Analyze the Effects of Budgeting and Teamwork

Week 4 – Assignment: Analyze the Effects of Budgeting and Teamwork InstructionsPrepare an assessment on the use of budgeting as a means of managerial control. Using the same healthcare organization, you selected for the previous assignment, address the following: Analyze the budgeting system(s) within this organization.Determine how the analysis process leads to successful managerial control.Identify and recommend control mechanisms that would also improve teamwork. Provide examples where possible to support your findings.Organization to be used in this assignment is: (Pharmacology Field)Support your paper with at least three scholarly resources. In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included.Length: 5-7 pages, not including title and reference pagesYour paper should demonstrate thoughtful consideration of the ideas and concepts presented in the course by providing new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards.Please watch following videos for additional help:Finance Basics presented by Evan Davis; produced by Robert Albury, British Broadcasting Corporation, in Working for Yourself (London, England: British Broadcasting Corporation, 2013), 30 minsUnderstanding Financial Information interview by Peter Quarry, in Learning a la Carte Series (Melbourne, Victoria: Seven Dimensions, 2010), 14 minsCriteriaContent (12 points)Modeled the budget system of the case study organization (3 points). Analyzed how the budget analysis process provides managerial control (4 points).Recommended other control mechanisms that also contribute to teamwork (5 points).Included a minimum of three scholarly references, with appropriate APA formatting applied to citations and paraphrasing. Paper is 5-7 pages long not including the title and reference pages (3 points).Total points 15
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40 JOURNAL OF GOVERNMENT FINANCIAL MANAGEMENT
FALL 2015
BEST PR ACTICES
By: Doreen T. Crisostomo, Ph.D., CGFM, CFE, CICA
P
erformance-based budgeting (PBB) has been
defined as a type of budgeting in which the
input of resources is related to the efficient
production, or output, of services.1 PBB turns
funding into results using missions, goals and objectives.2 Three principles of PBB: 1) government must
be driven by citizens’ needs, not rules and regulations; 2) taxpayers will pay for results, not efforts;
and 3) government must measure and communicate progress.3 PBB assists lawmakers in reviewing
priorities and agencies with making decisions not
usually made under traditional budgeting systems.4
This article addresses the advantages and challenges of implementing PBB; describes results of
research on successful implementation of PBB;
outlines five PBB models; and presents outcomes
of implementation of various PBB models in six
states across the country. Guam laws require the
implementation of PBB throughout government
agencies but has yet to occur. This article identifies
specific challenges to implementation of PBB in the
government of Guam and offers recommendations
for successful implementation moving forward.
Advantages of PBB5
Advantages of PBB include:
Shortening of the traditional budgeting
process and reporting procedures;
Assisting legislators in understanding
the effectiveness of funded programs and
determining whether to continue funding;
Making agencies more efficient at using
their limited resources;
FALL 2015
Identifying clear objectives by setting
specific core goals for the following year;
Increasing accountability through measuring
results of the prior year’s goals; and
Encouraging big-picture thinking through
commitment to activities that serve the
goals of the organization and providing
legislators with greater understanding of
agencies activities.
Challenges of PBB6
Challenges of PBB include:
Measurement issues: There may be conflicting views on when a goal has been reached
and about what is most important about the
agency’s work.
Cost analysis: PBB does not always present
a clear cost framework for organizations
to follow, thus requiring extra cost
analysis because focus is on a target.
Performance indicators may distract
and overwhelm legislators when making
key funding decisions.
Flexibility problems: Because PBB opens the
door for broad changes, previous cost analysis and budgets may become obsolete. For
example, the Office of Technology proposes
to purchase computers so that the Department of Administration and Department of
Revenue and Taxation can link their systems
to improve the effectiveness and efficiency of
JOURNAL OF GOVERNMENT FINANCIAL MANAGEMENT 41
If legislators want agencies to
take performance monitoring and reporting seriously,
they, too, must demonstrate
that they take it seriously. For
example, the legislature could
exercise stronger oversight
over agency implementation.
Service Efforts and
Accomplishments Studies8
the operations.
Management or
policymakers may change or
amend that plan to include other
agencies; therefore previous
cost analysis and budget may
become obsolete.
Results of PBB Studies
Hager, Hobson and Wilson 7
research reported the following
conclusions on PBB:
Legislators must determine
whether they want to hold
agencies accountable for what is
spent or achieved. For example,
the laws passed reflected an
accountability aspect because
a reduction in salary was to be
applied as a penalty for failure
to comply.
There must be a key decisionmaker in the budget process.
The legislature and governor
must take strong advocacy
roles in promoting change
in the workplace.
Performance measures should
be defined to accurately capture
outcomes. Examples of such
measures are included in the
citizen-centric report (CCR) that
is required for all departments
and agencies to prepare at the
end of each fiscal year.
