ANNEX B

FIAG RECOMMENDATIONS - IMPLEMENTATION SUMMARY

Recommendation	Action
1. In future, Government accounting should use simple language and commonly understood terms. (P 2.11)	New guidance on financial procedures to be used by the Executive and some associated bodies will use common financial terms instead of those used at Westminster. The Parliament's Standing Orders already use these.
2. The Scottish Parliament should adopt an annual procedure to scrutinise and approve the expenditure proposals of the Executive. (P 3.4)	Standing Orders drafted on the assumption of annual procedures. They provide for time to be set aside at specific times of the year for the various processes. Each budget Bill will allocate funds for a single financial year, though there will be arrangements to enable managers to carry forward savings. The Accountability, Budgeting and Audit Bill will require those who receive funds from the Scottish Consolidated Fund to produce annual accounts.
3. The Scottish Parliament should use a structure based on 3 Committee types. These are: Subject Committee, the Finance Committee and the Audit Committee. (P 3.8)	Standing Orders provide for Finance and Audit Committees as mandatory committees. They also allow the Parliament to set up other ones.
4. The whole Parliament should have the opportunity to scrutinise Budget Proposals and Budget amendments. The Subject and Finance Committees might also play an important role in scrutiny of the Executive’s main budget proposals prior to consideration by the whole House. (P 3.11)	Standing Orders provide for Committees to report to the Parliament. Therefore a mechanism is available to enable the Executive’s budget proposals to be considered by Committees before they are debated in plenary. Standing Orders ensure that budget proposals must be considered by the whole Parliament before they are approved.
5. It should also be open to members to use forms of questions or enquiries although it is acknowledged that this is probably more effective in calling the Government to account in relation to policy questions than for specialised financial scrutiny. (P 3.11)	Standing Orders provide for questions.
6. The Scottish Parliament should adopt broad principles as follows (3.12).
6.1 Budget approval should be by way of primary legislation;	Standing Orders make specific provision for Budget Bills; but the Executive wishes to explore the possibility of a simpler procedure that would still preserve the opportunity for scrutiny.
6.2 There should be no expenditure without appropriation legislation;	Effectively provided for by the Scotland Act 1998 (section 65). Furthermore, we expect that the Accountability, Budgeting and Audit Bill will set out a rule that any expenditure from the Scottish Consolidated Fund under the terms of section 65 must be for a purpose set out in the appropriate Budget Act.
6.3 Revised budgets are produced to reflect adjustments;	Implicit in the above. Successive Budget Bills will by implication enable the Executive to transfer some funds from one part of a Department’s budget to another (limits on this facility will be imposed administratively). If the Executive wishes to move funds between Departments, it will be obliged to seek the approval of the Parliament. FIAG recommended that this should be through primary legislation. There are some practical difficulties with this. Therefore the Executive is looking at other options for seeking authority that would be more flexible but that would still give the Parliament the opportunity for thorough scrutiny. The Accountability, Budgeting and Audit Bill will set out a system for contingency payments but even these must gain retrospective approval from the Parliament.
6.4 No undue reliance on Budget approvals for providing underlying powers to undertake functions;	We do not think that this principle can be enshrined by legislation. We propose an administrative arrangement to ensure that where there is no statutory power for Ministers to authorise a payment, the Parliament should be notified in advance that a payment is to be authorised using common law powers.
6.5 An absolute (cash) limit to spending;	Implicit in section 65. The Accountability, Budgeting and Audit Bill will put in place a rule which will limit total cash expenditure from the SCF under the terms of section 65 to the limit which will be set out in the appropriate Budget Act.
6.6 Annuality of agreed budget sums.	Budget Acts will allocate resources for a specific financial year. This will provide for annuality as far as the use of the Scottish Consolidated Fund is concerned.
6.7 Separate authority needed for overspends;	Implicit in section 65. The Scottish Ministers will be required to seek the Parliament's authority for an overspend in advance. Where this is not possible, the Scottish Ministers may (within certain limits) authorise the spending but must notify the Parliament. The Scottish Ministers will also be required to include the spending in the appropriate annual accounts.
