Instructor’spManualpforpFinancialpManagementp forpPublic,pHealth,pandpNot-for-ProfitpOrganizations1,
SOLUTIONS MANUAL for Financial Management for Public He
p p p p p p p
alth, and Not-for-Profit Organizations 7th Edition
p p p p p
by Steven Finkler, Thad Calabrese, (Complete 15 Chapters)
p p p p p p p
,Chapterp3:p Additionalp Budgetingp Concepts 3-4
INTRODUCTION
Chapter 1 p
TO
FINANCIALM p
ANAGEMENT
Questions for Discussion
p p
1-
1.pFinancialpmanagementpispthepsubsetpofpmanagementpthatpfocusesponpgeneratingpfinancialpinfor
mationpthatpcanpimprovepdecisions.pThepdecisionspareporientedptowardpachievingpthepvariouspgoalsp
ofptheporganizationpwhilepmaintainingpapsatisfactorypfinancialpsituation.pFinancialpmanagementpenco
mpassespthepbroadpareaspofpaccountingpandpfinance.
1-2.pInpproprietary,porpfor-
profit,porganizations,panpunderlyingpgoalpisptopmaximizepthepwealthpofpthepownerspofptheporganizati
on.
1-
3.pInppublicpserviceporganizations,pdecisionspareporientedptowardpachievingpthepvariouspgoalspofpthe
porganizationpwhilep maintainingpapsatisfactorypfinancialpsituation.
1-
4.pAccountingpispapsystempforpkeepingptrackpofpthepfinancialpstatuspofpanporganizationpandpthepfinan
cialpresultspofpitspactivities.pItphaspoftenpbeenpreferredptopasptheplanguagepofpbusiness.pThepvocabula
rypusedpbypaccountingpisptheplanguagepofpnonbusinessporganizationspaspwell.
1-
5.pAccountingpispsubdividedpintoptwopmajorpareas:pmanagerialpaccountingpandpfinancialpaccounting
.pManagerialpaccountingprelatesptopgeneratingpanypfinancialpinformationpthatpmanagerspcanpuseptopi
mprovepthepfuturepresultspofptheporganization.pThispincludesptechniquespdesignedptopgeneratepanypf
inancialpdatapthatpmightphelppmanagerspmakepmorepeffectivepdecisions.pMajorpaspectspofpmanageria
lpaccountingprelateptopmakingpfinancialpplanspforptheporganization,pimplementingpthosepplans,pandpth
enpworkingptopensurepthatpthepplansparepachieved.pSomepexamplespofpmanagerialpaccountingpinclud
eppreparingpannualpoperatingpbudgets,pgeneratingpinformationpforpusepinpmakingpmajorpinvestment
pdecisions,pandpprovidingpthepdatapneededptopdecidepwhetherptopbuyporpleasepapmajorppiecepofpequi
pment.pFinancialpaccountingpprovidespretrospectivepinformation.pAspeventspthatphavepfinancialpimp
licationspoccurptheypareprecordedpbypthepfinancialpaccountingpsystem.pFromptimeptoptimep(usuallypmo
nthly,pquarterly,porpannually),ptheprecordedpdataparepsummarizedpandpreportedptopinterestedpusers.p
Thepuserspincludepbothpinternalpmanagerspandppeoplepoutsideptheporganization.pThosepoutsiderspin
cludepthosepwhophaveplentporpmightplendpmoneyptoptheporganizationp(creditors),pthosepwhopmightps
ellpthingsptoptheporganizationp(calledpsuppliersporpvendors),pandpotherpinterestedpparties.pThesepinte
restedppartiespmaypincludepthosepwithpapparticularpinterestpinppublicpserviceporganizations,psuchpaspre
gulators,plegislators,pandpcitizens.pFinancialpreportspprovidepinformationponpthepfinancialpstatuspofpt
, Finkler,pFinancialpManagementpforpPublic,pHealth,pandpNot-for-ProfitpOrganizationsp7e
heporganizationpatpapspecificppointpinptime,paspwellpaspreportingptheppastpresultspofpthe porganization‘s
©pCQ pPress,p2023
poperationsp(i.e.,phowpwellpitp haspdonepfrompap financialpviewpoint).
1-
6.pFinancepfocusesponpthepalternativepsourcespandpusespofptheporganization‘spfinancialpresources.pO
btainingpfundspwhenpneededpfrompappropriatepsourcespandpthepdeploymentpofpresourcespwithinpth
eporganizationpfallpunderpthispheading.pInpaddition,pfinancepinvolvespthepfinancialpmarketsp(suchpasps
tockpandpbondpmarkets)pthatp providepapmeansptop generatingpfundspforporganizations.
