Responding to COVID-19: insight, support and guidance
Who should we depend on to make the tough decisions regarding finance? If something goes awry, who creates solutions?
While the statutory responsibility for the financial management of a local authority rests with the CFO, financial management cannot be something that is seen as purely the business of accountants. There has to be some collective responsibility. Good financial management needs to be embedded within the authority. Where finance in local government works well, there is often a common understanding and ownership of issues supported by good financial management.
While the recent spending round brought good news for many areas of local government, the sector is still reeling from years of austerity, rapid political change and emerging financial threats. It is becoming more important than ever that we are all on the same page when it comes to financial management.
When we say collective responsibility, we mean that all members of an authority collaborate to understand and implement the principles of good financial management. Knowledge of these principles must extend into the corporate culture to yield best results.
While some local authorities display strong financial management, there is evidence that this is not the case throughout the sector. This is why CIPFA has developed the Financial Management Code. This new Code supports the sector by providing consistent standards that are rooted in transparency and support financial sustainability.
Building an awareness and understanding of shared financial goals throughout an organisation will improve the quality of decision making. Shared ownership creates a sense of community, incentivising us to work together to achieve the best outcomes.
Collective responsibility is only one of several other principles we are highlighting in the FM Code. While accountability, transparency and effective leadership are all crucial to success, so too is the assurance of long-term sustainability.
Through the development of the FM Code, we have worked with the sector to establish consensus and bring consistency to financial management for local government.
The FM Code aligns itself to other CIPFA Codes, such as the Prudential Code, which promote financial sustainability. In this way the FM code supports authorities by bringing together many of these statutory requirements.
The FM Code principles also recognise the need for longer term financial planning - a difficult but important challenge in these turbulent times of one year announcements. It aspires to support improvements in this area so that local authorities have the ability to make decisions about the future effectively and create sustainable financial plans.
Putting those ideas into practice not only creates a way to defend against potential unexpected roadblocks, but also establishes a sense of trust between local authorities and the communities they serve.
But, how do we achieve this?
CIPFA is offering a variety of packages of hands-on support to local authorities implementing the Code, including webinars and bespoke on-site workshops.
We believe that good financial management should be at the very core of an organisation, permeating the inner workings of each department, the leadership team and those with an advisory role.
So, to revisit the initial question: who should we turn to when organisations need to make tough financial decisions? The answer should be: everyone.