6.8 Emergency spending subject to Parliament’s authority;	The Accountability, Budgeting and Audit Bill will grant the Scottish Ministers the power to authorise emergency spending if: it is required under the public interest to meet urgent expenditure for any purpose within section 65(2) and there is insufficient time to seek the Parliament's authority in advance. The Bill will limit the total amount of emergency payments in any financial year to a maximum of Ł50m. In addition, a payment may not be approved if it would cause the SCF to go into the red. If an emergency payment is made without the Parliament's advance authority, the Scottish Ministers will be required to report it to the Parliament.
6.9 No release of funds without legislative authority; and	Standing Orders prohibit use of policy legislation on its own as authority for expenditure.
6.10 Parliamentary authority is required to apply receipts.	Section 64(3) and (4) of the Scotland Act require payment of receipts into the SCF unless the Parliament makes alternative arrangements through an Act. Therefore, each year, the Parliament will be able to decide which receipts may be kept by managers and which should be surrendered. Utilisation of receipts might be authorised in two ways: (a) the Parliament would authorise both the category and the maximum amount that may be applied; (b) the Parliament would authorise the category but would not specify a maximum. The use of these receipts would normally be tied to a particular purpose.
7. There should be a presumption that the flexibility to carry forward savings from one financial year to should be passed to programme managers in order to influence management behaviour. (P 3.13)	We do not propose legislation on this. Instead, we envisage that where managers save some of their budget, the Parliament will be invited to approve its use in a subsequent financial year.
8. FIAG supports a regime (approved by the Parliament) which enables programme managers to retain current receipts to add to programme expenditure. A procedure will be required to decide which receipts should be available to sustain increased expenditure and which should be surrendered. Capital receipts above certain limits to be decided should be controlled. (P 3.13)	See 6.10.
9. FIAG recommends a 3 Stage framework for budgeting approval:
9.1 Stage 1 – A discussion of future strategy and priorities with public input through subject committees. Debate to be supported by the Executive’s publication of outline spending proposals for the year immediately ahead and provisional plans for two further years. The report should also cover policy objectives and some assessment of performance against past objectives. (P 3.22-3.24)	Standing Orders provide for time to be set aside. We propose an administrative agreement which will oblige the Executive to produce its existing plans supported by historical information by 20 March or the first day after that on which the Parliament sits. The content and format of these reports will also need to be agreed.
9.2 Stage 2 - Consideration of the Executive’s draft budget proposals, which should take account of the outcome of committees’ considerations at Stage 1. Parliament would have the option of proposing an alternative budget, not involving more money in total than the Executive’s proposals. This would not be binding the Executive. (P 3.25-3.27)	Standing Orders cover consideration by the Parliament. The format of the Executive’s proposals will require an administrative agreement between the Parliament and Executive.
9.3 Stage 3 - Consideration of the Executive’s final budget proposals leading to approval or rejection by the Parliament by the start of the financial year. (P 3.28)	The Accountability, Budgeting and Audit Bill requires that a Budget must be approved by the Parliament. Details of the Stage 3 process itself are set out in Standing Orders. The proposals set out in the Budget Bill are expected to follow closely those agreed by the Parliament and Executive at Stage 2. Stage 3 is intended to give them statutory approval. Under these rules, amendments to the proposals can only be tabled by the Executive. Once all the amendments have been dealt with, the Parliament will then be required to vote on the package as a whole. It will have the options of approval or rejection in total.
10. Budgets are formal procedures but are nevertheless necessary in terms of securing the Parliament’s formal authority for expenditure and as a means for checking the regularity of payments, etc. (P 3.36)	See 9 above.
