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In public service organisations

the role o the

chie fnancial ofcer

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CIPFA | The Role o the Chie Financial OfcerB

Contents

Foreword 1

Denitions Used Throughout The Document 2

Introducing The CIPFA Statement 3

Using The CIPFA Statement 4

Principle 1 7

Principle 2 13

Principle 3 17

Principle 4 23

Principle 5 27

CIPFA Statement on the role o the Chie Financial

Ocer in public service organisations

The Chie Financial Ocer in a public service organisation:

is a key member o the Leadership Team, helping it to develop and implement1

strategy and to resource and deliver the organisations strategic objectives

sustainably and in the public interest;

must be actively involved in, and able to bring infuence to bear on, all material2

business decisions to ensure immediate and longer term implications,

opportunities and risks are ully considered, and alignment with theorganisations nancial strategy; and

must lead the promotion and delivery by the whole organisation o good3

nancial management so that public money is saeguarded at all times and

used appropriately, economically, eciently and eectively.

To deliver these responsibilities the Chie Financial Ocer:

must lead and direct a nance unction that is resourced to be t or purpose;4

and

must be proessionally qualied and suitably experienced.5

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CIPFA | The Role o the Chie Financial Ofcer 1

The Chie Financial Ocer (CFO) occupies a critical position in any organisation,

holding the nancial reins o the business and ensuring that resources are used

wisely to secure positive results. While the global nancial crisis and economic

downturn have made these tasks even more challenging, they have also underlined

the undamental importance o the role.

oreword

Achieving value or money and securingstewardship are key components o the CFOs

role in public service organisations. But what

are the other duties and responsibilities that sit

alongside? What aspects o the organisations

activities and business must the CFO be able to

contribute to and infuence to be ully eective

in the role? What are the qualities, skills and

knowledge that the CFO must aspire to in order to

meet the organisations needs?

The list o the other potential roles that the CFO

might take on is diverse. Dierent organisationsinevitably make dierent choices. This makes

it critically important to be clear about the

absolutely essential ingredients that must be in

the mix. Without clarity about the undamental

components o the core job, we run the risk that

CFOs cannot reach all o the key levers to perorm

their core nancial duties eectively, or address

challenges when they arise.

CIPFA has developed this Statement on the Role o

the CFO in Public Service Organisations in order to

help bring clarity to this complex picture. It setsout an overarching principles-based ramework

that is intended to apply to all public service

organisations and their CFOs, irrespective o where

they work. The Statement draws on established

good practice and regulatory requirements, aswell as the requirements o CIPFA and other

proessional accountancy bodies codes o ethics

and proessional standards.

The Statement covers ground that is critically

important or the good governance o all public

service organisations. For that reason, our aim

is to encourage public service-wide use o the

Statement as the benchmark or organisational

arrangements. We recommend that all

organisations should report publicly on their

arrangements, particularly where these do notconorm to the governance requirements in the

Statement. Providing this inormation openly

on a comply or explain basis will help to assure

stakeholders and the public that the organisation

has given proper consideration to these vitally

important aspects o its governance arrangements.

The Statement is also intended to support

individual nance proessionals. It articulates

the core responsibilities o the CFO, as well as the

personal skills and proessional standards that are

crucial to success in the role. In this way it providesan important source o reerence or personal

development, both or current and aspiring CFOs.

We thereore hope that nance proessionals at all

stages o their careers will nd it useul.

Jon Pittam

Chair

CIPFA Role o the Public Services Director o

Finance Panel

Steve Freer

Chie Executive

CIPFA

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CIPFA | The Role o the Chie Financial Ofcer2

Chie Financial Ocer (CFO)

The organisations most senior executive role

charged with leading and directing nancial

strategy and operations.

Leadership Team

Comprises the Board and Management Team.

Board

The group o people charged with setting the

strategic direction or the organisation and

responsible or its achievement.

Management Team

The group o executive sta comprising the senior

management charged with the execution o strategy.

Chie Executive

The most senior executive role in the organisation.

Managers

The sta responsible or the achievement o

the organisations purpose through services/

businesses and delivery to its clients/customers.

Finance Function

The sta with a prime responsibility or nancial

matters, located either in a central department or

within business/service areas. Some unctions may

be outsourced.

Governance1

The arrangements in place to ensure that an

organisation ulls its overall purpose, achieves its

intended outcomes or citizens and service users,

and operates in an economical, eective, ecient

and ethical manner.

Financial Management2

The system by which the nancial aspects o a

public service organisations business are directed,

controlled and infuenced, to support the delivery

o the organisations goals.

Audit Committee

The governance group charged with independent

assurance o the adequacy o the risk management

ramework, the internal control environment and

the integrity o nancial reporting.

Internal Audit

An assurance unction that provides an

independent and objective opinion to the

organisation on the control environment, by

evaluating its eectiveness in achieving the

organisations objectives.

