Case Study Guidance The case study is an in-depth research project on a non-profit or government organization and its management control system. Your case study should start out with: • a description of the organization. It should include: name; size of the organization; when it came into existence; any history; services and products it provides; the organization’s mission; constituency it serves; possible how it is governed; and any other pertinent information that helps the reader understand who they are and what they do. • Next it should cover the organizations planning. Describe if you can its planning philosophy and processes. Does it have a strategic plan? How many years does it cover? How often is it updated? What are the vision, goals, and objectives from its latest strategic plan? Are the organization’s plans linked? Does the organization rely on its strategic plan for its resource planning? What other levels of plans does the organization use? • Next you need to address programming. In other words, how the organization decides what projects/programs will be funded and to what level. Does it have an internal organization like an Investment Review Board to make recommendations? How are the decisions ultimately made? • Budgeting is next. What budget system is used – line item; zero-based; performance; program; or composite (it should fall into one of those categories even if they call the system by a different name)? Is there anything interesting or unique about how the organization budgets? • Budget execution in general: – does the organization have spending plans? What is its general approach to how it monitors spending? Does it have mid year or quarterly reporting? How is this done – in writing or in presentations? • What accounting system(s) are used – cash, accrual, modified accrual, cost, etc? Any interesting information about the organization’s accounting approach. • Financial management – any information about how the organization manages its finances – especially non-profits that need to balance donations and other sources of revenue against administrative and operational costs. Does the organization borrow money and if so how much is it leveraged? • Financial reporting – basic information on what reports are required and any information about how the organization does its reporting. Who in the organization is responsible for the reports? • Performance management – how does the organization manage performance? Is performance a central part of the organization’s approach? • What is the organization’s approach to risk? Do they try to manage it and if so how? • Does the organization have a business continuity or continuity of operations plan and program? • After you have gathered all of the above information you should assess the information and draw some conclusions. This section is very important because it demonstrates your understanding about the information you gathered. Any areas where there was no information or not done by the organization, you should make some recommendations for how you think it should be done in the organization. Also make any other recommendations for changes you would advise. If you cover all of these areas you should do well with this assignment. I hope this information is helpful. Who is Doctors without Borders? An international nongovernmental organisation that provides humanitarian help in regions that are struggling with war and disease, Doctors without Borders was founded in France. The organisation has over 30, 000 employees providing medical aid to 70 countries. The doctors and nurses working for Doctors without Borders are volunteers who strive to provide solutions to issues impacting on health in the globe. Since it was first started, Doctors without Borders has provided treatment to well over a hundred million patients. The organisation has also been a recipient of the Nobel Peace Prize getting the award in 1999 in recognition of the amount of humanitarian work that Doctors without Borders has done in a number of continents (Medicins Sans Frontieres, 2016b). Doctors without Borders operates on the belief of Providing medical help driven by a respect for the rules of medical ethics in particular the duty to provide care without causing any additional harm to either groups or people. It also aims at gaining respect for the freedom of their patients, their confidentiality and the right they have to informed consent and treating patients in a dignified manner respecting their cultural and religious thoughts. The organisation also aims at providing medical care that is of the highest quality to each and every patient and also offering assistance founded on an independent examination of the needs of people. Moreover, it speaks out publicly against acts of violence that have been set out against either individuals or groups (Medicins Sans Frontieres, 2014b) Purpose “To provide assistance to populations that are facing distress from disasters that are natural or manmade and those involved in armed conflict regardless of race, religion as well as political beliefs” (Medicins Sans Frontieres, 2016b). Mission Statement Provide emergency medical help to people in areas around the world which are considered as in the greatest need especially those impacted by conflict, disasters or those who have been excluded from efficient health care Doctors without Borders mobilises funding to enable it provide primary health care, carry out surgeries, rehabilitate hospitals as well as clinics and run programs catering to the provision of nutrition and sanitation Doctors without Borders is fully committed to ensuring the protection of human rights, which is achieved by speaking out against the causes of the suffering that they treat. In many instances, the organisation has placed itself in instances where humanitarian law violations are being carried out and speak out for the victims of numerous crimes while providing medical help (Neo & Pettigrew, 2011). Doctors without Borders also responds to areas struggling with war and disease. In coordination with local partners, Doctors without Borders makes uses of the skills of its personnel to reduce the suffering of those who are injured and provide support to those who provide medical care in these instances. Doctors without Borders is impartial operating on a basis of serving every affected person regardless of their gender, race or religion and political affiliation” (Medicins Sans Frontieres, 2016b). Doctors without Borders does not accept the perception that people who are people only deserve medical care that is less than standard and therefore works to provide care that is high in quality to these patients. Doctors without Borders has put in place campaigns and partnerships such as those with the Drugs for Neglected Diseases Initiative to enable the lowering of treatment for HIV/AIDS. It has also encouraged research as well as development for medicines that aim to treat” (Medicins Sans Frontieres, 2014b). Doctors without Borders Executive Board The International General Assembly is the highest authority in Doctors without Borders and is made up of representatives from each of the organisation’s 24 associations. It is tasked with electing the International President with each of the representatives and the President having one independent vote on issues that are brought before the assembly (Medicins Sans Frontieres, 2016). The International General Assembly is tasked with the responsibility of providing protection to the medical humanitarian mission of Doctors without Borders and provides a strategic direction to all of the organisations working under the organisation. It entrusts duties to the International Board and holds the board to accountability for the achievement of these tasks” (Medicins Sans Frontieres, 2016b). The International Board of Directors is the body tasked with governing Doctors without Borders; it provides support as well as oversight for the organisation in line with the policy guidelines set out in the Doctors without Borders Charter. It is characterised by representatives of operational directorates and also a group that has been elected by the International General Assembly chaired by the International President (Neo & Pettigrew, 2011). The board of Directors also makes a review of the activities carried out by Doctors without Borders and makes a determination of whether they should be approved as well as its programmes in the numerous countries that it operates in and their constituent budgets. This Board is based in Geneva and also ensures