GovS 006 Finance

Government
Functional Standard
GovS 006: Finance
Version: 2.0
Date issued: September 2021 Approved
Government Functional Standard
This functional standard is part of a suite of management standards that promotes consistent
and coherent ways of working across government, and provides a stable basis for assurance,
risk management and capability improvement.
The suite of standards, and associated guidance, can be found at GOV.UK/government/
collections/functional-standards.
Functional standards cross-refer to each other where needed, so can be confidently
used together.
They contain both mandatory and advisory elements, described in consistent language
(see the table below).
Term Intention
shall denotes a requirement: a mandatory element.
should denotes a recommendation: an advisory element.
may denotes approval.
might denotes a possibility.
can denotes both capability and possibility.
is/are denotes a description.
The meaning of words is as defined in the Shorter Oxford English Dictionary, except where
defined in the Glossary in Annex B.
It is assumed that legal and regulatory requirements are always met.
Version 2.0 of GovS 006: Finance replaces the previous edition [version 1.1 dated
February 2020] and has the same purpose, scope and intent. The main changes, which
reflect input from users of the previous version, are as follows:
• new content on budget holders and finance business partners, knowledge assets, career
frameworks, risk management centre of excellence and finance board pack reporting
• alignment with the wider suite of functional standards, in terms of definitions used,
structure and references to these standards
© Crown copyright 2021
Produced by the Government Finance Function
You may re-use this information (excluding logos) free of charge in any format or medium,
under the terms of the Open Government Licence. To view this licence, visit
http://www.nationalarchives.gov.uk/doc/open-government-licence/ or email:
psi@nationalarchives.gov.uk
Where we have identified any third party copyright material you will need to obtain
permission from the copyright holders concerned.
ii
Version 2.0 – September 2021 GovS 006: Finance
Contents
1. About this government functional standard 2
1.1 Purpose of this government standard 2
1.2 Scope of this government standard 2
1.3 Government standards references 3
2. Principles 3
3. Context 4
3.1 Introduction 4
3.2 Parliament 4
3.3 Her Majesty’s Treasury 4
3.4 Public Expenditure Statistical Analyses 5
3.5 Office for Budget Responsibility 6
3.6 Office for National Statistics 6
4. Governance 7
4.1 Governance and Management Framework 7
4.2 Strategy and planning 9
4.3 Risk management and assurance 10
4.4 Decision making 11
4.5 Roles and accountabilities 13
5. Medium-term planning 17
5.1 Planning and performance framework 17
5.2 Spending reviews 17
5.3 Strategic plans 17
5.4 Public Value Framework 18
5.5 Other fiscal events 18
6. Annual planning 19
6.1 Planning and budgeting 19
6.2 Supply estimates 19
7. Financial processes 22
7.1 Financial processes 22
7.2 Data 26
8. Reporting 27
8.1 Introduction 27
8.2 Management accounting 27
8.3 Financial accounting 28
8.4 Other external reporting 30
iii
9. Enablers 32
9.1 Management information, analytics and reporting 32
9.2 Centres of excellence 33
A. References 35
B. Glossary 38
C. Key documentation 44
D. Government financial reporting landscape 46
iv
1 Structure and scope of this standard
Principles
2
3 Context
Governance
4 Governance and management framework, Strategy

and planning, Risk management and assurance,
Decision making, Roles and accountabilities
Medium Planning and performance framework, Spending

5 term review, Strategic plans, Public value framework,
planning Other fiscal events
Annual
6 planning
Planning and budgeting, Supply estimates
Purchase to pay, Order to cash, Cash

Financial management, Grants administration, Payroll,
7 processes Expenses, Inventory, Investment appraisal,
Project accounting, Tax, Non-current assets,
Debt management
Management accounting, Financial

8 Reporting
accounting, Other external reporting
9 Enablers
Figure 1 Core Structure: Finance Standard
1
1. About this 1.2 Scope of this government

standard
government
The standard applies to the planning,
functional standard delivery and management of finance
activities, including planning, risk
management, performance, financial
1.1 Purpose of this government
control, internal and external reporting.
standard
This standard applies to government
The purpose of this government standard departments, their arm’s length bodies and
is to set expectations for the effective some public corporations. Unless otherwise
management and use of public funds. specified, where a non-central government
This standard provides direction and entity is required to comply with Managing
guidance for: Public Money [1], it should also comply
with this functional standard. Organisations
• permanent secretaries, accounting
that fall outside central government can be
officers, directors general, chief
required, on a case by case basis, to apply
executive officers of arm’s-length bodies
this standard through instruments such as
• anyone with responsibility for finance, articles of association or loan and guarantee
or financial management, whether or not agreements.
they sit in a finance role Other public sector organisations
• finance operations, decision support might find this standard useful to
or reporting and control teams support benchmarking and continuous
• assurance and audit bodies, for testing improvement.
best practice The structure of the standard is shown
in Figure 1.
This functional standard should be used
with reference to other central Government Note: An organisation, in the context of
Finance Guidance, particularly Managing government functional standards, is the
Public Money [1], which explains the fiduciary generic term used to describe a government
duties of those handling public resources. department, arm’s-length body, or any other
entity that is identified as being within scope
of a functional standard.
2
1.3 Government standards 2. Principles

