Financial Management

It's an understatement to say that COVID-19 has presented significant challenges this year. We have witnessed its devastating effects physically, prompting us to take extra health precautions and increase virus testing. At the same time, it's important to take precautions fiscally to ensure local governments maintain financial health. With decreased revenue and increased costs, local governments must be especially vigilant and use reputable resources and tools to inform them when making difficult financial decisions.

A new reporting feature in the Financial Intelligence Tool makes it simple for a local government to project its data into the future. Governments, with their often limited or restricted resources, have a responsibility to plan for the future. That management responsibility is often required by state law through the budgeting process. Although a local government won't hear from us about how to budget or plan for the future, it can still take advantage of our statutory requirement to publish each government's financial data, which we do using FIT.

Look forward

The interactions between customer and cashier have become complicated by the pandemic. How do you collect payments but keep everyone safe? If you are exploring your options, here are some resources that might help you.

Credit card and online payment options

Accepting credit cards or direct bank withdrawals can be a simple and contactless way for citizens to pay over the phone or via your website. If you choose these options, there are a host of things to consider, such as:

We're jumping into some lessons learned from the 2020 filing season regarding Schedule 06 – Summary of Bank Reconciliations. Even if you don't file a Schedule 06, these tips are useful when preparing any bank reconciliation, or other schedules or reports. These were identified as the most common areas of emphasis when SAO staff helped clients in 2020.

Financial planning and forecasting are essential activities of finance and leadership, and especially so in the age of COVID-19.

The Financial Intelligence Tool's (FIT) financial health indicators provide “retrospective” measures of financial health based on historic data. However, any government can use these measures to help plan for the future.

Benefits from integrating FIT's financial health ratios

Our Financial Intelligence Tool (FIT) has long offered a way for users to examine data on specific governments, government types, and specific revenue or expenditure streams. For the first time, FIT has a way to view all important information on a specific government type in one place, using new government-type profiles.

These new profile views for all government types show unique statewide data, including:

Financial indicators have received a meaningful update in our Financial Intelligence Tool (FIT), making them even more useful by capitalizing on the power of FIT's statewide collection of financial data.

Comparison power

Each financial health indicator now shows both the mean and median for other governments of your type. A local government can view how its indicator compares to those of similar governments across the state.

Indicators refocused

What's the best advice we can give you regarding use of and documentation for CARES Act funding? Document, document, and document some more. These funds should be treated just like any other federal award, which means their use should comply with the terms and conditions of the award and the Uniform Guidance. The federal Office of Management and Budget (OMB) provided some additional guidance and some exemptions to Uniform Guidance in its memorandums. OMB has stressed the requirement to maintain appropriate records to support costs charged to federal awards.

Many of you are attempting to anticipate the length or depth of the financial impacts of the pandemic. This will be difficult to predict, which makes financial planning challenging. One important tool available to help you in these circumstances is scenario planning.

Scenario planning is the purposeful act of preparing forecasts based on different underlying assumptions. It might include a worst case, a best case, and maybe two more possibilities in between.

Why you should use scenario planning

It is critical to forecast your cash inflows, outflows, and balances into the near-term future to anticipate liquidity shortfalls and remain solvent. Annual budgets tell you your spending authority for a year, whereas a cash forecast will tell you whether you have sufficient cash in the future on a month to month (or even daily) basis.

Why do it?

Cash forecasts: