The Public Sector is undergoing radical reform and Finance is at the heart of the change. You know your function needs to transform to meet the ever-increasing demands, but do you know what needs to change and how you are going to make it happen?

Public Sector Finance is under increasing pressure from a variety of sources:

Addressing the strategic agenda

  • Gershon cost efficiencies must be delivered and business processes reviewed.
  • Government departments must analyse their spending and be able to link these to outcomes and output-based measures. Such a structured performance framework will aid preparation for future spending reviews.
  • Stakeholders have raised expectations of stewardship and the use of public money.
  • There is an increased focus on World-Class Financial Management from stakeholders such as the Treasury.
  • Government departments and local authorities have expressed a desire for Finance to be a more strategic function, acting as a true business partner. This involves a renewed focus on stakeholders who are demanding accurate, authenticated and fully disclosed results and projections on a "real time" basis.
  • There is a move towards consolidating transactional processes into Shared Service Centres to reduce the time and effort spent on low value-added tasks and release more resources into front-line service support.
  • Capability reviews require the Finance function to have a clear articulation of its role in directing and adding value to the organisation.

Professionalising the Finance function

  • Many Finance Directors are finding a shortfall of skills in their Finance function. This is a barrier to delivering strategic Finance services and may stem from the legacies of past structures and a historic lack of qualified personnel.
  • Recent directives have outlined the need for all Finance Directors to be qualified accountants by 2008.
  • The wider Finance function needs to be aligned with these requirements. Competency frameworks and career development plans of the Talent Agenda are key.

Establishing a clear governance structure

  • It is becoming increasingly evident that the organisational structure in many local authorities and central departments cultivate an environment in which there is duplication of tasks and a lack of clear governance.
  • Finance is frequently seen as the sole owner of the financial results, and not enough collaboration is demonstrated either with, or by, other departments.
  • The organisation needs to identify the optimal balance between corporate governance and individual autonomy.

Taking control of the Finance function

  • The performance of the Finance function is increasingly becoming a focal point with the National Audit Office and Audit Commission qualifying accounts.
  • With clear accountabilities of the Chief Accounting Officer, in an environment where transaction processing is performed within a Shared Service Centre, strong controls and counter fraud arrangements need to be in place to ensure proper accounting of public monies.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.