CFO role warning

The Audit Commission has warned of the dangers of the growing trends to be guaranteed a place on the management board and urges councils to broaden their responsibilities. among councils to relegate finance directors in local government to a non-board role. In a report issued this week, the Commission called for chief finance officers to have a more central role in management structures.

The commission said it was concerned councils were considering either downgrading CFOs or establishing structures in which the role was not part of the management board.

The report said local councils were developing varied management structures, where the role of finance director was combined with others and the person holding the role might not be a qualified accountant.

Andrew Foster, controller of the commission said some councils were not benefiting from a strategic approach to financial management because the CFO role was too narrow and called for wider development. ‘Some councils see the role as purely an administrative one. In the best councils finance directors have a pivotal role in maintaining the financial health of local government, acting as custodians of the public purse and in delivering corporate objectives but they are not as proactive as they might be in developing a wider role.

‘Financial directors can now demonstrate that they can play a role in the heart of local government,’ he continued.

The commission said that in cases where the CFO was not on the management board, councils should install appropriate safeguards including guaranteeing the CFO direct access to the chief executive, the management board and councillors when necessary.

Keith Beaumont, policy and finance officer at the Local Government Association, agreed. ‘We are supportive of the conclusions of the commission’s report.

Financial directors should have a key role in local government structures if authorities want to maintain their financial health,’ he said.

Foster urged financial directors and councils to use the report to re-assess whether they are getting the most out of the role. ‘The key issue is the need to deliver the council’s key objectives while safeguarding the public purse,’ he said.

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