Guidelines for Closing an Organizational Entity
The following guidelines and checklists have been developed to assist administrators responsible for a closure to identify the applicable administrative issues that must be addressed and acted on to ensure an orderly closing of an organizational entity.
Determination to close a program or an organizational entity is a management decision that will be reached through careful consideration of issues within established management processes and will include participation from appropriate constituencies within the organization before final decisions are made. While the impetus for such a decision may be initiated from within the department, no final decision to eliminate an organizational entity or to abandon a program can be reached without the express approval of the Executives or Board.
To ensure an orderly transition of any closure, one individual should be designated with responsibility and authority in a closure. In some cases, a "closure team" should be established. The team should include appropriate representatives involved in the closure; the individual assigned primary responsibility and accountability for the closure or his/her delegate will have responsibility for coordinating the team. The team approach is multipurpose: it serves as a conduit for clear communication across multiple organizational lines; it facilitates the identification and resolution of issues in a timely manner; and it facilitates evaluation of the progress of an orderly closure and revision of the tentative target date, as necessary.
The following questions should be considered when determining whether a closure team is necessary:
Will the closure have an impact on other departments? If so, which departments?
Who are the "customers" of the unit to be closed?
What will be the impact on clients or other contractual agreements?
How will factors such as regulations, licenses, permits, registrations, and similar legal requirements affect the closure?
The guidelines and checklists are to be used to assist closure team personnel through the closure process. The checklist will also serve as a "sign-off" by responsible parties confirming that all issues have been addressed and are complete.
I. PLANNING
Identify key person(s) responsible and accountable for the administrative closure in the affected unit and identify a key person in the operating/administrative unit responsible.
Evaluate and establish a closure team when developing the closure plan to ensure responsibility of the various aspects of the closure are assigned and authority is appropriately delegated. (Head of the Operating Unit)
II. COMMUNICATION
Notify the Public Affairs Office when discussions are first taking place about the possibility of closing a department/unit. (Closure Team Leader)
Appoint a person to give status reports to the Public Affairs Office as meetings progress so that a communication strategy can be developed. (Whether the closure takes place or not, the Public Affairs staff should be informed of ongoing discussions in case information about a possible closure is leaked to the press.) The communication strategy should be a well-organized, straightforward strategy that addresses the impending closure using three individual plans. These plans, which can be developed simultaneously or as appropriate to a given situation, are as follows: (Closure Team Leader)
Media Plan
Develop a media plan before a decision has been made on the closure.
Identify an official spokesperson who will be available to speak with the media. This person should be knowledgeable about the facts regarding the possible closure and comfortable and experienced in dealing with the press.
The Public Affairs Office, in conjunction with the official spokesperson, should be the official conduit of information to media outlets and should be responsible for communicating an impending closure in the most favorable manner possible.
Internal Plan
Consult with Human Resources (HR) for review of issues related to closure and established policies and procedures (i.e., necessary documentation, identification of affected employees, and coordination of required notification period). (Closure Team Leader)
Inform employees and those directly affected by the plan of facts to avoid unnecessary rumors, concerns, etc. The administration should announce the closure to employees directly affected at an assembly-type meeting. At that time, the administration will address personnel issues as well as answer questions.
Communicate information about the closure to other units that will be affected by the closure.
Announce the closure to other employees not directly affected by the closure via a letter from the administration. (Public Affairs)
Once the actual date of closure has been determined and approved by the appropriate administrative personnel, official notification of personnel affected by a closure can begin in accordance with established policies and procedures in the policy. Appropriate documentation must be submitted to HR and approved prior to dissemination of official written notification to employees.
External Plan
Develop an external plan to ensure appropriate communication with any external customers/clients that have an affiliation or prospective affiliation with the unit to be closed.
Others
Initiate discussions with entities with whom we have contracts that are affected by a possible closure.
It is also important to determine which other clients will be affected by a program closure to ensure appropriate communication in a timely manner.
III. AUDITING
At the discretion of the executive vice presidents, contact the Audit Department to assist in any capacity deemed appropriate in the closing of an organizational entity. Any requests from other individuals for the services of the Audit Department should be directed to the CEO, executive vice presidents or Board Audit Committee. (Closure Team Leader)
IV. FINANCE
NOTE: It is essential that an individual who is responsible and accountable for the financial aspect of the closure be identified. An individual responsible for continuity following the closure must also be identified. The primary administrative individual with overall responsibility for the closure must sign off on the closure/transfer of all accounts. Important issues to be addressed include the transition/transfer and termination of organization manager responsibility on all accounts. Computer system access authorization for changing/updating/terminating are to be followed. The following issues require decisions and actions prior to closure: (Closure Team Leader)
Accounting
Dispose of residual fund balances.
