Free «Financial Management» Essay Sample

Financial Management

Following the allocation of funds by the city manager worth $ 10 million dollars, it is necessary to make a report on the proposed expenditure plan for the city council. This is to help assist in managing the public funds. This will include planning, organizing, directing and controlling the financial activities of the city council’s allocation, as well as the federal funds. To ensure the council gets a regular and adequate supply of funds from the federal government, it needs to meet the set federal standards for applications. Once the city council obtains the funds, they should be utilized in the most maximum way while reducing costs. The funds are for the capital investment, operational requirements, as economic incentives encouraging private investments in the city or subsidizing non-profit organizations. Apart from the above activities, the city council will carry out disaster preparedness and response, as well as improving the social amenities in the city so as to improve livelihoods and standards of living.
Capital requirements are the capital investments that the city council requires to be effective and increase profits. This means that the money invested in a business must be used in purchasing fixed assets rather than covering the business' day-to-day operating expenses (Ward, 2011).
Operational requirements are the things needed for the day to day running of the business. In this case, this is what the city council needs for its daily operations. They could be fixed or variable in nature. Fixed costs are those costs incurred, regardless of the amount of business. A typical example would be an office space or salary costs of permanent members of staff. While all costs are variable over time, it is essential to include costs that are difficult to remove and that do not vary widely.
            Variable costs are costs which change according to the amount of business. If there are ten times as many flight bookings, the variable costs will go up ten times (Tatum, 2011).
              Subsidizing non-profit organizations means that some money will have to be used to give subsidies in a way that it complements or supplements nongovernmental organizations efforts. This may involve partnering with local nongovernmental organizations. Using economic incentives to encourage private ventures in the city will also be one of the key objectives. This will ensure complimenting and supplementing of the city council efforts for the smoother and easier running of the business. Additionally, the city council will ensure the delivery of social amenities to the members of the public to enhance better living standards. This will also help create measures that can be taken to enhance the disaster preparedness and response.
                                                    Meeting the Federal Requirements
           The city council must meet the following requirements by the federal government while applying for the funding; accounting procedures and fiscal control of the city council has to be sufficient to permit preparation of reports required the federal government, and the funds  tracing to a level of the expenditures which are adequate to establish that funds have not been misappropriated.
           The financial management systems of the city council must meet the following standards:
The financial reporting. Current, accurate and  the financial results of financial activities have to be made, according to the financial reports requirements of the following grant. The council will attach current financial reports of previous funds or grants from other organizations.
Accounting records: The council has to maintain records that adequately identify the application and source of funds provided for the financially assisted activities. Those records should contain information ofthe grant authorizations and awards, assets, expenditures, liabilities and income.
The internal control: The accountability and effective control should be maintained for all cash and  grant, personal and realproperty and other. For example, the city council’s real estate project. The city council must defend all property and make sure it is used for solely authorized purposes. This means that the council in its application for the match must commit itself to safeguard every asset or cash from the federal funding, as well as the city council funding.
The budget control: The actual outlays or expenditures should be compared to budgeted amounts of the federal funding. The financial information should be related to the productivity or  performance.
The data which include the development of the unit costs information andwhenever possible, the council will use available documentation to generate estimates for budgets. Such as operational costs should be estimated from the previous budgets, so the city council must submit the previous budget and the final expenditure to enhance the budget control.
The source documentation: The accounting records should be supported by the sources documentation as, payrolls, paid bills, , attendance and time records. For instance, to show the pay roll of all permanent employees, previous payrolls must be provided. This also applies to all other fixed administrative costs like telephone bills.
Cash management: The city council should establish the reasonable procedures to make sure that the cash balances, receipt of reports and cash disbursements are accomplished in sufficient time. This would enable them to prepare the accurate and complete cash transactions reports to the federal government.
In applying for the match, the council shall only use the standard application forms as prescribed by the federal government. The council will submit the original and two copies of applications. It will also specify and describe the programs, functions, or activities to plan, budget, and evaluate the work under the match fund (U.S Department of State, 1999).
                                                        Capital Investment
               Reasons for the capital investment include: replacing capital equipments,  increasing efficiency and expanding capacity. The council will invest in the forex market and real estate for the expand capacity, and pursue infrastructural rehabilitation of roads, ICT and buildings. Moreover, the council will replace capital equipments, i.e. computers, printers, vehicles, shelves and any other outdated equipment from every department by disposal of old items through bidding by members of the public in the city, and excluding  the city council staff. Other organizations in the city, such as nongovernmental organizations, may receive these items as donations.
                 A fraction of the money will purchase the fixed assets and for infrastructural development. This will include things like Road rehabilitation, Information Communication and Technology improvement, investing in the capital market, rehabilitating city council buildings like the city hall (Tatum, 2011).
               This is the most crucial part of the budget which requires a large allocation of the budget funds. An estimated 200,000 members of the public use public roads, sidewalks, railways and city halls which so they must be rehabilitated. This will also include lighting, beautification and structural enhancements to the exterior of specifically identified community structures. This will take 50% of the budget, which is $10 million dollars.
Half of this, $ 5 million dollars, will come from both the city council’s funds and the other half, $ 5 million dollars, from federal funds. The investment in the forex and capital market will ensure that the council has financial security which can lead to the council investing in real estates. Though the returns of some investments will not be in financial figures, the economic and social value will benefit most of the population; some of these areas include the rehabilitation of roads, ICT improvement and buildings.
             The finance department will be responsible for managing and controlling the budget under the supervision of the finance manager (Tatum, 2011). Out of the $ 10 million dollars, $ 5 million dollars for the real estate investment and $ 2 million dollars for forex and capital market investment. $ 2 million dollars for infrastructural investment or rehabilitation as identified. A survey should be carried out to determine what the priorities are. The research coordinator will spearhead the carrying out of the survey and thereafter the finance manager will allocate funding in order of priority and importance.
              The remaining $ 1 million dollars should be used to replace outdated equipments to ensure the efficiency in service delivery. Every department will identify outdated items for the disposal where the departmental administrators will oversee the disposal process.
                                   &nbs;                Operational Requirement
             Operational requirements are the costs incurred in the daily running of the city council. They could be fixed or variable in nature. Fixed costs are those costs businesse incur regardless of the amount of business done. A common example would be office space or salary costs of permanent members of staff. Although most costs are variable over time, it is crucial to include those costs which are exceedingly difficult to remove and that do not vary widely, according to the amount of business.
            Variable costs are costs which change according to the amount of business done (Tatum, 2011). For instance, if the city council requires casuals to do building and construction in its three buildings and later has six, that means the later will require twice as many casual laborers as the three buildings require.
            The fixed costs include salary for permanent employees, wages for temporary employees and wages for casual laborers. Others include utility bills like electricity, broadband internet connection, telephone, web hosting, banking services, insurance charges. This cost is an approximation from the previous budgets, since most charges are not likely to vary from the previous budget allocations, an estimated of $ 2 million dollars.
           The variable costs could be procurement of office stationery, repair and maintenance, hiring and training, taxes, fuel costs and other charges as identified by the operations departments (Raja, et al, 2006). This will require a budget of $ 2 million dollars, since most costs are variable but not as expensive as the fixed costs. Operational requirements require $ 4 million dollars in total. Half of this will be from the city council funds, $ 1 million dollars and $ 3 million dollars from the federal funds.

