Supplementary information and background
reading for Tutors
Use the following notes to support you as you facilitate this module.
Risks and Controls
Services should seek to minimise the risks they face and hence the liability they also assume. Risks
arise from these things:
 The complexity of client cases, especially those with clients that have special needs or very
high debt levels
 The opportunity for miscommunication between client adviser (and perhaps caregiver too)
 The possibility of mishandling (either deliberate or accidental) by an adviser
 The possibility of disagreement between client, adviser (and perhaps caregiver too)
There are a number of procedures that can be adopted to minimise risks.
In essence, for good risk management (from the budgeting service’s point of view), every effort
should be made to:
 Minimise the number of TMM clients by conducting careful assessment of the client prior to
accepting them as a TMM client,
 Minimise the number of TMM clients by restoring them to self-sufficiency as soon as
possible by careful management and education, and
 Remove any actual or apparent doubt during the handling of the TMM case.
Reducing client numbers by assessment is one way of minimising risk. Assessment of the client’s
suitability or need for TMM is achieved through a trial of conventional budgeting advice methods
with the client.
Reducing client numbers by careful management and education is another way to minimise risk.
TMM services have reported cases where clients with high debts and a permanent inability to
manage their own funds have been restored to a comfortable financial condition through careful
management of their funds by an adviser. This shows that it is possible to do this over time and to
thereby reduce the levels of stress that exacerbate so many problems for clients. That alone may be
enough to eliminate their dependency and hence their need for TMM.
In addition, clients can be educated and empowered to manage their own affairs. This is always the
aim of TMM and some surprisingly dependent clients can be first managed, and then educated to
the point where they are stable and capable of controlling many aspects of their finances.
Removing doubt from TMM operations is an important way of minimising risk. All TMM systems
should be designed so that there is:
 No doubt about what the client wants, then,
 No doubt about what the adviser agreed to, then,
 No doubt about what was actually done, and then,
 No doubt that all parties know (or can see) what is going on at any point in time.
Most of this can be achieved by having the clearest possible communication between parties,
supported by clear and detailed records. However in addition, to prevent fraud or the possibility of
it, services need to ensure that all financial transactions are properly checked.
To remove ‘doubt’ from the management system, services should consider procedures designed to
facilitate:
 Communication (including Recording, Authorisation and Reporting), and
 Transparency (including Accounting, Independent Checks, Supervision and Auditing)
Recording, authorisation, reporting, accounting, independent checks,
supervision
Auditing
These are the principles that underpin the NZFFBS Standards and they should also underpin the
policies written for each TMM service. Now we will look at what the NZFFBS standards mean and
how services can comply with them by applying those principles.
Service Policy
These rules require services to think about how they will run their TMM operations. The NZFFBS
expects services to look at their resources and determine answers to certain things and to set these
down in a policy that can be reviewed by the NZFFBS. Such issues include:
1. How many TMM clients they can safely handle, if any?
TMM clients can be demanding and may require advisers to be readily available. Some
clients will contact advisers many times each day during a stressful part of their life. A ratio
of 40 clients to 1 equivalent full time adviser is possible but may be a lot lower. Clients vary
widely, but on average a client may occupy several hours of an adviser’s time per week,
especially at first. Dealing with TMM clients can be very demanding in terms of time and of
stress on advisers.
2. Who will conduct or authorise transactions? (And by implication, are sufficient safeguards in
place to ensure independent checks of the adviser’s work?)
Transactions should be partially handled or checked by someone other than the adviser of
the TMM client. This can be for reasons of efficiency but also to help provide an
independent check on the work of the adviser.
The independent check of transactions is the primary safeguard for a budgeting service from
accusations or actual cases of fraud or mishandling of clients’ money.
There are two issues that can be resolved by having an independent check on all
transactions:
i.
Mistakes, which can be detected by an independent check and corrected
ii.
Fraud, which is discouraged by the existence of an independent check
Supplementary information and background reading for Tutors – March 2013
Page 2 of 12
3. Who will internally audit the TMM accounts (or indeed the entire TMM operation) and by
implication, whether they have the expertise and time?
Auditing of TMM financial accounts must occur twice a year, but the auditing or checking of
the whole TMM system from assessment of clients to ongoing education should also be
undertaken internally by the service.
Auditing is a specialised skill and should be performed by someone with experience and time
available to do a thorough job.
Depending on the legal structure of the budgeting service (ie. the service’s own rules of
incorporation) the service may have to retain an outside auditor for this purpose
4. Who will externally audit the accounts? This needs to be someone appointed by the
Governance body.
The aim is to ensure that checks are made on the integrity of the transactions in the
accounts and that collusion is not possible between the people involved in the day to day
managing or governing of the service.
5. Whether any exceptions can be made to the policies and procedures devised by the service?
The aim here is to ensure that policies set by the management of the budgeting service are
not changed at will by TMM staff. If any changes are permitted to policies, there must be an
established formal procedure for ensuring that management approves the changes before
they are adopted by staff. Regular audits of TMM operations should be conducted by
management to ensure that policies are being followed by staff.
Budgeting services are able to develop their own standards, as long as they meet the NZFFBS Inc
minimum standards.
It also specifies that only certificated advisers can advise clients. This is standard for all types of
budget client but in the case of TMM it is true that not all certificated advisers may be suitable to
handle TMM clients. Extra skills are usually needed. Services may decide to limit TMM clients to just
a few advisers.
Client Participation
These rules are designed to ensure that clients are not blindly inducted into TMM or kept
uninformed about their financial state or maintained as clients past the point at which they can
manage their affairs.
1. To begin with, clients should not be accepted until they have been assessed as needing
TMM. Some clients may want TMM but could manage their affairs if provided with support
and education. They should not be accepted as TMM clients. This would be a misallocation
of scarce resources. Assessment does not consist of an attempt to estimate the client’s
abilities by analysis or reference to expert opinion, but rather, to test the client’s ability to
Supplementary information and background reading for Tutors – March 2013
Page 3 of 12
handle normal budgeting procedures by trying those conventional procedures with the
client. If they don’t work, the client may need TMM.
2. Once the client is assessed as suitable for TMM, they must sign a written agreement that
clearly states the responsibilities of the parties. This may have to include a statement
defining the role and authority of the caregiver. A generic contract is attached to the
minimum standards.
3. Once clients are taken on, they are to participate as fully as possible in normal budgeting
procedures, but particularly in the writing and updating of the budget.
Clients need to know and approve what is being done for them. This is a basic right of all
clients.
Clients need to have some measure of control over their finances to reduce possible feelings
of powerlessness or inadequacy. Clients are adults and as far as possible should retain
responsibility for decision making. This includes setting goals and priorities for their budget
and usually, (though not always) for spending their own cash allowance unaided.
Clients need to be educated to take responsibility for as much of their affairs as they can
safely handle. The approach to this will differ between standard and custodial cases.
Standard clients are those for whom education is an integral part of the ongoing budgeting
process and for whom the expectation is that they will be on TMM for a short time only.
These clients must have an individual education plan. Custodial Clients are those for whom
education is probably not possible or practicable. However it is important to note that
Custodial cases should include as much of an educational component as is possible.
Although these clients may have limited ability to learn the required skills they must be
given every opportunity to gain experience and confidence in financial matters.
A sample education plan is included with the minimum standards.
A deadline for restoration of self-sufficiency needs to be set for all standard cases. This may
have to be amended but clients and advisers should not automatically assume that all TMM
clients will remain so forever. Education and empowerment by advisers will have to proceed
at the rate at which the client’s physical, mental and emotional state improve, but a
deadline for self-sufficiency is a worthwhile goal to aim at. Without it there is a well known
danger that clients may become unnecessarily reliant on a TMM service to conduct their
affairs for them at little or no cost. In effect, such clients are using a voluntary organisation
to provide the same services that are normally offered by a (paid) accountant. This has
happened in the past and benefits neither the client (whose dependency is reinforced) nor
the service (who should devote their efforts to those in real need). Those clients who are
receiving custodial management may not have such a deadline; however it is important that
their cases are regularly reviewed to see if they are ready to be moved to standard
management.
Transactions
These rules are designed to ensure that clear, accurate records are kept for clients and advisers and
in doing so, that opportunities for mistakes or fraud are reduced as far as possible. This is the
application of the principle of transparency.
Supplementary information and background reading for Tutors – March 2013
Page 4 of 12

A separate ledger must be kept for all clients. Entries into the ledger can be made by one
person, but should be checked immediately by another person for accuracy and to verify
that the transaction is properly authorised by either:
o the client directly (or their caregiver if so empowered), or
o the agreed budget, or
o the adviser (subject to the proper exercise of their discretion if allowed by the terms
of the TMM agreement)

This account may be contained within a Trust Fund created specifically to hold TMM client
funds and operated by the budgeting service. Alternatively, this account may be a subaccount of the budgeting service, but it must be completely separate from the accounts of
the budgeting service that are used to fund their operations.

The client must receive at least a verbal update on the state of their accounts once every
three months or sooner on request. A written statement of their accounts should support
this verbal update. They should also be given their debt balances (ie a Statement of
Accounts Owing [NZFFBS form 101]).

To reduce the possibility for any fraud or mishandling or repetitive error by a case manager,
the accounts should be open to inspection at any time by the client, the Co-ordinator, the
Treasurer and the Auditor. Normal precautions to protect the privacy and confidentiality of
the client should be taken.

The account must be audited every six months according to the methods prescribed in the
budgeting service’s rules of incorporation (or equivalent charter document). This audit may
not be performed by the case manager.

All money received by the service for the client must be receipted.

No payments to creditors shall be made in cash.

Payments made to creditors must be authorised according to the rules set for this by the
budgeting service’s rules of incorporation or equivalent charter. The principle of the
‘independent check’ applies here. The rules must specify if co-signatories are required for
cheques. This is strongly recommended by the NZFFBS as it is a fundamental accounting
procedure that is almost universally used in business. Case managers may be cheque
signatories, at the discretion of the budgeting service. Other methods of payment to
creditors (ie. AP, DD, electronic transfers etc) should also have an independent check by
another party, at the time they are authorised, and again when they are transacted. Thus, a
second party should sight the authorisation for the transaction and should check later on in
the ledger and the bank statement to see that it is correctly actioned.

All financial records (including financially related correspondence) are to be retained for
seven years. This should also include those papers that record the authorisation of
expenditure (ie. case file notes, agreed budgets, invoices, receipts etc.) Originals of
documents may be retained by the service but copies should be provided to the client on
demand.

The client account should be reconciled to the bank statement at least once a month.
Supplementary information and background reading for Tutors – March 2013
Page 5 of 12
Supervision
This rule is part of the quality management of our TMM service to clients, as much as a check on
accounting procedures. The co-ordinator or a senior adviser (with knowledge of TMM) must review
all account transactions (and may do so in the presence of the client) at least once every two
months. This rule has been created to do three things.
1. Firstly, to review the progress being made by each client towards self sufficiency. This is the
obvious opportunity to also review the deadline for self-sufficiency. Past experience has
shown that some clients become needlessly dependent on their case managers, and that
case managers can also be lax in encouraging self-sufficiency for clients. As a result, these
TMM clients may remain on the books of the budgeting service for far longer than is really
necessary. This is wasteful of the resources of the budgeting service and does not comply
with our stated aim of empowering the client through education.
2. Secondly, to ensure that each TMM case manager is interpreting standard procedures for
client accounts in the same way. If training or correction of the case manager is needed, the
management can arrange this. This is particularly likely to be needed in services that have
taken on TMM for the first time and where procedures are still being established.
3. Thirdly, to offer the client a regular chance to speak to another senior member of the service
about their case. This may help to reassure them that their affairs are being handled
correctly. It is a procedure that is linked to the need to manage TMM client accounts
transparently.
Another benefit is that if the case manager becomes unavailable, at least one other person in the
service has an approximate understanding of the client’s position and could assist with the case if
required until a replacement case manager is allocated.
Training
Prior to a budgeting service offering TMM, the service must arrange for everyone who will be
involved (including the majority of governance members) to complete the NZFFBS training module
on TMM. If a new staff member joins the budgeting service after the TMM training has been
conducted, and has a key role in the operation of TMM cases, they must complete the NZFFBS TMM
module before overseeing cases. If a new staff member joins the service and has a minor role in the
operation of TMM cases, they must first be trained by others within the service and, at the first
reasonable opportunity, the new staff member must complete the NZFFBS TMM training module.
Quality Assurance
This rule ensures that the NZFFBS can review the policy statements of every TMM service. The aim
here is to:
 Check that services have comprehensive policies that conform to the national standards.
 The requirement to have a policy on Total Money Management is part of the affiliation
criteria for the NZFFBS.
 All member services must have a TMM policy, and those services offering TMM must ensure
it contains everything necessary to meet the minimum standards.
Supplementary information and background reading for Tutors – March 2013
Page 6 of 12
Timeline
This timeline shows what activities should be performed in due course.
TMM Budget Account Management Timeline







Every months – Bank statement reconciliation of the client’s account.
Every 3 months – Routine update to standard clients including written statement of
account*
Every 6 months – Routine update to custodial clients including written statement of
account*
Every 6 months (minimum) – Supervision of case manager by coordinator or other senior
adviser
Every 6 months – Internal audit by non-case manager appointed by budgeting service
Every 12 months – External audit by person appointed by Governance
After 7 years – Destroy records
(*Client participation standard)
TMM principles: Risks and Controls
Risks
TMM cases generally have a higher risk of liability for the budgeting service or adviser. This is due
to:
 The greater degree of control exercised by the adviser over the client’s affairs, and hence
the greater duty of care owed to the client, and
 The nature of some TMM clients and their cases.
There are a number of factors about clients and their cases that increase the risks for services.

Complexity
Client cases may be inherently complex. Some clients have unusually high levels of debt
(though this is not significantly more common than in the general client population). What
makes it harder to handle is the inability of the client to deal with the problems caused by
the debt.

Miscommunication
Some clients have high degrees of disability (eg mental, physical, social or emotional) and
this makes it harder to communicate with them and harder to obtain co-operation or to
hand over any responsibility to them. Some clients also have third parties involved in their
care. This means that advisers may need to deal with caregivers, caseworkers or family
members with a greater consequent potential for miscommunication or disagreement.
Supplementary information and background reading for Tutors – March 2013
Page 7 of 12

Mishandling
It is important that the potential for mishandling a TMM client case does not happen.
If adequate controls are in place to ensure that the adviser’s work is independently checked and that
all discretionary decisions made by the adviser are made within a proper system of recording,
reporting and authorisation, then the grounds for complaint are largely eliminated. Proper systems
set up by the governance committee can remove not just the opportunity for mishandling or fraud
by advisers, but also the grounds for perception of those things by the client. Therefore, certain
controls or features should be built into all TMM procedures or management systems.
Controls
In essence, for good risk management (from the budgeting service’s point of view), every effort
should be made to:
1. Minimise the number of TMM clients by conducting careful assessment of the client prior to
accepting them as a TMM client,
2. Minimise the number of TMM clients by restoring them to self-sufficiency as soon as
possible by careful management and education, and
3. Remove any actual or apparent doubt during the handling of the TMM case.

Minimising Risk – Reducing Client Numbers by Assessment
Assessment of the client’s suitability or need for TMM is achieved by two things.
1. A thorough interview and study of the client’s background, including input (with
client permission) from family, caregivers, social workers and other agencies who
may have referred the client to the budgeting service.
2. A trial of conventional budgeting advice methods with the client.

Minimising Risk – Reducing Client Numbers by Careful Management and Education
TMM services have reported cases where clients with high debts and a permanent inability
to manage their own funds have been restored to a comfortable financial condition through
careful management of their funds by an adviser. This shows that it is possible to do this
over time and to thereby reduce the levels of stress that exacerbate so many problems for
clients. That alone may be enough to eliminate their dependency.
In addition, clients can be educated and empowered to manage their own affairs. This is
always the aim of TMM and some surprisingly dependent clients can be first managed, and
then educated to the point where they are stable and capable of controlling many aspects of
their finances.

Minimising Risk – Removing Doubt from TMM Operations
All TMM systems should be designed so that there is:
o no doubt about what the client wants, then,
o no doubt about what the adviser agreed to, then,
o no doubt about what was actually done, and then,
Supplementary information and background reading for Tutors – March 2013
Page 8 of 12
o
no doubt that all parties know (or can see) what is going on at any point in time.
Most of this can be achieved by having the clearest possible communication between parties,
supported by clear and detailed records. In addition, to prevent fraud or the possibility of it, services
need to ensure that all financial transactions are properly checked. To remove ‘doubt’ from the
management system, services should consider procedures designed to facilitate:
 Communication (including Recording, Authorisation and Reporting) and
 Transparency (including Accounting, Independent checks, Supervision and Auditing).

Removing Doubt – Communication
Communication is aimed at eliciting the client’s needs and then removing confusion and
doubt. It is the first step towards maintaining transparency in the dealings between client
and adviser. It begins even before the initial interview with the client. Advisers need to
ensure that TMM clients are accompanied by their supporters (family, caregiver, social
worker etc) if this is indicated. Care must be taken at the interview to be absolutely clear
about what the adviser can and cannot do for the client.
The potentially stressful situation of TMM demands extra skill of the advisers in the way they
interact with clients. Limits may need to be placed on how clients communicate with
advisers (eg only twice a week, only in person, only with a support person present etc).
The first interview should include an assessment of the client’s need and suitability for TMM
as well as discovery of the client’s financial state. The assessment may also include an
appraisal of the client’s special needs or special conditions that could affect the
communication between client and adviser.

Communication – Recording
If the interview supports the assessment that the client is unable to manage their affairs and
requires TMM, then the adviser needs to record details of the interview liberally. There
should be no doubt about what was discussed and agreed. Advisers need to get in the habit
of recording information and decisions, and of providing the client with a hard copy of the
record whenever necessary or attaching it to the case file.
All client interviews and updates (see below) are an opportunity for the adviser and client to
amend the budget and to plan ahead. Amendments need to be recorded and plans need to
be authorised by the client. They should be asked to sign to indicate their acceptance of
new budgets or plans.

Communication – Authorising
Authorisation takes two main forms – an initial written agreement and subsequent
authorities recorded by the adviser in the client’s account ledger or case file.
Initial Agreement: Authority for the adviser to exercise their discretion entirely is never
given. Instead, the adviser must be bound by the terms of their agreement or contract with
the client. This is signed by the client at the start of the case and is added to by subsequent
Supplementary information and background reading for Tutors – March 2013
Page 9 of 12
authorisations given verbally or in writing by the client. The initial agreement is known as
the TMM Agreement and is separate from the Budgeting Agreement (NZFFBS form 109).
Very early on in the process the adviser must discuss the TMM Agreement and get it signed
by the client. This is the general authorisation for the adviser to take over administration of
the client’s finances.
Subsequent Authority: After this, there needs to be a way of recording the specific
authorisation by the client (or caregiver if applicable) for the adviser to perform other
significant activities on the client’s behalf. Such significant activities could include:
o Changes to the agreed budget or to regular expenditure
o New or irregular expenditure
o Contact with creditors
All expenditure that is not specifically agreed to in advance as part of the planned budget
needs to be authorised by the client. Such authorisation should be recorded in writing with
details of the amount, purpose, name of the authority and date. A remarks column in a
ledger, or notes, invoices, receipts etc attached to a case file would suffice for this. The
authorising party (client or possibly the caregiver) should sign the record in full. (In general
accounting practice, the initials of an authority are not regarded as sufficient as they are too
easy to forge.)

