Like all the professions within the civil service, from HR to information technology, the finance profession has been under orders from the top – in its case, the Treasury – to professionalise. Considering that it is only nine years since ‘resource account’ techniques were introduced from the private sector and that six years ago fewer than half of all financial directors were qualified, the profession has had much to do.

John Thompson, who is director-general of finance for the Ministry of Defence (MoD), admits the government’s financial practices have lagged behind those in the private sector. But “central government has been catching up and catching up quite fast”, he adds.

In the past few years, the Treasury has carried out financial management reviews of all departments, overseen faster completion of resource accounts for Parliament, and published ‘Managing Public Money’: guidance on how public funds are spent. Meanwhile, the profession has set up a finance specialism within the civil service fast-stream, used the Professional Skills for Government initiative to provide training, and created the Government Hundred Group of senior finance officials; it meets every six months to discuss best practice and common concerns.

One of the most well-known reforms is the Treasury’s insistence that all government departments have a professionally-qualified financial director (FD) on their board. “It has been quite a challenge to meet the chancellor’s policy,” admits Thompson, “but we have now got there.” In this case, “qualified” means either a fully qualified member of one of the six Consultative Committees of Accounting Bodies – CCAB – or the holder of an equivalent international qualification.

Just a year ago, the National Audit Office berated departments because six of them were an impressive two years overdue in meeting the chancellor’s target. Thompson himself was one of the last pieces of the jigsaw, replacing the MoD’s Trevor Wooley earlier this year as its first qualified FD. (The Department for Business, Enterprise and Regulatory Reform and HM Revenue and Customs are currently without FDs, but their previous finance chiefs did fit the bill.)

This all took so long, and was “such an interesting and challenging process”, Thompson says, because “as organisations, departments are massive”, and there are not many people capable of doing the job. Thompson likens departments to companies in the top 10 of the FTSE index. Eleven of them spend more than £10bn a year, he says, and the biggest spenders – the Department for Work & Pensions and the Department of Health – spend more than £100bn each. “You are looking for someone who can do a financial leadership job in a really significant organisation; you are looking for individuals that are not exactly common,” Thompson explains.

“We’ve had a very mixed recruitment process,” he continues, resulting in the appointment of candidates from both the public and private sectors. “It’s good to get a range of views.” With the “full senior cadre” in place, the profession is now encouraging departments to adopt a strategic and cohesive approach to their succession planning and talent management – something that was not necessarily done in the past, says Thompson.

A finance profession that is at the top of its game will be all the more important as the economic situation results in tighter public spending. “The FD role will be crucial in informing the board and ministers how we can spend the money we have, and how that will impact on the public,” Thompson notes.

Those with little understanding of the profession might see it as a narrow field, but Thompson says there is more to it. “Being an FD is definitely not just about numbers; it is about what we’re trying to achieve for the taxpayer,” he insists. “You have got to see the connection between finance and public service delivery. If you don’t see that, you should not be in the job.”

Just as finance professionals must have an understanding of their department’s wider agenda, Thompson says it is very important that civil servants who do not work directly in finance understand the numbers that underpin their work. “All professional groupings – HR, technology, procurement – need to interact” with civil servants across their departments, he says. The profession already has online training for non-finance officials, and intends to provide training for the Top 200 and support for board members in order to make sure the wider civil service is confident with financial terms and figures.

“It is really crucial that the financial community does this,” Thompson concludes, “otherwise it will be stuck in a specialist ghetto on the sidelines.”


A profile of the finance profession

Who they are: Accountants, auditors, analysts, directors-general of finance – finance roles include every kind of accountancy role you can imagine within central government, including those whose job it is to improve the professionalism of public finance staff.

What they do: financial reporting, auditing, invoice payments, budget production, financial planning, taxation, financial analysis, management accounting, the setting of financial rules and checking of compliance, as well as roles that don’t involve managing public finances, such as the financial aspects of policy development or operational delivery.


Number Crunching

1982 The year the profession was established as the accountancy service, including just 600 qualified accountants
8661 Civil servants in the professional group – one per cent of all civil servants
50% of the profession are fully qualified, the other half are in training or are part-qualified (for definition of ‘qualified’, see Interview, right)
400 qualified finance professionals in the senior civil service (SCS) – eight per cent of all senior officials
20% of qualified and part-qualified finance staff do not work in mainstream finance
100% of departmental finance directors are now professionally qualified; in 2003, the figure was only 39 per cent


Looking ahead: The profession’s agenda

Financial training for the Top 200: the profession intends to look at the Top 200’s current skills, and supply financial training and mentoring to those who need it.

Finance Skills for All: the cross-government e-learning package for non-finance staff is to be relaunched this autumn.

Integrated reports: finance professionals are to be encouraged to include financial information and performance data about departments in the same report, to make analysis easier for decision-makers.

International Financial Reporting Standards (IFRS): the public sector’s move from UK GAAP (Generally Accepted Accounting Practice) to IFRS is due to take place between this autumn and the end of this financial year in March 2010. So far, all departments are on target to meet the deadline but, because the transfer requires departments to look at every private finance initiative and decide whether they should be on- or off-balance sheet, some, such as the Ministry of Defence, have more work to do than others.

Closer Line of Sight: means using the same system to produce the estimates of future spending for Parliament and resource accounts, which show what is actually spent. This will make parliamentary scrutiny easier and reduce the workloads for departmental finance teams. The reform requires legislation and could be introduced by 2010-11.

Benchmarking of finance functions: will give departments an idea of how much their finance operations, from paying an invoice to producing a budget, actually cost the department. The cost can then be compared to that in other departments.

Financial management improvement plans: departments had until March 31 to complete the financial management model developed by the profession and the Chartered Institute of Public Finance and Accountancy (CIPFA). This allows them to set out what they want to do and will be used to judge progress.