 2005)

Additionally, according to Berkowitz, "For example, one may select financial statement accounts such as fund balance, investments, accounts receivable, inventory, property plant and equipment, entitlement benefits payable, grant liability, appropriations used, non-exchange revenue, transfers in and out, undelivered orders, and intra-governmental assets, liabilities, revenue and expense. The specific accounts will vary by agency. For business processes, one could select grants, contracts and payroll. (Berkowitz, 2005)

The added internal controls ostensibly are derived from federal management accounting procedures. According to Lunney (2011), "Agencies really are under constant pressure to do more with less," Kay Daly, director of financial management and assurance at the Government Accountability Office, said during a March conference on preventing and recovering improper payments. Cracking down on such payments, achieving clean audits, strengthening internal controls, integrating technology systems and training people to use them effectively are just a few of the items on a CFO's (Treasurer's) checklist." (Lunney, 2011)

Internal controls are a function in the ability to conduct a proper internal audit that can track fiduciary inconsistencies that can cause a lack of trust from the public with regard to the manner to which local government handles its internal controls. The integration of technology systems does mean a greater level of IT sophistication as well as computer management skills. The training of staff to handle the newfound job responsibility is imperative to the overall function of these systems.

Government Financial Reporting

The Joint Legislative Auditing Committee (Legislative Auditing Committee, 2011), enforces federal reporting requirement standards to local government operations. According to the Legislative Auditing Committee, "All counties, municipalities, and special districts are required to complete an annual financial report (AFR) for each fiscal year. Counties, municipalities and independent special districts are required to submit the AFT to the Department of Financial Services (DFS). The Financial Reporting Entity of the county of the city to which it is dependent is required to provide that entity the financial information necessary to comply with the AFR reporting requirements." (Online Sunshine, 2011)

Government Accounting Standards Board Statement No. 34 was established in June of 1999 to address issues associated with the reporting of fund-based fiscal management that may, at times, exceed tens of public accounts internally controlled and monitored. The required basic financial statements that must be provided and reported to the federal government to establish compliance include those that establish compliance with GAAP, which include two separate yet related financial statements (Wiley, 2001)

Fiscal Management

The capital and operating budget are separate but symbiotic financial statements that disclose the expenditure with the requisite capital and operating outlay. As mentioned within the report, the capital budget includes infrastructure upgrades to establish a lower operating cost when compared to the current infrastructure. The integration of the fund accounting as a function of the oversight by the internal controls provides the fiscal compliance with federal reporting standards, as these are the exact systems that federal agencies deploy throughout their departments to fiscally monitor operations.

The $10mm budget before matching funds are dispersed to the city for purposes of matching are to meet federal expectations with regard to receiving the 100% match. Therefore, the procurement and administration of these integrating cost accounting and financial management systems are imperative to establish the necessary compliance to federal reporting standards whilst further establishing the trust to facilitate further grant disbursement in the future.

Applying the budget as a disciplinary process is a function of establishing an allowable variance that establishes whether the operations are efficient as well effective. Many budgets do not track the actual in comparison the expected. The expected costs are just that, expected and therefore are depicted within the budget. Additionally, zero-based budgeting practices are not adhered to across the board and so each year many programs must establish a new operating budget respective to the current capital budget outlay.

The capital budget is ostensibly a research-based expenditure proposal that exacts the expenditures for the year as a function of costs that enable city operations. Without a budget and without the budget approval, the process of enabling capital expenditure to facilitate government operations becomes inherently flawed. Therefore, it becomes imperative to necessitate the convergence of operational and capital budget expenditures to ensure the local government operations are compliant with federal reporting standards.

The operating budget is ostensibly a maintenance expenditure document that provides the associated carrying cost of the capital outlay as a function of the yearly cost to operate and maintain the capital outlay, which is a type of asset. The operating budget should be a function of the cost of the capital budget. This is to say, the capital budget of the city will be x and the operating budget…

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