Finance Transformation For The Public Sector

Public Sector Finance is under increasing pressure from a variety of sources:

Addressing the strategic agenda

• Gershon cost efficiencies must be delivered and business processes reviewed.
• Government departments must analyse their spending and be able to link these to outcomes and output-based measures. Such a structured performance framework will aid preparation for future spending reviews.
• Stakeholders have raised expectations of stewardship and the use of public money.
• There is an increased focus on World-Class Financial Management from stakeholders such as the Treasury.
• Government departments and local authorities have expressed a desire for Finance to be a more strategic function, acting as a true business partner. This involves a renewed focus on stakeholders who are demanding accurate, authenticated and fully disclosed results and projections on a "real time" basis.
• There is a move towards consolidating transactional processes into Shared Service Centres to reduce the time and effort spent on low value-added tasks and release more resources into front-line service support.
• Capability reviews require the Finance function to have a clear articulation of its role in directing and adding value to the organisation.

Professionalising the Finance function

• Many Finance Directors are finding a shortfall of skills in their Finance function. This is a barrier to delivering strategic Finance services and may stem from the legacies of past structures and a historic lack of qualified personnel.
• Recent directives have outlined the need for all Finance Directors to be qualified accountants by 2008.
• The wider Finance function needs to be aligned with these requirements. Competency frameworks and career development plans of the Talent Agenda are key.

Establishing a clear governance structure

• It is becoming increasingly evident that the organisational structure in many local authorities and central departments cultivate an environment in which there is duplication of tasks and a lack of clear governance.
• Finance is frequently seen as the sole owner of the financial results, and not enough collaboration is demonstrated either with, or by, other departments.
• The organisation needs to identify the optimal balance between corporate governance and individual autonomy.

Taking control of the Finance function

• The performance of the Finance function is increasingly becoming a focal point with the National Audit Office and Audit Commission qualifying accounts.
• With clear accountabilities of the Chief Accounting Officer, in an environment where transaction processing is performed within a Shared Service Centre, strong controls and counter fraud arrangements need to be in place to ensure proper accounting of public monies.