Assessing Financial Management: Budgeting, Reporting, Analysis, Planning, and Monitoring

Financial Management Assessment

Sets policies and procedures regarding how the finance team will process and distribute financial data, like invoices, payments and reports, with security and accuracy. Establishes tools and techniques that demonstrate payment integrity and supports research on company data needs.

Assessment of financial judgment and performance requires a good deal of subjective observation, including sensitivity (correctly identifying persons who are impaired) and specificity (correctly excluding nonimpaired cases). It also requires some degree of validity.

1. Budgeting and Planning

The Financial Management Assessment Tool (FinMAT) is a practical, customizable, easy-to-use approach to collecting technical information about an organization’s financial management systems and practices. The tool supports evaluation of business alternatives and setting financial targets through an iterative planning and budgeting process.

A well-established planning, budgeting and forecasting process can lead to more accurate financial reports and analytics — and ultimately more effective revenue growth.

Having the right amount of money available for your company’s expenses and operations is essential for the success of any project or engagement. The financial budget quantifies the finances that your company will be working with during a period, while financial forecasting estimates income and/or revenue. These tools are used in tandem, but they are distinct. This is due to the fact that financial forecasting measures past performance and financial budgets measure future plans.

2. Financial Reporting

Financial reporting is the process of tracking and communicating business performance, enabling finance teams to identify risks and opportunities. It also ensures that the company has sufficient cash flow to pay for daily operations and grow when necessary.

To effectively manage finances, it is vital to understand what makes them tick. Our assessment test evaluates candidates’ ability to make sense of complex financial data and reports – including budget variance, cost breakdown, and more.

It also assesses an individual’s financial knowledge, which includes knowing the concept of money, values of currency, making change, and using ATMs (automated teller machines). It encompasses self-reported information or observations of a person carrying out money-related tasks. The test also considers an individual’s judgment, pursuit of one’s own best interests, and the ability to learn from experience.

3. Financial Analysis

Financial analysis is the process of evaluating businesses, projects or budgets to determine their stability, liquidity and profitability. This form of analysis is used when assessing whether or not a company is worth investing in and also for reviewing past trends to predict future ones.

Some types of financial analysis involve calculating ratios from financial statement data to compare against industry standards, competitors or historical data. Others use horizontal or vertical analysis (which is a proportional comparison of line items on a financial statement such as accounts receivable/payable, inventory and cash flows) to analyze growth rates.

A thorough financial review involves comparing current and projected expenditures against budgets and to identify significant variances. A robust financial KPI dashboard offers a mix of visual metrics and indicators that can help you reduce inefficiencies, improve forecasting outcomes and maintain fiscal health.

4. Financial Planning and Analysis

In addition to accounting procedures and financial reporting, financial planning and analysis (FP&A) involves the collection, preparation and analysis of data in order to answer business questions and support major decisions. FP&A teams use both historical and current data to forecast future revenues, expenses, profits, cash flows and more.

Using data-driven models, FP&A professionals use best practices to help executives and board members understand where their company is headed financially. This includes analyzing the current state of working capital to identify issues, like downward trends in accounts receivable or inventory. This data can be used to alert other departments to speed up invoice collections or reduce inventory levels as needed. FP&A teams also perform scenario building to help companies prepare for potential future outcomes.

5. Monitoring

Monitoring involves regular tracking of the outputs, outcomes and impacts of development activities at project, program and country levels. The process of monitoring can identify errors and issues that require further investigation through evaluation.

Assessment of money management capability requires a measure that taps both knowledge and performance. There are some instruments that do both, such as the financial subscale of the Everyday Decision-making Instrument (ACED; Lai and Karlawish, 2007) and the KELS (Kohlman Evaluation of Living Skills) money management subscale, which measures higher-order functional skills such as making change, writing checks and balancing a checkbook.

However, these tools have not been tested in individuals with serious mental illness such as schizophrenia. A more promising tool is the monetary management subscale of the Everyday Functioning Battery.

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