Sufficient technical and staff
resources must be provided. As
in most governments, resources
are limited; however, if an
agency can identify employees
who are enthusiastic about their
jobs and familiar with the overall operations of the agency, they
could serve as critical resources
in guiding the successful implementation of PBB in that agency.
42 JOURNAL OF GOVERNMENT FINANCIAL MANAGEMENT
State of Arizona: Child
Support Division
nn The division’s primary goal
is to collect child support. It
identified key focus areas as
the establishment of paternity
rights and court-ordered child
support. After refocusing its
attention on these key factors,
the division saw a substantial
increase in child support
collection.
State of Louisiana: Department
of Corrections
nn The department created
measurements using healthcare charts, number of sick
calls per inmate, doctor calls,
duty charts, and the number
of inmates working. During
the summer months, sick
calls were increasing; after
the department instituted a
medical co-pay, the total sick
calls dropped.
States of Oregon and California
nn The states entered a partner-
ship involving the California
Department of Transportation,
California Highway Patrol and
Ashland, Ore., police, trucking
association and AAA. A zerotolerance zone was established,
where trucks without chains
were not allowed to drive
during icy conditions. As a
result, there was an 80 percent
decrease in blockage accidents
and a 50 percent decrease
in deaths.
survey on people’s feelings
of security. The department
saw a reduction in reported
offenses and an improvement
in users feeling more secure.
Results of Balanced
Scorecard
Mecklenburg County, N.C.9
reported on their balanced
scorecard:
nn The county’s goal was to have
84 percent or more of employees satisfied with working
for Mecklenburg County.
The result for FY 2014 was
87 percent, which met its target.
nn Employee Technology
Resources: The goal was to
have 84 percent or more of
employees satisfied with
technology related resources.
The results were 85 percent,
which met its target.
Town of Hillsborough, N.C.10
reported on their balanced
scorecard for FY 2014:
nn The target number of neigh-
borhood watch programs
was 12, however, the actual
number of programs was only
11. Therefore, the government
missed its target.
nn The target rating for sidewalks
in good or better condition
was 99 percent; the actual
was 99 percent, thus, the
government met its target.
nn The town aimed to keep Part
I crimes per 1,000 people at
less than 75; the result was
58.7, thus, the government
exceeded its target.
nn The percentage of brush
routes completed on schedule,
target was 95 percent; the
result was 81 percent, which
missed its target.
Results of a Citizen Survey
Austin, Texas: Department
of Parks and Recreation
Mecklenburg County, N.C.:
Parks and Recreation
nn Department managers shifted
nn 76 percent of respondent
staff coverage from morning to
evening in response to a user
households have visited their
parks during the prior year;
FALL 2015
90 percent rated the parks as
either excellent (31 percent)
or good (59 percent).
nn Two reasons for use of parks
were: enjoyment of the
outdoors and close
proximity to home.
nn 33 percent of respondents
would be most willing to fund
the zoo with their tax dollars.
nn Based on respondents’ top
choices, the most important
programs are special events/
festivals and adult fitness
and wellness programs.
Town of Hillsborough, N.C.:11
nn 7.40 — average rating for the
statement “I feel that the water
and wastewater services are of
good quality,” up 9.14 percent
from FY 2010.
nn 7.90 — average rating for the
statement “Collections staff
(located at Town Hall Annex)
are helpful,” up 5.61 percent
from FY 2010.
nn 6.65 — average rating for the
statement “I feel the Town
spends my tax dollars wisely,”
up 5.06 percent from FY 2010.
nn 7.03 — average rating for
the statement “The Town is
responsive to the needs of
citizens,” down 0.28 percent
from FY 2010.
Guam Public Laws 29-19, 29-113
and 30-5512 required several government departments and agencies to
execute PBB no later than Sept. 30,
2009. The penalty for failing to do
so is a 20 percent reduction in salary
for department and agency heads.
However, PBB has not been implemented and salary reductions have
not been made. In October 2014,
Legislative Vice Speaker Benjamin
J. F. Cruz13 called upon the Executive
Branch to implement PBB for FY 2016.
PBB Models
In October 2007,14 the Bureau of
Budget and Management Resources
provided initial PBB seminars for
several departments and agencies. In
February 2008, another seminar was
held to discuss the compilation of a
FALL 2015
strategic plan. During these seminars
five PBB models (described below)
were presented to the departments
and agencies; however, there did not
seem to be clarity regarding which
model should be used. This may
account for the lack of PBB implementation thus far.
Model 1: Service Efforts and
Accomplishments (SEA).15 The
objective of SEA is to provide
more complete information
about a governmental entity’s
performance. It will assist users
in assessing the economy, efficiency, and effectiveness of services provided, partially through
the use of citizen surveys. SEA is
comprised of four components:
purpose and scope; major goals
and objectives; key measures;
and discussion and analysis
of results.
