Financial Management Process Research Articles

A Global Stocktake of UNICEF's Programme Activities on Public Finance for Children

This global stocktake examines past trends and performance to ascertain achievements and identify how UNICEF can further strengthen its engagement in public finance for children (PF4C). The exercise includes a desk review and targeted survey that captures information on PF4C activities in 116 country offices during 2009-13.PF4C describes UNICEF’s efforts to influence the transparency, efficiency, equity and adequacy of public investments in children. By undertaking this work, UNICEF is better able to address gaps in public funding, which particularly disadvantage the poorest and most marginalised children. Key goals of PF4C include influencing government decisions about spending on children and social services, reducing spending disparities among different population groups, and applying value for money approaches so that children benefit optimally from the resources available to enhance their wellbeing. As a programme stream, PF4C brings together sector-based and cross-cutting initiatives to influence budgetary frameworks (how the budget is put together) and public financial management (PFM) processes (how funds are transformed into public goods and services) for the benefit of children. The stocktake finds that UNICEF’s PF4C work takes many shapes and forms, involving diverse interventions, sectors and partners. Activities at the national level are increasingly complemented by engagement at subnational levels and being carried out across all country typologies, from extreme poor and fragile situations to high-income countries, including ones with UNICEF National Committees. UNICEF’s efforts in PF4C have achieved positive outcomes for children, demonstrating the potential to do even more. More than half of the country offices reviewed succeeded in removing public finance-related bottlenecks, paving the way to ensuring results for children. A greater equity focus is also emerging, including interventions to address revenue side concerns, influence intergovernmental transfers, and support local government capacity in budget planning and management. At the same time, it is clear that longer-term planning that links sector-based and cross-cutting opportunities and actions coupled with more robust budget monitoring and tracking can help to maximize the impact of PF4C efforts.Looking forward, more systematic management of good practices and knowledge around PF4C is a pre-requisite for taking results to scale. While many country offices have positioned their PF4C work well, the current lack of articulation of PF4C innovations and lessons learned limits their potential application in other contexts. To synergize and systemize the equity focus of engagement in PF4C, UNICEF Headquarters and regional offices are developing a Strategic Guidance on PF4C, complemented by ongoing capacity development activities, which include a Community of Practice, a webinar series, ‘how to’ manuals and a new global learning programme. These products will strengthen UNICEF’s ability to identify the most appropriate approaches for specific country contexts and further channel the existing momentum around PF4C into greater results for children.

ANTECEDENTS AND CONSEQUENCES OF HOUSEHOLD FINANCIAL MANAGEMENT IN BRAZILIAN LOWER-MIDDLE-CLASS

Through two complementary and exploratory studies – one qualitative and one quantitative – this research aims to understand the ways in which lower-middle-class families in Brazil manage their household finances. The study proposes an integrated framework that brings together various previously disconnected theoretical fragments. Based on a survey with a sample of 165 lower-middle-class female consumers of a retail company in São Paulo, we explored and tested, via a quantitative study, how antecedents such as personal characteristics affect the financial management process, as well as its consequences, either negatively as defaults or positively as savings. The model calibration and analysis were derived from a series of regression analyses. The results revealed the mediator role that financial management plays in the relationship between personal characteristics and defaults and savings. Compared to previous studies with consumers of more affluent countries, we identified peculiar findings among Brazilian lower-middle-class consumers: inadequate attention to control, weak or no focus on short- or long-range planning, widespread absence of budget surplus, and influence of critical events on episodes of default.

Skorygowany o ryzyko kredytowe pomiar płynności banku jako narzędzie wsparcia procesu zarządzania stabilnością finansową

Skorygowany o ryzyko kredytowe pomiar płynności banku jako narzędzie wsparcia procesu zarządzania stabilnością finansową

Integration of Financial and Contract Management on the Shanghai Expo Construction Program

AbstractThe management of facility construction for hallmark events is critically important for their financial viability. However, little knowledge has been produced regarding the management of this type of construction. Based on the construction program for the Shanghai Expo 2010 and other cases reported in the literature, this paper provides an analysis of the common characteristics of construction for hallmark events, the challenges of financial management due to these characteristics, techniques to address these challenges, and lessons learned from the Expo construction. It is believed that one critical factor that contributes to the success of the Expo construction program is the integration of the financial management and contract management processes, assisted by a specifically designed computer program. The techniques used to integrate the two processes involve (1) mapping the program’s work breakdown structure, cost breakdown structure, and contract breakdown structure; (2) integrating the infor...