coordination, information as well as support to the Doctors without Borders movement and also puts in place international projects as well as initiatives as have been requested. All the programs, allocation of budgets as well as critical activities within the organisation are taken through a review and approved by the International Board of Directors (Neo & Pettigrew, 2011). Planning, Strategic Planning and Resource Allocation Doctors without Borders strategic plan aims at ensuring the organisation realises its goal of providing medical assistance by emphasizing on training of its employees. It aims at focusing on areas in the world that are characterised by the greatest amount of disadvantage and ensure that they are provided with the necessary medical aid (Medicins Sans Fromtieres, 2013). The strategic plan is made up of five core outcomes, which are contained within the training framework for Doctors without Borders. The strategic objectives are driven by the need to carry out training of staff in a way that will link their training to the organisation’s social mission. Below is a list of the expected outcomes: Source: (Medicins Sans Fromtieres, 2013) Doctors without Borders philosophy for strategic planning is based on its core mission statement, and its Charter which have been adopted by all the International General Assembly. Its present strategic planning is in a medium strategic plan which runs from 2014 to 2019 Doctors without Borders medium strategic plan provides a strategic context for both institutional as well as integrated budgets. The core principles guiding the medium strategic plan are outlined below: Ensuring that all work that is done by Doctors without Borders is driven by data, present knowledge as well as the lessons that accompany experience in international areas. In addition, it works together with partners and also within Doctors without Borders to ensure that medical aid is delivered in a way that positively impacts on those who are in affected areas with an equal focus on ensuring achievement of protection of vulnerable groups The organisation also strives to ensure the achievement of high levels of efficiency, value for the money brought into the organisation and overall excellence in the management of Doctors without Borders within the framework that is set out in the strategic plan and monitoring its effectiveness on a continuous basis. It brings in a perspective that focuses on the achievement of human rights in all the areas that Doctors without Borders staff are sent to work in (Neo & Pettigrew, 2011). In addition, the organisation aims at promoting and advocating for the rights of populations that are suffering through violence and distress in every instance. The Strategic Plan set out does not provide a link to the budget and therefore does not make a clear identification of the manner in which resources will be allocated not only to the outcomes of the organisation’s programmes but also the training of the staff. The strategic plan for Doctors without Borders has a number of core focus areas including, ensuring continuity in the missions carried out by Doctors without Border and preparation of specific skills related to the work that Doctors without Borders staff will take part in. Moreover, it aims at providing basic education of the staff on the requisite attitudes and behaviour that they should exhibit as members of Doctors without Borders with a focus on humanitarian activities Doctors without Borders has an integrated resource plan and is part of their medium term strategic plan. It is taken through revision and examination on a continuous basis and submitted annually to the International General Assembly in order to be approved. The Integrated resource plan is one of the tables touching on a budget and is included when information on the budget. The integrated resource plan has become a replacement for the financial plan as a result of the fact that they provide the same type of information Doctors without Borders presents a financial plan to the International Board of Directors through two distinct routes, an association document is presented to for approval to the International Board at the beginning of the cycle for a project, a budget for the institution that is presented once a year (Neo & Pettigrew, 2011). Resources to ensure effectiveness of the organisation as well as efficiency in results are allocated based on a methodology set out by Doctors without Borders and budgeting that is based on project outcomes and it is approved by the international board of directors. Resources are allocated to associations and these associations are expected to find a link between their results and the resources provided to them. Effectiveness of the programmes are closely related to the overall outcomes of the program and modalities of delivery that are unique to each association. The resources for ensuring effectiveness of development within Doctors without Borders are presented based on three core functional areas, which are policy, humanitarian action as well as effectiveness in the procurement as well as management of the supplies that are gained. Individual Doctors without Borders associations are tasked with the collection of donor funds and creating a relationship with these donors. The large percentage of income for Doctors without Borders comes from private donations, which the organisation uses to maintain the organisation’s independence from political interests and subsequently ensuring the flexibility of the response that they give. Doctors without Borders also gains its resources from grants from governments and this is used for specific programs that have been approved by the International Board of Directors. Planning and Resource Allocation Recommendations Doctors without Borders needs to put in place a more efficient system of financial planning and to put in place a more comprehensive strategic plan to align further with the wider organisational goals in order to meet its set out objectives. This programme plan will not only be more effective but will ensure that Doctors without Borders is able to put in place goals that are appropriate and by extension enable the setting of plans that are efficient. These particular processes should also provide the chance for the organisation to more efficiently measure its outcomes and to determine the extent to which its resources are being used in a manner that will be positive for the organisation. In addition, these processes will enable the organisation to hold all its employees accountable for the use of these resources ensuring that they are efficient. Budgeting and Budget Execution Budgeting is a critical process within non-profit making organisations such as Doctors without Borders. This is because while enterprises that cater to profits place focus on maximising on profits and value for the shareholder while on the other hand, an organisation that does not focus on the creation of profit only strives to focus on its goals (Medicins Sans Frontieres, 2016a). As with the large majority of non profit organisations, Doctors without Borders makes use of zero based budgeting since it presents the organisation with the chance to examine every decision in detail and by extension serves as a tool that can be used to systematically examine and perhaps abandon any projects that are found to be unproductive (Medicins Sans Frontieres 2014c). Budgeting is the responsibility of finance teams of all the individual organisations that operate under Doctors without Borders. Doctors without Borders Creates operational budget based on defined operational needs as well as priorities, by using zero based budgeting, it can overcome any deficiencies that exist within traditional budgeting since it provides the chance for the organisation to begin on a basis of zero at every period almost as if all the activities being undertaken were beginning similar to the first time (Medicins Sans Frontieres, 2016b). Using zero based budgeting has provided Doctors without Borders with the chance to make a clear classification of which projects should be allowed to continue and which should be stopped as well as the ones that should be focused on. In addition, zero based budgeting presents the chance for a comparison to be made of the numerous departments within the organisation that can ensure the management is in a better position to rank each of the projects that are being undertaken (Neo & Pettigrew, 2011). Doctors without Borders budget is spread out over a period of one year and is also integrated into the results for the budget and the framework for the resources those are to be used within the organisation. The Integrated budget is a core section of the organisation’s strategic plan since it is made up of all the budgetary needs that are required to provide a complement to the plan (Medicins Sans Frontieres, 2016b). Doctors without Borders associations provides a budget every year to the International board of directors and in each of the budgets, aspects are put in place that can be used to provide support to the next strategic plan that will be created. The Operations or the finance team liaises with the fundraising departments internationally in order to ensure that funds are raised to meet all the outlined goals. It is also important to note that well over 90% of the funds that are raised are not restricted which means that funds are directed towards medical projects that are classified as priority (Medicins Sans Frontieres, 2014a). The budget that is set out includes a budget for all the programmes and projects that will be undertaken by Doctors without Borders and a budget for providing resources to support ongoing projects or emergency situations(Neo & Pettigrew, 2011). The budget for the programmes and projects sets out funds that are needed for putting in place programmes that cater to individuals who have been identified as vulnerable as approved by the international board of directors. The budget for support programmes includes all the costs that might not be directly linked to a particular project but are critical to ensure maintenance of the presence within a given country but also the costs of management and administration of the headquarters that is set up within a given country (Medicins Sans Frontieres, 2014b). Budget analysis and Recommendations Doctors without Borders zero based budgeting needs to have a number of core aspects including the activities that will be undertaken in the course of the projects, the results that will be expected and what exactly will be achieved (Medicins Sans Frontieres, 2016b). In addition, all the financial managers will need to provide justification for each of their budgets in a manner that is detailed. It is only when these aspects are integrated can the organisation be able to clearly distributing funds by the needs, objectives as well as priorities. It is evident that Doctors without Borders has over a number of periods been unable to present a budget that is comprehensive and that can clearly be justified to the international board of directors (Doctors without Borders, 2014). Doctors without Borders is also vulnerable to going well beyond its budget as a result of problems that had not been expected or emergencies that came up in the countries that the organisation might have set up its projects in. The large majority of the areas that Doctors without Borders goes into countries that are either ravaged by war or those characterised by disease epidemics which means that the infrastructure is not as stable giving the chance for problems that might not have been seen while planning the project to come up(Neo & Pettigrew, 2011). This means additional costs that were not considered and in this particular instance, I would provide the recommendation that the organisation places focus on the creation of a program that strictly adheres to a set out program and the budget that has been outlined. In this way, resources would be allocated in a manner that aligns to the organisation’s annual projects (Medicins Sans Frontieres, 2016b). This would ensure that the organisation is in a better position to efficiently track its income as well as the manner in which the funds that have been raised are allocated to the different projects especially considering that projects are carried out based on priorities. Moreover, keeping track of the organisation’s resources would ensure that the expenditure outlined for the different programs is done to cater to purposes that are very specific thereby eliminating the danger of wastage of resources (Medicins Sans Frontieres, 2016b). I also recommend that the organisation put in place a separate budget for emergencies and support in order to ensure that funds as well as resources can be spread out in the instance that the expenditure that has been set out goes beyond what is expected as a result of circumstances that had not been considered. Collection of income that is based in zero based budgeting needs to be examined much closely especially in the different field offices which are vulnerable to wastage of resources (Medicins Sans Frontieres, 2016a). There is the danger that accompanies the use of zero based budgeting which is the large amount of work that will need to be carried out consuming a significant amount of time since it requires collection and analysis of information. In addition, it requires managers to have a clear realisation of the operations at different levels in order to prepare for budgeting. This might be one of the reasons why the budgets for Doctors without Borders are not as comprehensive as they should be (Medicins Sans Frontieres, 2016b). However, I recommend that the organisation can consider partially implementing zero based budgeting at the field offices since this will not only reduce the amount of time that is spent collecting data to create the budget. In turn this will play a role in enabling the organisation to solve the problems of allocation of resources that it is presently dealing with (Doctors without Borders, 2014). Financial Management Financial management is overseen at Doctors without Borders by financial administrators working for the organisation are tasked with controlling the budget and financing, managing staff who have been hired both locally and internationally and administration of the finances and salaries. The key role for these administrators is to protect the financial resources that have been provided to Doctors without Borders in order to provide benefits for people who require medical aid in areas that are characterised as war zones or those that are facing certain epidemics (Medicins Sans Frontieres, 2016a). In this regard, these financial administrators are expected to actively maintain as well as improve the systems of management that have been put in place in order to cater to both the finances as well as administration and all the requisite procedures that would ensure Doctors without Borders runs in a manner that is not only cost efficient but also transparently makes use of the funds that the organisation has been able to acquire from donors and government grants (Medicins Sans Frontieres, 2016a). In this regard, financial administrators at Doctors without Borders are tasked with ensuring that financial records of the organisation are kept up to date and that there is a clear audit trail for all the transactions that have been carried out within the organisation. They are also expected to provide protection to the organisation against such aspects as fraud and also theft and ensuring that all the funds that belong to the organisation are kept safe and those that need to be banked are done in a manner that is prompt. In addition, they are expected to ensure that the management of all the field offices as well as the board of directors have a clear understanding of what their financial responsibilities mean (Medicins Sans Frontieres, 2016b). These individuals are also expected to ensure that the board aligns with all the regulations on tax including those that cater to the payroll and any fringe benefits that might be given to the staff at Doctors without Borders. Financial Administrators also engage in carrying out a review of all of the processes within the organisation and providing reports on a monthly basis and also ensuring that income as well as expenditure for the organisation is tracked all through the year (Doctors without Borders, 2014). Doctors without Borders is taken through internal as well as external auditing. The internal auditing is done by the Audit and Risk Standing Committee, which is headed by the treasurer. This internal audit helps in the evaluation of the levels of governance as well as processes of controlling management and the level of financial risk that the organisation has ((Medicins Sans Frontieres, 2016a). On the other hand, external auditing is done by PriceWaterHouseCoopers, an auditing firm that presents its own independent opinion on the organisation’s financial statements and its overall financial health. PriceWaterHouseCoopers also provides the observations it might have on the procedures as well as controls and overall practices of management that are present in Doctors without Borders and is the only firm that has been contracted to carry out auditing of Doctors without Borders (Medicins Sans Frontieres, 2016b). Risk Management Doctors without Borders has in place a policy for managing of risk whose core objective is to integrate an approach that is both systematic as well as consistent. It aims at not only making identification, assessment as well as management of risks that might occur across the entire organisation. The Policy put in place to manage risk with a clear chain of responsibility regarding management of security. In addition, projects are measured in terms of whether they are low medium or high risk (Clementine 2014). Project coordinator is tasked with the management of the security of the team while the head of mission is responsible for the security management of the whole mission within a specific country. Every staff member is tasked with a personal responsibility to integrate the policy on risk management examining the negative potential for any words or actions they take (Neo & Pettigrew, 2011). Human resource coordinators working for Doctors without Borders on the other hand are tasked with the responsibility for carry out comprehensive risk as well as control assessment for the organisation at field offices. These individuals examine risks that are related to mobilisation of resources including those that include numerous offices, have a greater impact on Doctors without Borders and require action from the board of directors or a change in the policy that has been put in place within the organisation (Medicins Sans Frontieres, 2016b). Doctors without Borders philosophy on management of risk are involves encouraging every individual’s member of staff to consider management of risk as a personal responsibility. In this regard, all the members of Doctors without Borders are encouraged not to accept risks that are considered as unnecessary (Medicins Sans Frontieres, 2016a). Moreover, they are also expected to both anticipate as well as effectively manage risk by engaging in planning and are also asked to make recognition of opportunities and subsequently make decisions in a prompt manner (Medicins Sans Frontieres, 2016b). Putting in place such a policy will ensure that Doctors without Borders is in a position to actively facilitate decisions that are informed by the amount of risk especially with regard to the setting of objectives and also the selection as well as management of what is considered as the key course of action. It will also enable the organisation to put in place a mechanism to ensure the creation of a change within the organisation’s practice for managing risk (Medicins Sans Frontieres, 2016b). Risk Management Analysis and Recommendation The risk management policies as well as methodologies that have been adopted by Doctors without Borders is an efficient one since all individual members of the organisation across the different levels are provided with the responsibility of accessing the different types of risks that could have an impact on them and personally ensuring that they deal with these risks in order to create the least amount of impact for the organisation (Neo & Pettigrew, 2011). Financial Reporting Financial reports as well as the audits for Doctors without Borders are presented on an annual basis to the international board of directors. Reporting on the budgeting is a core aspect of its management (Doctors without Borders, 2014). It is expected that by the time the budget cycle comes to an end, the administration of each of the Doctors without Borders associations set out a formal report on performance to the board of directors setting out the manner in which resources in the budget have been utilised and explaining any differences that might have occurred between the budget that was first set out and the real expenditure that has been spent and also the projects that have been achieved over the period of the budget cycle(Medicins Sans Frontieres, 2016). On an annual basis, the International Board of Directors submits a report to the International General which sets out the results as well as analysis of progress of the projects and what has been achieved in the context of the performance of the entire organisation (Medicins Sans Frontieres, 2014b). Financial reporting is done as a part of all the controls on management that have been put in place by Doctors without Borders and is subsequently reported to the international board of directors and thereafter to the International General Assembly (Medicins Sans Frontieres, 2016b). Accounting There is not a large amount of information regarding the accounts of Doctors without Borders. However, its Financial Statements are often regarded as a way in which the organisation can provide proof of its transparency as well as level of accountability thereby providing an overview of the work carried out by the organisation (Medecins Sans Frontieres, 2014). As of 2014, the income for the year came to a total of 1, 066 million Euros, which was an increase of about 113 million Euros from 2013. This income is broken into 858 million Euros, which was spent on social mission, and 208 million Euros that was spent on expenses such as fundraising, management as well as income tax. By income 1142 million Euros came from private income, 115 million Euros from public institutions and 24 million Euros which was derived from other sources (Medecins Sans Frontieres, 2014). Knowledge Management I wasn’t able to find any information about knowledge Management at doctors without borders. Knowledge management is the process of capturing, distributing, and effectively using knowledge. I would recommend that doctors without borders apply knowledge Management system into their organization, because knowledge Management will improve the mission’s of doctors without borders. Doctors without borders should share their knowledge and experiences of past projects to give an idea to those who work to the same projects, because some of the projects that doctors without borders are similar such as war crises. Also they could have a shared system where anyone of their employee can upload and comment on work by themselves or others. Giving feedback one of the important tools to use, and having feedback would allow doctors without borders to develop their plan. The last recommendation in this section, doctors without borders should implement a system and call it “ lesson learned “ where information that are retrieved from people who have already tackled a problem and found a solution. This will allow the organization to solve any problem that similar to the one they have dealt with. Performance Management Performance reporting refers to the mechanism that is put in place by an organisation to ensure progress is monitored in terms of achievement of the set out objectives and is therefore critical if the body tasked with governing the processes of the organisation and the public are provided with a clear understanding of the achievements that an organisation. Doctors without Borders have in place a system for monitoring performance which provide the chance for the organisation to measure as well as track the outcomes that exist from the collection systems of data on an annual basis (Neo & Pettigrew, 2011). A performance monitoring system has been put in place, which provides the chance for the organisation to analyse and monitor the progress of both the projects put in place as well as the numerous employees. Doctors without Borders has in place a system for evaluating the employees where they present individual reports on their progress within the field and the challenges that they have gone through (Medicins Sans Frontieres, 2016b). These reports also provide a chance for the Independent board of directors to carry out a formal examination of projects and the extent of the problems within the countries that the organisation has set up operations in. These reports are largely encouraged since they provide key feedback on the situation of the offices and create significant information on the performance of their employees and more importantly the effectiveness of their programmes (Medicins Sans Frontieres, 2016a). Performance management analysis and recommendations One of the key problems that Doctors without Borders is dealing with performance that is not consistent with their activities in many of the projects that they are involved with. In this regard, the organisation needs to ensure that a better strategy for reporting on performance and mechanisms for management that are used to engage in reporting and also explaining the differences between the original budget and the real expenditure that is used, the manner in which resources are utilised and how the results that are expected will be fulfilled (Medicins Sans Frontieres, 2014b). There is also a need to put in place indicators that can be used to monitor performance such as the amount of worker turnover, the effectiveness of the projects that are implemented by the organisation and how motivated staffs are in carrying out their work. In this way, the organisation can determine the impact that projects will have not only on the population but also in advancing the mission statement of the organisation (Medicins Sans Frontieres, 2016b). Business Continuity plan Doctors without Borders is well aware of the fact that numerous issues as well as risks have the potential of arising in instances when there is a business environment that is negative and filled with a large amount of confusion. In this regard, the organisation has put in place strategies to enable it effectively deal with these challenges and one of these strategies is the integration of a programme for managing Business Continuity (Medicins Sans Frontieres, 2016ba). To this end, Doctors without borders has put in place a strategic system for managing issues, which is constantly being taken through a review and examination. This is done with the thought of aligning the goals and objectives driving the organisation with the constant changes occurring in both the globe as well as the local environment that the organisation has set up its projects in (Ne0 & Pettigrew, 2011). Business Continuity planning is well integrated within Doctors without Borders process of planning as well as its organisational culture, which aims at making sure every individual staff member, and stakeholder of the organisation protects the organisation’s goals (Medicins Sans Frontieres, 2014b). Doctors without Borders makes use of the Business Continuity plan as part of its strategic process and a tool for management that enables the organisation to deal with any issues that might not have been planned for without impacting negatively on the overall well being of the organisation. This tool has also been seen as key in ensuring the continued survival as well as flexibility of the organisation especially considering that the environment that the organisation is involved in is one that is unpredictable and which if not dealt with in the right manner could have a negative effect on the purpose of the organisation (Medicins Sans Frontieres, 2016b). References Clementine, O. (2014). Risk Management and Humanitarian Aid: An Impossible Marriage? Crash-Foundation Medicins Sans Frontieres, Retrieved Apr 12, 2016 from: < http://www.msf-crash.org/en/sur-le-vif/2014/07/31/7306/risk-management-andhumanitarian-aid-an-impossible-marriage/> Doctors without Borders, 2014, Financial Statements 2014 retrieved Apr 11, 2016 from: https://www.doctorswithoutborders.org/sites/usa/files/doctors_without_borders_finan cial_statements_-_final_20140429.pdf Medicins Sans Frontieres 2014b, “How MSF Works: Questions Answered, Explored and Raised”, Alert, vol. 15, no.2, pp. 3-16. Neo, HN., & Pettigrew, L 2011, “ An Interview with Medicins Sans Frontieres”, Br J Gen Pract, 61(592), pp. e761-e762. Medicins Sans Frontieres. (2016b). About Us. Retrieved Apr 12, 2016 from: < http://www.doctorswithoutborders.org/about-us> Medecins Sans Frontieres. (2014c). Financial Report: Key Figures. Retrieved Apr 12, 2016 from: Medicins Sans Frontieres. (2016a). Our Funding. Retrieved Apr 12, 2016 from: < http://www.msf.org/about-msf/our-finances> Medicins Sans Frontieres .(2013). OCHA Training Strategy: 2014-2019. Retrieved Apr 12, 2016 from: Case Study for the U.S. Department of Defense Introduction: The origins of the United States Department of Defense can be traced back to the start of the revolutionary war in 1775, when the Army, and Navy, and Marine Corps were formed. After the ratification of the Constitution, the original “War Department” oversaw the security of our nation, until it was officially renamed when the Army, Navy, and Air Force creating a unified force. These are the three main military departments of the DoD, with the Marine Corps falling under control of the Navy, and the Coast Guard as part of the Department of Homeland Security during peace times. Ash Carter is the current Secretary of Defense under President Obama, and his organizational chart can be seen below: Figure 1: Organizational Chart for the DoD The overall mission of the DoD is “is to provide the military forces needed to deter war and to protect the security of the United States.” With active members deployed to more than 140 countries, they strive for success in defeating and deterring aggression across the globe. To keep order and a common vision within the different military departments, the DoD has nine Unified Combatant Commands that are composed of at least two of the departments: U.S. Northern, Southern, Central, European, Pacific, Africa, Strategic, Special Operations, and Transportation commands. (Peforomance.gov) Also, within the DoD are many different defense agencies, most notably the Nation Security Agency (NSA) and Missile Defense Agency (MDA). As you can see, it is quite evident that the DoD is largest employer in the United States, with approximately 850,000 civilians and over 2.2 million service members. In an organization of this magnitude there must be specific strategic goals in place that enable managers to successfully plan for the future. PPBE: Before I go into the Planning, Programming, Budgeting, and Execution (PPBE) process, I first want to discuss recourse allocation protocol that DoD must follow because “PPBE is unique to DoD. The other executive agencies use internal annual processes to determine required resources. The purpose of PPBE is to identify mission needs, match needs with resource requirements, and translate requirements into budget proposals. The PPBE process produces the DoD portion of the President's budget.” (DAU) The enactment of funds begins with “the submission of the President’s budget to Congress” where it is then debated on and revised by both houses of Congress. After the new budget is authorized by Congress, it is then sent back to the President for the official signature or veto causing this process to be repeated. Once the budget has been approved, the House and Senate Appropriation Committees meet to “produce three Acts that provide budget authority for national defense: the DoD Appropriations Act, the Military Construction, Military Quality of Life and Veterans Affairs Appropriations Act, and the Energy and Water Development Appropriations Act.” The Office of Management and Budget (OMB) is then put in charge of the Congressional appropriations and released the funds to the intended agency. Shown below is diagram of the PPBE process for the DoD. Figure 2: PPBE Process Diagram Planning: The planning phase begins once the White House has issued its “provisional budget levels (fiscal guidance)” usually around February, and occurs on a yearly basis. The planning committee is comprised of the three military departments, Office of the Secretary of Defense (OSD), Joint Staff, OMB, and the National Security Council, and their job is to plan accordingly for the potentials threats to the United States over the next 6-20 years, and “assess capabilities to counter them, and recommend forces to defeat them.” (DoD.gov) Then around March 1st, the Chairman’s Program Recommendation (CPR) is submitted to the Secretary of Defense for review and eventually the Defense Planning and Programming Guidance (DPPG) is finalized by the Unified Commands, military departments, and defense agencies. This type of planning is from a strategic level, as the top management looks to translate the aforementioned vision into a mission statement. The following list is comprised of the strategic goal and objectives of the DoD for the years 2015-2018: 1. Defeat our Adversaries, Deter War, and Defend the Nation. 2. Sustain a Ready Force to Meet Mission Needs. 3. Strengthen and Enhance the Health and Effectiveness of the Total Workforce. 4. Achieve Dominant Capabilities through Innovation and Technical Excellence. 