Headlines: December 3rd, 2003

The creation of Finance Director posts in government departments signals the growing importance of finance in the civil service. The Finance Director will have a seat on the Management Board and be at the heart of decision making. Finance Directors will replace the Principal Finance Officer, a role created in the Exchequer And Audit Departments Act 1921. The responsibility of the PFO was essentially to ensure that money voted to the department was spent properly. Most PFOs were not qualified accountants, nor were they members of departmental Boards.Finance Directors will either be qualified accountants themselves, or have qualified accountants of sufficient stature to operate in their own right at the most senior levels of their departments. Their job will be to help their department to make the best use of resources. They will provide guidance on improving financial management and sharpening the departmental finance function. They will also be expected to close departmental accounts more quickly, improve information for management and develop financial skills training.

Treasury guidance makes it clear that there will be some variations from these arrangements, particularly for smaller departments. Where there are variations the Treasury wants an explanation of the reasons why the arrangements were not adopted.

The creation of Finance Director posts has been prompted by the introduction earlier this year of commercial-style systems of planning, control and reporting, known as resource accounting and budgeting. The UK is one of only three countries to have implemented such systems, but others are following the UK example.