CP-FIN Standard. Generated 12/04/2022. ©2022 Council on Accreditation.
2022 Edition

Financial Management Introduction

Purpose

Public authority/agency viability and positive financial outcomes are achieved through diligent application of sound financial management practices that accord with applicable requirements. 

Introduction

Sound financial management is the foundation for providing high quality services and achieving the public authority/agency’s commitment to providing high quality services relative to its mission or purpose.  Inherent in these standards is a recognition that public agencies may have limited ability to manage their own finances, and their budgets may be determined, and approved or rejected, by a legislative or other body. However, public agencies must still demonstrate that management has fostered a culture that supports sound financial practices and accountability at all levels of the agency. Accountability is established through clearly defined lines of authority and responsibility, adherence to internal control responsibilities, and by making the strategic connection between efficient and effective use of agency resources and improved outcomes. Effective financial management ensures that resources are being directed to those programs or interventions that have the strongest impact on persons served. 
Note: This standard does not apply to private organizations.

Note: COA’s Financial Management standards do not apply to for-profit organizations. For-profit organizations see COA’s Administration and Financial Management (CA-AFM) standards.

Note: The three levels of government are federal, provincial/territorial, and municipal

Note: Please see the CP-FIN Reference List for the research that informed the development of these standards. 

Note: For information about changes made in the 2020 Edition, please see CP-FIN Crosswalk.
 
2022 Edition

Financial Management (CP-FIN) 1: Internal Control Environment

An internal control system includes mechanisms for:
  1. senior management reviews and approvals;
  2. assuring that management directives are carried out;
  3. prevention of error, mismanagement, or fraud; and
  4. safeguarding and verification of assets.

Interpretation

Internal controls include "preventive" controls that address the question, "What could go wrong?” and "detective" controls which address the question, "What did go wrong?" As such, detective controls should be part of the public authority/agency's performance improvement system.
1
Full Implementation, Outstanding Performance
A rating of (1) indicates that the agency's practices fully meet the standard and reflect a high level of capacity.  
  • All elements or requirements outlined in the standard are evident in practice, with rare or no exceptions: exceptions do not impact service quality or agency performance. 
2
Substantial Implementation, Good Performance
A rating of (2) indicates that an agency's infrastructure and practices are basically sound but there is room for improvement.
  • The majority of the standards requirements have been met and the basic framework required by the standard has been implemented. 
  • Minor inconsistencies and not yet fully developed practices are noted; however, these do not significantly impact service quality or agency performance.
3

Partial Implementation, Concerning Performance
A rating of (3) indicates that the agency's observed infrastructure and/or practices require significant improvement.  

  • The agency has not implemented the basic framework of the standard but instead has in place only part of this framework.  
  • Omissions or exceptions to the practices outlined in the standard occur regularly, or practices are implemented in a cursory or haphazard manner.  
  • Service quality or agency functioning may be compromised.  
  • Capacity is at a basic level.
4
Unsatisfactory Implementation or Performance
A rating of (4) indicates that implementation of the standard is minimal or there is no evidence of implementation at all.  
  • The agency’s observed administration and management infrastructure and practices are weak or non-existent; or show signs of neglect, stagnation, or deterioration.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Internal financial control manual that includes policies and procedures
No On-Site Evidence
  • Interviews may include:
    1. Fiscal authority
    2. Agency senior management
    3. CFO or equivalent
    4. Financial personnel
 
2022 Edition

Financial Management (CP-FIN) 2: Financial Risk Assessment

The public authority/agency’s management evaluates financial risks in relation to its financial capacities and the resources needed to provide services.

Interpretation

Review of financial capacities and resources should be part of the authority’s/agency’s long-term planning and annual short-term planning process. Review of financial risk should be part of its annual risk prevention and management assessment.
1
Full Implementation, Outstanding Performance
A rating of (1) indicates that the agency's practices fully meet the standard and reflect a high level of capacity.  
  • All elements or requirements outlined in the standard are evident in practice, with rare or no exceptions: exceptions do not impact service quality or agency performance. 
2
Substantial Implementation, Good Performance
A rating of (2) indicates that an agency's infrastructure and practices are basically sound but there is room for improvement.
  • The majority of the standards requirements have been met and the basic framework required by the standard has been implemented. 
  • Minor inconsistencies and not yet fully developed practices are noted; however, these do not significantly impact service quality or agency performance.
3

Partial Implementation, Concerning Performance
A rating of (3) indicates that the agency's observed infrastructure and/or practices require significant improvement.  

  • The agency has not implemented the basic framework of the standard but instead has in place only part of this framework.  
  • Omissions or exceptions to the practices outlined in the standard occur regularly, or practices are implemented in a cursory or haphazard manner.  
  • Service quality or agency functioning may be compromised.  
  • Capacity is at a basic level.
4
Unsatisfactory Implementation or Performance
A rating of (4) indicates that implementation of the standard is minimal or there is no evidence of implementation at all.  
  • The agency’s observed administration and management infrastructure and practices are weak or non-existent; or show signs of neglect, stagnation, or deterioration.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
No Self-Study Evidence
  • Fiscal authority/senior management meeting minutes
  • Long-term or strategic plan
  • Annual risk management review

  • Interviews may include:
    1. Fiscal authority
    2. Agency senior management
    3. CFO or equivalent
 
2022 Edition

Financial Management (CP-FIN) 3: Financial Planning

Planning for the current fiscal cycle is authority/agency-wide and involves key stakeholders. 
1
Full Implementation, Outstanding Performance
A rating of (1) indicates that the agency's practices fully meet the standard and reflect a high level of capacity.  
  • All elements or requirements outlined in the standard are evident in practice, with rare or no exceptions: exceptions do not impact service quality or agency performance. 
2
Substantial Implementation, Good Performance
A rating of (2) indicates that an agency's infrastructure and practices are basically sound but there is room for improvement.
  • The majority of the standards requirements have been met and the basic framework required by the standard has been implemented. 
  • Minor inconsistencies and not yet fully developed practices are noted; however, these do not significantly impact service quality or agency performance.
3

Partial Implementation, Concerning Performance
A rating of (3) indicates that the agency's observed infrastructure and/or practices require significant improvement.  

