Scottish Public Finance Manual

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

Annual accounts


1. This section gives guidance on the annual financial reporting arrangements for bodies funded directly from the Scottish Consolidated Fund (SCF) and for relevant bodies sponsored by the Scottish Government (SG).

Key points

2. The administrative procedures for specifying the form of accounts to be published by spending bodies that are accountable to the Parliament are the subject of a Written Agreement between the Scottish Ministers and the Parliament.

3. The accounting guidance issued to those bodies that are subject to reporting requirements set by the Scottish Ministers will set out the applicable accounting policies and principles and disclosure requirements.

4. Where the SG makes funds available to a sponsored body the SG will account to the Parliament for the provision of those funds in the SG’s annual accounts. A sponsored body which is a separate accounting entity will account for the use of those funds (and of other funds in its stewardship) in its own annual accounts.


5. Under section 19 of the Public Finance and Accountability (Scotland) Act 2000 (the PFA Act) the Scottish Ministers and every other person to whom sums are paid out of the SCF in a financial year must prepare accounts of their expenditure and receipts for that year in accordance with any directions issued by the Scottish Ministers. The Scottish Ministers must also prepare separate accounts of payments into and out of the SCF.

6. The administrative procedures for specifying the form of accounts to be published by spending bodies that are accountable to the Parliament are the subject of a Written Agreement between the Scottish Ministers and the Parliament. Accounts directions are issued to all bodies funded directly out of the SCF. The Scottish Ministers also issue accounts directions to relevant public bodies - either under the terms of specific provisions in founding legislation or on an administrative basis.

7. The general principle is that financial reporting by central government bodies should be based on International Financial Reporting Standards, adapted where appropriate to take account of the public sector context. In England and Wales the Government Resources and Accounts Act 2000 requires HM Treasury to consult with an appropriate advisory group on the financial reporting principles and standards to be applied to departmental accounts and whole of government accounts. The Financial Reporting Advisory Board (FRAB) is the advisory group. The Scottish Ministers, with the agreement of the Public Audit Committee of the Scottish Parliament, determined that they should similarly be advised on such matters by the FRAB. The advice of the FRAB does not extend to the format of the accounts.

Principles of accounting

8. The annual accounts for bodies funded directly from the SCF should enable the Parliament (and any other interested party) to compare the overall consumption of resources, the use of income and cash drawn down from the SCF with the overall amounts authorised by Budget Act and to see the explanation of substantial variances.

9. As a general rule the accounts directions issued by the Scottish Ministers require that the annual accounts for a financial year shall:

  • comply with the accounting principles and disclosure requirements of the edition of the Government Financial Reporting Manual (FReM), as approved by the FRAB, which is in force for the financial year for which the accounts are prepared; and
  • give a true and fair view of the state of affairs of a relevant body as at the end of the financial year, and of the net resource outturn, resources applied to objectives, recognised gains and losses, and cash flows for the financial year then ended.

10. Any enquiries on the content or application of the FReM should be addressed to Corporate Reporting Division within the SG Finance Directorate. Any additional disclosure requirements included in the Scottish Public Finance Manual or other relevant guidance issued by the Scottish Ministers should also be adhered to by relevant bodies.

Scottish Government consolidated accounts

11. The prime purpose of the SG annual accounts is to set out income and expenditure along with other relevant financial data for report to the Parliament. The accounts are also the mechanism by which the SG reports to the Scottish Parliament on its performance against budget.

12. The accounts reflect the consolidated assets and liabilities and the results of all the entities within the SG consolidated accounting boundary as defined in the FReM. (Corporate Reporting Division produces, for each financial year, a Scottish Government Consolidated Accounting Boundary Statement setting out the application of the FReM boundary criteria.) The accounts are signed by the Permanent Secretary in his/her role as Principal Accountable Officer.

13. The Scottish Ministers, in consultation with the Public Audit Committee of the Scottish Parliament agree the format of the accounts, based on the following principles:

  • the adoption of formats and terminology to make the accounts more accessible and meaningful to the general reader;
  • providing a meaningful level of detail to reflect the structure of the SG;
  • providing a good link from the approved budget, and reflecting by reconciliation where necessary, areas where budgeting treatment differs from accounting treatment; and
  • the establishment of a clear audit trail between the various schedules/statements and notes.

