• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Inspiring Your Next Success!® Company Confidential ...
 

Inspiring Your Next Success!® Company Confidential ...

on

  • 535 views

 

Statistics

Views

Total Views
535
Views on SlideShare
534
Embed Views
1

Actions

Likes
0
Downloads
2
Comments
0

1 Embed 1

http://www.slideshare.net 1

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Inspiring Your Next Success!® Company Confidential ... Inspiring Your Next Success!® Company Confidential ... Presentation Transcript

    • Local Management Accounting Team Review Presentation of Findings DATE: July 07 Consultants: B.Brownlee, A.Duguid, J.Herman, C.Stone Ref: Final Draft DCLG-LMAT Rev-110707-1.3
    • LMAT Review - Contents
      • Introduction
        • Requirements & Objectives
        • Scope and Principles for Change
        • Project Approach
      • Management Summary
        • Baseline
        • Findings
        • Business Case for Change
        • Future Ways of Working
        • Gap Analysis
      • Next Steps
      • Baseline Analysis
        • Background
        • Local Management Accounting Team (LMATs) – Baseline Analysis
      • Strengths & Issues
      • Implications of Issues
      • Conclusions
      • Annex A – Current LMAT Organisation Structures
      MANAGEMENT SUMMARY SUPPORTING EVIDENCE
    • Introduction
    • LMAT Review - Requirements & Objectives
      • The LMAT Review seeks to address the following:
      • Requirements
        • How are the LMATs currently structured and constituted, and what are the inefficiencies and issues?
        • How can the LMATs add the most value in the future, in the light of proposed changes?
        • Is there a sound business case that underpins the changes and what does this constitute?
      • Objectives
        • To identify and analyse the staff and activities that currently encompass the LMATs.
        • To evaluate potential future ways of working and
        • The potential savings arising from changes to roles, structures and ways of working
    • LMAT Review - Scope & Principles for Change
      • Scope – LMAT’s current activities - excludes Government Offices of the Regions (GOs) and the wider CLG family
      • The principles for change to consider:
        • Centralisation of transaction processing
        • Greater focus on added-value services
        • Group Management Accountants (GMAs) and their staff to come under the control of the Finance Directorate
    • LMAT Review - Project Approach
      • The LMAT Review was structured as a project over a five week elapsed period comprising the following phases:
        • Project Initiation to establish project communications and administration
        • Baseline analysis of current ways of working
        • Evaluation of potential futures ways of working
        • Gap analysis between current and future ways of working
        • Presentation and final reports
    • LMAT Review - Project Approach Issue Surfacing Structured Interviews with GMAs, LMATs, Central Finance, FSSD & other stakeholders 1.Project Initiation 2. Current Ways of Working 3. Future Ways of Working 4. Report Establish Project
      • Initial communications
      • Project Plan
      • Deliverable format
      • Risk & Issue log
      Communicate with Stakeholders • Plan & Objectives • Timescales & Approach • Required involvement Confirm with Sponsors
      • Terms of Reference
      • Design Principles
      • Roles & Responsibilities
      • Deliverables
      Commence Baseline Analysis
      • Schedule Meetings/Workshops
      • Obtain available base data
      • Construct Interview agendas
      • Maintain Issue log
      Data Gathering • Headcount, grades, locations • Organisation Structures • Volumes, resource drivers • Actual & Required Outputs Current LMAT analysis • Staffing and Structures • LMAT issues • Scope for changes, added - value services, efficiencies LMAT Design Principles • Confirm & Agree Design Principles • Organisational options • Change management Evaluate Future Ways of Working • Organisation structure • High level Processes • Resources / FTEs • Business case evaluation Evaluation / Gap Analysis • Organisation structure • High level Processes • Resources / FTEs Develop and Test Presentation / Report • Develop presentation and test with stakeholders • Take into account other change initiatives Develop & present Draft Analysis & Evaluation Presentation / Report • Objectives • Analysis & Evaluation • Options • Change / Next Steps • Risks Briefing & Support for CLG July Board Wk 1 Wks 1 - 3 Wks 3 - 4 Wks 4 - 5 Key Deliverables Assess Current Ways of Working • Key activities and numbers of staff • Structures, IT support • Resources & Outputs Finalise Evaluation with Sponsors 5. Board Support Wks 6 - 8 Project and Change Management
    • Management Summary
    • Management Summary - LMAT Baseline
      • Numbers : (source: LMAT Review – June 07)
      • The total LMAT establishment is 94 with current in post headcount of 89, 4.51% of 1,972 headcount within the Groups, £3.4m total LMAT payroll cost to Department
      • An EO and AO headcount of 56, primarily focused on transaction processing, costs £1.8m per annum
      • At least £1m+ per annum, 29% of LMAT payroll costs of £3.4m p.a., is involved in managing invoice processing arising from c34,000 orders p.a. of which 75% (25,000) are for less than £1,000
      • The average LMAT process cost is, therefore, c£29 per order
      • The core Departmental spend is c£33bn of which only c£10bn is subject to LMAT oversight
      • Capability:
      • Department has never achieved a stable population of qualified GMAs, the LMAT leaders
      • Resource flexibility is diluted given the prevalence of small teams in LMATs and the difficulty in managing LMAT resources across the Department.
