Budget and Financial Management in Planning Events - DOC

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					                        ARMY CIVILIAN WELFARE FUND



This information applies to all Army and Department of Defense Agency Civilian
Nonappropriated Fund Instrumentalities. It is to be noted that certain information
present in the annual IMCOM/FMWRC FY08 Operating and Budget Guidance is
also applicable.

This FY08 Civilian MWR NAFI Financial Management Operating / Budget
Guidance may be accessed on the World Wide Web Army Civilian Welfare Fund
Homepage at under the Budget Guidance

Civilian NAF Financial Management Operating Guidance and Accounting Policy
and Systems Memoranda that were not incorporated into AR 215-1, AR 215-7,
DOD 7000.14-R Volume 13 NAF Policy and Procedures are still valid. These
memoranda may be accessed on the World Wide Web Army Civilian Welfare
Fund Homepage as listed above, under the Financial Management Section.


       All FY08 budgets for civilian field operating NAFIs are to be prepared
        using the Financial Management Budget System (FMBS) version 2.0.

       All PRF and CWF budgets are forwarded electronically through FMBS to
        the ACWF. All budget submissions are to be received by the ACWF NLT
        September 15, 2007.

       All PRF and CWF budget packages will include: 1) A “Strategic Plan”
        with a “Description of Activities and Services” Appendix. Include NAFI’s
        current approved Position Requirement Document (PRD). 2)
        Commanders Approval Letter. 3) Council Meeting Minutes endorsing
        budget approval. 4) FMBS input of an Annual Operating Budget (AOB),
        APF/NAF Five Year Financial Plan, Capital Purchase Minor Construction
        (CPMC) Budget, Cash Budget. 5) Direct Operated PRF Activities:
        Current Menu Price List with annual proposed price increases.

       All PRFs and CWFs considering ACWF financial assistance during FY08
        must submit intentions to the ACWF by September 15, 2007 for

                                         1                             Enclosure 13
      Budgeted labor is to encompass a minimum 4% overall increase
       beginning in January to account for the annual pay adjustment and
       estimated employee benefit package changes.

      The minimum NIBD for PRF’s is eight percent of total manual food service
       revenue. Income from concessionaires or other operations including
       Vending BPA agreements, interest income and Bingo will not be included
       in the determination of the eight percent standard. Administrative
       expenses will be allocated IAW GAAP.

      CWFs are authorized to expend no more than 25% of the funds total
       revenue on NAF employee salaries.

      All CWF business operations must be self-sufficient. Operational fees and
       charges will be sufficient to meet continual operational expenses, capital
       requirements and capital improvements.

      Fully contracted PRF operations will not utilize a Regular Full Time (RFT)
       NAF employee or equivalent for the restaurant officer/manager, custodian
       or COR positions. Total labor hours allocated to the PRF will not exceed
       20 per week from all NAF sources.

      CWF and PRF budgeting and financial reporting is to follow standardized
       General Ledger Accounting Codes (GLAC) and Departmental Guidance.

      All PRF’s must be participating in the Joint Service Prime Vendor program
       by 1 October 2007. No exceptions to this requirement will be granted
       unless installation documents 85% lower pricing on items delivered via
       local vendors.

Command attention should be focused on providing excellent customer service
and reducing fund losses by curtailing losing operations and programmed
activities. All PRFs will utilize the performance targets prescribed by the U.S.
Army Community and Family Support Center (CFSC) for Club Operations.

The dividend distribution policy will remain at a maximum of 50% of NIBD for
PRFs that own fixed assets and 95% for those that do not. The ACWF will
continue to receive five percent of each PRF’s NIBD. All special dividends will be
identified in the Strategic Plan, AOB and cash flow budget. All special dividends
of any amount must be approved by the ACWF.

                                        2                             Enclosure 13
All CWFs will continue to budget for positive cash flow. The CWFs that are
expected to incur a Net Loss Before Depreciation in FY07 must budget for a
NIBD in FY08 in an amount that will offset the expected loss unless the amount
was of the loss was due to a nonrecurring special event.

CWF business operations must be self-sufficient. Operational fees and charges
will be sufficient to meet continuing operational expenses, capital requirements
and capital improvements. CWF business operations include, but are not limited
to, the following: Bowling alleys, Cabins, Recreation Lodges and Pavilions, Rod
and Gun Clubs, Flying Clubs, Fitness Centers, Golf Courses and Driving
Ranges, and Recreational Fields.