references
Those engaged in the management of
The following standards are directly government finance shall:
necessary for the use of this standard:
1. ensure financial objectives are aligned
• GovS 002, Project Delivery to government policy and organisational
• GovS 003, Human Resources objectives
• GovS 004, Property 2. operate in line with Managing Public
Money [1] and the demanding
• GovS 008, Commercial
expectations of all public services
• GovS 010, Analysis
3. ensure decisions and spend are aligned
• GovS 013, Counter Fraud to the relevant controls and guidance as
• GovS 014, Debt signposted in this standard
• GovS 015, Grants 4. operate openly, as is compatible with

the requirements of their business
A functional standard supports achievement
of the outcomes sought by an organisation. 5. ensure governance and management
It sets expectations for what needs to be frameworks are proportionate and
done and why relating to the functional work appropriate to the work and levels of
within its scope, in order to achieve those prevailing risk
organisational outcomes. 6. ensure accountabilities and
Note: For expectations relating to responsibilities are defined, mutually
management of a function across consistent, and traceable across all
government, and management of levels of management
functional standards, please see GovS 001, 7. provide timely information to enable
Government Functions. business leaders to monitor their
financial obligations and make decisions
8. ensure continuous improvement is
promoted through capturing, sharing
and using experience and lessons
learned
9. ensure work is undertaken in multi-
disciplinary teams and is assigned to
people who have the required capability
and capacity
10. ensure public service codes of conduct
and ethics and those of associated
professions are upheld
3
3. Context The Public Accounts Committee (PAC)

has an explicit remit to examine financial
accounts and scrutinise the value for
3.1 Introduction money of public spending and to hold
the government and its public servants
This section provides essential background
to account for the quality of its past
information for the use of this functional
administration. Its remit is to focus on
standard.
how all aspects of finance and public
The government has the responsibility to expenditure has been undertaken (rather
control and account for public expenditure. than the merits of individual policies which
Understanding the relationship between is the responsibility of departmental select
the government, acting on behalf of the committees).
Crown, and Parliament, representing the
Parliament controls departments’ use of
public, is central to how public finances
income and receipts, just as it controls the
are managed. While ministers seek to
raising of tax, since both may finance use
implement government policies and deliver
of public resources. Departments should
public services through their organisations,
ensure that all income and associated cash
they can only do so when Parliament has
is recorded in full and collected promptly.
granted the right to raise, commit and
spend resources. Unless otherwise authorised, cash receipts
shall be paid into the Consolidated Fund.
Note: Refer to the Cabinet Manual [26] and
to Chapter 1 of Managing Public Money [1]
which sets out the key responsibilities of
3.3 Her Majesty’s Treasury
ministers, Parliament, HM Treasury, and Her Majesty’s Treasury (HM Treasury) is
departments. the government’s finance and economics
ministry, which maintains control of public
3.2 Parliament spending and sets the UK’s economic
policy, working to achieve strong and
It is for Parliament to approve the taxes
sustainable economic growth.
levied for government expenditure, although
in practice this is controlled by the House of HM Treasury has a statutory role and is
Commons. The House of Commons claims responsible to Parliament for the control of
exclusive rights and financial privileges public resources and meeting parliamentary
over the House of Lords in relation to expectations. HM Treasury ensures that
finance matters. The government must departments have adequate legal authority
ask the House of Commons for the money to spend public resources through:
and powers it needs to carry out their 1. Legislation and policy approval
policies. This is done through annual supply
• all legislation with expenditure
estimates (see 6.2) in accordance with its
implications are required to have the
financial privilege in Parliament.
support of HM Treasury
Parliament, particularly the House of
Commons, scrutinises and provides • policy decisions that are novel,
oversight over government activity contentious or repercussive with
and expenditure through the select financial implications shall be cleared
committee system, and has extensive with HM Treasury
powers to examine policies, expenditure, 2. Accounting officers (see 4.5.2)
administration and delivery of services, • responsibility for the appointment of
holding the government to account. departmental accounting officers
4
• the Treasury Officer of Accounts assists [33] to take account of the public sector
accounting officers in fulfilling their duties context
HM Treasury sets out how it seeks to meet • sets accounts directions for the
Parliament’s expectations for the control of different kinds of central government
public resources in the document Managing organisations whose accounts are laid
Public Money [1]. in Parliament
Managing Public Money sets out the main • may also work through the Cabinet
principles for dealing with resources in UK Office to set certain requirements
public sector organisations and the fiduciary applicable across central government
duties of those handling public resources
With reference to the fiscal targets, i.e.
to work to high standards of probity and
targets for economic performance and
to work transparently and in harmony with
public finance management, HM Treasury
Parliament. Policy and guidance for the
sets spending limits for departments
accounting and control of government
for future years (up to the length of a
finances are owned by HM Treasury.
Parliament) through spending reviews
Parliament requires HM Treasury to make (see 5.2) which form the basis for annual
sure that: budgets (see 6.1). HM Treasury then
• departments use their powers only as it oversees departments’ use of their budget
has intended allocations, although departments have
considerable freedom about how they
• revenue is raised, and the resources
organise, direct and manage these budget
so raised spent, only within the agreed
allocations.
limits
HM Treasury is required to: 3.4 Public Expenditure
• set the ground rules for the Statistical Analyses
administration of public money
The Public Expenditure Statistical Analyses
• account to parliament for doing so (PESA) is prepared for Parliament by HM
HM Treasury: Treasury. It includes a range of information
on public spending statistics including:
• designs and runs the financial planning
system (see sections 5 and 6) and • departmental budgets – the key central
oversees the operation of the agreed government departmental budgets
multi-year budgets to meet ministers’ that the government uses to control
fiscal policy objectives spending. Departments have separate
resource and capital DEL budgets
• oversees the operation of supply
(see 4.4.2)
estimates (see 6.2) through which
departments obtain authority to spend • by function – public spending is shown
year by year against ten functions (e.g. education,
health, defence) that are then further
• sets the standards to which central
divided into more detailed sub-functions
government organisations publish
(education is split into categories such
annual reports and accounts (see 8.3.4)
as primary and secondary)
in the Financial Reporting Manual
(FReM) [5]. This adapts International • by economic category – this shows
Financial Reporting Standards (IFRS) spending against categories such as
pay, procurement and grants
5
Statistics in most tables cover five years