      • Only 10 of the 28 HEO and SEOs are fully or partly qualified accountants (CCAB) limiting the practical delivery of value-added service
      • Quality of service delivery not consistent and effectiveness of professional oversight variable
      LMATs significantly resourced... … but not effectively organised, focused and competent to deliver value
    • Management Summary - Findings
      • LMATs undermined by:
        • insufficient resource of qualified accountants
        • diversion of resources to manage the payment of invoices that are not compliant with the procurement process
        • lack of consistent capability across the LMATs to participate in and to provide value-added services for decision support
      • Appropriate toolsets not provided to the LMATs and budget managers
        • Programme Management, payroll and personnel systems are not interfaced or integrated. There are no standard forecast, planning and programme management tools used across the Department.
      • Lack of clarity between the line and the LMATs with regard to accountabilities and responsibilities for financial reporting and outturn forecasting of programme spend
      • Non-compliance by the line with the prescribed procurement process.
        • Plan to centralise transaction processing in the shared service centre was abandoned in 2005 because of non-compliance.
      • The LMAT structure does not extend to all the Departments core Groups e.g. Thames Gateway, ERDF.
      LMATs well designed, planned, piloted... … but roll out not resourced and poorly implemented
    • Management Summary - Business Case for Change
      • LMATs have, therefore:
        • not achieved core objectives of:
          • more effective and accurate information
          • realisation of any significant efficiency and procurement savings
        • not been able to develop beyond exercising basic financial controls and record keeping to provide added-value management and decision support information
          • lack of discipline in the verification of balance sheet items
          • misuse of the accruals process
        • been required to support a non-compliant procurement process
          • for example, obtaining evidence of procurement authorisation after goods and services have been delivered and the invoice received.
        • become an unattractive working environment, lacking a clear career structure and difficult to attract high calibre civil service staff
      Unsatisfactory and inefficient working arrangements… … resulting in not meeting the core objectives
    • LMAT Review – Business Case for Change
      • The cost of doing nothing is to continue:
        • not meeting the core objectives of the original LMAT strategy
        • wasting resources of at least £1m p.a. on the LMATs supporting a non-compliant procurement process
      • The business case for change constitutes the following elements:
        • Non-financial
          • Improving the effectiveness of the LMATs to support the Department in:
            • Ensuring financial control and the quality of financial and management information
            • Maintaining the integrity of the balance sheet
            • Providing decision support and value-added services to the Group DGs
          • Timeframe – targeting a completion date of 31/12/07 to provide the focus and urgency required to drive the programme of change and realise the benefits at the earliest opportunity
        • Financial
          • Gross headcount savings in the LMATs arising from centralisation of transaction processing of at least 29 FTEs costing £1m per annum
          • Potential efficiency savings in Central Finance arising from reductions in Quality Assurance and reworking of submissions from the LMATs
          • Potential additional cost of resources that may be required in the shared service centre
    • Management Summary - Centralisation Potential Savings
      • The Smarter Business Process outline business case sets out the options for centralising transaction processing for invoicing currently undertaken by the LMATs.
        • this business case concluded that the option with the largest saving is to “tackle compliance issues with centralising transactional processing” and
        • used as a baseline for calculating savings in transaction processing the assumption that 23 EOs and 17 AOs costing £1.1m per annum are doing transaction processing full time.
      • The LMAT review has identified that:
        • Of the LMAT headcount of 89, 56 (30 EOs, 20 AOs and 6 contractors) costing c£1.8m p.a. are made available primarily for transaction processing,
        • The LMAT resources absorbed by transaction processing amounts to 29 FTEs, costing £1m per annum, across all grades
      • Additional resources may be required within the shared service centre focused on placing purchase orders, scanning paper invoices and processing invoices for payments. The additional resource requirements are dependent upon the design of the re-engineered processes and supporting technology.
    • Future Ways of Working - Design Principles
      • Centrally managed core of LMAT finance specialists working in partnership with Group Management Teams
      • Transactional activity from purchase ordering to invoice payment centralised within the Shared Service Centre
      • LMATs focused upon the delivery of value-added financial and risk management services, supporting effective decision-making and able to respond flexibly to emerging business needs, for example
        • Ensuring the accuracy, integrity and understanding of the balance sheet
        • Facilitating the identification of financial pressures that may impact the delivery of a programme’s outcomes
        • Engagement in the forecasting and management of programme resources beyond the current financial year
        • Providing management information and appraisal techniques to facilitate the value for money management of resources
        • Managing relationships in order to access and leverage knowledge expertise within the Group and Department.
    • Future Ways of Working - Design Principles
      • Supporting the Corporate New Ways of Working to enable prioritisation of resources and transparency of performance
      • One view of programme, accounting and HR data and information. No need to expend resources reconciling disparate systems, with consequent risk of misreporting.
