The principles of public procurement explained in under an hour

It used to be the case that 75% or 80% of public money was spent on salaries and wages but for many public bodies that has fallen to 50% or lower. This is because public bodies now do less of their work directly and buy in services from third parties.

Knowing how to procure a service and then manage the service provider is an important set of skills for the modern public sector manager. Modern managers get plenty of training in how to interview job candidates, leading teams, managing employee performance, etc but but in my experience many they rarely receive any training in the equivalent activities for suppliers rather than employees.

To help such managers I wrote a short e-book that explains the principles of public procurement by using the hiring of a consultant as an example. (As far as procurement goes the consultant could be any kind of advisor such as an architect, an IT expert, an interim manager, etc.) The book will take less than an hour to read and yet it includes an explanation of the key steps in the process and has links to additional resources to help with writing your specification (get this wrong and the chances of things going wrong increases dramatically) and managing suppliers.

To get the e-book — did I say it’s free? — click here.

Financial modelling course for public sector accountants

One of my goals for 2019 is to get my online school up and running and today I have published my first proper course. It’s a short course, taught mostly using videos, about the standards and principles that underpin good financial models. By adopting these principles you will make fewer errors in your spreadsheets and it will be easier for you, and others, to modify or revise the model after it is built. And because you have skills that are seldom taught to accountants you will stand out from the crowd.

The course fee is £49 but you can get 25% off From today until until 28 February 2019 by using the coupon code LAUNCH25. Get the course here.

This course is the first of five that I have planned under the umbrella of Skills for (Public Sector) Accountants. All five of the courses are about areas of work that are important to accountants but which are not taught in a professional accounting qualification. Following on from the financial modelling course will be courses about report writing, making presentations, managing suppliers and measuring value for money.

The remaining four courses in the bundle will be published over the first few months of 2019. If you want to get each course as it is published and save yourself more than half the price you can buy the whole bundle of five courses now and, until the end of February 2019, using the coupon code LAUNCH25 will get you 25% off the early bird price of £99.

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.

Writing about public financial management

For the last six months I’ve been writing a book about managing public money. The title won’t be confirmed until the manuscript is accepted by the publishers but for now it is International Public Financial Management: the Essentials. I’m writing it for CIPFA, based on their international public financial management qualifications. There are four different levels of qualification depending on which of the twelve modules are passed. Here’s a snapshot of the topics covered in the syllabus and if you want to know more about the qualifications just click on the image..

The experience of writing this book is different from writing my first book, Financial Management and Accounting in the Public Sector. In the first book I was free to deviate from my initial outline of the book. I could decide to write more about one topic and less about another if I felt that would be best for the book. Even when it came to the second edition I felt able to go further than a simple updating of the tables and references and could rearrange the chapters or sections within chapters. As a result I think the second edition flows better than the first.
With this new book I am constrained. The modules determine what the chapters are about and the content I am writing has to fit with the syllabus. Having said that, each chapter still has to be a manageable size (8,000 to 10,000 words) so a lot of time is spent deciding what to include and what to leave out. 
I’ve enjoyed the challenge of writing this book. I’m close to the finishing the manuscript. After submitting it there will still be work to do regarding the editing process and checking the proofs but I hope this book will be on the shelves by the autumn. I’ll write some more about the process over the summer.

Budget time: here's 5 questions to ask about yours

A few years ago I was asked to give a presentation to some councillors to help them in their work of scrutinising their council's budget proposals. What I came up with were five questions that the councillors could ask in their scrutiny meetings. Whilst these questions were conceived in the context of a scrutiny role it strikes me that they could apply to any budget, whether in the public or private sector or for operating or capital spending.

The five questions I suggested were:

How was the budget made?

There are different methods that can be used to produce a budget. The most common is incremental budgeting, where the new budget is based on the existing budget. This has the advantage of being easier to do but is not quick to respond to policy changes. Zero-based and priority-based budgeting address this weakness but have weaknesses of their own, namely they are time-consuming and complex.

What outputs will the budget deliver?

The thing about budgets is that they express plans in terms of money and that means that they focus on inputs: how many people, buildings, computers, vehicles, etc will we employ next year. However, the whole point of this plan is to achieve the organisation’s goals so it is important when looking at budgets to make the connections between the plans and the objectives.

Who has been consulted?

It is perfectly possible for a budget to be constructed by a team of finance staff without involving anybody else but the chances are that, however good the budget is, no-one will take ownership of it. That means that managers should be consulted on their own budget. In the public sector consultation has to go further, involving relevant stakeholders, even the general public, in the budget making process. There is a growing call for participatory budgeting.

What assumptions is the budget based on?

Budgets are forecasts and there are many assumptions and estimates that underpin the numbers. It is important to understand what assumptions have been made especially the major ones about pay and price rises, interest rates, staffing levels, demand for goods and services and income.

How robust is the budget?

Just because a budget is the result of an orderly, controlled process does not mean that it is any good. It might be that the managers and accountants have been unduly optimistic in their forecasts or there may be some significant risks that need to be understood. It is is fair to challenge the finance director and senior management about how they have assured themselves that the budget is robust.

I think all of the questions are good questions for any budget holder to ask about their proposed budgets but question 4 is especially important for them. If they do not understand and agree with the assumptions on which their budget is based then they are could have serious problems managing within it and yet still be held accountable. Complaining that the budget was wrong when you're already three quarters of the way through the year is not going to sound like you're a manager to be trusted.

You can download a PDF of the handout from my presentation here.

Online certificate in IPSAS launched

I’m a CIPFA accountant but over the last few months I’ve been working with a different accounting institute, the Association of Chartered Certified Accountants (ACCA) on the development of an online course. The course is their Certificate in International Public Sector Accounting Standards (IPSAS). The course opened today for registrations.

Those who don’t know much about the accounting profession might not be entirely surprised to learn that accountants have lots of rules and regulations to follow. Unfortunately (or perhaps fortunately, depending on your point of view) the rules and regulations are not the same for every organisation in the world. There are some differences between countries in the accounting standards used by private sector companies although many countries have adopted the International Financial Reporting Standards (IFRS).

IFRS nearly fit, but don’t quite fit, public sector bodies. Public bodies have some significant differences in their finances, such as having tax-raising powers, and investing in assets like roads and parks and schools and public hospitals that have no promise of earning them income in the future but will cost them money to operate and maintain. Hence, over the last 15 years or so, the accounting profession, in the guise of the International Public Sector Accounting Standards Board (IPSASB) has been developing and publishing IPSASs. There are now 32 of them (plus a special one for public bodies that use cash accounting rather than the more sophisticated accruals basis of accounting). The full set is available for free in PDF format from the IPSASB (use this link) but be warned, there are 2,000 pages over two volumes, and a total download of over 8MB.

There are some countries (including Austria, Cambodia, Kenya, Spain,South Africa, and Vietnam) and organisations (including the European Commission, NATO and the United Nations family of organisations) that have adopted IPSASs as they are. In some other countries, like the UK, public bodies follow the IFRS as far as they are able, and look to IPSAS for guidance on how to deal with transactions that IFRS doesn’t deal with. And there are other countries who have developed their own standards for their public bodies, often using the IFRS and IPSAS as a basis.

Anyway, my point is that IPSASs are important to public sector accountants, either because they are used directly, or because they underpin the accounting standards that they follow, and the course by the ACCA is intended to address the need for accountants around the world to know what IPSASs are, and at least understand the important principles. If you are interested in the course you can read more about its contents and find out how to register for it at the ACCA’s website.