Communication – Reporting
There are two reporting functions prescribed in the NZFFBS standards. A routine (usually
verbal) update delivered frequently to the client and a periodic report (usually with written
statements attached) delivered at least quarterly.

o
Routine Update: Clients must be regularly interviewed by their advisers (in person or
by phone) and must be constantly updated on the state of their finances. The
frequency of these updates is variable but the client must know that they can ask for
an update at any time. They should be supported by accurate current ledger
entries. The client may inspect all their financial records at any time and they may
request a full report (see below) at any time.
o
Periodic Update: Clients must receive a detailed verbal report and a statement of
their accounts (in writing). The adviser should explain all the transactions taken
since the previous report. For standard cases this should occur at least once every
three months or sooner at the client’s request. For custodial cases this should occur
at least once every six months or sooner at the client’s request.
Removing Doubt – Transparency
Transparency is a term used to describe those procedures followed to ensure that no fraud
or mishandling can occur and to give regular proof of the effectiveness of those systems to
the client and the management of the budgeting service.

Transparency – Accounting
Supplementary information and background reading for Tutors – March 2013
Page 10 of 12
Conventional accounting practices should be followed. These are designed to provide clear
records of the flow of money in and out of the client’s account. Each client is to have a
ledger showing income and expenditure with marginal notes or references to the client’s
case file and budget showing explanations and authorisation.
This account is either a trust account (in which case it is subject to other laws governing the
operation of trusts) or may be a form of sub-account named for the purpose and operated
by the budgeting services. In all events it is to be entirely separate from the daily
operational accounts of the budgeting service.
Reports showing the statement of accounts and explaining the transactions are to be given
to the client at least quarterly .
The ledger is to be open to the client (and / or caregiver), the co-ordinator and the treasurer
on request.
No cash payments are to be made to creditors from the client’s account and all money
received is to be receipted.
It is however common (and practical) for a cash allowance to be paid to the client each
week, but this is to be signed for by the client. Some services maintain a cash float to service
requests from clients for cash at short notice. This may be justified, but if irregular cash
payments are made to clients, a procedure must be set and rigorously applied to ensure that
cash is safely and properly disbursed to clients. It is not unknown for clients to lie or
attempt to fool advisers to obtain cash to feed addictions. It is also not unknown for
relatives or partners of clients to falsely attempt to obtain cash from client’s accounts,
sometimes ostensibly for the client. Impersonation (during phone calls allegedly made by
the client to the adviser to authorise cash payments) or elaborate cover stories have been
employed for this purpose. To avoid risks like this requires vigilance, careful application of
rules that are set for disbursal of cash, and a healthy scepticism by advisers. Addicts and
their friends are the chief practitioners of this.
All cheques or equivalent bank transfers must be signed (or co-signed) according to the rules
of the budgeting service. It is highly recommended that all cheques be co-signed in
accordance with the principle of the independent check (see below).
Records of the client accounts Including the ledger, correspondence etc) is to be maintained
for seven years.
All bank statements must be reconciled with transactions at least monthly.

Transparency - Independent Checks
To ensure transparency and to reduce the potential for fraud, expenditure from the client
account should be checked by someone other than the adviser. This person should sign to
indicate the checks they performed and their approval of the transactions. While this may
be inconvenient at times for advisers, it is a fundamental principle of normal accounting
practice. This is the single most effective way of protecting the service from any actual fraud
or any allegation of it. If all transactions are checked and approved by an independent party,
Supplementary information and background reading for Tutors – March 2013
Page 11 of 12
then the opportunity for mistakes or fraud is almost eliminated. The independent check is
fundamental to the safe operation of TMM accounts by budgeting services.

Transparency – Supervision
In keeping with the principle of independent checks, all TMM cases are to be reviewed at
least every two months by the co-ordinator or a senior adviser. The client may attend the
review. The aim here is not just to check the probity of transactions and accuracy of record
keeping, but also to review the progress being made with the client. The ongoing education
and empowerment of the client needs to be reviewed and decisions need to be taken about
whether the client still needs TMM. This review may also look at moving a client from
standard to custodial management or vice versa.

Transparency - Auditing
The client ledger is to be audited by the budgeting service bi-annually using whatever
procedure is prescribed by the service. For safety, the NZFFBS recommends that this audit
should conform to normal accounting practices.
Other key information for governance committees:
 Police checks for staff
 Experience of staff
 House calls for housebound clients
 Internet banking
Supplementary information and background reading for Tutors – March 2013
Page 12 of 12