The Role of the Financial Officer at Penn State
"Resolved, that the officers of the University be, and they hereby are, authorized and directed to establish the position of Financial Officer and to appoint one to each of the major budget areas, each to be under the general direction of the University Corporate Controller; and to authorize the University Corporate Controller to delegate to said Financial Officer the authority for budget management and certain specified duties for each of the major budget areas; and the officers of the University are further authorized to take all such actions as are necessary to give effect to this resolution."
The executive committee of the Board of Trustees adopted the above resolution on October 1, 1965. Prepared by the Office of the Corporate Controller March 1996.
Table of Contents
The Role of the Financial Officer at Penn State
- Establishment of the Financial Officer Organization
- Dual Nature of the Position
- Support to the Corporate Controller
- Budget Control
- Expenditure Control
- Income and Cash Control
- Position/Appointment and Salary Increase Processes
- Policy and Procedure Compliance
- Training Financial Personnel and Orienting Budget Administrators
- Audit Coordination--Financial and Procedural
- Bursar - Student Accounts
- Special Reports/Assignments
- Change Management
- Support to the Budget Executive
- Strategic Assessment
The Role of the Financial Officer at Penn State
The Financial Officer position was authorized by a resolution of the Board of Trustees in 1965 to provide financial and budgetary service to each major administrative division of the University. Although the Financial Officers are responsible to the Corporate Controller, they are located throughout the University Park campus as well as at Penn State campuses throughout the Commonwealth.
Financial Officers work closely with the Budget Executives of the colleges, campuses, and/or administrative divisions they serve. However, direct supervision of the 30 Financial Officers, 3 Assistant to the Financial Officers, and 9 combined Director of Business Services/Financial Officer positions, is by the Assistant Controller, University Financial Officers.
The mission of the University Financial Officers is:
To provide financial and budgeting services to the assigned administrative area(s), while maintaining prudent fiscal controls through adherence to University policies and procedures.
Providing exceptional customer service to the administrative area is critical to the success of the Financial Officer, but must be done within the context of fiscal controls. The Financial Officer is the representative of the Corporate Controller in each area and, as such, must always adhere to policies and procedures. The successful Financial Officer is a professional who is respected for both service and control.
This document has been prepared to inform the University community on the role of the Financial Officer at Penn State. A full understanding of the responsibilities administered and services provided by the Financial Officer has proven to be a key factor contributing to the fiscal awareness of Penn State's Budget Executives.
The Financial Officer is an integral part of Penn State's system for budgetary control, policy implementation, and accounting consistency. A Financial Officer serves each of the University's major budget areas, reporting directly to both the Budget Executive and the Corporate Controller (through the Assistant Controller/Director of University Financial Officers). In addition to documenting the current role of the Financial Officer, which has evolved and expanded over time, this document projects the future role of this key position and discusses the responsibilities, relationships, support, and authority necessary for the Financial Officer's optimum effectiveness.
This document presents the Role of the Financial Officer in six sections, as follows:
Establishment of the Financial Officer Organization
Section I includes the Board of Trustees resolution that established the position of Financial Officer and summarizes the resulting responsibilities of the Financial Officer both to the Corporate Controller and to the Budget Executive.
Dual Nature of the Position
Section II describes the dual reporting requirements of the Financial Officer both to the Corporate Controller and the Budget Executive, and discusses the function of the Financial Officer within this matrix organizational structure.
Support to the Corporate Controller
Section III identifies the responsibilities for budget and expenditure control and protection of University assets that organizationally support the Corporate Controller, including budget control, expenditure control, position/appointment control, policy and procedure compliance, training and orientation of personnel, audit coordination and change management.
Support to the Budget Executive
Section IV identifies the responsibilities for administrative area coordination, reporting, and decision making that organizationally support the Budget Executive, including budget planning and forecasting, strategic planning, financial analysis, human resource planning/allocation, policy and procedure development, professional development, management audits, and change management.
