The buck stops everywhere

12 Jun 18

Budget holders may be unable or even unwilling to accept they have financial reponsibilities. There are several ways to address this, says CIPFA’s Lisa Forster. 

A common response to budget questions is: “Why are you asking me about finance? I don’t work in it.”

Yet, if you hold a budget, regardless of where you work, finance is your responsibility.

Many councils are teetering on the edge of financial sustainability so an active rather than passive acceptance of budget responsibility is needed in departments.

Also needed on the part of central finance are an understanding of services and clear communications on budget management.

Austerity has led to staff cuts, with back office services bearing the brunt of this.

Finance teams have had to reduce the amount of time and sometimes the range and depth of support they offer. Budget holders must self serve in respect of their financial responsibilities.

Some have grasped this well and can robustly cite their spending positions and forecasts.

Others, however, feel this is not their domain so the financial impact of their actions do not readily play a part in their decision making. This can be down to culture, a lack of understanding or even a lack of challenge.

So how do councils instigate and establish change in behaviour and culture?

This needs a two-pronged approach, where finance staff and service teams work collaboratively.

One approach is through finance business partners (FBPs).

Many councils have FBPs in accountancy teams who bridge the gap between the number cruncher and the service provider. They should understand the service requirements and challenges and offer proactive advice.

CIPFA’s financial management reviews have shown that, done well, this can make a difference.

However, it is sometimes a cosmetic change to a job title and the role has not evolved into a true FBP.

Technical skills are usually strong, but softer skills such as coaching, facilitating and negotiating are less evident.

However, we are beginning to see significant progress in this area, and CIPFA’s FBP postgraduate programme is evidence of the need and desire to change and progress this role.

We also need finance departments to respect the budget process and acknowledge ownership of service budgets.

For example, central finance staff may change service budgets (usually cutting), without telling the budget holder first.

This may be rare but it does happen and leads to mistrust and poor working relationships.

The second line of attack is ingraining a culture of financial responsibility in non-accountants.

For some managers, service provision is the priority regardless of cost; different options that could deliver the same outcome but be more cost effective are often not explored.

Some services, such as social care, are led by demand that can be volatile, which makes planning difficult.

However this doesn’t mean budget holders can avoid taking responsibility for decisions.

CIPFA’s work with local authorities shows some budget holders have embraced financial responsibility, while others feel they lack the understanding, accountancy support and capacity to deal with it.

Others say financial procedures dictated by accountants are unrealistic, bureaucratic and make their budget management less effective.

Some do not see “money” as their priority and the culture allows their lack of compliance to remain unchallenged.

There is no easy fix to change a culture, but understanding can be improved through training and change management programmes.

What is critical is that budget holders truly appreciate the need.

When training or changes to work practices are mandated and communication about the need for them is unclear, budget holders can be reluctant to engage.

Cultural change is needed to improve many areas, from commercial skills, financial acumen, communication skills and working practices.

Hierarchical structures and rigid systems and procedures must make way for more flexible, innovative systems.

Cultural change must be demonstrated at the very top.

Without this lead and “permission”, it is unlikely to permeate.

However, once embedded, it can be truly transformational.

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