5. Reform and Reshape the Defense Institution. Recommendations and Conclusions: The Department of Defense has a very structured planning process as seen through their mission statement and list of strategic goals. From a strategic level, the DoD uses these goals to layout everything they need to comply with their mission statement, without constraints. These goals give DoD representatives a reason to fight for the necessary budget. Then once the budget has been approved through the political process, the DoD is guaranteed a certain amount of funding to act on the priorities from a top level down process. The tactical and operational levels of planning rely heavily on the strategic goals of the military because the focus can change during the transition from wartime to peacetime. I would recommend limiting the amount of bureaucracy involved with the planning phase, because I believe it hinders agencies when they have to change their plans because of politics. Programming: After the DPPG has been approved, the programming and budgeting phases can formally begin. “However, in reality the departments and agencies start their [Program Objectives Memorandum and Budget Estimate Submission] POM/BES development much earlier. Programming is the process that matches available dollars against a prioritized list of requirements to develop a five-year resource proposal. It is the bridge between planning (with broad fiscal guidance) and budgeting (which meticulously prices each program element). The POM is a blueprint of each department/agency proposal for updating the FYDP to reflect resources needed for mission accomplishment.” (DAU) Front End Assessments (FEAs) identify the major issues in the upcoming fiscal year that will affect recourse allocation. Each department individually conducts a FEA during the late summer months, and remains in sync with program decision budget process. Once the FEA has been established and reviewed, each branch then prepares a Program Objectives Memorandum (POM) based on guidance. For reviewing purposes, “the CPA, prepared in consultation with other members of the JCS, the Commanders of the Unified Commands, and the Defense Intelligence Agency, is the Chairman's personal assessment of the POMs conformance to the priorities established in strategic plans and unified command requirements. It also provides the Chairman an opportunity to submit alternative program recommendations and budget proposals.” (DAU) Once the Chairman submits their alternatives, a 3-Star review group comprised of members of the Office of the Secretary of Defense(OSD) makes the finals changes to the recommendations, when it is then presented to the Secretary of Defense as a series of Recourse Management Decisions (RMD). Recommendations and Conclusions The overall goal of the programming phase is to prioritize resources for the budget and conduct analyses of alternatives that help to balance the budget. Organizations like Department of Defense often budget for a certain amount of money, when in reality they have to settle for less, and start to set constraints. The release of documents throughout the process, which can be clearly seen in the DoD (FEAs, RMDs, POMs, etc.), layout the resource constraints and begin to distinguish the essential programs. The constant internal review that is put in place allows the DoD to analyze alternatives and evaluate tradeoffs for their different programs in order to determine their priorities. Budgeting: The Department of Defense uses a composite type of budgeting, known as the Program Planning Budgeting Systems, which links line item and program budget approaches. When it comes to approving or rejecting a budget, the President can only respond with yes or no, and can’t fragment the bill for line item vetoing. The Under Secretary of Defense (Comptroller) has the responsibility to review the budgeting estimates put forth by each department/agency. There are two crucial areas that the USD is looking to “scrub”, program pricing and program executability. The importance of the budgeting phase is to “convert the programmatic view into the format of the congressional appropriation structure, along with associated budget justification documents.”(DAU) Now that budget request has been properly formatted and sent to the President, “the FYDP is again updated to reflect the President's budget and becomes the baseline for the next cycle.” At the organizational level, the DoD uses the previous year’s “budget resolution” as a baseline for the upcoming fiscal year. Recommendations and Conclusions: The DoD uses the composite type of budgeting to their advantage, however, I agree with what Jimmy Carter proposed in mandating zero-based budgeting for the government. I believe the DoD along with all other agencies should have to justify each dollar that they spend because it is coming directly from my tax dollars. Differing political views or interests between Congress, the President, and the public demand creates a difficult environment for passing a budget. It is important to look at how much the budget would most likely cost from an unbiased point of view and then if the program phasing, funding profile, obligation, and outlay rates are within reason. Budget Execution: With a defense budget of $585 Billion for FY16, it is essential for the DoD to implement management controls to monitor their spending. In the budgeting execution phase, the appropriated funds for the DoD have been dispersed to the respective programs that are outlined in the President’s Budget. The funds are released to organizations within the DoD in the form of appropriations, that are to be used solely for the intended purposes. The execution phase is also known as the “real world application” of the entire PPBE process, and only occurs after these five events have occurred: 1. The President signs the Authorization and Appropriations bills passed by the Congress 2. OMB must apportion the appropriations providing obligation/budget authority 3. The Department of the Treasury must issue a Treasury Warrant providing cash 4. Program authority must be released by the Under Secretary of Defense (Comptroller) 5. Finally, all these authorities must be loaded into the Program Budget Accounting System (PBAS) Ongoing reviews for the program and budgeting provide senior leadership with “the effectiveness of current and prior resource allocations” (DAU) as well as a quantifiable measure for the output performance of execution. Each branch of the military provides a “report of programs” (ROPs) to the Comptroller on a quarterly basis, which provides an update on the state of spending. The Comptroller then decides what actions need to be take for reprogramming or transferring funds within Department of Defense to areas that are in need. Recommendations and Conclusions: One of the major concerns I have with the budgeting execution of the Department of Defense is the fact that there is a spending increase every 4th quarter of the fiscal year. Organizatoins within the DoD are conservative with the spending throughout the first three quarters to ensure that they do not run out of money, and then rush to spend the leftover cash in the final quarter. Money that is not spent gets returned to the federal treasury instead of being kept at a program level, which is another prevalent issue within the government. I would recommend that the budget be broken down into a quarterly basis for approval, especially since there are already quarterly ROPs set in place. Accounting System: The DoD relies on “working capital fund” for financing purposes, and has been directed by the Defense Finance and Accounting Service (DFAS) since 1991. DFAS provides all of the funding services to the Department of Defense, and is also used to control the payments to DoD civilians, service members, and all of their benefits. Using working capital for funding is done by “charging its customers for the services it provides rather than being funded through direct appropriations.” (dfas.mil) The Program Budget Accounting System (PBAS) is used at the department level to transfer and distribute fund to DFAS down to the individual level. There PBAS implements specific control to set thresholds on the amount of money to be reprogrammed or prevent overdrawing on the amount appropriated by Congress. “Transactions are generally recorded on a budgetary basis, but are required to be reported (in the financial statements) on an accrual accounting basis. Under the accrual method, revenues are recognized when earned and expenses are recognized when a liability has been incurred, without regard to the actual receipt or payment of cash. Due to identified financial systems