"Since the Public Accounts
Committee last reported on financial management in government, in
2008, there have been some important improvements. However, there
is scope for still more progress in two significant
areas:
- Despite a clear commitment from the centre, we do not
yet see good financial management strongly positioned as an
indispensible part of departments’ deficit reduction strategies;
and
- We do not feel that the culture of the Civil Service
has yet taken information-led management, and financial
management in particular, to its
heart"
Amyas Morse, head of the National Audit Office, 3 March
2011
Despite good progress in improving the
professional capability and capacity of government finance
departments since the National Audit Office last reported in 2008,
good financial management is still not embedded in the civil
service culture, and financial matters do not have sufficient
influence over departments’ strategic decision making, according to
the spending watchdog.
In recent years, the NAO has reported
extensively on financial management in government departments.
Using this body of work, the spending watchdog concludes that
departments have achieved a core level of competence in financial
management, but that further improvement in financial management
capacity and capability throughout their organisations is required
to enable them to meet the challenge of delivering the savings set
out in the Spending Review 2010.
There has been important progress –all
departments now have a professionally qualified Finance Director,
supported by an increased number of qualified finance staff. The
Treasury is also implementing accounting changes to bring greater
transparency to government financial reporting. There are some
examples of substantial improvement, including at the Home Office.
However, achieving further progress will require all Accounting
Officers as the leaders with the most influence on Whitehall
culture to demonstrate clearly, through their leadership of
departments, their commitment to putting financial management at
the heart of their organisation.
Whitehall’s central finance functions
competently capture and report the transactions and financial
position of the departments. Annual accounts are delivered before
the July Parliamentary recess. The number of overall overspends
against the amounts approved by Parliament is low. However,
departments are generally weak at monitoring their balance sheets
and at forecasting cash flow in the medium term.
Departments do not fully understand the costs of their
activities, and it is rare for them to have good information on the
unit costs of outputs, levels of productivity or the value of
outcomes. Departmental Boards are not normally presented with
balance sheet information, such as on stock levels and investment
in assets. Departments generally focus on monitoring against the
agreed one-year budget, with a few looking as far ahead as the
current spending review period of four years.
Publication details:
HC: 487, 2010-11
ISBN: 9780102969528