Author Archives: hbpublications

To move from annual budgets to a three to five-year time horizon for the public sector enables budgets to align with the big picture of long-term objectives and outcomes. In order to impact change, you need time. The budgeting process, particularly in local government, has been focussed on an annual balanced budget which can be difficult to achieve. However, having a budget that reflects a 3-to-5-year Medium Term Financial Strategy (MTFS) will allow for some years to have planned deficits knowing that these will be covered in future years. There is a caveat however, deficit budgeting must always be justified as a means to an end, and those preparing budgets must be confident in their ability to be realistic about the future. They must be sure that short term deficits lead to longer term gains through a fully funded action plan that can be monitored and yield results. This is the only way SMART objectives can be achieved. The greater the level of devolved budgeting, the more care needs to

Our first publication was Managing the Devolved Budget, and it remains our best seller. The concept of devolving budgets is not new. In fact, the debate about “Devolve or not to Devolve” has always, and continues to be, a topic of discussion. This insight considers the pros and cons of devolvement, the theoretical benefits and the practical challenges. The theory of devolvement is the process whereby budgets are devolved to an individual or organisation who becomes the budget holder and who is then totally responsible and accountable for that budget. This requires management and financial responsibilities to be aligned such that the budget holder is accountable for the financial implications of their decision making. The first step in this process is decentralisation, allowing centrally held budgets to be devolved within the decentralised structure. Getting the decentralised structure right is key to successful devolvement. This works at all levels within an organisation, within a service, within a department and within a team. The nearer budget devolvement is to service delivery, the

The above poster sets out why accountability matters and gives a financial accountability framework. All organisations will have financial policies and procedures which should be known and adhered to by those responsible for budgets and spending. The level of this knowledge and awareness should be assessed on a regular basis. Our online assessments may prove useful in some areas such as fraud awareness. They can be tailored to correlate to the localised procedures and ensure good practice becomes an organisational strength rather than a weakness.

Financial forecasting is essential as part of managing budgets Looking ahead each month should be part of any budget monitoring routine. It should consider what part of the budget has been spent to date, how much budget remains; and is there sufficient budget to cover the future planned expenditure to the end of the year? The answers to the first two questions should be straight forward and available from the financial management systems. Regardless of the ERP/software being used, a report should be able to provide the spend to date and budget remaining. The first issue may be, is the spend to date accurate, complete, and up to date? (See future insights on commitment accounting). The topic of this insight is “future planned expenditure”. This is effectively a forecast, and it is required to “project the outturn”, that is how much will be spent by the end of the  year. The future forecast is likely to change each month due to internal and external factors. In month one, eleven months