Ch 5. Financial Management Flashcards by Erik Parson

There are several different budget procedures used in the field of fire and EMS. While each has its strengths and weaknesses, the most commonly used procedure
is the _____. (57)

Line-item Budget

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Checking for adherence to a legal or policy mandate is called a _____. (69)

Compliance audit

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_____ is the process of translating financial resources into services while providing fiscal accountability. (57)

Financial management

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One of the main criteria government officials and the public use to measure an organization’s success is its ability to ____. (57)

achieve its goals within its allotted budget

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____ is responsible for planning and tracking the agency’s budget- its revenues and expenditures. (57)

An administrator

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____ are useful for monitoring expenditures and tracking financial accounts, although they are generally not as effective as other methods for measuring outcomes. (57)

Line-item budgets

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Line-item budgets are essentially a statement of used and available funds broken down into ____. (57)

categories

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The fiscal year, which is a full year period, starts on ____ for the federal government. (57)

October 1st

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When market forces fail to bring a demand for the public good, this becomes a justification for ____. (58)

government regulation

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Some elements [of the general budget process] might start ____. (58)

years in advance

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4 phases of the budgetary cycle: (58)

1) Planning
2) Submission
3) Review and approval
4) Management

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The process of budget ____ may begin with the selection of a task force made up of representatives from the agency, the public, other agency heads, and elected and appointed officials. (58)

planning

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Consider _____; this can help the administrator submit a request that has the best chance of being approved. (58)

reviewing successful budget increase requests from previous years

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After the budget has been reviewed and approved by the municipal executive officer and the budget agency, the budget goes to the ____ for approval. (59)

legislative body

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After the budget passes ____, it is officially adopted. (59)

legislative review

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In what budgetary phase does the manager monitor revenues and expenses over time and revise the budget if necessary? (59)

Management

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While administrators are busy with the never-ending budgetary cycles, the must rely on ____ to alert them to any potential problems that may interfere with the agency’s budget plan. (59)

a financial manager

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Public fire protection and EMS are fortunate to have ____ for their service levels, which are not held by police and education. (60)

national standards

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3 areas covered in national standards: (60)

1) Training for firefighting and EMS personnel
2) Safety of personnel
3) Deployment and staffing of fire and EMS units

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The more chief officers rely on ___, ___, or ___, the better chance there is to convince elected officials to support new and existing programs. (60)

national standards, a formal planning process, or cost-benefit analysis

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Without ____, governments do not always do what is right, efficient, and in the best interests of citizens. (60)

valid guidance

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It is assumed that when all else is equal, voters vote according to ____. (60)

their pocketbooks

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____ help convince the public and elected officials that the department is looking for budget solutions that consider all costs. (61)

Regional approaches

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Remember, ____ may be the best way to demonstrate the benefits of existing service levels and the impact of reductions. (61)

statistics

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The main sources of revenue for most fire and EMS agencies are _____. (61)

government taxes, such as property tax, income tax and sales tax

_____ is the most common funding source for local government programs, particularly in states that do not have a state income tax. (61)

Property tax (or real estate tax)

This tax is assessed as a percentage of the total value of property and improvements, or in some cases as a rate based on income for commercial property. (61)

property tax

Residential property taxes are assessed at a flat rate based on ____. (61)

the value of the property

____ is the federal government's leading source of funds, followed closely by the ____. (61)

Income tax; payroll tax (social security and medicare)

Income tax is a _____ tax, which means it is taxed at a higher percentage for higher wage-earners. (61)

progressive

This type of tax has one major growing problem: ____. (61)

tax evasion (18-19% of income not reported to IRS)

_____ is a tax applied to consumer purchases, such as electronics and vehicles. (62)

Sales tax

The sales tax is a common source of revenue at the ____ level. (62)

state and local

____ is the most widely fluctuating revenue source. (62)

Sales tax

A _____ can be a set value for all residences or can vary depending on the square footage of the dwelling or the ____, which calculates the approximate amount of water needed to extinguish a fire based on the combustibility and area of the structure. (62)

fire service tax; fire flow formula

A ____ applies only to the use of specific goods or services (motel rooms, rental cars, tourist attractions, etc.); these funds are used to offset the cost of providing services to tourists. (62

use tax

One of the most common use taxes is the ____, which is added to the price of fuels used by motor vehicle. (62)

road tax

Although most of a fire and EMS agency's operating costs are covered by taxes and fees, additional funds, such as those necessary for major capital improvements, are generally provided by loans through the sale of _____. (62)

government bonds

A ____ is typically an item that has a long life expectancy, such as a fire station, which have a life expectancy of 30-50 years. (62)

capital item

State and local governments sell ____ for a low interest rate at a set interval up to 30 years with tax-free interest. (63)

bonds

The federal government is able to borrow to cover its excess expenditures over revenues, most of which is caused by ___. (63)

operating costs, not capital improvements.

