Press Release - Financial management in the Foreign and
Commonwealth Office
3 June 2009
The Foreign and Commonwealth Office has made
good progress in its financial management, aiming to establish
itself as one of the best departments in Whitehall in this
respect. It has shown strong leadership in raising the
profile of good financial management across the Department,
according to a report today from the National Audit Office.
Up to 2007-08, however, the FCO has underspent consistently against
its budget.
The Department has introduced a financial
management improvement programme "Five Star Finance", the aim of
which is for the department to be a Whitehall leader in financial
management. It currently rates itself at three and a half
stars on a 1(low) to 5 (high) scale. The NAO report confirms
this as a sound assessment. The Department needs to build on
the progress made so that improved financial management is embedded
across the department and sustained beyond the end of the Five Star
Finance programme in 2010.
The FCO operates in a challenging environment
in terms of the global nature of its operations. The
fluctuations of global currency markets pose particular
difficulties for the Department. Until 2007-08, its budgets
were protected by the Treasury from exchange rate
fluctuations. When this protection was withdrawn, the FCO
introduced alternative measures to manage its exposure, principally
the forward purchase of major foreign currencies. It needs to
ensure that its finance team has the right skills and experience to
manage the financial risks it now faces.
The NAO reports that the FCO is taking action
to avoid future underspends against its budget. A resource
underspend of £128 million was recorded in 2007-08, despite the
Department requesting additional funding from Parliament part way
through the year. Evidence points to improvement and fuller
use of resources is anticipated in 2008-09.
In other respects, though, FCO’s financial
management has improved. The accuracy, reliability and timeliness
of its financial reporting have all been enhanced. In 2007-08
it laid its accounts on 30 June, the earliest date it has ever
achieved after the March year-end, making the FCO amongst the
first of the large Government departments to lay its accounts
before Parliament.
The Comptroller and Auditor General
said today:
"The FCO has made a concerted effort
to improve its financial management in what is a difficult
operating environment. It has strong leadership and a
determination to drive its financial management forward, and it is
working to increase the proportion of staff in its finance function
who are qualified accountants. In managing within
increasingly constrained resources, the Department will need to use
the capability created through its “Five Star Finance” project to
utilise available resources to best effect".
Notes for Editors:
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This report is one in a series of reports from
the NAO on financial management. The first report on
financial management in the Department for Children, Schools and
Families was published in April this year, with a second report on
the Home Office in May. Over the next few years the NAO
intend to report on financial management in all major
departments.
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The Foreign and Commonwealth Office manages a
budget of nearly £2 billion. As well as its UK presence, the
department runs a network of 278 overseas posts and also provides
funding to the British Council and the BBC World Service.
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Press notices and reports are available from
the date of publication on the NAO website, which is at http://www.nao.org.uk/. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
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The Comptroller and Auditor General is the
head of the National Audit Office which employs some 900
staff. He and the NAO are totally independent of
Government. He certifies the accounts of all Government
departments and a wide range of other public sector bodies; and he
has statutory authority to report to Parliament on the economy,
efficiency and effectiveness with which departments and other
bodies have used their resources. This report has been made
by Tim Burr, who was C&AG until 31 May 2009. He was succeeded
by Amyas Morse on 1 June 2009.
Press Notice 34/09
All enquiries to Sarah Farndale, NAO
Press Office:
Tel: 020 7798 5350
Mobile: 07985 274 421