All CWF golf operations will continue to budget for a NIBD of eighteen percent.

Additional ACWF budgeting details and responsibilities can be found in AR 215-
7, Section 2-6.

Civilian MWR NAFI Budget Requirements and Submission Procedures:

Preparation: The Financial Management Budget System (FMBS) Version 2.0 is
the standard for preparing the FY08 NAF budgets and is required to be used.

Civilian NAFI custodians are responsible for initial preparation of all required
budgets, including coordinated planning of dividend requirements by the CWF
and capabilities of the PRF. Due to the dependency of the CWF NAFI on the PR
NAFI for financial support, there must be assurance that the CWF budget is
realistic and that the PRF can generate the projected dividend amounts.

Submission: Each Army Civilian NAFI budget package will be submitted through
the Regions to the ACWF. DOD Agency budgets will be submitted directly to the
ACWF. The submission date required for budget packages to be received at the
ACWF is September 15, 2007. The budget package will consist of the following
separate elements:

   1. Command approval letter, Commander or appointed representative’s
      signature required.

   2. Strategic Plan that includes the following:

          a. Organizational Values, Purpose, Vision and Mission statement with
             supporting Goals and Objectives.

          b. Discussion of significant trends and command factors influencing
             operations, activities and civilian support.

          c. Evaluation of current status of operations and services provided.

                                        3                            Enclosure 13
      d. Discussion of variances of more than 10% from prior year actual
         and or budget for the following areas: Sales/COGS, Income
         (proposed changes in rates, etc.), Labor expenses (to include
         proposed changes in staffing), Other expenses (including use of
         NAF for items authorized APF and any planned cost savings and/or
         overhead reductions).

      e. Discussion of CPMC items in terms of replacements, and new

      f.   Any other items the Manager/Custodian consider significant.

3. Description of Activities and Services:
     a. Description of operations, facilities, services, programs and
         activities offered and planned.
     b. Days and hours of operations.
     c. Discussion of most recent renovations, recommendations, and
     d. Most recent copy of approved fund PRD, with number of staff,
         position titles, full-time, part-time, flex.
     e. Direct operations only: Current Menu Price List with annual
         proposed price increase, along with month of implementation.
4. Council Meeting Minutes endorsing budget approval.
5. Annual Operating Budget (AOB)

     a. Ensure projections are realistic, submit justifications if variances are
         unusual or significant from prior year actuals.
     b. Ensure overall manual food service operations of PRFs meet 8%
         NIBD standard.
     c. Ensure Golf programs meet 18% NIBD standard.
     d. Gear operations towards meeting benchmarks (See Business
         Programs Guidance Section).
6. APF/NAF Five Year Financial Plan
     a. Five year financial plans can be projected by increasing AOB data
         by 3-5%. Out years are revised as they draw near through each FY
         AOB submission.
7. Capital Purchase Minor Construction (CPMC) Budget
     a. Ensure tangible fixed assets are budgeted to be capitalized (not
         expensed in the AOB) and depreciated IAW AR 215-7, p. 4-12.
     b. Annual and Five year APF/NAF Budgeting for capital requirements
         to adequately reinvest in civilian funds is essential.
     c. CPMC items should not reflect APF authorized expenditures.
     d. If APF authorized expenditures are included, submit certification
         from the Command Resource Management office of non-availability
         of funds throughout FY07.
     e. All CPMC items will be listed and funded separately.

                                     4                             Enclosure 13
   8. Cash Budget
        a. Enter beginning cash. The AOB and CPMC data transfers
            automatically into the cash budget. Enter liabilities taken from the
            most recent balance sheet or use a projected amount by Oct 1,
            enter that figure all the way across in FY08 and the out years.
        b. Increase to cash line is typically used to budget for anticipated
            receipt of financial assistance.
        c. Decrease to cash line is typically used by PRFs to document
            outgoing local CWF and ACWF dividends, based on council
            approved percentage of NIBD.
        d. No Civilian NAFI is to budget for a negative cash flow.
        e. Ensure the cash flow budget reflects fund solvency. Following
            integration of the AOB and CPMC budgets, print the cash budget
            report and review line 18, ensure the acid test ratio remains greater
            than or equal to 1:1 throughout FY08 and the out-years.
   9. NAF Major Construction Budget
        a. Major Construction Projects include amounts greater than or equal
            to $750,000.