      • GMAs adept at building relationships within Groups and considered a trusted financial expert, aware of the policy and programme challenges facing the Group
      • LMATs have oversight and accountability for all financial management activities with a Group
      • The Finance Director accountable for:
        • LMAT strategy
        • Recruitment and resource management across the LMATs
        • Professional & career development
        • LMAT processes and systems
        • Knowledge sharing and best practice
        • Resource Management across the LMATs
    • Future Ways of Working - Design Principles
      • Finance is an attractive place to work providing
        • A formalised career structure
        • Professional training and development opportunities
        • Valued experience for fast trackers
        • Exemplar for the new ways of working
      • Performance Management
        • Clear targets
        • Rewards for successful delivery and outcomes
    • Management Summary - Gap Analysis
      • A clear vision and definition of the strategy for financial management within the Dept and the role of the LMATs within that.
      • Use of the “Financial Management Capability Maturity Model” or other such model to assess current competence and development path .
      • A clearly defined LMAT strategy that driving delivery and performance management.
      • A strategy to develop financial management competences across the Dept.
      • Focus on the original LMAT strategy of effectiveness and efficiency is not currently central to scoping and defining the roles, accountabilities and responsibilities of the LMAT.
      • No understanding of CLGs financial management objectives
      Strategy
      • Managed exit / re-deployment
      • Skills and personal development training
      • Role definition and recruitment of required expertise
      • Building confidence of Group Management Teams
      • Significantly reduced resource but far more skilled and competent
      • Resource consolidated into flexible pool of expertise that can be managed as a Dept. resource.
      • Focused on value-added services
      • Centralised management – GMAs and other finance personnel reporting to the Department’s DG Finance.
      • 89 people, predominantly AO and EO
      • Organised in small teams within LMATs
      • Focused on transaction processes
      • Management of the LMATs and other finance personnel, devolved to the Groups, GOs and other parts of the wider CLG family.
      Structure & People Bridging the Gap Future Current
    • Management Summary - Gap Analysis
      • Clarity on performance objectives
      • Change in reporting structures to extend the LMAT structure to all finance personnel within the Group
      • Explicit and managed career development opportunities
      • Continuous improvement in capability
      • All financial management personnel within the Groups e.g. ERDF, LGF to be within the LMAT structures subject to appropriate oversight and control
      • No explicit career structures
      • No performance measurement and management system that is linked to an LMAT strategy, desired outcomes and individual performance
      • Not all finance personnel within the Groups are within the LMAT structure
      Structure & People (contd)
      • Integrated system architecture
      • Extending the use of existing tools by the line
      • Shared Service Delivery
      • Integrated Financial, HR and programme management systems across the Dept. with clear information owners
      • Limited integration between financial and HR systems, payroll and programme delivery
      • Ongoing use of local spreadsheets
      Systems Bridging the Gap Future Current
    • Management Summary - Gap Analysis
      • Refreshed business processes
      • Managed migration of activity to Shared Service Centre
      • Driven by the strategic and operational needs of the Department.
      • Transaction processing centralised within a Shared Service Centre
      • Less doing it by the book and more attention to getting things done in the most effective and efficient way, taking proper account of risks and how they are addressed.
      • Line responsibilities embedded
      • Compliance orientation
        • Procurement process
        • LMAT Operations Manual
      • Weak financial controls
        • Weaknesses in balance sheet verification
      Process Bridging the Gap Future Current
    • Next Steps
    • Next Steps - Implementation Risks
      • A restructuring and change programme for the LMATs must take account of:
      • 1. Benefits not realised
        • Failure to obtain the commitment of senior managers will limit the realisation of financial and performance benefits
        • FSSD is unable to effectively interact with the line resulting in LMATs continuing to handle transaction processing enquiries
      • 2. Reduction in performance while change is being effected
        • Change implementation will potentially reduce the initial perceived performance of the LMAT because of staff uncertainty and weaknesses in existing LMAT management
      • 3. Implementation perceived to have failed because stakeholder expectations not managed
        • Expectations raised by the original roll-out have not been met. The upgrade of the LMATs further inflates expectations and undermines future LMAT credibility
    • Next Steps - Implementation Risks (contd)
      • 4. Departments reputation impacted through mismanagement of employee relations
        • Consultation with staff and the Trade Union Side, concerning potential redeployment and recruitment are not well managed
      • 5. Change Programme fails through lack of resource and ability to integrate all the change initiatives
        • Change Programme is not adequately and competently resourced
        • The scale of change throughout the Dept. is not managed and inter-dependencies between initiatives are not identified
    • Management Summary - Next Steps
      • Doing nothing is not an option because of the waste of resources within the LMATs and the requirement to improve basic financial controls.
