The street children force society is humanitarian government agency which tries to get street children off streets in the cold and from dangers found on the streets and put them in fosters homes where they can be taken care off so that they can become better citizens of tomorrow. We also offer relief food and medical aid services to vulnerable streets families who need urgent emergency, we doesn’t discriminate anyone base on gender or race.
The organization has branches all over the major city of the country. It’s also involved in community services projects like provision of clean water, offering scholarships to bright students from poor families who might end up on the streets if they don’t get help and other essential commodities which might be needed in the communities and the streets families. The organization is always ready to help whenever called upon. Its main goal is to save streets children and alleviate their suffering.
The agency get most of its funds from the government and through donations from well wishers of all walk of life from school children to big companies CEOs, from common citizens to presidents, it does not choose who to get funds from provided its within the law. It also has some income generating activities and investment, which provide additional income to supplement the funds from the government and donations (Shim &Siegel, 2000).
The economic situations
Recently the economy has gone through a drastic meltdown. The currency has lost its value hence contributing to commodities prices to escalate beyond the reach of common citizens. The fuel prices have hit the highest notch ever and the government has increased the price of electricity. The banks have reacted to this financial crisis by increasing interest rates on loans (Chartered Institute of Management Accountants, 2011). This has resulted in people losing their homes, businesses closing, many companies and individuals have filed for bankruptcy to escape debts.
Driving a car is becoming a luxury nowadays. The gas gauge of many cars is almost hitting empty mark. Many parents cannot afford to bring and pick their children from school. The public transport has become a darling to common people who cannot fuel their vehicle anytime they please. The consumers’ purchasing power has gone down. The education and health insurance is not for everyone the premiums charged are too high to sustain. Affording three meals a day is a nightmare for many.
The government is heavily into debt both domestic and foreign. This has forced the government to cut on the public spending. Most students are not getting bursary and scholarship when they apply this is due the small amount allocated to agency by the government. The law makers are not making laws to reduce taxes or make education and health care insurance more affordable to common man on the streets and in the slums or allocating more funds to the agency.
Therefore, the government has cut down the funds it allocates to the agency. The treasury has asked the agency to do a major financial audit so that it can scrap completely or suspend to later date some of programs it is running currently. The donors have reduced their funding and some have withdrawn their support and donations completely.
The agency is yet to copy and come into terms with this predicament. It is struggling with its budget to pay for suppliers and its employees who are asking for pay rise. The agency cannot sustain some of the programs it is running currently due to financial constraints hence it has resulted in obeying the advice from treasury and get into cost cutting measures which will make it reduce its budget so as to run its operation normal.
The agency has a good information system, which has stores all is financial records. This has enabled the agency to be accountable to its spending and the funds it get from the government, donors and some income generating activities. All the transactions are available in detail at request from the interested parties who may want to do a full auditing of the funds. Here is the summary of all the revenues and expenditure incurred by the agency.
Government funds, the government gave the organization US$1 million during the last financial year to spend on its operations. The government was very specific in stating that the agency should not expect any additional funds. The donors gave the agency another US$500,000 and the agency generated US$100,000.
The general expenses, the agency incur some expenses daily in the running and maintaining its operations. These expenses are as results of printing of posters and paperwork, coffee for workers at the offices, paying janitors and messengers, organizing meetings avenues, decorations for the meeting, transport, telephone services, electricity and water bills, stationery and other expenses. There are also employees’ salaries and retirement pension plan funds, all this accounted for US$ 200,000 on the budget expenditure of the agency.
Maintenance expenses on the assets, the organization has 15 vehicles which assist in the caring out its operations efficiently. These vehicles need to be maintained properly so that they can offer quality service and reduce their expense. The vehicles are fueled by the agency every week and taken for services after every six months. There are also expenses due to repair of furniture, floor, and windows at the office. The agency also painted all its offices this year. This cost the age US$ 300,000
Projects cost, the agency use a lot of funds to cater for its core operations that is service delivery, the projects which the agency is involved in at the current financial year are provision of scholarships to the needy but bright students from junior schools to the university, getting streets children to foster homes, community services, providing food to street families and some foster homes and anti-drugs campaigns, this services cost the agency US$ 1milion.