1-4 above can either be faxed or sent hard copy, provided all is received at the
ACWF no later than September 15, 2007.

      FAX: COM 703-328-3524 or DSN: 221

      Headquarters Department of the Army- DAPE-CPZ-WF

      2461 Eisenhower Ave, Hoffman Bldg. I, Room 148

                              Alexandria, VA 22332

5-9 above are entered into the automated budgeting system (FMBS) and
submitted electronically.

Review and Approval:

Each Fund Council will review and approve budgets prior to submission.

The installation or agency command will approve budgets prior to submission.

The ACWF has final budget approval authority; FY08 NAFs will not be expended
until budgets are approved by the ACWF.

CWF/PRF Financial Guidance:

Acquisition planning must be made part of the CPMC and FY budget process.
Advance planning will require the efforts of all personnel responsible for an

                                        5                             Enclosure 13
acquisition to be coordinated and integrated through a comprehensive plan for
fulfilling the NAFI’s needs in a timely manner and at a reasonable cost. A part of
this planning will include the probable receipt on completion for items or projects.
This will then be followed subsequently by the anticipated invoice date(s). A
clear crosswalk and reference to the cash flow budget will complete the planning
cycle and ensure moneys will be available. During this process, the needs of the
requester should be developed and specified in a manner which will promote
competition and will ensure that the NAFI receives the best overall value, price
and other factors considered. Requesting activities should give the Contracting
Office sufficient procurement lead-time to meet their required delivery schedule.
Remember, acquisition planning is the key to successful procurement.

All current department codes, and general ledger account (GLAC) codes are
listed at enclosure 12.

Overhead Cost Allocation: A direct reduction in overhead costs to Civilian MWR
operations is required through proper operation allocation.

Directly charged services. These are services provided by the Central
Accounting Office (CAO), Civilian Personnel Office (CPO), and the Risk
Insurance Management Program (RIMP). The CAO costs are allocated based
on the documented cost incurred to record transactions for Civilian MWR funds.
The CPO costs are normally allocated based on the percent of the total active
personnel files being serviced. The RIMP insurance is billed directly to the NAFI
based on the coverage provided. These expenses are reported using General
Ledger Accounting Codes (GLACs) 685 – Central Accounting Office Expense,
682 – Civilian Personnel Services Expense, 733 – Insurance Premiums
Expense, and 734 – Buildings and Contents Insurance Expense. These costs
are to be charged to the appropriate funds administration department (G1).

Installation Military MWR Fund (IMWRF) overhead services provided to Civilian
MWR funds. When the IMWRF provides support services to civilian funds, the
cost may be equitably apportioned to PRFs or CWFs. Any charges of IMWRF
administrative/overhead costs are to be negotiated (agreed upon as to which and
how much of the overhead program services will support civilian funds) between
IMWRF and the civilian funds on the installation. Also, Civilian Funds may
provide services to the IMWRF when it is determined that it is most efficient to do
so. The support agreement is to be documented in a MOA and a copy furnished
to the CAO and ACWF. The MOA will list the services provided and the charging
methods used. Any cost allocation is to reflect services necessary and work
actually performed. The IMWRF expenses charged to civilian funds are not to
include Department Code GL – APF Support (Normal Operations).

Maximum charges for overhead support. Costs allocated will be based on actual
expenses incurred to provide these services. In no case will the charges for
support or services provided to Civilian MWR Funds be more than the PRF’s or

                                         6                              Enclosure 13
CWF’s proportionate share of the total of all expenses of the IMWRF and Civilian
Funds combined (not including the expenses of the overhead programs to be
allocated nor any Department Code GL – APF Support (Normal Operations).
The shared and overhead cost allocations should be reviewed and reconciled to
actual expenses incurred twice each fiscal year, and if necessary, adjusted to
ensure that they are appropriate.

Environmental Issues. Indirect support services authorizes APF use for all
categories of MWR for the purposes of environmental compliance. APF funds
are earmarked for these uses and a statement of non-availability of APF funding
must be obtained before NAFs are used for this purpose.

Installation Internal Review Offices will be requested to review the allocation of
costs to ensure appropriateness. Army-wide review of the charge by allocation is
anticipated to be one of the U.S. Army Audit Agency’s functional audits.

