Strategic commercial interventions: due diligence guidance

Definitions

Accountable Officer – the accountable officer (AO) has responsibility for ensuring information risks are assessed and mitigated to an acceptable level. The Scottish Public Finance Manual (SPFM) defines the Accountable Officer’s role as a personal responsibility for the propriety and regularity of the finance under their stewardship and for the economic, efficient and effective use of all related resources. Accountable Officers are personally answerable to the Parliament for the exercise of their functions.

Appraisal – an ordered, but flexible, general approach to the analysis of proposals with implications for expenditure / use of resources. Good appraisal entails being clear about objectives, thinking about alternative ways of meeting them, estimating and presenting the costs and benefits of each potentially worthwhile option, and taking full account of risks.

Business Case – the business case provides justification for undertaking an intervention, in terms of evaluating the benefit, cost and risk of alternative options and rationale for preferred solution, against which continuing viability is tested. Its purpose is to obtain management commitment and approval for intervention in the business. In a standard five-case model the business case is owned by the Senior Responsible Owner. The Green Book, Appraisal and Evaluation in Central Government published by HM Treasury provides more detailed guidance on the principles, techniques and procedures applicable in relation to appraisal and evaluation.

Contingent Liability – a contingent liability is a liability that may occur depending on the outcome of an uncertain future event. Contingent liabilities can be financial or non-financial obligations that arise from past events. Pending lawsuits and warranties are common examples.

Due Diligence – the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care.

Evaluation – evaluation examines the outturn of a project, programme or policy against its objectives. It adds value by providing lessons from experience to help future management or development of a specific project, programme or policy.

Strategic Assets – strategic assets, in this case, are defined as “otherwise commercial assets (where the sectoral operating model is private-sector led), and where a tactical (and time limited) intervention is considered and made to benefit communities in Scotland and maximise the public good. This guidance is not tailored towards interventions into wholly public sector businesses (e.g. rail operators). However, the guidance will still be a useful reference point for other assets.

Subsidy Control – the United Kingdom’s international commitments on subsidy control arising from, amongst others, the EU-UK Trade and Cooperation Agreement, World Trade Organisation Membership and commitments arising from international treaties and agreements to which the United Kingdom is a party.

Scottish Public Finance Manual (SPFM) – issued by the Scottish Ministers to provide guidance on the proper handling and reporting of public funds.