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Safeguarding the accountability of resources: Financial and management autonomy incur considerable risks: if arm’s-length bodies are able to raise their own resources, they can reduce the ability of government to control its overall spending and impact on the economy, and they can disguise inefficiencies by extracting more revenues from their clients. When they are permitted to do their own borrowing or enter into leases, they may create contingent liabilities for government. Managerial autonomy and freedom from the general rules regarding the hiring and remuneration of staff can attract skilled staff away from core government and also increase opportunities for corruption and patronage.
Increasing managerial flexibility over budgets and staff does not mean abrogating central control: it means substituting a form of governance based on detailed external rules and individual transaction-based approvals with one based on strong external budget disciplines, monitoring, reporting and audit; and assurance through good systems of internal controls and internal audit. No government should delegate without being
satisfied that it has both the internal and external framework for effective steering and control in place.