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BASIC ELEMENTS OF AN EFFECTIVE FINANCIAL …

BASIC ELEMENTS OF AN EFFECTIVE FINANCIAL MANAGEMENT SYSTEMBASIC ELEMENTS OF AN EFFECTIVE FINANCIAL MANAGEMENT SYSTEMMay 1994 IntroductionAgencies are required to have an EFFECTIVE FINANCIAL management system as a condition of receiving federal funds. Federal and state rules and regulations establish several criteria that the FINANCIAL systems of agencies receiving funds must meet. These criteria can be grouped in several different ways. However, we have chosen to rely heavily on the Federal "Common Rule," which broadly establishes standards for FINANCIAL management which are applicable to most grants, and we have identified seven essential ELEMENTS to an EFFECTIVE FINANCIAL management system.

Several issues related to accounting records and source documentation are discussed in Chapter 2.2 (Accounting Records and Source Documentation) of this manual. These issues include criteria for documents and records, record retention requirements, and principles for accounting records related to the administration of financial assistance programs.

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