Section V attempts to place the information presented in Sections I through IV in perspective by emphasizing the need to integrate the Financial Officer's responsibilities to achieve the satisfaction of both the Corporate Controller and the Budget Executive. This section also relates the Financial Officer's current role to recent trends, changing technologies, and evolving methodologies.
Section VI draws on all information previously presented, recognizes that University growth has resulted in the decentralization of many functions under the Financial Officer's area of responsibility, encourages the continuation of current trends, and recommends administrative support for exploring organizational alternatives.
I. Establishment of the Financial Officer Organization
On October 1, 1965, the executive committee of the Board of Trustees adopted a resolution stating: "Resolved, that the officers of the University be, and they hereby are, authorized and directed to establish the position of Financial Officer and to appoint one to each of the major budget areas, each to be under the general direction of the University Corporate Controller; and to authorize the University Corporate Controller to delegate to said Financial Officer the authority for budget management and certain specified duties for each of the major budget areas; and the officers of the University are further authorized to take all such actions as are necessary to give effect to this resolution."
As the Corporate Controller's representative, it is the responsibility of each Financial Officer to control the budgets of the administrative area(s) to which he or she is assigned in accordance with the approved budget policies and regulations of the University. University Policy BT02 states the Financial Officer responsibility for general budget regulations:
"The Budget Officer of the University and the Corporate Controller, or their authorized representative, and the designated Financial Officer, shall be responsible for the following financial controls:
Budget Control - The Budget Officer of the University/Financial Officer is responsible for the control and maintenance of the budgets in accordance with allocation provisions, budget policy, and regulations.
Expenditure Control - The Corporate Controller/Financial Officer is responsible for the control of budget expenditures within the allocated amount and authorized regulations governing each funding area."
Additionally, the Financial Officer has the responsibility to furnish the Budget Executive with the necessary reports, facts, and information to assist in administering the financial operations of a major budget area. This responsibility involves the maintenance of the budget and other necessary accounting records, which are the sources of the reports, facts, and information submitted to the Corporate Controller, the Budget Officer, and the Budget Executive.
Along with maintaining the budgets and other financial records of the administrative area, it is the responsibility of the Financial Officer to interpret the operating results as reflected in these records. It is of utmost importance that the interpretation and analysis of these records and the financial operation of the administrative area are properly reported so that they can be understood by the Budget Executive, Budget Administrators, Project Directors, etc. The Financial Officer is responsible for the interpretation of new and revised general University policies and procedures as they pertain to the administrative area.
To ensure the accomplishment of the aforementioned responsibilities, the Financial Officer must make each administrator within the operational area aware that:
- The Financial Officer is the administrative position through which all fiscal events occur;
- The Financial Officer position is responsible for assuring that all financial and budgetary operations are performed properly and in a timely manner; and
- No fiscal operation may be changed without the approval delegated to the Financial Officer through the Corporate Controller.
II. Dual Nature of the Position
The Financial Officer position has dual reporting line: to the Corporate Controller of the University (where the appointment is budgeted) and to the Budget Executive(s) of an administrative area(s). This organizational structure has shaped the role of the Financial Officer as an influential member of both organizations, with broad financial and administrative responsibilities and a unique set of performance challenges.
Within the administrative area of the Budget Executive, the Penn State Financial Officer is recognized as the expert and authority on a wide range of financial and administrative matters including accounting, policies and procedures, and budgeting. Many Budget Executives rely on the Financial Officer for duties beyond those specifically defined in the job description. Financial Officers are looked upon to provide an independent viewpoint on issues affecting the administrative area, even if they are not directly finance related. Budget Executives tend to rely on the Financial Officer to interact with other University offices on their behalf--usually to request exceptions to policy or to resolve disagreements regarding a procedure.
As a participating member of the administrative team, the Financial Officer has invaluable exposure to the inner workings of Penn State and encounters many opportunities to become involved in new initiatives within the unit. To be of optimal support to the Budget Executive, the Financial Officer functions with much independence and little direct supervision, and exercises broad decision-making responsibilities for fiscal matters within the unit.
