Foreword and scope of the SPFM
The Scottish Public Finance Manual (SPFM) issued by the Scottish Ministers sets out the main principles for dealing with resources in public sector organisations in Scotland, the relevant bodies to which they apply are set out below. The principles are applicable to all, but for organisational specific guidance these principles should be read alongside that key guidance held in either the SG Core Intranet “Saltire” and for those in public bodies who do not have access to Saltire via either the Governance hub where highlighted or within specific local guidance held within each body as appropriate.
The key themes and principles remain unchanged from previous version of this web resource and its predecessors. They are the fiduciary duties of those handling public resources to work to high standards of probity; and the need for the public sector to work in harmony with the Scottish Parliament. These principles are invariant. However, the law, business practices, and public expectations all change. Public sector organisations can and should innovate in carrying out their responsibilities, using new technology and adopting good business practice. Throughout, the Scottish Parliament always expects the government and its public servants to meet the demanding standards set out in this manual.
SG Finance directorate and other principle owners as appropriate within the Scottish Government stand ready to help anyone who needs assistance in thinking through the issues and will revise this document from time to time as the need arises. Where necessary, SG Finance directorate will also issue Finance Guidance Notes, to highlight amendments to the manual or provide specific advice on issues of accountability, regularity and propriety, value for money or temporary or otherwise financial requirements. The content of those notes carries the same force and effect as the material contained in the main body of this manual.
Above all, nothing in the SPFM should discourage the application of sheer common sense.
Format of the SPFM
Each subsequent page of this manual will include a note on the scope and applicability of the section, information on key linked guidance and where to access it and information on the relevant policy owner contact for the section.
Legislative background
The Scotland Act 1998 is essentially the Scottish Constitution and the financial aspects are covered in sections 64 to 72. Section 119 translates the references to the UK Consolidated Fund in legacy legislation to the Scottish Consolidated Fund (SCF). Section 53 provides for all the statutory, prerogative or other executive powers and duties of Ministers in the UK Government (Ministers of the Crown) in devolved areas to be transferred to the Scottish Ministers. Section 126 states that "Minister of the Crown" includes Treasury. References in legacy legislation to Treasury are therefore translated to the Scottish Ministers and guidance issued by Treasury has no direct application to devolved areas of responsibility unless explicitly adopted by the Scottish Ministers.
Section 64 (1) of the Scotland Act makes provision for the SCF. The UK Parliament provides the Secretary of State for Scotland with the resources to pay into the SCF. The management of those resources falls thereafter to the Parliament and to the Scottish Ministers - including their officials. The Secretary of State operates within the procedural framework which applies to the UK Parliament. The financial relationships between the UK Government and the Scottish Ministers are set out in the Statement of Funding Policy, Statement of Funding Policy Addendum, the Memorandum of Understanding and Supplementary Agreements between the devolved administrations and the UK Government and the Concordat between the Department of Work and Pensions and the SG.
The Public Finance and Accountability (Scotland) Act 2000 (PFA Act), which is framed in resource terms, sets out the rules for spending money, accounting requirements, accountability of officials and auditing arrangements. The basic principle is that spending takes place only if authorised by the Parliament in Budget Acts and must not exceed any amount so authorised in relation to that purpose. The only exception (section 65 of the Scotland Act) is where expenditure is charged on the SCF (e.g. judges' salaries, certain payments to the Secretary of State). The PFA Act leans heavily on the recommendations of the Financial Issues Advisory Group (FIAG). FIAG was set up to assist the then Scottish Office in offering advice to the Consultative Steering Group on financial aspects of its remit.
Section 21 of the PFA Act covers the audit of accounts that, as a result of any enactment or prerogative instrument, are subject to audit by the Auditor General for Scotland (AGS). Section 22 of the PFA Act sets out the matters that the AGS - or qualified person appointed by the AGS - must include in their report on an account. In particular the auditor must report their findings on whether the expenditure and receipts shown in the accounts were incurred in accordance with relevant enactments, including the Budget Act (as amended) for the period in question.
The auditor must also report on: whether any sums paid out of the SCF were applied in accordance with section 65 of the Scotland Act; whether the account complies with any applicable direction issued under any enactment (e.g. accounts directions issued by the Scottish Ministers under section 19 of the PFA Act); and whether expenditure and receipts have been incurred or applied in accordance with any applicable guidance issued by the Scottish Ministers.
Applicability
The SPFM (and any other relevant guidance issued by the Scottish Ministers e.g. Finance Guidance Notes) should be regarded as "applicable principles and guidance" by all bodies the accounts of which are subject to audit by the AGS as a result of any enactment or prerogative instrument.
The bodies to which the guidance in the SPFM is directly applicable therefore includes:
- the constituent parts of the Scottish Administration (i.e. the core SG, the Crown Office and Procurator Fiscal Service, SG Executive Agencies and non-ministerial departments)
- bodies sponsored by the SG; (such as Non Departmental Public Bodies and other bodies as set out in the Scottish Public Bodies Directory) including where a body as a result of any enactment or prerogative instrument makes them subject to audit by the Auditor General for Scotland (AGS)
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the Scottish Parliament Corporate Body
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bodies sponsored / supported by the Scottish Parliament Corporate Body
Bodies sponsored by the SG means those commonly referred to as non-departmental public bodies (NDPBs). NDPBs include Executive NDPBs, Public Corporations and NHS Bodies. Details of NDPBs, listed by category, are published in the National Public Bodies Directory on the Scottish Government website. Other organisations which do not meet the NDPB criteria will also be regarded as sponsored bodies where the activities of the organisation and the nature of the relationship between the SG and the organisation makes it appropriate to do so.
The principles included in the SPFM are aimed primarily at the constituent parts of the Scottish Administration with other bodies to which the SPFM is applicable being required to ensure compliance with any specific provisions and arrange for procedures consistent with the principles to be put in place. The principles included inthe SPFM should be considered relevant and applicable to all of the bodies covered by the preceding paragraphs except where specific principles clearly have limited application and any provisions that would be inconsistent with statutory requirements. If you are unsure of applicability please contact your sponsor team (for sponsored bodies) or SG Finance Directorate as appropriate.
Other direct funded bodies
Other direct funded bodies refers to those bodies other than the Scottish Administration funded direct from the SCF. They are identified separately in the Budget Act and currently consist of the Scottish Parliament Corporate Body (SPCB) and Audit Scotland. The principles in the SPFM are directly applicable to the SPCB (and the bodies sponsored / supported by the SPCB), as regards Scotland, as a result of relevant accounts being subject to audit by the AGS under statute. However, Audit Scotland are not subject to audit by the AGS. It is open to Audit Scotland to adopt or adapt relevant guidance issued by the Scottish Ministers. However, the Parliament authorises expenditure by Audit Scotland on the understanding that guidance consistent with relevant provisions contained are the SPFM is being followed.
Page published / Updated: February 2025