  • The agency has not implemented the basic framework of the standard but instead has in place only part of this framework.  
  • Omissions or exceptions to the practices outlined in the standard occur regularly, or practices are implemented in a cursory or haphazard manner.  
  • Service quality or agency functioning may be compromised.  
  • Capacity is at a basic level.
4
Unsatisfactory Implementation or Performance
A rating of (4) indicates that implementation of the standard is minimal or there is no evidence of implementation at all.  
  • The agency’s observed administration and management infrastructure and practices are weak or non-existent; or show signs of neglect, stagnation, or deterioration.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Budget planning procedures
  • Financial information
  • Relevant financial data
  • Cost analysis reports
  • Interviews may include:
    1. Fiscal authority
    2. Agency head
    3. Senior management
    4. CFO or equivalent

 
Fundamental Practice

CP-FIN 3.01

The budget planning process is a collaboration between the authority/agency’s administrative, program, field, and budget personnel and is based on:
  1. direct and indirect operating expenditures; 
  2. contractual requirements; 
  3. performance improvement and outcomes data;
  4. changing costs and conditions; and
  5. anticipated revenue for the program year.

Interpretation

Performance improvement and outcomes data in this context refers to the use of program and client outcomes data in planning and budgeting decisions. Such data may be used, for example, to direct available resources toward programs or interventions that have the strongest impact on individuals and families served.

 

CP-FIN 3.02

The public authority/agency’s fiscal authority: 
  1. approves the budget and any revisions to the budget;
  2. reviews fiscal summaries at least quarterly to evaluate expenditures against revenues;
  3. ensures the budget-to-actual variance analyses are performed after year end numbers are finalized; and 
  4. reviews fiscal policy and the recommendations of the agency’s auditors.

 
Fundamental Practice

CP-FIN 3.03

Financial information is routinely analyzed and the information includes: 
  1. a regular analysis of financial performance against budget projection with budget-to-actual variance analyzes performed on interim financial statements of activities; 
  2. service revenues and actual service delivery costs; and 
  3. an annual inventory of significant assets, including securities.
 
2022 Edition

Financial Management (CP-FIN) 4: Financial Management

Positive financial outcomes are achieved through a financial management system that receives, disburses, and accounts for funds consistent with sound financial practices. 
1
Full Implementation, Outstanding Performance
A rating of (1) indicates that the agency's practices fully meet the standard and reflect a high level of capacity.  
  • All elements or requirements outlined in the standard are evident in practice, with rare or no exceptions: exceptions do not impact service quality or agency performance. 
2
Substantial Implementation, Good Performance
A rating of (2) indicates that an agency's infrastructure and practices are basically sound but there is room for improvement.
  • The majority of the standards requirements have been met and the basic framework required by the standard has been implemented. 
  • Minor inconsistencies and not yet fully developed practices are noted; however, these do not significantly impact service quality or agency performance.
3

Partial Implementation, Concerning Performance
A rating of (3) indicates that the agency's observed infrastructure and/or practices require significant improvement.  

  • The agency has not implemented the basic framework of the standard but instead has in place only part of this framework.  
  • Omissions or exceptions to the practices outlined in the standard occur regularly, or practices are implemented in a cursory or haphazard manner.  
  • Service quality or agency functioning may be compromised.  
  • Capacity is at a basic level.
4
Unsatisfactory Implementation or Performance
A rating of (4) indicates that implementation of the standard is minimal or there is no evidence of implementation at all.  
  • The agency’s observed administration and management infrastructure and practices are weak or non-existent; or show signs of neglect, stagnation, or deterioration.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Financial management and accounting procedures
  • Job description of the person responsible for managing financial accounts
  • Resume of the person responsible for managing financial accounts
  • Procedures regarding protection of client funds and assets
  • Documentation tracking staff completion of training on the accounting system
  • Interviews may include:
    1. Governing body members
    2. CEO
    3. CFO
    4. Relevant personnel
  • Observe reporting and accounting system

 

CP-FIN 4.01

The public authority/agency takes full advantage of available funding opportunities provided by the three levels of government.

 

CP-FIN 4.02

The agency seeks to conserve its fiscal resources by:
  1. taking advantage of tax exemptions permitted for public agencies, where applicable;
  2. coordinating the purchase of goods or services among internal divisions; and
  3. involving staff and other stakeholders in identifying creative ways to use funds effectively and efficiently. 

 

CP-FIN 4.03

The public authority/agency’s fiscal department:
  1. employs qualified financial personnel;
  2. trains personnel to use the accounting system and adapt to changes in the system as they occur;
  3. ensures system security in accordance with established safeguards; 
  4. maintains all financial records required to support legal, regulatory, and contractual claims; and
  5. complies with all applicable court orders or mandates.

 
Fundamental Practice

CP-FIN 4.04

A public authority/agency that assumes fiduciary responsibility for client funds or disburses client funds: 
  1. segregates client funds from other agency funds;
  2. complies with applicable legislative, regulatory, judicial, and governmental requirements; and
  3. plans for meeting the needs of clients in the event of unexpected resource disruptions impacting client funds.
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