The Financial Officer also is part of a University-wide team of Financial Officers who report to the Corporate Controller through the Assistant Controller/Director of University Financial Officers. A Financial Officer must be skilled at managing the sometimes conflicting demands inherent in this dual reporting structure, particularly if the Financial Officer is responsible for more than one budget area. Because each "boss" typically expects 100% of the Financial Officer's time, the Financial Officer must be skilled at arranging priorities and allocating time appropriately. Perhaps more importantly, the Financial Officer must maintain objectivity and balance when making decisions on issues over which the Budget Executive and the Corporate Controller hold opposing positions.
Additionally, the Financial Officers must have strong leadership skills to ensure enforcement of policies within the organization. This responsibility is complicated by the size and complexity of Penn State, which sometimes results in exceptions being granted in one administrative area to policies that must, nevertheless, be enforced in other administrative areas. Strong interpersonal skills are required to enforce policies when faculty and staff within the unit are aware that other areas within Penn State may not be required to follow the same policy.
Organizationally, the Financial Officer is a member of the Corporate Controller's staff and the salary is provided by this unit. As a key member of his/her staff, the Budget Executive supports the Financial Officer by providing direct staff support, office space and equipment. When selecting and hiring a new Financial Officer for an area, the Assistant Controller works jointly with the Budget Executive and his/her staff to assure that the individual selected meets the needs of both the Budget Executive and the Corporate Controller. All candidates are interviewed and evaluated by representatives of both the Corporate Controller and the Budget Executive, with the final selection being a decision of the Corporate Controller in consultation with the Budget Executive. Training is provided by the Corporate Controller's office, both upon hiring and throughout their career, with the Budget Executive supporting additional professional development, especially in matters that relate directly to the administrative area. Performance reviews are conducted by the Assistant Controller after consultation with the Budget Executive. Given the dual nature of the position, the Financial Officer is evaluated on the performance of duties for both the Budget Executive and the Corporate Controller. Open discussion between the Budget Executive and the Assistant Controller/Director of University Financial Officers, about concerns and issues surrounding a Financial Officer is encouraged throughout the year.
Typically, the Financial Officer at Penn State is, of necessity, an organized, efficient person with strong leadership skills who cultivates effective working relationships within the organization, is an excellent time manager, and maintains an open-minded approach to problem solving and decision making.
The following sections provide more details of the Financial Officer's responsibilities to both the Corporate Controller and the Budget Executive.
III. Support to the Corporate Controller
In accordance with the Board of Trustees resolution, the Corporate Controller is authorized to delegate the authority for budget management and certain specified duties for each of the major budget areas. The following is an overview of the duties that the Financial Officer performs in support of his or her role as the representative of the Corporate Controller in an administrative area:
The Financial Officer administers income and expense budgets for both general and miscellaneous funds to ensure financial stability within the administrative area. Control is accomplished through budgeting approved funding allocations, conducting on-going budget reviews, ensuring the integrity of the administrative area's accounting system, and maintaining compliance with University budgeting policies and procedures. Specific items within the Financial Officer's control include the preparation of reallocations for the initial operating budget, permanent and temporary budget amendments, the analysis of income in relation to expenses, and the preparation of budget requests/revisions for miscellaneous funds in accordance with award guidelines.
The Financial Officer is responsible for ensuring that expenditures from both general and miscellaneous funds are monitored and approved and are consistent with established University expenditure policy guidelines. Control is accomplished through review and approval of properly completed documents, posting to the appropriate accounting systems (central systems as well as internal systems), and compliance with policies and procedures. For restricted funds, the Financial Officer reviews expenditures for compliance with award or grant guidelines and performs the final financial close-out procedures. The Financial Officer is responsible for the management of the Integrated Business Information System (IBIS) for the administrative area, including development and maintenance of approval paths and development and maintenance of account structures and appropriate security.
