Financial modelling in government

Accounting officers should: a) Oversee the use of models within their organisation and ensure an appropriate quality assurance framework is in place and used for all business-critical models.

Ref Page 14, paragraph 22, point a · Implemented Q3 2025-26

The Cabinet Office is working on common standards for departmental sponsorship of ALBs. As part of this work, it should: j) include guidance for departments on overseeing the production and assurance of models in ALBs, based on expert input from the Analysis Function.

Ref Page 15, paragraph 26, point j · Implemented Q2 2023-24

The Finance Function should work with the Analysis Function to: k) strengthen the requirements in the Finance Functional Standard on departments to apply the Analysis Functional Standard and the Aqua Book to financial planning and reporting. This should include guidance on how accountants should analyse, manage and communicate uncertainty; and

Ref Page 15, paragraph 27, point k · Implemented Q4 2023-24

l) include appropriate elements relating to analysis and modelling from the Finance Functional Standard in the Finance Function’s self-assessment tools to measure compliance of functional members with requirements on modelling.

Ref Page 15, paragraph 27, point l · Implemented Q2 2024-25

The OBR should: m) require departments, as a matter of routine, to analyse and present the range of plausible outcomes driven by key inputs and model parameters in each case to take account of where there might be material uncertainties around best estimates.

Ref Page 15, paragraph 28, point m · Implemented Q2 2025-26

HMT should: b) re-emphasise accounting officer responsibilities for business-critical models as set out in Managing Public Money, and the importance of publishing lists of such models on gov.uk by specifying this requirement in the guidance HMT issues on annual reports and accounts;

Ref Page 14, paragraph 23, point b · Implemented Q1 2025-26

c) put in place processes to assure itself that outputs from departments’ and ALBs’ business-critical models, which HMT uses, have been quality-assured in line with modelling standards. This should include clarifying in all relevant guidance that all models must comply with the Aqua Book;

Ref Page 14, paragraph 23, point c · Implemented Q3 2025-26

d) build on its current approach to quantifying uncertainty and risk analysis by requiring departments to present HMT with a range of plausible outcomes from business-critical models as a matter of routine. This range should be driven by key inputs and model parameters in each case to take account of where there might be material uncertainties around best estimates; and

Ref Page 14, paragraph 23, point d · Implemented Q3 2025-26

e) agree with the Analysis Function on responsibilities for ownership and maintenance of the Aqua Book, including appropriate sign-off arrangements between the Function and HMT for Aqua Book updates.

Ref Page 14, paragraph 23, point e · Implemented Q4 2022-23

The Analysis Function should: f) set out the appropriate governance structure for the ownership, maintenance, monitoring and assurance of analytical modelling standards and guidance, as presented in the Analysis Functional Standard. As part of this, the Function should work with the Cabinet Office to develop an appropriate assessment framework to provide the necessary processes to monitor departments’ and accounting officers’ implementation of the Analysis Functional Standard;

Ref Page 14, paragraph 24, point f · Implemented Q4 2022/23

g) update its Functional Standard and relevant guidance to include clear principles for departments and ALBs to follow on independent review of business-critical models, and on publication of a model’s inputs, methodology, assumptions, and outputs; and

Ref Page 15, paragraph 24, point g · Implemented Q3 2025-26

h) work with departments, ALBs and other stakeholders such as the Quality Assurance Working Group on guidance and training to facilitate system-wide learning and improvement. This should include sharing good practice on how business-critical models are managed and practical advice on how to analyse and communicate uncertainty.

Ref Page 15, paragraph 24, point h · Implemented Q3 2025-26

HMT and the Analysis Function should: i) agree the funding and capacity implications of the proposed governance structure in relation to analytical modelling standards and guidance.

Ref Page 15, paragraph 25, point i · Implemented Q4 2022-23