By Victoria Barnard, Senior Consultant CIPFA
Many local authority finance teams are looking to improve their accounts closedown process. Why?
- Faster closes release personnel to concentrate on other priorities far earlier in the financial year.
- Smoother processes create a less pressurised working environment for staff.
- More accurate accounts reduce the risk of audit headaches and late adjustments.
However, turning the ambition into a reality can be difficult. One practical way to identify key areas for improvement is through a systems analysis framework. For example:
Inputs
- When does your team find itself waiting for information, and how can you prevent these delays? Influencing skills come to the forefront, and each situation needs a unique and maybe unconventional response. For example, if an internal team always misses deadlines, is there a resourcing issue that could be helped by revising the split between what’s considered to be “their work” and “our work” – if it would speed up your process overall, could you make one of your team available to help?
- Have some honest conversations to check where your team is confident in their knowledge and abilities and where there may be gaps. Is knowledge spread appropriately through the team, or is it the same individuals who always attend the FAN courses? Could external advisors help, and if so, when can they have the most impact – should you consult them early to prevent errors, rather than later when time may already have been wasted?
Processing
Are you using the right tools for the job? Computers are significantly faster and more accurate than human brains when it comes to applying algorithms and reproducing data, whereas our brains are irreplaceable when there is a need for nuanced, contextual considerations. Is this the balance that you are operating?
Outputs
- What are the key products that you need to get right and on time to create the overall Statement of Accounts? Likely examples include Notes 12 (Property Plant and Equipment) and 7 (Adjustments between Accounting Basis and Funding Basis under Regulations). These items represent your critical path for success, so prioritise them in terms of resource allocation and management attention.
- Where are you wasting time chasing down unnecessary perfection? The accounts only need to be materially correct; any more than this may have to be seen as a luxury. A classic example is year-end accruals where staff accept numerous small updates well beyond a published deadline. Instead, stick to the deadline you set, only making genuinely material changes after that point. Sometimes, perfection-chasing is a cultural issue – staff need to be reassured that they won’t be criticised for not balancing figures to the pound.
With careful analysis, every council can improve its closedown process, and CIPFA has the tools, guidance, training and consultancy support available to help you identify and make the changes you need.
Cashflow Toolkit and ProForma Toolkit, pre-order now.