of outturn and also any years that the
spending review (see 5.2) spans.
Note: See Government Financial Reporting
Review [11] for further detail on Public
Expenditure Statistical Analyses and GOV.UK
for the latest release.
3.5 Office for Budget

Responsibility
The Office for Budget Responsibility (OBR)
has a mandate to provide independent and
authoritative analysis of the UK’s public
finances. One of its key roles is to evaluate
government’s performance against its
fiscal targets.
3.6 Office for National Statistics

The Office for National Statistics (ONS) is
the executive office of the UK Statistics
Authority, a non-ministerial department
which reports directly to the UK Parliament.
It is responsible for the collection and
publication of statistics related to the
economy, population and society of the UK.
6
4. Governance
Governance
Governance Risk
and Strategy and management Decision Roles and
management planning and making accountabilities
framework assurance
4.1 Governance and The governance of financial management

within an organisation should be an
Management Framework integrated part of that organisation’s overall
governance. Each public sector organisation
4.1.1 Governance framework
should establish governance arrangements
Governance comprises prioritising, appropriate to its business, scale and
authorising, directing, empowering and culture. The framework should combine
overseeing management, and assuring and efficient decision making with accountability
reviewing performance. and transparency. In doing so, public sector
For each public sector organisation, a organisations should be guided by the
governance framework shall be: Corporate Governance Code [2].
• defined and established which complies Each public sector organisation should have
with government, HM Treasury and clear leadership, normally provided by a
departmental policies and directives and board (see 4.1.2).
with this standard It is good practice for arm’s length bodies to
• referenced from the respective use similar principles. In many arm’s length
Accounting Officer System Statement [28] bodies some structural features, such as
board composition, derive from statute but
Public sector organisations shall operate
considerable discretion may remain.
within the rules set by HM Treasury
(see 3.3) and in particular with Managing Note: Chapter 1, Managing Public Money [1]
Public Money [1] which sets out the main sets out the principles. Chapter 4 sets out the
principles for dealing with resources in governance and management to be applied
UK public sector organisations and the within public sector organisations.
key requirements of spending: regularity, Within the expectations of Parliament,
propriety, value for money and feasibility. and subject to the overall control and
Appropriate delegation of responsibilities direction of their ministers, departments
and effective mechanisms for internal have considerable freedom about how they
reporting should ensure that performance organise, direct and manage the resources
can be tracked. at their disposal. Each accounting officer
in each department should act according
to their ministers’ instructions, and be
supported by their boards, to control and
account for the department’s business.
7
Within each department, there should Note: For further details refer to Managing
be adequate delegations, controls and Public Money [1], Box 4.2: key decisions
reporting arrangements to provide for boards.
assurance to the board, the accounting Note: Box 4.3 in Managing Public Money [1]
officer and ultimately ministers about what sets out the essentials of effective internal
is being achieved, to what standards and decision making.
with what effect. These arrangements
should provide timely and prompt 4.1.2 Departmental boards
management information to enable plans to A departmental board, chaired by the senior
be adjusted as necessary. minister, should lead each department.
Financial decisions should be made and The board should support:
approvals given in a timely manner in
• ministers and senior officials in directing
accordance with the organisation’s financial
the business of the department in as
governance and management framework,
effective and efficient a way as possible,
financial management controls (including
with a view to the long-term health and
delegations of authority), government
success of the department
policy and the organisation’s strategy and
strategic plan (see 5.3). • the accounting officer for the discharge
Alternative choices of policies, programmes of obligations set out in Managing
and projects shall be agreed against Public Money [1] for the proper conduct
defined criteria and in consultation with of business and maintenance of ethical
stakeholders and subject matter experts standards
in line with HM Treasury requirements The board may choose for its committees
(see Green Book [17], GovS 002, Project to carry out some of its activities. As a
Delivery and GovS 008, Commercial). minimum, there should be committees
In maintaining governance arrangements, responsible for Audit and Risk (the
key decisions for boards can include, but responsibilities of which shall include
are not limited, to: reviewing the comprehensiveness of
assurances and integrity of financial
• delegations and arrangements for
statements), and nominations and
reporting performance
governance (the responsibilities of
• procedures and processes for business which shall include ensuring there are
decision making satisfactory systems for identifying and
• scrutiny, challenge and control developing leadership and high potential,
of significant policies, initiatives, scrutinising the incentive structure and
investments and projects succession planning for the board and the
senior leadership of the department, and
• risk appetite and risk control procedures scrutinising governance arrangements).
• control and management of associated Where part of the business of the
arm’s-length bodies and other department is conducted with and through
partnerships arm’s-length bodies, assurance should be
• accountability – to the general public, to provided to the department’s board that
staff and other stakeholders there are robust governance arrangements
with each arm’s-length body’s board.
These arrangements should set out the
terms of their relationship and explain how
8
they should be put in place to promote 4.1.4 Joint ventures

high performance and safeguard propriety Where investment takes the form of a joint
and regularity. venture (JV), there are a range of factors
Note: Refer to Managing Public Money [1] and which the public sector should consider in
Corporate Governance in Central Government determining whether a joint venture is the
Departments: Code of Good Practice [2]. best delivery model for its infrastructure
and public services needs and one which
4.1.3 Arm’s-length bodies is likely to meet its objectives in the most
Where part of the business of the effective and efficient way.
department is conducted with and through Where properly constructed and managed,
arm’s-length bodies, the department’s public sector organisations can use private
board should ensure that there are robust finance arrangements to construct assets
governance arrangements with each arm’s- and/or deliver services with good value for
length body’s board. money. Structured arrangements where
Where part of the business of the the private sector puts its own funds at
department is conducted with and through risk can help deliver projects on time and
arm’s-length bodies, assurance should be within budget.
provided to the department’s board that Note: Private Finance 2 (PF2) replaced
there are robust governance arrangements the Private Finance Initiative (PFI) as the
with each arm’s-length body’s board. government’s preferred approach to public
The framework document (or equivalent) private partnerships in 2012. In 2018 the
agreed between an arm’s-length body and government announced that it would no
its sponsor always provides for the sponsor longer use PF2; existing PFI and PF2
department to exercise meaningful oversight contracts shall continue [10].
of the arm’s-length body’s finance, risk, Note: Chapter 13 of the Consolidated
governance, strategy and performance, Budgeting Guidance [4] sets out the purpose
including pay arrangements and/or major of PFI and PF2, and how to record and
financial transactions, e.g. by monthly budget for these, and similar vehicles.
returns, standard delegations and exception
reporting. The sponsor department’s Note: Refer to HM Treasury Joint Ventures: a
accounts consolidate those of its arm’s- guidance note for public sector bodies forming
length bodies so its accounting officer must joint ventures with the private sector [22].
be satisfied that the consolidated accounts For joint ventures, GovS 004, Property and
are accurate and not misleading. GovS 008, Commercial shall be followed.
Note: For further details refer to Managing Note: Refer to the Government Financial
Public Money [1] – 3.8 Arm’s-length bodies, Reporting Manual [5], including for details
Corporate Governance in Central Government of the applicability of IFRS 3: Business
Departments [2] – Chapter 6, Arm’s length Combinations, IAS 16: Property, Plant and
bodies and UKGI: UK Government arm’s- Equipment, IAS 17: Leases and IAS 36:
length bodies [42]. Impairment of Assets.
4.2 Strategy and planning