deficiencies, these statements do not meet the requirements for full accrual based accounting.” As you can see, the DoD records their transactions on a budgetary basis rather than the full accrual method that is required by GAAP. The DoD also turns to the Federal Accounting Standards and Advisory Board (FASAB) for guidance and advisory services when areas of concern have been identified (i.e. timing of R&D funds or reasonable baseline estimates). Recommendations and Conclusions: The establishment of the DFAS was a great way to monitor and streamline operations through a standardization process. As the world’s largest finance and accounting operation, the DFAS can be used as a can effective example for other non-profits across the globe. Since the Department of Defense is a government organization, they rely on government appropriations to spend funds, therefore cannot spend money that they don’t physically have. This makes the accounting process easier than with a for-profit company because no borrowing of funds is involved. Since the DoD receives their money from the taxation of citizens, they are held accountable to the public and critiqued on their decision making processes. Like other government entities, the DoD also has to maintain books to ensure that funds were used for their intended purposes and conduct individual reports among agencies. Financial Management Reporting & Auditing: Mike McCord, the Under Secretary of Defense, is also known as the Comptroller or Chief Financial Officer (CFO) of the Department of Defense. He is in charge of advising the “Secretary of Defense on all budgetary and financial matters, including the development and execution of the Department’s annual budget” (Defense.gov) Using the DoD Financial Management Regulation 7000.14-R as reference, the Comptroller establishes and enforces the obligatory standards in order to comply with the requirements of the DoD. Along with the updated federal regulations, the DoD releases several different reports, the most important being the FY DoD Agency Financial Report (AFR)/DoD Performance and Accountability Report (PAR). This document is published with the annual budget submission in February, and goes into great detail on the overall health of finances within the department for the previous fiscal year. The FY 2015 financial report includes a message from SECDEF Carter, followed by management’s discussion and analysis of affairs and the balance sheet, Statement of Net Cost (Income Statement), Statement of Changes in Net Position (Cash Flows), and Statement of Budgetary Recourses. In order to comply with Financial Improvement and Audit Readiness (FIAR) , the Comptroller hires public accounting firms, such as Deloitte, to conduct an internal audit before the documents are released. Recommendations and Conclusions: The DoD follows the typical format for financial reporting among government organizations. They release an annual report that can be compared to a 10-k in the private sector, which includes the four equivalent statements of finances. This report is a great way to maintain the books and ensure that funds were spent on their intended purposes. Instead of a net profit or loss, the DoD uses the terms surplus or deficit to assess their overall spending for the year. Just as it is done the private sector, internal audits are preformed to ensure they don’t face legal implications for falsifying their documents. Out of the key aspects of reporting, the DoD is more focused on asset management rather than profitability or liquidity, simply because of their not profit nature. Overall, I believe the DoD provides sufficient financial reporting to the constituents of the United States. Performance Management: The Department of Defense follows the U.S. Office of Performance Management (OPM) guidelines when assessing the performance of its employees. This performance based rating is also known as rating based and an award is granted only if the employee has been “fully successful” in meeting their objectives. Directly from the OPM website, “agencies [DoD] must design their performance-based cash award programs to reflect meaningful distinctions based on levels of performance to ensure employees with higher ratings of record receive larger cash awards.” The money that is set aside for performance awards is placed into a pool of cash and can be dispersed to the employee in the form of a lump-sum bonus, percentage increase of base pay, or both. In regards to new employees, because in the first two years of employment we can only receive our “bonus” in the form of a salary increase instead of both a lump sum and salary increase that is seen by the rest of the work force. In the end however, this amount seems to even out because we are given slightly more of percentage increase to accommodate for the lack of bonus. The performance based cash awards are a great way for people to continue to move up in the company each year without actually being promoted to a higher level position. The Deputy Secretary of Defense is held responsible for the performance level of the DoD as the Chief Operating Officer (COO). Also included in the FY Financial Report is a performance review in which the COO reviews successes from the previous year, and tracks performance measures to ensure that they meet the strategic plan. Through the third quarter of FY15, it appears that “67 percent of the Department’s quarterly performance measures were on track to meet the annual goals, while 33 percent did not meet third quarter targets and are considered “at risk” of not achieving their annual targets.” (Defense.gov) Recommendations and Conclusions: As a current employee of the Department of Defense I can tell you first hand that the performance appraisal system in place is very structured and fair to all of its employees. The pool that is generated and distributed ensures that people do not receive outlandish bonuses as seen in the private sector that could lead to jealousy amongst coworkers. However, this can limit the people that are exceptional performers because there is a cap on how much money can be dispersed each year. The “slackers” are truly the ones who could benefit from this because even though they had a year of poor performance, they only get slightly less of a raise than the top performers. The incentive to work hard begins to diminish when you take this inequality into consideration. The only recommendation that I have is to make it easier for managers to reward their employees for high levels of performance without having to jump through all of the hoops and administrative process of asking for the extra money. If all of their employees perform at a high level then they should all be properly compensated for it. Knowledge Management: Throughout the Department of Defense, it is crucial for all of the agencies to share information and that is done with proper knowledge management. As defined by the DoD Directive 5015.2, knowledge management ensures that “information and intellectual capital contained in DoD records will be managed as national assets. Effective and efficient management of records provides the information foundation for decision making at all levels, mission planning and operations, personnel and veteran services, legal inquiries, business continuity, and preservation of U.S. history.” (dtic.mil) The purpose of knowledge management is to ensure that information is documented and shared within the Department of Defense, and it is broken down into data, knowledge, and information. Data management refers to past performance from testing that has been gleaned from after action reports, which can be applied to future cross project learning. Knowledge refers to any actionable information that is based on facts or meaning, and information is the data that is relevant and has a purpose. All three together create a sense of wisdom that is necessary for effective decision making in the DoD. Recommendations and Conclusions: The DoD does a great job of managing their information for capturing and using organizational knowledge with the implementation of wisdom. As the third largest piece of the U.S. budget, it is clear that the DoD is a vast organization with a great deal of information. The amount of information from research and development, testing, production, etc should be properly utilized by anyone it could help. Most recently, I have seen in the DoD workforce a large age gap that has caused a surge of hiring recent college grads, as the older employees begin to retire. This raises the importance