Financial management in the Foreign and Commonwealth Office
Description:... The Foreign and Commonwealth Office (FCO) has made good progress in its financial management, aiming to establish itself as one of the best departments in Whitehall in this respect. It has shown strong leadership in raising the profile of good financial management across the Department. Up to 2007-08, however, the FCO has underspent consistently against its budget. The Department has introduced a financial management improvement programme "Five Star Finance", the aim of which is for the department to be a Whitehall leader in financial management. It currently rates itself at three and a half stars on a 1(low) to 5 (high) scale, a rating confirmed by NAO. The FCO operates in a challenging environment in terms of the global nature of its operations. The fluctuations of global currency markets pose particular difficulties for the Department. Until 2007-08, its budgets were protected by the Treasury from exchange rate fluctuations. When this protection was withdrawn, the FCO introduced alternative measures to manage its exposure, principally the forward purchase of major foreign currencies. It needs to ensure that its finance team has the right skills and experience to manage the financial risks it now faces. The FCO is taking action to avoid future underspends against its budget. In other respects, FCO's financial management has improved. The accuracy, reliability and timeliness of its financial reporting have all been enhanced. In 2007-08 it laid its accounts on 30 June, the earliest date it has ever achieved after the March year-end.
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