Debts payment, the agency acquired a building in the city through a loan of US$5 million to be paid in 6 years from the capital bank with an annual payment and interest which amount to US$100,000. This building is meant to provide recreation facilities like swimming pool, table tennis, basketball court, drawing, sowing, mechanical, carpentry among others to the streets children at the fosters home. It was found most of fosters home don’t have recreational facilities and facilities which can help them nature their talents in drawing or singing. This will provide a platform where they can unleash their stress and potential so as to become better people in the society. The children will also interact and share experience, knowledge and learn from each other.
After all the expenses have been paid the agency is left with nothing at the end of the financial year. Although the balance sheet of the agency balances, it is not able to save or initiate other projects which can be valuable or need by the society. The agency hands are tied it cannot be able to expand to other areas where it services are needed.
The key to efficient management of operations and good performance to any organization is the sound control and update management of funds. These measures make sure the agency delivers its services and achieve its goals both long term and short term. It prevents corruption and misappropriation of funds. The agency has put in place measures to make sure the cash flows in and of the agency is well recoded and documented. This is done to make sure funds are well utilized and there no chances or avenues of committing a fraud. The following are the control measures which the agency has put in place.
- The computer systems, the system is keeps records of up to date of inventories and cash. There is transaction which is not done without receipts. These receipts are captured by the system and recorded. The system also follows the movement of cash in the bank and when the suppliers are being paid through banker’s cheques or deposits. There agency has put in place policy and regulations how data should be entered and who is authorized to enter the data. The wrong entry is automatically rejected by the system.
- Regular reports, the chief accountant of the agency have to provide monthly reports showing how the funds have been spent and how much is remaining. The accountant also has to show comparison between the budgeted fund and the actual expenditure. He/she also has to show the comparison between the current year and the previous year. The accounts have to balance. The expenses, grants, donations and revenue have to balance. The project managers have to hand in reports showing the progress of the projects. They have to explain how the resources were used and what is remaining for the projects to be completed, the human resource manager also has to write a report to indicate how various engage in their daily activities in the specified time. If any manpower was sourced from outside it has to be clearly recorded and how it cost.
- Regular review and forecasting of the budget and expenditure, the agency from time to time revisits its plans, which it tries to achieve. The management of the agency checks the progress, which has been made and correct and any diversion from the plans of the agency in achieving its goal. The agency also forecasts and observes the obstacles might come in the future. This helps the agency to put contingency measures to deal with any in eventualities. The variances in the budget have to be explained with clear proof of documents and corrective measures implemented and put on record. And additional budget or expenses has to be approved by the board of the agency (United States, 2010).
- Internal and external audit, the agency also conduct auditing both internal and external twice a year so that it can be know how it fund have been used and the amount of assets it has. The internal auditing is done by each department while external is sourced from the government and independent audit firms.
- Separation of power, the agency has made that sure there is a clear responsibilities and separation of duties. The person who places an order of the item is not the same who will purchase it, transport it, receive it or store it. Each person is given his or her area and duties are passed on. This is to make sure fraud does not happen.
- Insurance cover, the agency has insured it’s assets against any risks which are exposed to them. This is to make sure the agency does not loss its funds or assets in case of an unfortunate calamity. This also assures the agency continuity in case some unfortunate happens which might cripple the operations of the agency.
- Records of the assets, debts and credits, All the agency assets have to be on record whether new or old as per agency regulations. Their movement must also be recorded in the systems. These assets have to be assigned to an employee who will be responsible for them. The debts and credits have to be recorded clearly and when they have been paid they have to be clearly recorded as paid.
Control and management of public expenditures
The agency is the centre of attention to many in the society. The children have high expectation on the agency because some have placed their future prospects on the hands of the agency. The government and the donors want to know how each coin was spent and how the decision was arrived at. The agency is has to show transparency in its dealing to avoid any criminal activity from happening.
The agency is expected to utilize the taxpayer money well with the current financial constraints. Many sectors of the economy are struggling and the agency is not exception to this but it is expected to utilize and manage the funds well to meet its obligations. The decisions the agency made has to show value. Therefore, to make sure that the public funds are utilized well and managed as expected the agency have put in place controls, which make sure this is achieved (Razek, Hosch, & Ives, 2000).
- First and foremost the agency has made sure that it has created an environment where rules and regulations are followed to the letter. All the procedures put in place have to be followed. Each action has to be within the law.