Head o Proession

The leading proessionally qualied accountant

charged with promoting proessional standards

within the organisation.

Annual Governance Report

The mechanism by which an organisation publicly

reports on its governance arrangements each year.

Public Service Organisation

One or more legal bodies managed as a coherent

operational entity with the primary objective o

providing goods or services that deliver social

benets or civic society, are not privately owned,

and receive public and/or charitable unding.

1 The Good Governance Standard for Public Services 20042 CIPFA FM Model 2009

denitions used

throughout the documentThe public services have a variety o organisational structures and governance

arrangements. Some include elected representatives, while others are wholly

appointed. The ollowing terms are used throughout the Statement in a generic

sense. The Statement and the supporting guideline and requirements need to be

read in the context o these. Terms in use in dierent parts o the public services can

be substituted or the generic terms used here.

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introducing the

CIPFA StatementThe public service context

Citizen, service user, and taxpayer: all o us occupy

one or other o these roles at dierent times.

We all have dierent priorities and emphases,

but our common ground is that we expect high

standards o service, on an improving trajectory,

within aordable tax levels and that we demand

exemplary standards o behaviour where publicmoney is spent.

These public demands have generated a

succession o initiatives, rom governments and

other institutions, aimed at extracting maximum

value rom public money. These have variously

emphasised sustainability, eciency and the

productive use o resources. They have oten been

reinorced by inspection and assurance regimes,

the intensity o which has ebbed and fowed over

time. However the enduring task o the public

services remains the resolution o the tensionbetween ever increasing public expectations and

increasingly limited unding.

The public services also ace requent structural

changes. The prevalence o complex social issues

that require a coordinated response is increasingly

bringing together organisations with dierent

structures and objectives in various orms o

partnership. Expectations o contestability and

competition as drivers o value or money are also

blurring the boundaries between the public and

private sectors. This has increased the variety o

governance arrangements, even among similar

types o bodies.

Good Governance and strong Public

Financial Management

The changing political environment within

which decisions are taken and services delivered

creates a web o stakeholders whose interests and

infuences must be acknowledged, understood,

managed and balanced. Stakeholders all expect

the organisation to report on their business

outcomes in dierent ways.

The ocus on ambition and organisational capacity

to deliver good public services within a complex

environment has strengthened expectations

o eective governance. Good governance in a

public service organisation requires a ocus on

the organisations purpose and its intended social

outcomes. It also carries a specic obligation to

citizens, taxpayers and service users to make best

use o resources and ensure value or money.

The role o the CFO is a undamental building block

o good corporate governance. The two critical

aspects o the role are stewardship and probity in

the use o resources; and perormance, extracting

the most value rom the use o those resources.

The key role played by the CFO

The CFO, as the organisations most senior

executive role charged with leading and directing

nancial strategy and operations, occupies a

pivotal role, both or external stakeholders and

within the Leadership Team. CFOs everywhere have

a responsibility to ensure that their organisations

control and manage money well, and that strategic

planning and decision making are supported by

sound analysis. In the public service context,

CFOs must also meet the demands o openness

and accountability in decision making, balance

competition or limited resources across a range

o worthwhile objectives, deliver value or money

and saeguard taxpayers money. Delivering these

requires a range o personal qualities, as well as

support rom both the nance unction and the

organisation as a whole.

It is these expectations, combined with the personal

qualities and leadership skills needed or them to

be met, that have shaped the CIPFA Statement on

the Role o the CFO in Public Service Organisations.

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Statement approach and structure

The Statement sets out the ve principles

that dene the core activities and behaviours

that belong to the role o the CFO in public

service organisations and the organisational

arrangements needed to support them. Successul

implementation o each o the principles requires

the right ingredients in terms o:

The Organisation;

The Role: and

The Individual.

For each principle the Statement sets out the

governance arrangements required within

an organisation to ensure that CFOs are able

to operate eectively and perorm their

core duties. The Statement also sets out the

core responsibilities o the CFO role withinthe organisation. Many o the day-to-day

responsibilities may in practice be delegated or

even outsourced, but the CFO should maintain

oversight and control.

Summaries o personal skills and proessional

standards then detail the leadership skills and

technical expertise organisations can expect rom

their CFO. These include the key requirements o

CIPFA and the other proessional accountancy

bodies codes o ethics and proessional standards

to which the CFO as a qualied proessional is

bound. The personal skills described have been

aligned with the most appropriate principle, but in

many cases can support other principles as well.

Demonstrating compliance

The Statement supports CIPFAs work to strengthen

governance and nancial management across

the public services. It is intended to allow the

Leadership Team o a public service organisation,

whether elected, executive or non-executive, to

benchmark its existing arrangements against a

dened ramework.

Public service organisations operate within a

variety o legal and regulatory structures, and

there is a huge range in size and scope o services

delivered. The Statement thereore adopts

a substance over orm approach, ocussing

on the principles that capture the essential

characteristics o the CFO role in any public

service organisation.

