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A5. EXPENDITURE OTHER THAN ON STAFF

The SCRA shall not, without prior approval of the sponsor Department, enter into any undertaking to incur any expenditure, which falls outside the specific limits on its delegated authority as set out in the attached Annex A.

A5.1 Capital expenditure

A5.1.1 Capital expenditure is defined as expenditure on new construction, land, extensions or alterations to existing buildings and the purchase of any other fixed assets ( e.g. fittings and equipment) including vehicles with an expected working life of more than one year.

A5.1.2 The SCRA may spend up to £100,000 on individual capital items (excluding motor vehicles) or projects; beyond that delegated limit, the sponsor Department's prior authority must be obtained before expenditure is incurred. (See also para A5.7 below on Public/Private Partnerships.)

A5.1.3 Applications to the sponsor Department for approval of large-scale projects should be supported by formal notification that appropriate consideration has been given, and the project duly authorised by the Board. Regular reports on the progress of such projects should be submitted to the sponsor Department.

A5.2 Virement

All transfers of budgetary provision from resource to capital budgets and from "cash" to "non-cash" headings require the approval of the sponsor Department. The presumption will be that no reserve transfers will be allowed. Other transfers between main budget headings may be undertaken without the prior approval of the sponsor Department subject to the conditions set out in A5.2.1. It should be noted that under the terms of RAB, from 2004-05 a penalty may be applied to any such virement between headings.

A5.2.1 The SCRA may reallocate (vire) funds between the headings in its budget without the sponsor Department's prior agreement, provided that no heading is increased or decreased by more than 10 per cent and provided that in aggregate the SCRA's net payments do not exceed the total approved Budget. However, the staff costs ceiling heading may not be increased without the sponsor Department's agreement.

A5.3 -Borrowing, lending, guarantees, indemnities and contingent liabilities (including letters of comfort)

A5.3.1 The SCRA shall not, without the sponsor Department's prior written consent, borrow (including temporary borrowing such as prearranged overdraft facilities), lend money, charge any asset or security, give any guarantee or indemnities or letters of comfort, or incur any other contingent liability (as defined in http://intranet/content/departments/fcsd/finance/standards/contingentLiabilities/index.htm) whether or not in a legally binding form.

A5.4 Grant or loan schemes

A5.4.1 All grant or loan schemes proposed by the SCRA must be approved by the sponsor Department before any payments are issued. Payments of grant or loan must be made properly and in accordance with the guidelines for the appropriate schemes.

A5.4.2 The SCRA shall ensure that any grants made to organisations which receive the major part of their funding from the SCRA are accompanied by appropriate conditions, including obligations to ensure that the books and records of such organisations are readily available for inspection by the sponsor Department.

A5.4.3 Please also see section A7.3 below "Recovery of grant-financed assets".

A5.5 Gifts; write-offs, losses and other special payments

A5.5.1 Proposals for making gifts or other special payments, including write-offs outside the SCRA's delegated limits, must have the prior approval of the sponsor Department. Gifts to staff are subject to http://intranet/content/departments/fcsd/finance/standards/spfm/gifts/index.htm.

A5.5.2 The SCRA has delegated powers to incur expenditure on these items as defined in the SPFM as follows:

A5.5.3 The SCRA's role in the Children's Hearings system has developed to offer improved support to members of Children's Panels who often have to work in a difficult environment. In that regard, taking account of the assurance from the Scottish Ministers in respect of loss of earnings and dental costs, where it can be demonstrated that the member has incurred the loss in connection with their role as a member of the panel, the SCRA has delegated powers to incur expenditure as follows:

Running Costs

• carry forward an excess of up to 5 per cent of running costs from one financial year to the next;
• dispose of any asset not exceeding £100,000 in value which has been purchased wholly or mainly with grant-in-aid funds; and
• write-off losses or sanction special payments not exceeding the amounts specified in Annex A of the financial memorandum.

Capital Expenditure

• incur capital expenditure not exceeding the current level of European threshold ¹ on any individual item or group of items; and
• carry forward an excess of up to 10 per cent of programme expenditure from one financial year to the next.

Personnel

• settle the numbers of staff posts, their grades and salary levels having particular regard to paragraph A4 above within the structure approved by the Scottish Ministers from time to time and the running costs available.
• In all other instances - and in any case of doubt - the SCRA should seek the sponsor Department's express authority.

A5.6 Leasing

A5.6.1 Before entering into any lease the SCRA must demonstrate that the lease offers better value for money than purchase.

A5.7 Public/Private Partnerships

A5.7.1 The SCRA should seek opportunities to enter into Public/Private Partnership where this is more cost effective than conventional procurement. The sponsor Department should be consulted in all such cases.

A5.7.2 The SCRA should also consult the sponsor Department in all cases where different cash flow projections may result in delegated spending authority being breached.

A5.8 Insurance

A5.8.1 The SCRA shall not take out any insurance without the prior approval of the sponsor Department, with the exception of third party insurance required by the Road Traffic Acts and any other insurance which is a statutory obligation.

A5.9 Financial investments

A5.9.1 The SCRA shall not make any financial investments without the prior approval of the sponsor Department.

A5.10 Unspent end-year balances of grant-in-aid

A5.10.1 The SCRA may not carry over unspent cash balances from its total grant-in-aid provision as authorised by the Scottish Parliament from one year to another without first submitting a request to their sponsor Department for consideration. Any request for carryover will be considered on its own merits. The expectation would always be that the Executive managed the grant prior to it leaving ED and made any adjustment to a future year payment if slippage in a project had occurred. The Executive would not expect the SCRA to accumulate unspent funds in its own accounts prior to use.

A5.10.2 The retained balances cannot be used to increase any of the various budget sub-heads by more than the limits set out in this document. Grant in aid not drawn down by the end of the financial year will lapse. Under the Scottish Executive's end-year flexibility ( EYF) arrangements the SCRA may, subject to the approval of the sponsor Department, carry forward from one financial year to the next, in part or in full, unused Departmental Expenditure Limit ( DEL) budgetary provision. It is the SCRA's underspending in terms of the use of DEL budgetary provision rather than of grant in aid that will determine the level of EYF available to be carried forward. Subject to the provision at paragraph A.5.10.1 above, the SCRA must at the earliest opportunity submit to the sponsor Department any proposals for carrying forward budgetary provision. Any such proposals shall be considered by the sponsor Department in the light of competing priorities.

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