11. Budgets should follow the internal structure of the Scottish Administration and hence align with Accountable Officer responsibilities. (P 3.36)	The Executive proposes that the instructions agreed by the Parliament on the format of accounts should give effect to this recommendation. (See also 29)
12. The ambit is a useful concept and should be retained. However, FIAG recommends that this part of a Budget should be known as its "Scope" as this is a term which is more commonly understood. (P 3.36)	We are not sure that "scope" accurately reflects what is required and think that perhaps each budget proposal might instead be fronted up with a "Statement of Purpose". Linguistics aside, the use of an ambit type provision will still be required in each Budget Act.
13. The Budget spending proposals should cover all expenditure by the Executive which the Parliament has to approve, rather than all public expenditure in Scotland. (P 3.36)	The Accountability, Budgeting and Audit Bill will propose that the Parliament will approve annually the limits on: the amount that can be borrowed by the new water and sewerage authorities and NHS trusts; and on the capital expenditure of local authorities.
14. These proposals should also include, after consultation with the Parliament, expenditure which the Parliament has to approve but is not formally for the Executive to propose - notably expenditure by the Parliament itself and expenditure on judges’ salaries. (P 3.36)	Legislation is not required on this point. It is our intention to make the budget proposals as clear as possible. Therefore all items of expenditure, including those on which Parliamentary approval is not required will need to be included.
15. The Executive should also report to the Parliament on the levels or expected levels of other public expenditure in Scotland, including expenditure decisions by local authorities, expenditure by Parliament and judges’ salaries. (P 3.36)	See 14 above.
16. Each Budget proposal should be accompanied by a narrative (ie a financial memorandum) explaining the objectives which would set out proposed outputs and expected outcomes. (P 3.36)	We propose that proposals should be as clear as possible and that information on outputs and expected outturns should be included. The Executive will be preparing proposals on this which will need to be agreed with the Parliament.
17. Budgets should be disaggregated to a lower level than that required by the Parliament for the purposes of financial control. (P 3.36)	The Executive's proposals on budget documentation will incorporate this recommendation.
18. The Scottish Parliament should be invited to adopt an interim budget approval procedure to be used if Parliament does not formally approve the Budget before the start of the financial year. (P 3.39)	The Accountability, Budgeting and Audit Bill will provide a mechanism for this. The intention is that each person who received spending authority in the previous year shall be able to spend, in each month, up to one twelfth of the total approved by the Parliament for that person for the previous year.
19. The Parliament should adopt arrangements that balance in year flexibility for managers with parliamentary control. (P 3.40)	The provisions set out at 6 above concerning the movement of funds within and between Departments achieves this balance.
20. Budget amendments should:
20.1 be simpler to understand;	Will be implemented in the design of relevant documents.
20.2 provide more opportunities to present Budget amendments to Parliament if required;	We deliberately avoided specifying times that the Parliament should devote to Budget revisions. This was done so that the Executive will be able to propose revisions when they are needed rather than at fixed times of the year.
20.3 provide monitoring information in relation to expenditure; and	Those responsible for the design of Budget revision documentation are aware of this requirement and will ensure that it is implemented.
20.4 provide better dovetailing between control mechanisms and statutory approvals. (P 3.41)	-do-
21. The Executive should be allowed reasonable discretion to transfer funds with appropriate internal controls but they should be subject to the Parliament being informed of transfers on a regular basis and not just when accounts are prepared as now. (P 3.46)	6.3 above explains the general arrangements for controlling the transfer of funds within and between Departmental Budgets. The Executive's authority to move sums within a Departmental Budget will not be unlimited. The maximum amount that may be moved without seeking additional authority from the Parliament is to be Ł50m or 15% of the Budget concerned, whichever is smaller. A working arrangement between the Parliament and Executive will be required to ensure that the Parliament is notified promptly of those transfers that take place where the specific approval of the Parliament is not required.
22. Budget transfers should be allowed between sections or subheads of a Departmental Budget but not between Departmental Budgets. (P 3.46)	See 6.3 and 21 above.
23. Departments should be allowed to automatically transfer up to 15% of receiving subheads or Ł50m whichever is the lesser. (P 3.46)	See 6.3 and 21 above.