      • CLG Board support is sought to adopt the following LMAT restructuring proposals for change with a target completion date of 31 December 2007 for centralisation of transaction processing:
        • Transfer the primary reporting line for the LMATs to the DG Finance & Corporate Service Delivery, Hunada Nouss
        • Centralise invoice transaction processing in the shared service centre
        • Agree to the initiation of an implementation programme to enable the LMATs to focus on added-value services and to deliver the change
      • Investment
        • It is proposed that the preparation of the detailed plan including resource requirements and the availability of investment funding will be completed by the end of August. This opportunity will need to be taken forward on an invest-to-save basis. However by delivering at pace the Department will realise financial benefit before the end of the current financial year.
      Further detail regarding the above recommendations is provided within the ensuing slides…
    • LMAT Review - Next Steps
      • Transfer accountability for the LMATs to the Finance Directorate in order to speedily:
        • align the DG Finance reporting structures with the current responsibility for providing assurance to the Department’s Accounting Officer regarding the integrity of the Resource Accounts
        • develop the LMAT strategy in the context of the Department’s strategy for financial management
        • determine financial management objectives, disciplines and priorities
        • manage the skills and resources across the LMATs
        • manage professional & career development
        • establish LMAT processes and systems
        • promote knowledge sharing and best practice
        • create an attractive working environment
    • LMAT Review - Next Steps
      • Accelerate, as a matter of urgency, the current Smarter Business Process approach to centralising transaction processing
        • the current approach is to tackle compliance issues with centralising transactional processing
        • reframe the procurement process problem as
          • “ what must we do to transfer processing to the shared service centre as a matter of urgency, efficiently and effectively in compliance with a revised set of rules for accounts payable?”
        • determine the financial risk exposures and how to mitigate and manage them, and
        • determine the necessary and sufficient conditions to enable centralisation.
    • LMAT Review - Next Steps
      • 3. Implementation Programme
      • a . Review and update the original LMAT strategy with respect to:
        • The vision and objectives for the LMAT in the context of the Department’s financial management strategy
          • Challenge the requirement for the LMAT structure
          • “ What should the LMAT be doing and why?”
          • Manage the Step-up through the Financial Management Capability Maturity Model
          • The challenge of resourcing the LMATs with appropriately qualified finance staff
      • b . Provide appropriate toolsets for programme and budget management, management reporting and forecasting.
        • identify the needs of the Department for programme, financial and management reporting
        • design the ICT and process architecture to support the Department’s business and financial needs
        • map the current standard application set to the ICT and process architecture identifying the need for any additional systems and facilities
    • LMAT Review - Next Steps
      • 3c LMAT Capabilities - resource the LMATs with the required level of professionally qualified personnel
        • In the context of the LMAT strategy, establish the financial management objectives and the associated performance management systems
        • Assess the skills and capabilities required to deliver the LMAT strategy
        • Re-define the LMAT structures, roles and role descriptions
        • Develop appropriate grading structures and job titles that match the scope of responsibilities and provide opportunities for career development both within finance and the wider civil service, for example:
          • Group Management Accountants to be accorded titles that better describe their status and responsibilities (Group Finance Manager/Director/Group Finance and Planning Director).
        • Manage the exit and recruitment of personnel to fit the roles
    • LMAT Review - Next Steps
      • 3d LMAT Structures
        • Redesign the LMAT structures to incorporate financial management oversight and accountability for all financial management activities within the Department including Local Government Finance, European Regional Development Fund, Thames Gateway and any other financial management resources within the Groups .
      • 4 Change Management, Communications and Culture
        • Sponsorship – ensure strong sponsorship and buy-in of Director Generals
        • Staff Considerations
          • Consultation with staff and unions, preference exercise design and implementation
        • Change management – provides glue for both LMATs and centralisation
          • Unfreeze the current, implement new design and refreeze so it sticks
          • Identify and deploy levers to overcome passive resistance
          • Gather feedback from staff and adjust the plan
    • Next Steps – Programme Management Plan
      • 5 . Programme Management Plan for completion by end of December 2007 to include:
        • determining the source of funding for the change as part of the business case
        • governance framework and creation of Project Initiation Documents
        • confirmation of work streams and requirement for internal and external resources
          • programme, project managers
          • change and stakeholder management expertise
          • expertise on finance transformation
          • expertise in the complex preference exercise process and consultation with the Trade Union Side
          • process and implementation expertise
          • business case and benefits realisation manager
        • initial consultation with the Trade Union Side and staff
        • integration with other Department initiatives
        • development and management of the business case process
