You are in the role of a chief operating officer. A board of directors has reque

Question

You are in the role of a chief operating officer. A board of directors has requested that you prepare a summary of the issues involved in a $50 million expansion. Because of local political and uncertain national financial policy of the to-be-elected national officials they may have to scale the expansion back to $25 million.

Prepare a report for the mayor and city council on your proposed expenditure plan assessing the key course objectives including fund accounting and financial controls, control and management of public expenditures, government financial reporting requirements, analyzing financial statements and budgets to make appropriate administrative decisions, and applying budgets as disciplinary process.

This is a 15-20 page double spaced paper

Explanation / Answer

The fund of $50 million allocated by the city manager may be used for the following purpose. but because of local political and uncertain national financial policy of the to-be elected national officials they may have to scale the expantion back to $25 million.

1. Maintenance of roads, pavements, streetlights etc. - Around 30% of the alloted amount of $25 million i.e. $3 million will have to be used to repair old roads. Many roads are in a dilapidated condition, and are in need of urgent repairs. The $3 million will be used for the cost of materials, payment to contractors and some administrative expenses. Some amount will also be required for repair of pavements and installing and repairing of streetlights.

2. Operational requirements - the municipal body needs to hire more employees to carry out the picking and disposal of garbage in an eco-friendly way. This will require around $1 million or 1% of the total fund.

3. Subsidizing non-profit organizations - The city subsidizes various organizations involved in activities like providing education to poor people, providing healthcare facilities to poor people, etc. These subsidies has an annual outlay of around $2.5 million or 25% of total fund.

4. Economic incentives to bring new private concerns - This activity involves organizing road shows, holding confrences and roadshows for investors. The activity aims at informing the investors about the benefits of investing in the city, tax holidays on setting up industries, flexible labor laws etc. This initiative will need an outlay of $3.5 million or 35% of total fund.

If, the federal amount of another $10 million is released, then it will be applied in the same proportion to the above mentioned activities.

Strict fund accounting will have to be done, so as to ensure that every penny is being spend on the earmarked activity and there is no wastage due to inefficiencies, poor planning or corruption. There should be a strict audit control for this purpose. The audited financial statements would have to be filed on an annual basis with the concerned authorities.

To ensure disciplinary process, the process of budgeting should be adopted. Thus a flag will be raised in case the expenditure overshoots the budget. The city council will have to make seperate budgets for each expenditure head like capital requirements, operational requirements, etc.

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