of passing knowledge from the experienced mentor to the mentee. However, I have also seen people who are subject matter experts and are hesitant to share their knowledge with the fear of being replaced. I believe the DoD should find a way to better institute a culture of sharing knowledge. Risk Management: The future is unpredictable and it is up to the DoD to prepare for a future condition that takes into consideration the probability and consequence of an undesired event. Much of the work done for the Department of Defense is actually done by government contractors, therefore most of the risk involved is put on the contractor. This effort is used to address and mitigate the three most important risk factors to the Defense Acquisition process: cost, schedule, and performance. In the chart below you can the Risk Management Process that is a complete circle and is a never ending process. Figure 3: Risk Management Process Starting from the Risk Planning phase, Program Managers (PM) are required to summarize their approach and planning activities usually within the Risk, Issue, and Opportunity (RIO) Management plan. It is important to have a procedure that documents the risk management process, and applies a criteria for handling of the individual risks. A sense of traceability is established bringing together the technical requirements and overall objectives. Also found in RIO plan are the clearly defined roles for contractors and governments workers and their available resources. Next is the Risk Identification phase where the simple question “What can go wrong?” is answered by looking at any proposed plan. The PM “examines each element of the program to identify risks and their associated future root causes, begin their documentation, and set the stage for successful risk management.” (DAU) The early they get a jumpstart on this, the better for the ultimate success of a program. In order to properly assess risk, members of the DoD generate a matrix in the Analysis phase. The likelihood and severity of an occurrence are given values and placed into a color coded chart, green for low risk, yellow for moderate risk, and red for high risk. This process gives a great visual demonstration of a potential threat and quantify how big the risk truly is. The “Risk Reporting Matrix” also identifies consequences on common playing field, through the cost, schedule, and performance, in order to compare the alternatives. The most important part of the Risk Handling phase is to mitigate the threat to an acceptable level of risk. DoD representatives must be able to explain “what should be done, when it should be done, who is responsible, and the funding and/or resources to implement the risk handling plan.”(DAU) The goal in this phase is the choose whether to accept, avoid, or transfer most of the risk responsibility onto an outside source (contractor) leaving the government free of any liability. The final phase of the Risk Management Process is to monitor the risk you have identified and chosen to accept. PMs typically hold technical reviews to implement and track risks, as well as provide constant updates to their ongoing plans. The stakeholders involved, which includes soldiers, are kept up to date with how risks change over time and if the risk handling options are still successful. In the end, the overall objective of a risk management plan within the DoD is to ensure that a program remains on schedule, within budget, and performs at the expected level. Recommendations and Conclusions: Risk management is one of the most important management controls for the DoD, simply because of the products they develop. What they create is used on battlefield across the world and is involved in saving lives and taking lives, and knowing how to choose between the two. That is why the DoD has such a complex process for weighing the probabilities and consequences of their actions. The impact of risk to a program’s cost, schedule, and performance not only affects the people generating the technology but also the war fighters themselves, and the quality of product they ultimately receive. From my research and work experience, I believe the DoD has done their due diligence in proper risk management, because you can never too careful when loss of life is involved. Continuity: As the largest civilian employer in the nation, the Department of Defense has a duty to its constituents to keep a steady flow of operations. According to the DoD Directive 302.26, the DoD must follow a continuity of government (COG), continuity of operations (COOP), endure constitutional government (ECG) and state mission essential function (MEFs). This is crucial in times of war when emergencies happen every day, and the DoD has built in succession plans in the event a top leader should fall. Continuity also remains true in the civilian workforce, as stated by the Government Publishing Office (GPO): “under the direction of the President, the Secretary exercises authority, direction, and control over the Department of Defense. Deputy Secretary of Defense. The Deputy Secretary of Defense is delegated full power and authority to act for the Secretary of Defense and to exercise the powers of the Secretary on any and all matters for which the Secretary is authorized to act pursuant to law.” (GPO.gov) The passing of authority occurs in a sequential fashion, and is made clear to the employees who should take over power during a time of crisis. If a disaster should occur at any given base across the world, there are relocation sites available for every branch of the military. The DoD has set in place “Allocate adequate resources to implement the requirements of this Instruction, ensuring that family readiness services are available to all Service members and their families regardless of geographic location or proximity to military installations.” Recommendations and Conclusions: As a member of the civilian workforce, I witness every day the implementation of continuity. Whether is when a branch chief falls ill or has to travel, there is always an email notification determining the 2nd in line as the “Acting Branch Chief.” We also have numerous Army bases throughout the D.C. area and all over the country that can act a temporary duty stations in case of an emergency. One major recommendation for the DoD is to find a better form of communication in the workplace. For security reasons, the DoD computer networks are all hard-wired Ethernet to prevent hacking. This can be troublesome for moving throughout the office or if employees had to relocate to a temporary work station, therefore working from home is not an option. I know this could be a very difficult task to implement and a serious threat to our country, but the idea of a virtual private network (VPN) for government employees would benefit the flow of operations. Conclusion: In conclusion, the Department of Defense represents the largest employer in the United States, and has successfully implemented the management controls presented in this case study. Led by Ash Carter, the DoD has a model PPBE system in place that clearly defines how they get their money and what it is going to be spent on for budgeting purposes. There is a great deal of documentation on the type of accounting they utilize and how they report their state of finances to the public. Performance, knowledge, and risk management all play major roles in the functionality of the organization and how they operate as a whole. Lastly, continuity provides a steady flow of operations that ensures business will not be affected in the event of a crisis. References 1. https://www.gpo.gov/fdsys/pkg/GOVMAN-1996-05-31/pdf/GOVMAN-1996-05-31Pg176.pdf 2. https://www.performance.gov/agency/department-defense 3. http://www.defense.gov/About-DoD 4. http://www.dfas.mil/pressroom/aboutdfas.html 5. http://comptroller.defense.gov/Portals/45/documents/cfs/fy2000/06_Section_3_FY2000.p df 6. http://www.reuters.com/investigates/pentagon/#article/part1 7. http://www.dfas.mil/ 8. http://www.dau.mil/ 9. http://comptroller.defense.gov/FinancialManagement/Reports/afr2013.aspx 10. https://www.opm.gov/policy-data-oversight/performance-management/performancemanagement-cycle/rewarding/approaches-to-calculating-performance-based-cashawards/ 11. http://www.dtic.mil/whs/directives/infomgt/index.htm 12. http://www.dtic.mil/whs/directives/corres/pdf/501502p.pdf 13. http://www.allgov.com/departments/department-of-defense/defense-finance-andaccounting-services-dfas?agencyid=7362
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