24. The system for budget transfers should be reviewed in 2002. (P 3.46)	This recommendation should be considered by the Finance Committee and action then agreed between the Parliament and Executive.
25. FIAG recommends Standing Orders are developed to enable financial legislation to be passed more quickly than is normally the case eg by limiting opportunities for non-Government amendments. (P 3.50)	Standing Orders provide special Budget Bill procedures. Amendments and notice of proposed amendments may only be made by a member of the Executive.
26. In addition:
26.1 the Executive should give as much information as early as possible on proposals for use of the tax varying power;	This will require an administrative agreement.
26.2 amendments by MSPs should be restricted to expenditure proposals (and should not include revenue or taxes);	Standing Orders prohibit MSPs from submitting amendments on revenue and taxes.
26.3 budget approval should be made using primary legislation.	The consultation paper seeks views on the possibility of a simplified procedure.
26.4 in the event of Parliament rejecting the entire budget, fresh proposals must be brought forward before the expiry of the interim spending approval. (P 3.51)	Until the Parliament approves the Budget, the Executive's ability to spend money will be extremely limited. The Executive will therefore have a clear incentive to produce revised proposals as soon as possible. It might be possible for the Parliament and the Executive to agree a procedure to cover this eventuality but we do not propose legislating for it. (Standing Orders cannot be used to oblige the Executive to do this either.)
27. The Scottish Parliament should adopt resource accounting and budgeting. (P 4.15)	We think that the Parliament should adopt RAB as it gives a better picture of the use of resources than the current cash system. Continuing with a cash system when the UK government moves to RAB would also be problematic. See also 28 below.
28. Resource budgeting should be implemented one year earlier than the Whitehall model as far as is practicable. (P 4.15)	The Scottish Executive has been working on the development of resource accounting and budgeting (RAB) systems for some time now. Unfortunately definitive Treasury guidance on RAB will not be available for some time yet. There seems little point in starting the Parliament using a cash system only to move to RAB a short while later. Therefore we propose that financial information should be presented to the Parliament in RAB format from day 1. However, most of the actual figures will be cash until the changeover to RAB is complete.
29. The Scottish Administration should provide a clear explanation, perhaps in a supporting memorandum, of how the numbers in the accounts differ from those that would have appeared in old style cash accounts and how they relate to the (cash) sum paid into the Scottish Consolidated Fund by the UK Government. (P 4.15)	The Executive is developing proposals for a mechanism that would specify the format of accounts. This could then be used to give effect to this recommendation.
30. Accounts should be produced to cover all devolved Government expenditure in Scotland. (P 4.16)	The Accountability, Budgeting and Audit Bill should provide for the production of accounts by those who receive funds from the SCF. They also cover the requirement that Scottish Ministers themselves must prepare an account of payments into and out of the SCF.
31. In addition, separate work should be undertaken to distil these into more accessible versions. (P 4.16)	The Parliament (ie the Audit Committee) and the Executive will need to discuss this requirement.
32. A comparison with the previous financial year should be provided. This should be wide-ranging and cover financial and performance information. (P 4.16)	This point will be covered once a mechanism to specify the format of accounts has been agreed.
33. Performance reporting will be an important part of resource accounting; and annual reports should be important. These should set out an overall commentary on:	Mainly for implementation in the Executive’s annual statement on outline spending proposals but some information will be in accounts.
33.1 the overall budget strategy;
33.2 the nature and objectives of each main programme;
33.3 the outturns in previous years, including assessments of output and performance against objectives as well as financial outturns;
33.4 the plans for the year ahead, as approved by Parliament; and
33.5 the provisional plans for the two subsequent years. (P 4.16)
34. FIAG recommends that separate volumes should be issued for each of the Executive’s spending Departments. (P 4.16)	This proposal should be put to the Parliament once the Executive's structure has been agreed. If approved by the Parliament, the recommendation would then be for the Executive to implement.
