Raise your game – professionalism in government finance

Mirroring industry after a long history of resting on its laurels, government finance is changing. The government finance profession (GFP) has much to say on the progress it has made in its aim to join the 21st century, from hiring qualified accountants into financial management roles to standardising financial reporting and introducing the balanced scorecard.

But most interesting is the fact that its finance directors have emerged as pivotal players in efforts to professionalise government finance and, crucially, as the people to galvanise management and finance function buy-in to the idea it should want to and can earn its place in business decision-making, instead of simply keeping score.

However, some observers think progress is slower than it should be and believe an enduring lack of interest from public sector department boards, in the contribution finance can make to business, has hamstrung FDs’ efforts to shake the status quo.

A National Audit Office study in May found that 86% of finance staff within the Home Office “fully or partly” believe the board “sets the tone that finance matters”. But a PricewaterhouseCoopers study of government and public finance in the same month found that a large swathe of public sector FDs across the UK think that their boards have “a mixed appetite for transparency of financial decisions and performance”.

John Berriman, head of PwC’s government and public sector finance practice, thinks finance departments are “not generally seeking radical improvement to the finance function”, identifying “relatively modest aspirations” held across public sector finance functions and a lack of support for finance from senior policy and decision makers.

He concludes that the two “essential leadership steps” needing to be grasped are the FD moving to address cultural challenges in the finance function and providing the necessary leadership to move it forward and, in turn, public sector management responding to “welcome finance aboard as a genuine business partner”.

Cultural challenge
Jon Thompson, head of the GFP, admits problems persist, but believes it is down to FDs to make management understand the business case for valuing finance. “It’s true there remains a cultural challenge in some areas of central government to get all departments to take the financial excellence as seriously as the private sector or other parts of the public sector,” he tells Financial Director. “It is now for senior colleagues to demonstrate the value they can add to the business and continue to build on the reforms we have introduced.”

Hunada Nouss, director general for finance and corporate services delivery at the Communities and Local Government department since 2007, is one of a slew of FDs imported from industry as part of the professionalisation effort. She was formerly UK FD for Burger King and a financial alumni of Diageo. She agrees more needs to be done to raise the profile of finance.

“When I first came in, we spent a lot of time fixing the finance function. It needed to raise its game ­ we had to earn our permission to play,” says Nouss. “Boards didn’t understand what the finance function could deliver or how it could enhance decision making. Although central government ‘got’ the need to professionalise intellectually, I wasn’t sure it really wanted to change.”

The message form the top is now clearer. “The only way finance is valuable is for it to understand the business and help leaders and decision makers in delivering quality and value for money public services. That requires understanding of what politicians are trying to deliver, the overall strategy and policy agenda, the options for delivery, clear performance management arrangements and the resource impacts,” says Thompson.

“The FD must be well placed to be at the heart of this conversation and connect the various parts.”

And Nouss believes recession is a boost to FDs’ efforts. “With the economic downturn and fiscal outlook there’s a recognition of the real need for strong financial management skills and I think finance now has a huge appetite for this, having seen its stature grow. It is responding well to those challenges,” he says.

Hear Home Office FD Helen Kilpatrick discuss these issues at the Financial Director Summit 2009