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.


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Accountable Officer

An individual designated to be personally responsible for propriety, regularity and value for money issues in relation to the public finances of parts of the Scottish Administration or other relevant devolved public bodies.

Accounting Standards

Standards are issued or adopted by the Accounting Standards Board and/or the International Accounting Standards Board and are applicable to the financial statements of relevant organisations. They are intended to ensure that the financial statements present a true and fair view of its state of affairs and its income and expenditure.

Accounts Directions

Directions issued by the Scottish Ministers setting out the accounts that must be prepared and the form and content of those accounts.

Accruals Accounting

A method of recording expenditure as it is incurred and income as it is earned during an accounting period. By contrast cash accounting records cash payments and receipts when they are made or received.

Accruing Superannuation Liability Charges (ASLCs) Payments representing an actuarial assessment of the accruing discounted future cost of public expenditure on pensions arising from the current employment of staff. They are included in DEL.

Aggregate External Finance (AEF)

The total of Revenue Support Grant (RSG), specific grants and local authorities' income from non-domestic rates.

Annually Managed Expenditure (AME)

Expenditure within Total Managed Expenditure (TME) that does not fall within Scotland's Departmental Expenditure Limit (DEL). Expenditure in AME is generally less predictable and controllable than expenditure in DEL.

Arm's Length Bodies (ALBs)

NDPBs and other sponsored bodies.
Assigned Budget

That part of the DEL over which the Scottish Government has full discretion to determine where to allocate expenditure. Sometimes referred to as the Scottish Block.



Balance Sheet

A financial statement for an accounting entity which shows its financial position on a particular day (called the "balance sheet date") by stating the values of its assets and liabilities and the owner's equity.

Barnet Formula

A population-based formula that allocates a share of changes in planned expenditure on comparable services by Departments of the United Kingdom Government to the devolved administrations in Scotland, Wales and Northern Ireland.

Base Year Year immediately prior to the first year of a spending review period.
Best Value Best Value is about continuous improvement, seeking to change the way things are done in a way that transforms and sustains the delivery of quality public services in Scotland.

Budget Act

The means by which the Scottish Parliament authorises details of gross expenditure and related income of the Scottish Administration and other bodies funded direct from the Scottish Consolidated Fund (SCF).

Budget Amendment / Budget Revision

A revised budget submitted to the Parliament for approval in the form of a Budget Amendment Order.

Budget Documents


Accompanying explanatory documentation for the Budget Act - and for budget revisions.

Business Case The business case provides justification for undertaking a project, in terms of evaluating the benefit, cost and risk of alternative options and rationale for the preferred solution, against which continuing viability is tested. Its purpose is to obtain management commitment and approval for investment in the project. The business case is owned by the Senior Responsible Owner.


Capital Expenditure Expenditure, on the purchase of assets, above a certain threshold, which are expected to be used for a period of at least one year. It includes the purchase of buildings, equipment and land.
Central Government Comprises parliaments, associated executives (including the Scottish Government) and their executive agencies, non-departmental public bodies, and various other non-market public bodies and funds controlled by central government.
Civil Service Code A concise statement issued by the Cabinet Office which sets out the framework within which all civil servants work, and the core values and standards they are expected to uphold.


The concept that where an asset financed by public money is sold within a specified period of time, all or part of the proceeds of the sale should be returned to the funder.

Commercial Banks

Bodies other than the GBS which provide banking services, including private sector banks and building societies.

Common Law One of the historical sources of law in the United Kingdom. Often used to distinguish judge made case-law and longstanding legal principles defined in legislation.

The extent to which services delivered by Departments of the United Kingdom Government corresponds to expenditure within the assigned budgets of the devolved administrations.

Comprehensive Spending Review A zero based review of all UK Departmental policies, objectives and spending plans, the conclusion of which sets out Departmental Spending Limits for the following three years and all other spending aggregates.

Consolidated Fund

The UK Exchequer account into which tax revenues and other relevant receipts are directed and from which payments for the bulk of UK central government expenditure is made.


The process of incorporating the results of linked entities into a single account which involves the elimination of inter-entity transactions and balances.

Contingent Liabilities

Potential liabilities that are uncertain but recognise that future expenditure may arise if certain conditions are met or certain events happen.

Corporate Governance

The system by which organisations are directed and controlled.

Cost of Capital

The opportunity cost of tying up funds in assets.

Current Expenditure Includes most direct expenditure on public sector pay and providing services. It does not include expenditure on the purchase of assets above a certain threshold.

