Public Budgeting and Finance

Financial management

Generating financial info for decision-making.

Stakeholders

vendors/suppliers; creditors; clients/customers; regulators, citizens

Sources and uses of funds

Management of short-term resources and controls of organizational performance.

Accounting

System for tracking activities ('financial accounting') and results ('managerial accounting').

Net Working Capital

Resources an organization uses to provide goods and services over the year.

Payables and receivables

Current assets - current liabilities.

Current Liabilities

Obligations that will have to be paid within a year.

Working Capital Management

Management of current assets and current liabilities to maximize results.

Assets

Any resource that the organization has that can help it provide goods and services.

Liabilities

Obligations that the organization owes to other organizations or individuals.

Public Service Organizations

Decisions are oriented to achieving the varied goals of the organization while remaining financially sound.

Managerial accounting

Relates to generating any financial information that managers use to improve the future results of the organization.

Financial Accounting

Provides retrospective information.

Cash Basis

Recognizes revenue and expenses based on actual cash flow. Useful for short-term cash management.

Accrual Basis

Recognizes revenue when goods or services are delivered and expenses when incurred, regardless of cash flow.

Modified Accrual Basis

Recognizes revenues when they are available and measurable, and expenses when incurred.

Fund Accounting

Ensures revenues are used for their intended purposes, acknowledging that government funds are often earmarked for specific uses.

Special Revenue Funds

For specific earmarked revenues.

Economic Order Quantity

Calculated the optimal amount to order at one time.

Working Capital Cycle

Ensures daily cash needs are met.

Accounts Receivable

Bills sent by the organization but not yet collected.

Aging schedules

A valuable management tool; that helps determine priorities

Liquid Resources

Cash for transactions as a safety margin and for investments.

Legacy Costs

Pensions, OPEB.

Total cost of ownership

The overall cost associated with acquiring and using a resource.

Efficiency

Whether the organization uses the minimum needed resources to produce its outcomes or outputs.

Effectiveness

Whether the organization is accomplishing its mission.

Intergovernmental Revenue

Funds state and local services not otherwise affordable.

General Fund

Collects general revenues like sales and property taxes.

Carrying Costs

Costs incurred for holding inventory over time.

Short-Term Obligations

Amounts owed by an organization due soon.

Payroll Payables

Salaries and benefits owed to employees.

Taxes Payable

Tax obligations not yet paid by the organization.

Notes Payable

Amounts due on loans taken by the organization.

Liquidity

Ability to access funds when necessary.

Triple Bottom Line

Measures financial, environmental, and social impacts.

Unrestricted Net Assets

No donor restrictions on these funds.

Temporarily Restricted Assets

Assets with donor-imposed time or purpose restrictions.

Permanently Restricted Assets

Gifts maintained indefinitely for specific purposes.

Statement of Financial Position

Summarizes assets and liabilities at a point in time.

Statement of Activities

Shows financial operations over time, like income statement.

Change in Net Assets

Reflects difference between revenue and expenses.

Expense Classification

Categorizes expenses by function for reporting.

Audit Trail

Tracks transactions back to their source for accountability.

Financial Event

Changes assets or liabilities in accounting records.

Efficiency of Spending

Resource allocation effectiveness beyond mere spending.

Debt Ratios

Metrics comparing debt to assets for financial health.

KPI

Key Performance Indicators for measuring success.

Management Controls

Systems ensuring compliance and efficient resource use.

Fixed Assets

Long-term tangible assets recorded at cost.

Depreciation

Reduction in asset value over time for accounting.

Risk Assessment

Evaluating potential risks to financial stability.

Board Independence

Ensures unbiased governance and oversight.

Trustworthy Employees

Essential for preventing fraud and errors.

Cost Drivers

Factors influencing an organization's costs.

Statement of Cash Flows

Shows actual cash flow in and out.

Separation of Functions

Divides responsibilities to reduce fraud risk.

Balance Sheet

Snapshot of overall financial status.

Proper Authorization

Ensures controls over financial transactions.

Cash Flow Categories

Operating, investing, and financing activities.

Operating Activities

Daily cash inflows and outflows.

Investing Activities

Cash related to investments and capital assets.

Financing Activities

Cash from debt or long-term funding.

Days Operating Cash

Aim for 60 days of cash reserves.

Cash Flow from Operations

Positive cash flow avoids reliance on debt.

Performance Audits

Evaluate if organizational objectives are met.

Auditor's Reports

Provide opinions on financial statement accuracy.

GAAP

Guidelines for preparing financial statements.

Entity Concept

Defines the organization for accounting purposes.

Materiality

Detail level necessary for decision making.

Accrual Concept

Records revenues and expenses when earned or used.

Tax-Exempt Status

Exempts organizations from federal income tax.

Managerial Accounting

Focuses on internal organizational management.

Performance Obligations

Conditions of a gift or pledge identified.

Footnotes

Provide additional details affecting financial perception.

Physical Safeguards

Protect assets physically and digitally.

Bonding

Protects against theft through employee vacations.

Cost Convention

Values based on objective resource valuation.

Key Review Areas

Cumulative cash inflows and outflows assessment.

Trends Analysis

Compare cash flow trends with previous periods.

Explicit Price Concessions

Discounts or reductions clearly stated.

Discounts

Reductions in revenue recorded for client offers.

Key Risks

Factors threatening exemption status for organizations.

Implicit Price Concessions

Unrecorded reductions in revenue expectations.

Asset Classification

Categorization of assets based on liquidity.

Bad Debts

Amounts expected to be uncollectible from clients.

Duty of Care

Board members' obligation to exercise diligence.

Marketable Securities

Investments reported at fair market value.

Deferred Revenue

Liabilities for services not yet rendered.

Net Assets

Total assets minus total liabilities.

Non-Exchange Transactions

Contributions not directly tied to goods/services.

Imposed Tax Revenues

Taxes mandated and assessed by authorities.

Derived Tax Revenues

Taxes based on self-reporting by entities.

Financial Events Recognition

Recording events when they occur, not when paid.

Long Term Liabilities

Obligations due beyond one year.

Operating Budget

Budget for day-to-day organizational operations.

Capital Budget

Budget for long-term investments in assets.

Variance Analysis

Comparison of actual results to budgeted expectations.

Volume Variance

Difference due to actual output vs. budgeted.

Price Variance

Difference caused by unit price changes.