Strategic Financial Plan for an Organization or Governmental Entity - Report Example

Strategic Financial Plan

United States Department of State

Year 2018 to 2020

INTRODUCTION

This three-year strategic financial plan outlines the state’s financial strategy over a period of three years which cover years 2018, 2019 and 2020. Its objectives are to:

• Identify the United States Department of States’ priorities.
• Estimate the cost of these priorities and develop a multi-year financial plan
• Identify the actions needed to fund those priorities and develop recommendations

These strategic financial plan serves as the guide for the annual budgeting activity each year and does not replace the annual budget. The annual budget constitutes only of a particular year actions to implement the priorities and resource alignment strategies indicated or reflected in the strategic plan and it will continue to include many actions not included in the strategic financial plan. Variations and deviations from the strategic plan may be used in analysis in drafting annual plans.

BACKGROUND

The U.S Department of State (the Department) is the lead U.S. foreign affairs agency within the Executive Branch and the lead institution for the conduct of American diplomacy. Established by Congress in 1789, the Department is the nation’s oldest and most senior cabinet agency.

The Department is led by the Secretary of the State, who is nominated by the President and confirmed by the U.S Senate. The Secretary of State is the President’s principal foreign policy advisor and a member of the President’s Cabinet. The Secretary carries out the President’s foreign policies through the State Department and its employees. (http://www.state.gov/secretary/2017index.htm)

The Department of State’s main function is to develop and implement the foreign policy worldwide. The State Department is created not only to best serve the American people but also to extend assistance to those countries in need by supporting the United States Agency for International Development (USAID).

The Department’s mission influences the lives of Americans in several ways which includes:

• Supporting American citizens outside the US territories.

They provide support to U.S citizens living in a disaster stricken country. Also they are providing assistance in international adoptions and into child trafficking cases.

• Creating jobs for the Americans
• Promoting stable democracies worldwide.
• Saving lives by investing in health advocacies which includes issues in HIV/AIDS, polio, malaria and tuberculosis.
• Helping countries to build a strong and stable agriculture industry.
• Providing assistance to calamity stricken countries.
• Promoting the rule of law and protecting human dignity.
• Helping Americans be aware of what’s happening around the world.
• Representing Americans overseas.

Underlying Assumptions as a basis for analysis:

• • No occurrence of any relevant event that will affect the financial stability of the Department
  • The Department will enable to carry out their goals and maintain the support of the United States Government
  • No fraudulent and or scandalous situations will take place.
  • No acquisition of any property for the duration of 3-years
  • Same as 2017 and 2016 Fund Balance with Treasury, Investments, and Property and Equipment is 97% of the total assets.
  • After Employments Liability stays at 77% of total liabilities.
  • There is an increasing trend in total assets since 2012 and will continue until 2020
  • Increasing cost of operations due to new programs areas and higher cost of daily operations due to inflation.
  • There is steady revenue earning activities.
    • The Department depends its operations from annual Congress appropriations, proceeds from selling of properties, donations and particular consular-related activities.
  • Horizontal or trend analysis of financial statement is applied.
    • Horizontal analysis (also known as trend analysis) is a financial statement analysis technique that shows changes in the amounts of corresponding financial statement items over a period of time. It is a useful tool to evaluate the trend situations.
    • The statements for two or more periods are used in horizontal analysis. The earliest period is usually used as the base period and the items on the statements for all later periods are compared with items on the statements of the base period.(https://www.accountingformanagement.org/horizontal-analysis-of-financial-statements/}

FINANCIAL SUMMARY AND HIGHLIGHTS

Below is the overview of the Department of State financial statements for fiscal years 2017 and 2016. This will be used as a guide in the Multi-Year Financial Planning. Year 2017 will be used as the based year for generating the succeeding three years. Note that horizontal trend analysis is used in the projection together with some assumptions taken in consideration. The United States Department of State is a vital department of the government. All figures are in dollars in billions.

Department of State Agency Financial Statements

CONSOLIDATED BALANCE SHEET

(dollars in million)

As of September 30

2017

2016

Change

% Change

ASSETS

Intragovernmental Assets:

-

Fund Balance with Treasury

55,305

50,655

4,650

9.2%

Investments, Net

18,867

18,397

470

2.6%

Interest Receivable

136

141

(5)

-3.5%

Accounts Receivable, Net

110

94

16

17.0%

Other Assets

1,316

1,452

(136)

-9.4%

Total Intragovernmental Assets

75,734

70,739

4,995

15.8%

Accounts and Loans Receivable, Net

93

59

34

57.6%

Cash and Other Monetary Assets

222

194

28

14.4%

Property and Equipment, Net

23,517

21,797

1,720

7.9%

Other Assets

1,038

1,026

12

1.2%

Total Assets

100,604

93,815

6,789

97.0%

Stewardship Property and Equipment; Heritage Assets

-

-

LIABILITIES

-

Intragovernmental Liabilities

-

Accounts Payable

164

202

(38)

