Magazine article Public Finance

The Complex Life of Boards

Magazine article Public Finance

The Complex Life of Boards

Article excerpt

How can public sector boards be made more effective? That was the question that exercised participants in a recent round table debate hosted jointly by CIPFA and ICAS in Edinburgh.

The round table, chaired by former Accounts Commission chair John Baillie, opened with a candid discussion of the issues that kept participants up at night. Scandals, cybercrime and corporate governance failures of the kind that make the headlines every day were among board members' biggest fears.

"What keeps me awake at night is something - a scandal, poor accounting - surfacing when I've got a position of responsibility," said Norman Murray, chair of the ICAS ethics board and Scottish Ballet. "I can't possibly know everything, but I need to be part of a system that's going to give me some early warnings." Getting that right was not easy, he said at the discussion on 6 December.

CIPFA council member Karen Kelly serves as a board member at the Golden Jubilee National Hospital. "The key concern for me at the hospital is about ... the safety of patients, and the concern that somebody will die through negligence in the hospital," she said.

David Hume, board member at the Scottish Police Authority, spoke of the particular challenges facing a new composite organisation with "new staff, no coherent culture, no received , compounded by the sheer scale of wisdom and a great deal of uncertainty" the organisation and the risks inherent in what it does.

The sustainability of pension funds and the difficulties involved in long-term financial planning were also major boardroom headaches. But perhaps the biggest underlying challenge was the growing complexity of governance arrangements across the public and private sectors.

Nick Bennett, audit partner at accountants Scott-Moncrieff, gave the example of the integration joint boards set up to plan health and social care services locally. "The complexity surrounding financial reporting ... has become even more difficult to understand for the lay person," he said.

Gordon Smail, associate director at Audit Scotland, agreed, saying that the public sector was already "a pretty busy playing field" in terms of governance arrangements.

"One of the concerns I have from an audit perspective is the overlaying of that with new governance arrangements such as integration joint boards, arms' length organisations and the City Deal," he said.

"That's a big shift in recent years which adds layers of complexity to governance arrangements."

Alistair Gordon, former finance director at Ayrshire College, suggested the question should be rephrased as what kept board members awake every three months. "I'm not sure a public sector board is geared to an instant response to that sort of calamity, a cyberattack or whatever," he said.

"Boards take a long-term strategic view, and instant problems that need instant solutions are more for the executive management team."

Alan Gray, director of finance at NHS Grampian, agreed, saying his job was to free the board to deal with the bigger picture.

"I'm living and breathing the organisation day in and day out, so my duty is to reduce that complexity, to provide the direction to the board, so the board can focus on strategic issues," he said.

Nevertheless, Murray observed that the time commitment involved in becoming a nonexecutive board member should not be underestimated.

"Your responsibility is all the time," he said. "If there are ethical issues out there, the board should know ... so when they get up in the morning and read the papers, and there's some scandal somewhere, they're not caught completely unawares. …

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