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© 2011 Community Action Program Legal Services, Inc.
A Joint Project of CAPLAW and Meliora Partners
Risk Management: An Organizational “Flu Shot”
Part of the Beyond Basics Webinar Series
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Risk Management – An Organizational “Flu Shot”
A positive management practice contributing to
organizational good health
3© 2011 Community Action Program Legal Services, Inc.
Session Overview & Learning Objectives
• Explore definitions of “risk”
• Understand risk management as an organizational internal controls component
• Learn the elements of a Risk Management Plan, as part of a RMP template
• Work through the elements of a Risk Management Plan
• Obtain a list of risk management planning resources
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Who is Participating?
• 1/3 executive directors, operations managers
• 1/3 finance, human relations, program directors
• 1/3 fiscal and state CSBG staff
• ½ participated in a Risk Management Plan
© 2011 Community Action Program Legal Services, Inc.
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What is risk?
© 2011 Community Action Program Legal Services, Inc.
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Management of the Unknowns
Donald Rumsfeld, February 12, 2002,on Iraqi weapons of mass destruction
© 2011 Community Action Program Legal Services, Inc.
7© 2011 Community Action Program Legal Services, Inc.
RM – An Essential Internal Control
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More Emphasis on Accountability
© 2011 Community Action Program Legal Services, Inc.
Goals of CSBG Reform (Seth Hassett, February, 2011)1. Maintain an emphasis on place-based services2. Increase performance accountability3. Direct resources to the most efficient organizations in
high need communities4. Maximize amount of funding that goes to services5. Promote evidence-based practice6. Maintain a high level of program integrity
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Importance of Risk Management
“Agency managers and staff should be
encouraged to identify control deficiencies, as
this reflects positively on the agency's commitment to recognizing and addressing management
problems….Agencies should carefully consider
whether systemic weaknesses exist that
adversely affect internal control across organizational or program lines.”
A-123, IV, B
© 2011 Community Action Program Legal Services, Inc.
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IM 112 – CAA specific
� Audit and monitoring findings
� Internal control systems testing
� Compliance: laws and regulations
� Equipment, property purchase waivers
© 2011 Community Action Program Legal Services, Inc.
“The process of assessing entity
vulnerabilities and risks should be
ongoing and
integrated within management and board oversight
efforts.“
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A-123, II GAO/AIMD-00-21.3.1 (11/99)
Internal Control Objectives
© 2011 Community Action Program Legal Services, Inc.
Effectiveness and efficiency of operationsEffectiveness and efficiency of operations
Reliability of financial reportingReliability of financial reporting
Compliance with applicable
laws and regulations
Compliance with applicable
laws and regulations
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Internal Control Framework
© 2011 Community Action Program Legal Services, Inc.
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Who Manages Risk?
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Risk Management Process
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Assess – Identify Risks
© 2011 Community Action Program Legal Services, Inc.
Complaints ClaimsLawsuits
Accident reportsWorkers Comp
claims
Accident reportsInsurance claims
Internal monitoringFunder monitoring
Bank reconciliations Verification of assets and liabilities External audit Eligibility verification
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Assess – Anticipate Vulnerability
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Respond – Mitigation Measures
© 2011 Community Action Program Legal Services, Inc.
Turn down program
Remove hazardous equipment
Anti-virus software
Monitor program filesNight security
Subcontract CPAOutsourced payroll
Insurance
Policies and procedures
Self insuranceMajor medical policy
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Respond - Implementation
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Monitoring – Determining Effectiveness
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Risk: Ineligible applicants approved
Respond – Tracking Mitigation Strategies
© 2011 Community Action Program Legal Services, Inc.
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Monitoring Plan – Ineligible Applicants
© 2011 Community Action Program Legal Services, Inc.
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Monitor – Tracking Report
© 2011 Community Action Program Legal Services, Inc.
