Delegated authority
Scope
1. This section gives guidance on the delegation of authority. The guidance is aimed primarily at the constituent parts of the Scottish Administration (i.e. the core Scottish Government (SG), the Crown Office and Procurator Fiscal Service, SG Executive Agencies and non-ministerial departments) and bodies sponsored by the SG. However, other organisations to which the Scottish Public Finance Manual (SPFM) is directly applicable should ensure compliance with any relevant provisions and follow procedures consistent with the guidance.
Key points
2. Public sector organisations to which the SPFM is directly applicable should establish documented internal delegated authority arrangements appropriate to their circumstances.
3. Appropriate delegated limits should be included in the framework documents for SG Executive Agencies, non-ministerial departments and bodies sponsored by the SG.
4. Authority cannot be delegated to sponsored bodies in circumstances where the SPFM requires the prior approval of the SG or with regard to novel, contentious or repercussive financial transactions, even if they fall within delegated limits.
Background
5. Appropriate delegation of authority is fundamental to corporate governance arrangements i.e. the way in which organisations are directed and controlled. Authority should however be defined clearly such that decisions are made and actions taken by the appropriate people. In general, authority should be delegated to the point where decisions can be taken most efficiently. It should be noted that delegated authority for budgets does not confer purchasing authority, which should be the subject of separate delegations.
Accountable Officers
6. Accountable Officers for public sector organisations should delegate authority for budgets and associated strategic and financial management responsibilities to senior executives for further sub-delegation as considered appropriate. However, while an Accountable Officer can delegate authority the responsibilities of an Accountable Officer cannot be delegated or shared. Detailed guidance on Accountable Officer arrangements is included in the section of the SPFM on Accountability.
Strategic management responsibilities
7. At the higher levels of public sector organisations, it is particularly important that financial responsibilities are discharged in the context of wider risk and strategic management considerations. Senior executives, within their area of responsibility, should therefore be delegated responsibility for:
- proposing objectives, priorities, outcomes and performance indicators for the organisation which square with the organisation's aims, policy and management objectives;
- making plans and ensuring that adequate systems are in place to achieve these objectives effectively, efficiently and economically;
- ensuring that adequate systems for internal control and risk management, both financial and otherwise are in place and are monitored and reviewed regularly; and
- monitoring and reporting of performance to the organisation's management board and/or Accountable Officer.
Financial management responsibilities
8. The general financial responsibilities associated with delegated authority for discrete budgets include the following:
- ensuring that proper financial procedures are followed and compliance with relevant guidance, in particular the SPFM;
- ensuring that functions are discharged with due regard to economy, efficiency and effectiveness within an overall framework of Best Value;
- ensuring that funds and assets are properly managed and safeguarded, with checks as appropriate; and
- ensuring that any relevant risks, whether to achievement of business objectives, regularity, propriety or value for money, are identified and effectively managed.
Scheme of Delegation
9. The SG has put in place a Scheme of Delegation (available on the SG Intranet) detailing internal structures for the delegation of authority to senior executives across the SG. This includes the option of further sub-delegation as and when considered appropriate. Other public sector organisations to which the SPFM is directly applicable should establish documented internal delegated authority arrangements appropriate to their circumstances. It is however for Accountable Officers to determine precisely how authority should be delegated to individual managers. Such arrangements complement the assurance process within organisations necessary to support the signature of Governance Statements that must be provided by Accountable Officers as part of the annual accounts.
Executive Agencies and NMDs
10. SG Executive Agencies and non-ministerial departments (NMDs) should adopt the principles of the SG Scheme of Delegation. The delegation of financial responsibilities should be covered in the framework documents setting out the key relationships between these entities and the core SG. Such delegations must be approved by the relevant SG Finance Business Partner (or equivalent). The prior approval of the relevant SG Finance Business Partner (or equivalent) will always be necessary with regard to novel, contentious or repercussive financial transactions, even if they fall within delegated limits.
Sponsored bodies
11. Bodies sponsored by the SG are covered by the requirement to establish documented internal delegated authority arrangements. SG sponsor units, on behalf of Portfolio Accountable Officers and in consultation with SG Finance Business Partners (or equivalent), are separately required to put in place appropriate delegated limits on sponsored bodies' use of funds as part of the framework documents setting out the key roles and responsibilities which underpin the relationship between sponsored bodies and the SG. Such delegated authorities must strike a balance between the sponsor unit’s need to be able to fulfil its responsibilities towards the Portfolio Accountable Officer and the sponsored body’s freedom to manage under the terms of the framework document.
12. Authority cannot be delegated to sponsored bodies in circumstances where the SPFM requires the prior approval of the SG (e.g. compensation schemes for severance, early retirement or redundancy) or with regard to novel, contentious or repercussive financial transactions, even if they fall within delegated limits. Any expenditure undertaken without the necessary delegated authority from the SG may be deemed irregular and lead to the accounts being modified and an investigation by the Scottish Parliament's Public Audit Committee.
Novel or contentious
13. Whether or not a financial transaction might be regarded as novel or contentious inevitably involves a degree of judgement. "Novel" would include proposed expenditure or financial arrangements of a sort not previously undertaken or entered into by the body in question or that could not be considered, reasonably, to be standard practice. "Contentious" would include proposed expenditure or financial arrangements where there was doubt as to regularity (i.e. compliance with relevant legislation and guidance) or propriety (i.e. compliance with the standards expected of public bodies or officials). Proposed expenditure or financial arrangements that might be considered to be politically sensitive would also be regarded as contentious. If in doubt advice should be sought from the relevant SG Finance Business Partner (or equivalent).
14. While the prior approval of the relevant SG Finance Business Partner (or equivalent) must be obtained for any novel or contentious (or repercussive) financial transactions undertaken by constituent parts of the Scottish Administration and bodies sponsored by the SG, responsibility for such transactions remains with the relevant Accountable Officer. The relevant Accountable Officer should therefore be made aware of all such transactions.
Review
15. Both internal and external delegated authorities and delegated limits should be reviewed from time to time to make sure that they remain up to date and appropriate.
Page updated: March 2019