Scottish Public Finance Manual

Accountability

Scope

This section gives the principles on accountability arrangements for the use of public resources - and for connected purposes - authorised by the Scottish Parliament.

Applicability

The guidance is relevant to all organisations to which the Scottish Public Finance Manual is directly applicable. 

Definitions

Links to relevant guidance 

Review/update

Lead area: Scottish Government Finance Directorate; Risk Control & Assurance Division - Governance and Accountability Branch
For update/review of this principle please refer to the Guidance and Procedure available on the SG intranet or from the Governance and Accountability team, this includes information on ministerial approval.
Accessibility guidance is available on the SG intranet

Background

The Public Finance and Accountability (Scotland) Act 2000 (the PFA Act) is the legislation that creates the basis for the statutory framework of Accountability which is in operation in Scotland. The PFA Act makes provision for Accountable Officers for the Scottish Administration and related Scottish public bodies plus, separately, the Scottish Parliament Corporate Body and Audit Scotland.

The role of the Accountable Officer is a personal accountability to Parliament for the exercise of their functions as set out in the act and detailed later in this section, this includes a statutory duty to obtain written authority from the Scottish Ministers or when appropriate the relevant governing body board before taking any action that they consider may be inconsistent with the proper performance of their functions. The framework is designed to promote good governance.

Principal Accountable Officer

The Permanent Secretary of the Scottish Government is the most senior officer of the Scottish Government and therefore is the Principal Accountable Officer (Principal AO) for the Scottish Administration in accordance with section 14 of the PFA Act. They are answerable to Parliament for the exercise of their functions like other Accountable Officers (AO’s), but they also have specific responsibilities which are set out in more detail in Annex 1 of this section, in summary their key functions include;

Designating Accountable Officers for “parts of the Scottish Administration” i.e.;

• Directors-General (also known as Portfolio Accountable Officers as explained below)
• the Crown Agent (for the Crown Office and Procurator Fiscal Service)
• Chief Executives (or if appropriate a senior officer/employee of the body) of SG Executive Agencies and Non- Ministerial Offices (NMOs)

The responsibilities of Accountable Officers for “parts of the Scottish Administration", as designated by the Principal AO, are set out in Annex 1 of this section and is linked to the designation letter, these AO's should make sure they understand fully their role, training and support is available via the SG Intranet and Governance Hub.

The Principal AO also designates Accountable Officers “for other public bodies” (excluding the Scottish Parliament Corporate Body) the accounts of which are by law subject to audit by or under the control of the Auditor General for Scotland (AGS) (also known as sponsored bodies).

The responsibilities of such Accountable Officers are set out in the Memorandum to Accountable Officers for Other Public Bodies at Annex 2 of this section and is linked to in the designation letter. As with other Accountable Officers they must be employed by the body to which they are an AO and are conventionally also the Chief Executive of that organisation, this is due to the requirement for AO’s within public bodies to seek direction from the board of that body when necessary such as in the case of written authority. Therefore the most senior official employed by that organisation is the most appropriate choice, unless due to necessity the AO role must be temporarily vested in another senior official such as during a period of long term absence, or otherwise current vacancy of the CEO role. Designated AO's should make sure they fully understand their role, training and support is available via govandrisk@gov.scot and the Governance Hub.

The duty to designate AO's also includes the withdrawal of that designation of any AO’s status as necessary if the Principal AO concludes that the individual is no longer a fit person to carry out the responsibilities of an Accountable Officer. Detailed principles on the procedures for handling the withdrawal of Accountable Officer status is at Annex 3.

The Principal AO’s role also includes ensuring the propriety and regularity of the finances of the Scottish Administration and that the resources of the Scottish Administration are used applying the principles of Value for Money and Feasibility (economy, efficiency, and effectiveness), including ensuring the performance of those functions by Accountable Officers for “parts of the Scottish Administration.”

The Principal AO is also responsible for signing the consolidated accounts for the SG and the accounts for the Scottish Consolidated Fund (SCF).

They also have a duty like other AO’s to obtain written authority from, as necessary, the Scottish Ministers, the Lord Advocate, or the Non-Ministerial officeholder in question before taking the action and sending a copy of the authority to the Auditor General, the Clerk of the Public Audit Committee and published on the SG website as soon as possible. Further detail on the Principal AO’s full role is detailed in Annex 1 of this section. 

