Financial planning threatened by staff cuts in Scotland
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Photo: Amanda Slater, Flickr.
Financial planning in some Scottish councils may be under threat from continued staff cuts, according to a spending watchdog.
A new report said that most councils north of the border have reduced finance staff in recent years.
Alongside this reduction, an increasing number of auditors are identifying weaknesses in accounting systems, the report found.
“To date the reduction in finance staff has had little or no overall negative impact on operational financial management with auditors reporting that the quality of unaudited accounts and working papers has not been affected,” the report from Audit Scotland said.
However, it went on to say: “Some councils are planning to reduce finance staffing further.
“There is a risk that by further reducing finance staff, councils will not be able to carry out good long-term financial planning, effective monitoring of budgets and savings, and respond to the additional work involved in budgeting for the new health and social care arrangements.”
However, it said that so far, cuts to staffing have yet to fully bite, with auditors for 2014/15 accounts noting an improvement in the quality of unaudited accounts and working papers.
But it warned that it was not clear if councils have appropriate succession planning in place to support future demands within finance departments.
Audit Scotland also emphasised the importance of developing and scrutinising annual budgets, particularly during periods of financial restraint.
Between 2010/11 and 2014/15, Scottish Government funding for councils fell by 6.5% in real terms, to £10.76bn.
The 2016/17 draft budget has allocated total funding of £9.4bn to local authorities with further reductions likely in future years.
Audit Scotland said: “There is limited evidence that outcomes are linked to spending decisions.
“The need to consider outcomes is increasingly important as financial pressures continue and spending decisions impact on priorities and service delivery.”
Auditors reported that eighteen councils have a mechanism in place to monitor and report how spending decisions contribute to long-term outcomes.
However, seven authorities do not directly reconcile current budgets to original forecasts, making the impact of budget changes unclear, Audit Scotland said.
Of Scotland’s 32 chief financial officers, 21 have additional responsibilities, covering areas such as human resources, legal services, customer services, corporate services, information technology and procurement, while only 10 were purely focused on finance.
The report said: “There is no evidence that these additional responsibilities affect the CFOs ability to ensure financial oversight at both a strategic and operational level.”
Photo (cropped): Amanda Slater, Flickr.
