Magazine article Public Finance

A Very Fine Line

Magazine article Public Finance

A Very Fine Line

Article excerpt

THE ECONOMIC DOWNTURN and unprecedented spending cuts have placed chief finance officers in an exceptionally tough position - supporting their authorities as they make the difficult choices, while ensuring that they fulfil their legal and professional responsibilities in the public interest.

Of course, CFOs do not act in a vacuum and in such challenging situations it becomes all the more important for them to provide timely, relevant and reliable advice, in accordance with the law and professional standards, and to use their statutory powers appropriately.

In addition, financial management takes place within a broader governance code, which places the CFO's responsibilities as part of a framework for ensuring effective decision-making, risk management and operations.

The whole cotmcil should be able to rely on this code and on the professional skills and advice of its chief executive and all its senior officers, including its CFO, in approving the budget.

CFOs' vital role in positively influencing the budget-setting process and in finding sustainable sohitions for the future is detailed in CIPFA's Statement on the role of the chief financial officer in local government. How ever, they also have statutory duties to ensure that local authority' budgets remain robust.

The 2003 Local Government Act requires the CFO to report on the robustness of the budget and on the adequacy of proposed financial reserves - and the council must pay due regard to this when it sets the budget.

It is important to view the CFO's responsibilities under the 2003 Act as part of a continuum of professional advice, with the formal report the culmination of a budget process in which a lot of detailed work with service managers, corporate management teams and councillors has already taken place. Any concerns CFOs may have about the robustness of budgets should be well rehearsed and hopefully settled before the report is written.

Given the uncertainties of the economic environment and the scale of the expenditure reductions required, there will inevitably be significant risks involved in delivering balanced budgets.

In carrying out their professional responsibilities, it will be critical that CFOs take a risk management approach in their reports, setting out the main risks associated with the proposed budget and how they can be managed. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.