CIPFA recommends that organisations should use

the Statement as the ramework to benchmark

their existing arrangements, and that they should

report publically on compliance to demonstrate

their commitment to good practice in both

governance and nancial management. CIPFA

also recommends that organisations should report

publicly where their arrangements do not conorm

with to the compliance ramework in the Statement,

explaining the reason or this, and how they deliver

the same impact as those in the Statement.

Status o the Statement

The Statement does not have the status o a

CIPFA Code. Nor does it replace the sector-specic

guidance or the codes and proessional standards

that underpin accountancy bodies competency

and disciplinary rameworks. The aim is that

regulators should draw on the Statement when

reviewing their own guidance.

On a personal basis, the Statement should help

guide both current and aspiring CFOs, by providing

a summary o the core responsibilities entailedin the CFO role as well as the personal skills and

proessional standards necessary to succeed.

It should thereore provide a ocus or nance

proessionals own personal development at all

stages o their careers.

using the

CIPFA Statement

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Cipa Statement on the role o the Chie Financial Ocer (CFO) in public

service organisations

The CFO in a public service organisation:

is a key member o the Leadership Team, helping it to develop and implement strategy and to1

resource and deliver the organisations strategic objectives sustainably and in the public interest;

must be actively involved in, and able to bring infuence to bear on, all material business2

decisions to ensure immediate and longer term implications, opportunities and risks are ully

considered, and alignment with the organisations nancial strategy; and

must lead the promotion and delivery by the whole organisation o good nancial3

management so that public money is saeguarded at all times and used appropriately,

economically, eciently and eectively.

To deliver these responsibilities the CFO:

must lead and direct a nance unction that is resourced to be t or purpose; and4

must be proessionally qualied and suitably experienced.5

The Organisation:

Governance Requirements

The Role:

Core CFO Responsibilities

The Individual:

Personal Skills andProessional Standards

1

2

3

4

5

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The CFO in a public service organisation is a key member o the Leadership Team,

helping it to develop and implement strategy and to resource and deliver the

organisations strategic objectives sustainably and in the public interest.

Key member o the Leadership Team

The Leadership Team in public services

organisations takes many orms, with dierent

mixes o executive and nonexecutive members,

as well as sometimes including elected

representatives. Collectively the Leadership

Team are responsible or setting the strategic

direction or the organisation, its implementation

and the delivery o public services. In

recognition o the centrality o nancial issues

to organisational success it is UK government

policy that all government departments should

have a proessional CFO reporting directly to

the permanent secretary with a seat on the

departmental board, with a status equivalent to

other Board members. HM Treasury recommends

It is good practice or all other public sector

organisations to do the same, and to operate the

same standards.3

CIPFA supports the Treasurys recommendation.

The governance requirements in the Statement

are that the CFO should be proessionally

qualied, report directly to the Chie Executive

and be a member o the Leadership Team, with

a status at least equivalent to other members.

The Statement requires that i dierent

organisational arrangements are adopted the

reasons should be explained publicly in the

organisations Annual Governance Report,

together with how these deliver the same impact.

Developing and implementing

organisational strategy

All public service organisations ace competition

or limited public unds. However they dier in

the level o control they have over their total

resource envelope. Many will have allocated cash

limits, while others have tax raising powers. All

will be concerned to examine opportunities, with

suitable assessment o legal powers and risk,

or building income streams, whether through

attracting external grants, charging or services,

or commercial activity.

Strategic planning needs to be based on an

understanding o the external political

landscape, the organisations demand and cost

drivers, and the need to manage and und longer

term commitments on a sustainable basis.

Finance translates ambitions and goals across

the organisation into a common language, so the

CFO must share in the strategy development and

implementation responsibilities o the

Leadership Team. Where relevant these include

supporting elected representatives under the

proper governance arrangements. The CFO must

also ensure the members o the Leadership Team

have the nancial capabilities necessary to

perorm their own roles eectively.

The CFO must encourage continuous improvement

and development to enable the organisation to

deliver at the highest levels As well as having theundamental concern or probity and control,

the CFO must be proactive in managing change

and risk, be ocussed on outcomes, and help to

resource the organisations plans or change and

development in the public services it provides. As a

key member o the Leadership Team, the CFO must

also behave in ways that are consistent with the

organisations agreed values and objectives.

principle 1

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Helping resource and deliver

organisational objectives

There is a growing trend or CFOs to hold a

range o dierent responsibilities beyond

nance, including managing other services

or leading change programmes. Whilst these

can develop the individual as a corporate

manager, organisations must not let the CFOscore nancial responsibilities be compromised

through creating too wide a portolio. Dilution

and/or overload in the role o the CFO can result

in poor nancial outcomes or the organisation.

Setting out the core CFO responsibilities in this

Statement is intended to allow public service

organisations and their CFOs to assess their job

descriptions to ensure that their core nance

responsibilities can be properly perormed.

