BBC has stronger grip on finances, says National Audit Office

Anthony Fry Anthony Fry: Trust will monitor improvements

The BBC has 'strong financial leadership' which has promoted 'a culture of financial accountability', says the National Audit Office.

In a report into the BBC's finance function published on Tuesday, it said that the BBC had improved its financial management which had helped it deliver necessary savings.

The NAO - which scrutinises public spending on behalf of Parliament - also found that the BBC had taken steps to ensure financial matters were 'subject to more robust challenge and accountability'.

It pointed to clearer roles in this regard for the BBC Trust and the non-executive directors, particularly on approving spending on major projects.

System shortcomings

But the report also identified shortcomings in the BBC's financial systems which the NAO believed could hinder effective decision making.

The NAO said that the systems did not produce automated reports of spending against the BBC's strategic and editorial priorities. This type of analysis required 'significant manual effort', said the report.

The systems also failed to link financial reporting to performance indicators, like reach and quality. As such, the NAO said, it was difficult to determine whether or not a service offered value for money and, therefore, whether there was scope for savings.

It praised budgeting as 'detailed and robust' but said that the introduction of benchmarking of costs, which it had previously recommended to the BBC, had not had an impact on cost reduction plans. 'This means that the BBC cannot be confident that its savings targets are pitched at the right level.'

'Slow' reporting

It also found that internal financial reporting and planning processes were 'slow' and 'resource intensive' which had the potential to hinder BBC decision making.

The BBC had consistently underspent against its forecasts - by at least 3% in each of the last four years - the report stated. While a degree of underspending was 'prudent', the NAO said, it called for closer scrutiny of 'in year forecasts' so that money could be reallocated where appropriate.

In response to the report, the BBC Executive has said it will look for further opportunities to improve the way it monitors spend against strategic and editorial objectives and how it integrates financial and performance reporting.

'This will help ensure senior management have a clearer overall picture, as a matter of routine,' it said. 'However, we need to be aware that direct relations between audience performance and cost are frequently not easy to establish, and there are many non financial factors which influence editorial performance.'

The BBC Trust said it would monitor the improvements.

Anthony Fry, BBC Trustee, said: 'We are pleased that the NAO has concluded that the BBC's approach to managing its finances has improved and supports the BBC's delivery of value for money for licence fee payers.

'At a time when the BBC's resources are being squeezed and when it needs to achieve substantial savings over the next few years, getting this right is more important than ever and we will ensure that the improvements the Executive has committed to make are delivered - and that it goes even further where possible.'

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