Finance managers in the NHS, do not adjust your sets. Yes, the picture really is much brighter than it used to be.

And at a time when just about every news story is about one financial crisis or another, it must be a relief for most NHS finance directors to know that this year the spotlight is not on them.

In the Audit Commission's latest auditors' local evaluation (ALE) scores, which will form the Healthcare Commission's use of resources scores, one figure really stands out: the most common score for NHS trusts and primary care trusts overall is now level three, performing well. This is very encouraging. The number rated weak overall fell from 104 in 2006-07 to 20 this year. And over half improved their score.

The words "significant and continuous improvement" spring to mind. In this round of scores, the improvement is all the more impressive given that the strongest performing trusts have become foundation trusts and are not subject to ALE.

Getting up to speed

PCTs' performance improved strongly in 2007-08, virtually eliminating the gap between PCTs and NHS trusts. PCTs and ambulance trusts have overcome the effects of reconfiguration in 2006-07 and have caught up with their colleagues, establishing and embedding much better arrangements for the use of financial resources.

The fact that nearly all NHS bodies returned to financial balance was obviously a factor in this. But performance in every one of the five themes improved, not just in financial standing, and there is a clear link between those scoring well on the financial management and value for money themes as well as on financial standing.

At the bottom of the scale, six organisations still struggled to score more than level one for each of the three key themes - five of these organisations also failed to do so in 2006-07 and four in 2005-06. But the message from the bottom is that it is possible to change with the right approach. The four organisations that failed to meet minimum standards across all five themes in both 2005-06 and 2006-07 have all improved.

Increasing professionalism

The move from an overall deficit to a planned surplus was certainly no fluke and was not simply dependent on extra money being available. It owed a lot to improved processes and, in my view, to increased professionalism. It is also nice to know that ALE has helped in the process of improvement in financial matters - a Healthcare Financial Management Association survey last year showed 79 per cent of finance directors thought ALE had led to improvement in financial management and financial performance.

This financial year will be challenging for finance departments, with a more demanding accounts timetable under the DH's faster close programme. But two-thirds of bodies are well-placed to meet them on the basis of this round of ALE.

The NHS is now in a much better position to meet the challenges of tighter public spending settlements, implementing the Darzi report, and using the resources available to improve services to patients, which, after all, is the real purpose of improving financial management.

The ALE briefing and notable practice can be found at www.audit-commission.gov.uk

See Auditors praise NHS trusts' financial management for more