Public Sector Finance: Organizations, Accountability, and Analysis

This report provides a comprehensive analysis of financial management within the public sector. It begins by examining different public sector organizations, such as local councils, government agencies, NHS trusts, and QUANGOs, detailing their structures and operations. The report then assesses the accountability of public sector managers, emphasizing the importance of audits, financial reporting, and adherence to legislation. It analyzes financial information reported by public sector organizations, highlighting the sources of finance and the need for detailed financial statements. The report also evaluates the use of financial information for decision-making, covering budgeting, costing, and the analysis of financial statements. It further explores areas for monitoring, such as budget variances and revenue streams, and analyzes different types of financial decisions, including investment decisions and project selection, along with the techniques used to support these decisions. Finally, the report details the process of putting projects out to tender, including documentation, supplier selection, and evaluation criteria, ensuring ethical and compliant practices. The report uses the healthcare industry of the UK as a case study.

Managing Finance in Public Sector

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1 .................................................................................................................................................3
1.1 Analyzing the different organizations in the public sector....................................................3
1.2 Assessing the accountability of public sector managers in relation to finance......................4
1.3 Analyzing financial information reported for different public sector organizations.............4
LO 2.................................................................................................................................................5
2.1 Analyzing financial information and evaluating its use for decision making ......................5
2.2 Assessing areas to be monitored and demonstrating its achievement...................................5
2.3 Analyzing different types of financial decision and demonstrating techniques to support
decision........................................................................................................................................6
LO 3.................................................................................................................................................6
3.1 Determining process to put out project to tender...................................................................6
3.2 Analyzing evaluation of public sector tender and suitable suppliers selection.....................7
CONCLUSION................................................................................................................................8
References........................................................................................................................................9
2

INTRODUCTION
Management of finance in public sector is the crucial aspect because it involves number
of efforts by management so as to operate business in an effectual manner. This aspect gives
certainty for future business activities with effective allocation of financial resources. Present
report covers analysis of different organization in the public sector along with their structure.
Furthermore, accountability of public sector managers in relation to finance has been assessed
effectively. In addition to this, analysis of financial information as well as evaluation of financial
information for decision making and control has been done. In addition to this, different types of
financial decision and techniques to support decision making are also analyzed.
LO1
1.1 Analyzing the different organizations in the public sector
There are different organizations in the public sector which are explained as follows-
 Local councils-It is operated at local basis under the inspection of government. For
example health care of UK works with collaboration of local councils which provide
immense support in successful running of the business. It also consists of Care Quality
Communication and other regulatory authority thereby health care industry of UK
ensures ethical aspect (Andrew, 2004).
 Governments agencies-There are several government agencies which are directed and
operated by the government of UK and are accountable towards ministries of
government. These agencies are provided financial support from UK government so they
can effectively inspect operation of health care industry in nation (Hildreth, 2008).
 NHS trust- National Health Service Trust has wide network of health care settings
through which health care services are provided across nations. This includes structural
hierarchy of board thereby all business activities are performed (Phillips, 2009). It
provides immense support in providing good quality of care services to large number of
visitors or sufferers.
 Quasi Autonomous Non government organization (QUANGO)-It includes four
distinctive bodies such as Advisory NDPB, Tribunal NDPB and Executive NDPB as well
3

as independent monitoring boards. These all are regulated by the government for carrying
out different government processes (Reid, 2002).
1.2 Assessing the accountability of public sector managers in relation to finance
The accountability of public sector managers in relation to finance is ensured by focusing
on different aspect such as audit, financial report and legislation as well as policies. Here, it is
very important for the corporation to pay tax on right time with the help of proper auditing
procedure of internal record keeping process. Furthermore in record keeping, standards set by
UK government need to be kept in mind so that smooth flow of production can be maintained in
health care industry of the nation (Sisaye and Birnberg, 2010). Management is required to
prepare all financial statement by focusing on certain aspect like GAAP, IFRS etc. Accordingly,
tax is required to be paid on right time thereby corporation can meet expectations of all its
important stakeholders such as shareholders, services users and suppliers etc. Furthermore,
management is also liable to assess effective use of available limited financial resources so that
organizational objectives can be met effectively. Similarly, policies and legislation related to
audit and record keeping need to be followed by the management of public sector (Lam, 2010).
In addition to this, different measures for valuation of money are required to be adopted by
corporation thereby business in public sector work with integrity and without any kind of barriers
with regards to finance.
1.3 Analyzing financial information reported for different public sector organizations
Public sector organizations like Health care industry of UK are required to provide report
for its financial information. It can access different sources to raise long as well as short term
finance. Here, sources like taxes, government grants and reported financial as well as non-
financial performance indicators are effective sources through which finance can be availed. It
enables the corporation to deliver good quality of services to large number of buyers.
Furthermore, health care industry need to provide report to its higher authorities so as to ensure
that it is complying with legal framework (Young and et.al., 2011). It facilitates in preparing
financial statement effectively whereby important information can be published in front of
stakeholders who are directly or indirectly associated with corporation. Furthermore, financial
statements like income and expenditure and movement in the reserve statement are provided for
detail information. This proves to be effective in providing information with regards to financial
4