Public service organisations also need to engage

with partners through a range o collaborative orcommissioned relationships in order to realise

their goals. Partnership working and the ocus

on community outcomes mean that the CFO

needs to understand the nancial risks and

potential liabilities that may impact on the

organisation and have appropriate involvement

in partnerships business decisions. The CFO must

thereore work to develop strong and constructive

working relationships with key decision makers

in partner organisations.

Delivering the organisations strategic

objectives sustainably and in the

public interest

Public service organisations have a corporate

responsibility to operate within available resources

and to remain nancially sound over the short,

medium and longer term. Maximising public value

involves an appreciation o user needs, expectations

and preerences, and the planning process must

allow or their involvement and infuence.

The internal process to determine priorities oten

then needs to grapple with service rationing and

dicult trade-os between dierent groups o

service users, as well as between present and

uture benets. The overarching long term need

to match nancial resources to the organisations

purposes and policies, within constraints o

aordability, taken with the responsibility to

citizens and taxpayers or nancial stewardship,mean that the CFO must contribute actively

to cross organisational issues and to corporate

decision making.

Public nance is complex and highly regulated,

and the CFO must contribute expert technical

advice and interpretation. CFOs must act in

the public interest, even i necessary against a

perceived organisational interest. In some types

o public service organisation this proessional

obligation is given statutory backing, and a

duciary duty is established in case law. Asholders o the red card, the CFO must exercise

a proessional responsibility to intervene in

spending plans in order to maintain the balance

o resources so that the organisation remains

a going concern. To ensure that the necessary

corrective action is implemented, the CFO must

have direct access to the Chie Executive, other

Leadership Team members, the Audit Committee

and also to external audit.

3 HM Treasury Managing Public Money Annex 4.1. 2007

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Governance requirements Principle 1

Set out a clear statement o the respective roles and responsibilities o the Leadership Team and its

members individually.

Ensure that the CFO reports directly to the Chie Executive and is a member o the Leadership Team

with a status at least equivalent to other members.

I dierent organisational arrangements are adopted, explain the reasons publicly, together with

how these deliver the same impact.

Determine a scheme o delegation and reserve powers, including a ormal schedule o those

matters specically reserved or collective decisions by the Board, and ensure that it is monitored

and updated.

Ensure that organisations governance arrangements allow the CFO:

to bring infuence to bear on all material business decisions; and

direct access to the Chie Executive, other Leadership Team members, the Audit Committee and

external audit.

Review the scope o the CFOs other management responsibilities to ensure nancial matters are

not compromised.

Assess the nancial skills required by members o the Leadership Team and commit to develop

those skills to enable their roles to be carried out eectively.

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Core CFO responsibilities Principle 1

Contributing to the eective leadership o the organisation, maintaining ocus on its purpose and

vision through rigorous analysis and challenge.

Contributing to the eective corporate management o the organisation, including strategy

implementation, cross organisational issues, integrated business and resource planning, risk

management and perormance management.

Supporting the eective governance o the organisation through development o

corporate governance arrangements, risk management and reporting ramework; and

corporate decision making arrangements.

Leading or promoting change programmes within the organisation.

Leading development o a medium term nancial strategy and the annual budgeting process to

ensure nancial balance and a monitoring process to ensure its delivery.

Ensuring the medium term nancial strategy refects joint planning with partners and

other stakeholders.

10 CIPFA | The Role o the Chie Financial Ofcer

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Personal skills and proessional standards Principle 1

Role model, energetic, determined, positive, robust and resilient leadership, able to inspire

condence and respect, and exempliy high standards o conduct.

Adopt a fexible leadership style, able to move through visioning to implementation and

collaboration/consultation to challenge as appropriate.

Build robust relationships both internally and externally.

Work eectively with other Leadership Team members with political awareness and sensitivity.

Support collective ownership o strategy, risks and delivery.

Address and deal eectively with dicult situations.

Implement best practice in change management and leadership.

Balance conficting pressures and needs, including short and longer term trade-os.

Demonstrate strong commitment to innovation and perormance improvement.

Manage a broad portolio o services to meet the needs o diverse communities.

Maintain an appropriate balance between the deeper nancial aspects o the CFO role and the need

to develop and retain a broader ocus on the environment and stakeholder expectations and needs.

Comply with the IFAC Code o Ethics or Proessional Accountants, as implemented by local

regulations and accountancy bodies, as well as other ethical standards that are applicable to them

by reason o their proessional status. The undamental principles set out in the Code are integrity,

objectivity, proessional competence and due care, condentiality, and proessional behaviour.

Impartiality is a urther undamental requirement o those operating in the public services.

11CIPFA | The Role o the Chie Financial Ofcer

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Responsibility or nancial strategy

No organisation can achieve its goals eectively

without proper structures or allocating and

optimising the use o resources. The centrality o

nance means the CFO must play the lead role in

advising and supporting the Leadership Team in

turning policy aspirations into reality by aligning

nancial planning with the vision and strategic

objectives or the organisation.

