» Introduction
» Qualifications of the Chief Finance Officer (CFO)
» Statutory Responsibilities of the CFO
» The Non-Statutory Role of the CFO
» The Relationship between the JCE and CFO
1.1 This paper sets out, as a basis for consultation, the Lord Chancellor's proposals for a Chief Finance Officer (CFO) ( endnote 1 ) to the Greater London Magistrates' Courts Authority (GLMCA).
1.2 On 1st April 2001 the GLMCA will replace the existing 22 London MCCs as the MCC for Greater London. It will be an authority under Part IV of the Local Government and Housing Act 1989. Whilst other Magistrates' Courts Committees are supported by their paying authorities, the GLMCA will be it's own paying authority. Arrangements for financial administration must therefore reflect the requirements of this role, and be appropriate for the size of it's budget and range of functions.
1.3 There is undoubtedly a need for clear responsibility and accountability for expenditure of public funds. To this end, for many public bodies (e.g.local authorities) there is a statutory requirement under The Local Government Act 1972 ( endnote 2 ) for one of their officers to have responsibility for the administration of financial affairs. Similarly, the Justices of the Peace Act (JPA) 1997 ( endnote 3 ) provides that the GLMCA shall "make arrangements for the proper administration of their financial affairs". In addition, Ministers have decided that, like other similar bodies, the GLMCA should include a CFO amongst its staff, to have explicit responsibility for the proper administration of its financial affairs.
1.4 This consultation paper seeks your views on;
the qualifications,
the statutory duties/responsibilities, and
the non-statutory elements of the role, of the GLMCA's CFO, and
the relationship between the JCE and the CFO.
1.5 In each section, the Local Authority arrangements are given for illustration, followed by questions relating to the GLMCA. Section 2 covers the qualifications of the CFO, section 3 covers the statutory responsibilities, section 4 the non-statutory role, and section 5 the relationship with the JCE.
1.6 Copies of this paper are being sent to:
Further copies of this paper can be obtained from the address in para 1.7 or by calling 020-7210 8711.
1.7 If you would like to comment on any of the proposals or questions in this paper, please send your responses by 27th July 2000 to:
When responding it would be helpful if you explain who you are and, where relevant, who you represent.
1.8 Please ensure that you mark your response clearly if you wish the Government to keep your name and the contents of your response confidential. Otherwise, your name and the general contents of your response may be made public in response to questions under the Open Government initiative.
2.1 The Local Government Finance Act 1988 requires the CFO of a local authority to be (in England and Wales) a member of one or more of the following bodies:
| Q1. Should the same qualification criteria apply
to the CFO of the GLMCA?
If not, please list which, if any, you think should apply, and give your reasons why these should differ from those listed above. |
3.1 The Local Government Finance Act 1988 ( endnote 4 ) requires the CFO to make a report if the Authority, a committee or a joint committee on which the authority is represented;
has made or is about to make a decision which involves, or would involve, the authority incurring expenditure which is unlawful,
has taken or is about to take a course of action which, if pursued to a conclusion, would be unlawful,
is about to enter an item of account the entry of which is unlawful, or
if the expenditure of the authority is likely to exceed the resources available to it to meet that expenditure.
3.2 In preparing such a report, the CFO is obliged to consult, so far as is practical, with the head of the paid service (in the GLMCA's case, the Justices' Chief Executive). Copies of any such report are required to be sent to each member of the authority and the person responsible for auditing the authority's accounts.
3.3 The statutory duties of the CFO are required to be performed by him/her personally, with statutory contingency arrangements made for their illness or absence. The authority is required to provide the CFO with such staff, accommodation and other resources as are in his/her opinion sufficient to allow his/her statutory duties to be performed.
| Q2. Should the same statutory responsibilities apply
to the CFO to the GLMCA, and to the GLMCA?
If not, please list which, if any, you think should apply, and give your reasons why these should differ from those listed above. |
3.4 Any legislation of the statutory role and responsibility of the CFO will be implemented by applying Part VIII of the Local Government Finance Act 1988 (with or without modifications and exceptions) as provided by the Access to Justice Act 1999 ( endnote 5 ).
3.5 The Audit Commission Act 1998 ( endnote 6 ) places a responsibility for maintaining adequate and effective internal audit systems on the authority whilst recognising that in practice most would delegate this function to one of their officers. Audit and accounting will be dealt with in a separate, subsequent consultation.
4.1 The Chartered Institute of Public Finance and Accountancy (CIPFA) published "A Statement on the Role of the Finance Director in Local Government" in December 1999. The full report is available from CIPFA, 3 Robert Street, London WC2N 6BH. The five main areas where it considers the CFO of a Local Authority should contribute are given below. The first incorporates the statutory responsibilities referred to in section 3 above.
maintaining financial administration and stewardship e.g. advising on effective systems of internal control
supporting and advising on the democratic process e.g. advising on developing an overall financial strategy
contributing to corporate management e.g. ensuring financial resources are well managed
supporting and advising officers in their operational roles e.g. ensuring that budgets are properly managed
delivering services and providing information to members of the public and the community e.g. by providing financial and performance information.
4.2 The role of the CFO to the local authority is different to that of the CFO to the GLMCA as the constitution and remit of the authorities are so different. (For example, the CIPFA report covers "Supporting and Advising the Democratic Process" as local authority councillors are elected and politically accountable). The CIPFA guidance is therefore not directly applicable to the role of the GLMCA's CFO, but elements of it may be useful.
| Q3. Do you think it would be beneficial for specific
guidance to be drafted relating to the non-statutory role of the GLMCA's
CFO?
If so, what elements should such guidance cover, and should any of them be given in statute? |
5.1 Some concerns have been raised about potential conflict of line management responsibility/authority should the CFO have a statutory obligation to report directly to the GLMCA. It may be helpful to reiterate that any such obligation relates only to the circumstances itemised in para 3.1 above. In all other aspects, the Justices' Chief Executive (JCE) would have the same power and authority to direct the CFO in their activities as he/she would have to any member of staff. The JCE would still have overall operational responsibility for the effective and efficient administration of the magistrates' courts. The CFO's direct reporting line to the GLMCA would provide an independent safeguard for the propriety of the Authority's expenditure, and parallels that found in local authorities and other bodies without detriment to the normal chain of line management or accountability.
5.2 CIPFA's view in the local authority report is that the role of CFO should not be combined with the role of Chief Executive. This safeguards the effectiveness and objectivity of the scrutiny function to ensure the effective stewardship of public funds is not compromised. The report also mentions that other arrangements can be effective, but only where additional means of safeguarding the effectiveness of the scrutiny function are put in place.
| Q4. Do you have concerns about the line management
relationship between the CFO and the JCE? If so, please briefly outline
them, giving the underlying rational and what your solution would be.
Q5. Within the GLMCA, do you think the role of JCE could be, or should not be, combined with that of CFO? If you think it should not be combined, do you think this should be laid down in statute? |
For ease of reference, the term CFO has been used in this paper for reference to any of the following: Finance Director, Financial Administrator or Responsible Finance Officer.
s151
s59D(3)(b) as introduced by the AJA 1999 commencing August 2000
s114(2)
s83(2) inserting s59(D)(4)(a) to the JPA 1997 commencing August 2000
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