1-
7.pYes.pAchievingpthepgoalspofptheporganizationprequirespfinancialpplanning.pFinancialpmanagementp
providespinformationpforpmanagersptopusepinpmakingptheirpdecisions.pItphelpspmanagerspbypprovidi
ngpinformationponptheplikelypfinancialpimpactpofpeachpproposedpalternative.pItpalsopprovidespinforma
tionpaboutpfinancialpstability,pefficiency,pandpeffectiveness.
1-
8.pClearly,pwepmightpexpectpsomeppublicpserviceporganizationspthatparepproprietary,psuchpaspsomeph
ospitals,ptopearnpprofits.pButpwhatpaboutpotherppublicpserviceporganizationspsuchpaspcharities?pTheyp
shouldpmakepapprofitpaspwell.pProfitspprovidepapsafetypmarginpagainstpunexpectedpcosts,pprovidepres
ourcesptop replacepbuildingspandpequipment,pandptopexpandpandpimprovepservices.
1-9.p Federalpgovernmentp(seeptextpFigurep1-1)
◼ Individualpincomeptaxes
◼ Socialpinsuranceptaxes
◼ Corporatepincomeptax
Statepandplocalpgovernmentp(seeptextpFigurep1-4)
◼ Salespandpgrosspreceiptsptax
◼ Federalpgovernment
◼ Propertyptaxes
◼ Individualpincomeptaxes
Healthpsectorp(seeptextpFigurep1-6)
◼ Privatepinsurance
◼ Medicare
◼ Medicaid
◼ Otherpgovernmentpprograms
Not-for-profitp sectorp(seeptext)
◼ Privateppaymentspforpgoodspandpservices
◼ Governmentppaymentspforpgoodspandpservices
◼ Donations
1-
10.pFederalpgovernmentpspendingpexceededp$6ptrillionpinp2020pandpstatepandplocalpgovernmentp spe
ndingpwaspmorepthanp$3ptrillionpinp2018.pInpcontrast,pthepGDPpwasp$21ptrillionpinp2020.pForpmorepupp
, Chapterp3:p Additionalp Budgetingp Concepts 3-4
topdatepinformation,pexaminepthepstatisticalptablespofpthepmostprecentpEconomicpReportpofpthepPre
sident,pwhichpispavailableponline.
1-
11.pThepreportedpsurpluspincludespbothponpandpoffpbudgetpitems.pSocialpsecurityptaxesprepresentpan
poffpbudgetp itemp thatp untilp recentlyp raisedp morep revenuep thanp wasp spentp onp socialp securityp pay
ments.
Thepsurpluspinpthispareapoffsetpotherpgovernmentplosses,pandpevenpresultedpinpanpoverallpsurpluspfor
pthepfederalpgovernment.pThispispnoplongerpthepcase,pand,poverptime,ptrustpfundpresourcespwillpbepus
edpupptopprovidepbenefits.pAspthepfederalpgovernmentpwillpnotphavepaccessptopthepexcesspresourcespf
rompsocialpsecurity,pitp willphaveptop borrowpandpincreaseptheptotalplevelpofpfederalpdebt,punlesspreven
uesporpspendingparepchanged.
1-
12.pSometimespgiftspcomepwithpstringspattached.pIfpthepconditionspofpthepgiftpcreatepapburdenpthatpt
heporganizationpdoespnotpwantptopaccept,porpsomehowprequiresptheporganizationptopworkpinpopposi
tionptopitspmission,p itp mightp turnpdownpthepgift.
1-
13.pThepWorldpBankphaspdefinedpNGOspasp"privateporganizationspthatppursuepactivitiesptoprelievepsu
ffering,ppromotepthepinterestspofptheppoor,pprotectpthepenvironment,pprovidepbasicpsocialpservices,p
orpundertakepcommunitypdevelopment"p(WorldpBankpOperationalpDirectivep14.70).pNGOsparepquit
epsimilarptopthepnot-for-profitporganizations.pTheyparepprimarilypmission-focusedpratherpthanpprofit-
pfocused.p NGOspfallpintopthreepmainpcategories:pcommunity-based,pnational,pandpinternational.
PLANNING
Chapter 2 p
FOR
SUCCESS:B p
UDGETING
Questions for Discussion
p p
2-
1.pPlanningphelpsptheporganizationpbypcausingpitspemployeesptopthinkpaheadpandpanticipatepchang
e.pThispispdonepbypestablishingpspecificpgoalspandpobjectives,pcommunicatingpthosepobjectivesptopt
hepindividualspwhopmustpachievepthem,pforecastingpfuturepevents,pdevelopingpalternatives,pselect
ingpfrompamongpalternatives,pandpcoordinatingpactivities.pThepactivitiesparepsummarizedpinpapdocu
mentpcalledpapbudget.pThepbudgetpdescribespwhatpwephopeptopachievepandpthepresourcespthatpwill
pbepusedp topcarrypoutptheporganization‘spactivities.