Current Liabilities

Liabilities incurred in the normal course of business which fall due within one year and include creditors, accrued expenditure and deferred income.



Delegated Authority A standing authorisation under which a body, business area or individual may commit resources etc without specific prior approval i.e. on their own authority. Delegated authority for committing resources is separate from delegated purchasing authority (DPA).
Delegated Purchasing Authority (DPA) The authority to enter into a contract for goods, services and works and oversee the process leading up to and including the award of a contract and any subsequent contract changes.

Departmental Expenditure Limit (DEL)

A spending aggregate determined by Treasury. It includes the Assigned and non-Assigned Budgets. Expenditure in DEL is generally more predictable and controllable than Annually Managed Expenditure (AME) . DEL is therefore planned and controlled across the period of each Spending Review i.e. set on a multi-year basis. Separate elements are identified for capital and current spending.


The measure of the wearing out, consumption or other reduction in the useful life of a non current asset whether arising from use, passage of time or obsolescence. The term amortisation is used in relation to intangible assets.

Designated Receipts

Receipts / income designated by HM Treasury after consulting with the Scottish Ministers. Scottish Ministers are required to make payments to the Secretary of State for Scotland - effectively for onward transmission to the UK Consolidated Fund - of sums equal to such designated receipts.

Discretionary Services

Services that are not required by statute but are provided often into competitive markets.



European Commission

The Executive of the European Union. Commissioners are appointed by member states. The body has three distinct functions initiating proposals for legislation; acting as guardian of the Treaties; and managing and executing EU policies and international trade relationships.

European Court of Auditors

Responsible for checking that the European Union spends its money according to its budgetary rules and regulations and for the purposes for which it is intended.

Executive Agency

A discrete unit set up to undertake an executive function of government.

Excess Receipts / Income

Income / receipts in excess of those authorised by Budget Act to be used in support of related expenditure.


UK government's central financing arrangements, based on the Consolidated Fund and National Loans Fund, and managed by the Treasury and the Bank of England.

Exchequer Pyramid

A series of accounts operated by the Treasury through which the overnight sweep and funding flows.

External Finance Requirement The financial support in terms of lending, subsidies and grants from central government required by trading funds and other public corporations and their borrowing from commercial sources. Includes movements in deposits and borrowing by way of finance leases.


Financial Reporting Advisory Board (FRAB)

An independent board set up to advise HM Treasury on the application of financial principles and standards contained in the Government Financial Reporting Manual.

Financial Reporting Standard (FRS)

An accounting standard issued by the Accounting Standards Board, which forms part of generally accepted accounting practice (GAAP).

Fiscal Policy The set of decisions made by the UK government that determines the levels of taxes and public expenditure.

Framework Document

A document setting out the strategic aims and objectives for Executive Agencies, non-ministerial Departments and sponsored bodies plus the responsibilities and accountabilities of the key parties.

Full Cost

The total cost of all the resources used in providing a good or service in any accounting period (usually one year). This will include all direct and indirect costs of producing the output (both cash and non-cash costs), including a full proportional share of overhead costs and any selling and distribution costs, insurance, depreciation, and the cost of capital, including any appropriate adjustment for expected cost increases.

Funding Requirement

The requirement for cash and resources that the Budget Act represent.



Gateway Review

A short, focused review of a programme or project carried out at key decision points in its lifecycle by a team of experienced practitioners, independent of the programme or project team.

Generally Accepted Accounting Practice in the UK (UK GAAP)

The accounting and disclosure requirements of the Companies Acts and pronouncements by the Accounting Standards Board supplemented by accumulated professional judgement.

General Government Central government and local government.

Government Procurement Card (GPC)

A corporate charge card used for the purchase of low-value items.


Funding provided by the Scottish Government to individuals or organisations, in accordance with legally binding conditions of grant and normally in arrears, for specific purposes provided for in statute, subject normally to the meeting of relevant eligibility criteria.

Grant in Aid

Pre-funding provided by the Scottish Government to sponsored bodies under the terms of a framework document.

Green Book

The informal title for Appraisal and Evaluation in Central Government, published by HM Treasury.

Gross Domestic Product (GDP) The value of goods and services produced in the UK including in that valuation the impact of taxes on products and subsidies. "Gross" means there is no deduction for capital consumption. Economic data are often quoted as a percentage of GDP to give an indication of trends through to time and to make international comparisons easier.



Transaction(s) designed to reduce or eliminate financial risk, eg because of interest rate or exchange rate fluctuations.



