Training Basics For Organization's Fiscal Leaders

Many organizations face unnecessary financial difficulties because the individuals in fiscal or financial leadership capacities are often untrained, and thus not optimally qualified for the position. In my three decades of involvement in these areas, I have discovered that, while most of the people that ascend to these positions are intelligent and well meaning, as well as educated, they do not fully understand all the responsibilities and duties involved with fiscal officer leadership.

Because of this, organizations should develop a professionally designed training program specifically geared to individuals who wish to be fiscal officers. Some of the items that these individuals should be trained in, include:

(1) Budget creation and familiarity are necessities. These individuals should understand what "zero-based" budgeting is, and its important applications to responsible fiscal guidance. Individuals should also be trained to properly read and interpret budgets, and to "read through" the voids in most budgets. Fiscal leaders must also understand items that should "red flag" potential problem areas. "Red flagging" means identifying portions of a budget that appear to conflict with reality, either because revenue figures are too optimistic, or expense figures too low. Budgeting should always underestimate revenues, while working with worst case expense scenarios. Responsible budgets should also always includes reserves for contingencies, such as maintenance, over-runs, etc.

(2) Fiscal officers must be familiar with the basics of negotiation. While every fiscal office need not be an expert negotiator, a fiscal officer must understand what is needed to be an effective negotiator, and have the ability to effectively and properly select a negotiator for his organization, that he can depend upon.

(3) Another area that must be understood is a basic understanding of contracts, including items such as "out clauses," liabilities, responsibilities, etc. A fiscal officer need not be the one to draw up a contract (that should be performed by a legal professional), but he should and must be able to understand what a contract contains, interpret it correctly, not make unwarranted assumptions, and have the ability to effectively communicate with his legal professional as to what terms and conditions he wants included in any contract. Fiscal officers must always insist upon maximum possible protections for his organization.

(4) A basic understanding of bookkeeping is another necessity. Training must be taken in what proper bookkeeping includes, and why. A fiscal officer must also learn ways to protect the organization's funds from improperly handling or mishandling by employees or staff members. I am constantly "shocked" when I observe organizations that do not use strict protections in terms of check signatories and limitations. Training must also be given on how and why a thorough invoicing and receipt system is a must!

(5) How an organization selects its accountant, and what type of review might be needed is another area of training that is important. Fiscal leaders must understand when a review or an audit is more appropriate, and in certain instances, when an audit might even be mandated by law. Since audits are far more expensive than reviews, it is important not to unnecessarily use audits, when they will not be needed for the specific purpose. These leaders must also be familiar with what to ask of an accountant, and what might be needed to select the best accountant for the organization's needs.

(6) Fiscal leaders must also be trained in interpreting all types of financial statements. They must also understand interest rates, dividends, prudent investing, and fiscal appropriateness.

Of course, these items are just a sampling of the type of training needed, and that should be required. For example, if the organization holds major events such as large meetings, conferences or conventions, these leaders must understand the financial necessities and ramifications involved.

In the long run, organizations that address their fiscal leadership maintain stronger financial conditions, and that optimizes their chances of achieving their desired mission.