Chartered Institute of Public Finance and Accountancy (CIPFA) Strategic Public Finance and Governance Syllabus

What are the five cases of the UK Treasury 'Five Case Model' for business cases?

Strategic case, Economic case, Commercial case, Financial case, and Management case — assessing strategic fit, value for money, viability of procurement, affordability, and deliverability respectively.

Define the Accounting (Average) Rate of Return and its formula.

ARR expresses average annual accounting profit as a percentage of investment: $$\text{ARR} = \frac{\text{Average annual profit}}{\text{Average (or initial) investment}} \times 100\%$$ Accept if it exceeds a target return.

List the principal sources of capital finance available to UK public bodies.

Borrowing (e.g. PWLB loans, bond issuance), capital grants from government, capital receipts from asset sales, revenue contributions/reserves, leasing, and partnerships such as joint ventures or developer contributions (e.g. Section 106/CIL).

What is the Public Works Loan Board (PWLB) and what does it provide?

A UK government lending facility (operated via the Debt Management Office) that provides loans to local authorities and other public bodies to finance capital expenditure, typically at rates linked to gilt yields.

What is the 'Prudential Code' and the central question it requires local authorities to answer?

CIPFA's framework governing local authority capital expenditure and borrowing. It requires that capital plans and borrowing are affordable, prudent and sustainable, with no statutory borrowing limit but self-determined prudential indicators.

What is the Minimum Revenue Provision (MRP)?

A statutory annual charge to a local authority's revenue account to set aside a prudent amount to repay debt incurred to finance capital expenditure, ensuring borrowing is repaid over the life of the assets.

Define treasury management as used by CIPFA.

The management of an organisation's cash flows, borrowing and investments, together with the associated risks, and the pursuit of optimum performance consistent with effective control of those risks.

State CIPFA's order of priority for treasury management investment objectives.

Security first, then liquidity, then yield (often abbreviated 'SLY') — protecting the principal sum and maintaining access to cash take precedence over earning a return.

What are the main categories of treasury management risk?

Credit/counterparty risk, liquidity risk, interest-rate (market) risk, refinancing risk, inflation risk, legal/regulatory risk, fraud/error risk, and (where relevant) foreign-exchange risk.

What is the difference between liquidity risk and refinancing risk in treasury management?

Liquidity risk is being unable to meet payment obligations as they fall due because cash is not available; refinancing risk is being unable to renew or replace maturing borrowing on acceptable terms.

What is a Treasury Management Strategy Statement (TMSS)?

An annual statement, approved by full council before the financial year, setting out a local authority's borrowing strategy, investment strategy, prudential and treasury indicators, and approved counterparties/limits.

What does financial resilience mean for a public body?

The capacity to absorb financial shocks and continue delivering services — reflected in adequate reserves, manageable debt, balanced budgets, realistic savings plans, and the ability to respond to funding cuts or demand surges.

Name four key indicators used to assess a council's financial sustainability and resilience.

Level and trend of usable reserves, reliance on reserves to balance the budget, the budget gap/savings requirement, and external debt as a proportion of income — alongside auditor 'value for money' judgements.

What is the CIPFA Financial Resilience Index?

A comparative analytical tool that benchmarks English councils against peers using indicators (reserves, debt, ratio of reserves to expenditure, auditor flags) to highlight relative financial risk and support self-assessment.

Define 'going concern' in the context of a public body's financial sustainability.

The assumption that the entity will continue to operate and meet its obligations for the foreseeable future (at least 12 months); for most public bodies it rests on continued statutory funding rather than commercial profitability.

What is a Section 114 notice and when must it be issued?

A report issued by a local authority's Chief Finance Officer (s.114 Local Government Finance Act 1988) when the authority cannot set or maintain a balanced budget. It halts new expenditure (except protected commitments) until council action is taken.

What are the seven Nolan Principles of Public Life that underpin governance in UK public bodies?

Selflessness, Integrity, Objectivity, Accountability, Openness, Honesty and Leadership.

What is corporate governance for a public body?

The system of rules, practices, relationships and processes by which a public body is directed and controlled, ensuring it achieves its objectives while acting with integrity, accountability and openness to stakeholders.

What are the seven core principles of the CIPFA/SOLACE Framework for Good Governance in the Public Sector (2016)?

(A) Integrity and ethical values & rule of law; (B) Openness and stakeholder engagement; (C) Defining outcomes (economic, social, environmental benefits); (D) Determining interventions to achieve outcomes; (E) Developing capacity and capability; (F) Risk and performance management plus strong controls; (G) Good transparency, accountability and reporting.

What are the 'three lines of defence' in a governance/assurance model?

First line: operational management owning and controlling risk; second line: risk, compliance and oversight functions that monitor controls; third line: internal audit providing independent assurance to the board/audit committee.

What is the role of an audit committee in a public body?

An independent body providing assurance to those charged with governance on the adequacy of the control environment, risk management, internal/external audit, financial reporting and counter-fraud arrangements.

Define Enterprise Risk Management (ERM).

A coordinated, organisation-wide process for identifying, assessing, responding to and monitoring risks across the whole entity in an integrated way, aligned to strategy and objectives, rather than managing risks in isolated silos.

State the four generic risk response strategies (the '4 Ts').

Tolerate (accept), Treat (control/mitigate), Transfer (e.g. insure or outsource), and Terminate (avoid the activity). Some frameworks add 'Take the opportunity' for upside risk.

How is a risk's significance scored in a typical risk matrix?

By combining its likelihood and impact: $$\text{Risk score} = \text{Likelihood} \times \text{Impact}$$ The result is plotted on a heat map to prioritise responses, distinguishing inherent (gross) from residual (net) risk.

Distinguish inherent risk from residual risk.

Inherent (gross) risk is the level of risk before any controls or mitigations are applied; residual (net) risk is the remaining exposure after controls have been put in place. The gap measures control effectiveness.

What is 'risk appetite' and why must a board define it?

Risk appetite is the amount and type of risk an organisation is willing to accept in pursuit of its objectives. Defining it provides a boundary for decision-making and ensures consistent, accountable risk-taking across the body.

What is the CIPFA 'Fighting Fraud and Corruption Locally' strategy built around?

A coordinated counter-fraud strategy structured around four pillars: Govern (commitment and leadership), Acknowledge (assess and understand fraud risks), Prevent (deter and design out fraud), and Pursue (investigate, sanction and recover).

What are the three elements of the 'fraud triangle'?

Pressure/motivation (financial need), Opportunity (weak controls allowing the act), and Rationalisation (justifying the act to oneself). All three are typically present when fraud occurs.

What is PESTLE analysis and what does each letter stand for?

A strategic environmental scanning tool examining external factors: Political, Economic, Social, Technological, Legal and Environmental — used to identify opportunities and threats facing a public body.

What does a SWOT analysis assess in strategic planning?

Internal Strengths and Weaknesses together with external Opportunities and Threats, providing a structured basis for setting strategy and aligning capabilities with the operating environment.

What is the key principle of John Kotter's model for leading change in financial transformation?

That successful, lasting change follows a sequence beginning with creating a sense of urgency, building a guiding coalition and a clear vision, and ending with embedding new approaches into the culture so gains are not lost. It stresses change is a process, not an event.

What is 'commercialisation' for a public body, and name common alternative delivery models?

Commercialisation is generating income and adopting business-like approaches to fund services and reduce reliance on grants. Alternative delivery models include local authority trading companies, joint ventures, shared services, outsourcing/contracting, and arms-length management organisations (ALMOs).