Helping colleges into a commercial frame of mind

This weekend will see about 600 public-sector accountants qualify, with the announcement of the examination results of the Chartered Institute of Public Finance and Accountancy (Cipfa). As the public service reforms bite ever harder, so these Cipfa graduates will gravitate to the centre of public administration.

Graduates of Cipfa's Advanced Diploma, which focuses on financial management, also seem assured of a central role in the public services. The results of the first Advanced Diploma course have just been announced, with 22 students graduating from six training centres. The diploma's growing status is attracting increasing numbers of students, with 217 people now studying for it in 10 centres across the UK.

Bernard Kane, secretary to Peterborough Regional College, is one of those who graduates with an Advance Diploma. He says the skills he has learnt have already helped to make his further education college more commercially minded.

The financial crisis of some FE colleges has illustrated the necessity for colleges, as with other public bodies, to adopt commercial practices and improve financial controls. A study conducted by the Further Education Funding Council showed that it was not student numbers which determined the financial health of an FE college so much as the quality of its financial management.

More FE colleges are in serious financial difficulties as they face severe competition for vocational students from schools, universities and private colleges. Last summer 9 per cent of the 440 FE colleges were in weak financial positions, according to the FEFC, though none at that time was technically bankrupt. Some now carry deficits of hundreds of thousands of pounds from the last financial year and, in addition, owe similar amounts of prepaid grant to the FEFC for failing to meet student targets.

While an FEFC spokeswoman was reluctant to talk of a financial crisis in the sector, she would not predict that no colleges would be forced to close in the near future. Some FE colleges are currently in negotiation to merge, others talking with universities about being taken over.

Part of Mr Kane's job at Peterborough is to project-manage the continuing effects of the transfer from local education authority control to independence, which took place in 1993. Mr Kane, 49, was an RAF administration officer until he retired from the forces in 1990, but he fully recognises the commercial imperatives of an FE college today.

"It became clear that we were moving to a situation where we were a business in our own right but did not have the skills or the experience of the commercial world outside, or the more practical aspects of business management needed to survive," says Mr Kane. Both he and his principal believed the Cipfa diploma offered the college the opportunity to become more business- orientated.

"My dissertation was on introducing an information systems strategy into the college," says Mr Kane. Before operational independence it was not essential for a college to be aware of student numbers. Now, with funding related to a college's success in attracting students and providing them with qualifications, it is vital that managers have regular information about this, which Mr Kane's new computer systems provide.

"We now monitor precisely what each student does," says Mr Kane. "We ensure that we undertake what we are supposed to." The college is now clear which courses make money, and which do not. Some courses are deliberately run as loss leaders to enhance prestige, but this is on the basis of conscious decisions.

Peterborough has introduced a financial appraisal of all capital projects, also as a result of Mr Kane's course. The college now benchmarks expenditure against other organisations, and evaluates requests for funding against a value for money exercise.

A new commercial era has hit FE colleges such as Peterborough, and opportunities for partnering and selling to local businesses are actively sought out. A video-conferencing facility is available for hire; new sports and leisure facilities may be built that can be used by the public; private finance is being sought for new halls of residence; and the college is available as a conference facility on the increasingly rare occasions when it is not being used by students.

It is a tough world the public sector now faces, and accountants and managers need all the help they can get. Effective training could be the factor that counts.

Cipfa's accountancy examination results will be published in full in 'The Independent on Sunday'.