The organization identified as the Federal Aviation Authority (FAA) located in New York in the United States is used as a study example. The organization is mandated to regulate all activities in Civil Aviation in the United States and beyond. Management of finance is under the office of finance and management (AFN). The department works to streamline all agency functions, evaluates all budget requests, and improves efficiency in operations by improving responsible and accountable stewardship of all FAA possessions (Harper, 2015). The research paper will focus on finance processes in FAA by concentrating on different sections as shown in different subheadings throughout the paper.
Execution of the finance process
The department of financial services facilitates financial execution through the following offices: budget and programs, financial analysis, financial operations, financial reporting, and accountability. All the offices collaborate in a systematic way through specified roles, responsibilities and accountabilities (Hammer, 2015). Financial process is executed through the offering financial services. FAA budget is financed from Airport and Airway trust fund, revenues from airline tickets, cargo, excise taxes from aviation services, overflight charges, and aviation fuel charges. Every office is allocated a given amount of fund with every activity allocated a given amount. The amounts allocated are termed as budget estimates. Actual budget is matched with the estimated budget at the end of every financial year to increase transparency and accountability (FAA website).
Work centers
There are four working centers/ offices that collaborate in different capacities. Budget and program center defines all budgetary needs by identifying uses and fund resources. Also, under the president Management Agenda, the office makes sure there is proper integration of budget plans and performance to ensure the initiative is successful. Financial Analysis office is the second center that ensures FAA adapts where possible, cost reduction and control initiatives. The center also offers financial guidance for agency contacts, manages internal and agency related costs, and ensure the business decisions are sound by analyzing their impacts to the organization. The financial operation is another working center that manages procedure systems in financial management, cost and property accounting. Lastly, the Financial Reporting and Accountability center implements all accounting and financial policies, ensure FAA internal controls are working, reviewing general ledger and prepare a financial statement.
Tools
Some of the identified finance tools include estimate budgets for a given financial period. Different activities are defined and allocated rough estimates depending on the projected cost. Another financial tool used is cash flow analysis. The process is facilitated by the use of financial reporting in different working centers. Also, inventory management is another tool in FAA that manages the flow of inventory from the manufactures to the warehouse and then to the consumer. Inventory management in FAA is under order guide number 4600.27 3rd August 2012. Interim or annual financial statements like a statement of financial position and statement of financial performances are other financial tools used for expense tracking (Anandarajan et al., 2012).
Workflow
The workflow in the finance section flows between the four working centers. Budget and programs center plans and systematically integrates all budgetary needs. The center is also mandated to developed policies, and standard procedures for budget estimates and justification (Kokemuller, 2017). The proposed budget is then presented to the financial analysis center which develops cost reduction initiatives along with chief finance officers (Bentley et al., 2-13). The financial unit is also mandated to ensure internal and agency costs are within manageable standards. Financial operation center ensures proper recordings of every transaction in the agency by ensuring cost accounting, procedural policies and reporting procedures are adhered to. All financial information is consolidated in financial reporting and accountability center. Information in the general ledgers is reviewed before interim or final financial reporting is done. The center is also mandated to review travel cards and to implement both accounting and financial policies (Carraher and Auken, 2013).
Instructions and guidelines that define the process
The four working centers are well elaborated with well-detailed information about the functions and responsibility of each working center. In addition, there are accompanying PDF document, handbooks, and manuals that give detailed information about every working center.
Federal regulations that limit the work
FAA develops regulations using different committees from both aviation community and FAA. Different committees include advisory and rulemaking committees, subcommittee, and workgroup. There are also regulatory documents like regulatory and guidance library and aviation safety documents.
Organizational elements involved
Although they are not clearly identified FAA contains several elements Departmentalization, a chain of command, and span of control. Departmentalization is portrayed by different offices like budget and programs, financial analysis and financial operations offices. Chain of command as an organizational element is portrayed by the presence of the chief of staff (AFN), Assistant Administrator and executive director that represent the top management that oversees all activities of other smaller departments.
AFN organizational chart
Synchronizing the system using an Enterprise Resource Planning system (ERP)
ERP is an information system that integrates a wide range of both internal and external information system of an organization into a unified operational system. Both Software, hardware and network resources, work together to streamline organizational processes (Shao et al., 2012). At FAA, AFN integrates different programmes namely: FAA budgets, government contracts, business development programs, aviation and education programmes using Information Technology (IT). The IT systems harmonize all the programs in a timely way to avoid confusion or delay in the whole AFN system.
Conclusion
Management of finance in FAA works in a systematic way that harmonizes all activities, programs and different departments in the organization. Execution of the finance processes is enhanced by different work centers and finance tools that enable workflow in different departments by use Enterprise Resource Planning system.
References
Anandarajan, M., Anandarajan, A., & Srinivasan, C. A. (Eds.). (2012). Business intelligence techniques: a perspective from accounting and finance. Springer Science & Business Media.
Bentley, K. A., Omer, T. C., & Sharp, N. Y. (2013). Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, 30(2), 780-817.
Carraher, S., & Van Auken, H. (2013). The use of financial statements for decision making by small firms. Journal of Small Business & Entrepreneurship, 26(3), 323-336.
Federal Aviation Administration (2017). United States Department of Transportation. Retrieved November 26, 2018, from: https://www.faa.gov/
Hammer, M. (2015). What is business process management?. In Handbook on business process management 1 (pp. 3-16). Springer, Berlin, Heidelberg.
Harper, C. (2015). Organizations: Structures, processes and outcomes. Routledge.
Kokemuller, N (2017). What Roles Does the Finance Department Play in Business? Bizfluent. Retrieved November 26, 2018, from: https://bizfluent.com/facts-5683333-role-finance-department-play-business-.html
Shao, Z., Feng, Y., & Liu, L. (2012). The mediating effect of organizational culture and knowledge sharing on transformational leadership and Enterprise Resource Planning systems success: An empirical study in China. Computers in Human Behavior, 28(6), 2400-2413.