position of health care industry of UK. Here, most of the sources which are accessed by health
care industry are from government so they need to ensure proper allocation of financial
resources. Similarly, audit report should also be provided to government on the right time. Apart
from this, other important statements like balance sheet, cash flow is required to be prepared by
health care industry of UK to represent its financial and non-financial indicators (Broyles, 2007).
LO 2
2.1 Analyzing financial information and evaluating its use for decision making
The financial information are analyzed and evaluated to take right action on behalf of
health care industry. Under this, corporation assesses budgets so that they can have idea
regarding expenses to be made in the future. It provides rough estimation for setting budget for
next year. Further, costing and budgeting information cater need of organization for setting
criteria of operation for new venture. For example, health care industry analyzes the cash budget
for current year and accordingly controls the cash. Here, there can be two situations; deficit and
surplus (Frank, 2006). In both cases, management found that poor estimation exists in the
organization At this juncture, it is very important for the organization to take right action by
taking appropriate decision. Apart from this, by assessing financial statement information related
to solvency, liquidity and turnover position of health care industry will be known. This aspect
helps shareholders to make decision with regards to investment (Shah, 2007). Thus, analysis of
financial information facilitates in reducing gap between actual and expected results. Also, as per
the analysis and evaluation corporation can take decision related to training among workforce,
expansion of business and to improve operational efficiency if required. Therefore, effective
monitoring processes can also be set so as to achieve long as well as short term objectives of
health care industry.
2.2 Assessing areas to be monitored and demonstrating its achievement
Different processes like budget, monitoring variance and different revenue collection
streams are used. It assists the corporation in taking right decision for growth and expansion of
firm so as to meet expectations of different related stakeholders. For example assessment of
budget will enable the management to ascertain major areas of improvement (Sottini, 2009). It
could be related to income or expenses. In case, there is high expenditure in comparison to
expected one then management can adopt specific procedure to reduce the amount of
5

expenditure in future time span. This can be done either by effective forecasting or by setting
right expectations. Similarly, review of politicians can also be taken so as to assess the financial
performance of health care industry (Young and et.al., 2011). Apart from this, continuous
monitoring process can be applied by corporation so that management can easily assess major
differences in actual and expected results. It enables the health care setting to bring improvement
in current work environment by taking right action on the right time. In addition to this, variance
budget can also be monitored which consists of detail information related to wages, material and
other related expenses of health care setting. With this, management came to know the areas
which need improvement and accordingly modification will be made by setting right budget
from next time.
2.3 Analyzing different types of financial decision and demonstrating techniques to support
decision
There are different types of financial decision made by the management of health care
industry which can be related to investment decision, selection of right project and expansion of
corporation at new location. Here, role of government is also crucial so that funding related
queries can be sorted out. Also, distribution of funds can be done as per appropriate technique.
Owing to this, different techniques like investment appraisal, cost benefit analysis and ratio
analysis are helpful. It assists the corporation in selecting the right project and invests in right
project so as to achieve aim of the same. Here, investment appraisal includes techniques like net
present value method, payback period and internal rate of return (Sisaye and Birnberg, 2010). It
will assist the corporation to select right project in accordance with time taken to recover initial
investment and rate of return over a specified time span. On the other hand, ratio analysis is
another effective technique under which management or stakeholders come to know regarding
solvency, liquidity and efficiency of health care setting. In addition to this, cost benefit analysis
is also an effective measure through which management assess that whether corporation is
getting benefit equal to associated cost or not.
LO 3
3.1 Determining process to put out project to tender
In order to put out project to tender health care industry need to follow certain procedure.
Here, first process of documentation should be completed by providing description with regards
6

