Carrying the load

18 Jun 09
IAN CARRUTHERS | As the role of the chief financial officer becomes more ever critical, new CIPFA guidance clarifies the main requirements for the post

As the role of the chief financial officer becomes more ever critical, new CIPFA guidance clarifies the main requirements for the post

Strong leadership, tight control of finances and effective governance are vital ingredients for public services as organisations adjust to the changed economic climate and forecast contraction in finances. The role of chief financial officers is crucial in this. They hold the financial reins of the business and ensure that resources are used wisely.

In the public services, they must balance competition for limited resources across a range of objectives, provide value for money and safeguard taxpayers’ money. Achieving this requires a range of personal qualities, as well as support from the finance function and organisation as a whole.

Public sector organisations have many different structures, legal constitutions and governance arrangements. Some will include elected representatives in their leadership teams, others will not. The title of the most senior executive charged with leading financial strategy and operations might be finance director, director general for finance, or resources director. That person might have other responsibilities, such as IT and estates.

All this begs the question of what their core responsibilities are and how organisations can be assured that they have the right person for the job.

CIPFA is launching a statement on the Role of the chief financial officer in public service organisations at its conference next week to help bring clarity to this. Developed over the past 12 months, the statement sets out five principles. It says 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;

- must be actively involved in, and able to bring influence to bear on, all material business decisions to ensure immediate and longer term implications, opportunities and risks are fully considered, and alignment with the organisation’s financial strategy; and

- must lead the promotion and delivery by the whole organisation of good financial management so that public money is safeguarded at all times and used appropriately, economically, efficiently and effectively.

To deliver these responsibilities the chief financial officer:

- must lead and direct a finance function that is resourced to be fit for purpose; and
- must be professionally qualified and suitably experienced.

For each principle, the statement describes governance compliance requirements that will allow the organisation’s leadership team to benchmark its existing arrangements against the defined framework.

CIPFA recommends that organisations publicly report compliance with these. Where their arrangements do not conform they should explain how their alternative structures will have the same impact.

For current and aspiring CFOs, the statement sets out the personal skills and professional standards they will need, and a summary of core responsibilities. It will therefore provide a focus for finance professionals’ personal development. CIPFA is developing new services and support for the role that will capture the softer skills crucial to effective leadership. These will sit alongside our existing good practice guidance on technical issues and professional standards.

The statement is intended to apply to all public service organisations and CFOs. After its launch, work will start on bringing existing CIPFA guidance up to date with the principles established in the framework. Work will start with an update of the Local Government Statement from 2003 and revision to the CIPFA/Society of Local Authority Chief Executives and Senior Managers framework for corporate governance in local authorities.

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