Detecting Financial Problems
Financial problems can easily and relatively quickley derail an otherwise sound organization. Both Boards and management need to be aware of those things that can contribute to financial instability and avaoid any one of them having a negative impact on the organisation, as a whole. The Board and management must:
* understand the full cost of operating each program, including the correct allocation of indirect costs.
* understand how costs and revenues are changing over time
* understand fund accounting structure
* understand how resources and fund balances are changing over time
* recognize early warning signs such as;
> recurring deficits and cash crunches
> no cost study done within the last two years
> bills not paid withing 45 days
>ignoring depreciation as a cost of operation
>monthly financial statements not ready within 45 days
>audits are late, diffifult or QUALIFIED
>all payables are not reported
>government reports are not filed as required
>no Board policy on programs to be subsidized or self supported
>no written strategies or written financial plans
While these are a few of many if you having any of the above, its time to take action!