Income and Cash Control
The Financial Officer is responsible for assuring that cash is being handled in accordance with University policy and procedures. Periodic reviews of areas collecting cash to assure that controls are in place and functioning are part of an annual audit conducted by the Financial Officer. In addition, the Financial Officer is responsible for tracking income against projections and taking action as necessary to control related expenditures to assure that the budget is balanced at year-end.
Position/Appointment and Salary Increase Processes
The Financial Officer executes and administers the creation, updating, and realignment of positions and appointments within funding guidelines. The position and appointment control is accomplished through IBIS functions involving position management, position schedules, new appointment and reappointment processing, and terminations. The Financial Officer provides coordination, implementation, and advice during the annual preparation of salary increases, in accordance with University guidelines and salary allocations within the administrative unit.
Policy and Procedure Compliance
The Financial Officer interprets University guidelines that are established to conform to the generally accepted accounting principles involving budget and expenditure practices. Enforcement of these policies and procedures is accomplished through the review, approval, and routing of financial documents through the administrative area. Specific policy requirements and types of documents used are incorporated in the Policy Manual and the General Forms Usage Guide. Exceptions to these policies may be granted by the Financial Officer or in special circumstances by written approval from the Corporate Controller. If possible, the Financial Officer provides the Budget Executive with policy and procedure alternatives to accomplish desired objectives.
Training Financial Personnel and Orienting Budget Administrators
The Financial Officer coordinates on-going training of financial personnel and orientation of new budget administrators in the necessary aspects of budgeting, document processing, IBIS system operations, and policies and procedures governing operations in the administrative area. The training can consist of individual contact, various University programs, regular meetings with staff assistants responsible for financial processing, and updates of changes via electronic mail. In addition, the Financial Officer can conduct orientations for faculty and staff.
Audit Coordination--Financial and Procedural
The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Audit when audits are being performed in the administrative area. Audits relating to sponsored activities or other audits performed by external auditors may also be performed. The Financial Officer would also be responsible for working with the external auditor and/or a central university office related to these procedures.
Bursar - Student Accounts
At locations other than University Park, the Financial Officer is responsible for controlling and analyzing all student financial records through the Integrated Student Information System (ISIS). This Bursar responsibility involves processing payments, requesting refunds, charging fees, placing holds on student financial accounts, and third party billings. In order to accurately maintain student account balances and successfully advise students, knowledge of student aid policies, government sponsored scholarships, loan requirements, and tuition payment policies is essential. The Financial Officer is often responsible for making the final decision as to whether a student is financially eligible to register for classes.
The Bernreuter Emergency Loan Fund was established for students at non-University Park locations who have an immediate need for short term cash. The Financial Officer is responsible for managing the disbursements and collection of all emergency loans.
The Financial Officer is responsible to the Assistant Controller and Corporate Controller for the preparation of financial information and analyses, which provide an overview of the fiscal operations of the assigned administrative unit.
As continuous quality improvement and reengineering have made their mark on the University, the Financial Officer has emerged as an important manager in the change process. As the Corporate Controller and other areas incorporate new systems or procedures, the Financial Officer is responsible for implementation in the administrative area(s). To achieve a successful implementation, the Financial Officer must not only understand the new system or procedure, but must also understand how to manage people during the process of change. The acceptance of new financial systems and procedures is dependent on the change management skills of the Financial Officer.
This role has become more important over the past several years. The Financial Officer has been a key resource in the implementation of the electronic approval of forms (EASY system), the direct billing procedure for airline/rail and car rental, and the IBIS system. In the future, the Financial Officer will be expected to manage the implementation of future releases of IBIS as well as the proposed procurement card.
The Financial Officer also serves as an important feedback loop in the development of new financial systems and procedures. Working directly in the administrative areas allows the Financial Officer to provide first-hand information on the impact of new systems and procedures. The Financial Officer represents the administrative area in discussions on planned system and procedure changes. This provides some early assurance that the financial systems or procedures will meet the needs of the administrative areas.