SOLUTIONS MANUAL for Financial Management for Public He
p p p p p p p
alth, and Not-for-Profit Organizations 7th Edition
p p p p p
by Steven Finkler, Thad Calabrese, (Complete 15 Chapters)
p p p p p p p
,Chapterp3:p Additionalp Budgetingp Concepts 3-4
INTRODUCTION
Chapter 1 p
TO
FINANCIALM p
ANAGEMENT
Questions for Discussion
p p
1-
1.pFinancialpmanagementpispthepsubsetpofpmanagementpthatpfocusesponpgeneratingpfinancialpinfor
mationpthatpcanpimprovepdecisions.pThepdecisionspareporientedptowardpachievingpthepvariouspgoalsp
ofptheporganizationpwhilepmaintainingpapsatisfactorypfinancialpsituation.pFinancialpmanagementpenco
mpassespthepbroadpareaspofpaccountingpandpfinance.
1-2.pInpproprietary,porpfor-
profit,porganizations,panpunderlyingpgoalpisptopmaximizepthepwealthpofpthepownerspofptheporganizati
on.
1-
3.pInppublicpserviceporganizations,pdecisionspareporientedptowardpachievingpthepvariouspgoalspofpthe
porganizationpwhilep maintainingpapsatisfactorypfinancialpsituation.
1-
4.pAccountingpispapsystempforpkeepingptrackpofpthepfinancialpstatuspofpanporganizationpandpthepfinan
cialpresultspofpitspactivities.pItphaspoftenpbeenpreferredptopasptheplanguagepofpbusiness.pThepvocabula
rypusedpbypaccountingpisptheplanguagepofpnonbusinessporganizationspaspwell.
1-
5.pAccountingpispsubdividedpintoptwopmajorpareas:pmanagerialpaccountingpandpfinancialpaccounting
.pManagerialpaccountingprelatesptopgeneratingpanypfinancialpinformationpthatpmanagerspcanpuseptopi
mprovepthepfuturepresultspofptheporganization.pThispincludesptechniquespdesignedptopgeneratepanypf
inancialpdatapthatpmightphelppmanagerspmakepmorepeffectivepdecisions.pMajorpaspectspofpmanageria
lpaccountingprelateptopmakingpfinancialpplanspforptheporganization,pimplementingpthosepplans,pandpth
enpworkingptopensurepthatpthepplansparepachieved.pSomepexamplespofpmanagerialpaccountingpinclud
eppreparingpannualpoperatingpbudgets,pgeneratingpinformationpforpusepinpmakingpmajorpinvestment
pdecisions,pandpprovidingpthepdatapneededptopdecidepwhetherptopbuyporpleasepapmajorppiecepofpequi
pment.pFinancialpaccountingpprovidespretrospectivepinformation.pAspeventspthatphavepfinancialpimp
licationspoccurptheypareprecordedpbypthepfinancialpaccountingpsystem.pFromptimeptoptimep(usuallypmo
nthly,pquarterly,porpannually),ptheprecordedpdataparepsummarizedpandpreportedptopinterestedpusers.p
Thepuserspincludepbothpinternalpmanagerspandppeoplepoutsideptheporganization.pThosepoutsiderspin
cludepthosepwhophaveplentporpmightplendpmoneyptoptheporganizationp(creditors),pthosepwhopmightps
ellpthingsptoptheporganizationp(calledpsuppliersporpvendors),pandpotherpinterestedpparties.pThesepinte
restedppartiespmaypincludepthosepwithpapparticularpinterestpinppublicpserviceporganizations,psuchpaspre
gulators,plegislators,pandpcitizens.pFinancialpreportspprovidepinformationponpthepfinancialpstatuspofpt
, Finkler,pFinancialpManagementpforpPublic,pHealth,pandpNot-for-ProfitpOrganizationsp7e
heporganizationpatpapspecificppointpinptime,paspwellpaspreportingptheppastpresultspofpthe porganization‘s
©pCQ pPress,p2023
poperationsp(i.e.,phowpwellpitp haspdonepfrompap financialpviewpoint).
1-
6.pFinancepfocusesponpthepalternativepsourcespandpusespofptheporganization‘spfinancialpresources.pO
btainingpfundspwhenpneededpfrompappropriatepsourcespandpthepdeploymentpofpresourcespwithinpth
eporganizationpfallpunderpthispheading.pInpaddition,pfinancepinvolvespthepfinancialpmarketsp(suchpasps
tockpandpbondpmarkets)pthatp providepapmeansptop generatingpfundspforporganizations.
