A changed financial year

Press, 1 June 1978, Page 14

A changed financial year

The report of the Controller and Auditor-General on financial management and control in administrative Government departments was highly critical of the .ways many departments run their affairs. Many of its recommendations may prove to be controversial and difficult to effect over the resistance of bureaucrats who feel they are under attack or have been unfairly impugned. Among these recommendations may be numbered the appointment of senior financial officers in various departments to positions of considerable responsibility and power, the greater delegation of financial responsibility within the departments and greater powers of supervision by the Treasury and by the Audit Office.

But one recommendation appears to require such minor adjustments within the departments and to promise such major benefits that it can and should be acted on immediately This is the recommendation that the Government’s financial balance date should be changed from March 31 to June 30, but that the timing of the Budget should remain the same. Many citizens will have had experience of Government departments spending money in a flurry as the end of the financial year approaches and even, in their haste, spending their allocations on what is most readily available rather than what is really needed. This is a consequence. in part, of the departments* often not knowing what are their final allocations for the year until May or June. Other expenditure programmes are often not approved until later. Were the Governments financial year to begin on July 1, the departments would have three extra months to plan and commit their spending and be less likely to have

to make rapid, last-minute adjustments to ensure they spend all the money allocated to them in the estimates. The more time departments are given to plan their spending, the more likely they will be able to obtain the best value for the money spent in accordance with their planned priorities.

To secure the full advantage of a change of balance date, the Government may also have to act on another of the recommendations of the Controller and Auditor-General and base its allocations to the various departments on the departments’ estimates for the various programmes they administer rather than on what was spent the previous year. If departments are made confident that any failure to spend the money allocated in one year will not prejudice their allocations in the next, provided that their spending programmes are properly justified, the need for an end-of-year spending rush will be diminished further.

Further advantages of a balance date of June 30 should follow because it falls economically in a relatively quiet period. The AuditorGeneral has concluded that the pattern of charges on the Government best lends itself to a balance date in this period. Some difficulties may arise from the need for a transitional 15-month “year.” But these should count for little against the great advantage of enabling departments to plan their spending more carefully. The Auditor-General has made a convincing case for other, more drastic changes. But the simple change of balance date should give the departments some oportunity to correct of their own accord some of the inefficient practices observed by the Audit Office.