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                                      Subsidizing Non Governmental Organizations
             Subsidies are a means for governments to promote the growth of industries or regions to enhance the social welfare. Part of a country’s GDP spent each year by governments is to; supplement the farmers’  income, help unemployed workers find jobs, fund research into new technologies, discharge the costs of exploration and research in industries, assist companies to invest in eco-friendly technologies, lower the education cost and medicine to the public and nurture growing manufacturing industries.
            These subsidies usually achieve objectives like economic and industrial development, research and innovation, redistribution and environmental protection (Raja, 2006).
In this case, the city council will supplement or complement the efforts of the Non Government Organizations (NGOs). This will include making grants to the NGOs, collaborating with the NGOs with similar interests and common objective as the council. This will be a community based project dubbed “Clean and Beauty Community Based Project).    This will help to involve members of the community in the decision making, as well as the activities of the council. For instance, the city council will donate some of the office equipments and furniture to be disposed, to the young NGOs to help them establish themselves, as well as increase their efficiency (Raja, 2006). The administrators in every department will oversee this function.
             Furthermore, the city council will collaborate with NGOs that have projects which are in line with its objectives. The corporate affairs department will implement this as part of the council's social and corporate responsibility. The objective of this project will be to fund the development, implementation and oversight of a variety of community based projects with the specific focus on the environmental stewardship, anti-littering, blight reduction and beautification.
              This will also include personnel/labor, administrative oversight, materials, equipment and related maintenance costs. Rather than separate funding of the stipend programs, the new community-based projects should include component for stipends. Where appropriate, these are to pay local youth and/or other community members for participating in dumping prevention and beautification activities.
             The Clean and Beauty Community Based Projects to be funded would be solicited through open Request for Proposals process and could include; Neighborhood Clean Ups Projects, Greening Project, and Mentorship Programs.
            The Clean and Beauty project will take $3 million of the budget. The project's money will come from the city council’s fund to prevent sub-granting of the federal funds. Moreover, it will help avoid the requirements of the federal funding sub-granting which may involve a lot of bureaucracy.
            The proposals should include the statement of the problem, introduction, objectives, goals, expected output, breakdown of different activities and the population it intends to reach in the city, Project implementation plan, budget and a logical framework matrix. The organizations selected should be willing to expand their programs, so that they can serve more than 150, 000 people in the city in each of its activities. The organization should contribute 25% of the amount they expect from the city council, while the community contribution should be 25% of the requested amount. The NGOs selected will report to the city council every three months, that is, quarterly and the progress report should be of this format:
2012 Clean and Beauty Community Project
Progress Report
Contact Person:
Progress Report Period:

                                                   Description of the Project
                This provides a brief description of the services delivered with the Clean and Beauty community based project. This information should be consistent with information in the Service Plan attached to your City/County Agreement signed on the award.
                                                         Tasks Accomplished
             This provides narrative information (can be in bullet points) about the various tasks that each organization completed during the Contract period (should consolidate/update the information included in prior Progress Reports, as well as any additional work completed, since the last report submitted).
                                             Number of Persons Served from the City
              Each non-governmental organization should provide the population served by different services.
                                                Project’s Meeting Attendance
             Each nongovernmental organization should provide all minutes of all meetings held by the Clean and Beauty Community based project. The meetings should be conducted on a quarterly basis during the contract period.
            Identify how well each organization’s project achieved the anticipated goals/outcomes identified in their proposals. Each nongovernmental organization should hand in success stories resulted by your project’s activities, previously unidentified in your original proposal.
           Identify the challenges during the implementation and specify any unmet goals or objectives, in case of any, and why?
                                    &nnbsp;                        Lessons Learnt
           Each nongovernmental organization should share lessons learnt from the participants of the project.
                                                     Feedback from Community
          Each nongovernmental organization should share the feedback from the members of the city, the community, which should include copies of quotes, emails/letters received and findings of completed surveys/evaluations.
                                                Any additional Important Information
          Each nongovernmental organization should provide further additional information about their work that could not fit in any other sections through the attached photos.
                                                              Expense Summary
         Each nongovernmental organization should give a summary of expenses, and in case of overspending, attach copies of invoices of transactions for reimbursement.