Model 2: Service Delivery. This
model uses four categories of
performance: Resources, processes, outputs and outcomes.
Resources are financial and
physical resources; processes
describe the sequence of steps
that convert inputs into outputs;
outputs are the units of work
completed (e.g., number of
people trained, number of
vouchers processed); and outcomes are the results of goods
and services being provided.
Model 3: Performance Accountability. This model requires
organizations to establish goals
and demonstrate that they have
been accomplished. This model
also requires defining performance expectations based on
public input. Effectiveness is
measured through outcomes
(i.e., whether there is a difference in delivering particular
government services).
Model 5: Management Control.
This model focuses on management’s monitoring of how well
performance goals are being
accomplished, by addressing
three areas: results, outcomes
and accomplishments. Results
depend on external controls
such as citizens and the legislature. Outcomes apply to results,
quality and timeliness. Accomplishments relate to output and
outcome performance.
PBB Guidelines16
A successful PBB plan must
address the following areas, which
the government already has in place:
Agency Mission: What is being
done, why and for whom?
Goals: What are the general ends
embodied in the mission?
Objectives/Tasks: What are the
expected results?
Performance measures: What are
some measures that gauge the
degree of success?
Tracking analysis and reporting:
Are the goals and objectives
being achieved?
Policy-Implementation
Model
Edwards17 believes that successful
implementation of PBB requires the
use of the top-down model approach.
He identified four categories for
successful implementation:
Model 4: Report Card/Balanced
Scorecard. This model is comprised of several measures such
as financial results, mission
results, customer measures,
internal operations, and
innovation and learning.
JOURNAL OF GOVERNMENT FINANCIAL MANAGEMENT 43
departments should be better guided
to implement a single model, such
as the balanced scorecard model,
which seems to be more simple and
doable. In addition to implementing
this model, it is highly suggested that
a citizen survey be administered
to determine the citizen’s needs of
government services.
Implementing PBB should not be
difficult since department and agencies are already required by law
to prepare a citizen-centric report
(CCR). The CCR describes the
agency or department’s performance
measures, which can be found on the
performance page or its budget decision package, specifically its workload
indicators that are submitted to the
Legislature. Examples of performance
data that already exists, as taken
from the Office of Chief Medical
Examiner’s (OCME) budget decision package and CCR, Office of the
Attorney General’s (OAG) CCR and
Guam Police Department’s (GPD)
CCR are as follows:
Figure 1. Medico-Legal Death Investigations
600
500
499
513
89
83
423
400
300
200
85
100
0
2011
2012
2013
Met
Proposed
Actual
Proposed
Actual
Proposed
Actual
Target?
485
508
500
588
500
596
?
Autopsied cases
1. Communication: Provide clear
communication and consistent
implementation orders. Inform
stakeholders of the purposes
of PBB, such as to improve the
effectiveness and efficiency
of programs.
2. Resources: Identify staff and
facilities, including information about how to implement
the reform and the authority
to ensure implementation as
intended; Legislatures can use
performance information to
allocate resources.
3. Dispositions and attitudes: Create
an organizational culture in
which the majority of participants are supportive of PBB.
4. Bureaucratic structure: Establish
organizational fragmentation
and standard operating
procedures, or routines for
budgeting and planning.
Non-Autopsied cases
2. Create a program purpose
statement. Identify the programs,
services and public benefit of
those services.
3. Identify ideal performance measures, which relate back to the
agency’s mission and programs.
This should include targets that
are realistic and attainable.
Office of the Chief Medical
Examiner
Since 2011, the number of investigations has been increasing. As the
OCME prepares its future budgets, it
may want to identify the “autopsied”
and “non-autopsied” cases based on
their trends, which is included in
their CCR (see Figure 1).
Although the starting point for
implementation is clear, successful
implementation requires support
from the top levels of government.
It starts with the legislature and
the governor. Guam’s agencies and
Figure 2. Cases Received/Requests
Family/Juvenile
680
404
Civil Litigations
534
201
2013
1,360
1,143
Civil Solicitor
Where Do We Start?
The general data or information needed to create a PBB budget
already exists. Information needed to
complete PBB includes the following:
1. Prepare a strategic plan covering
3–5 years of historical and
current year activities. What
is the mission/vision statement
of that agency?
44 JOURNAL OF GOVERNMENT FINANCIAL MANAGEMENT
2012
3,184
Prosecution
Cases Received/Requests
2012
2013
4,034
% Change
Family/Juvenile
680
404
(40.59%)
Civil Litigations
534
201
(62.36%)
Civil Solicitor
1,360
1,143
(15.96%)
Prosecution
3,184
4,034
26.70%
$14,489,206
$12,202,406
(15.78%)
Child Support $ Collected
FALL 2015
Office of the Attorney General
Based on OAG’s FY 2013 budget
decision package, there was no
mention of its target in its workload indicators, therefore, it was not
determined if it did or did not meet its
target. As seen from its CCR reports,
the cases received/requested has
been decreasing, except for prosecution (see Figure 2). Although these
appear to be incoming cases, the OAG
may want to consider including the
actual cases completed or closed to
give the citizens a clearer picture of
their performance.
