Restructuring of finance function

Report: 11
Date: 17 October 2000
By: Commissioner

Summary

This paper proposes a structure for the Finance Directorate which addresses the key objective to enhance competencies and skills in support of the action plan for Financial Management arising out of the Treasurer’s Function Review (Report FPBV Committee 19 th September 2000 refers).

A. Supporting information

Introduction

1. This paper describes a structure for the Finance Directorate which addresses the issues facing the financial management function of the Metropolitan Police Service:

• Entry into the local authority financial regime
• Capacity inadequacies recognised in both external audit Management Letters and the review instigated by the MPA Treasurer during transition
• Acknowledged deficiencies in internal financial control
• The requirement for consistent and professional finance support to all parts of the MPS as resource management devolution increases.

2. The present structure implemented by the Receiver at the beginning of 1998, and which was designed as an interim arrangement, included two Directors and six Assistant Directors managing various finance functions. The majority of staff within the Directorate are not professionally qualified or under training. In addition there are a small number of accountants in specific parts of the organisation providing limited support.

3. The restructuring of the Directorate should be viewed as an incremental change following previous restructuring rather than a radical development. However it is clear that financial management development is fragmented and inconsistent across the organisation.

4. The introduction of an organisation-wide finance management system will help to counteract this but it must be accompanied by a tighter framework of financial control which will drive consistent accounting processes and quality financial support to all areas of the MPS.

5. This should not be seen as a ‘centralisation of power’ nor a diminution of flexibility and devolvement but a recognition that the financial control framework of the MPS is weak and that the general level of financial support requires improvement to meet the joint demands of internal management and the Metropolitan Police Authority.

Directorate structure

6. The proposed structure is based on four principles.

• All professional financial support currently existing within the organisation should fall within the line management structure of the Finance Directorate.
• Existing Professional finance staff who have operated in isolation within some business groups will be brigaded to provide dedicated but resilient support to discrete units within the organisation. In the majority of cases this support will also be co-located with the relevant units.
• There will be one Head of Finance managing the Finance Directorate on behalf of the Director of Resources whilst acknowledging that the latter is both senior financial adviser to Management Board and lead contact with the Treasurer of the MPA.
• The Directorate structure recognises four functional elements which deliver its responsibilities in the context of the scheme of delegation agreed by the MPA and best practice as referenced in the Home Office Financial Management Code of Practice for Police Authorities.
• It is planned for the structure to be in place and functional by the end of the 2000/01 financial year.

7. The four functional divisions within the structure are:

• Corporate Finance - macro Revenue and Capital planning and analysis (with relevant MPA liaison); technical finance issues - Best Value, Costing, PFI.
• Accounting and Financial Services - all aspects of accounting and statutory report production, treasury management and all associated financial services (receipts and payments).
• Business Support - Financial support to operational and support business units (from Assistant Commissioner / Director to BCU / Department level); Explicit support to the Performance Review process; Budgeting and reporting links between Corporate Finance and “the business”.
• Financial Systems - Development and support of the corporate financial management system; Liaison with other Back Office system management; “first call” support to Finance Directorate information systems.

8. Each of these functions will be headed by a senior finance manager; with the Head of Finance they will form the Directorate Management Team responsible for the development and delivery of the Directorate business plan. They will also, as necessary, support the Director of Resources in his ‘Head of Profession’ role.

Next steps

9. The agreed Action Plan arising out of the Treasurer’s review of the finance function contained a number of high level activities required to deliver service improvement.

10. In addition to determining the overall structure of the Directorate, there is much detailed work in hand.

• Definition of job roles and descriptions for senior directorate posts;
• Definition of structure lower down within the four divisions within the Directorate;
• Identification of the skills and attributes required to deliver a modernised Directorate and the revised roles within it;
• Conduct a “skill-needs” assessment of existing staff;
• Identification and devolvement of training plans and support for existing staff members who lack identified requirements;
• Development and implementation of a recruitment and retention strategy to attract and retain appropriately skilled staff.

11. Whilst the Financial Systems division was substantially reviewed during the implementation of the corporate finance system, the three newly proposed divisions require focused management to support their development.

12. Acting appointments have been made to the posts of:

• Head of Finance
• Financial Controller
• Chief Accountant
• Head of Corporate Finance

The first two posts are filled by existing, suitably experienced MPS staff. The latter two posts are filled by experienced external interim managers who will manage the shaping of the relevant divisions pending the outcome of an extensive recruitment process.

13. Some consultancy support has been retained to provide HR/Finance support to the restructuring project which is being led by the Acting Head of Finance on behalf of myself.

Financial implications

14. Whilst the full detail of the restructuring is not known, it is not possible to fully cost the structure proposals. However, it has been recognised that the deficiencies identified in earlier reports will require a strengthening of the finance function in both numbers and quality of staff.

15. It is inevitable that the overall cost of the finance function will increase in the short term whilst weaknesses are addressed and processes/functions reviewed. There will also be the one-off costs associated with consultancy support which may be met from a reserve for first year set-up costs being considered by the Treasurer as part of the finalisation of the Authority’s opening financial position.

B. Recommendations

The Committee is invited to comment on the proposals for restructuring of the Finance Function, to note the management changes and action which is already taking place and to note that future reports on progress and cost implication will be reported to future meetings.

C. Financial implications

The restructuring process will have direct financial implications during implementation and in the final solution. These costs are being identified as are proposed funding sources. The 2001/02 budget will be constructed taking account of the final structure developed.

D. Review arrangements

Further reports will be made to the Committee on the progress of the restructuing and the measures to address the skills and competencies in MPS finance.

E. Background papers

The following is a statutory list of background papers (under the Local Government Act 1972 S.100 D) which disclose facts or matters on which the report is based and which have been relied on to a material extent in preparing this report. They are available on request to either the contact officer listed above or to the Clerk to the Police Authority at the address indicated on the agenda.

None.

F. Contact details

The author of this report is Bob Alexander, MPS Finance Directorate.

Trevor Lawrence, Director of Property Services, MPS.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Send an e-mail linking to this page

Feedback