Public sector organisations take both
medium-term and shorter-term approaches
to planning. These are covered separately in
Sections 5 and 6 of this functional standard.
9
4.3 Risk management and of governance, risk management,

and internal controls, including the
assurance effectiveness of the first and second
4.3.1 Risk management framework lines of defence
The board of each public sector Internal Audit shall operate in line with the
organisation should actively seek to Public Sector Internal Audit Standards [29].
recognise risks and direct the response Additional assurance can be provided
to them. It is for each accounting officer, by other independent bodies such as
supported by the board, to decide how. the National Audit Office (see 4.3.5)
The board and accounting officer should be whose Comptroller and Auditor General
supported by an Audit and Risk Assurance is responsible for providing independent
Committee, who should provide proactive external audit.
support in advising on, and scrutinising, the The work of internal and external
management of key risks and the operation assurance providers should be planned
of internal controls. The Audit and Risk to minimise disruption to other work,
Assurance Committee should also support avoiding overlaps with other assurance
the accounting officer in drawing up the activities and duplication of effort, whilst
governance statement(s) which is published remaining rigorous and meeting the needs
in each organisation’s annual report and of stakeholders. Where assurance includes
accounts (see 8.3.4). formal review activity, the customer for the
Organisations should have a defined and review should be clearly identified.
consistent approach to assurance as part The requirements of the Orange Book:
of their risk management framework. This Management of Risks – Principles and
should include giving sufficient, continuous Concepts [16], should be met.
and reliable assurance on financial
stewardship, evaluating the management Note: For further details refer to Managing
of major risks to organisational success Public Money [1] annex 3.1: the governance
and the delivery of improved, cost-effective statement, Assurance Frameworks Guidance
public services. [15], the Orange Book: Management of Risks –
Principles and Concepts [16] and the Audit and
Assurance should ensure at least three Risk Assurance Committee Handbook [30].
separate and defined levels are applied that
are proportionate to the risk and value of 4.3.2 Assurance mapping
the activity, such as: Assurance mapping is a mechanism for
• first line: carried out by, or on behalf of, linking monitoring and reporting from
the operational management that own various sources to the risks that threaten
and manage risk to ensure appropriate the achievement of an organisation’s
standards are being used outcomes and objectives. They can be at
• second line: undertaken by, or on various levels, dependent upon the scope of
behalf of, those who have no first line of the mapping.
defence responsibilities, to ensure the Note: Annex A: Process review in Assurance
first line is properly designed, in place, Frameworks Guidance [15] sets out an
and operating as intended overview of the process.
• third line: carried out by internal audit,
to provide senior management with an
objective opinion on the effectiveness
10
4.3.3 Counter fraud of all government departments and many

