Improve performance using the GFOA'S new financial management assessment tool.

• Author: Bailey, Michael

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Every jurisdiction strives to achieve excellence in financial management. But knowing how effective you are means looking at each component of financial management to learn what is working well and what might benefit from improvement. The more thorough the assessment, the more the organization can do to ensure optimal performance.

In the United Kingdom, the CIPFA FM Model has been helping to define good financial management practices for local governments for decades. A large number of U.K. local jurisdictions use this self-evaluation tool to develop financial management approaches that fit their business goals and service aspirations. To help U.S. and Canadian governments build on this success, the Government Finance Officers Association has adapted the Chartered Institute of Public Finance and Accountancy (CIPFA) model for use in North America. The new version, called the CIPFA-GFOA FM Model, invites users to test their own financial management practices against professional best practices.

FINANCIAL LEADERSHIP

In addition to the immediately understandable benefit of pursuing world-class performance in financial management--that is, achieving fiscal efficiency and effectiveness throughout the organization--there are also other, perhaps less obvious, advantages. In this era of very tight budgets, combined with increasing scrutiny of how public funds are spent, it is useful to have a tool that reviews the jurisdiction's adherence to best practices. Good financial management is how managers meet their obligation to spend taxpayer money carefully, using it to improve services that affect the lives of citizens. An organization that handles its finances well has a solid foundation for providing services the public wants and needs, which is the business of every government manager.

The role of the finance officer requires leadership as well as stewardship. Finance officers are helping transform their organizations--a process that has taken on a new urgency as a result of the Great Recession. The FM Model is useful in helping leaders focus on and track improvement efforts. The model can help an organization ratchet performance up through an initial round of assessment and improvements, and then be used to revisit each area at a later time, so the organization can build on its successes, continually improving.

One aspect of good leadership is engaging others in the jurisdiction's improvement efforts. You achieve more buy in when you explain what you're doing and why, and the best practice target you're working toward. At the same time, feedback from disparate sources can point out problems you hadn't noticed, and point to solutions you hadn't considered. Engaging the following constituencies can be useful:

* Customers. The FM Model can help you analyze how easily other units within the government can access financial management services and how well their needs are addressed.

* Stakeholders. Demonstrating your efforts toward improvement can enhance your credibility with interested citizens, board members, and other managers, and further enhance your role as a trusted advisor.

* The Community...