Transforming the finance function

Don Peebles, Policy and Technical Manager, CIPFA Dave Baldam, Senior Consultant, CIPFA Steven Mair, Borough Treasurer, Oldham Council

Transforming the Finance Function

CIPFA Conference 2013 – Workshop 11 July 2013

Today’s Team - Introductions

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Don Peebles Policy & Technical Manager CIPFA

07919 044246 [email protected]

Dave Baldam Senior Finance Advisor CIPFA

07919 017569 [email protected]

Steven Mair Borough Treasurer Oldham Council

07786 525809 [email protected]

Some Questions We Hope to Answer

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Why “transform” my finance department?

Has anyone else tried this?

How can I do this?

What do we mean by “transformation” Transform my finance department? – don’t think I need to

Transformation….

The Vision

“…a modernised and integrated financial management system which is fit for purpose for the modern public body…” This means: A whole systems approach to budgeting, in-year budget management and reporting, with a seamless link to end of year reporting cipfa.org.uk

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Ambition

Is there an opportunity to redesign the closedown process for local government (initially)?

 Development of a robust and reliable standardised process for year end close down  No standardised process exists across local government?

 Why redesign the final accounts process? - improves financial management - to save time and resource - focus on ‘added value’ work - Staff benefits cipfa.org.uk

So what is happening? (1)

 Oldham Council has been doing its own pioneering work  New product development – look for early adopters and innovators – Oldham!

 CIPFA will be working closely with Oldham to develop the new product  Adopting a three stage process to final accounts redesign cipfa.org.uk

So what is happening? (2)

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Stage 1 - Standardisation

Process map Oldham’s closedown processes  Identify scope for further improvements to Oldham’s processes  Identify barriers that Oldham had to overcome, and solutions (people and technical)  Explore opportunities to standardise processes cipfa.org.uk

So what is happening? (3)

 Explore different processes needed for different types of authority (Oldham is a unitary)  Having regard to the previous points: identify adaptations required to Oldham’s processes having regard to: - completeness (different types of authority) - compliance/ robustness (Code) - reliability (system)  Review, test and go live!

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So what is happening? (4)

 Process map another LA’s closedown process that has not replicated Oldham’s pioneering work  Illustrate differences i.e. where LAs are currently versus where we want to move them in terms of the Oldham way cipfa.org.uk

So what is happening? (5)

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Stage 2 - Automation

To design a software solution which is capable of being attached to multiple systems (both corporate financial system and service department systems) to extract all the information required to produce a set of Code compliant accounts, which has significantly reduced the level of manual input  Market research available technologies  Identify appropriate partners and select a preferred partner  Build, test, refine, test and go live!

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So what is happening? (5)

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Stage 3 – Advice, Assistance & Support

Move into developing new ways of working on closedown  Local authorities pro actively review and engage with others on improving their closedown (different delivery models?)  Sharing of best practice, standardisation of processes/ systems, all share in the benefits (improved quality & cost) cipfa.org.uk

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Product Launch – Indicative Timetable

 Phase 1 – Standardisation: Oct – Dec 2013  Phase 2 – Automation: 2014?  Phase 3 – Advice, Assistance & Support: 2015?

Transforming the Finance Function The Oldham Council Story

 The Ambition  The Reason  Why the Accounts?

 The Track Record  How Did We Do It?

 The Benefits cipfa.org.uk

cipfa.org.uk

Transforming the Finance Function The Ambition

 It is not about the accounts  It is about:  transformation, financial management standards, innovation …………….

 improved quality and reduced cost (highest performance, lowest quartile cost)  step change not incremental, starting with the fundamentals moving rapidly on, through and up

Transforming the Finance Function The Reason

 Need for change, need to kick start transformation  There were:  Pockets of excellence   Elements of ambition Some aspiration and occasional new ways of working  There was also the usual:       We’ve always done it this way Does he know what’s talking about ……..

It’ll never last, give it a year Never work in “Oldham” If only those services/other teams/third parties ……… Why?

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Transforming the Finance Function Why The Accounts

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 Wanted something that was:  Significant       SMART Visible Service wide Easily “messaged” Externally verifiable About quality, pace and transformation  A catalyst

Financial Year

2008-09 2009-10 2010-11 2011-12 2012-13

2013-14

Transforming the Finance Function The Track Record

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Submitted for External Audit

30 June 2009, material errors 27 May 2010, no material errors 19 May 2011, no material errors 3 May 2012, no material errors 26 April 2103, no material errors

TBD, but earlier and better

Audit Opinion & Publ. Accounts National Ranking

End September 2009 31 August 2010 29 July 2011 Low Top 6 Council & 1st Met Authority Joint 1st Council 25 June 2012 31 May 2013

TBD, but earlier and better

1 st Local Gov. Body (LGB) 1 st LGB, top 60% FTSE 100

1 st LGB and top 30% FTSE 100

Transforming the Finance Function How Did We Do It? - Initially

    At the start great deal of sheer xxxxxx mindedness A great deal of hard work Lot of dependence on key individuals Also identified enablers, doubters and blockers cipfa.org.uk

 Also:   Applying project management methodology Challenging current timelines   Technical expertise Refining quality assurance techniques

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Transforming the Finance Function How Did We Do it? - Project Management and Timelines

    Detailed timetable and list of working papers Defined roles and responsibilities Communication plan Stakeholder and risk management     Early planning – extensive & timetable review as soon as close Earlier assurance gained from monthly close & FFS audits External audit support – incorporate resources to timetable Technical groups – on going programme of activity

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Transforming the Finance Function How Did We Do It? - Technical Expertise and QA

 Technical Expertise  Key individuals identified as technical experts and backup for these people identified so knowledge and workload shared  Technical Issues picked up in the monthly monitoring programme so resolved prior to year end  3 Stage quality assurance process:    Preparer Reviewer Quality Assurer

Step Change Process Adopted

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Transforming the Finance Function The Benefits

      Improved processes More resource from end of April QA is normal business Rotation of staff – building resilience, and resistance is changing to requests Broader understanding Tackling by way of example:  Two year budgets     Integrating systems Embedding self service “Added Value” finance Themed developments cipfa.org.uk

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Transforming the Finance Function – Other Benefits

 Drives continuous review and improvement:  Embeds refined project management skills  Focuses resource to improve systems for further efficiency and streamlined financial reporting  Cost effectiveness:  Frees up finance staff months earlier   Forward looking focus, rather than the historic Early programme builds in capacity to address emerging issues  Raises the financial management “bar”:  Sets a standard of quality, aspiration and timeliness   Applied to other financial work. Provides confirmed information for all stakeholders months earlier

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Transforming the Finance Function – Other Benefits

 Culture change:  Can do - and what else can we do   Being bold Ideas  Staff benefits :     Staff experience, motivation and career development is enhanced Develops the reputation of Oldham and its finance service Pride in the job is promoted Attracts and retains excellent top quality staff 

In a nutshell….

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Short Term Pain

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Longer Term Gain to Organisation and Finance Team

Your views………………….

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Transforming the finance function

Don Peebles, Policy and Technical Manager, CIPFA Dave Baldam, Senior Consultant, CIPFA Steven Mair, Borough Treasurer, Oldham Council