BAASS Business Solutions was happy to have the following article distributed to us by Russell Cullingworth, MBA.
"Strategic Accountability Reporting is the indispensable 3rd leg (control) in the annual Planning, Budgeting and Control Cycle. Without this 3rd leg, the process cannot stand and will inevitably fall into a pile of dusty, unused planning binders.
With the Strategic Plan as the point of reference, annual operating plans are required to set short-term objectives (the Operating Plan) that will move the organization toward longer term strategic goals. The operating plan should be well defined and measurable and typically have a one-year time frame. A clearly defined operating plan can readily be translated into detailed step-by-step Action Plans that need to take place in order to meet each objective. Adding dollars to each step of the action plan results in an activity-based Budget – a financial expression of what actions (and spending) needs to happen in order to reach the operating goals and thereby the strategic goals.
These steps are fairly well known and reasonably exercised in many organizations – but often this is where the process breaks down. Some organizations may continue to track variances, but if these are not related DIRECTLY back to action and operating plans, the process breaks down. What tends to happen is that organizations allocate their budget by Department, and more often than not, departments are organized according to line reporting, and not aligned with the strategic and operating plans. It follows then that the remaining systems – General Ledgers, Variances and Financial Reports continue to represent line reporting DEPARTMENTS and not the more desirable strategic and operating objectives.
The STAR Framework© aligns the Budget, General Ledger, Variance Notes and Financial Reports with the Strategic and Operating plans – managers explaining variances are required to relate those variances back to the impact on planned activities – for if the activities are not taking place, then the operating plan is not happening and the organization may be drifting off its strategy. The financial variances become a reliable early warning system for strategic drift. There is NO OTHER reliable method to measure this in real time. Without this integrated Planning, Budgeting and Control cycle, organizations are likely to wake up a year or two down the road and realize that they are nowhere near where they planned to be. The STAR Framework is visually represented as follows:
About Russell Cullingworth
Russell was trained in finance in South Africa, completing articles with Price Waterhouse in 1991. He immigrated to Canada in 1996 and completed the Executive MBA Program at Simon Fraser University in 1999. Russell’s career experience includes Controller at CGA-Canada and Director, Finance and Facilities at Canuck Place Children’s Hospice and over five years consulting on Accounting Systems Implementations with clients such as PHS Community Services Society, Vancity and HSBC. Russell is currently owner/manager of the Centre of Excellence for Young Adults Vancouver Inc. and part shareholder of CharityGiftBag.org. He also consults to organizations on the STAR Framework and financial systems implementation.
For more information about Russell, please contact our office.