"Role Of Financial Manager"
Public Budgeting & Finance Summer 1990 Volume 10, Number 2 JOHN L, MIKESELL and THEO EDWIN MALOY MARVIN PHAUP/ Federal Financial Reporting JOHN YINGER/ States to the Rescue? ROBERT LACEY/ Public Enterprises and the Budget KEITH SNAVELY/ State Taxation of Interstate Sales ROBERT C, RICKARDS/ Budget Presentations in Texas HARRISON S, CAMPBELL, JR./ Comparative Fiscal Analysis STATE SERIES JON YUNKER/ Managing a Budget Office VIEWPOINTS: PROFESSIONAL BUDGETING HERBERT G, PERSIL / Profession of Budgeting DAVID S, BROWN / Role of the Financial Manager AL KLIMAN /A Successful Budget Process TRANSACTION PERIODICALS CONSORTIUM DAVID S. BROWN The Role of the Financial Manager The chief financial officer is one of the most important positions in any organization. While it might be known under a variety of names--budget officer, comptroller, controller, vice-president for financial affairs, or some other designation--it clearly is at the top of those positions traditionally described as staff. And since all organizations depend on the resources available to them, the person who fills this top financial position in an agency is extremely important to the organization as a whole. In government, both at the federal and state level, the position of chief financial officer is usually filled by someone who has been trained in the skills of public administration, Said in another fashion, when selecting a chief financial officer, the head of an agency chooses not among those individuals who have been involved in operations, engineering, marketing, or other operational areas of an organization where a specific knowledge of the product or service is required. Instead, the selection of a financial manager is usually made from among those candidates for the position who have received academic training in the various staff areas. Financial managers have many responsibilities and much may be expected from them. A variety of skills are required of them and these vary depending on the needs of the organization. I. The Financial Manager as Supervisor of the Budget Process. This traditional role gives the financial manager major responsibilities in budgetary preparation. He or she is more than the assembler of estimates, as often was the case in the past. Today, the financial manager must put together the agency's budget and also guide the process in terms of its real needs. The chief elected/executive officer (depending on the organization) must approve the agency's "plan of action" in the final analysis. But the financial manager must put the budget in shape to win the required approval. He or she should know what the appropriate legislative committees are willing to accept and also manage the budget's presentation, no easy task at any time. 2. The Financial Manager as Forecaster of Future Needs--and as Provider of Ways of Meeting Them. Those in the public service are well aware that the source of future funds is ordinarily the legislature. But this does not mean that there are no other sources of needed monies. Funds can often be moved from one appropriation to another, or are David S. Brown is a professor emeritus in the Department of Public Administration at George Washington University. available at times from other agencies. The financial manager should be aware of program needs as they occur and also aware of ways of satisfying them. He or she must estimate all sources of income, including any potential borrowing authority (such as the issuance of bonds). Thus, at all times, the financial manager must be well-informed of the organization's financial status- -and health--as well as the condition of the money markets and other matters relating to fiscal stability. 3. The Financial Manager as Overseer of Expenditures. Historically, the financial manager is the "keeper of the budget." This means being well aware of the ways that money is used. The task is not so much to give approval to everything that is spent as much as to be assured that spending is generally carried out in accordance with the stipulations approved by legislators and political executives. The cavalier fashion in which many program administrators may have used the funds made available to them suggests the "chain of command" has not always worked in the fashion intended. Someone must be alert to what is really happening. That person is the financial manager. Good judgment requires avoiding telling operational officials what to do, while ensuring that the wishes of those who voted the funds available to the agency are respected. There are many ways in which an agency can get into trouble financially and it is always part of the financial manager's job to see that these are avoided. 4. The Financial Manager as Guardian of Assets. An agency has many assets, including properties, buildings, and equipment. They all have value. The financial manager and associates are responsible for protecting these assets. This responsibility, has, in recent years, in addition to other duties, put them in the business of finding ways of protecting the agency's investments. Also, because the way things are done often becomes bureaucratic -- and as a result costs money--the financial manager has gotten into the "management analysis" business and increasingly uses computers and other sophisticated equipment. This calls for specialists, of course, who logically come within the financial manager's purview and complement other assignments. They also assist in the traditional task of financial management. 5. The Financial Manger as Contracting Officer. The fact that so many of the transactions of the modern organization involve contributions from the outside means that large sums of money are needed in the life of the organizational system. This reaffirms the requirement that the modern financial manager be involved with the procurement process. Again, the major work needs to be done by those people with expertise in contract matters. But they should be considered as part of the financial manager's domain. For all these purposes, the financial manager must have skills considerably removed from the budget officer of old. He or she is, of course, the advisor to the chief elected/executive officer. But more than that, the financial manager and staff are advisors as needed to those on the line. The financial manager is also a trainer. Those who are at the operational levels are often unaware of the kind of problems which those at higher levels must face. It is the financial manager's responsibility to convey these problems to others in the organization. The literature of organizational management has given too little consideration to the Public Budgeting & Finance / Summer 1990 importance of negotiation as one of the manager's capabilities. The financial manager is a person whose knowledge of the resources available to the organization is critical. But because others produce the goods and services which must be produced, their views must also be heard and taken into account. Financial managers must never let the power or influence they posses lead them to forget that there are others whose contributions must be weighed and measured in the decision-making process. This is why "negotiate" is more appropriate to the financial manager's work than either "direct" or "control"