BUDGET MANAGEMENT AND MONITORING
Contents:
Scope
Key Points
Background
Management
Monitoring
Annex:
Basic Points for Financial Management
Scope
1. This section gives guidance on the management and
monitoring of budgets.
Key Points
2. Individual budget managers are responsible for the
management and continuous monitoring of their respective
budgets.
3. All proposals with resource implications (or other
financial considerations) should be cleared with Finance
Teams.
4. Budget managers should be aware of the End Year
Flexibility (EYF) arrangements which allow for unexpended
provision to be carried forward in part or in full to the
following financial year.
5. Budget managers should inform their Finance Teams
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.
6. Finance Teams should monitor overall expenditure and
forecasting of outturn and advise Departmental Accountable
Officers on the management of authorised budgets.
Background
7. The Scottish Executive's budget proposals for the
Expenditure Review period are set out in its Annual
Expenditure Report. Budgets for Departments (and other
direct funded bodies and office-holders) are authorised by
the Parliament on an annual basis by Budget Act and any
subsequent Amendment Orders. The Budget Act (as amended)
specifies the purpose for which resources may be used and
the maximum amount of related expenditure and applicable
receipts. Departmental budgets are disaggregated and
allocated to business areas together with responsibility
for management and monitoring.
8. The guidance in this note relates to budgets for
programme expenditure and income. The Administration Costs
Manual (electronic copies available from the Finance
Administration & Pay Policy Team) provides guidance and
instruction on matters relating to the administration costs
of the Scottish Executive, and in particular their
monitoring and control through the use of information
provided by the Scottish Executive accounting system.
Management
9. Individual budget managers are responsible for
ensuring that financial planning is carried out effectively
and efficiently and that sufficient resources - but no more
- are bid for in the Spending Review process. Outside the
Spending Review process budget managers should ensure that
all proposals with resource implications (or other
financial considerations) are cleared with their Finance
Teams in line with the guidance on involving Finance
included in the section on the "Roles and Involvement of
Finance".
10. Budget managers should be aware of the End Year
Flexibility (EYF) arrangements which allow for unexpended
provision to be carried forward in part or in full to the
following financial year subject to the agreement of the
relevant Accountable Officer and responsible Minister.
However budget managers should seek the advice of their
Finance Team before entering into any future year
commitments which will make use of EYF.
11. Budget managers should also be familiar with the
"Basic Points for Financial Management" set out in the
Annex.
Monitoring
12. Individual budget managers are responsible for
monitoring expenditure and income throughout the financial
year. Continuous monitoring and accurate forecasting of
outturn are essential in order to identify significant
deviations from plans and ensure that any necessary
corrective action is taken as quickly as possible e.g.
reducing or postponing expenditure, transfers between
budgets by means of a Budget Amendment Order or by
virement. However, payments which are due should not be
delayed; under resource accounting expenditure and income
are charged or credited to budgets in the period to which
they relate. Departmental Finance Teams will commission
monthly profiles of estimated expenditure and receipts from
budget managers prior to the beginning of each financial
year and at key stages during the financial year. The
monthly profiles and re-profiles will be loaded into the
Scottish Executive accounting system to enable planned
expenditure and receipts to be compared with actuals.
13. Budget managers should inform their Finance Teams
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.
14. Departmental Finance Teams should monitor overall
expenditure and forecasting of outturn and advise
Departmental Accountable Officers on the management of
authorised budgets. This should include reports on an ad
hoc basis throughout the financial year and at key stages
e.g. following re-profiling exercises and prior to any
Budget Amendment Order. The reports should keep Accountable
Officers informed of the position on the overall budget for
which they are responsible and of any significant
developments and, where appropriate, seek views on
proposals for dealing with pressures and savings.
15. The Financial Reporting Unit has responsibility for
the preparation of quarterly monitoring reports to
Management Group and the Minister for Finance and Public
Service Reform. These reports draw on information provided
by Finance Teams. Forecasts of outturn and explicit
explanations of variances are a critical element of these
reports, which are intended to play a key role in the
overall financial management of the Scottish Executive,
informing in-year spending decisions and the reallocation
of resources as appropriate.
Back to top
Page Published/ Updated on: 21st December 2001