- Speech will focus on the importance of financial management and trust, as the Government has set a new framework for delivering 5% savings over the next three years.
- NAO head will say a renewed focus on the fundamentals of good financial management is needed to maintain trust and accountability for taxpayers.
- Head of the public spending watchdog will outline how the NAO will continue to contribute to better value for money for citizens and service users.
Good quality financial management is key to government achieving its savings targets and better services to citizens, but too often the basic requirements are not being met as proven by the whole of government accounts being disclaimed for a second year in a row, the head of the National Audit Office (NAO) will say on Tuesday 10 February.1
Making his annual speech in Parliament, Gareth Davies, the Comptroller & Auditor General (C&AG), will set out the four fundamentals of financial management that can unlock the necessary improvements in value for money for the Government.
These are: Timely and accurate financial reporting; fit-for-purpose financial management information; the skills and capability to inform decision-making; and the leadership and culture that supports innovation and continuous improvement.
On timely and accurate financial reporting, the C&AG is expected to say:
“Not all departments and public bodies yet match the best for timely and high-quality accounts… If you are in any doubt that timely and robust accounting matters in the public sector, the situation in English local government remains a cautionary tale, where backlogs of unaudited accounts… mean that a material part of the whole of government accounts is not assured, but also that local taxpayers are not getting the most basic form of financial accountability.
Arguing for a more proportionate reporting regime for small public bodies, he is expected to say “We should also ensure that reporting requirements are serving their purpose of clear accountability and not becoming an end in their own right”
On financial management information that is fit for purpose, the C&AG is expected to say:
“Managers often do not have access to the activity cost information they need to drive efficiency and performance. Government systems are set up to control spending within budgets, not to help managers manage.
“If the unit cost of delivery, and the components making it up, are not well understood, it’s difficult to make sound operational decisions. How do you know where the biggest ‘bang for the buck’ is?”
On the skills and capability needed to inform decision-making, the C&AG is expected to say:
“The challenge of transforming services and business processes and delivering real efficiency improvements requires more rather than less of these high-level financial management skills.
“It’s not a question of headcount, but of expertise.
“We see significant scope for better integrating expert financial advice into the decision-making process… There are great examples of departments getting this right… The result is better planning and forecasting and better operational decisions.”
On the leadership and culture that supports continuous improvement, the C&AG is expected to say:
“This is the hearts and minds part of any change, with a clear tone from the top and a credible narrative on the achievements made possible by a better grip on the money. Financial management is not just about compliance; it’s how better results are delivered.
“Our five financial management Good Practice Guides build on these fundamentals and provide practical help.
“I commend the guides to Boards and management teams and ask you to use them to build or tune up your financial management capability.”
The C&AG is also expected to look at how the NAO will sharpen its focus on financial management over the coming years as the UK government faces some urgent challenges.
On defence spending, the C&AG is expected to say that the NAO’s recent “value for money reports show painfully clearly that without robust financial management, additional funding will not deliver the capability we need.
On AI, the C&AG is expected to highlight that the NAO “will update our previous work on government’s progress in identifying use cases for AI and whether the expected benefits in efficiency and service quality are being realised.”
On cross-government working, including devolution, the C&AG is expected to say that he will “support Parliament in understanding how well the devolved funding system is working… The financial management skills required at national and local level will need to develop as the system changes”.
Notes for editors
The full video and transcript will be available via the following link shortly after the end of the event: https://www.nao.org.uk/insights/step-change-needed-in-government-financial-management/