14. Annex 1 provides a brief description and explanation of the financial statements.

Other Scottish Government accounts

15. Legislation may require the preparation of separate accounts covering specific areas of activity in addition to the SG Consolidated Accounts e.g. the Crown Office and Procurator Fiscal Service, the SCF. In addition SG Executive Agencies and non-ministerial departments produce separate accounts covering their particular areas of activity. These accounts are the subject of separate directions from the Scottish Ministers and are signed by the relevant Accountable Officers as designated by the Principal Accountable Officer.

16. An organisation’s Board has a role in approving the body’s annual accounts and ensuring that the Minister is provided with the annual report and accounts to be laid before the Scottish Parliament. The Chief Executive as the Accountable Officer of the public body is responsible for signing the accounts and ultimately responsible to the Scottish Parliament for their actions.

17. The accounting requirements for a public body will normally be set out in its founding legislation and/or its Framework Document.

18. Where the SG makes funds available to a sponsored body the SG will account to the Parliament for the provision of those funds in the SG's annual accounts. A sponsored body which is a separate accounting entity will account for the use of those funds (and of other funds in its stewardship) in its own annual accounts. Some sponsored bodies, such as advisory NDPBs and tribunals, have their operations charged directly to the SG's budget and are accounted for solely in the SG's annual accounts.

19. Where a sponsored body is set up under statute or a Royal Charter, the legislation or Charter should provide for the production of accounts and their audit by the Auditor General for Scotland. The founding legislation should normally provide for the sponsored body to prepare accounts in such form as the Scottish Ministers may direct. However, there may be variations in the wording; in particular the powers of direction may extend to the information to be contained in the accounts, the manner in which the information is to be presented and the methods and principles according to which the accounts are to be prepared.

20. Accounts directions will normally require sponsored bodies to produce accounts that show a "true and fair" view and comply with the relevant accounting guidance in the FReM. Sponsored bodies with charitable status account under the Charities SORP.

21. Sponsor units should ensure that, where a sponsored body has formed a subsidiary body, the accounts direction - where appropriate - for the sponsored body makes clear that consolidated accounts are to be prepared in accordance with International Financial Reporting Standards as adapted for the public sector. Sponsored bodies must also comply with any additional or specific requirements set out in their framework documents.

22. In cases where the sponsored body's expenditure is charged direct to the SG's budget but the sponsored body produces its own annual report, the latter should contain a statement of any significant expenditure incurred on the sponsored body's activities.

Whole of Government Accounts

23. Whole of Government Accounts (WGA) is a consolidated set of financial statements for the UK public sector designed to increase transparency and accessibility of information about public finances. It consolidates the audited accounts of around 6,000 organisations across the UK public sector, including the SG, bodies sponsored by the SG and Scottish local authorities. It complements data produced by the Office for National Statistics (ONS), by providing a set of financial statements based on standards familiar to users of private sector accounts.

Financial records

24. Guidance on the retention of financial records which may be required in connection with the preparation and audit of accounts is set out in Annex 2.

Data Protection 

25. In order to comply with the provisions of the Data Protection Act employers are required to obtain the prior consent of the individuals concerned before personal data (such as that on salaries and pensions) can be disclosed. Employers should therefore consult the individuals whose data they would wish to disclose and seek to obtain their consent to do so (where consent has not already been given) before disclosing that data. The individual must be free to withhold consent, but where consent is withheld this fact must be disclosed in the notes to the accounts. To ensure consistency the wording "consent to disclosure withheld" should be shown against the name(s) of the appropriate individual(s) in the table giving details of relevant personal data. For the avoidance of doubt, in relation to the annual accounts, the SG policy is one of full disclosure.

26. In view of the importance attached to full disclosure, employers should ensure that it is made clear to individuals moving to posts for which disclosures are required, before they take up such posts, that the post has been designated as one where disclosure of personal data (such as salary and pension details) is required.


Page reviewed: November 2018

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