Fraud is a significant risk to the UK public other public sector bodies and carries out
sector and has far-reaching financial and value-for-money examinations that assess
reputational consequences. the economy, efficiency and effectiveness
with which public money has been deployed
In addition, serious and organised economic in selected areas of public business.
crime is a national security issue.
Note: See Managing Public Money [1]
Government organisations shall follow Chapter 1, Responsibilities, Annex 1.1,
GovS 013, Counter Fraud, when managing The Comptroller and Auditor General and
the risk of fraud, bribery and corruption. https;//www.nao.org.uk/ [46] for further detail.
Note: For further details refer to
https://www.gov.uk/government/groups/ 4.4 Decision making
counter-fraud-standards-and-profession [48]
4.4.1 HM Treasury and Cabinet Office
4.3.4 Internal audit controls
A professional, independent and objective The purpose of HM Treasury and Cabinet
internal audit service is one of the Office spending controls is to help public
key elements of good governance, as sector organisations reduce unnecessary
recognised throughout the UK public sector. spend, to achieve value for money and to
It helps an organisation accomplish its encourage cross-government collaboration.
objectives by bringing a systematic,
disciplined approach to evaluate 4.4.1.1 HM Treasury controls
and improve the effectiveness of risk Departments shall obtain HM Treasury
management, control and governance consent before undertaking expenditure or
processes. making commitments which could lead to
Note: For further details refer to Public Sector expenditure. HM Treasury may agree general
Internal Audit Standards [29]. approvals for each department subject to
delegated limits and/or exclusions.
4.3.5 National Audit Office Each department should define and agree
The National Audit Office (NAO) scrutinises with each of their arm’s-length bodies a
public spending on behalf of Parliament, similar set of delegations appropriate to
auditing financial statements to support their business.
Parliament to hold government to account HM Treasury approval is required if a
and improve public services. transaction is in excess of the delegated
The Comptroller and Auditor General authority, or if transactions which set
(C&AG) leads the National Audit Office and precedents, are novel, contentious or could
is an officer of the House of Commons. cause repercussions elsewhere in the
Supported by staff of the National Audit public sector.
Office, the Comptroller and Auditor General Note: For further details surrounding
is the independent auditor of nearly all delegated authorities and approvals refer
central government institutions. Using to Managing Public Money [1], Chapter 2,
extensive statutory rights of access to Use of Public Funds and Annex 2.2,
records, the Comptroller and Auditor Delegated Authorities.
General provides direct advice and
assurance to Parliament. The Comptroller
and Auditor General certifies the accounts
11
4.4.1.2 Cabinet Office controls Note: For further details, including to scope,
HM Treasury may delegate certain responsibilities and breaches, refer to
controls to the Cabinet Office. Cabinet https://www.gov.uk/government/collections/
Office expenditure controls require central cabinet-office-controls
government bodies to obtain expenditure 4.4.2 Budgetary control
approval from Cabinet Office ministers,
based on professional advice from relevant 4.4.2.1 Budgetary allocation
functions, before certain expenditure is Spending by organisations should be
made or committed. Organisations should split into:
take advice from relevant functions well in
advance of planned expenditure, and comply • departmental expenditure limits (DEL)
with expenditure controls guidance [9]. • annually managed expenditure (AME)
Departments and arm’s-length bodies shall All spending is deemed by HM Treasury to
adhere to these controls as part of the wider be departmental expenditure limits (DEL)
approvals approach set out in Managing unless agreed by the Chief Secretary to
Public Money [1]. The objectives of the the Treasury.
Cabinet Office spend controls [9] are to:
Annually managed expenditure (AME)
• improve the cross-government spending includes areas of spending that
approach to spending HM Treasury deems unpredictable, difficult
• improve capabilities and efficiency to control, and of a size that departments
within government organisations, would have difficulty managing within
for example, commercial and departmental expenditure limits budgets.
technical expertise The Consolidated Budgeting Guidance
• increase savings by promoting reuse [4] is produced annually for government
of technology and discouraging departments and sets out the budgeting
wasteful spending framework that shall be applied to
expenditure control.
• support implementation of government
policies 4.4.2.2 The control of departmental
expenditure limits (DEL)
There are eight categories of Cabinet Office
controls: Departmental expenditure limits shall be
made up of the following elements, which
• advertising, marketing and
are subject to HM Treasury management:
communications
• Resource DEL (RDEL) excluding
• commercial control and dispute
depreciation; effectively current spend
disclosure
and includes an administration budget
• digital and technology for spending on non-frontline services
• consultancy • Capital DEL (CDEL): spending on items
• property, including facilities deemed capital in nature
management • Depreciation: a ring-fenced budget
• redundancy and compensation within RDEL
• external recruitment Only total Resource DEL and total Capital

DEL are control totals for the purposes of
• learning and development Parliament and estimates.
12
4.4.2.3 The control of annually managed • Government Finance Global Design