Within the overall corporate governance and

management structure, the CFO has direct

responsibility or leading development and

implementation o the nancial strategy

necessary to deliver the organisations strategic

objectives sustainably. The CFO must thereore

work closely with decision makers to establish a

medium to long term strategy that ensures the

nancial sustainability o the organisation.

The CFO must also develop and manage resource

allocation models to optimise service outputs and

community benets within unding constraints

and any tax raising limits. In implementing these

models, the CFO must ensure that the nancial

and risk implications o policy initiatives areanalysed and appropriately addressed. Models

must encompass capital investment programmes

and annual operations, as well as nancial targets

and benchmarks. They must also take into

account uture commitments, resources available

and the desirable levels o reserves, to ensure that

the organisations nances remain sustainable.

Infuencing decision making

Public service organisations must be rigorous in

their decision making, be explicit about the reasons

or their decisions and record the supporting

inormation and expected impact. This requires

the CFO to be actively involved in, and able to bring

infuence to bear on all material business decisionswhenever and wherever they are taken.

The CFO must be able to advise the Leadership

Team directly, in order to discharge responsibilities

in relation to the organisations nancial health

and long term viability. The CFO must thereore

be a persuasive and condent communicator with

the status and credibility to challenge others, and

infuence material business decisions. The CFOs

advice and reports to the Leadership Team must

be clear, concise, relevant and timely, highlighting

issues that the team needs to be aware o, and

options or action.

The CFO must also work to develop strong and

constructive working relationships with both

the executive and non executive members o

the organisations leadership, creating mutual

respect and eective communication. Providing

inormation and advice to elected ocials as a

public servant will call on an understanding o

ethics, the wider public interest, and diplomacy.

Financial inormation or decision makers

At all levels in the organisation those taking

decisions must be presented with relevant, objective

and reliable nancial analysis and advice, clearly

setting out the nancial implications and risks.

The CFO has an important role in ensuring necessary

nancial inormation and advice is provided to the

Leadership Team and decision makers at all levels

across the organisation. Meaningul nancial

analysis and robust and impartial interpretation

is a key component in perormance management,

asset management, investment appraisal, risk

management and control.

The CFO in a public service organisation must be actively involved in, and able to

bring infuence to bear on, all material business decisions to ensure immediate

and longer term implications, opportunities and risks are ully considered, and

alignment with the organisations overall nancial strategy.

principle 2

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Responsibility or nancial strategy

Agreeing the nancial ramework with sponsoring organisations and planning delivery against the

dened strategic and operational criteria.

Maintaining a long term nancial strategy to underpin the organisations nancial viability within

the agreed perormance ramework.

Implementing nancial management policies to underpin sustainable long-term nancial health

and reviewing perormance against them.

Appraising and advising on commercial opportunities and nancial targets.

Developing and maintaining an eective resource allocation model to deliver business priorities.

Leading on asset and balance sheet management.

Co-ordinating the planning and budgeting processes.


Establish a medium term business and nancial planning process to deliver the organisations

strategic objectives, including:

a medium term nancial strategy to ensure sustainable nances;

a robust annual budget process that ensures nancial balance; and

a monitoring process that enables this to be delivered.

Ensure that proessional advice on matters that have nancial implications is available and

recorded well in advance o decision making and used appropriately.

Ensure that those making decisions are provided with inormation that is t or the purpose

relevant, timely and giving clear explanations o nancial issues and their implications.

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Infuencing decision making

Ensuring that opportunities and risks are ully considered and decisions are aligned with the overall

nancial strategy.

Providing proessional advice and objective nancial analysis enabling decision makers to take

timely and inormed business decisions.

Ensuring that the organisations capital projects are chosen ater appropriate value or money

analysis and evaluation using relevant proessional guidance.

Checking, at an early stage, that innovative nancial approaches comply with regulatory requirements.

Financial inormation or decision makers

Monitoring and reporting on nancial perormance that is linked to related perormance

inormation and strategic objectives that identies any necessary corrective decisions.

Preparing timely management accounts.

Ensuring the reporting envelope refects partnerships and other arrangements to give an overall picture.


Implement appropriate management, business and strategic planning techniques.

Link nancial strategy and overall strategy.

Demonstrate a willingness to take and stick to dicult decisions even under pressure.

Take ownership o relevant nancial and business risks.

Network eectively within the organisation to ensure awareness o all material business decisions

to which CFO input may be necessary.

Role model persuasive and concise communication with a wide range o audiences internally

and externally.

Provide clear, authoritative and impartial proessional advice and objective nancial analysis and

interpretation o complex situations.

Apply relevant statutory, regulatory and proessional standards both personal and organisational.

Demonstrate a strong desire to innovate and add value.

Challenge eectively, and give and receive constructive eedback.