Example of a worksheet for recording ineligible applications submitted
for approval, with coding key
Identifier SS# Income Utility Shutoff Worker
1-2345 1, 3 1 2 2 ABC
1-6789 2 4,7 1 ABC
2-1234 3 1 LMN
2-9876 4,5 LMN
Total Errors 3 6 2 2 = 13
Key Social Security # Income Verified Utility Service Docs Shut-off Notice Intake Worker
1 Some adults Less than 90 days No bill No document Initials2 Some children Over 6 months ago Not in applicant name Overdue bill
3 None for children No self-declaration Over 60 days old Award not yet credited
4 Applications for Unsigned self-declaration
5 Miscalculated6 Unsigned Inc. Wks7 No income wks8 Docs viewed not listed
9 Docs copies not in file
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Monitor - Corrective Action
Risk – Approval of ineligible applicants
Report analysis: 37 applications monitored- 6 instances of poor income verification
(out of 14 errors, or 43%)
- Types of errors
- Less than 90 days of income documented 1
- Unsigned self-declaration of income 1
- Income miscalculated on worksheet 2
- Income worksheet not signed by workers 1
- Income documents not copied and in file 1
© 2011 Community Action Program Legal Services, Inc.
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Monitor – Corrective Action
© 2011 Community Action Program Legal Services, Inc.
STRATEGY:Intake Worker Income Documentation Training
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Respond: Tracking Mitigation Strategies
Risk: Insufficient cash flow
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Monitoring Plan – Negative P & L
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Monitor – Tracking Report
Tracking worksheet to analyze negative P&L
� Identify funds in negative balance
�Accumulate list of causes in column A
�Add more detail in each fund’s column
© 2011 Community Action Program Legal Services, Inc.
Negative Funds By Date
List Funds >> ABC DEF GHI JKL
Claim rejected Not signed
Tardy Filing +12 days
Unfunded expenses Unallowed Overspent
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Monitor – Corrective Action
Risk: Over spending
Strategy: Enforce Purchase Order approval
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Your Risk Management Plan
© 2011 Community Action Program Legal Services, Inc.
RiskAssessment
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Your Risk Management Plan
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Responses to Risk
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Your Risk Management Plan
© 2011 Community Action Program Legal Services, Inc.
Monitoring the Plan
32© 2011 Community Action Program Legal Services, Inc.
The Presenters
Meliora Partners, Inc.www.meliorapartners.org
Owen [email protected]
641-751-1022
641-691-0033This publication was created by Meliora Partners, Inc., in the performance of the U.S. Department of Health and Human Services, Administration for Children and
Families, Office of Community Services Grant Number 90ET0430. Any opinion, findings, conclusions, or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the U.S. Department of Health and Human Services, Administration for Children and Families.
33© 2011 Community Action Program Legal Services, Inc.
Resources & Tools
• COSO Internal Control Frameworkhttp://www.coso.org/IC-IntegratedFramework-summary.htm
• OMB Circular A-123 – Management’s Responsibility for Internal Controlhttp://www.whitehouse.gov/omb/circulars_a123_rev
• “Inside ISO 31000:2009”http://www.deloitte.com/assets/Dcom-Canada/Local%20Assets/Documents/ERS/ca_en_ers_inside_ISO31000_handout_040310.pdf
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Resources & Tools – 2
• “Risk Management for Nonprofits”http://www.virtualcap.org/viewprogram.cfm?pid=296
• “Risk Management Overview”
http://www.niqca.org/documents/Risk_management_Overview.pdf
• http://en.wikipedia.org/wiki/Risk_management
• Hallmarks of a Risk-Aware Nonprofithttp://www.nonprofitrisk.org/tools/hallmarks/intro.shtml
© 2011 Community Action Program Legal Services, Inc.
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Resources and Tools - 3
• “How to Develop A Risk Management Plan”http://www.wikihow.com/Develop-a-Risk-Management-Plan
• “How to Write a Risk Assessment”
http://www.wikihow.com/Write-a-Risk-Assessment
• “State of Minnesota Risk Management Plan” (Search on this title)
© 2011 Community Action Program Legal Services, Inc.
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Tools developed for this webinar
• Slide 16: Risk Matrix – Modified from example in Wikipedia article
• Slide 18: Implementation matrix
• Slide 21: Monitoring plan matrix
• Slide 22: Tracking Report format
• Slides 29, 30, 31: Risk Management Plan Outline
• Risk Management Plan template: separate Word document containing all of the worksheets demonstrated
© 2011 Community Action Program Legal Services, Inc.
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Don’t Forget Your Evaluation!
© 2011 Community Action Program Legal Services, Inc.
Next Webinar:
Budget Builders: Who Does
What? Why is it Important?
Wednesday, May 18, 2011
2 p.m. – 3:30p.m. EST
Presented by Kay Sohl
Kay Sohl Consulting
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