Determine if a fund balance surplus/deficit exists. If a deficit exists, determine from where it will be covered; if a surplus exists, determine to where it will be transferred.
If appropriate, have account organization manager(s) changed and notify Finance where any subsequent ledger sheets should be sent (if other than to the organization manager).
Settle unencumbered obligations.
Determine who will initiate transactions to settle unencumbered obligations and what procedure will be followed to obtain approval to pay them.
Anticipate possible special reporting and/or audit requirements.
Determine if any special external reports are (or will be) due and determine who will prepare, and who will review/approve, these reports.
Decide whether any special audits of the closed entity are likely to be conducted. If audits are likely, decide where/how/by whom the audit team will be accommodated and, if possible, have them contact the audit team.
Settle accounts receivable balances.
Determine who will be responsible for subsequent billings, who will be responsible for and will apply collections, and who will initiate/approve any patient refunds.
Determine who will resolve any credit balances, and what guidelines will be followed, who will be responsible for any subsequent researching of patient accounts, and who will process/approve any bad debt write-offs.
Take necessary actions regarding other non-capital assets or liabilities.
Determine whether other non-capital assets or liabilities exist, and determine appropriate actions.
Reconcile and turn in Petty Cash/Change Fund to the Central Cashier.
Identify inventories for possible resale (contact Capital Assets Management).
Identify and resolve any deposits held that belong to others.
Identify and close/transfer responsibility for any special bank accounts.
Identify any office supplies and their disposition.
Expedite closing blanket encumbrances or pre-encumbrances.
Review all blanket encumbrances or pre-encumbrances and decide how they can be closed and who will close them.
Capital Assets Management
Facilitate reconciliation and transfer of capital assets--equipment inventory.
Identify an individual in the entity who is responsible for and coordinates the reconciliation and transfer of the equipment inventory.
This individual should schedule a preliminary meeting with Capital Assets Management (CAM) to review the current status of the inventory and to discuss policies and procedures related to the equipment disposition.
CAM must take a final inventory prior to the closure and certify that proper documentation and approvals have been obtained to remove the assets from the organization's inventory.
The individual responsible for the equipment as well as the director of capital assets management must sign-off on the final inventory report.
Contracts and Grants
Service Contracts and Others for Which Services Are Provided or Received
If contracts exist, contact the Legal Affairs to review them for terms regarding termination or reassignment. Most contracts have, at best, a 30- or 60-day notification clause. Some contracts may not have an "out" clause until the contract terminates according to its terms. Therefore, depending on the time required to close an entity, negotiations with the other party may be required.
V. FACILITIES MANAGEMENT
Identify key person(s) responsible and accountable for the closure or partial closure of a facility in the affected unit and identify an individual responsible following the closure to ensure continuity of required services.
Contact the appropriate administrative departments for assistance in the closure process. The following considerations should be evaluated and appropriate action taken.
Regarding closure/partial closure of a building, evaluate the impact on utilities, phones, copy services, mail services, computer/network services, security, storage of furniture, supplies, etc. (Facilities Operations)
VI. RECORDS MANAGEMENT
On notification that an organizational unit will be closed, contact the Records Management to arrange for a consultation with the unit personnel to provide information on records issues and to identify the different types of records that exist in the unit.
Records Management personnel will identify the specific records categories from the broad categories of records to be examined including Administrative Records, Employee Time Records, Equipment Inventory Records, Financial Records, and Historical Records.
A physical inventory of the records will be taken, an estimate of the existing volume made, and notations of locations noted for use in developing a plan for disposition.
An interview process will also be used to gather other pertinent information about the records collection. During this process, Records Management personnel will take the following actions:
Identify key contacts who have knowledge about and access to active records stored in the office files and off-site inactive storage locations.
Identify external regulatory agencies to which the entity has reporting responsibilities.
Identify professional associations that provide guidelines for record keeping.
Identify upcoming audits.
Identify client/customer base and the provisions for their notification of closure.
Identify computerized records databases that are not supported by Information Services, and determine what software and equipment combinations are necessary for maintaining the information.
Identify filmed records systems, indexes, and equipment used for reading the filmed records.
When the inventory is concluded, the Office of Records Management will provide a written recommendation for disposition of the records that will include recommended retention periods, recommended methods of destruction, recommended optimal storage methods and media, appraisal of records for historical value, and identification of the ongoing cost of maintaining the records for the required retention periods.