The primary responsibility of the Financial Officer in support of the Corporate Controller is the control of financial operations within an administrative area. However, to realize the full scope of the Financial Officer position, it is important to understand the responsibilities of the Financial Officer in support of the Budget Executive, which are detailed in the following section.
IV. Support to the Budget Executive
One of the objectives of creating the position of Financial Officer was to provide direct support to the administrative areas, specifically to the Budget Executive. The Financial Officer's major duty is to provide and interpret financial information for the Budget Executive and the staff of the administrative unit. Over time, the scope of this support function has grown as the University has grown in both size and complexity. The following is an overview of the major areas of responsibility that a Financial Officer has in support of the Budget Executive.
Budget Planning and Forecasting
The Financial Officer assists the Budget Executive in planning for the effective and efficient use of the financial resources of the administrative area. The Financial Officer prepares analyses of the allocation fund and commitments/requests for allocations, prepares and interprets income forecasts (if applicable) and any potential impact on operations, and reviews the current level of expenditures versus those planned to determine the year-end status of the budget. These analyses include scenario formulations based on current budget data and rely heavily on the Financial Officer's knowledge of the unit and its priorities.
The Financial Officer assists the Budget Executive and his or her staff in the development of the annual strategic plan for the administrative area(s). This assistance impacts the budget resource request (quantitative aspects) as well as the overall plan (qualitative aspects). The Financial Officer must understand the priorities of the administrative area and how those priorities translate into a resource request. He or she must also provide insight into other means of financing for those requests that may not be centrally funded.
The Financial Officer prepares analyses of various financial reports for the Budget Executive as requested. This service involves any financial information that may be needed to help with management decision-making, including "if/then" scenario development, trade-off analysis, costing/pricing studies, and financial viability studies.
Planning/Allocation of Human Resources
The Financial Officer advises the Budget Executive on planning for human resources by providing information regarding the financial impact of various personnel decisions. This information includes analyzing equity considerations during the salary increase process and analyzing whether to fill open positions with permanent or temporary employees. Working closely with the Personnel Representative or Human Resource Officer, the Financial Officer has year-round responsibility for coordinating the position management and appointment process.
At non-University Park locations, the Financial Officer serves as a key resource for students. Financial Officers provide financial counseling and support to students upon enrolling in the University as well as in monitoring their financial resources for continued enrollment.
Policy and Procedure Development
The Financial Officer assists the Budget Executive by developing internal administrative policies and procedures for the area. This activity might involve membership on a task force to address a specific issue or preparation of a report on the implications of a policy/procedure proposed by a task force or committee. The Financial Officer may also identify areas in which policies and procedures need to be clarified or updated (operational issues). In addition, the Financial Officer assures consistency with University policies and procedures. This activity occurs on an ad hoc basis throughout the year.
The Financial Officer is responsible to the Budget Executive for coordinating orientations or professional-development training sessions relating to budgeting or financial-planning issues. This activity could involve training sessions on new policies or procedures as well as presentations to educate the unit on current financial issues (e.g., a presentation on a proposed model for revenue sharing and how it would work). These special assignments occur on an irregular basis.
The Financial Officer assists the Budget Executive by performing management audits to assure that resources are being used as efficiently as possible. This function could include, for example, an analysis of travel expenditures for the entire unit or a specific budget, or a review of pricing for income-producing units. The Financial Officer provides this service as deemed necessary by the Budget Executive. Special Reports and Assignments The Financial Officer prepares special reports and undertakes special assignments in his or her role as a member of the Budget Executive's staff. This function could include, for example, an assignment to a task force on space planning or responsibilities for overseeing a non-financial matter such as alumni activities, accreditation, or academic survey reports. Given the skills of the Financial Officer as both a financial expert and an administrator, the Budget Executive often relies on the Financial Officer as a key resource for special assignments.
