CIPFA chaired an energetic debate about whether internal audit could add more value in risk-mature organisations at the recent Government Finance and Internal Audit Conference.
The most striking aspect of the debate was the wide range of activities and types of organisation that internal auditors now work with.
We have moved away from a model where largely public sector organisations provide public services directly to end users. We now have a mixed economy of public, private and third sector providers, operating in an increasingly resource constrained and sophisticated marketplace.
Today, public service finance operations have four key functions.
This role involves exploring ways to make taxpayers’ money stretch further, often working with other bodies, and is likely to become more prominent. Evaluation of public outcomes is likely to be viewed more from an individual’s than a budgetary perspective.
This concerns influencing strategy and business outcomes, working with managers to reach policy goals, offering analysis and interpretation, presenting options to solve problems and exploit opportunities, and developing financial understanding and informed decision making.
This is the traditional role of finance, involving safeguarding resources from loss, waste, abuse or corruption and providing an account of their use.
This role concerns the infrastructure of the financial operation and core financial administration processes, including specialist services, directly and through commissioning external providers.
These functions place finance professionals at the heart of modern public service organisations, responsible for securing stewardship and supporting performance and transformation. To fulfil these roles, they must be both technically proficient and able to manage and drive change. It is easy to focus on the wider organisational and change management role and assume that traditional skills will still meet the needs of the modern public sector.
CIPFA has always recognised that public sector accountants need a wide portfolio. Increasingly, the environment has moved away from regulation and towards professional best practice in financial reporting. Regulation works well for the simple local authority service delivery model but not the huge variety of organisations and models that exist now. Finance professionals need to be able to account for not only their own organisations but also delivery vehicles in the private and third sectors, and manage complex taxation issues. It is vital that the complex financial models behind provider proposals are understood and can be evaluated. The collapse of the West Coast rail franchise illustrates how problems can arise when using financial models.
CIPFA recently introduced the concept of the finance business partner in the public services, explaining how adding value is central to the finance professional’s role. By involving functions such as finance or HR early on, better solutions are generated, time is saved, the organisation is better placed to achieve its objectives and stakeholders are better served.
Finance business partners are at the heart of public services, securing stewardship, supporting performance and enabling transformation. To fulfil this pivotal role, they need to engage with other functions to both support the business and add value.
CIPFA is launching a Finance Business Partner accredited training course to give finance professionals the skills they need to be an excellent business partner