Audit Commission

Summary [Download full report below this summary]

This paper highlights aspects of financial and performance management and reporting for local authority trading units that authorities should re-evaluate. Its core is a focus on in-year accounting arrangements - defined as the processes for compiling accounting and performance information which authorities provide to all levels of management (both operational and corporate) and members.

The key messages of this paper are:

1. All significant local authority trading units should have annual business plans, summaries or composites of which should be approved at member level.
2. The reliability and timeliness of in-year accounting and performance data are at the core of sound financial arrangements for all services. Unless an authority can be assured about its core financial and performance data, the whole reporting framework is at risk of collapse.
3. The finance director has a key role in ensuring the stewardship of a local authority's financial affairs. This role/function should not be a rationalisation for an overcentralist, directive approach. Finance directors and their staff must understand the commercial imperatives that drive many trading units and the complex areas in which they operate.
4. Financial reporting requires clarity about who receives what and when. This imperative implies a hierarchy of information. It is important that operational managers receive all the information that is relevant to the areas that they control. Key statutory officers and members should be clear about what reports they receive and the timing and basis on which they receive them.

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Management paper ( PDF, 1006kb )

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