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4. PLANNING, BUDGET REPORTING AND INTERNAL AUDIT
4.1 The Corporate Plan
4.1.1 Consistent with the timetable for public spending reviews, the SCRA shall submit to the sponsor Department a draft of its Corporate Plan covering the spending review period. The SCRA shall have agreed with the sponsor Department the issues to be addressed in the plan and the timetable for its preparation. The plan, or elements thereof, shall be updated between public spending reviews as and when considered necessary.
4.1.2 The plan shall reflect the SCRA's statutory duties and, within those duties, the priorities set from time to time by the Scottish Ministers.
4.1.3 The Corporate Plan shall set out:
- the SCRA's key objectives and associated key performance targets for the three forward years, and its strategy for achieving those objectives;
- a review of the SCRA's performance in the preceding financial year (together with comparable outturns for the previous 2-5 years), and an estimate of performance in the current year;
- alternative scenarios to take account of factors which may significantly affect the execution of the plan but which cannot be accurately forecast;
- other matters as agreed between the sponsor Department and the SCRA.
4.1.4 The main elements of the plan - including the key performance targets - shall be agreed between the sponsor Department and the SCRA in the light of the sponsor Department's decisions on policy and resources taken in the context of the Scottish Ministers' wider public expenditure plans and decisions.
4.2 The Business Plan
4.2.1 The Business Plan for the year immediately ahead shall be consistent with the agreed Corporate Plan. The Business Plan shall be updated annually by the SCRA to include key targets and milestones for the forthcoming year and shall be linked to budgeting information so that resources allocated to achieve specific objectives can readily be identified by the sponsor Department. A copy of the Business Plan shall be submitted to the sponsor Department for information (and comment where considered appropriate) prior to the beginning of the financial year in question.
4.2.2 The plan will reflect the SCRA's duties and, within those duties, the priorities set from time to time by the Scottish Ministers.
4.2.3 In the light of the SCRA's Mission Statement and Performance Targets ( see section 7), the plan will set out:
- the SCRA's key objectives and associated key performance targets for the three forward years and its strategy for achieving these objectives;
- a review of the SCRA's performance in the preceding financial year, together with comparable outturns for the previous three years, and an estimate of performance in the current year;
- a forecast of expenditure and income taking account of guidance on resource assumptions and policies provided by the sponsor Department at the beginning of the planning round. These forecasts should represent the SCRA's best estimate of its available income, including any grant or grant-in-aid and other expenditure within the SCRA's provision within Total Managed Expenditure; and
- additional forecasts derived from alternative forward scenarios and estimates, the effects of these on the achievement of the SCRA's objectives. In particular, the Corporate Plan should include options for greater and for lower total provision.
4.2.4 The main elements of the plan - including the key performance targets - will be agreed between the sponsor Department and the SCRA in the light of the sponsor Department's decisions on policy and resources taken in the context of the Scottish Ministers' latest public expenditure decisions.
4.3 Publication of plans
4.3.1 Subject to any commercial considerations the Corporate and Business Plans shall be published on the Internet. A summary version shall be made available to staff.
4.3.2 Meetings between the SCRA and the sponsor Department to monitor progress against planned expenditure will be held at least twice yearly (September and January).
4.4 Reporting performance to the sponsor Department/Budgeting procedures
4.4.1 The SCRA shall operate management information and accounting systems which enable it to review in a timely and effective manner its financial and non-financial performance against the budgets and targets set out in its Corporate and Business Plans.
4.4.2 The SCRA shall take the initiative in informing the sponsor Department of changes in external conditions which make the achievement of objectives more or less difficult, or which may require a change to the budget or objectives set out in the Corporate or Business Plans.
4.4.3 The SCRA's performance in helping to deliver the Scottish Ministers' policies, including the achievement of agreed key objectives and associated key performance targets, shall be reported to the sponsor Department on a quarterly basis. Performance will be formally reviewed regularly by officials of the sponsor Department. The appropriate Scottish Minister shall meet the Board formally and regularly to discuss the SCRA's performance, its current and future activities and any policy developments relevant to those activities.
