One of the things agencies routinely have problems with is tracking the true costs associated with their agency. This usually arrives as a problem when budget proposals for the upcoming cycle are being denied prior to final budget hearings because there are expenditures showing up that are not accounted for on the agency’s end. Labor can cause this issue, however, it’s usually equipment and products that cause the largest distortions. And when it comes to preparing budget requests, nothing is better than having a fully customized financial report, that documents the true history of expenditure paired with past funding sources, so that true accountability can be described, and attributed correctly. This is even more valuable when municipal council and boards incorrectly argue that a budget was overspent, without considering alternative financing sources, that do replenish general fund expenditures.
Asset Management Functions
Asset managers have a wide range of products and equipment to manage. But, they also must account for a lot of the components that go into bottom line reporting. However, that role has not truly been developed into what it should be, despite a clear expectation of responsibility. Asset managers end up being your best agency-level cost accountants. The reason being is that their position has hands on every supply item you are purchasing. And if they have ability to track and associate expenditures, you will typically find that they produce reports that have a better handle on your agency’s purchasing history, and budget use, than the people who are designated to that task: the finance department. In order to do that, your asset manager needs a system that allows them to track items as they relate to purchase orders issued by your finance department. Simply typing in the number is not enough. Any system should allow for a purchase order to be entered in full. Scanning the document into the system’s workflow is one component, but also entering data into a system form that allows for the data from that originating point to be recalled in many scenarios, like when the items associated with the purchase order arrive, and when those items are due for replacement.
From this initial form, adding funding categories can be important for a few reasons. As an example, let’s say that the State department of transportation has provided us $3,500.00 for equipment and service related to Portable Breath Testers and Blood Alcohol Concentration Units. From that funding, $300.00 is used for mouthpieces for both PBT and BAC units. Since that is likely a grant fund, that detail should be added to our purchase order, for tracking of costs, and where funding sources come from. This helps with organizing and planning future budgets, establishing historical data that informs readers that grant funding was successfully applied to this purchase, which means it could be applied again. And with the name of the grant attached to the purchase order, it makes it easy to track that grant, for grant reporting, which someone in your agency is likely required to do for compliance.
Sometimes special funds come up; be it a donation from a large business in the local area, or money that was procured through asset forfeiture, those special circumstances should be tracked to your purchases and equipment as well. Why is this important? Because that funding cannot be regularly counted on, so if the funding is used for regular equipment purchases, it’s important to know that detail and be able to explain why. Was there a budget shortage? An unusually immediate need? If the special funding was used for something rare, it would be important to have this detail as well, because then it can be explained why something not normally afforded in the budget was acquired. While these data examples may not explain the why about certain items, it explains the how, which is very important when justifying a budget, and then having to persuade for its acceptance.
When it comes to reports, this same software should be able to generate forms that show the pertinent funding information, but not just in a simple re-telling of numbers. It must provide summary pages that show the percentage of funding used, who is in control of acquiring the funding, with contact information included. In budgets, details matter, and having an executive summary built out from your asset management software is key to building a trustworthy system concerning purchases.
Having asset management software that tracks the details about your purchases, the funding sources, and shows clear paths of how money is spent helps your agency administration with their roles as executives, and helps your asset manager fulfill the ever-important cost accounting role your agency needs. While intergovernmental interactions should never turn into an ‘Us v. Them’ situation, budgets can cause animosity, and having software that helps explain purchase history, funding, which ultimately leads to tracking true expense, is the kind of help your agency needs in establishing responsible budgeting practices.
Be safe out there!