What are the essential components of a financial governance framework? (2024)

A financial strategy is a high-level plan that defines the financial goals, priorities, and principles of a program. It aligns with the program vision, mission, and scope, and provides direction for financial decision-making and resource allocation. A financial strategy should address questions such as: What are the expected costs and benefits of the program? How will the program be funded and sustained? What are the financial risks and opportunities? How will the financial performance be measured and evaluated?

Financial policies and procedures are the rules and guidelines that govern the financial operations and transactions of a program. They ensure compliance with relevant laws, regulations, standards, and best practices, and promote accountability, transparency, and efficiency. Financial policies and procedures should cover topics such as: How are the financial roles and responsibilities defined and delegated? How are the financial plans and budgets prepared and approved? How are the financial records and reports maintained and audited? How are the financial controls and safeguards implemented and reviewed?

A financial plan and budget is a detailed document that outlines the estimated income and expenditure of a program for a specific period of time. It reflects the financial strategy and objectives of the program, and serves as a tool for financial management and control. A financial plan and budget should include elements such as: What are the sources and amounts of revenue and funding? What are the categories and items of costs and expenses? What are the assumptions and contingencies? How are the variances and deviations tracked and reported?

Financial monitoring and reporting is the process of collecting, analyzing, and communicating the financial data and information of a program. It enables the program stakeholders to assess the financial status and progress of the program, and to identify and address any financial issues or risks. Financial monitoring and reporting should involve activities such as: How often and to whom are the financial reports prepared and distributed? What are the key financial indicators and metrics? How are the financial results compared and evaluated against the financial plan and budget? How are the financial feedback and recommendations incorporated and acted upon?

Financial risk management is the process of identifying, assessing, and mitigating the potential financial threats or uncertainties that may affect the program's objectives, outcomes, or benefits. It involves establishing a risk appetite, a risk register, and a risk response plan for the program. Financial risk management should consider factors such as: What are the internal and external sources of financial risk? How likely and how severe are the financial impacts? How can the financial risks be avoided, reduced, transferred, or accepted? How can the financial risk exposure be monitored and controlled?

Financial evaluation and learning is the process of reviewing and reflecting on the financial performance and achievements of a program. It involves measuring and comparing the actual financial results against the expected financial outcomes and benefits, and identifying and sharing the financial lessons learned and best practices. Financial evaluation and learning should address questions such as: How well did the program meet its financial goals and priorities? What were the financial successes and challenges? What were the financial gaps and opportunities? How can the financial governance be improved for future programs?

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Program Management

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