                          Using Economic Incentives to Encourage Private Ventures
         There are various types of incentives:material incentives and tangible rewards, such as remunerations. Solitary incentives include intangible rewards like status and sense of identification. Purposive incentives are the intangible rewards related to the organization’s goals. (Clark and Wilson 1961).
          The primary reason cities and states offer incentives is to remain competitive. When the company chooses to expand locally or relocate, internationally or nationally they narrow their research to cities that appear to meet their needs. The desire of the community and/or state to have the company in their locality dictates their interest and ability to invest in it. This will be through the capital investment and jobs the company will bring (Rives, 2009). Corporate America has increasingly come to expect incentives as a standard part of doing business. Incentives increase due to competing states being more aggressive with what they have to offer. Site Selection magazine conducted a survey of the corporate real estate professionals. Almost 80 percent of respondents said incentives is part of their firms’ corporate location strategies. Many companies take incentives to play a significant role in the final decision-making process.
        Companies require incentives to offset hard or soft costs, associated with the relocation, assist with, build or provide hard or soft infrastructure, or assist in maintaining the bottom line (Scottsdale City council, 2004). For smoother and easier running of the economic activities, provision of incentives will complement and supplement the city council's efforts. Establishment of a local chamber of commerce will be the first incentive that will help to attract private ventures into the city.
         The chamber of commerce will serve to promote and perpetuate the business, commercial, manufacturing, agriculture, civic interests, general welfare and prosperity of the community and its environs.
            Also, it will ensure the stimulation of public interest to these ends to advance the industry of the said community and develop a uniform public spirit and a better place. The chamber will consist of businesses that meet certain criteria, but which should not lock out many businesses. The businesses will discuss what is best for them and enact an incentive policy that attracts and enhances private ventures (Bromley, 2008).
The chamber will set incentives like waiving all the outstanding land rates of land owners within the city. This will encourage those with existing businesses to expand. It will also lower the land rates according to how many local people the business or organization employs (Bromley, 2008).
             The city council will also ensure a reduction of plan review fees, building permit fees, inspection fees, sign permits and construction meter loops, encouraging more companies to settle in the area. The city council will also lower all rates required to acquire the land including survey rates. It will also ensure the reduction of certain costs related to infrastructure improvements, as defined by its incentive Agreement (Bromley, 2008).
Creating incentives to encourage the private venture will require $ 2 million dollars. This will serve an estimated 200,000 of the city’s population. The businesses set up in the city will serve most of the people. The better the incentives provided are, the better the services delivered to the public. While $ 1 million will go to the formation of the local chamber of commerce, the other $ 1 million will go to the other incentive requirements. The finance manager will oversee the creation of incentives.
                                                 Enhancement of Social Amenities
The city, apart from the listed activities will use some of the remaining budget of $ 0.5 million to enhance the social amenities in the city. This improves the living conditions of the community.
            Improving access to the basic health care and hygiene is one way of improving the city’s population living condition. The city council will hire the community health workers to educate the public on hygiene through health campaigns and attend to health emergencies. It will also increase the number of attendants who collect street dust bins to ensure no bins remains emptied and cleaned (Rives, 2009). The council will ensure that every member of the city access safe and clean water for consumption.
                                                 Disaster Preparedness and Response
The remaining 0.5 $ million dollars will add more fire fighting equipments and machines. This will ensure preparedness for the fire tragedies, which, are more common than any other disasters. Training members of the public on preparedness and response, in case of a fire within the city, is also crucial to all community members (Brooks, 1993).
The disaster preparedness and response coordinator, and the capacity building coordinator will work hand in hand with the finance manager. This will serve approximately 200 000 people in the town as most members of the public get trained on disaster preparedness and response by the city council.

The following table shows a breakdown of Activities and their respective costs.


Cost  Per  Activity ($)

City Council Funds. ($)

Federal Funds. ($)

Capital Investment.

10 Million.

5 Million.

5 Million.

Operational Requirements.

4 Million.

1 Million.

3 Million.

Subsidizing NGO’s

3 Million.

3 Million.


Using Economic Incentives to encourage private ventures

2 Million.

1 Million.

1 Million.

Enhancement of Social Amenities.

0.5 Million


0.5 Million.

Disaster Preparedness and Response.



0.5 Million.

These activities such as; capital investment, operational requirements, subsidizing nongovernmental organizations, creating incentives for private venture will ensure the efficient use of the city council’s funds. Apart from the listed activities, the city council will also undertake the disaster preparedness and response, and enhancing social amenities. The activities may play more than one functions like the real estate investment which will not only bring income to the council, but also provide the proper housing to the population as an incentive and social amenity. These activities involve all the stakeholders in the management of the council and benefit from it; i.e. the financiers, the financial market and the owners who are the community (Drake, 2007).

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