Corporate transparency: Babcock University

Transparency is a major requirement in environments where finance and value for money is appreciated. The aim of this paper is to expose the critical need for openness in the financial management process in universities. The findings of the study re-affirm that transparency compels accountability and that both invoke trust and good governance. The paper, therefore, concludes that transparency is inevitable in any financial management process where the goal is effective control and efficiency. The leadership employs formal and informal communication to insure transparent financial management processes. The management has to critically assure the security of the staff that may question certain practices and encourage them to come up with suggestions for improvement of the processes and procedures without fear of victimisation. Finally, the administration should seek employment of only individuals who understand ‘value for money’ to head the financial management positions at different levels of the organisation.

An Examination of Government Internal Audits’ Role in Improving Financial Performance

This research empirically examines how the work of government internal audits lead to improvements in government financial performance. Periodic economic downturn and dwindling state aid to local governments have left many public managers looking for ways to improve financial oversight and operational efficiency. Although internal audit is one area with the expertise to assess efficient utilization of financial resources and help improve oversight and financial performance, public administration research has paid little attention to the role of internal audit in the financial management process. A survey was sent to local government Chief Auditors to learn of audit's examination of government operations and financial management. Financial performance data were obtained from the Comprehensive Annual Financial Reports (CAFRs) of survey respondents’ local governments and analyzed with the survey responses. Results show that in general, local government auditors perform more audits in operational areas that deal with fiscal receipts and outlays. Additionally, auditors’ work significantly influences local government financial performance both directly and indirectly through improvements in internal controls and efficiency of operations.

Selling Energy Efficiency: The Energy Engineer as Investment Advisor

ABSTRACT This article evaluates the energy efficiency investment decisionmaking used by most organizations. A financial risk management process is shown to provide greater financial returns and less risk in selecting investment projects compared to the traditional practice of payback analysis. An example application of Energy Budgets at Risk, a value-at-risk-based energy efficiency investment analysis, is presented to illustrate the advantages of risk management analysis in evaluating energy efficiency projects. Summary risk analysis results are presented as a communication bridge between technical project engineers, chief financial officers, and other financial executives and decision-makers. The article concludes with the suggestion to expand the traditional roles of energy engineers and managers to include providing energy efficiency and budget financial risk management analysis.

A benchmark-learning roadmap for the Military Finance Center

This paper aims to explore the operating efficiency and the benchmark-learning roadmap of military financial units for the finance center under the supervision of the Comptroller Bureau. A benchmarking managerial framework is developed and illustrated through application to the finance center. The framework encompasses a performance pyramid which embodies multiple perspectives of the organization under a balanced scorecard, data envelopment analysis, and cluster analysis. This assessment can assist the Comptroller Bureau to enhance the operational management of the finance center and to help military financial units deliver more efficient services, including the Armed Forces’ financial management, the audit of personnel-related expenditure, and the supervision and evaluation of the operation and financial management process. This paper highlights the potential applications and strengths of the methods used in assessing the military financial units.

An empirical study of classification algorithm evaluation for financial risk prediction

A wide range of classification methods have been used for the early detection of financial risks in recent years. How to select an adequate classifier (or set of classifiers) for a given dataset is an important task in financial risk prediction. Previous studies indicate that classifiers’ performances in financial risk prediction may vary using different performance measures and under different circumstances. The main goal of this paper is to develop a two-step approach to evaluate classification algorithms for financial risk prediction. It constructs a performance score to measure the performance of classification algorithms and introduces three multiple criteria decision making (MCDM) methods (i.e., TOPSIS, PROMETHEE, and VIKOR) to provide a final ranking of classifiers. An empirical study is designed to assess various classification algorithms over seven real-life credit risk and fraud risk datasets from six countries. The results show that linear logistic, Bayesian Network, and ensemble methods are ranked as the top-three classifiers by TOPSIS, PROMETHEE, and VIKOR. In addition, this work discusses the construction of a knowledge- rich financial risk management process to increase the usefulness of classification results in financial risk detection.

Hospital management games: a taxonomy and extensive review

Hospital management games have gained importance in better planning for scarce resources in times of growing health care demand and increasing technology costs. We classify and investigate the main characteristics of these games from an Operations Research (OR) perspective. Hospital management games model the complex decision making process of internal resource, process, and financial management all influenced by the external hospital environment (e.g., purchasing markets, job markets, legal/political conditions, competition) and simulate situations of the real world. We also highlight the potential of these games for teaching OR in the classroom. Experiencing the advantages of OR may reduce the reservations policy makers have and could make them increasingly open to promoting OR applications in practice. We also disclose potential for new applications.

