The best books about how governments collect and spend your taxes

As part of the promotion of the upcoming third edition of Financial Management and Accounting in the Public Sector, I wrote a list of five books about how governments collect and spend your taxes. Check it out at https://shepherd.com/best-books/how-governments-collect-and-spend-your-taxes

All public managers should manage contracts

Choose a public service organisation — it could be where you work or your local government or a major hospital — and I will bet you that the number of human resources professionals is greater than the number of procurement professionals. Not only that, it will be far out of proportion with the split of the budget between employee and non-employee expenses. Why is that? 

An example

Let me use myself as an example. My CIPFA professional qualification course included general theories about management but it was mostly about accounting and trained me to be an accountant and not a manager. Therefore, after qualification, I went through the whole management development process as part of my professional development. I did management courses on recruitment, leading a team, equalities and diversity, disciplinary procedures and communication. I also did some skills-based training on things like report writing and presentations. What I didn’t do was any training in connection with procurement, contract management and negotiation skills. In fact, I don’t think those courses were available to me.

As it happened, almost immediately after I qualified I became involved in an outsourcing project and other outsourcing projects happened fairly regularly throughout the 20 or so years I worked as an public sector accountant. I learned, therefore, about procurement and contracts from the lawyers and procurement professionals I worked with. Whilst this is great on-the-job training, if I had been assigned to some different tasks and projects as a newly qualified accountant I never would have learned this stuff. I doubt, though, that it would have stopped me becoming a finance director because it was never on a person specification or asked about in an interview

Does it matter?

I think this matters. I think weak contract management skills is an under-recognised problem. 

The Open Contracting Partnership’s 2020 Annual Report estimates that public contracts amount to $13 trillion a year. That is something like 15% of the world’s total GDP and about half the total spending by governments. The proportion of government spending through public contracts will vary between countries and programme areas, but it is clear that procuring and managing contracts needs to be a significant component of the work done by public managers.

I think the senior managers in an organisation need to know how to manage contracts and suppliers given the proportion of spending that is not an employee spending. I find it very hard to believe that senior private sector managers get their jobs without having experience of managing contracts and suppliers. 

I think that if an organisation’s managers know nothing about contract management and supplier relationship management then they do not know the good from the bad, they do not know if their organisation is good or bad at managing its suppliers. That has to be an issue. 

What should be done?

Actually I don’t think the answer is for public sector organisations just to recruit a mass of qualified procurement professionals and hope that fixes things. What I think needs to happen is more subtle than that. I think public managers need their training and development to encompass the provision of public services through outsourced suppliers just as much as through direct employees. They should continue to have their training in recruitment and diversity and so on; but they should also have training in the parallel arts of procurement, contract management, and supplier relationship management. 

This applies to public finance professionals just as much as to public managers in general. Public finance professionals can play a positive role through the whole contract life-cycle. They can help in the procurement phase; they need to understand contracts in order to give advice during the delivery phase of a contract, and how it affects the budget. If things go wrong then public finance professionals can help with the exit from the contract and its replacement with an alternative supplier or even the direct provision by the public organisation.

None of these things will happen by accident. I think the professional accounting syllabuses need to incorporate procurement, contract management and negotiation as key skills for finance professionals. I think they could also encourage their students to adopt a more commercial approach in their thinking so they can understand suppliers better. 

More generally, a good starting point for any organisation would be to analyse how much of its activity is done by direct employees and how much by contractors and train its managers to match.

Let me be your guide to public financial management

I have written and produced a new online course. It’s called Introduction to Public Financial Management and is aimed at anyone working in government or public sector organisations.

Completing the course will enable you to:

• Understand the public finance management cycle.

• Manage a budget for a project, service or organisation.

• Understand the sources of funding available to governments and their relative strengths and weaknesses.

• Understand the importance of creating value for money and how to measure it.

• Know when it makes sense to involve a partner in the delivery of a project or service, and how to get the best from the partner.

• Know how to evaluate investments and projects.

I created the course in partnership with FreeBalance, the government software company. They have been developing a portal for online learning — the FreeBalance Academy — and invited me to contribute my own courses to it. I took the opportunity to make an online version of the course I teach at the University of Nottingham. 

The course has ten units, each aligned with a chapter of my book. Unlike a book, this course is interactive. There are more than 60 videos and a whole host of other resources including downloadable documents and quizzes to test your learning. And if you pass the final assessment at the end there is a certificate of completion.

Find out more, and register, by clicking the button below.

New Year, New Direction, New Course

January 1st is an arbitrary day to be the first day of the year. As a former public servant in the UK I would also see 1 April as the first day of the financial year. Several years ago I wrote a post explaining why the UK tax year starts on 6 April (which itself refers to the first day of the year traditionally being 25th March, “Conception Day”). Anyway, 1 January is the conventional start of the year in terms of the change from 2018 to 2019 (CE, not AD) and the extended break I had over the Christmas and new year period has given me a chance to think about this blog.

Hitherto I have regarded this blog as something aimed at anyone working in government or public sector organisations who is responsible for managing money. This includes people working in finance/accounting departments but also all the managers and frontline staff with budget responsibilities, the politicians and others who direct the organisations, and even volunteers. My reason for this was, I think, an attempt to have the broadest impact. To some extent it also reflected my mindset in writing my first book, Financial Management and Accounting in the Public Sector, which was conceived to be a book that librarians, social workers, police officers and nurses would find useful.

