Guidance

Public spending – the accountability framework

Published 24 August 2021

The public, and Parliament acting on their behalf, have a right to expect that funds raised using powers agreed by Parliament will be used for the purposes intended. Public servants have a demanding fiduciary duty to use public money responsibly.

All spending within central government is subject to the principles set out in Managing Public Money (MPM), which is the core document for anybody in central government handling public funds. The overall planning and performance framework is described in more detail here.

Much of what Managing Public Money requires is just good common sense, or sound financial management. There are also some specific requirements to meet the expectations of Parliament, as well as ensuring that policies, programmes and projects work smoothly and serve their intended purposes.

Managing Public Money

Managing Public Money is amended periodically as the need arises, though the main principles are timeless. Where new or amended requirements are introduced between publications, these will be communicated through a “Dear Accounting Officer” (DAO) letter

DAO letters

The Government Functional Standard GovS 006: Finance provides further useful guidance for the effective management and use of public funds.

Accounting Officers

The accounting officer in a public sector organisation is the person who Parliament calls to account for the stewardship of its resources.

Each organisation in central government must have an accounting officer, who has personal responsibility for the propriety, regularity, value for money and feasibility of spending and the use of resources. The accounting officer is usually the senior official in the organisation, supported by the relevant board. In relation to departments, the accounting officer is usually the permanent secretary.

A list of accounting officers appointed by HM Treasury is available here.

Templates for the appointment of accounting officers are available here.

Guidance for accounting officers on fulfilling their responsibilities is available here.

Guidance on framework documents, which set out the governance and accountability relationships between arm’s length bodies and sponsor departments, are available here.

Accountability to Parliament

The Committee of Public Accounts (PAC) holds regular public hearings, usually on value for money studies produced by the National Audit Office (NAO). The accounting officer(s) of the relevant institution(s) to attend as witness(es), sometimes accompanied by appropriate officials.

The Government responds to reports from the PAC through a Treasury Minute.

Departments’ progress on implementing the recommendations of the PAC is reported on twice a year in progress reports.

Accounting Officer Assessments

Each accounting officer must make sure that the actions of the public organisation they lead meet the four accounting officer standards of regularity, propriety, value for money and feasibility set out in Managing Public Money. The accounting officer should personally approve, in advance, all significant initiatives, policies, programmes and projects (taking account of any internal delegated authorities). One straightforward method of analysis of whether the standards have been met is a systematic written accounting officer assessment.

An accounting officer assessment should always be produced for projects or programmes which form part of the Government’s Major Projects Portfolio (GMPP), and a summary of the key points from the assessment should be published.

AO assessments – guidance

AO assessments – collection page

Directions

Where an accounting officer does not think that a proposal meets the four standards set out in Managing Public Money, they can seek a direction from their minister (or board if appropriate).

When a direction is made, the accounting officer should arrange for it to be published on gov.uk as soon as possible, unless there is a broader public interest in keeping it confidential. All directions are copied to the Comptroller and Auditor General who will inform the PAC.

A list of directions since 2011 is available here.

Accounting Officer System Statements

All the main central government departments are expected to prepare an Accounting Officer System Statement (AOSS). The purpose of an Accounting Officer System Statement is to provide to Parliament a single statement setting out all of the accountability relationships and processes within a department, making clear who is accountable for what, from the principal accounting officer down. It should ensure accountability for all of the public money and other public resources which fall within an accounting officer’s responsibilities.

Accounting Officer System Statements should be revisited annually as part of the process for providing an Accounting Officer with a Governance Statement for the Annual Report and Accounts (see Annex 3.1 of Managing Public Money).

AOSSs – collection page

Delegated Authorities

All central government departments and their ALBs are delegated spending authority up to certain limits by Parliament. All spending over those limits must be approved by the Treasury, as must all spending within those limits that is novel, contentious, or repercussive.

The delegated authority limits of central government departments are set by the Treasury directly; the delegated authority limits of ALBs are negotiated between the ALB and department and must be approved by the Treasury. The limits are formalised in a Delegated Authority Letter, which must be completed in a standard format and a template for which can be found on the MPM page here.

Delegated Authority Letters form an important part of the accountability landscape, and sit alongside AOSSs as a means by which Principal Accounting Officers (responsible for a department and its ALBs) assure themselves that the system for which they are responsible observes MPM principles.

The template Delegated Authority Letter details a category of payment known as special severance. No spending authority can ever be delegated to departments or ALBs to make special severance – such payments must always be approved by HMT.

A template for approval can be found here, and guidance on the special severance process can be found here.