Crafting a plain-English financial policy.

• Author: King, Merrill

Financial policies are critical in setting criteria for acceptable and unacceptable courses of action, government operations, and fiscal performance. When crafted well, they are of great benefit in guiding (and explaining) important financial decisions. But sound principles alone are not enough. Policies must be communicated effectively and accurately in order to be of practical use to end users and governing boards.

After a financial policy is developed, it must be adopted and implemented, and communicated to a wide variety of people (who have varying degrees of expertise) along the way. The policy should be accessible to everyone in its audience, especially those who don't have the same depth of knowledge as the person or people who created it. In fact, it's ironic that the deep knowledge one needs to create a financial policy can in fact be a roadblock to clear communication. Experts sometimes inadvertently use specialized concepts or language, or make incorrect assumptions about how much a non-expert knows about a given topic.

IDENTIFY YOUR AUDIENCE

It's critical to identify your audiences from the outset. With financial policies, there is always more than one. Writing with these diverse audiences in mind will help guide the policy's development.

The first group to consider is elected officials and other policymakers, including all applicable governing boards (e.g., councilmembers, appointed committee/board members, and, potentially, elected officials from oversight agencies at a state or regional government level). Keep in mind the current professions and backgrounds of these individuals whenever possible.

Another important segment of your audience is taxpayers and the general public. It's important to understand demographics, level of engagement, and how they can be influenced by interest. Consider the community's historical level of engagement in local government issues and residents' needs.

Finally, consider the individuals who will be in charge of implementing the policy, especially governmental employees (both current and future). Auditors will use the policy to judge your compliance, and rating agencies will employ it to discern fiscal soundness. Other financial professionals may draw upon it to provide services to your government, and your financial peers may make use of it for their own deliberations as a point of comparison or example.

COVER ALL THE BASES

Most financial policies include sections about goals and objectives...