expenditure (AME) Principles [12]
Annually managed expenditure (AME) • Sustainability Reporting Guidance [31]
spending is related to the cost of delivering
• Greening Government Commitments [32]
policies which are demand-led or
where expenditure is otherwise volatile, See Annex C for a fuller description of these
unpredictable and large compared with the key documents.
department’s total budget, which would
4.4.3.2 Externally set requirements
make it difficult for departments alone to bear
the risks associated with variations in spend. • International Financial Reporting
Standards (IFRS) as adapted or
Departments and HM Treasury
interpreted for the public sector [33]
spending teams should have a common
understanding of the planned levels, and • European System of National and
risks of variance to plans, of: Regional Accounts (ESA2010) [34]
• resource budget AME • Companies Act 2006 [35]
• capital budget AME • Charities Statement of Recommended
The Consolidated Budgeting Guidance Practice (SORP) [36]
provides clear steers on budgeting
treatment, budgeting adjustments and 4.5 Roles and accountabilities
actions to take if there is going to be a
breach of any of the control totals. The 4.5.1 Introduction
guidance (Chapter 2, Budget Exchange) Roles and accountabilities for those
also details the rules, controls and approval contributing to finance activities shall be
processes to budget exchange DEL defined in the organisation’s governance
underspends forward one year into the next. and management framework and assigned
Note: Refer to Chapter 1, Consolidated to people with appropriate seniority, skills
Budget Guidance [4] for the composition of and experience. This should include, but
budgets and control totals. is not limited to, the activities, outputs or
outcomes they are responsible for, and the
4.4.3 Other requirements for the person they are accountable to.
management and reporting of The Finance Career Framework sets
public finances out clear and agreed cross-government
Those accountable for the management definitions of the core finance roles found
and reporting of public finances shall in most departments/organisations to help
comply with the most current version guide consistent job design, recruitment
of the following internal and externally and selection; outlines the skills and
produced documents. experiences needed to be effective in these
roles to support our professionalisation
4.4.3.1 Internally set requirements agenda; provides a baseline against
• Managing Public Money [1] which we can capture data and measure
• Supply Estimates Guidance Manual [6] progress – at individual, team, department
and function level; and provides a clear
• Consolidated Budgeting Guidance [4] framework to help individuals shape their
• Government Financial Reporting finance career plans at any stage.
Manual [5]
13
Note: Managing Public Money [1] includes the arm’s-length bodies and third-party delivery
definition of a range of roles connected with partners. Accounting Officer System
finance operating at different levels. Statements should form an important
Note: Refer to The Career Framework, at part of an accounting officer’s personal
https://gff.civilservice.gov.uk/the-career- responsibility to account to Parliament for
framework/ the public resources under his or her control.
Each accounting officer shall manage
4.5.2 Accounting officer and control the resources used in his
The permanent head of a government or her organisation. The governance
department is usually its rincipal accounting statement, a key feature of the
officer. An organisation’s accounting officer organisation’s annual report and accounts
is accountable (via a principal accounting (see 8.3.4), manifests how these duties
officer where appropriate) to Parliament have been carried out in the course of the
and the public for the stewardship of year. It has three components: corporate
public resources, ensuring they are used governance, risk management and, in the
effectively and to high standards of probity. case of some departments, oversight of
Each organisation in central government certain local responsibilities.
shall have an accounting officer, who has The accounting officer:
personal responsibility for the propriety and • should be satisfied, and shall sign,
regularity of spending. They shall assure that the accounts, annual report and
Parliament and the public of probity in the governance statement have been
use of resources. The principal accounting properly prepared to reflect the business
officer generally appoints the most senior of the organisation
executive in the arm’s-length bodies within
the department’s ambit as an accounting • shall personally approve the voted
officer. Chapter 3 of Managing Public budget limits and the associated
Money [1] explains the role and personal estimates memorandum (see 6.2)
responsibilities of accounting officers. • should ask for a formal written direction
