The role of the public service finance director has steadily evolved and is now more important than ever. Ian Carruthers explains the changes and discusses the principles in CIPFA’s new draft statement
There is no doubt that these are increasingly challenging times for finance directors. Not only must they struggle with ever-tighter resources and increasing demand for services, but their organisations will be crucial in helping people get through a probably deep and protracted recession.
How much easier would it be for the individuals involved if they merely fulfilled the role of ‘bean counter’ — adding up the sums resulting from the difficult decisions others were making?
Instead, modern finance directors are at the heart of their organisations as vital members of the top leadership team, making and helping implement the tough decisions.
To do this, they must provide the right information and advice to the right people at the right time to influence and support good, robust decision-making.
As well as this vital strategic role, finance directors occupy a critically important position, holding the financial reins of the business and ensuring that resources are used wisely. These stewardship responsibilities have an extra edge because public money is at stake.
But that’s not all. The list of the other roles that finance directors might take on is almost endless, so different organisations inevitably make different choices.
It is vital, therefore, to be clear about the essential ingredients needed in the mix.
Without clarity about these fundamental components of the core job, we run the risk of having finance directors who can neither reach all of the main levers to perform their job effectively, nor address challenges when they arise.
In attempting to address these issues, and support finance directors in their role, CIPFA has developed its draft Statement on the role of the finance director in public service organisations. The statement is an overarching, principles-based framework that sets out the organisational as well as personal responsibilities of the director of finance.
These principles are intended to apply to finance directors across the public sector, from small district council to large central government department.
CIPFA believes that the finance director of a public service organisation:
- is a core member of the leadership team, helping it to resource and achieve the organisation’s strategic objectives sustainably;
- must be actively involved in, and able to bring influence to bear on, all material business decisions, to ensure that the immediate and longer-term implications, opportunities and risks are fully considered, and consistent with the financial strategy; and
- must lead the promotion and provision of good financial management throughout the organisation, so that public money is safeguarded at all times, and used appropriately, economically, efficiently and effectively.
To meet these responsibilities, the finance director must be professionally qualified and suitably experienced, and must lead and direct a finance function that is resourced to be fit for purpose and is appropriately developed.
The statement will be critically important for good governance and we aim to encourage sector-wide use.
However, just as importantly, it will help to articulate to all finance staff the skills they need to build to be able to take on the finance director role in the future.
The statement will be used by CIPFA to help develop training and other types of support for the current and next generation of finance directors.
It has been developed with input from experienced finance directors across the public services but CIPFA would like as many people as possible to read the draft statement and to comment by February 27.
Ian Carruthers is the policy and technical director of CIPFA. The draft Statement on the role of the finance director in public service organisations is available on http://www.cipfa.org.uk/panels/ finance_director/index.cfm
