On the money

The Chartered Institute of Public Finance and Accountancy has recently developed a self-assessment model covering all aspects of financial management. Public service organisations will find it useful for judging how well they measure up against best practice in financial management – though they will need to purchase it through the CIPFA website.

Associations straddle the divide between the public and private sector and are regulated to ensure they are well governed. They have a range of stakeholders, including tenants, staff, regulators, private lenders and suppliers.

All of these stakeholders have an interest in the health of an association. But where financial management is poor, it is the tenants who will suffer the most.

The CIPFA model will help housing associations respond to risk-based regulation and improve efficiency.

Regulatory codes focus on the need for coherent and robust business plans, the adequacy of financial resources and effective risk management, alongside proper governance arrangements and the highest standards of probity.

So how well are you doing? Can you point to evidence that demonstrates a clear picture of health on all aspects of financial management? Is financial control secure, and is finance supporting business aims and developments?

Our model defines financial management as “the system by which the financial aspects of an organisation are directed and controlled to support the delivery of the organisation’s goals”. Internal control and accountability processes are essential, but social objectives, value for money, stakeholder interest and partnership are equally part of the recipe.

There are 42 good practice statements listed by the model, which asks organisations to score themselves against each statement. Detailed questions are posed to explore whether there are relevant groundwork policies and practices in place, whether these are deployed consistently and effectively, if they influence behaviour or results and if they deliver the desired outcome.

Associations have many stakeholders, but when financial management is poor it’s the tenants who suffer the most

The statements are grouped in a matrix so that financial management is analysed across different aspects of management, such as stewardship of the business and how the financial management is supporting performance and enabling transformation. Also analysed are leadership, people, process, stakeholders and results.

The self-assessment delivers a profile of your financial management, outlining strengths and areas that need improving. For example, if a picture emerges of weaknesses in performance, weaknesses in financial competencies in key posts may be identified and prioritised for improvement by digging deeper into individual statement scores.

By repeating the self-assessment from year to year, progress can be tracked over time.

The model is hosted on a secure website, which allows for the self-assessment to be divided into more manageable chunks and for tailored questionnaires to be sent out to gain a perspective from outside the finance departments as well as within.

The views of board members on the strategic aspects of financial management and leadership on financial strategies can also be included within the assessment.

The model aims to present an organisation-wide view of financial management. It can help to establish whether finance is – as it should be – the business of everyone in the organisation and whether it’s linked to a clear strategic view of the goals of the organisation.