Over the last 9 months or so I have been developing online training courses based on my books and my experience of real-life teaching. I confess at times to have struggled to know who my target audience is and what, therefore, they would need from the courses. This has been a tension between the fact that I’m an accountant and I best understand the skills and needs of accountants and my wish for my courses to appeal to the librarians, etc. My recent reflections have resulted in a decision, for the next year at least, to focus my courses, and this blog, on skills and productivity tips for accountants working in public sector organisations, whether in the UK or elsewhere. This means parking, for now, the major finance for non-financial managers course I was working on and focusing on a programme of shorter courses: Essential Skills for Public Sector Accountants. 

I have five courses planned for the first half of 2019:

• Financial modelling in the public sector

• Presentation skills for public sector accountants 

• Writing for public sector accountants

• Procurement skills for public sector accountants 

• Measuring value in the public sector

The titles of these courses may change if/when I think of titles that are better in marketing terms. Whatever the titles ultimately are I think the content will be unique. I know there are courses about financial modelling but I do not think anyone has created on specifically about the kinds of spreadsheet models used in public sector organisations. And I am almost sure that no-one has ever targeted presentation skills at accountants. This course, by the way, is about how to communicate financial messages and information and not about helping introverts to speak up. (I’m in the 99th percentile of the scale of introversion—really, I am—and yet I can and do stand in front of audiences and talk to them. Introversion is not the same thing as shyness.)

What does this all mean for this blog? Well, first I hope to post here more frequently than I’ve managed over the last few years. Second those posts will be related to the content of the courses I’m developing so they are more likely to be practical tips than news items.

How to Hire a Consultant in the Public Sector — the e-book

Over the last couple of weeks I’ve been working on a small e-book as a learning exercise. This is not learning how to write a book, but how to get a manuscript formatted as an e-book, with a cover, etc and uploaded to a platform for sale. It turns out that it is fairly easy to do but, like many things, the first time you do it takes a lot longer.

I wrote an e-book about procurement in the public sector, using the example of hiring a management consultant or advisor. I did this because it seems like the sort of thing a manager might do in pretty much any part of the public sector. Schools, hospitals, local councils, police forces, etc will all use advisors from time to time and they all have to follow the same process in broad terms. What I mean is, they all need a specification, a tender or quotation process, an evaluation, and an award process even if all of them have their own specific rules. They also all need to manage the consultant once appointed, an aspect often overlooked.

I wrote the manuscript in an app called Ulysses because it allows you to write your text as plain text but export it in many formats. One of the export formats is epub which happens to be one of the formats that Apple’s iBookstore can handle. As an Apple nerd I wanted to make the book available as an iBook even though the sales potential in the iBookstore is very limited. (Let’s face it, first you have to have Apple hardware and then you have to be interested in a niche subject!)

Before I could export the epub from Ulysses I had to create a cover. I could have commissioned an artist to create a cover for me but that would cost potentially more money than I might make from this test book so I made my own. I’m not a great graphic artist but I know a bit about using an app like Pixlmator so that’s how I created the cover you can see below.

Once I had a cover I had to incorporate it into the export function in Ulysses and, bingo, I had an epub file.

Amazon Kindle does not support epub files so I then had to run my epub file through an app called Kindle Previewer in order to convert it into the mobi file type that Kindle does support.

The next part turned out to be the hardest and longest step in the whole process. I thought I would be able to use my accounts with iTunes and Amazon to upload the files and click a few buttons to add prices etc and that would be that. It is sort of like that except the first time you need to get yourself an American tax identification number in order to benefit from the tax treaty between the UK and USA. As American companies Apple an Amazon would hold back 30% tax from any royalties that I earn unless I registered with the IRS and claimed an exemption under the tax treaty. On that basis they would withhold 0% tax and I would have to pay only the UK tax on the income. That took a fair bit of research, the completion of a form, a long phone call to the IRS to explain what I was doing, etc. To be fair, at the end of the call I was given my ID number and could use it directly in the Amazon and iTunes set up pages.

After that is is more or less a case of uploading the file, entering meta data, marketing blurb, pricing information and a publication date and the book will be published.

If you are interested in reading this book about public sector procurement click on the following links to get it from Amazon or the iBookstore.

What are the principles of managing public money?

I’m working on an online course about the principles of managing public money. The course is aimed at everyone in the public sector, whether employees, politicians, volunteers, etc. I want it to be a great course that is valuable to the people who register for it. I’ve got over thirty years’ experience of managing public money and there is a temptation to cram all my knowledge into a single course, but that would not be a good idea.

There’s not a technology reason why I could not have a course comprised of hundreds of lessons that would take the learner many weeks to complete. There is, I think, a practical limit on what a person is willing to take on, especially if it is additional to their work commitments. This means that one of my challenges is to find the balance between including enough material for the course to be valuable without going into too much detail and becoming onerous — or worse, boring. I’ve spent quite a bit of time, therefore, deciding what to include and what to exclude and I’ve had to delete some sections and ideas that I would like to teach in order to keep things focused.

The platform I am using for my courses allows lessons to be grouped into modules. I think five modules, each taking one to two hours to complete is about right. This is something someone could complete in a day if they really wanted to, but more likely they could complete it over 1 to 4 weeks to fit with their schedule.

The five modules I have now decided on are set out below.

1. The big picture—to cover what the public sector is for and the differences in financial management between the private and public sectors.
2. The principles of funding public services—so that learners understand why some services are funded from taxes whilst others charge fees to users
3. The fundamental importance of the budget in the public sector—because it is.
4. Principles for making decisions about spending public money—in order to get the best possible public services in terms of value for money.
5. Being accountable for the use of public money—because anyone who handles public money has to be willing and able to account for what they did and what they did not do.

These are my thoughts on grouping the course into modules. I would be interested in hearing your thoughts and observations in the comments section.

If you’re interested in this course you can sign up for my mailing list and be the first to know when the course opens for registration by clicking here.