Operate with sensitivity in a political environment.

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The CFO in a public service organisation must lead the promotion and delivery

by the whole organisation o good nancial management so that public money

is saeguarded at all times and used appropriately, economically, eciently,

and eectively.

Promotion and delivery o good

nancial management

Good nancial management is undamental to

establishing condence in the public services and

good relationships with the taxpayer and other

unders. The Leadership Team collectively needs

to set the tone that nancial management is core

to achieving strategic aims, and to demonstrate

that public money is used well. Nevertheless it is

the CFO who must take the lead in establishing

a strong ramework or implementing and

maintaining good nancial management across

the organisation. The CFO will be instrumentalin assessing the existing organisational style o

nancial management and the improvements

needed to ensure it aligns with the organisations

strategic direction.

Financial management is the business o the

whole organisation. When the Leadership Team,

managers and the nance unction all ull

their nancial management responsibilities

successully, they collectively create the

nancially literate and adept organisation. The

CFO must actively promote nancial literacythroughout the organisation, so that the

Leadership Team and managers can discharge

their nancial management responsibilities,

alongside their wider responsibilities in relation

to risk and perormance management.

Value or money

The CFO has a key role to play in balancing

control and compliance with value creation and

perormance.4 Better value or money releases

resources that can be recycled into higher

priorities, without increasing taxation. Helping tosecure positive social outcomes within aordable

unding thereore lies at the heart o the CFOs role

in the public service organisation.

With the oundations in place, good nancial

management will ocus on stretching limited

resources to maximise value or the public

service. Value or money (economy, eciency

and eectiveness) should be the concern o all

managers, but the CFO will need to take the lead in

coordinating and acilitating a culture o eciency

and value or money. This will involve approachesand techniques such as

Enabling the organisation to measure value

or money, and making sure that it has the

inormation to review value or money and

perormance eectively;

Advising on appropriate strategies or

managing assets and stretching utilisation,

and the productive use o other resources;

Providing leadership in using and developing

eciency tools and techniques, includingbenchmarking, IT, shared services, process

analysis and cost management, collaborating

with others where this is more ecient,

eective or economical; and

Ensuring the rigorous nancial appraisal and

oversight o change programmes, income

generation proposals and investment projects.

principle 3

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Saeguarding public money

The CFO must lead the implementation and

maintenance o a ramework o nancial controls

and procedures or managing nancial risks, and

must determine accounting processes and oversee

nancial management procedures that enable

the organisation to budget and manage within

its overall resources. At the most undamentallevel this means ensuring robust systems o risk

management and internal control, that nancial

control is exercised consistently, and that the

organisation implements appropriate measures to

protect its assets rom raud and loss.

The CFO also has a specic role with regard to

stewardship. This includes ensuring that the

governance structures codiy nancial control,

internal control, risk management and assurance,

as well as dening a ramework o nancial

accountabilities and reporting.

Assurance and scrutiny

Accountability or public expenditure is a core

requirement or public service organisations.

They are held accountable by intermediary

stakeholders, such as scrutiny groups, service

inspectorates and external auditors, and by

primary stakeholders: the citizens, service users,

unders and taxpayers.

Managing inormation fows is a key component o

the CFOs role as an ambassador or the organisationon nancial matters and in building relationships

with stakeholders. The CFO must also provide

inormation and advice to those who ocially

scrutinise and review the organisation; unders,

regulators, and external audit, and any group which

exercises scrutiny internally. The community,

taxpayers and the press also expect inormation.

Internal audit is an important independent internal

scrutiny activity. The CFO must support the

organisations internal audit arrangements, whether

the unction reports directly to the CFO or the Chie

Executive, and ensure that the Audit Committee

receives the necessary advice and inormation, so

that both unctions can operate eectively.

Public service providers ace a variety o regulatoryrequirements and standards or external nancial

reporting, while measures o value are expressed

both as nancial and as non-nancial perormance

targets. The role o the CFO in external reporting

is to meet the reporting requirements relevant

to the organisation and to apply proessional

good practice, conscious o the needs o users.

External nancial reporting must be o good

quality, supported by analysis and documentation

and should receive an unqualied audit opinion.

This will be acilitated i the CFO maintains a

constructive proessional relationship with externalauditors and inspectors.

4 IFAC PAIB The Roles and Domain of the Professional

Accountant in Business 2005

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Make the CFO responsible or ensuring that appropriate advice is given on all nancial matters, or

keeping nancial records and accounts, and or maintaining an eective system o nancial control.

Ensure that systems and processes or nancial administration, nancial control and protection

o the organisations resources and assets are designed in conormity with appropriate ethical

standards and monitor their continuing eectiveness in practice.

Address the organisations arrangements or nancial and internal control and or managing risk in

Annual Governance Reports.

Publish annual accounts on a timely basis to communicate the organisations activities and

achievements, its nancial position and perormance.

