In many countries, public sector finance management occurs in five main areas:
• Raising of revenue and making of expenditures;
• Preparing and submitting budget estimates (including the time for doing so);
• Preparing and submitting accounts for audit (including the time for doing so);
• Borrowing; and
• Making banking arrangements, including the opening of bank accounts and investing of public funds.
Future-focused public sector organisations are equipped with the internal management capabilities to channel resources effectively and efficiently in these areas. Their chief financial officers (CFOs) are partners to management and take the lead in building internal capacity in public finance management matters. They walk the talk on transparency and accountability.
For that to happen, the CFO role in public bodies must necessarily switch from that of a scorekeeper to that of a business partner of senior management and politicians.
Their objective should be to improve operational and service performance at all levels of the organisation and provide forward-looking information that is useful for decision-making. Actions like implementing accrual accounting can improve decision-making and transparency and build trust, but they are not a cure-all. Instead, they are starting points towards transforming the government’s finance function overall.
However, public sector finance functions may not have the requisite in-house skills for delivering their mandate in the first place. The recruitment and retention of qualified CFOs and other personnel remains a challenge to improving public finance management. Future-focused public finance functions need to reflect carefully on the range of skills they need to fulfil the role of business partner, working together with senior management so that decisions are evidence-based with clear financial consequences.
Future-focused finance professionals in the public sector will need to develop in a different way in response to growing expectations for well-developed business understanding and engagement skills, as well as sharp technical and analytical insights. Many public bodies struggle to explore, manage and use new forms of finance due to a lack of financial management capability in-house training and development. Programmes can be better structured to build capacity within public sector finance functions and ensure that:
• Staff training emanates from a more focused and objective appraisal system;
• Nominations to attend conferences and training programmes are based on identified capacity-building
• needs;
• Greater emphasis is placed on local and in-house training programmes that address identified needs; and
• Post-training evaluation of attendees is carried out.
Identifying, supporting and retaining people with potential are important to the development and success of public sector finance functions. Public sector organisations need to work harder to attract and develop the next generation of finance managers capable of stepping up to this new challenge. Finance needs to identify those people with the potential to take on insight roles and develop clear career paths with them. Another way to develop finance function talent is through short secondments both to and from other organisations in either the public or private sectors.
Future-focused public sector organisations deal with uncertainty, delivering affordable services while also coping with disruptive changes. Public bodies must decide if they want to consume the legacy left behind by predecessors or create a new legacy for the next generation, while navigating some seismic shifts and mega trends.
Bert I. Odiaka