-18.8%

Other Liabilities

283

193

90

46.6%

Total Intragovernmental Liabilities

447

395

52

27.8%

-

Accounts Payable

2,102

2,052

50

2.4%

After-Employment Benefit Liability

20,603

20,052

551

2.7%

International Organizations Liability

1,933

1,599

334

20.9%

Other Liabilities

1,696

1,632

64

3.9%

Total Liabilities

26,781

25,730

1,051

57.8%

Contingencies and Commitments

NET POSITION

Unexpended Appropriations-Funds from Dedicated Collections

45,102

40,816

4,286

10.5%

Unexpended Appropriations - Other Funds

322

316

6

1.9%

Cumulative Results of Operations - Funds From Dedicated Collections

Cumulative Results of Operations - Other Funds

28,399

26,953

1,446

5.4%

Total Net Position

73,823

68,085

5,738

17.8%

Total Liabilities and Net Position

100,604

93,815

6,789

75.6%

CONSOLIDATED STATEMENT OF NET COST

Peace and Security

Total Costs

$2,092

$2,072

$20

1.0%

Earned Revenue

-64

-60

-4

6.7%

Net Program Costs

2,028

2,012

16

0.8%

Democracy, Human Rights and Governance

Total Costs

591

585

6

1.0%

Earned Revenue

-10

-

Net Program Costs

581

585

-4

-0.7%

Health, Education and Social Services

Total Costs

8,370

8,702

-332

-3.8%

Earned Revenue

-

Net Program Costs

8,370

8,702

-332

-3.8%

Humanitarian, Economic Development and Environment

Total Costs

3,358

3,482

-124

-3.6%

Earned Revenue

-

-

Net Program Costs

3,358

3,482

-124

-3.6%

International Organizations and Commissions

Total Costs

3,099

4,020

-921

-22.9%

Earned Revenue

-12

-6

-6

100.0%

Net Program Costs

3,087

4,014

-927

-23.1%

Diplomatic and Consular Programs

Total Costs

14,214

14,071

143

1.0%

Earned Revenue

-6,814

-6,633

-181

2.7%

Net Program Costs

7,400

7,438

-38

-0.5%

Administration of Foreign Affairs

Total Costs

3,258

3,166

Earned Revenue

-1,892

-1,895

3

-0.2%

Net Program Costs

1,366

1,271

95

7.5%

Actuarial Loss/(Gain) on Pension Assumption Changes (Note 1 and 10)

326

-153

479

-313.1%

Net Program Costs

1,692

1,118

574

51.3%

Total Cost and Loss/Gain on Assumption Changes

35,308

35,945

-637

-1.8%

Total Revenue

-8,792

-8,594

-198

2.3%

Total Net Cost

$ 26,516

$ 27,351

-$ 835

-3.1%

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

Cumulative Results of Operations

Beginning Balances

$ 27,269

$ 25,387

$ 1,882

7.4%

Budgetary Financing Sources:

Appropriations Used

28,432

29,675

-1,243

-4.2%

Donations

14

19

-5

-26.3%

Transfers in (out) without Reimbursement

46

46

0

0.0%

Other Financing Sources:

Transfers in (out) without Reimbursement

-7

-

Imputed Financing from Costs Absorbed by Others

137

168

-31

-18.5%

Non-entity Collections

-654

-675

21

-3.1%

Total Financing Sources

27,968

29,233

-1,265

-4.3%

Net Cost of Operations

-26,516

-27,351

835

-3.1%

Net Change

1,452

1,882

-430

-22.8%

Total Cumulative Results of Operations

28,721

27,269

1,452

5.3%

Unexpended Appropriations

Beginning Balances

$ 40,816

$ 39,827

$ 989

2.5%

Budgetary Financing Sources:

Appropriations Received

33,032

30,828

2,204

7.1%

Appropriations Transferred in (out)

-64

44

-108

-245.5%

Rescissions and Canceling Funds

-250

-208

-42

20.2%

Appropriations Used

-28,432

-29,675

1,243

-4.2%

Total Budgetary Financing Sources

4,286

989

3,297

333.4%

Total Unexpended Appropriations

45,102

40,816

4,286

10.5%

Net Position

$73,823

$68,085

$5,738

8.4%

MULTI-YEAR FINANCIAL STATEMENT

CONSOLIDATED BALANCE SHEET

(dollars in million)

Base Year

3-Year Projection

As of September 30

2017

2018

2019

2020

ASSETS

Intragovernmental Assets:

Fund Balance with Treasury

55,305

60,382

65,925

71,976

Investments, Net

18,867

19,349

19,843

20,350

Interest Receivable

136

131

127

122

Accounts Receivable, Net

110

129

151

176

Other Assets

1,316

1,193

1,081

980

Total Intragovernmental Assets

75,734

81,184

87,126

93,605

Accounts and Loans Receivable, Net

93

147

231

364

Cash and Other Monetary Assets

222

254

291

333

Property and Equipment, Net

23,517

25,373

27,375

29,535

Other Assets

1,038

1,050

1,062

1,075

Total Assets

100,604

108,007

116,085

124,912

Stewardship Property and Equipment; Heritage Assets

LIABILITIES

Intragovernmental Liabilities

Accounts Payable

164

133

108

88

Other Liabilities

283

415

608

892

Total Intragovernmental Liabilities

447

548

717

980

Accounts Payable

2,102

2,153

2,206

2,259

After-Employment Benefit Liability

20,603

22,769

25,373

28,651

International Organizations Liability

1,933

2,337

2,825

3,415

Other Liabilities

1,696

1,763

1,832

1,903

Total Liabilities

26,781

29,569

32,952

37,209

Contingencies and Commitments

NET POSITION

Unexpended Appropriations-Funds from Dedicated Collections

45,102

49,838

55,071

60,854

Unexpended Appropriations - Other Funds

322

328

334

341

Cumulative Results of Operations - Funds From Dedicated Collections

-

-

-

Cumulative Results of Operations - Other Funds

28,399

29,923

31,528

33,219

Total Net Position

73,823

80,089

86,934

94,414

Total Liabilities and Net Position

100,604

109,658

119,886

131,623

CONSOLIDATED STATEMENT OF NET COST

Peace and Security

Total Costs

$2,092

2,112

2,133

$2,153

Earned Revenue

-64

(68)

(73)

-78

Net Program Costs

2,028

2,044

2,060

2,075

Democracy, Human Rights and Governance

Total Costs

591

597

603

609

Earned Revenue

-10

(10)

(10)

-10

Net Program Costs

581

587

593

599

Health, Education and Social Services

Total Costs

8,370

8,051

7,744

7,448

Earned Revenue

-

Net Program Costs

8,370

8,051

7,744

7,448

Humanitarian, Economic Development and Environment

Total Costs

3,358

3,238

3,123

3,012

Earned Revenue

-

Net Program Costs

3,358

3,238

3,123

3,012

International Organizations and Commissions

Total Costs

3,099

2,389

1,842

1,420

Earned Revenue

-12

(24)

(48)

-96

Net Program Costs

3,087

2,365

1,794

1,324

Diplomatic and Consular Programs

Total Costs

14,214

14,358

14,504

14,652

Earned Revenue

-6,814

-7,000

-7,191

-7,387

Net Program Costs

7,400

7,359

7,313

7,265

Administration of Foreign Affairs

0

0

0

Total Costs

3,258

3,258

3,258

3,258

Earned Revenue

-1,892

-1,889

-1,886

-1,883

Net Program Costs

1,366

1,369

1,372

1,375

Actuarial Loss/(Gain) on Pension Assumption Changes (Note 1 and 10)

326

-695

1,480

-3,154

Net Program Costs

1,692

674

2,852

-1,779

Total Cost and Loss/Gain on Assumption Changes

35,308

34,682

34,068

33,464

Total Revenue

-8,792

-8,995

-9,202

-9,414

Total Net Cost

$ 26,516

$ 25,688

$24,866

$24,050

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

Cumulative Results of Operations

Beginning Balances

$ 27,269

$ 29,291

$ 31,462

$ 33,794

Budgetary Financing Sources:

Appropriations Used

28,432

27,241

26,100

25,007

Donations

14

10

8

6

Transfers in (out) without Reimbursement

46

46

46

46

Other Financing Sources:

Transfers in (out) without Reimbursement

-7

-7

-7

-7

Imputed Financing from Costs Absorbed by Others

137

112

91

74

Non-entity Collections

-654

-634

-614

-595

Total Financing Sources

27,968

26,758

25,600

24,492

Net Cost of Operations

-26,516

-25,706

-24,922

-24,161

Net Change

1,452

1,120

864

667

Total Cumulative Results of Operations

28,721

30,250

31,861

33,558

0

0

0

Unexpended Appropriations

Beginning Balances

$ 40,816

$ 41,830

$ 42,868

$ 43,933

0

0

0

Budgetary Financing Sources:

Appropriations Received

33,032

35,394

37,924

40,635

Appropriations Transferred in (out)

-64

93

-135

197

Rescissions and Canceling Funds

-250

-300

-361

-434

Appropriations Used

-28,432

-27,241

-26,100

-25,007

Total Budgetary Financing Sources

4,286

18,574

80,494

348,835

Total Unexpended Appropriations

45,102

49,838

55,071

60,854

Net Position

$73,823

$80,045

$86,790

$94,105

RECOMMENDATIONS AND CONCLUSION

• Enhance and intensify strategic engagement among other countries to promote stability and security.
• Support peace and understanding up to the local level and initiate and encourage parties to discuss solutions especially in crisis stricken counties.
• Strengthen efforts to improve global health.
• Boost economic governance to achieve stability, security and peace.
• Modernize diplomacy through involving social media and other technologically advance platforms to reach out their advocacies to people worldwide.

The United State Department of State plays a vital role in the US Government hence, this department should ensure that its goals and objectives be met. This is through having enough money and resources to fund its daily operations. In order for the department to raise enough funds they need first improve its foreign affairs policies and diplomatic relationships not only within the state but also abroad.