4.4.4 The SCRA's performance against key targets shall be reported in the SCRA's annual report and accounts ( see Section 5.1). Other forms of reporting performance to the public should also be considered.
4.5 Internal audit
4.5.1 The SCRA shall establish and maintain arrangements for internal audit in accordance with the Treasury's Government Internal Audit Standards ( GIAS). The SCRA shall consult the sponsor Department to ensure that the latter is satisfied with the competence and qualifications of the Head of Internal Audit and the requirements for approving appointment.
4.5.2 The SCRA shall arrange for periodic quality reviews of its internal audit in accordance with the GIAS. The sponsor Department shall consider whether it can rely on these reviews to provide assurance on the quality of internal audit. However, the sponsor Department reserves a right of access to carry out/commission independent reviews of internal audit in the SCRA.
4.5.3 The Scottish Executive's internal audit service shall also have a right of access to all documents prepared by the SCRA's internal auditor, including where the service is contracted out. The audit strategy, periodic audit plans and annual audit report, including the SCRA's Head of Internal Audit's opinion on risk management, control and governance shall be forwarded without delay to the sponsoring team who shall consult the Scottish Executive's Head of Internal Audit as appropriate.
4.5.4 The SCRA shall establish a Fraud Policy and Fraud Response Plan which will be submitted for approval to the sponsor Department. In addition, the SCRA shall forward to the sponsor Department an annual report on fraud and theft suffered by the SCRA; notify any unusual or major incidents as soon as possible. In addition, the SCRA shall notify any changes to its internal audit's or Audit Committee's terms of reference or its Fraud Policy and Fraud Response Plan.
4.6 Budgeting
4.6.1 The SCRA should inform the sponsor Department immediately of any significant change in estimated outturns. It is particularly important to have an accurate picture of expenditure and receipts towards the end of the financial year.
4.6.2 In advance of each financial year the sponsor Department will send to the SCRA a formal statement of its financial provision as approved by Scottish Ministers, together with a statement of any change in policies affecting the SCRA in the coming financial year. The notified provision will be subject to parliamentary approval and will represent a resource limit. Under resource accounting this provision will include "cash" and "non-cash" items.
4.6.3 As part of its annual plan, and taking account of its approved financial provision, the SCRA will prepare a budget of estimated payments and receipts, including a profile of expected expenditure and of drawdown of any grant in aid and other income over the year.
4.6.4 Once the budget has been approved by the sponsor Department and subject to any direction by Scottish Ministers and MS/ FM, the SCRA will have authority to incur expenditure approved in the budget without further reference to the sponsor Department, on the following conditions:
- the SCRA will comply with the delegations set out in the financial memorandum attached to this document. These delegations may not be altered without the prior agreement of the sponsor Department;
- inclusion of any planned and approved expenditure in the SCRA's budget will not remove the need to seek formal Departmental approval where any proposed expenditure is outside the delegated limits or is for new schemes not previously agreed;
- the SCRA will provide the sponsor Department with such information about its operations, performance, individual projects or other expenditure as the sponsor Department may reasonably require;
- the SCRA will notify the sponsor Department immediately and formally if it becomes apparent at any time that an overspend of the estimates of its expenditure over the year, as voted by the Scottish Parliament, is likely to occur; and
- the SCRA will formally notify the sponsor Department if it is likely to underspend by more than the equivalent of 5 per cent of its total grant in aid.
4.6.5 The SCRA will also provide the sponsor Department with:
- a financial statement every month showing for each main budget heading - including non-cash provisions - the payments made and any receipts received in the previous month, together with the accumulated net payments to date and the balance of cash remaining available to the SCRA for the year;
- an analysis every month of financial outturn against forecasts of expenditure and income, indicating proposed action when necessary; and
- details of the outturn for the full financial year for each main budget heading.
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