Maintain and resource an eective internal audit unction.

Develop and maintain an eective Audit Committee.

Ensure that the organisation makes best use o resources and that taxpayers and/or service users

receive value or money.

Embed nancial competencies in person specications and appraisals.

Assess the nancial skills required by managers and commit to develop those skills to enable their

roles to be carried out eectively.

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Promotion o nancial management

Assessing the organisations nancial management style and the improvements needed to ensure

it aligns with the organisations strategic direction.

Actively promoting nancial literacy throughout the organisation.

Value or moneyChallenging and supporting decision makers, especially on aordability and value or money, by

ensuring policy and operational proposals with nancial implications are signed o by the

nance unction.

Developing and maintaining appropriate asset management and procurement strategies.

Managing long term commercial contract value.

Saeguarding public money

Applying strong internal controls in all areas o nancial management, risk management and

asset control.

Establishing budgets, nancial targets and perormance indicators to help assess delivery.

Implementing eective systems o internal control that include standing nancial instructions,

operating manuals, and compliance with codes o practice to secure probity.

Ensuring that delegated nancial authorities are respected.

Promoting arrangements to identiy and manage key business risks, including saeguarding assets,

risk mitigation and insurance.

Overseeing o capital projects and post completion reviews.

Applying discipline in nancial management, including managing cash and banking, treasury

management, debt and cash fow, with appropriate segregation o duties.

Implementing appropriate measures to prevent and detect raud and corruption.

Establishing proportionate business continuity arrangements or nancial processes and inormation.

Ensuring that any partnership arrangements are underpinned by clear and well documented

internal controls.

Assurance and scrutiny

Reporting perormance o both the organisation and its partnerships to the board and other parties

as required.

Supporting and advising the Audit Committee and relevant scrutiny groups.

Preparing published budgets, annual accounts and consolidation data or government-level

consolidated accounts.

Liaising with the external auditor.

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Generate buy-in to, and support delivery o, good nancial management across the organisation.

Develop and sustain partnerships, and engage eectively in collaboration.

Deploy eective acilitation and meeting skills.

Build and demonstrate commitment to continuous improvement and innovative, but

risk-aware, solutions.

Place stewardship and probity as the bedrock or management o the organisations nances.

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Meeting the nance needs o the business

The organisation o nance unctions is changing

rapidly. Traditionally they have been centralised

services, but increasingly they include devolvednance teams in business areas. Arrangements

may also now include outsourced unctions, or

services shared between organisations.

Whatever the structure, a strong customer ocus

both externally and internally must be a key

eature o the way the nance unction does

business. It must support the organisations

broader development agenda, by appraising

investment options and change programmes and

contributing creative nancial solutions within an

eective risk management ramework.

The nance unction must also have a rm

grasp o the organisations nancial position

and perormance. The CFO must ensure that

there is sucient depth o nancial expertise,

supported by eective systems, to discharge this

responsibility and challenge those responsible or

the organisations activities to account or their

nancial perormance. The resources available

must be proportionate to the complexity o the

nancial environment.

Appropriately developed nance skills

The CFO must promote nancial literacy

throughout the organisation, including

championing training and development o relevantskills at all levels. However the CFO has a particular

responsibility or learning and development

amongst nance sta in order to ensure that

both current and likely uture nance skill needs

are addressed. This will include identiying the

competencies needed by the nance unction,

including specialist skills, and ensuring it can

access the skills and experience to exercise

stewardship o public nances, develop nancial

perormance and contribute eectively to new

organisational directions and innovation.

The CFO must ensure that the Head o Proession

role or accountants and nance specialists

organisation-wide is properly discharged in

order to ensure compliance with regulatory and

proessional standards. Exercising leadership

on nancial matters in a devolved environment

will require a documented line o proessional

accountability to the CFO, where this is not a direct

line management relationship.

The CFO in a public service organisation must lead and direct a nance unction that

is resourced to be t or purpose.

principle 4

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Provide the nance unction with the resources, expertise and systems necessary to perorm its

role eectively.

Ensure there is a line o proessional accountability to the CFO or nance sta throughout

the organisation.


Leading and directing the nance unction so that it makes a ull contribution to and meets the

needs o the business.

Determining the resources, expertise and systems or the nance unction that are sucient tomeet business needs and negotiating these within the overall nancial ramework.

Implementing robust processes or recruitment o nance sta and/or outsourcing o unctions

Reviewing the perormance o the nance unction and ensuring that the services provided are in

line with the expectations and needs o its stakeholders.

Seeking continuous improvement in the nance unction.

Identiying and equipping nance sta, managers and the Leadership Team with the nancial

competencies and expertise needed to manage the business both currently and in the uture.

Ensuring that the Head o Proession role or all nance sta in the organisation is properly discharged.

Acting as the nal arbiter on application o proessional standards.

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Create, communicate and implement a vision or the nance unction.

Role model a customer ocussed culture within the nance unction.

