Financial Accountability of Human Services Agencies

“Government Is Criticized On Oversight of Head Start,” March 18, 2005, New York Times

“D.C.’s Anti-Poverty Agency Is Under Federal Scrutiny;
Possible Fiscal Irregularities Questioned,” March 24, 2004, Washington Post

“Ethics Charges Filed Against Top Officials Of Nassau Health Unit”, April 24, 2003, New York Times

Three different headlines, but they all tell the same story — supporting the functioning of human services organizations is a financial challenge. The work of these agencies, coupled with limited money, results in a pressing need for close attention to financial management. Frequent newspaper accounts of financial irregularities underscore the increasing call for accountability. The public wants to know, and feels it has the right to know just how and where public money is spent.

In order to guard against distortion of an agency’s true financial health and to achieve credibility with clients, donors, lawmakers, and the public, every human services agency must be financially accountable. Financial accountability is as much a legal concern as it is a fiscal concern. How can we tell if a human services agency is being run in a financially accountable way? Here are 12 questions agency administrators should ask themselves:

1. Who is the one person responsible for managing the accountability structure of each of the agency’s units?

2. Who is the one person responsible for ensuring that the structure clearly defines all areas of responsibility?

3. Is there one person who can delegate financial management tasks within each unit?

4. Are all of the tasks of each of the agency’s units clearly defined and assigned to qualified people?

5. Does any worker have any conflicting duties?

6. In terms of being financially accountable, does everyone fully understand what is expected of them?

7. Do workers know who to contact if certain accounting problems arise?

8. Does each person have sufficient training to complete their assigned tasks?

9. Does each person have the knowledge and experience to make sound financial judgments concerning each task they are assigned?

10. Whose job is it to ensure that there is a reasonable distribution of work in accordance with the available resources?

11. Who is responsible for keeping current records of various aspects of the agency’s financial accountability?

12. Who monitors, in a systematic fashion, the financial accountability structure?

If an administrator has difficulty answering any of these questions, perhaps some fundamental guidelines would be helpful. In order to ensure financial accountability an agency should, at a minimum:

A. operate in accordance with an annual budget that has been approved before the beginning of each fiscal year;

B. maintain financial reports on a quarterly basis. These records should compare actual expenses to budgeted revenues;

C. have an annual audit by an independent Certified Public Accountant;

D. allow clients and employees to have a confidential mechanism to report suspected financial abuse to a neutral third party;

E. have a written procedure and financial manual that is periodically updated;

F. ensure that all documents are signed by a legally authorized employee so that payments and invoices can be processed in a timely way;

G. maintain appropriate liability insurance;

H. maintain a risk management program.

A number of disturbing trends are occurring simultaneously: litigation against human services agencies seems to be on the rise; much of this litigation has been in the form of class action lawsuits; the cost to defend against or settle these lawsuits is mounting. Maintaining a vigilant program of internal financial accountability will help an agency to weather this trend. Management needs to be keenly aware that financial responsibility must be taken seriously if scarce resources are to stretch to their maximum. And, they must be relentless in minimizing costs to simplify procedures and increase efficiencies. We all admit that it is challenging to remain optimistic amid such scary headlines, but there are many of us who have a vital and core belief that there are opportunities now to build human service organizations which can truly be accountable, in every sense of the word.

Responsibility and accountability are the fundamental building blocks of human services agencies; without them, we cannot continue to function.

This commentary originally appeared in Policy & Practice, (June, 2005), 63 (2), 24.

Guest commentary by
Daniel Pollack, MSW, JD
Professor at Yeshiva University’s School of Social Work in NYC
Senior Fellow, Center for Adoption Research,
University of Massachusetts Medical School
Dan can be contacted at (212) 960-0836

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