Scottish Consolidated Fund Accounts: year ended 31 March 2025

Governance Statement

Strategic governance arrangements in relation to the SCF are covered in this governance statement. Although the SCF itself sits outside the Scottish Government’s internal governance arrangements, the operation of the SCF is carried out within Scottish Government’s Financial Management Directorate and is subject to the same controls and assurance procedures that apply to the Scottish Government, in particular the certificates of assurance and risk management arrangements, overseen by the Director General for Corporate. I have received appropriate assurance from the Chief Financial Officer about this account. The governance arrangements within which the SCF operates are assessed by the Scottish Government, and the Scottish Government confirms that these arrangements comply with generally accepted best practice and relevant guidelines. Assurance is also provided by the work of internal and external audit. Scrutiny of the SCF annual account and accompanying control and governance arrangements has also been added to the remit of Scottish Government Audit and Assurance Committee.

The operation of the Scottish Consolidated Fund is governed by the provisions of the Scotland Act 1998, the Public Finance and Accountability (Scotland) Act 2000, the Scotland Act 2012, the Revenue Scotland and Tax Powers Act 2014 and the Scotland Act 2016, which set out the conditions for payments to be made from the SCF and sums to be paid into the SCF. The SCF uses and relies on the financial management systems of the core Scottish Government to carry out associated accounting and payment functions. Specific assurances on the reliability of these central systems have been provided by the Director General for Corporate and relevant senior members of staff. The systems have been in place for the year under review and up to the date of approval of the annual report and accounts.

In 2024-25, Financial Management Directorate in its operation of the Scottish Consolidated Fund has:

• Monitored the balance on the account and taken appropriate action to maintain the balance at an appropriate level whilst remaining within the cash limits set by the UK and Scottish Parliaments.
• Carried out operations on the Scottish Government IT network and on systems managed by the Scottish Government, and hence has been subject to its IT and data security arrangements. There were no breaches of data security relating to the SCF during the year;
• Following the introduction of a new Scottish Government financial system, supported the migration of balances from SEAS to Oracle and reconciled all balances appropriately; and
• Continued to review processes and procedures in relation to the operation of the SCF considering various changes during the year, including staff changes, with a view to updating documentation and providing training to staff on revised processes and procedures.

The following procedures to identify, evaluate and manage significant risks have already been implemented:

• Risks arising from the operation of the SCF have been identified, assessed and kept under review;
• Risk management arrangements in place have been assessed and confirmed that they are operating effectively; and
• Where appropriate, risks associated with the operation of the SCF have been incorporated within the Scottish Government Financial Management Directorate Risk Register which applies to the SCF, together with the determination of a control strategy for each risk which is kept under constant review.
• The Scottish Government’s external auditors, Audit Scotland, provide reports on the adequacy and effectiveness of the systems of internal control with recommendations for improvement as part of their annual audit review of the Scottish Government. Appropriate action is taken to address any weaknesses identified as they apply to the SCF and to ensure the continuous improvement of the system.
• The Scottish Government’s internal auditors provide reports from time to time on the adequacy and effectiveness of Financial Management Directorate systems of internal control together with recommendations for improvement. Such reports include the Directorate’s operation of the SCF where appropriate. Appropriate action is taken to address any weaknesses identified and to ensure the continuous improvement of the system.

Joe Griffin

Principal Accountable Officer