- 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, , 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 a national and local
level will need to develop as the system
changes”.
ENDS
Notes to editors
1. 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/
