chapter 5

The CIPFA FM Model

5.1 The CIPFA FM Model

Readers of this publication may also benefit from use of the CIPFA FM Model. This has been developed as a model for financial management that identifies the contribution financial management makes to a successful public service organisation. Balance sheet management should be an integral part of an overarching approach to strong financial management. As a consequence, the FM Model includes an explicit reference to the need for organisations to have processes to ensure that they have the information about key assets and liabilities necessary for effective balance sheet management.

The model offers a practical tool for improving organisational effectiveness. It presents the components of financial management in a structured framework based around three styles of financial management:

■Enabling transformation: the finance team have input into strategic and operational plans taking into account proactive risk management, clear strategic directions and focus-based outcomes.
■Supporting performance: finance teams are actively committed to continuous improvement focused on efficient and effective delivery and organisational performance.
■Delivering accountability: financial information is accurate, timely and focuses on controls, probity, compliance and accountability.

It looks for each style across four management dimensions:

■Leadership – which focuses on strategic direction and performance management, and the impact on financial management of the vision and involvement of the board and senior managers
■People – which includes both the competencies and the engagement of staff. This aspect generally faces inward to the organisation
■Processes – which examines the organisation’s ability to design, manage, control and improve its financial processes to support its policy and strategy
■Stakeholders – which deals with the relationships between the organisation and those with an interest in its financial health, whether government, inspectors, taxpayers, suppliers, customers or partners. It also deals with customer relationships inside the organisation, between finance services and their internal users

The model is a matrix setting out statements of good practice, 30 in total.

Behind each statement lies a set of questions that invite users to explore the practical implications of the statements. By using the model, organisations can conduct a self-assessment of their financial management. They can score themselves and build up a profile of financial management effectiveness.

The methodology used in the model is also used in Aligning Local Public Services Framework: A Reference for Good Practice (CIPFA, 2015). This is a reference guide of good practice in working with local partners to deliver public services as economically, efficiently and effectively as possible, based on common strategies and high-quality financial and operational data.

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