Finance: The In-Tray Is out of Control

By Gosling, Paul | The Independent (London, England), April 29, 1998 | Go to article overview
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Finance: The In-Tray Is out of Control


Gosling, Paul, The Independent (London, England)


Local councils are being urged to free their managers to deal with long-term risk.

Local authority finance directors are so bogged down by day-to- day problem solving that they are prevented from being fully involved in the strategic management of their councils, according to today's report by the Audit Commission. Councils are advised to take radical steps to liberate the roles of senior financial staff to improve the situation.

One key weakness is in risk management. "Eighty per cent of finance directors spend less than 5 per cent of their time on risk management," explains Paul Vevers, the commission's director of audit support. "If you think of Year 2000 and so on, these are critical issues which need a well-thought- out focus." Another worrying oversight is internal audit, which also attracts less than 5 per cent of finance directors' time. Yet organised crime has increasingly been targeting local government, especially in fraudulent claims for housing benefit. It is a problem being tackled by many councils, but in others it needs more attention, says the commission. "Too often finance directors' focus is on financial administration and accounting, and that, in our view, is not what it should be about," says Mr Vevers. "For at least the minority, they are bogged down in day-to- day fire-fighting, with insufficient time left to consider critical issues." Many finance directors devote most of their attention to maintaining departmental services, such as council tax and rent collection, housing benefit administration and advising other departments. The problem is made worse by the character of council committee meetings, where councillors may instruct officers to do things without regard to other activities - eg strategic management - that may be sidelined as a result. Pressures on finance directors will worsen, and the report itself will increase them, admits the Audit Commission. New challenges will include the Private Finance Initiative (PFI) and partnerships with outside bodies. "Finance directors have to ask themselves: at what stage do I get involved in a big new PFI deal for schools, for example," explains Mr Vevers. "If they get involved too soon they may find it difficult to tell the education department that they are perhaps committing themselves to a 60-year contract that will cost too much in the long run. "Other things around now, especially partnerships, are going to make probity issues more complex. The Crime and Disorder Bill will create new statutory partnership arrangements, one of which will be between local authorities and the police to improve community safety, and teams to tackle youth offending, which local authorities will be required to put finance into.

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