- All the project and assets where taxpayer money is spent have to show value for money. Any activity has to valuable and worth the resources put to it. The resources allocated have to be used effectively
- Any expenditure has to be planned upon and approved by the board of the agency. The emergency expenditure has to be explained afterwards and documents including receipt have to be produced. The projections have to be forecast using records from the previous years or from a reliable source like financial institutions. The plans in place have to viable.
- Before any project is undertaken the feasibility study has to take place 6 months before the project commence. The tasks force which carried out the feasibility study has to write a report show economic, social and political element of the project.
- The budget, which has been made by the project manager, has to evaluate by the accounting department before it reaches the board, which has the final say on approving the budget. All the budgets also from all the departments must pass thorough the accounting department. The account department will check the cost of the items in the budget if are correct according to the current market prices. The accounts will also check if the items are in the agency stores so that they can be bought again. The department must check the financial position of the agency if it current supports the budget with the current resources (United States, 2010). The department will write a report on the budget citing irregularities, corrections and viability of the budget and forward both to the managing director who will forward it to the board for approval. If the corrections can be changed it can be sent back to the department before the final decision is made.
- The resources of the agency must be utilized well. Any person found misusing the resources should be perished according to the laid down disciplinary actions and procedures. Every employ should account for the resources allocated to him or her. The results expected should be achieved if not proper explanation with clear documents should be given.
- There should be consistency in improving services and reducing cost of operations. The employees must deliver or risk losing their jobs. Wastes to resources and mistakes by an experience worker are not expected.
- All the stake holders in a particular project are welcome to scrutinize the budget, expenditure and revenue generated by that project. The stakeholders should be free to check how the project is performing and suggested any changes they deem fit.
- A budget prepared should obey all the accounting rules, it should be realistic, transparent, financeable, policy driven and should indicate who is accountable to it.
Analyzing financial statements and budgets and providing solutions to financial constraints
The agency also has many cars, which eat on the budget of agency. The cars need drivers, fuel and maintenance services which eat on the finances of the agency. The agency can reduce these cars to seven. This will be more efficient and the agency will be able to utilize the car efficiently. The seven cars can also be sold to offset loans of the recreation facility. The agency is advisable not to implement the swimming pool plan since the maintenance of the pool will drain the agency more resources. The agency can relocate some its offices to the facility to reduce the cost of rent. The rooms which are left unaccompanied can be rented which will generate more income to the agency. The agency can also invite the public to use the facility at a fee hence generating more income (Ruth & American Institute of Banking, 2003).
The agency can organize for events like music shows or plays and charge a small fee for attendance. The agency can encourage the employees and former streets children to show case their talents to the invited guest. The contributions made in these shows can be used to run some projects and programs in the agency.
The food program can be revised to provide a food program, which is cheaper, healthy and has all the nutrients needed. The agency can also cut cost through streamlining operations and gradual layoffs of stuffs old employees who are near retirement by giving them a good send off package and embrace volunteers programs since is an humanitarian agency.
The agency can also open a shop at the facility where the pictures, drawings, music albums or clothes made by the former street children can be sold at a friendly price.
The agency can also hold fund raising activities organize a charity walk or a marathon races. The mayor, local government donors, and other well wishers can contribute funds and equipment, which can be used in the agency to run its operations more effectively (Bangs, 2010). The agency can also ask for more funds from the central government and corporate firms.
Chartered Institute of Management Accountants. (2011). Financial management. London: BPP Learning Media.
Ruth, G. E., & American Institute of Banking. AIB. (2003). Analyzing financial statements: Master case book. Washington, D.C: American Bankers Association
Shim, J. K., & Siegel, J. G. (2000). Financial management. Hauppauge, N.Y: Barron's.
Bangs, D. H. (2010). A crash course on financial statements. Irvine, Calif.: Entrepreneur Press.
Razek, J. R., Hosch, G. A., & Ives, M. (2000). Introduction to governmental and not-for-profit accounting. Upper Saddle River, NJ: Prentice Hall.
United States. (2010). Financial regulation: Clearer goals and reporting requirements could enhance efforts by CFTC and SEC to harmonize their regulatory approaches: report to congressional committees. Washington, D.C.: U.S. Govt. Accountability Office.