Directors General - Portfolio Accountable Officers

Directors-General (DG’s) are responsible for families of directorates - the building blocks of the core Scottish Government. DG’s and Directors together provide strategic direction and leadership and are the key management team of the organisation as a whole. Budgets, however, are allocated by the Scottish Ministers and authorised by the Parliament on the basis of Cabinet Secretary/Ministerial portfolios. Designating DG’s as Accountable Officers on the same basis therefore provides Ministers and the Parliament with clarity in respect of Portfolio Accountable Officer responsibilities.

These responsibilities include advising Ministers in the exercise of their responsibilities in relation to SG Executive Agencies and NMOs. DG's in their role as Portfolio Accountable Officers (or senior members of their staff) also have specific responsibilities regarding Agencies and NMOs which should be set out in individual framework documents covering accountability arrangements and other relevant matters.

The responsibilities of Portfolio Accountable Officers regarding sponsored bodies are set out in Annex 1. These include the putting in place of an appropriate framework document and, where considered appropriate to do so, recommending to the Principal AO the designation of the Chief Executive or a senior official of the body as Accountable Officer.

Portfolio Accountable Officers are also responsible for ensuring that robust local accountability arrangements are in place in decentralised bodies in respect to the funding they receive from the SG, such as local authorities. Local authorities are of course accountable to their electorates for the spending decisions that they make. They are also subject to a framework of legal duties. 

Framework documents

The framework document will normally be prepared by the public bodies in consultation with their sponsor team (for “other public bodies”) or Senior Lead Officer (usually an SG Director for Agencies and NMO’s) along with the core SG staff such as the Finance Business Partner for the relevant portfolio, Governance and Accountability team within Risk, Control and Assurance Division, the Public Bodies Support Unit and other specialisms within SG as necessary.  Responsibility for ensuring that an up-to-date document is in place, agreed as necessary by the responsible Cabinet Secretary or Minister, rests with the relevant Portfolio Accountable Officer, and should be subject to review every three years.

The framework documents for Executive NDPBs, Executive Agencies, NMOs and Advisory NDPBs are available to download. The models may be adapted and applied in respect of other types of sponsored bodies, but the necessary documentation should reflect the status of the different types of sponsored bodies and their relationship with the SG.

In the case of cross-border/jointly funded bodies it would normally be sufficient to ensure that the accountability, funding, and reporting arrangements regarding the bodies' activities in Scotland were included in the framework document put in place by the lead UK Department. The preparation of framework documents for sponsored bodies is the responsibility of the relevant SG sponsor unit in consultation with its Finance Business Partner (or relevant Finance equivalent) but must be agreed by the Portfolio Accountable Officer.

Bodies where an AO is not designated

Designation of the Chief Executive (or senior officer of the body as appropriate) of a public body as an Accountable Officer should, be made in relation to separate accounting entities where the accounts are laid before the Parliament and are subject to Audit or control by the Auditor General by virtue of an enactment in line with the requirements of the PFA Act. For bodies who have their finances accounted for solely within the SG's accounts, for example some bodies classified as; Advisory NDPB’s, Tribunals and other significant bodies may not have their own separately appointed Accountable Officers, when these bodies are funded as part of the Scottish Administration and accounted for within the SG consolidated accounts, are staffed by civil servants (usually SG staff) and will have a sponsor director who will support the administration of the body. The Office holder or board have specific functions separate from Ministers and the SG but are supported in their fulfilment of such by SG staff. The Portfolio Accountable Officer for the relevant Ministerial portfolio the body falls under remains the Accountable Officer for any spend incurred.

Scottish Ministers

Neither the Principal AO nor Accountable Officers for parts of the Scottish Administration are answerable to the Parliament in respect of policy decisions. The Scottish Ministers determine policy and account to, and are held to account by, the Scottish Parliament for the policy decisions and actions of the Scottish Administration, including SG Executive Agencies and NMOs.

Whilst SG Executive Agencies, NMOs and bodies sponsored by the SG are distanced to varying degrees from the Scottish Ministers, the responsible Cabinet Secretary or Minister is accountable to the Parliament for the degree of independence enjoyed; for the organisation’s usefulness as an instrument of government policy; and so ultimately for the overall effectiveness and efficiency with which it carries out its functions. Only Ministers can propose the use of resources by such organisations to the Parliament in the Budget Bill. Ministers therefore remain ultimately accountable to the Parliament for the use of the resources, even though the organisations operate at arm’s length with their own designated Accountable Officers. Ministers are also ultimately answerable for the performance of the organisations and for their continued existence.