The Corporate Governance Code [2] to proceed if a minister decides to
makes clear, the minister in charge of the continue with a course the accounting
department looks to the department’s officer has advised against
accounting officer to delegate within A formal written direction should be
the department to deliver the minister’s published on GOV.UK as soon as possible,
decisions and to support the minister in unless there is a broader public interest in
making policy decisions and handling public keeping it confidential. If confidentiality is
funds. The equivalent senior leaders of other deemed necessary, it is good practice for
public sector organisations are expected to the accounting officer to write to the Chair
perform a similar role. of the Public Accounts Committee (and
Accounting Officer System Statements relevant departmental select committee)
[28] should be produced by all central to explain the reasons for this, and provide
government departments and cover all an expectation for when that need for
of the accountability relationships and confidentiality is likely to fall away.
processes within that department, making Accounting officers can be called to
clear who is accountable for what at all Parliament for the organisation’s use of
levels of the system from the accounting public funds. This is normally through the
officer down, including relationships with Public Accounts Committee (see 3.2). For
14
example, the Public Accounts Committee Note: 3.4 Advice to ministers of Managing
may hold public hearings on the accounts Public Money [1] explains the role of
of central government organisations accounting officers giving advice to ministers.
laid in Parliament. When a hearing is
scheduled, the Public Accounts Committee 4.5.3 Senior officer responsible for
normally invites the accounting officer(s) finance within an organisation
of the relevant institution(s) to attend The senior officer responsible for finance
as witness(es). The Treasury Officer of within an organisation is responsible to
Accounts, who has policy responsibility for the accounting officer (or equivalent) for
the guidance of Managing Public Money [1], leadership of financial responsibilities within
should also be in attendance. the organisation. He or she should ensure
Each accounting officer should make sure that the information on which decisions
that the actions of the public organisation about the use of resources are based
they lead meet the four accounting officer is reliable.
standards of regularity, propriety, value for The senior officer responsible for finance
money and feasibility set out in Managing in a public sector organisation shall be
Public Money [1]. The accounting officer professionally qualified and should:
should personally approve, in advance, all • have board status equivalent to other
significant initiatives, policies, programmes board members
and projects (taking account of any internal
delegated authorities). One straightforward • report directly to the permanent head of
method of analysis of whether the standards the organisation
have been met is a systematic written • be a member of the senior leadership
accounting officer assessment. team, the management board and
An accounting officer assessment the executive committee (and/or
should always be produced for projects equivalent bodies)
or programmes which form part of the • signoff accounting officer assessments
Government’s Major Projects Portfolio prior to their submission to the
(GMPP), and a summary of the key points accounting officer
from the assessment should be published.
• maintain strong and effective policies to
The accounting officer assessment
control and manage use of resources
should follow the structure and guidance
in the organisation’s activities. This
as set out in the Accounting Officer
includes improving the financial literacy
Assessments: Guidance document [49]. The
of budget holders in the organisation.
accounting officer should only signoff these
assessments if the senior officer responsible Note: The senior officer responsible for
for finance within the organisation has finance within an organisation is a specialist
already signed them. finance role often called a Finance Director or
Note: ‘Dear Accounting Officer’ (DAO) Chief Financial Officer.
letters [3] are used to provide specific advice Note: Annex 4.1 of Managing Public
on issues of accountability, regularity and Money [1] explains the role and responsibilities
propriety and annual accounting exercises. of the senior officer responsible for finance.
They supplement guidance published in
Managing Public Money [1]. For a full list of 4.5.4 Finance business partner
DAOs, refer https://www.gov.uk/government/ Finance business partners shall engage
collections/dao-letters and work directly with the business,
15
collaborating and supporting budget financial controller, management accountant,