LONG-TERM RISK MANAGEMENT FOR UTILITY COMPANIES: THE NEXT CHALLENGES

Since the energy markets liberalization at the beginning of the 1990s in Europe, electricity monopolies have gone through a profound evolution process. From an industrial organization point of view, they lost their monopoly on their historical business, but gained the capacity to develop in any sector. Companies went public and had to upgrade their financial risk management process to international standards and implement modern risk management concepts and reporting processes (VaR, EaR…). Even though important evolutions have been accomplished, we argue here that the long-term risk management process of utility companies has not yet reached its full maturity and is still facing two main challenges. The first one concerns the time consistency of long-term and mid-term risk management processes. We show that consistencies issues are coming from the different classical financial parameters carrying information on firms' risk aversion (cost of capital and short-term risk limits) and the concepts inherited from the monopoly period, like the loss of load value, that are still involved in the utility company decision-making process. The second challenge concerns the need for quantitative models to assess their business model. With the deregulation, utilities have to address the question of their boundaries. Although intuition can provide insights on the benefits of some firm structures like vertical integration, only sound and tractable quantitative models can bring answers to the optimality of different possible firm structures.

Decision Science

The allocation of resources for public health programming is a complicated and daunting responsibility. Financial decision-making processes within public health agencies are especially difficult when not supported with techniques for prioritizing and ranking alternatives. This article presents a case study of a decision analysis software model that was applied to the process of identifying funding priorities for public health services in the Spokane Regional Health District. Results on the use of this decision support system provide insights into how decision science models, which have been used for decades in business and industry, can be successfully applied to public health budgeting as a means of strengthening agency financial management processes.

Financial Management Knowledge Among Malay Family-Owned Business (MFOBs) Entrepreneurs

Financial management is one of the ways for entrepreneurial to remain profitable and solvent. Each year thousands of businesses fail because of poor financial management. For the major small business’s owner especially Malay family-owned business (MFOBs), financial management does not seem as a necessary step to build a strong financial structure for its business. The process of financial management is to help entrepreneurs determine needs, set goals, establish objectives and devise plans of action. Understanding an entrepreneur’ knowledge is a critical step in being more successful in business world. The objective of this study is to examine financial management knowledge in Malay family-owned business. One hundred entrepreneurs were interviewed in this research using questionnaires. The sampling method that that was used in this research paper is qualitative sampling using simple random sampling technique. Financial management knowledge were measured based on fifteen items in financial management knowledge using Likert scale (1= strongly disagree, 2= disagree, 3= partially, 4= agree, 5= strongly agree). The socio demographic factor of entrepreneurs consist of gender, age, marital status, education level, business period, types of business and fund for the business. SPSS were used to analyze data collection, select cases, and random sample, approximate or exact need for an electronic SPSS data. The study found that majority respondents had acquired moderate knowledge in financial management which indicates a high score of in knowledge. As a conclusion, knowledge and skills are related to one’s experience. Knowledge is important to establish whether that someone really knows what to do with the business they are involved in. Well informed entrepreneur, know their strength and weakness, both on a personal level and business level.

Business Performance Management Platforms Overview Part 2: The Hyperion/Oracle Platform

By acquiring Hyperion Solutions in 2007, Oracle consolidated its position as a leader on the BPM Market. Released in the July 2008, the new BPM platform is called Oracle EPM System and includes a number of innovations and capabilities to improve business insights and decision-making. Oracle EPM System integrates performance management applications and technologies from Hyperion, which Oracle bought in March 2007, and BI applications and technologies from Siebel, which Oracle bought in September 2005.A component of Oracle Fusion Middleware, Oracle EPM System supports strategic, financial and operational management processes across a common foundation enabling organizations to become smart, agile, aligned and better able to optimize enterprise-wide performance. It helps organizations drive greater value from existing Oracle investments and represents a significant milestone in the integration of Hyperion's market-leading performance management applications and business intelligence (BI) technologies with Oracle Fusion Middleware, including Oracle's scalable BI foundation, and Oracle Applications. (Oracle Press Release).

Value of Liquidity During Short-Run Financial Management Process, an Address About Doctoral Dissertation

Actually determining the value of liquidity is one of the unsolved problems in finance. Firms hold liquidity for a variety of different reasons. Generally, liquidity balances held in a firm can be called considered, precautionary, speculative, transactional and intentional. The first are the result of management anxieties. Managers fear the negative part of the risk and hold liquidity to hedge against it. Second, liquidity balances are held to use chances that are created by the positive part of the risk equation. Next, liquidity balances are the result of the operating needs of the firm. Having information about value of liquidity we can better dissolve the problem of liquidity management. The liquidity management leaning on the information about the value of liquidity drives to increase of the value of the firm.