Federal [capital improvement] debt is funded by ___. (63)

Treasury bills

Theoretically, federal debt never has to be repaid, only _____ must be paid each year. (63)

interest payments

Bonds are a form of borrowing and anytime money is borrowed, there is ____. (63)

an additional cost associated with the loan

Whenever revenue is generated by the sale of bonds for a specific capital improvement project, these funds ____; however, in some cases, local or state laws allow these funds to be transferred to another capital improvement project. (63)

cannot be used for any other purpose

What is a project that is immediately ready for use? (63)

Turnkey project

Funds for a turnkey project can be used toward ____, ____, and, in some cases, ____. (63)

station construction, furnishings, and, in some cases, new apparatus

Funds from ____ cannot be used to cover salaries because these costs are part of the operating budget.

bond sales

When chief officers use these ____ as part of a formal budget planning process, they increase government and public support for new and existing programs. (65)

national consensus standards

Why is it difficult to measure benefits or direct outcomes from FES programs as a cost-benefit analysis? (65)

It is hard to assign a value to an individual's life or quality of life.

To increase the likelihood of a spending request being approved, the fire or EMS administrator can point to ___. (65)

specific areas of available funding

Evaluation of frant applications is done by ___. (65)

fire service peers

4 separate grant programs: (65)

1) Assistance to Firefighters Grant Program- 1 year; to enhance firefighting and emergency response 2) Fire Prevention and Safety Grants- directed at high-risk target groups including children, seniors, and firefighters. 3) Staffing for Adequate Fire and Emergency Response Grants- help departments attain 24-hour staffing 4) Assistance to Firefighters Fire Station Construction Grants- (Department of Homeland Security) to build new or modify existing fire stations

74% of al healthcare costs are confined to 4 chronic, mostly preventable, conditions: (66)

1) Cardiovascular disease 2) Cancer 3) Diabetes 4) Obesity

[when tracking expenditures], a system should be set up that keeps track of expenditures on a ____ basis. (66)

monthly

At the end of each month, the administrator should review the actual expenditures for the month and compare them to ___. (66)

the expected amounts

To ensure that adequate funds are available for the purchase of goods or services, the administrator can use ____, which sets aside funds until the invoice is received and payment is issued. (66)

an encumbrance

_____ is an accounting procedure that indicates that the money has already been committed to be spent even though the actual payment may be made sometime later in the fiscal year. (66)

An encumbrance

Keeping _____ for each month facilitates the planning of any future and actual seasonal peaks or one-time costs occurring in a later month. (67)

real-time spending records

It is wise to consider ____ before making a purchase. (68)

how the transaction would look to outside observers

The business of emergency services is about always being ___. (68)

ready to respond

Financial accountability is confirmed through the ____ process. (69)

audidting

____ are commonly performed on an annual basis to ensure that financial records are accurate and complete. (69)

Financial audits

____ are designed to evaluate management policies and procedures. (69)

Procedural audits

The compliance audit may include a review of the agency's ____ for small purchases to ensure compliance with relevant spending guidelines. (69)

petty cash account

If forced to cut the department's budget, it is a good idea for the chief to have a plan that _____. (70)

protects the highest priority items

____ is a financial decision-making technique that reverses traditional budgeting. It is based on the assumption that the present level of funding may not be justified. (70)

Zero-based budgeting

Experts project that individuals should have ____ of the working income to maintain a comparable lifestyle after retirement. (71)

80%

The chief officer should have ____ done to identify any items that could be deemed unnecessary or unjustified. (71)

an internal audit of the budget

____ are the major source of revenue for most fire and EMS departments. (71)

Taxes

A desirable feature for a tax system is ___ . (73)

low cost of administration and compliance

Most FES organizations are funded at the ___ level. (73)

city or county

____ puts emergency service agencies in the best position to provide their valuable services, regardless of local, economical, or political factors. (74)

Use of sound financial practices and strategies