BBC

The BBC needs to improve its financial reporting systems, according to a report by the National Audit Office (NAO).

The report for the BBC Trust found that while the broadcaster had “strengthened its approach to managing its finances” its financial reporting is “slow and resource intensive”.

It also needs to monitor “how its spending aligns with its strategic and editorial priorities” on a more frequent basis.

The report’s publication falls at a time when the BBC is embroiled in implementing brought about through the £700m Delivering Quality First scheme.

The NAO said:

‘The BBC is making more effective use of the skills and independence of its non-executive directors to help it scrutinize and challenge major financial decisions, following concerns raised previously by the Public Accounts Committee that it did not subject spending decisions to sufficient challenge.’

The report recommended that the BBC Trust and Ofcom work together to explore the scope for coordinating the information they require the BBC to report to them, as current separate reporting arrangements and timescales take up resources that could be better used elsewhere.

It said the BBC had begun to benchmark its costs both internally and with other organizations, but it was still not clear that the results of benchmarking have influenced the the organisation’s cost reduction plans.

NAO chief, Amyas Morse, said:

‘The BBC has strengthened its approach to financial management which has helped it meet savings targets in the past. I welcome the improvements it has made.’

‘The BBC now needs to make sure it can monitor more frequently how its spending decisions align with its strategic and editorial priorities. This will put it in a better position to decide how best it uses its shrinking resource, in a way that offers value for money for the licence fee payer and still delivers the performance viewers and listeners expect.’

When comparing annual results against forecasts, the NAO found that the BBC has underspent against its forecast by at least 3% in each of the last four years, but it needed to be clear about how much resource could be available for reallocation.

The NAO also recommends that the BBC Trust and Ofcom work together to explore the scope for coordinating the information they require the BBC to report to them, as current separate reporting arrangements and timescales take up resources that could be better used elsewhere.

BBC Trustee, Anthony Fry, 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.’

The BBC, which has had its licence fee frozen for the past two years, amassed £3.6bn through the licence fee in 2011-12, boosted by an additional £300m in commercial activities.