Guam Police Department
Based on GPD’s FY 2013 CCR,
crash/traffic accidents had decreased
in 2012, but increased by approximately 65% in 2013 compared to the
prior year (see Figure 3). GPD may
want to use this data and collaborate
with the Department of Public Works
to determine any contributing factors.
For example, when Oregon and California implemented a zero-tolerance
zone where trucks without chains
were not allowed to drive during icy
conditions, blockage accidents and
deaths decreased by 80 percent and
50 percent respectively.
During Governor Edward J.B.
Calvo’s first term, he publicized
his administration’s use of many
performance measures, such as the
numbers of first-time homeowners
serviced and road improvements.
Vice-Speaker Cruz18 called upon the
governor to identify the agencies
he would like to use to begin PBB.
The OCME, OAG, and GPD are
good starting candidates as small-,
medium- and large-size agencies,
respectively. Additionally, performance measures reflected in their
CCRs are in line with their mission,
strategic plans and goals, which are
directly applicable to PBB.
Conclusion
Implementing PBB in Guam should
not be difficult. What needs to be
addressed is determining a target
for these performance measures like
what OCME did. The department and
agencies must also ensure the performance measures used are doable and
achievable. Most importantly, Guam
FALL 2015
Figure 3. Crash/Traffic Accidents
10,000
8000
7,188
6,437
6000
4000
3,913
2000
0
2011
2012
2013
Crash/Traffic Accidents
should begin a citizen survey to determine if the citizens are satisfied with
the services our government provides
and to determine the citizens’ needs
to improve their quality of life.
Governments are not in the business of making profits. Instead,
governments are expected to collect
enough money to provide services
to the public while maintaining a
balanced budget. Performance-based
budgeting provides the government
and the public with a more clear way
to manage government finances while
measuring the effectiveness and efficiency of agencies and departments
in running programs and providing
services.
Passing laws to mandate the transition to PBB was a significant step
taken in seizing this opportunity.
Government leaders now need to
provide the necessary support to
allow this transition to be made:
starting with setting a clear direction
on which PBB model to follow such
as the SEA or balanced scorecard and
continue with active oversight.
Endnotes
1. Reck, J., Lowensohn, S., & Wilson, E.
(2013). Accounting for Governmental and
Nonprofit Entities. 16th Edition. New York:
McGraw-Hill.
2. Carter, J. (2012). Performance-Based
Budgeting: Interpretations and Best
Practices.
3. King, L. (1995). Operating and Capital
Budget Reform in Minnesota: Managing
Public Finances like the Future Matters.
4. NCSL (2015) Performance Based
Budgeting: Fact Sheet.
5. Dontigney, E. (n.d.). The Advantages
of Performance-Based Budgeting; NCSL
(2015) Performance Based Budgeting:
Fact Sheet.
6. Lacoma, T. (n.d.). The Disadvantages
of Performance-Based Budgeting; NCSL
(2015) Performance Based Budgeting:
Fact Sheet.
7. Hager, G., Hobson, A. & Wilson, G.
Performance-Based Budgeting: Concepts
and Examples.
8. GASB. Service efforts and accomplishments reporting for governments.
9. Mecklenburg County’s Customer
Focus Positions it for a Tough Economy.
https://balancedscorecard.org/Portals/0/
PDF/MecklenburgAward09.pdf
10. Town of Hillsborough Balanced
Scorecard.
11. Town of Hillsborough Citizen
Survey, FY 2012 Results.
12. http://www.guamlegislature.com
13. Cruz, B. J. (2014). Cruz to Calvo:
Begin Performance-Based Budgeting.
14. Performance Based Budgeting
Status (6-23-08).
15. GASB (n.d.) Basic Facts About
Service Efforts and Accomplishments
Reporting.
16. Guidelines to Performance-Based
Budgeting (n.d.).
17. Edwards, G. (1980). Implementing
Public Policy. Washington, DC: Congressional Quarterly Press.
18. See Endnote 13.
Doreen T.
Crisostomo, Ph.D.,
CGFM, CFE, CICA
is an assistant
professor of
accounting at the
University of
Guam. She teaches
courses in financial
accounting, government accounting, and
accounting systems, and manages the
accounting internship program. She is a
member of the Journal Editorial Board,
Senior Vice President Section III, and Past
President of AGA’s Guam Chapter, and
received the Platinum Regional Vice
President Award in 2012.
JOURNAL OF GOVERNMENT FINANCIAL MANAGEMENT 45
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