The knock-on effect for charities of the MPs' expenses row

Get ready for the transparency debate, says Chris Harris, resources director of the Chartered Institute of Public Finance and Accountancy

Political commentator Iain Macwhirter recently pointed out on publicfinance.co.uk that members of the Scottish Parliament are basking in a virtuous glow because their expenses are declared openly and posted on the Scottish Parliament website. "With transparency, there is no story - just a lot of boring numbers," he wrote.

From a finance perspective, leaving aside the strange notion that numbers can ever be boring, there is a balance to be struck. Many people would like to have more information about what others are doing. But many people would also like to spend less time telling others about what they are doing.

Our management accounts should shed enough light on matters to demonstrate responsibility and maintain accountability, but should not take an excessive amount of time and energy to produce. As finance professionals, we have a responsibility to recommend best practice and mobilise support from external and internal audit colleagues when we need it.

Unfortunately, as demonstrated by the expenses debacle, change is often possible only when there is a crisis. So don't let the current one go to waste.

A knee-jerk reaction might be for you to require the finance director to sign off all expenses; since the finance department has to pay them anyway, there is some logic to that. However, transparency should be a corporate issue rather than just a problem for the finance department, and the system works best when checks and balances are built in throughout the organisation. Perhaps it is time to remind the management team of this.

The lead shown by those at the top has a significant effect on the culture of an organisation. Are MSPs really more virtuous than their English counterparts?

Maybe, but in Scotland devolution has offered an opportunity to learn from past problems and implement best practice. In England, the longevity of Parliament became an excuse for complacency. It was not politically expedient to reform what everyone knew to be a rotten system. But that's what good governance is for.

We need to consider the context. Macwhirter points out that £58,000 is a good salary in Scotland, whereas comparisons with City salaries may have made MPs in London feel hard done by.

Charities need to be wary that they, being primarily values-driven, are not seduced by financial rewards. The reputation of the third sector will be damaged if household names become tarnished with sleaze.

So finance directors, dust off your procedures and get ready for the transparency debate.


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