ABSTRACT
Financial management has excited much controversy between doctors and managers. This friction is created by the transition of the medical role. The objective of financial management in the public sector has been described as to provide value for money. The clinical director is primarily concerned with providing the pathology service within the agreed resources. The financial component of the management task is confined to the internal management arrangements of the trust and is termed management accounting. The public accountability of trusts is governed by statutory requirements and with respect to finance there are three statutory responsibilities for the trust directors: not to overspend; not to exceed the borrowing limit; and to earn a 6% rate of return on capital employed. The pathology budget may be viewed as a statement of the directorate's activities expressed in a financial language. It is an organic document in a state of evolution dating from the original introduction of functional budgeting to the NHS.
