ZHRC/HTI Financial
Management Training
Session 1: Financial Management
Overview
Learning Objectives (1)
• By the end of the session, participants
will be able to:
•
Define financial management
•
List challenges to strong financial
management in the ZHRCs/HTIs
•
List the ‘7 Principles of Financial
Management’
•
List the ‘4 Building Blocks of Financial
Management’
Learning Objectives (2)
•
Describe how to apply concepts of financial
management to the ZHRCs/HTIs
•
Describe the central role of financial
management in achieving an organizations
objectives
•
Recognize that financial management is
everyone’s responsibility
What is financial management?
Definition
• Financial management is the process of
planning, organizing, controlling and
monitoring the financial resources of an
organization to achieve its objectives
• In the ZHRC/HTI context, financial
management is comprised of processes and
actions taken by administrative leaders and
financial staff of the ZHRC/HTI
Why is financial management
important?
Importance of Good Financial
Management
• Helps managers make effective and efficient
use of resources to achieve objectives and
fulfill commitments to stakeholders
• Helps the organization achieve long-term
financial sustainability
• Helps the organization be more accountable
to stakeholders and development partners
Financial Management of an
Organization is like Maintenance of a
Car
Functions of Financial Management
• In Tanzanian Government entities, the
functions of financial management
include:
•
•
•
Maximizing the sustainability of service
provision
Making financing and investment decisions
Managing liquidity and cash flow
Tanzania Public Finance Act of 2001
• The principle Act governing the financial
operations of all government institutions in
Tanzania
• Purpose of the Act is ‘to make provision for
revenues, management of funds and resources of
government authorities, and for other matters
connected to securing proper collection and sound
management of finances in local and central
government systems’.
Public Finance Act 2001 Outline (1)
There are 7 parts to the Act:
• Part I : Preliminary Provisions
• Part II : Control and Management of
Public Finance
• Part III: Estimates of Revenue and
Expenditure
• Part IV: Preparation, Audit and
Examination of Accounts
Public Finance Act 2001 Outline (2)
• Part V : Audit of Public Authorities and
Other Bodies
• Part VI: Finance and Audit of the
Controller and Auditor-General and
Related Provisions
• Part VII: Other Provisions
Elements of Financial Management
• There are three broad elements of
financial management:
• Allocation of finances
• Controlling resources
• Financing decisions
Methods Used to Achieve Financial
Management Elements
• Management methods, including contracting out
service delivery
• Accounting methods, including record keeping and
financial reporting
• Budget methods and processes like Medium Term
Expenditure Framework (MTEF)
• Financial analysis such as examining resource
utilisations
• Management Information Systems
• Auditing
Four Key Components of Financial
Management (1)
1. Managing scarce resources
• Matching available resources to the
activities planned by the ZHRC/HTI
• Monitoring the efficiency of resource use
• Finding ways to finance new initiatives
• Identifying methods to reduce and
recover costs
Four Key Components of Financial
Management (2)
2. Managing Risk
• All organizations face internal and
external risks that can threaten
operations
• Risks must be identified and actively
managed in an organized way to limit
damage they can cause
Four Key Components of Financial
Management (3)
3. Managing Strategically
• Financial management is part of management as
a whole
• Strategic management includes:
• Identifying trends in past resource usage in order
to determine future budget requirements, project
cash needs, and forecast financial growth
• Developing long-term financial plans to meet
future resource requirements
Four Key Components of Financial
Management (4)
4. Managing by Objectives
Plan
Review
Do
Features of Good Financial Management
Systems in the ZHRCs/HTIs (1)
• Financial information is available to plan
and control the use of resources
• Clear objectives are set for planning and
budgeting
• Revenue/resources are mobilised
• Officers are accountable for ensuring that
expenditure and revenues comply with the
regulations
Features of Good Financial Management
Systems in the ZHRCs/HTIs (2)
• Relevance is clear between the achievements
accomplished and the resources used
• Strong systems, controls and audit processes
• Guided by the Public Finance Act and Ministry
of Health financial circulars and regulations
• Public Procurement Act No. 21 of 2004,
Standing Orders
• All financial affairs should be subject to both
internal and external audits
Challenges to Strong Financial
Management in the ZHRCs/HTIs
• Insufficient funds and resources for planned
activities
• Staff turnover and delays in hiring to fill
vacant positions
• Limited opportunities for professional
development and training for the ZHRC/HTI
financial employees
• Insufficient time available for thorough
budgeting, planning and reviewing results
7 Principles of Financial Management
•
•
•
•
•
•
•
Consistency
Accountability
Transparency
Viability
Integrity
Stewardship
Accounting standards
Work in Pairs:
7 Principles of Financial Management
4 Building Blocks of Financial
Management (1)
1. Accounting Records
• Accurate records of how funds have been
used
2. Financial Planning
• Budget
3. Financial Monitoring
• Financial reports
4. Internal Controls
• System of controls, checks, and balances
4 Building Blocks of Financial
Management (2)
Getting the Basics Right
4 Building Blocks of Financial
Management (3)
• All building blocks must be in place
continuously
• Effective financial management will
not be achieved by partial
implementation
Work in Pairs:
4 Building Blocks of Financial
Management
Key Points (1)
• Financial management is the process of planning,
organizing, controlling and monitoring the financial
resources of an organization to achieve its
objectives
• It is essential for an organization to meet its
financial objectives
• 4 key components of financial management are:
•
•
•
•
Managing scarce resources
Managing risk
Managing strategically
Managing by objectives: ‘Plan-Do-Review’
Key Points (2)
• The 7 principles of financial management
include: consistency, accountability,
transparency, viability, integrity, stewardship and
accounting standards
• Use of these principles is good practice for
building strong systems
• The 4 building blocks of financial management
include: accounting records, financial
monitoring, financial planning and internal
controls