DBIS urged to extend financial management improvements

11 Jul 12
The Department for Business, Innovation and Skills must improve its financial management to meet the ‘substantial challenges’ of spending cuts and other public sector reforms, the National Audit Office has said.

By Richard Johnstone | 12 July 2012

The Department for Business, Innovation and Skills must improve its financial management to meet the ‘substantial challenges’ of spending cuts and other public sector reforms, the National Audit Office has said.

In a report examining the department’s financial management skills, auditors said that it was ‘unclear’ if attempts to integrate financial management across its agencies and other bodies had succeeded.

The department sponsors 42 partner organisations, which accounted for 78% of its spending in 2010/11.

A programme to better integrate these organisations with the department’s own financial management is ongoing, but the NAO said further action is still needed.

Although 53% of partners provided timely information to be included in the department’s monthly management accounts in February 2012 – up from the 12% that managed this in May 2011 – there is yet to be ‘lasting change’, the watchdog said.

As well as better management of partner organisations, the department also needs to improve the financial information available to support decision-making, and strengthen cross-departmental scrutiny of investment proposals.

The NAO also warned that the department faces a much tighter financial position following the 2010 Comprehensive Spending Review. DBIS is targeting a 27% reduction, after inflation, in core resources between 2010/11 and 2014/15.

The department has worked hard over the last 18 months to improve its financial management, and current practices have enabled it to keep its day-to-day financial management on track, auditor general Amyas Morse said.

However, it should ‘meet the challenges posed by the 2010 Spending Review through coherent strategic planning, rather than short-term fire-fighting’, he said.

‘Until it does so, the department will not achieve the value for money it needs from its financial management activities.’

Responding to the report, a DBIS spokesman said: ‘We are pleased that the NAO has recognised the hard work the department has done to ensure sound financial management and value for taxpayer's money.

‘We are committed to a 27% reduction in our resources and, as recognised by the NAO, we are working hard to ensure we have the skills and capacity to manage this challenging, but achievable target. We are also working closely with our 42 partner organisations to develop more effective management across the whole of the BIS family.’

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