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The organisations we audit told us our ‘how to’ guides and frameworks are very useful – but hard to find on our website. They were right. So we’re delighted to say that we’ve now put them all in one place: our new Self-assessment resources web-page. So if you’re about to undertake a self-assessment and planning […]


Why reinvent the wheel?

Posted on February 26, 2016 by

Self-assessment resourcesThe organisations we audit told us our ‘how to’ guides and frameworks are very useful – but hard to find on our website. They were right. So we’re delighted to say that we’ve now put them all in one place: our new Self-assessment resources web-page. So if you’re about to undertake a self-assessment and planning process, there may be something on this page to save you reinventing a wheel. To illustrate, this post highlights some of the resources you can find on our new page.

The need to reduce costs while maintaining high quality services underpins much government activity at present. To meet the challenges, government has introduced new ways of delivering public services, with more focus on user choice, more authority devolved to local levels, and more use of financial incentives, such as payment by results. These changes demand, in turn, strengthened leadership, accountability and understanding of spending and what taxpayers get for it. We set out the ways that strong, integrated finance functions can help in Delivering value and accountability, a report based on the input of a panel of finance experts from across the public and private sectors, brought together by the NAO and the Chartered Institute of Management Accountants (CIMA).

The report highlights the key importance of the finance function in understanding both costs and how inputs translate into outcomes. Illustrating best practice through ten case studies, the report sets out 5 key factors that enable the finance function to meet these requirements, providing a checklist of questions to ask in each case:

  1. The organisation understands its business model.
  2. Leadership demands, uses and rewards the right management information.
  3. The finance function has the right structure and skills.
  4. There is one version of the truth on costs and value.
  5. There is the right balance of stability and flexibility in the financial framework.

As the ongoing need to reduce costs across government effectively ups the “price” paid if things go wrong, it’s not surprising that we are often asked for good practice in risk management. No one enjoys planning for failure, yet as shown in our Lessons for major service transformation, this is exactly what’s needed, especially on major projects.

There’s a fine line between a risk – a potential outcome, beyond direct internal control – and the issues expected to be incurred in any operations or project, which should be addressed in the planning. As our Good practice guide: Managing risks in government shows, the same themes underpin risk management as most of our value for money advice. These include the need for informed decision-making, clear and realistic objective setting, managing the inter-dependencies between projects, managing arm’s length delivery – especially when through market mechanisms (I will return to this issue), and the challenge of a dynamic environment and need to be agile.

This guide poses questions for Boards to ask about whether risk management arrangements are being used effectively in their organisation and it details these six principles of good risk management, explaining why each is so important:

Principles of risk management

Sustainable cost reduction frequently requires major business transformation involving, in turn new processes, often based on digital or more commercialisation approaches. A key risk of transformation is, therefore, the availability of the right skills. My colleague Yvonne Gallagher has previously blogged about the shortage of skills for digital transformation and coming posts will focus on the challenges of commercialisation and contract management, including the new skills needed.

The creation of public service markets is another key area in which the public sector often lacks the required new skills. Our ‘Self-assessment resources’ page includes a number of papers providing guidance in this area, including Delivering public services through markets: principles for achieving value for money, which sets out ten principles intended to help the public sector to address four key needs:

  1. To provide the rules and coordination needed to ensure the orderly operation of public services markets, whether overseen by central or local government.
  2. To empower users to make good choices, through tailored information and support, and by ensuring there are real ways for them to exercise their preferences.
  3. To encourage innovation, high quality and fairly-priced services by enabling providers to enter and exit the market, while ensuring service continuity, avoiding harm to users and ensuring appropriately-priced services.
  4. To ensure that the market mechanisms are delivering their policy objectives and to intervene when necessary.

These are just some of the issues covered in the resources on our new web-page. Others include guides to specific activities such as forecasting, option appraisal, reorganising arms’-length bodies, designing outcome-based payments systems and using private finance in complex capital investment programmes. There are maturity models, comprehensive toolkits to issues such as commissioning from third-sector providers and gaining assurance on grant programmes, and guides to statistical matters such as sampling approaches.

You can also find guidance and support materials for boards and audit committees on our Technical Guidance page.

Illustrating how useful we think you’ll find these documents, a number have already been mentioned in previous blog posts, including in The challenges of major projects, which references three guides, and Improving services for citizens, which focuses on what government needs to get right about managing business operations.

These are all resources you may already have seen on our website. But now that we’ve created this web-page, we’ll seek to publish more frameworks and guides – so do watch this space.

Kate Mathers

About the author: Kate Mathers is the Director responsible for the NAO’s Financial Audit Practice and Quality team, which leads for the NAO on audit quality, policy and methodology, financial reporting technical matters and professional learning and development. Kate is a Chartered Accountant with over 15 years’ experience auditing a wide range of central government sectors. She has also worked on secondment in senior finance and operations roles.


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