Debating the Impact of Accrual Accounting and Reporting in the Public Sector

Debates about the adoption of accrual accounting and financial reporting techniques by the public sector have been so widespread over the last decade that they may be labelled, without risk of inaccuracy, peripatetic. Questions as to whether accrual based techniques should be adopted by public sector entities are largely passe in the antipodes where they have penetrated every layer of the public sector over the past decade, making the question moot (Pallot, 1994; Shand, 1995; and English et al., 2000). However, these same issues are still being pondered by interested parties in jurisdictions which have only recently adopted comprehensive sector wide accrual based financial management and reporting frameworks, for example the UK (Likierman, 2000), or which are at the stage of announcing future moves to accrual based reporting and management frameworks, for example Hong Kong (Awty, 2002). Given the breadth and depth of extant literature on the subject, scepticism on the part of the reader as to the capacity of yet another paper on the subject to make a meaningful contribution to the literature would be entirely natural. However, gaps do exist in our understanding of the implications of the decision, on the part of many jurisdictions, to transform accounting, reporting and financial management processes from cash to an accrual footing. In particular, little attention has been paid to the impact wrought by the implementation within the public sector of accrual accounting and financial reporting in the context of other related public financial management reforms, for example capital charging, the adoption of a purchaser – provider model of government and the implementation of accrual output based budgeting (Carlin and Guthrie 2001a; Carlin 2003a; Heald and Dowdall 1999; and Robinson 1998b). The remainder of the paper proceeds as follows. The next section reviews international patterns of adoption of accrual accounting and reporting in the public sector. This part of the paper provides broad background context to the subject matter of the paper. The third section demonstrates the motivation for the paper by critically analysing the existing literature on accrual accounting and financial

Implementing Reforms in Bolivia: Too Much to Handle?

This article looks at the implementation of budgeting and financial management reforms in Bolivia. These reforms were intended to facilitate the introduction of an integrated approach to budgeting and financial management, and a results-orientation in management. Evidence suggests that, at least in its first few years, there was little successful reform implementation. The main factors seen to impact reform implementation include the entrenched patronage of the political system, the weak nature of reform incentives, weaknesses in central financial management systems and processes, poor internal monitoring, authority limits in the Audit Office, a lack of Parliament scrutiny, questions about transparency and participation, and relational complexities arising from donor involvement. The opinions expressed in this paper are those of the authors and do not necessarily reflect the positions or perspectives of the World Bank.

Reforming Budget ritual and Budget practice: The Case of Performance Management Implementation in Virginia

Virginia is accepted as one of the leading examples of performance-based reform among US states. This article reports on some of the key factors that have helped to ensure that these reforms have established performance as a basis for both budget ritual and budget practice. Virginia's strong record of implementation is explained as the result of a consistent legislative basis for reform, effective reform leadership by a core agency, the integration of results-oriented activities into all facets of the financial management process, a focus on high levels of citizen engagement, and an emphasis on ensuring that performance management systems are tailored to be useful. The opinions expressed in this paper are those of the authors and do not necessarily reflect the positions or perspectives of the Virginia Department of Planning and Budget or the World Bank.

Incorporating Collateral Data in Conservation Biology

Abstract: Conservation biologists often need to set ecological modeling assumptions or estimate parameters from sparse data. In some cases this problem can be addressed by incorporating data from closely related species or from the same species at different sites (i.e., collateral data). Currently no structured methods exist for incorporating such information. An analogous problem in Actuarial science is to set premium rates in situations with little direct data on claim frequency or size. The rates are estimated using actuarial credibility theory, which incorporates collateral data with the direct data. actuarial credibility theory combined with the actuarial control cycle financial management process also provides an adaptive mechanism for updating assumptions. This theory may have some utility for ecologists wanting to incorporate collateral data in an adaptive management framework, a companion to approaches such as Bayesian updating. We describe the historical development of actuarial credibility theory from early ad hoc methods to empirical Bayes approaches. We explore some of the theory's strengths, such as relative simple formulae for incorporation collateral data, and we explore some of the theory's weaknesses, such as the use of the best linear approximation to the Bayes estimate. We illustrate potential applications of the theory using an example on the mortality rate of the Powerful Owl ( Ninox strenua).

Changing approaches to financing and financial management in the South African local government sector

Sections 152 and 153 of the Constitution of the Republic of South Africa, 1996 (Act 108 of 1996) have given local government a developmental mandate. Local government has a constitutional obligation to participate in national and provincial development programmes. Local government should become a powerful development catalyst in collaboration with other spheres of government, the non-governmental sector and the local citizenry. It has to address social, economic and infrastructural backlogs and inequalities in a stable and sustainable manner to ensure developmental outcomes are reached. Different financing and financial management policies, strategies, structures, processes and procedures have to be instituted with a view to transformation and innovation. Constant and consistent monitoring, analysis and evaluation of these policies, strategies structures, processes and procedures should ensure these constitutional imperatives.