Infrastructure Projects Database (IPD) The IPD contains information relating to infrastructure projects which have a capital value of at least £5 million and for which an Outline Business Case has been prepared. The IPD assists the Scottish Government in informing financial planning and procurement decisions as well as project governance and is updated on a quarterly basis at source by project areas within the Scottish Government and other relevant bodies.

Resources needed to develop and implement projects, programmes or policies (e.g. funding for school education).


Any application of funds which is primarily intended to produce a return by way of interest, dividend or capital appreciation.



Joined-up Government

Arrangements under which policy-making and service delivery are unhindered by "departmental" boundaries.

Judicial Review A procedure by which the courts can review the legality of the decisions and actions of public authorities, including the government. Judicial review looks at the fairness of the decision-making process rather than the merits of the decision itself.
Key Stage Reviews (KSRs) KSRs are an independent quality assurance tool designed to improve the likelihood of projects achieving successful outcomes by ensuring that appropriate planning and preparation has been carried out and that key risks are actively managed. Projects that meet one or more of the following criteria may fall under the scope of the KSR process:- (i) Assessed as High Risk / Complexity in the SG Stage 2 Project Risk Assessment process, (ii) Non-standard projects and that are of an unusual scale or nature for the procuring organisation, (iii) Projects over £20 million in value, (iv) Projects which are mission critical to the procuring organisation, (v) Projects procured under the Competitive Dialogue procedure and (vi) All revenue-funded projects.


Letter of Representation

A signed written statement made by persons responsible for the operation of an accounting entity (Accountable Officers) to the auditor of that entity providing information for the purposes of an audit, especially on matters which cannot be directly verified by the auditor.


Licences to operate public goods, often set to recover associated costs such as supervision by a regulator.


Obligations to transfer future economic benefits as a result of past transactions or events. Current Liabilities are liabilities incurred in the normal course of business, including creditors, accrued expenditure and receipts in advance.

Local Authority Self-Financed Expenditure (LASFE) The aggregate local government expenditure less its receipts of government grants. It represents local government expenditure financed from local resources such as council tax borrowing trading surpluses investment income and use of reserves.


Major Investment Project Investment projects with a budget of £5M+ including fees and VAT.

Any form of administrative failing or bad practice.


The extent to which the misstatement or omission of an item of information might reasonably be expected to influence a decision of a user of the information.

Memorandum Trading Accounts (MTAs)

An informal working document, prepared before the start of the financial year in the form of a forecast to determine the appropriate level of fees and charges for a repayment service, and after the end of the year in the form of an outturn statement to provide a record of performance.

Misstatement A statement which is untrue. The maker of a misstatement can be sued for damages by those who have relied on the misstatement, but only if in the circumstances it was reasonable to rely on it.


National Accounts Accounts produced by the Office for National Statistics (ONS) in accordance with the European System of Accounts 1995, which promotes standardisation in the way in which public sector income and expenditure is measured.

National Audit Office (NAO)

Office of the Comptroller and Auditor General, which audits the accounts of UK Departments and other relevant bodies.

National Debt

The gross liabilities of the National Loans Fund.

National Insurance Fund (NIF)

A UK government fund used to meet the cost of contribution-based benefits, financed mainly by contributions paid by employers and individuals.

National Loans Fund (NLF)

The fund through which passes most of the UK government's borrowing transactions and some domestic lending transactions.


Resource expenditure that has a related cash implication, even though the timing of the cash payment may be slightly different. For example, expenditure on gas or electricity supply is incurred as the fuel is used, though the cash payment might be made in arrears on a quarterly basis. Other examples of near-cash expenditure are: pay, rental.

Net Cash Requirement (NCR)

The amount of cash required to carry out the functions specified in the Budget Act. It represents the sum of net resources and net capital less non-cash items and working capital.

Net Resources Requirement (NRR)

The total amount of resources required to carry out the functions specified in the Budget Act. Resources comprise cash and non-cash elements.

Non-assigned Budget in DEL Provision not determined directly through the Barnett Formula and ring-fenced within the Departmental Expenditure Limit.
Non-cash Cost

Costs where there is no cash transaction but which are included in a body's accounts (or taken into account in charging for a service) to establish the true cost of all the resources used.

Non-departmental Public Body

A body which has a role in the processes of government, but is not a government department or part of one and is not staffed by civil servants. NDPBs accordingly operate at arm's length from government Ministers i.e. the body carries out its day-to-day functions independently of Ministers, but Ministers remain ultimately accountable.

