"In corporate performance management, we deliberately opted for a program that offers greater flexibility in the analyses."
Head of Corporate Performance Management and Legal Department
- Integrated financial planning
Effective Corporate Performance Management for the New Millennium
Klosterkammer Hannover (the Monastic Chamber of Hanover), formally constituted by sovereign patent on 8th May 1818, is one of Germany’s largest foundation managers. It manages four public foundations, the largest being Allgemeiner Hannoverscher Klosterfonds (the General Hanoverian Monastery Fund) with total assets of approximately €660m (in 2010) and an annual turnover of about €33m.
Being a regional state authority, Klosterkammer Hannover had always presented the accounts for the foundations under its management according to German public-sector accounting principles. The financial assets of all foundations, including public foundations, must remain at the foundation’s disposal on a continuous and undiminished basis. However, with the German public-sector accounting system, which is entirely cash-based, changes in asset values could not be adequately reflected. Klosterkammer Hannover therefore decided to introduce commercial double-entry bookkeeping for the four foundations in 2008.
A team set up especially for this project was tasked with the planning and implementation. This involved choosing suitable software for financial accounting and corporate performance management. Up to that point, a fiscal budget had been produced.
“In corporate performance management, we deliberately opted for a program that would offer greater flexibility in the analyses than financial accounting software,” explains Cord-Heinrich Kröger, Head of Corporate Performance Management and the Legal Department at Klosterkammer Hannover. In the choice of software, flexibility when preparing receiver-oriented reports was a key factor.
Setting up corporate performance management step by step
The CP-Suite software was introduced in stages alongside Navision. Individual subtasks were implemented in succession. The cost accounting system was set up according to specified use cases.
So that he would have an excellent command of the program and its functions and handling right from the start, Cord-Heinrich Kröger carried out each implementation step together with a CP consultant. “That was an intense training in itself,” he points out. Nevertheless, he also attended basic training courses and specially designed workshops, such as Integrated Financial Planning and Reporting.
The Corporate Planner module is used mainly for the four foundations managed by Klosterkammer Hannover and for their stated aims.
The focus in corporate performance management is on depicting the expense and income items of the individual projects and institutions as well as those of Klosterkammer Hannover as a whole. In addition, a record is kept of the asset values whose development is relevant to the foundations. The actual data are imported from the financial accounting system. On that basis, Corporate Planner displays the central corporate performance management structures. With the help of another financial controller at Klosterkammer Hannover, the required data and reports are made available.
At present, Corporate Planner is used extensively to create receiver-oriented reports. All the required reports and analyses are arranged together in the Controlling Report. For the time being, most of the reports are created in Corporate Planner and forwarded to the users. However, the use of the CP-Web module is being expanded all the time, so the information will soon be available on demand.
Budgeting for the new millennium
For the first time in Klosterkammer Hannover’s history, the foundation as a whole, complete with an asset statement, can be depicted in full using the integrated financial planning model in Corporate Planner. This is an important step towards greater transparency. Here, Klosterkammer Hannover follows the Guiding Principles of Good Practice for Foundations published by the Association of German Foundations.
With the changeover from the public-sector accounting system to commercial bookkeeping and the introduction of suitable software, modern corporate performance management was established at Klosterkammer Hannover – with all the benefits that this can offer a foundation’s commercial directors: a quick, clear overview of the income from operating activities and the use of the foundation’s funds, rapid preparation and approval of the budget and financial statements, increased transparency and greater credibility.
The changeover to commercial bookkeeping also enabled a general portfolio analysis on which to base the necessary strategic change and reorientation, for instance, the development of new business segments with the primary objective of increasing income and maintaining financial assets even under changing economic and social circumstances. Klosterkammer Hannover has arrived in the new millennium while remaining true to its 200-year-old patent.
About Klosterkammer Hannover
Klosterkammer Hannover, a regional state authority and a foundation governing body under the remit of the Lower Saxony Ministry of Science and Culture, manages four independent foundations incorporated under public law that are similar in origin and purpose and have grown over time: the General Hanoverian Monastery Fund, the Verden Cathedral Structure Fund, Ilfeld Abbey and St Benedict’s Hospital Fund in Lüneburg. Klosterkammer Hannover’s work involves making mandatory and ex-gratia payments from the proceeds from the assets of the respective foundation.
The high mandatory payments are for the conservation of about 800 mostly listed buildings, to support monasteries, and to subsidize parishes. The funds remaining after these obligations have been met are used for supporting church, social, school and education-related projects in the region of the former Province of Hanover.