Following the money

Who It's For

Board members, councillors, trustees and audit committee members in public bodies, housing and the voluntary sector

Overview

Financial failure in public bodies rarely arrives without warning. Part of the Immerse Governing the money, this half day starts with how numbers mislead, through Goodhart's law as restated by Marilyn Strathern, Cressey's fraud triangle and the Tesco and Wirecard cases. It turns to external audit from the board's seat: the expectation gap, going concern and England's local audit backlog. Financial resilience follows, from reserves matched to risk to section 114 notices, with Birmingham and Northamptonshire, and a capstone on Croydon, Robin Hood Energy and the Co-operative Bank. It closes with risk appetite, assurance mapping and counter fraud, drawing on the Airbus A380 and Wells Fargo.

Aims

Above all, it seeks to help boards follow the cash rather than the comfort: reading an audit report for what it does and does not say, testing their organisation's financial resilience while there is still time to act, and matching assurance to the risks that genuinely matter.

In summary, you will be able to:

1. 1Explain how numbers can mislead and read an external audit report for what it does and does not say, including on going concern.
2. 2Assess your organisation's financial resilience, from reserves matched to risk to the warning signs seen at Birmingham, Northamptonshire and Croydon.
3. 3Design assurance that matches the risks that matter, using risk appetite, assurance mapping and the fraud triangle.

What you'll develop

Across this Explore, you will develop the ability to:

1. 1Identify the four places where accounting judgement can bend results, and distinguish prudent from aggressive choices made on the same facts.
2. 2Explain what an audit is and is not, including true and fair, materiality and the expectation gap.
3. 3Outline the stages of a medium-term financial plan, and test how realistically it closes the gap over three to five years.
4. 4Apply the topic's financial and governance lenses, such as cash, asset value, borrowing, full cost and resilience, to a real case, and identify the warning signs that were visible.
5. 5Use Failure Mode and Effects Analysis and the Structured What If Technique to identify risks precisely, asking how a process could fail rather than whether it will.
6. 6Distinguish risk appetite, risk tolerance and risk capacity and explain why a board needs all three.
7. 7Plan and build an assurance map in six steps, rating each source of assurance by its strength, recency and independence.
8. 8Explain the fraud triangle of pressure, opportunity and rationalisation, and use it to reduce the conditions in which fraud occurs.