to services and products as well as health and social care. Here, corporation can fill online form
to register themselves on E-tendering and then category need to be selected for which
corporation is interested. At this juncture, corporation will be updated of the same when
opportunity will be availed. However, documentation process is most important under which
detail with regards to project, pricing, quality need to be specified (Tenders & Contracts, 2016).
However, process of approval from suppliers, equality issues and other related factors need to be
considered. Furthermore, during the procedure of tender health care organization will be assessed
on all aspect like quality, technically, financial and functionally. Therefore, all these parameters
are required to be taken into account thereby tender process will be completed (Phillips, 2009).
Not only has this, but requirement or regulations imposed by government and EU is also needed
to be considered so that tender can be passed in an ethical manner. Here after completion of all
this process council shortlists the tender in accordance with price and quality as well as other set
criteria.
3.2 Analyzing evaluation of public sector tender and suitable suppliers selection
The public sector tender are analyzed in the light of specific criteria which facilitate to
ensure equality among applicants. At this juncture, it is very important to keep into mind
financial stability of health care organization and its monitoring as well as recording of
evaluation of process. Along with that, feedback of unsuccessful suppliers should also be given
through which the corporation can depict its ethical aspect among others. According to Mod
Contract, detail information of tender should be assessed such as number of employees, evidence
of innovation and long term development aim and current PA savings are includes (Sottini,
2009). The most important component is value which needs to be taken within set criteria so that
corporation can easily go through process of tender. Apart from this, design criteria which
include cost, capability, financial feasibility and time frame as well as detail information of
project is required to be assessed. In addition to this, selection of tender or suppliers is done as
per past financial records, cost of services and availability of updated tools and techniques as
well as operation of corporation under control of legal framework (Andrew, 2004). Not only this,
but scoring system is also used in which score is given according to 5 points. These five points
include information related to poor response, limited information, non-fulfillment of desired
criteria and other related factors. This leads to selection of right suppliers and right tender.
7

CONCLUSION
The aforementioned report concludes that public sector organization works according to
specified regulations of the government. It assists corporations to contribute towards growth and
success of the nation as their funds are arranged by government grants and other related sources.
It can also be said that process of tender and other related techniques facilitate to profitability for
health care industry of country. In addition to this, financial information is very important to take
decision related to expansion, growth and development of industry. It proves to be effective in
determining long run success of firm by providing good quality of services to its service users.
8

REFERENCES
Journals and books
Andrew, A., 2004. Property appraisal in Government. Journal of Property Investment & Finance.
22(2). pp.192 – 199.
Broyles J. 2007. Financial Management and Real Options. Wiley publishing.
Frank, H., 2006. Public Financial Management. CRC Press publishing.
Hildreth, W., 2008. Financial Management Theory In the public sector. Greenwood Publishing
Group.
Lam, W., 2010. Funding gap, what funding gap? Financial bootstrapping: Supply, demand and
creation of entrepreneurial finance. International Journal of Entrepreneurial Behaviour
& Research. 16(4). pp.268-295.
Phillips, P.A., 2009. The strategic planning/finance interface: does sophistication really matter?.
Management Decision. 38(8). pp.541-549.
Reid, P., 2002. A critical evaluation of the effect of participation in budget target setting on
motivation. Managerial Auditing Journal. 17(3). pp.122–129.
Shah, A., 2007. Local Public Financial Management. World Bank Publications.
Sisaye, S. and Birnberg, J., 2010. Extent and scope of diffusion and adoption of process
innovations in public accounting systems. International Journal of Accounting and
Information Management. 18(2). pp.118 – 139.
Sottini, M., 2009. It Financial Management. Van Haren Publishing.
Young, M. and et.al., 2011.Whole of enterprise portfolio management: A case study of NSW
Government and Sydney Water Corporation. International Journal of Managing Projects
in Business. 4(3). pp.412 – 435.
Online
Tenders & Contracts, 2016. [Online]. Available through:
<https://www.sutton.gov.uk/index.aspx?articleid=3410> [Accessed on 5th January 2016].
9