As mentioned above, the Financial Officer is a major change agent for the administrative area. The Financial Officer is responsible for the successful implementation of new financial systems and procedures in the administrative area and serves as a major contact for problem resolution. The Financial Officer represents the administrative area when new financial systems and procedures are being discussed or reviewed.
Although there may be variations in how the role of the Financial Officer is perceived by Budget Executives, the Corporate Controller, and the Financial Officers themselves, the responsibilities listed above are the ideal level of support that a Budget Executive should expect and the Corporate Controller should require. By successfully fulfilling these roles, Financial Officers at Penn State have established productive relationships with their Budget Executives.
V. Strategic Assessment
The role of the Financial Officer encompasses many varied responsibilities among which the Financial Officer must strike a balance. For example, the function of creating an operational plan, which is controlled through the budget process of the Corporate Controller's Office and the Office of Budget and Resource Analysis but which is consistent with the strategic plan of the Budget Executive, requires the Financial Officer to have the technical and interpersonal skills necessary to maintain equilibrium between the two disciplines.
At Penn State, the budget process and the strategic planning process have gone through significant changes during recent years. Strategic planning has become quite formalized, with a strong focus on results, resource needs, and operating plans. The budget process, while always very formal, has taken on new dimensions with the development of computer capabilities.
Along the way, the Financial Officer has been called upon to provide greater support to the Budget Executive while simultaneously satisfying the requirements of the Corporate Controller. With the implementation of the computerized IBIS system, financial activities have become more decentralized, requiring more expertise from staff in the administrative unit and greater coordination with the University central administration. Training needs for support staff in the administrative units have become greater because of changing technologies and new methods of obtaining information.
Growing demands placed on the administrative areas for increased services without associated increases in funding have resulted in significant workload increases for the Financial Officer, who must find innovative ways to obtain additional or enhanced analysis support within the context of budgetary control and strategic objectives. Implementing these innovations--through current systems with detailed attention to forms utilization, timing issues, internal controls, and results monitoring--requires a broad and detailed knowledge of existing requirements as well as a thorough understanding of local capabilities.
This changing role of the Financial Officer, coupled with new technologies, systems, and philosophies, provides additional challenges for success in the position. A broad knowledge base, sophisticated analytical skills, and detailed knowledge of University policy, procedures, and systems are prerequisites for the position. In addition, a sound grasp of the administrative area's vision and plans is absolutely essential in order for the Financial Officer to achieve total success.
The Role of the Financial Officer has evolved toward greater support of the Budget Executive, and the Financial Officer has become an integral part of operations and decision making within the administrative area while taking full responsibility for budget and expenditure control. As the University has grown and the expectations of the Budget Executive have increased, the performance of many financial functions has been decentralized through computer technology. This decentralization has resulted in the delegation of traditional Financial Officer responsibilities to employees outside the Corporate Controller's organization and has required Financial Officers to exercise strong leadership skills in addition to their traditional role as fiscal managers. With increasing demands to downsize, leadership becomes more critical; some Financial Officers are now serving two or more administrative areas.
Influences from outside the University, including regulatory and audit functions, have placed greater demands on the Financial Officer to respond quickly to changes in regulations, as well as to tighten approval authority on many expenditures. Because much of the approval authority has now been delegated, communication links must be made stronger and more responsive to satisfy these external requirements efficiently. While the financial support structure has grown within the individual administrative areas, the Corporate Controller's accountability to the University and the public has remained a high priority. The Financial Officer is a key point of control in a decentralized financial system.
The current Financial Officer organization has served the intent of the 1965 Board of Trustees resolution in its support of the Corporate Controller and Budget Executive. It has proven to be an effective response to maintaining control while supporting the operations and growth of the University. The position of Financial Officer at Penn State has evolved into a strong vehicle for maintaining the internal controls required by the Corporate Controller to meet the mandates of external agencies, while meeting the continually increasing need for support to the Budget Executive.