35. The Scottish Parliament should set a statutory deadline of 31 December by which the preceding year’s accounts must be published. Departments and the Auditor General might be invited to make progress against a target. (P 4.17)	The Accountability, Budgeting and Audit Bill will place a statutory deadline of 31 December for the publication of accounts and of 30 September for the submission to the Auditors.
36. Executive Agency and (Scottish) Departmental Resource Accounts should be produced at the earliest possible date, ahead of the Consolidated Resource Account. (P 4.17)	This would be a matter for administrative arrangement.
37. An interim report should be provided to the Parliament in May containing performance management information in relation to the financial year which will have just drawn to a close. The intention is that this information would inform the Scottish Parliament’s consideration of resource allocation decisions throughout the early summer. This could be incorporated into the Annual Report that sets out the Executive’s budget plans for the financial year ahead. (See paragraph 3.23.) (P 4.17)	We have concluded that these details should in fact be incorporated into the planning document which is to be made available on or just after 20 March each year (see 9.1 above).
38. The Scottish Parliament should set up a similar system to that of "Accounting Officers" as used by the UK Parliament. Senior officials within the Scottish Administration should be designated as "Accountable Officers". This term reflects more accurately the role such individuals would have in being accountable to the Parliament for the actions of the Scottish Administration. (Although the term "Accounting Officer" is well understood in Government circles it tends to indicate a more specialist financial role and is hence somewhat misleading to the lay person.) FIAG recommends that the head of the Scottish Administration is automatically designated as Principal Accountable Officer on appointment. He or she should then be responsible for appointing other Accountable Officers throughout the rest of the Administration. These officials could then be required to account for the actions of the Administration both to the Audit Committee and to any subject committee considering a value for money report produced by the AGS. (P 5.3)	The Accountability, Budgeting and Audit Bill will set up an Accountable Officer system in the Scottish Administration. It will provide for the automatic appointment of a Principal Accountable Officer and will set out his or her duties (in broad terms). These duties will include the appointment of Accountable Officers for different parts of the Administration. The Bill will also cover the designation of the Office Holders of the Scottish Administration as Accountable Officers and will require them to appoint at least one other within their commands. Parliamentary committees will be able to call on Accountable Officers to account for the actions of the Administration. The Bill will also cover arrangements for the Statutory Officeholders, the SPCB and the Auditor General for Scotland.
39. FIAG recommends a mechanism whereby committees are able to liaise with the Administration to ensure that, in addition to or instead of the Accountable Officer concerned, other relevant officials can be called to give evidence. (P 5.6)	We cannot legislate for this but recommend that the Parliament and Executive establish working procedures to ensure that appropriate individuals are able to give evidence.
40. The system of accountability should be seen as a way of promoting a free flow of information between Parliament and the Administration and the sharing of good practice should be an integral part of the process. (P 5.7)	This is a key difference between the workings of the Committee of Public Accounts (PAC), where the emphasis is on investigating problems and the Accountable Officer system which is intended to be as much about sharing good practice as about investigations and enquiries. We suggest that FIAG's intentions are conveyed to the Audit and other committees. It will however be for the committees to decide on implementation.
41. Vfm issues should be dealt with by the Audit Committee, a Subject Committee or a combination of the two as is appropriate. (P 6.7)	The Parliament's Standing Orders put in place procedures to share tasks amongst the appropriate committees.
42. The Auditor General should co-ordinate the programme and (as set out in statute), consult as appropriate. (P 6.7)	The Accountability, Budgeting and Audit Bill will make it clear that the Auditor General sets his or her own programme of work. It will also oblige the AGS to take into account the views of the Parliament. The Parliament's views are not however to be binding.
43. Recommendations of committees should not be binding on the Executive but the Executive should be required to publish a response within a specified timescale (FIAG recommends two months) and should be required to report progress on the actions that have been agreed. (P 6.7)	The recommendations of Parliamentary committees cannot by their very nature be binding on the Executive. Only legislation can achieve that. However, we recommend that the Parliament and Executive reach a working agreement on this issue.