Reporting Personnel Strengths and Labor Costs. A review of personnel strength
reports versus financial statements indicates there are discrepancies between
the location codes on NAF employee work center codes and the location codes
cross-referenced in the accounting system. All managers should reconcile the
location code shown within the work center codes shown on each employee’s
timecard with the location code association currently in use in the accounting
system. Any discrepancies found can be rectified through a correction in the
employee’s personnel record or through a notification to the accounting office of
a need for a change to the cross-reference table used in the accounting
structure, as applicable.

Labor is to be charged to an appropriate department code that reflects where the
work was actually performed. In instances where employees work in multiple
departments, use reasonable judgment to appropriately prorate the labor to
department codes that reflect where the work actually took place. For example,
when an individual who collects money for the greens fees (Dept 41) and also
works in pro shop sales (Dept 39), his/her labor hours must be prorated to each
respective department based on his/her hours actually worked in each. This is
necessary to accurately evaluate the financial activity of different operating
departments within programs. In the unusual case where an employee works
20% or less of his/her total labor hours in any one department, the employee’s
labor cost is not required to be prorated among the different departments. It may
be reported in total in Department Code G1 – Administration.

Depreciation Expense, is to be reported in the department where the asset is
used. Other Operating Expenses, such as materials and supply expenses
should be recorded in department codes that appropriately reflect where the
materials and supplies are used. If supplies are purchased and then used by
several operating departments, make a reasonable attempt to prorate the costs
among the appropriate department codes that represent the operating

                                        7                             Enclosure 13
departments where the supplies were actually used. The intent of this is to assist
with managing different operating departments, and not to make management
oversight an onerous task.

The Army Banking and Investment Fund (ABIF) anticipated interest rates for
FY08 are computed on the expected average cash account balances: Use the
rate of 4.50 percent interest for cash invested in the ABIF by DOD and Army

Two methods to improve/sustain civilian fund facilities are available to all Civilian
MWR Fund Operations: (1) Request and compete for ACWF prioritized financial
assistance funds through a board review process; or (2) self-funding of valid
projects through the Capital Purchases and Minor Construction (CPMC) Planning
and Programming process. Requirements must be included in the installation’s
comprehensive Five-Year Plan.

The final phase of centrally supported Facility Improvement Plans/Projects
requires each operation to maintain capital reinvestment in the operation.
Budget preparation shall insure CPMC schedules reflect an evaluation consistent
with the age of the new facility, equipment, or renovation projects. Budgeting for
valid CPMC projects should follow the established CPMC process.

CWFs are not authorized to expend more than 25% of the funds total revenue on
NAF employee salaries.

Fully contracted PRF operations will not utilize a Regular Full Time (RFT) NAF
employee or equivalent for the restaurant officer/manager or custodian position.
Total labor hours allocated the PRF will not exceed 20 per week from all NAF

It is essential that the correct program and location codes are used to account for
all revenue and expenses in each activity or operation. Bingo is accounted for in
department E1 under the appropriate activity location. Location codes are not to
be used as an administrative accounting mechanism; such use distorts the
proper accounting of revenue and expenses. Location codes are assigned to
outlet facilities.

Facilities (locations) with catering operations or private party functions must
report catering income and expenses separately in department code 13 for
Private Party Food.

CWFs that provide travel service activities such as package tours, hotel
reservations, drive group tours that use land transportation, cruises, or discount
tickets, etc. should seek to provide those services that increase the NAF’s

                                          8                             Enclosure 13
PRF Budgeting and Reporting using defined departmental codes and

Department 11: Dining Facilities – This is defined as a main cafeteria that
produces primary food items for sale.

Department 14: Snack Bar – This is defined as a snack bar facility or small
cafeteria that sells quick snack items or hot menu items that are produced and
transferred from an alternate facility such as a large dining facility.

Department C1: Vending Other than Concessionaire – This department is utilized
for vending operations that are owned and operated by a Civilian MWR Fund.

Department G1: Administration – Reporting miscellaneous income (non-sales)
and expenses for program administration and management that are not specific
to departments. Excessive G1 Labor identified as un-attributable to specific
operational departments is highly susceptible to ACWF review and justification.

GLAC 502: Concessionaire Commission Income – This general ledger
accounting code is utilized to report commission income from contracted
operations and is typically ran through a Department G1 Administration Code.