Accountable Officer assessments

To meet the duties outlined above and within Annex 1 or Annex 2 respectively the Accountable Officer (AO) should approve, in advance, all significant initiatives, policies, programmes and projects (taking account of any internal delegated authorities), and so be able to provide assurance to Parliament that those activities are meeting the AO standards. They may also need to review existing programmes or projects against those duties when there is a significant change in a programme or policy including when looking to disinvest in a public sector asset.

AO’s should undertake an Accountable Officer Assessment for all significant spend, projects or programmes, initially in principle at an early point, then again as appropriate in more detail at suitable strategic points as the policy or proposal is developed. In practice, this means undertaking an assessment:

• Alongside the request for the Accountable Officer’s approval of the Outline Business Case
• at subsequent stages of the project if it departs from the AO standards or the agreed plan – including any contingency – in terms of costs, benefits, timescales, or level of risk, which informed the Accountable Officer’s previous approval.
• when looking to disinvest in a public sector asset or programme
• if the Senior Responsible Owner (SRO) of the project decides one is merited at any other stage of the project - SROs and AO's should be prepared to defend their decisions to Parliament if challenged, for example, if called to give evidence to the Public Audit Committee.

In many cases, the normal governance procedures, such as production and approval of business cases and the use of pre-expenditure assessments (defined in the SPFM under Appraisal and Evaluation), will provide most of the information needed to develop an AO assessment. The AO assessment should always be completed if the AO is contemplating the need for a ministerial written authority direction in accordance with section 15(8) of the Public Finance and Accountability Act. AO's should be prepared to evidence the reasoning behind their decisions to Parliament if challenged. For example, if called to give evidence to a Parliamentary Committee.

The responsibilities and tests expected for projects and proposals are detailed in the four AO standards;

• Regularity: the proposal is compliant with relevant legislation (including the annual Budget Act), delegated authority and relevant guidance issued by the Scottish Ministers i.e., the SPFM and is compatible with the agreed spending budgets.
• Propriety: the proposal meets the high standards of public conduct and relevant Parliamentary control procedures and expectations.
• Value for money (i.e., Economy, Efficiency & Effectiveness): the proposal must demonstrate good value for money for the use of public funds. In comparison to alternative proposals or doing nothing, the proposal should be systematically evaluated and assessed to provide confidence about suitability, effectiveness, prudence, quality, value and avoidance of error and other waste, judged for the public sector as a whole.
• Feasibility (i.e., Economy, Efficiency & Effectiveness): the proposal is feasible, can be implemented accurately, sustainably, and to the intended timetable ensuring it is demonstrating economy, efficiency, effectiveness, considers the equal opportunities requirements, and contributes to the achievement of sustainable development judged for the public sector as a whole.

Further SG Guidance is available on Saltire which provides more detail for how this policy is applied within SG. Public Bodies should either follow the SG Guidance or follow the guidance provided in the governance hub.

Written Authority

Written Authority (also sometimes known as Ministerial Direction) must be sought from the relevant minister or public body board by the AO where an action they are required to take does not meet one or more of the AO standards. This is a statutory duty under section 15(8) of the Public Finance and Accountability (PFA) Act. A value for money written authority need only be sought in relation to the implementation of policy.

AO’s therefore must ensure that they have undertaken a robust AO assessment to evidence any written authority request, and this should be done at an early point to ensure appropriate decision making.

The written authority itself is a formal exchange of letters, one from the AO to the relevant Minister or Cabinet Secretary (or in the case of a sponsored body where appropriate, the chair of the board). The letter from the Accountable Officer identifies the proposed action and why it does not meet the AO standards as set out in the SPFM and PFA Act. The response from the Minister, Cabinet Secretary (or board where appropriate, in the case of a sponsored body) authorises the AO to go ahead, citing reasons why. These reasons typically involve wider factors that AO's cannot bring to bear.

Cabinet procedures require any written authorities from Ministers to be assessed separately by the Cabinet Secretary for Finance and cleared by the First Minister, and the Deputy First Minister. The PFA Act requires copies of any written authorities to be sent to the Auditor General for Scotland as soon as possible and the SPFM requires that the authority be also copied to the Public Audit Committee and published on the SG website as soon as practical, these should also be reported in the annual accounts of the body in question.