    • Management Summary - Implementation Plan Overview Establish Project Steering Group July Decision / Sign-off Next Phase Change Management, Communications and Culture LMAT Capability & Structure Centralise Transaction Processing Project Management / Business case management Immediate Action / Mobilisation Change Implementation Project Review LMAT Strategy & Transfer control of LMATs Implementation planning - Project plan, resourcing - Integration with other projects - Update LMAT Vision & Strategy Decision to centralise Transaction processing Risk assessment, end to end process agreement. FSSD Readiness Transfer responsibility to FSSD, performance management system, data and process changes Plan to Close the LMAT capability gap Design roles, responsibilities, Secure required GMAs Deploy new roles, structures, performance targets in all core parts of the Department Vision, Objectives & Strategy Staff, department and stakeholder continuing communications & feedback, ways of working & Change Management Workstream Completion be end of December 2007 Performance feedback including staff perceptions Staff changes Consultation and Preference exercises Staff changes 1 2 3 4
    • Next Steps - Change Implementation Core Components Programme & Change Management Strategy Implement the LMAT Strategy in the context of developing CLGs financial management competencies Stakeholder & Customer Needs Understand how to deliver value To the business for financial information & decision support Central finance for financial information & control Other stakeholder needs People
      • Put the right people in place
      • Recruit
      • Upskill
      • Manage out poor performers
      • Provide career structure
      • Control from the Centre
      Provide the right tools IT Applications: -Budgeting, Programme management & planning -Integration of programme tools with SAP -Decision support tools Management Techniques: -Performance measurement and management Systems & Infrastructure Integrate the processes -LMAT, business, procurement, & accounting -Centralisation of transaction processing -Reinforce accountabilities & responsibilities Ways of Working Deployment Service Delivery Objectives Resources Tools
    • Local Management Accounting Team Review Baseline Analysis
    • Background to the Assignment
      • The Department is changing:
        • Moving towards a strategic and policy focus with delivery through partners, supported by a slimmer, professional core able to deliver with reduced resources
      • The LMATS were introduced in 2005/06, following a successful pilot. The current business perception is that although improvements have been made in terms of data integrity, the quality of the service being delivered by LMATs is not consistent and the primary focus remains on transaction processing rather than on the value-added services envisaged in the LMAT business case
      • The Central Procurement Division Smarter Business Process outline business case for the centralisation of invoice processing assumes a baseline of LMAT transaction processing costs of £1.1m that requires validation
      • The professionalisation of the Department’s financial capability continues to gather pace and is essential if it is to meet the future financial management challenges that will arise as a result of tight constraints on public expenditure
    • Local Management Accounting Team Review Original LMAT Strategy
    • LMAT Original Strategy
      • Proposed changes included:
        • Centralisation of invoice processing to FSSD
        • A CPD procurement specialist within the LMAT
        • Transfer SAP processing from the line to the LMAT
        • GMA to report to the local Group Director General
        • Financial Qualifications
          • GMAs to be qualified accountants
          • Local Management accountants to be at least part qualified accountants
        • LMAT to provide a finance support role to programme budget managers
        • Accountability for strategic planning and performance reporting to be transferred to the GMA or a BDA
        • Maintain the responsibility of a PBM to manage the Programme
        • GMA to provide financial management and policy advice to Group senior management
        • … and the realisation of significant efficiency and procurement savings
      To contribute to the improvement of financial planning and control processes… X X X X X X X X Implemented?
    • LMAT Original Strategy Implementation
      • Only two of the proposed changes have been successfully implemented!
    • Local Management Accounting Team Review Current Analysis Headcount
    • Current LMAT Analysis - Headcount
      • The total LMAT in post headcount is 89, 4.51% of 1,972 headcount within the Groups
      • The range of LMAT size ranges from the smallest (PPI) at 2.92% to the largest (Gov & Comms) at 6.25% as a % of Group total headcount
      • There is no obvious correlation between LMAT and Group size
      • There is an unclear differentiation between the roles and responsibilities of the EO and AO grades
      No correlation between the size of the Group and the LMAT headcount
    • Current LMAT Analysis - LMAT Scope
      • The LMATs have oversight and responsibility for only 31% £10bn of the core Departments total expenditure of £33bn
      • The remaining £23bn is managed outside of the LMAT structure with limited direct oversight and input from the LMATs
    • Local Management Accounting Team Review Current Analysis Organisational Structure
    • Current LMAT Analysis - Typical Organisational Structure
      • LMAT organisation structure has narrow spans of control (1 to 1 relationships) with limited sharing of EO/AO resources across an LMAT
      • EO/AO Headcount of 56 costing £1.8m per annum will be directly impacted by Centralisation of transaction processing
      GMA SEO HEO HEO EO EO AO AO AO (Qualified Accountant) (Qualified or finalist) (Qualified /studying) Studying CIMA/ACCA May or may not be AAT 26 = £0.8 30 = £1.0m TOTAL 89 staff = £3.4m per annum Current Headcount & average direct annual salary costs Deputy Director Finance Directorate Transaction Processing 4 = £0.3m Support to the DG 7= £0.4m 22 = £0.9m Support to BMs & Central Finance Traditional hierarchical structure… … but not consistent with new ways of working
    • Local Management Accounting Team Review Current Analysis Process Costs
    • Current LMAT Analysis - Process Costs
      • £1m+ per annum, 29% of LMAT payroll costs, absorbing 1/3 rd of the FTEs across all the grades is involved in managing the procurement and invoice process.
      • This is likely to be an understatement as the LMATs are not structured for efficient workload management and productivity is considered to be low.
      • The Smarter Business Process Business case assumed an annual cost for transaction processing of £1.1m in respect of 40 EO/AOs, which is consistent with the results obtained from the activity analysis.
