Financial management strategy - programme

Report: 06
Date: 21 February 2002
By: Treasurer

Summary

The report presents a programme for delivering the Authority's financial management strategy and proposes arrangements for monitoring progress.

A. Recommendations

The Committee is recommended:

1. To approve the financial management strategy as a basis for taking forward improvements in the Authority's financial management and for monitoring progress.
2. To agree the proposals for reporting progress on the programme

B. Supporting information

Background

1. When I was setting up the financial management arrangements for the Metropolitan Police Authority in 2000 I commissioned an independent review of the Finance function in the MPS. That review identified two key areas of concern:

• The quality and capacity of the Finance function
• The weakness of financial controls

2. An action plan was agreed between myself and the Receiver, and subsequently the MPS Director of Resources. The first priority was agreed to be the strengthening of the Finance Department for whom an urgent task would be the documentation of the required financial controls. Although it has taken longer than originally envisaged the enhancement of financial skills within the MPS is well underway and at the same time considerable progress has now been made in setting out financial instructions and the scheme of devolved management which need to operate below the Authority's Financial Regulations.

Financial management strategy

3. This is therefore a good point to take a step back and survey the requirements for improved financial management generally, building on the progress made so far. It is also timely to clarify the Authority's objectives for financial management as a basis for responding to the concerns expressed in the external auditor's annual audit letter. Such a process will also set targets for achieving improved financial management up to the next Assembly elections and appointment of independent members.

4. The attached action plan has been drawn up to cover all the Authority's interests from a financial perspective. There is nothing essentially new in the programme but it does serve to consolidate existing initiatives and aspirations. This is underlined by the fact that much of the programme can be referenced to action plans already being pursued. In other areas the programme is less well developed and further clarification is required as to the process for achieving the objectives. The programme will therefore need to be regularly updated. Some of the actions are concerned more with maintenance of performance rather than improvement. However, given the stage of development of the Authority most of them are about securing improvement to a standard acceptable for a local authority.

5. Progress needs to be made on a broad front. However it is suggested that some of the highest priorities for the forthcoming year are:

• Completing the documentation of financial controls and embedding them in management processes (actions 1b), c) and d))
• Linking medium term financial forecasts with policing priorities (action 2a))
• Improving budgetary control (actions 3a), b))
• Strengthening the Authority's reserves (actions 9a), b) and c))

6. Reports will be made to this Committee, or other committees as appropriate, in relation to specific actions. Indeed there are reports on this agenda dealing with budgetary control and with reserves policy. However it is suggested that I should report periodically to the Committee on progress on the whole programme. I would propose to do an annual report with an interim update half yearly.

C. Financial implications

There are no direct financial implications of this report although the financial management strategy should have a profound effect on the financial performance of the Authority.

D. Background papers

None.

E. Contact details

Report author: Peter Martin, MPA.

For information contact:

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

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