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Lecture note Government and not-for-profit accounting: Concepts and practices (7/e) – Chapter 15: Managing for results

Chapter 15 - Managing for results. In this chapter, the learning objectives are: Roles of accountants in the management of governmental and not-for-profit organizations; how program budgets overcome limitations of traditional object-classification budgets; the need for, and characteristics of, sound operational objectives; | Chapter 15 Managing for Results © 2016 John Wiley & Sons, Inc. All rights reserved. 1 1 Learning Objectives Roles of accountants in the management of governmental and not-for-profit organizations How program budgets overcome limitations of traditional object-classification budgets The need for, and characteristics of, sound operational objectives Risks of establishing explicit organizational objectives Ways in which program budgets link expenditures to objectives Advantages and disadvantages of program budgets Why it’s important to develop and report measures of service effects and accomplishments Special problems governments and NFPs face in planning and budgeting capital expenditures © 2016 John Wiley & Sons, Inc. All rights reserved. 2 2 Role of Accountants They play multiple roles in entity’s management. There are 4 phases to the process: 1. When social problems arise: area specialists Collect and analyze budgetary and financial information Compare potential costs and benefits . | Chapter 15 Managing for Results © 2016 John Wiley & Sons, Inc. All rights reserved. 1 1 Learning Objectives Roles of accountants in the management of governmental and not-for-profit organizations How program budgets overcome limitations of traditional object-classification budgets The need for, and characteristics of, sound operational objectives Risks of establishing explicit organizational objectives Ways in which program budgets link expenditures to objectives Advantages and disadvantages of program budgets Why it’s important to develop and report measures of service effects and accomplishments Special problems governments and NFPs face in planning and budgeting capital expenditures © 2016 John Wiley & Sons, Inc. All rights reserved. 2 2 Role of Accountants They play multiple roles in entity’s management. There are 4 phases to the process: 1. When social problems arise: area specialists Collect and analyze budgetary and financial information Compare potential costs and benefits Accountants can make valuable contribution to this phase. © 2016 John Wiley & Sons, Inc. All rights reserved. 3 Role of Accountants (cont’d) 2. When policy-makers select among the options presented to them: -Accountants have less to contribute in this phase. 3. When programs are administered by appropriate agencies: -Accountants actively involve in establishing plans, operating budgets, controlling costs, preparing financial and other operating reports. 4. When programs are audited: Assessed by audit teams where accountants play a vital role. The teams also include statisticians, economists, and other specialists. © 2016 John Wiley & Sons, Inc. All rights reserved. 4 Limitations of Traditional Budgets Budget: is the most significant of financial documents Determines amounts of resources to be received Details the financial strategy of the organization Limitation: But budget doesn’t provide information on the extent the expenditures will enable the organization to achieve its objectives. .