Magazine article Public Finance

Emerging Stronger

Magazine article Public Finance

Emerging Stronger

Article excerpt

WITH THE PUBLIC sector in the foothills of unprecedented spending cuts and significant changes to local government finance around the corner, chief financial officers are needed more than ever to help their organisations navigate the challenges.

CIPFA issued its definitive statement on the role of the CFO in public service organisations in 2009.

The first principle in this is that the CFO 'is a key member of the leadership team, helping it to develop and implement strategy and to resource and deliver the organisation's strategic objectives sustainably and in the public interest'.

It added: 'The CFO should be professionally qualified, report directly to the chief executive and be a member of the leadership team, with a status at least equivalent to other members.'

The statement requires that if different organisational arrangements are adopted, the reasons should be published in the authority's annual governance report, along with an explanation of how these will have the same effect.

So what has been done to ensure this principle is implemented in practice?

In central government, the CIPFA statement is part of the government commitment to improve financial management announced in the Treasury's Managing taxpayers' money wisely, published in January 2011. This document underpins the Finance Transformation Programme being led at ministerial level.

In local government, CIPFA has introduced a formal requirement for local authorities to report on compliance with the statement in the annual governance statement from 2011/12 onwards.

In 2010/2011 the 'comply or explain' requirement was voluntary and approximately half of local authorities explicitly met the requirement that year, the Audit Commission reported.

In addition, some authorities that had complied with the CFO principle itself that year had interpreted the guidance as requiring disclosure only if they were not complying fully.

This should not be an issue for 2011/12, as the reporting requirement is mandatory and is included in the Code of Practice on Local Authority Accounting.

The Audit Commission will collect data on levels of compliance with both the new disclosure requirement, and with Principle 1 of the role of the CFO statement through auditor returns on the 2011/12 audits. …

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