Non profit distributing public private partnership model (NPD)

The NPD model is the Scottish Government's preferred procurement option for revenue financed projects and was developed and introduced as an alternative to, and which has since superseded, the Private Finance Initiative (PFI) model in Scotland. The NPD model is defined by the broad principles of enhanced stakeholder involvement in the management of projects, no dividend bearing equity and capped private sector returns.

Notional Cost of Insurance

A cost which is taken into account in setting fees and charges to improve comparability with private sector service providers. The charge takes account of the fact that public bodies do not generally pay an insurance premium to a commercial insurer.

Notional Expenditure

Expenditure which does not involve an actual cash transaction but which must be reflected in the accounts to show the full costs of a body's activities.




Specific planned achievements. Objectives contribute towards an organisation's aim and are expressed in a way that enables determination of their achievement.


Benefits resulting from outputs. They should correspond to ultimate objectives - the impact of a policy intervention on the welfare of producers or consumers (e.g. better educated school students).


Products resulting from inputs (e.g. number of teachers). Outputs should facilitate the meeting of outcomes.


An account with a negative balance. An agreed overdraft would qualify as short-term borrowing.



Parliamentary Authority

The Scottish Parliament's formal agreement to authorise an activity or expenditure. Activities giving rise to expenditure are authorised by the Parliament in specific enabling legislation. Parliamentary authorisation of actual expenditure is provided in the annual Budget Act, including any Amendment Orders.

Payable Instruments

Cheques, payable orders and other items of paper which give the intended recipient an entitlement to money.

Payment Clearing System

Arrangements for transferring funds between a paying account and a receiving account.

Post Evaluation Review (PER) A review that take place when an IT project is nearing or has reached completion. For larger, complex or risky projects a PER may also be conducted at the end of a particular project phase.
Post Implementation Review (PIR) One or more reviews held after project closure to determine if the expected benefits have been obtained. Other similar terms are Post Project Evaluation (PPE).

Prerogative Powers

Powers exercisable under the Royal Prerogative, i.e. powers which are unique to the Crown, as contrasted with common-law powers which may be available to the Crown on the same basis as to natural persons.

Primary Legislation

Acts that have been passed by the Scottish Parliament. They start off as Bills on their introduction to the Parliament and become Acts on receiving Royal Assent.

Principal Accountable Officer for the Scottish Administration

The Public Finance and Accountability (Scotland) Act 2000 (PFA Act) provides for the most senior member of staff of the Scottish Administration (the Permanent Secretary) to be the Administration's Principal Accountable Officer. They may designate Accountable Officers for parts of the Scottish Administration and other bodies the accounts of which are subject to audit by or under the control of the Auditor General for Scotland.


The process of buying goods, services and works from external suppliers. The procurement process begins when a need to buy something is identified and will generally end after the contract is awarded.

Project A unique, transient endeavour undertaken to achieve a desired outcome - an undertaking for a limited duration which is not part of routine operations.


Propriety involves respecting the Parliament's intentions and conventions and adhering to values and behaviours appropriate to the public sector.

Public Corporation

A trading body controlled by central government, local authority or other public corporation that has substantial day to day operating independence.

Public Dividend Capital (PDC)

Finance provided by government to public sector bodies as an equity stake; an alternative to loan finance.

Public/Private Partnership (PPP)

A structured arrangement between a public sector and a private sector organisation to secure an outcome delivering good value for money for the public sector. It is classified to the public or private sector according to which has more control.



Rate of Return

The financial remuneration delivered by a particular project or enterprise, expressed as a percentage of the net assets employed.

Real Terms Figures

Amounts adjusted for the effect of general price inflation as measured by the GDP market price deflator. Enables comparisons of spending across years without the distortion caused by price changes.


Regularity involves compliance with relevant legislation (including the annual Budget Act), delegated authority and relevant guidance issued by the Scottish Ministers - in particular the Scottish Public Finance Manual.

Requisition for Credit

The means by which Scottish Ministers seek the approval of the Auditor General for Scotland to issue money from the Scottish Consolidated Fund.

Resource Accounts

Accruals accounts prepared in accordance with the Financial Reporting Manual (FReM).

Resource Accounting and Budgeting (RAB)

An accruals based accounting and budgeting system that focuses more on resources consumed rather than when cash has been spent. It treats capital and current expenditure in a way which better reflects their economic significance and encourages greater emphasis on outputs and the achievement of aims and objectives.

Resource Accounting

The application of accruals accounting to central government.

Resource Budgeting

The means by which the Scottish Government plans and controls the expenditure of resources to meet its objectives.