44. The Scottish Parliament should be invited to set out in statute equivalent arrangements (to those at Westminster) for the audit of financial statements, together with a timetable for their presentation. (P 6.10)	The Accountability, Budgeting and Audit Bill will provide for rationalisation of present arrangements. Includes statutory deadline for laying of accounts.
45. The Scottish Parliament should be invited to set out in statute a role for the Auditor General for Scotland in examining issues of regularity and propriety in public expenditure. (P 6.13)	The Accountability, Budgeting and Audit Bill will give the AGS a statutory duty to comment on the regularity and propriety of the accounts which he or she reports on.
46. The auditor’s role should include the validation of performance measures within the context of financial audit and vfm work. (P 6.19)	The Accountability, Budgeting and Audit Bill will give auditors the power to comment on the appropriateness of performance indicators used by an audited body and to suggest others. They may not however require audited bodies to adopt particular indicators as this might start to affect the actual policies of the body concerned. (The use by the Accounts Commission of nationally agreed indicators in local government will continue as before.)
47. Auditors should be entitled to comment whether indicators that have been set are appropriate and complete in relation to policy objectives but they should not set indicators. (P 6.19)	See 46 above.
48. The AGS should be responsible for all NHS audit. (P 6.20)	The Accountability, Budgeting and Audit Bill will transfer responsibility for the audit of certain NHS bodies from the Accounts Commission to the AGS. As a result, the AGS will become responsible for all NHS audits in Scotland. (The Bill proposes that the size of the Accounts Commission will be cut to reflect this transfer of responsibilities.)
49. The AGS should be invited to continue the development of good practice in public audit in Scotland. (P 6.24)	For the AGS.
50. The Scottish Parliament should be invited to legislate to afford the AGS an explicit right to require explanation as well as the right of access to documents of the Scottish Administration. (P 6.26)	Through the transfer of powers set out in the Scotland Act, the AGS will already have some rights. It is intended that the Accountability, Budgeting and Audit Bill should ensure that the AGS obtains rights of access and explanation to all those bodies that he/she is responsible for the audit and to all others that receive more that half their income directly or indirectly from the Scottish Consolidated Fund. We do not want voluntary organisations to be caught up in this and we have therefore suggested that the actual coverage is set by Order.
51. Existing audit arrangements for public bodies receiving grants from Ministers should be made more consistent by making the AGS or his appointee the statutory auditor for executive NDPBs, where this is within the competence of the Scottish Parliament. (P 6.30)	The Accountability, Budgeting and Audit Bill is intended to give the AGS the power to appoint the auditors of the Scottish Administration, NHS bodies, Executive NDPBs and further education colleges.
52. There should be a statutory right of access for the AGS to all public bodies receiving funds directly or indirectly from the Scottish Consolidated Fund including public sector companies, with the exception of local authorities for whom separate arrangements should continue to apply. (P 6.31)	See 50 above.
53. Legislation should provide a consistent statutory right of access to the AGS to all local spending bodies, subject to any body being significantly dependent for its income – from public funds or statutory levies. (P 6.34)	See 50 above.
54. When access to the records of contractors is required, this should be agreed during contract negotiations. (P 6.35)	For the Scottish Administration to pursue in its internal guidance on purchasing procedures.
55. The Parliament should continue an audit arrangement which integrates financial audit and vfm. (P 6.39)	No specific action is required in the short term as both the NAO and Accounts Commission follow this model. The recommendation should however be bought to the attention of the Committee for Public Audit, the AGS and the Audit Committee.
56. The current staff of NAO in Scotland and the Accounts Commission should be merged to form one audit delivery agency, Audit Scotland. (P 6.42)	The Accountability, Budgeting and Audit Bill is being prepared with this recommendation in mind.
57. The Auditor General’s role should encompass the responsibilities of the Chief Executive of Audit Scotland. (P 6.53)	Practical difficulties have been experienced on this point. The Executive is therefore reviewing this proposal.
