CIPFA PROFESSIONAL UPDATE CIPFA Europe Seminar 7th November 2018 Don Peebles Head of CIPFA Policy & Technical UK

Copyright © CIPFA 2018 protected under UK and international law. Session Agenda Professional Ethics – CIPFA ‘Raises the Bar’ Setting Financial Management Standards UK Insight: Public Sector Commercial Activity – The tensions The Accounting World Copyright © CIPFA 2018 protected under UK and international law.

But first back to June 2016 ……

www.ethics@cipfa.org

Setting Financial Management Standards – Why Necessary?

CIPFA’s Professional Code Hierarchy & Index Professional Proper Practice Primary/Secondary Legislation Good Practice CODE OF FINANCIAL MANAGEMENT ---------

The CIPFA Principles of Good Financial Management - Expanded

Statements of Standard Practice The Code Hierarchy Principles Financial Management Standards Statements of Standard Practice

The CIPFA FM Code Structure

Statements of Standard Practice Principles FM Standards Statements of Standard Practice

The Code: the Debating points so far….. Testing the principles -sufficiently robust so far Challenging Areas to Codify: The planning horizon, finance talent management ratio, ‘guidance’ on reserve levels Do the standards/practice statements provide the basis to proceed?

The Code: An Outline Timeline Stake holder group agreed content and terms of reference July 2018 Research, recommendations on chapters content initial draft October 2018 Stake holder ‘road’ test December 2018 Consultation on Draft Code Early 2019 Code ‘Franked’ by CIPFA July 2019 Code Release September 2019

UK Insight: Public Sector Commercial Activity

Borrowing & Treasury Management:The Code(s) Changes Capital strategy – clarifies the links between the two Codes Minor changes to TM indicators investments includes non- treasury management investments: Development of a capital strategy High level context setting and strategy with key indicators Delegation of detail but responsibility remains with council Coverage of group and combined authorities etc. Encouragement of local indicators Removal of duplication

Borrowing for Commercial Investments

Statutory Guidance on Local Government Investments - Extracts

CIPFA Intervenes October 2018

Linking to The Capital Strategy Extract from The Prudential Code: ‘high level overview’ ‘how ..risk managed’ ‘Implications for future sustainability’

The Capital Strategy – Building Blocks Capital Expenditure Governance Long term plans Asset management planning Restrictions around funds Investments and liabilities (risks) Approach, due diligence, risk appetite Governance process for approval and monitoring Summary of material investments, guarantees and liabilities Treasury Management Long term planning inc. MRP Risk appetite, key risks and sensitivities Skills and knowledge Copyright © CIPFA 2018 protected under UK and international law.

Promoting IPSAS adoption & implementation Currently 25% of governments report on accrual…… Source: IFAC / CIPFA International Public Sector Financial Accountability Index Data from 150 countries

…...within 5 years 65% will report on accrual Source: IFAC / CIPFA International Public Sector Financial Accountability Index Data from 150 countries

Summary Evidence of ethical pressures on members The current climate (and wider factors) increases responsibilities on professionals Uncertainty continues ….. Opportunity for professionals?