Establish an open culture, built on eective coaching and a no blame approach.

Promote eective communication within the nance department, across the broader organisation

and with external stakeholders.

Apply strong project planning and process management skills.

Set and monitor meaningul perormance objectives or the nance team.

Role model eective sta perormance management.

Coach and support sta in both technical and personal development.

Promote high standards o ethical behaviour, probity, integrity and honesty.

Ensure, when necessary, that outside expertise is called upon or specialist advice not available

within the nance unction.

Promote discussion on current nancial and proessional issues and their implications.

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The CFO in a public service organisation must be proessionally qualied and

suitably experienced.

Demonstrating proessional and

interpersonal skills

The CFO must be able to demonstrate their

own proessional standing to exercise nancialleadership throughout the organisation. As a

member o a proessional body, the CFOs skills,

knowledge and expertise will have been tested

by examination and must be continuously

developed in a structured and monitored context.

The CFO must adhere to the proessional values

o accuracy, honesty, integrity, objectivity,

impartiality, transparency and reliability and

promote these throughout the nance unction.5

The CFO must communicate complex nancial

inormation in a clear and credible way.They should be able to operate eectively in

dierent modes including directing, infuencing,

evaluating and inorming. The CFO must also

have the condence to give impartial and

objective advice even i it may be unwelcome,

and be suciently orceul to intervene with

authority i nancial or ethical principles need to

be asserted or deended.

Applying business and proessional

experience

The CFO must have an understanding andcommitment to the wider business, looking

beyond narrow nancial objectives, to inspire

respect, condence and trust amongst colleagues,

inspectors and stakeholders. In practice this means

being creative and constructive in strategic roles

and eective in management responsibilities, with

a sound grasp o approaches such as perormance

management and project leadership.

The CFO must understand how and when to apply

the tools and techniques o nancial analysis in

support o business decisions in order to evaluate

proposals and to oer well ounded and expert

advice. Such techniques include strategic analysis,review o sector best practice, benchmarking,

option appraisal, perormance measurement,

and risk assessment. However data is not always

clear cut and the CFO must also be able to apply

judgement to imperect inormation.

The CFO must have a good understanding

o public sector nance and its regulatory

environment and comply with standards

ormulated through rigorous due process in

support o the public interest to support the

Leadership Team eectively. The CFO must alsohave a good understanding o the principles o

nancial management, and personally set a tone

or the organisation that nance matters and

is a key part o everyones job throughout the

organisation.

5IFAC: Code of Ethics, 2005

principle 5

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Appoint a proessionally qualied CFO whose core responsibilities include those set out under the

other principles in this Statement and ensure that these are properly understood throughout the

organisation.

Ensure that the CFO has the skills, knowledge, experience and resources to perorm eectively in

both the nancial and non-nancial areas o their role.


Be a member o an accountancy body recognised by the International Federation o Accountants

(IFAC), qualied through examination, and subject to oversight by a proessional body that upholds

proessional standards and exercises disciplinary powers.

Adhere to international standards set by IFAC on:

ethics

Continuing Proessional Development.

Demonstrate IT literacy.

Have relevant prior experience o nancial management in the public services or private sector.

Understand public service nance and its regulatory environment.

Apply the principles o corporate nance, economics, risk management and accounting.

Understand personal and proessional strengths.

Undertake appropriate development or obtain relevant experience in order to meet the

requirements o the non-nancial areas o the role.

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Membership o the Public Services

Director o Finance Panel

Jon Pittam (Chair)

Hampshire County Council

Graham Duncan / Lindsay Bell

Department or Communities and Local Government

Ally Cook

Formerly o Sport England

Christine Daws

Welsh Assembly Government

Steve Freer

CIPFA

Alan Geddes

Highland Council

Lin Homer

Borders and Immigration Agency

Chris Jackson

ICAEW

Paul Keane

National Audit Oce

Claire Newton

Great Ormond Street Hospital

Gareth Moss

Bridgend County Borough Council

Kevin Orord

East Midlands Strategic Health Authority

Tony Redmond

Commission or Local Administration

Jon Thompson

Ministry o Deence

Lee Yale-Helms

PricewaterhouseCoopers

Ian Carruthers (Secretary)

CIPFA

Carole Hicks (Technical support)

CIPFA

CIPFA are grateul to all the members o the

Panel or their invaluable contributions, as well

as to Sue Beauchamp or her help with the initial

drating. The statement was widely circulated

or comment during its drating and many

individuals and organisations responded giving

us additional insights into how the CFO operates

in practice across the public services.

appendix

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Registered oce:

3 Robert Street, London WC2N 6RL

T: 020 7543 5600 F: 020 7543 5700

www.cipa.org.uk

The Chartered Institute o Public Finance and Accountancy.

Registered with the Charity Commissioners o England and Wales No 231060

Registered with the Oce o the Scottish Charity Regulator No SCO37963

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