58. There should be safeguards to protect the legitimate and distinctive interest of the Accounts Commission and the Controller of Audit. (P 6.53)	This matter is being covered in the consideration of Audit Scotland's structure. The Bill will also give the Commission for Public Audit rights to seek professional advice from non-MSPs - and in particular from the Accounts Commission.
59. There should be a single central support service unit, separate from Audit Scotland, reporting to the AGS, the Accounts Commission and the Controller of Audit. Either party would be able to withdraw from this arrangement if they had concerns about the unit’s independence or effectiveness. (P 6.55)	The Executive is seeking views on Audit Scotland’s structure.
60. FIAG recommend a working group to look at the issues involving in setting up Audit Scotland. The early appointment of the AGS would help this process. (P 6.63)	The NAO and Accounts Commission are already taking this forward.
61. The AGS should be appointed as early as possible. (P 6.65)	The post has been advertised. The recruitment process is now being taken forward by the Parliament itself.
62. Recruitment should be through open competition. (P 6.67)	The recruitment process is following the normal codes of open competition as set down by the Civil Service Commissioners.
63. The criteria to be used in selecting the candidates should be published and should be included in the advertisement and particulars of the post. (P 6.67)	The necessary details have been included in the advertisement and in the candidate memorandum which is sent to all those who respond to it.
64. A Panel should be appointed to deal with the matter. It should be chaired by the Presiding Officer; who will appoint the other members of the panel having regard to overall party mix. The panel should include the respective chairs of the Public Accounts Commission and the Audit Committee. The Parliament should consider whether to include arrangements for the appointment of independent assessors to the panel. (P 6.67)	Standing Orders have put in place the necessary arrangements.
65. Selection procedures should reflect Nolan principles. (P 6.67)	The SPCB is adhering to Nolan principles.
66. The Parliament should set a salary for the AGS that is commensurate with similar posts elsewhere in the UK. (P 6.71)	The Accountability, Budgeting and Audit Bill should provide for the Parliament to set a salary for the AGS by resolution. The SPCB will be briefed on those terms and conditions of service (including salary) on which the Parliament must decide.
67. There should be a Public Accounts Commission, which would consist of Members of the Scottish Parliament. It would have commissioning and funding responsibilities in relation to public accounts. (P 6.72)	FIAG subsequently agreed that this body should be called the Commission for Public Audit (CPA) in order to avoid confusion with Westminster’s PAC. The CPA should be established using the Accountability, Budgeting and Audit Bill. The Bill will list its main duties which are: to appoint the members of the Board of Audit Scotland other than statutory appointments; to scrutinise budget proposals submitted by the AGS; and to appoint auditors for the AGS and Audit Scotland and to receive and consider their audited accounts.
68. There should be a constraint on the Executive’s ability to enter into contingent liabilities, and the Scottish Parliament may wish to consider a limit above which, prior approval must be sought. It should be considerably higher than the Westminster precedent. (P 7.4)	For working practices.
69. There should be Standing Orders that would require the Executive to provide, for all legislative proposals, as full a statement as possible on their resource implications, including timescales and margins of uncertainty. The information should also distinguish the implications for local government and compliance costs. This statement should be developed and scrutinised as part of the pre-legislative process. (P 7.7)	Standing Orders provide that Bills (except Budget Bills) shall be accompanied by a Financial Memorandum setting out the best estimates of the administrative, compliance and other costs, estimates of timescales over which they would arise and an indication of margins of uncertainty. The Financial Memorandum must distinguish between costs to the Administration, local authorities, other bodies, individuals and businesses. A Bill only be introduced without a Financial Memorandum, etc only with the agreement of the Parliament.
70. Any opposition or backbench amendments to policy Bills having significant additional resource consequences should be subject to a special scrutiny procedure. (P 7.9)	Standing Orders provide that where a Bill or amendment has expenditure implications, no proceedings may be taken beyond stage 1 unless the Parliament has agreed a Financial Resolution (which can only be proposed by a member of the Executive). The Finance Committee must prepare a report on the implications before the vote takes place. Amendments outside the terms of the financial resolution may not be considered.