A legal concept which allows money and property to be returned to its rightful owner. It typically operates where another person can be said to have been unjustly enriched by receiving such monies.

Return on Capital Employed (ROCE)

The ratio of profit to capital employed of an accounting entity during an identified period. Various measures of profit and of capital employed may be used in calculating the ratio.

Revenue Support Grant (RSG) The unhypothecated grant from central government to supplement local authorities' own finances in support of their non-housing net revenue expenditure. It is the balancing factor between an authority's assessed spending need and its income raised locally through the council tax and non-domestic (business) rates.
Ring-fenced Expenditure that is specific to a particular policy or programme and cannot be used for any other purpose without the prior agreement of the funding body.
Risk Potential Assessment (RPA) Form A form designed to assess impact and complexity and identify the necessary level of independent assurance.


Scottish Administration

The Scottish Administration comprises the Scottish Ministers (including the Lord Advocate and the Solicitor General for Scotland) and their staff ie the core Scottish Government and Executive Agencies - plus junior Scottish Ministers and non-ministerial office holders in the Scottish Administration (ie the Registrar General of Births, Deaths and Marriages for Scotland, the Keeper of the Registers of Scotland, the Keeper of the Records of Scotland and others as specified in statute.)

Scottish Consolidated Fund (SCF)

The account in which draw-down of funding from Westminster and other relevant receipts is held. Payments out of the SCF are subject to statutory authority while all receipts of the Scottish Administration (but not other direct funded bodies) must be paid into the SCF unless otherwise authorised by the Parliament.

Secondary Legislation Laws, including orders and regulations, which are made using powers in primary legislation. Normally used to set out technical and administrative provision in greater detail than primary legislation, they are subject to a less intense level of scrutiny in the Parliament.
Senior Responsible Owner (SRO) / Sponsor

The SRO is the individual responsible for ensuring that a programme/project meets its objectives and delivers the intended benefits. They own the overall business change being supported or enabled by the programme/project and ensures that it maintains its business and vision focus. The SRO chairs the Programme/Project Board.

Sensitivity Analysis

A technique used in appraisal and analysis to attempt to measure the potential effect of items that cannot be forecast with certainty.

Service Level Agreement (SLA)

An agreement between parties, setting out in detail the level of service to be performed. Where agreements are between central government bodies, they are not legally a contract but have a similar function.

Spending Review

Sets out spending plans for the following three years. Normally held at 2 year intervals.

Sponsored Body

Essentially those bodies commonly referred to as non-departmental public bodies (NDPBs). NDPBs include Executive NDPBs, Public Corporations and NHS Bodies. Other organisations which do not meet the NDPB criteria may also be regarded as sponsored bodies where the activities of the organisation and the nature of the relationship between the Scottish Government and the organisation makes it appropriate to do so.

Statement on Internal Control (SIC)

An annual statement that Accountable Officers are required to make as part of the accounts on a range of risk and control issues.
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.

Surrendered Receipts / Income

Receipts / income not authorised by the Parliament to be used in support of related expenditure and which must therefore be surrendered to the SCF.



Target Rate of Return

The rate of return required of a project or enterprise over a given period, usually at least a year.

Third Sector

Private sector bodies which do not act commercially, including charities, social and voluntary organisations and other not-for-profit collectives.

Total Managed Expenditure (TME)

Aggregate public spending derived from National Accounts. It covers all current and capital spending carried out by the public sector (i.e. not just by central government).

Transferable Instruments

Crossed or uncrossed payable instruments where the issuer does not restrict payment to the intended payee's bank account.


Value of sales of goods or services included in the accounts for an accounting period.



Ultra Vires

A legal term for activity which is outside the scope of the relevant legal powers and therefore illegal.

Uncrossed (or "open") Instruments

Payable instruments which have not been crossed with two parallel lines and which give the intended recipient the entitlement to be paid in cash.



Value for Money

The process under which organisation's procurement, projects and processes are 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.

Virement A term used for the process by which funds are moved between budget sections or subheads (detailed subdivisions of budget sections as set out in the Budget Documents) such that additional expenditure on one is met by savings on one or more others.


Whole of Government Accounts (WGA)

WGA are commercial-style accounts covering the whole of the UK public sector. WGA are produced on an accruals basis and use generally accepted accounting principles, adapted where necessary for government. Government is treated as if it were a single entity by eliminating all significant transactions between public sector entities.

Wider Market Activity

Activities undertaken by central government organisations outside their statutory duties, using spare capacity and aimed at generating a commercial profit.

Working Capital

Current assets less current liabilities.








Updated: March 2021 

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