The Scottish Government

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Dates Issued: 23 September 2004 Topic: Monitoring Arrangements for New Capital Grant Scheme

Implementation: Immediate

Impact: 1 April 2004

Contact(s) for more information: Pauline Scott (Tel: 0131-244-2912)
Neil MacLennan (Tel: 0131-244-2143)
(at the above address)

Dear Colleague

Purpose of the circular: To implement new accountability arrangements between the police authorities and the Scottish Executive in order to monitor the expenditure outturn of each force of their yearly Capital Grant Allocation.

Summary of contents: This circular sets out guidance on payments by the Scottish Ministers for Capital Grants. It also covers the arrangements for dealing with potential or actual underspends and explains the new accountability monitoring process to be undertaken by all forces.

A copy of this circular is enclosed for the Director of Finance in the police authority. Copies have also been sent to the Convention of Scottish Local Authorities, the police associations and Audit Scotland and the Accounts Commission.

PAULINE SCOTT
Police Division 1.1

SCOTTISH POLICE SERVICE CIRCULAR 20/2004

LOCAL AUTHORITY CAPITAL FUNDING: ARRANGEMENTS FOR POLICE

1. From 1 April 2004 new arrangements were implemented for allocating capital funding to the police authorities i.e. the two unitary police authorities and the six joint police boards. The purpose of this circular is to set out detailed guidance on the payment by the Scottish Ministers of capital grants, and the arrangement for dealing with potential or actual underspends.

Purposes of the Grants

2. The grant is made under section 37 of the Local Government in Scotland Act 2003 in respect of police authority capital expenditure. The grant shall only be used for those purposes and for no other purpose whatsoever. This circular does not affect the operation of Police Circular No: 7/2004, which relates to The Police Grant (Scotland) Order 2004.

No part of the grant shall be used to fund any activity by the forces that is party political in intention, use, or presentation, or which promotes or opposes a point of view on a question of political controversy which is identifiable as the view of one political party and not another.

Payment of Grant

3. The grant shall normally be paid by the Scottish Ministers to the forces in twelve equal instalments in each Financial Year, on or around the 15th day of each month.

Monitoring, and managing underspends

4. Forces are requested to provide the Scottish Ministers with three in-year and one end year assessment of capital spending as soon as possible after the end of June, September, December and March respectively. The assessments should set out actual capital expenditure to date and the forecast levels of expenditure for the remainder of the Financial Year. To allow for consistency with Force accounting systems, the assessment can be submitted on a 12-week or 3-month basis.

An example of the pro-forma return for forces is enclosed at Annex A.

5. If it becomes apparent that a force is expecting to underspend its annual allocation, it will be open to the force to transfer the unused grant to another force or forces for spending in the same financial year. Any such transfer should be recorded in the in-year assessment referred to in paragraph 4 above.

6. At the end of each Financial Year, each Force Finance Officer, as a member of any of the bodies detailed within (a) to (h) of this paragraph; shall prepare an account showing the capital expenses reasonably and properly incurred by it in executing its functions during that Financial Year against the amount of grant received by it from the Scottish Ministers. Such an account shall be audited and certified as true and accurate. Preparation of the final account is currently being discussed and Forces will be notified when this arrangement has been confirmed.

a) The Institute of Chartered Accountants in England and Wales;

b) The Institute of Chartered Accountants in Ireland;

c) The Institute of Chartered Accountants in Scotland;

d) The Chartered Association of Certified Accountants;

e) The Chartered Institute of Management Accountants;

f) The Institute of Company Accountants;

g) The Association of International Accountants; or

h) The Chartered Institute of Public Finance and Accountancy.

7. In addition to the requirement to submit an audit as specified at paragraph 6 above, a copy of the annual external auditor's certificate on the financial statements of the grantee shall be submitted to the Scottish Ministers no later than 30 November - following the completion of the audit.

8. If the account prepared under paragraph 6 above indicates that the forces has underspent its annual allocation [notwithstanding that it has transferred funds to another force or forces under the transfer arrangements referred to in paragraph 5], it will be open to the force to carry forward that underspend to the next Financial Year up to an amount not exceeding 5% of the annual allocation for the year in which the underspend occurred, or, with the express consent of the Scottish Ministers, up to an amount not exceeding 10% of the said annual allocation. If the underspend exceeds the 5% or 10%, it will be open to the Scottish Ministers to reduce the following year's allocation by the excess amount.

Inspection and Information

9. The force shall keep and maintain adequate and proper records and books of account recording all receipts and expenditure of monies paid to it by the Scottish Ministers by way of grant. These records shall be maintained for a period of 3 years after the financial year end in which the expenditure occurs. The force shall afford: the Scottish Ministers, their representatives, Audit Scotland, and such other persons as the Scottish Ministers may reasonably specify from time to time, such access to those records or books of account as may be required by them at any reasonable time. The force shall provide such oral or written explanations in connection with the inspection of such records or books of account, or any entry in them or any matter arising from them as may be required by the person carrying out the inspection.

10. The force shall ensure that adequate internal expenditure controls are in place and that all resources are used economically, effectively and efficiently. In particular the force shall ensure that all expenditure is compliant with law, and that any procurement is undertaken in accordance with the local authorities financial instruction, EC Directives, UK Procurement Regulations, State Aid rules, and indicate Best Value.

11. From time to time the Scottish Ministers may inspect any Force property and may require information from the force to enable them to monitor the expenditure of grant in light of this circular or any other direction of the Scottish Ministers.