71. Parliament should make arrangements to set aside each year, a reserve. This would consist of money that will be held back to deal with any crises that arise. (P 7.10)	For implementation by the Executive in successive budget rounds.
72. The Parliament should make arrangements for a Contingencies Fund to cope with the need to spend money on areas where there is no authority for expenditure. The Parliament’s fixed budget is distinct from the arrangement at Westminster, and therefore, the Scottish Executive should be limited in the amount of advance it can access and also the time it has to report to Parliament and secure approval. (P 7.12)	Contingency arrangements are to be put in place through the Accountability, Budgeting and Audit Bill. This is dealt with in more detail at 6.8 above.
73. Normally, the Finance Committee (or sub-committee/chair) should ratify Contingencies Fund expenditure in advance (except during the recess). (P 7.12)	See 6.8 above. The terms of the Accountability, Budgeting and Audit Bill will provide that where advance authority for contingency spending cannot be arranged, the Scottish Ministers must seek ratification for a contingency payment from the Finance Committee. If the Parliament is in recess, the Scottish Ministers will be able to authorise payment (subject to the limits at 6.8 above), but must notify the Finance Committee as soon as the Parliament reconvenes.
74. The use of Contingencies Fund is to be disclosed, even if the Scottish Parliament is in recess and a report made to the Finance Committee as soon as possible. (P 7.12)	See 6.8 and 73 above.
75. FIAG believes that it is in the public interest that the Parliament designates an Accountable Officer in respect of the SPCB expenditure. (P 7.15)	The SPCB is not part of the Scottish Administration and hence is not required to designate an Accountable Officer under the terms of the Scotland Act. The Accountability, Budgeting and Audit Bill will be used to fill this gap as FIAG suggests. (See also 38)
76. FIAG recommends that, in common with other Parliaments, there should be some special procedures for determining how much money the Parliament spends on its own administration and on public audit. (P 7.16)	We do not propose legislating for this. We expect that this issue can be dealt with administratively. The SPCB will be able to propose spending plans at Stages 1 and 2 of the budget process as at 9 above. The Executive will not be able to refuse the Parliament funds but if it thinks that the SPCB’s proposals are excessive, it will be able to table proposals of its own. The Parliament will then need to debate the alternatives before the budget as a whole is voted on at Stage 3.
77. A single administration budget should be established for all core Departments’ expenditure on administration. (P 7.24)	For successive Budget rounds.
78. For information purposes, administration expenditure should be disaggregated as far as possible to individual Departments, with planned and actual expenditure shown in their budgeting and reporting arrangements. (P 7.24)	This will be a matter for those tasked with agreeing the format of the Administration’s accounts.
79. Distinct business units, such as Executive Agencies, should have a discrete budget with the Chief Officer of the body concerned being accountable to the Parliament for that budget. These organisations should have the discretion to manage their budget within the overall limits set by Parliament, subject to the general rules for switching resources within a budget. They should in principle be able to retain excess current receipts and use these to finance any new expenditure, including expenditure on administration. (P 7.28)	For internal working arrangements of the Executive.
80. The Executive should bring forward detailed proposals for internal controls over expenditure on administration, and these should be reported to Parliament along with the Executive’s proposals for the use of delegations. (P 7.31)	Internal guidance is being prepared by the Executive.
81. FIAG recommends detailed guidance is developed on financial procedures. However, normally it should not be necessary for the Parliament to be burdened with this. The Audit Committee should nevertheless receive copies of all guidance on which it could comment/amend if it chose. (P 7.57)	-do-
82. FIAG recommends the SPCB develops a financial briefing package which will enable new MSPs to quickly gain a thorough understanding of how the Parliament’s financial affairs are likely to be managed. (P 7.39)	Specialist training will be needed for members of the CPA, the Finance and Audit Committees. Consideration is being given to the production of a written package for other MSPs.