Monday, November 14, 2011

Waiting, YES

OK, left in the dark ambulance (LDA), you've drawn the short straw and have been dispatched to 1-1-2-2 Boogie Boogie Avenue for an unknown type emergency.  Dispatcher releases microphone button but yet we still hear a deep Moo-haa-ha laugh track in the background. Just another day in Paradise.

On scene.  LDA do you need PD on scene?  Ahh, not right now but I'll keep my portable with me thanks.

Hey!  In here!  Hurry!  OK, what's your I begin looking around at the space paraphernalia located in every wall, drawer, and shelf in the room.  "I feel sick."  I think I surmised that when I walked in here and looked at your decor.  "My stomach hurts, I've been having trouble swallowing for the last few days."   OK, have you been eating normally?  "Yes."  Anything new in your diet, do you take any medications?  "Yes to both. I changed my diet recently based on suggestions by my doctor."  What were his suggestions?  "I need more iron in my diet."  OK

Hey partner, yeah, what do you make of this stuff?  "Oh that's my vitamins."

Wait for it...

Looking at partner, and you have been taking this the last few days?  "Yes, I use the file to take shreds off and then I wash them down with water."  And that's "iron, yep just like the doctor told me."  Sound of silence.

Let's get you out to the ambulance.  "Good I can tell you on the way how I was abducted by aliens..."

Wait for it...

"The last time."

Thursday, November 10, 2011

Fire Accounting 101

I hesitate to bring this up on what is usually a comical look at the seemingly dying art of firefighting but honestly money may be the root of all problems, but without it you've got some pretty serious problems too.

We got chief officers, staff officers, line officers, safety officers, more officers than we can shake a halligan bar at.  But who is responsible for the common sense running or the ruining of our financial well being?   In the city it's the comptroller, in the county a treasurer, in smaller places the secretary.  All in line prior to us receiving a plug nickle.  It could be the mayor, supervisor, county executive, council, or commissioner that hold the final purse strings for the fire department.  Do you know who has that responsibility in your jurisdiction?  If you're lucky enough and cover more than one local governmental area you may have several different people with different titles holding separate purses.  What a treat.

OK, so you are either getting money from a taxing jurisdiction, as agreed on between the two groups, from your own hard work (bingo, dinners, carnival, tickets), from your investments (dare to dream) or donations.  You have been given that money in good faith and need to both account for it and be responsible for it.  What's the difference?

Accounting for the money is as easy as keeping a checkbook.  Tracking where the money comes from and how you use it is one of the most basic ways of confirming that you know what you take in and what goes back out.  Being responsible is balancing that checkbook each month compared to the bank balance.  Note the lack of an accounting degree to do any of this stuff.  If you have a truck account, a general account, and a fundraising account you can have three different checkbooks and separately track everything.  What more can anyone ask for right?

Well, as it turns out a lot more can be asked of us, or you and that's where people start to glaze over when I stand up and talk.  Just sit on the tailboard for a few minutes and follow me.

All public and private businesses, and yes even a volunteer fire department is a business, are required to do the simple stuff I have already mentioned.  It's the expected things where we run afoul.  My analogy is a recent one.  Joe Paterno the great Penn State football coach appears to have followed the rules of the college yet because of his position more was expected of him and he recently lost his job.  It's the same with our accounting.  Sure we spend the money on what we feel we need but how do we go about determining that we need it and procuring it for our use?  If we receive money from taxes, fund raising, or outright gifts don't we owe those providers of funds an explanation of how they are used?  Maybe we should even back up a little farther and show the public that we have a plan in place to demonstrate how we expect to receive and spend the monies that we estimate we will receive in the coming year.  That's a budget.

Now a budget can be both a marketing tool and a way to compare sources and uses of funds throughout the year.  I would like to approach it in the most basic way.  How can you plan on spending money for anything unless you have some idea of how much money you will have to spend?  Start a budget by going through the checkbook and locating all of the deposits throughout the last few years.  List the different types of money you received.  Some simple categories are tax money, donations, interest, social hall rent, chicken BBQ money.  You get the idea.  No income item is too small to be listed.  Next using the checkbook, bank statements or monthly treasurer's reports divide the income items into the categories that you just chose.  Keep the years separately so you can see how each one breaks out.  Total the list in each category and that will be the income for each item in your budget.  Total the categories and you have your grand total income for a year.  If you do this for more than one year maybe you can see similarities between the years.

After you have totals you can use one year's information or average two year's totals for a budget.  Some items should not be included in your budget, for example if you received a one time federal grant for $25,000 you cannot count on that money in your next year so leave it out.  Now you say but what about the BBQ we run?  Well if you're going to plan BBQs you generally know what profit to expect and I feel you should build that in to your budget.

Now you have an estimate of what is available for use.  Let's spend it!

List your expenses in much the same way you just found your income.  You can use fuel, repairs, training, clothing, insurance, anything you spent money on in the last few years.  Then categorize and total.  Did the expenses come out less than the income?  If they did you are running in the black, or you have money left at the end of the year for savings or special projects.  This is a good thing.  If the expenses were greater than the income you are running in the red and either you used savings to pay the extra expenses, or you have a loan or credit that covered them for you.  Not necessarily a good thing, but OK if you manage it.

Now use the history you just gathered and project a budget into the future.  If you think diesel fuel is going up add some expense there.  If you think donations are going to be down, reduce that category.  When you are finished you might be amazed how it turns out.  If you are projecting that you will be in the red maybe you have to plan more fund raising, or ask for more tax money to cover the difference.  If you come out in the black maybe it's time to put away money for a rainy day. 

Now a budget is no more than an educated guess on your future, but if you feel comfortable enough to share it with the public they can see you have a plan and know where you want to go.  Hopefully meeting their expectations not just the requirements.

Next can be spreadsheets, financial statements, IRS 990s, comparisons to other departments, audits or a host of other accounting items.  Maybe not as exciting as having the nozzle at the big one, but important none the less.