Special Report 101 - Financial Management Maturity Model: A Good Practice Guide

Published on 11 July 2018

Financial management is the system by which the resources of an organisation are planned, directed, monitored and controlled to enable it to achieve its goals. Good financial management is essential for the effective running of an organisation. 

The financial management maturity model

This report presents a model — the financial management maturity model — which can be used to assess and identify opportunities for improvement in financial management practices in public sector organisations.


The model describes practices and awareness of financial management and relates them to the outcomes organisations might expect. The model also provides a basis for assessing financial management practices by setting out 15 questions across the five key themes

Five levels of maturity are identified. The appropriate maturity level for an organisation is best determined by those responsible for its governance. The benefits of operating at a higher maturity level must be balanced with the increased cost associated with moving to that level. However, it is not appropriate for a public sector organisation to be operating at Level 1 or 2.

Characteristics of organisation practice — five maturity levels
LevelOverview of practice
5Leading edge: The organisation has in place financial management practices that are leading edge and allow it to actively anticipate both challenges abd key opportunities, in order to optimise performance.
4Professional: The organisation has in place professional financial management practices which enable it to cope effectively in challenging times and will identify some opportunities to improve its performance.
3Adequate: The organisation has in place financial management practices that are adequate in supporting the business under stable circumstances and that enable it to develop, but will not be sufficient in challenging times.
2Basic: The organisation has in place financial management practices that are basic and allow it to function on a day-to-day basis but do not support the organisation to develop.
1Inadequate: The organisation has some financial practices in place but they are inadequate in that there are many gaps which affect the day-to-day running of the organisation.

Validation of the model

Enterprise Ireland completed a self assessment using the model. This was followed by a review by consultants appointed to validate the model. The self assessment together with instances of good practice and opportunities for improvement identified by the consultants are summarised in Chapter 3 (the report of the consultants is reproduced in Appendix C). 


Enterprise Ireland considered that the model provided an effective framework to review its financial management.

 

Using the model

The model is primarily intended for use by organisations to self assess their financial management practices in order to identify opportunities for improvement. The model may also be used in future examinations and audits by the Office of the Comptroller and Auditor General.


An assessment of an organisation using the model should be conducted by a suitably qualified person who should apply professional judgement and knowledge of the organisation in conducting the assessment.

Having determined its desired level of maturity and assessed its current level, an organisation can use the model to identify any changes to its financial management practices that are necessary.