      • Under utilisation is likely to be analysed to processes such as “other activities” and “training and personal development”.
      • Average process cost per order = £29 (£1m/34,000)
      £1m + per annum consumed by processing invoices… Source: Activity Analysis returns completed by the GMAs … of which 75% (c25k) of purchase orders are for less than £1,000.
    • Local Management Accounting Team Review Current Analysis Skills and Competencies
    • Current LMAT Analysis - Financial Management Capability Model Level 1 START UP Level 2 CONTROL Focus on compliance and control Level 3 INFORMATION Focus on measuring how resources are used and managing for the efficient and economical use of resources Level 4 MANAGED Focus on balancing efficient and economical use of resources with quality / effectiveness of results achieved Level 5 OPTIMISING Focus on continuous improvement and learning
      • LMATs level of maturity is variable
      • Focus remains on Level 2 and attaining effective control and compliance
      • Level 3 provides the base from which LMATs can provide the desired value-added capability
      • Level 2 OBJECTIVES
      • Internal Control
      • Financial & Outcome information
      • Stewardship
      • Regulatory compliance
      • Level 3 OBJECTIVES
      • Risk Management
      • VFM
      CLG stuck at level 2… … but LMATs need to step-up to at least level 3
    • Current LMAT Analysis - Skills and Competences
      • As part of the Department’s Keegan action plan objective to develop “quality financial management in the line” there is a specific action to identify and mandate the required grades and qualifications for GMAs and LMAT staff and to restructure the LMATs and improve skills to provide stronger support to the line.
      • Although all GMAs are now qualified accountants, those holding or studying for a recognised accounting qualification at the SEO/HEO grades is currently only 35% (10 out of 28) and are not universally pursuing an accounting qualification.
      • However, the competence, i.e. the ability to deploy technical accounting skills and experience, even amongst the qualified accountants, is considered by the line to be insufficient to meet their needs for “value-added” services such as financial risk management, technical advice and guidance, investment appraisal, forecasting and other types of decision support.
      Low level of accounting qualifications… … impairs the capability to provide added-value services to the line
    • Current LMAT Analysis - Professional Qualifications
      • Only 10 of the 28 HEO/SEOs are fully or partly qualified accountants (CIMA, ACCA, ICAEW)
      • 51% of LMAT staff do not hold or are studying for a financial qualification
      • There is evidence of renewed interest in finance qualifications especially amongst the EO and HEO grades
      LMATs are reliant upon a limited pool… … of fully qualified and experienced staff
    • Local Management Accounting Team Review Current Analysis Ways of Working
    • LMAT Original Strategy - Roles & Responsibilities The responsibilities for the LMAT roles… … were clear but remain largely unfulfilled RESPONSIBILITIES ROLES
      • Financial Management & Transaction Service to a Directorate for both programme and administration expenditure:
      • Procurement
      • Assistance & Support to Budget Managers
      • Ensuring the quality of financial data and complying with reporting timetables
      • Liaison point for cascading from Central Finance financial reporting policy and procedures
      Finance Support Officers (HEO/AO) Financial Management Advice to the Line (Directors, Divisional and Programme Budget Managers) Local Management Accountant (SEO)
      • Line Management of the LMAT
      • Financial advice in support of Group strategy development
      • Programme & Admin financial planning
      • Compliance with HMT, CLG financial policies and procedures
      • Reports to the Director General and provides support to the Finance Directorate
      Group Management Accountant
    • Current LMAT Analysis - Ways of Working
      • People and Structure
        • small team approach does not support resource flexibility and capability development and is inconsistent with the New Ways of Working being developed by the Department .
        • time allocated to core activities is spread across the grades
          • lack of a clear definition of roles and priorities
          • AOs and EOs priority is completing the procurement and invoice paper-chase
      • Process
        • Delivery approach focused upon compliance with process rules and the LMAT Operations Manual rather than business requirement
          • for example the management of the procurement process
        • No consistent, shared timetable for the completion of key financial tasks and controlling the quality of the content
          • For example the production of monthly reports and balance sheet reconciliations
      • Systems
        • The systems (SAP, spreadsheets, programme management, payroll and HR) do not provide a common and consistent view of data and need to be manually reconciled with each other.
      Inefficiencies are inherent … … in all aspects of current ways of working
    • Procurement Process High Level Process
    • Compliant Procurement Process
      • A compliant procurement has the following process steps:
        • An authorised “request for procurement” (RFP) if not covered by a blanket order
        • A purchase order sent to the supplier (PO)
        • A goods received note (GRN) to evidence supply
        • A supplier invoice that matches with the RFP, PO and GRN.
      • This process is applied to all procurements that are not done electronically or using the Government Procurement Card.