CWF Budgeting and Reporting with consistent GLACS:

GLAC 501: Service/Recreation Activity Income – Record the amount of any
income collected associated with General Entertainment activities supported, i.e.
Holiday Parties, Annual Picnics, etc.

GLAC 744: General Entertainment Expense – Record expenses associated with
General Entertainment activities.

GLAC 503: Special Events Income – Record the amount of income received from
special events sponsored by an activity, i.e. Trip/Tour events, Dinner Theaters,
Amusement Park Tickets, etc.

GLAC 745: Special Events Entertainment Expense – Record the cost of
entertainment for special events for which admission/participation fees are
charged, trip expenses, etc.

Business Program Guidance.

Where variances in PRF operating budgets exceed the performance variance of
less than or equal to 15 percent, particular attention is needed by the program
manager to monitor the actual results against budget projections and
develop/revise budgets as required.

                                         9                             Enclosure 13
Business Program Benchmarks are used to identify locations within the
manager’s purview in need of financial improvement. A review conducted by the
U.S. Army Community and Family Support Center (USACFSC) indicates that
operating standards are not only sound, but could improve overall financial
results if primary benchmark targets are achieved through all targeted
operations. For example, Food and Beverage and Golf NIBD could be 25% or
higher if all operation primary benchmarks are met. Managers should compare
actual performance in key areas against budgeted goals, at least on a monthly
basis, to track variances against performance objectives. When actual
performance is at a significant variance to budget, investigate variances and
revise budgets as necessary. Critical areas to monitor include: revenue, labor,
cost of goods sold, other operating expenses, and NIBD. To assist in the
management of program operations and budget planning, benchmarks have
been established for the following:


Dining Room (Dept. 11)    37 percent

Snack Bar (Dept. 14)      38 percent

Mobile Snack Bars (Dept. 16)            45 percent

Vending (Dept. C1)        50 percent

Private Party Food Sales (Dept. 13)     31 percent

Labor Cost:

Dining Room (Dept. 11)    39 percent

Snack Bar (Dept. 14)      35 percent

Private Party Food Sales (Dept. 13)     34 percent

Other Operating Expense (OOE):

Dining Room (Dept. 11)                 9 percent

Snack Bar (Dept. 14)      7 percent

Private Party Food Sales (Dept. 13)     6 percent


                                       10                           Enclosure 13
Manual Food Service Operations of PRFs for FY08        8 percent

All direct operated operations will prepare Cost Cards in support of their budget
preparation and submission. A duplicate set of cost cards as well as your
present menu will be forwarded via email to the ACWF. This is an intricate part of
the budget process for each manager. There are some major factors that each
manager must be aware of when preparing Cost Cards:

   1.   The Menu and its mix
   2.   Market Conditions on Special Items
   3.   Availability
   4.   Price
            a. Seasonal Products
            b. Perishable Products

Cost Cards, which meet any of the above conditions, must be checked and
adjusted at least monthly. All other cost cards will be checked quarterly and
adjusted as necessary.

The soft drink and confectionary industries raise their prices to offset pending
increases in costs. This year will be no different as they are projecting between a
5% - 7% increase beginning in Jan 08.

To offset anticipated increases in labor and food costs, price adjustments must
occur on an annual basis. Since a majority of our installations raise prices
annually, a copy of the proposed price increase and its effective date as well as a
copy of the present menu price list will accompany your budget submission.

With the ever-increasing changes and demands on our operations to meet the
DA Standards, there are some operational decisions that all managers will need
to research and implement. The following is provided for your review and

1. Price Increases                              5. Reduce Labor / BBAs’

2. More Effective Marketing                     6. Use more “prepared” products

3. Changes in Operational Hours                 7. Utilize Char broiler

4. Reduction in Services                        8. More Specials & Ethnic Items

These decisions are never easy or are they popular, but we have responsibilities
to our customers and staff along with command.

Inventory Turn Over Ratios within our facilities are poor within most PRFs.
Warehousing for our vendors’ places additional costs as well as labor

                                        11                                Enclosure 13
requirements on each PRF. In FY08, we must make every effort to improve this
critical measure.

Since the majority of our vendors deliver two or three times a week, our facilities
par stock levels should also be reduced.

                                         12                             Enclosure 13

Description: Budget and Financial Management in Planning Events document sample