1-
7.pYes.pAchievingpthepgoalspofptheporganizationprequirespfinancialpplanning.pFinancialpmanagementp
providespinformationpforpmanagersptopusepinpmakingptheirpdecisions.pItphelpspmanagerspbypprovidi
ngpinformationponptheplikelypfinancialpimpactpofpeachpproposedpalternative.pItpalsopprovidespinforma
tionpaboutpfinancialpstability,pefficiency,pandpeffectiveness.
1-
8.pClearly,pwepmightpexpectpsomeppublicpserviceporganizationspthatparepproprietary,psuchpaspsomeph
ospitals,ptopearnpprofits.pButpwhatpaboutpotherppublicpserviceporganizationspsuchpaspcharities?pTheyp
shouldpmakepapprofitpaspwell.pProfitspprovidepapsafetypmarginpagainstpunexpectedpcosts,pprovidepres
ourcesptop replacepbuildingspandpequipment,pandptopexpandpandpimprovepservices.
1-9.p Federalpgovernmentp(seeptextpFigurep1-1)
◼ Individualpincomeptaxes
◼ Socialpinsuranceptaxes
◼ Corporatepincomeptax
Statepandplocalpgovernmentp(seeptextpFigurep1-4)
◼ Salespandpgrosspreceiptsptax
◼ Federalpgovernment
◼ Propertyptaxes
◼ Individualpincomeptaxes
Healthpsectorp(seeptextpFigurep1-6)
◼ Privatepinsurance
◼ Medicare
◼ Medicaid
◼ Otherpgovernmentpprograms
Not-for-profitp sectorp(seeptext)
◼ Privateppaymentspforpgoodspandpservices
◼ Governmentppaymentspforpgoodspandpservices
◼ Donations
1-
10.pFederalpgovernmentpspendingpexceededp$6ptrillionpinp2020pandpstatepandplocalpgovernmentp spe
ndingpwaspmorepthanp$3ptrillionpinp2018.pInpcontrast,pthepGDPpwasp$21ptrillionpinp2020.pForpmorepupp
, Chapterp3:p Additionalp Budgetingp Concepts 3-4
topdatepinformation,pexaminepthepstatisticalptablespofpthepmostprecentpEconomicpReportpofpthepPre
sident,pwhichpispavailableponline.
1-
11.pThepreportedpsurpluspincludespbothponpandpoffpbudgetpitems.pSocialpsecurityptaxesprepresentpan
poffpbudgetp itemp thatp untilp recentlyp raisedp morep revenuep thanp wasp spentp onp socialp securityp pay
ments.
Thepsurpluspinpthispareapoffsetpotherpgovernmentplosses,pandpevenpresultedpinpanpoverallpsurpluspfor
pthepfederalpgovernment.pThispispnoplongerpthepcase,pand,poverptime,ptrustpfundpresourcespwillpbepus
edpupptopprovidepbenefits.pAspthepfederalpgovernmentpwillpnotphavepaccessptopthepexcesspresourcespf
rompsocialpsecurity,pitp willphaveptop borrowpandpincreaseptheptotalplevelpofpfederalpdebt,punlesspreven
uesporpspendingparepchanged.
1-
12.pSometimespgiftspcomepwithpstringspattached.pIfpthepconditionspofpthepgiftpcreatepapburdenpthatpt
heporganizationpdoespnotpwantptopaccept,porpsomehowprequiresptheporganizationptopworkpinpopposi
tionptopitspmission,p itp mightp turnpdownpthepgift.
1-
13.pThepWorldpBankphaspdefinedpNGOspasp"privateporganizationspthatppursuepactivitiesptoprelievepsu
ffering,ppromotepthepinterestspofptheppoor,pprotectpthepenvironment,pprovidepbasicpsocialpservices,p
orpundertakepcommunitypdevelopment"p(WorldpBankpOperationalpDirectivep14.70).pNGOsparepquit
epsimilarptopthepnot-for-profitporganizations.pTheyparepprimarilypmission-focusedpratherpthanpprofit-
pfocused.p NGOspfallpintopthreepmainpcategories:pcommunity-based,pnational,pandpinternational.
PLANNING
Chapter 2 p
FOR
SUCCESS:B p
UDGETING
Questions for Discussion
p p
2-
1.pPlanningphelpsptheporganizationpbypcausingpitspemployeesptopthinkpaheadpandpanticipatepchang
e.pThispispdonepbypestablishingpspecificpgoalspandpobjectives,pcommunicatingpthosepobjectivesptopt
hepindividualspwhopmustpachievepthem,pforecastingpfuturepevents,pdevelopingpalternatives,pselect
ingpfrompamongpalternatives,pandpcoordinatingpactivities.pThepactivitiesparepsummarizedpinpapdocu
mentpcalledpapbudget.pThepbudgetpdescribespwhatpwephopeptopachievepandpthepresourcespthatpwill
pbepusedp topcarrypoutptheporganization‘spactivities.