      • 75% of procurements (c25,000 per annum) are for less than £1,000
    • The Procurement Process Supplier Delegated Authoriser Line Manager LMAT 1. Need & preferred supplier identified 2.Give authority to proceed 3.Obtain price, Negotiate terms with supplier 3.Agree terms with customer 4.Complete Purchase Requisition Form 5.Authorise PRF
      • 6.Validate PRF
      • DA, Procurement
      • Process /rules (<£20k)
      • Authorised Supplier
      7.Complete & submit PO 8.Process PO 9.Deliver Goods/ Services in accordance with PO 10.Receive Goods/Services - Complete GRN 12. Produce Invoice for accepted goods/ services 15.Authorise Invoice 16.Process Invoice for Payment against PO & GRN FSSD 17.PAY Invoice 11. Input GRN to SAP 13. Invoice date stamped, FAX File 14. Auth’n Needed? Y N
    • Non-Compliant Procurement Process
      • Non-compliance with the procurement process means that some or all of the required documentation (RFP, PO,GRN) is not available, with the consequence that the SAP accounting system will not accept the supplier invoice as valid and one that can be processed for payment.
      • The majority of procurements (70%+) are non-compliant and for amounts less than £1,000.
      • On receipt of a non-compliant invoice, the LMAT will seek to identify the business manager responsible for the procurement and who has the appropriate delegated authority.
      • The missing documentation (RFP, PO, GRN) is then generated and processed to maintain the audit trail and enable the invoice to be cleared for payment.
      • Operation of a non-compliant process is resource intensive for the LMATs, costing £1m+ per annum and arguably provides little, if any, internal control benefit.
    • Non-Compliant Procurement Process Supplier Delegated Authoriser Line Manager LMAT 1. Need & preferred supplier identified 2.Give authority to proceed 3.Obtain price, Negotiate terms with supplier 3.Agree terms with customer 4.Complete Purchase Requisition Form 5.Authorise PRF
      • 6.Validate PRF
      • DA, Procurement
      • Process /rules (<£20k)
      • Authorised Supplier
      7.Complete & submit PO 8.Process PO 9.Deliver Goods/ Services in accordance with PO 10.Receive Goods/Services - Complete GRN 12. Produce Invoice for accepted goods/ services 15.Authorise Invoice 16.Process Invoice for Payment against PO & GRN FSSD 17.PAY Invoice 11. Input GRN to SAP 13. Invoice date stamped, Reconstruct missing documentation X X X X X X FAX File 14. Auth’n Needed? Y N X Non-compliance steps
    • Current Ways of Working Strengths & Issues
    • LMAT Review - Current State - Strengths
      • The Smarter Business Process Business Case is being actioned in order to fix procurement non-compliance and facilitate centralisation.
      • The CLG Board are committed to quickly address the issues impacting the perceived poor performance of the LMATs
      • The role of the LMATs in controlling the SAP input has improved the quality of accounting data.
      • The LMAT roles are now physically established in the business
      • LMATs support the procurement process as currently defined.
      • LMATs are a repository of inherited corporate knowledge
    • LMAT Review - Current State - Issues
      • Issues are well understood and acknowledged but what to do next?
      • LMATs well conceived, piloted, planned but poorly implemented:
        • Local Implementation Managers not appointed
        • Resourced with personnel with insufficient skills and competencies
        • Appropriate toolsets not provided to the budget managers and the LMATs
      • Inefficiencies
        • Non-compliance with procurement process by the business
        • Over-compliance by the LMATs
        • LMATs not structured for efficient use of resources
        • Responsibility for the prompt payment indicator is with the LMATs not the Line.
    • LMAT Review - Current State - Issues
      • Ineffectiveness
        • LMATs delivering a poor service to Central Finance and the business
          • Central Finance still required to retain resources to manage financial control and quality assure information received from the LMATs
          • Inconsistent level of qualifications, skills and competencies across the LMATs
      • Lack of Financial Control
        • Lack of focus on basic financial controls e.g. balance sheet reconciliations, as evidenced by recent NAO reports
      • Inadequate Scope
        • The scope of the LMATs does not extend to some areas within the Department that are responsible for large programme budgets or the collection and redistribution of grants and rates. Such expenditure amounts to £23bn (69%) of the Department’s expenditure. These areas e.g. Local Government Finance, are supported by finance staff who have no accounting qualifications and
    • LMAT Review - Current State - Issues
      • Lack of appropriate toolsets
        • There is no CLG consistent view of data as accounting, programme management, payroll and personnel systems are not interfaced or integrated. Manual reconciliations must be performed to reconcile between, for example payroll v personnel, accounting v programme management. Failures to keep the systems reconciled may result in misreporting of spend, errors in forecasting and having no control over commitments.
        • Integrated applications for programme, financial and resource planning and forecasting
        • Integration between HR and payroll systems
      • Inadequate Performance Measurement & Management
        • Apart from the prompt payment indicator, there are no evident LMAT key performance indicators
    • LMAT Review - Current State Implications of Issues
      • Inadequate financial oversight by the DG Finance over all of the Department’s core expenditure of £33bn p.a.
      • Managing controls over an ineffective procurement process absorbs 29% (29 FTEs) LMAT resources costing £1m per annum.
