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CAIRNGORMS NATIONAL PARK AUTHORITY 
FINANCE COMMITTEE


FOR DISCUSSION 

Title: BALANCED SCORECARD: FINANCE MEASURES 

Prepared by: David Cameron, Head of Corporate Services 


Purpose 

To present the financial performance measures proposed for inclusion in the Authority’s 
balanced scorecard model to the Committee for consideration, in order that members may 
consider the appropriateness of these measures in establishing a high level, summary view 
of the financial health of the organisation. 


Recommendations 

Committee members are invited to consider whether: 

a. The six financial performance measures proposed at point 5 provide an appropriate 
set of measures on which to assess the financial performance of the Authority; 

b. Any areas of the Authority’s financial activities are missed by these measures and 
therefore…; 

c. Any additional measures are required; 

d. Tolerance levels proposed in monitoring actual performance set acceptable levels of 
variation from targets. 

Subject to comments on points a to d above, the Committee is requested to agree the 
financial performance measures proposed for inclusion in the Authority’s balanced 
scorecard model 


Executive Summary 

Operational Plan Update reports for 2006/07 to the Board have indicated that the 
Management Team has been developing a “Balanced Scorecard” model to assess the 
organisation’s health. It is intended that this will complement the quarterly review of 
Operational Plan activities by also presenting summary information on the Authority’s 
financial performance; its staffing and recruitment position; management of strategic risks 
and governance measures; and progress made on delivering priority three-year Corporate 
Plan outcomes. The purpose of this paper is to present the financial performance measures 
proposed for inclusion in the Authority’s balanced scorecard model to the Committee for 
consideration 


Six financial indices are proposed to give a broad overview of the financial health of the 
organisation: 

a. Total Available Income in line with Budget estimate (current year); 

b. Core expenditure in line with budget estimate (current year); 

c. Operational Plan expenditure in line with budget estimate (current year); 

d. Forecast year-end result in line with target (current year); 

e. Next year income in line or above forecast; 

f. Future year expenditure commitments in line with agreed control level. 

The paper seeks the Committee’s views on these measures proposed. 

The development of a balanced scorecard approach also assists in embedding the 
Authority’s risk management processes into our Operational Planning and Monitoring 
arrangements. Key aspects of the organisation’s operations, governance and resourcing are 
highlighted. Any increased risk to delivery of organisational objectives through these 
essential components not falling within required tolerances are also exposed, requiring 
management to address and seek to remedy the situation. 



BALANCED SCORECARD: FINANCE MEASURES 
FOR DISCUSSION 

Background 

1. Operational Plan Update reports for 2006/07 to the Board have indicated that 
the Management Team has been developing a “Balanced Scorecard” model to 
assess the organisation’s health. It is intended that this will complement the 
quarterly review of Operational Plan activities by also presenting summary 
information on the Authority’s financial performance; its staffing and 
recruitment position; management of strategic risks and governance measures; 
and progress made on delivering priority three-year Corporate Plan outcomes. 

2. It is also intended that the balanced scorecard model will help integrate the 
work of the Board’s Committees within overall activity monitoring. 

3. The purpose of this paper is to present the financial performance measures 
proposed for inclusion in the Authority’s balanced scorecard model to the 
Committee for consideration, in order that members may consider the 
appropriateness of these measures in establishing a high level, summary view 
of the financial health of the organisation. 

4. The Audit and Staffing and Recruitment Committees will similarly be 
requested to consider the indices relevant to governance/risk management and 
HR operations respectively. 


Balanced Scorecard: Financial Measures 

5. Six financial indices are proposed to give a broad overview of the financial 
health of the organisation: 

a. Total Available Income in line with Budget estimate (Current year); 

b. Core expenditure in line with budget estimate (current year); 

c. Operational Plan expenditure in line with budget estimate (Current year); 

d. Forecast year-end result in line with target (current year); 

e. Next year income in line or above forecast; 

f. Future year expenditure commitments in line with agreed control level. 

6. These indices are intended to present a combined, summary view of the in-year 
financial monitoring undertaken by the Committee with consideration of the 
current status and robustness of information on future year income and 
expenditure commitments. The proposed measures are set out in Annex 1, 
together with the result of the assessment of performance against these 
measures over the last 9 months. 

7. Tolerance levels have been suggested for each of these indices, and are shown 
in Annex 1. Tolerance levels are set to establish acceptable levels of variation 
from target before the underlying position measured by each index requires to 
be highlighted to Management to address. 

8. For example, the history of the Authority’s finance monitoring has shown that 
a relatively large variation from budget in Operational Plan expenditure is 
common at an early part of a financial year, and can normally be remedied by 
the year-end. Hence, we have suggested that it is appropriate to accept 
Operational Plan expenditure variations of up to 6% below budget forecast at 
the end of the first quarter of a year; up to 4% below budget forecast at the end 
of the second quarter; and up to 2% in the remaining third and fourth quarters. 

9. Our budget management strategy is to both improve accuracy of budget 
forecasting and to even out phasing of expenditure over the year. These 
tolerance levels are not, therefore, introduced to excuse budget variations, but 
to highlight that larger variations in some aspects of the organisation’s 
activities may be acceptable at some stages of the year. 

10. Through establishing the set of six financial measures proposed, it is intended 
that a relatively simple and clear overview of the financial monitoring process 
may be reviewed and agreed by the Committee and used for onward reporting 
to the full Board. 

11. Committee members are invited to consider whether: 

a. The six financial performance measures proposed at point 5 provide an 
appropriate set of measures on which to assess the financial performance 
of the Authority; 

b. Any areas of the Authority’s financial activities are missed by these 
measures and therefore…; 

c. Any additional measures are required; 

d. Tolerance levels proposed in monitoring actual performance set 
acceptable levels of variation from targets. 


Risk Management 

12. The development of a balanced scorecard approach also assists in embedding 
the Authority’s risk management processes into our Operational Planning and 
Monitoring arrangements. Key aspects of the organisation’s operations, 
governance and resourcing are highlighted. Any increased risk to delivery of 
organisational objectives through these essential components not falling within 
required tolerances are also exposed, requiring management to address and 
seek to remedy the situation. 

13. It is intended that the full balanced scorecard will be presented to the Board 
along with the quarter 3 Operational Plan monitoring report in February. 
Thereafter, it will be updated quarterly to provide an up to date overview of 
the Authority’s operational health. 

14. To illustrate the intended final presentation, the current balanced scorecard 
summary is set out at Annex 2 to this paper. Members are asked to note that 
this presentation is prior to consideration and agreement of the performance 
indicators for Human Resource Management or Governance and Risk 
Management by the Staffing and Recruitment and Audit Committees, while 
the final measures on Operational Plan Management have still to be agreed by 
Management Team for recommendation to the Board. 


David Cameron 
17 November 2006 

davidcameron@cairngorms.co.uk