      • Marginalised by the business – lack of finance input to “value-added services” policy development, business cases, submissions to Ministers
      • Over Resourced & Under Skilled
        • More people than needed to do the wrong things right e.g. manage the P2P process
        • GMAs need to be more finance directors than management accountants
        • LMATs do not have the appropriate systems to facilitate delivery of value-added services.
      • Resources not managed
        • No clear career structure for finance staff and the GMAs
        • There is no structure to enable resource management across the LMATs.
      • Risk of financial control failure
      • Reputational Risk of failure of financial controls/procurement
    • Conclusions
      • The LMAT strategy was not implemented
        • An insufficient spread of financial trained and competent staff
        • The LMATs and the line were not provided with the appropriate toolsets that are integrated with the accounting system to enable consistent planning, performance monitoring and forecasting.
      • The LMATs are not meeting their core objectives of:
        • Enhancing financial planning and control
        • Realising efficiency gains
      • Resources are being wasted on transaction processing without any understanding of the financial and non-financial risk exposures inherent in operating a non-compliant procurement process.
      • The current LMATs do not have the capabilities to effect the changes required and provide added value service to the line.
    • Conclusions
      • Risks of doing nothing
        • Continued waste of resources at least £1m per annum
        • Not providing basic financial management control
        • Not providing decision support information
        • Risk of financial control failure and NAO censure
    • Annex A Current LMAT Organisational Structures
    • GMA Finance HR, Transformation Strategy & Performance Unit Knowledge Management & IT Working Environment Legal HEO EO AO AA CSU SEO Nigel Smith Neluka Vithanage Natasha Whitney Stephen Chapman Teresa Samuel Patricia Boakye-Yiadom Nicholas Kapor Dawn Smith Anzell Van Heerden Patrick Crown Audrey Burth Max Siksnys Sukuma Lahiri Ajibade Ogunro Gloria Gabari Hasha Shah Roger Palmer Victoria Reville Derek Blackhall (qualified accountant) +Allen Chapman Contractors (CIMA) (CIMA) 20 Headcount Corporate Delivery & Transformation LMAT Structure
    • SEO Firelink Fire Control New Dimension Ken Naden HEO EO Alison Alleyne Jennifer Sealey Gillian Allchurch AO Kamalasany Ravindran Pankaj Yadav Tirath Lotay Elizabeth Davis Andrew Moorcroft Subhra Mukherjee Tim Fuller GMA (CIMA) (AAT) ACCA Finalist (Studying) (AAT) (CIMA) Fire & Resilience LMAT Structure 16 Headcount Ralph Moran Admin & other Gary Hope New Dimension Assets Pauline Cairney Firelink Fire Control Sarah Maryon F&R Programmes Julia Carroll Admin Zareen Ahmed
    • Governance & Communications LMAT Structure GMA SEO AO HEO Ralph Moran Equalities Fire & Resilience Steve Bradshaw Race, Faith & Cohesion Women & Equality Unit, DG’s Office EO Shafi Khan Edwin Gomes Usman Ghanti Esa Manley Toyosi Ogunyemi Bryn Reynolds CIMA (CIMA Studying) Paul Searles Vacancy Dave Starbuck Vacancy Local Democracy, LMAT, DG’s Office Local Gov Finance Sohini Mehta Mita Das Suzanne Ward Bithika Mitra Gary Mehler Tola Ariyo
      • Private Office
      • Deputy Prime Minister
      Regina Obiora Directorate of Communications Sajal Das Berkman Osman Gabriel McGuigan Janice Newman Ritis Haria Una Savage AAT studying AAT Provides training support (Studying ACCA) CIMA Studying CIMA Governance & Communications See separate org chart 23 Headcount
    • GMA SEO HEO AO Philip Mabe Katherine Hitchman Vacancy Barry Pullum EO
      • Dorrett Annon
      • David Woolford
      • Jamil Ahmed
      • Stephen Gillbanks
      Akeem Yusuf Elena Figueira
      • Lynda Agboola
      • Vacancy
      Ayesha Mazhar Onome Oteri
      • Serifat Bakare
      • Selina Ahmed
      • Leonard Carter
      • Victoria Adekoyu (Cont)
      • Euphemia Dourado (Cont)
      • Patricia Opara (Cont)
      New Housing & Sustainable Development Regional Urban & Economic Policy Analytical Services
      • Housing Strategy & Support
      • Planning
      • Thames Gateway
      • Home Information Packs Implementation
      • European Regional Development Fund Programme
      Policy, Programme & Innovation LMAT Structure 18 Headcount
    • John Hutchinson (Interim) GMA SEO HEO AO EO Kurt Horder Olusola Jolaoso (Akin) Divya Patel Beverley Kong Theophilus Holdbrook Rodney Bholan Victoria Akeredolu Simon Newitt John Brookes Danny Fairbrass Kevar Bheda Oluwagbenga Odubunmi (David) Local Authorities Agreements New Deals for Communities LMAT Support LDR & CGD Places & Communities LMAT Structure 13 Headcount