holders within their business area enabling financial reporting team, as included in the
financial management, planning, processes Finance Global Design Principles [12].
and budget setting activities to ensure
value for money, putting finance at the 4.5.6 Budget holder
heart of decision making. They should build The accounting officer in an organisation
trusted relationships with key stakeholders usually chooses to delegate some or all of
within their business area, and translate their budget allocation to staff across their
potentially complex financial issues for their organisation, typically disaggregating down
stakeholders, consulting expert finance and the organisational structure. In doing so,
other corporate professionals on behalf of the accounting officer, supported by the
the business where necessary. senior officer responsible for finance within
Finance business partners should also use the organisation, shall ensure that staff
their technical expertise and experience to delegated responsibility:
provide useful insights on business activity, • are sufficiently trained and/or
challenging key decisions where appropriate. experienced
Finance business partners are ultimately • are clearly informed of the expectations
accountable to the senior officer responsible placed on them to effectively manage
for finance within an organisation. that budget and are made aware that
Accounting officers and the senior they will be held to account for its
officer responsible for finance within the performance where appropriate
organisation should promote a culture • receive relevant, timely and accessible
where budget holders and decision makers reports, to enable budget holders to
consult their finance business partners monitor the financial position of their
in key strategic decisions that carry a assigned budget(s)
financial impact.
Note: Refer to Annex D Government Financial
Note: For further details on the role and Reporting Landscape for a parliamentary
expectations of a finance business partner, accountability timeline and data table with a
refer to Excellence in Finance Business description of key reports.
Partnering [7] and The Career Framework,
Staff delegated budgetary responsibility
at https://gff.civilservice.gov.uk/the-career-
(budget holders) shall ensure they comply
framework/
with the expectations set by the accounting
4.5.5 Specialist financial roles officer (often included in a delegation
Other financial roles should be defined letter) and the senior officer responsible for
to suit the needs of the activity being finance within the organisation, and shall
undertaken. This can be for managing also engage their finance business partner
a variety of aspects of financial practice on key financial management, planning,
in accordance with this standard (and in processes and budget setting activities.
particular the processes in section 7.1)
and the organisation’s governance and
management framework. Such roles may
be either advisory, as part of a team or
taking a leadership or executive role, with
accountability assigned.
Note: Examples of a specialist role are
16
5. Medium-term
planning
Medium-term planning
Planning and Other fiscal

Spending Strategic Public value
performance events
reviews plans framework
framework
5.1 Planning and performance as the Office for Budget Responsibility

(OBR) (see 3.5).
framework
HM Treasury shall set, in a departmental
The government sets priorities, plans settlement, the maximum amount each
activity, allocates money and monitors its government department is permitted to spend
progress and performance using a collective in the years specified under the spending
set of processes – the government’s review, which shall be communicated to the
planning and performance framework [8]. accounting officer as a settlement letter.
The medium-term planning framework
Spending reviews should cover the
forms part of the government’s approach
whole of the UK, including the devolved
to managing public money to ensure value
administrations, in areas where spending
for money in the short and long term and
responsibility is devolved, such as for
includes spending reviews (see 5.2) and the
education or health. The Barnett formula
preparation of strategic plans (see 5.3).
should be applied at spending reviews and
fiscal events and allocations to each of the
5.2 Spending reviews devolved administrations are calculated by
The purpose of spending reviews is to provide HM Treasury on the basis of the settlements
certainty to departments for several years and reached with UK government.
encourage consideration of long-term value
for money when making spending decisions. 5.3 Strategic plans
HM Treasury periodically carry out a The purpose of a strategic plan is to set out
spending review to determine how to a department’s objectives for the duration
spend public money, usually over a multi- of Parliament.
year period, in line with the government’s
Each department shall develop, have
priorities, to ensure future funding continues
approved and maintain a strategic plan.
to be efficient and cost-effective.
The strategic plan:
The overall amount of spending available
• should be a live document and be
should be informed by the wider fiscal
revised annually, in line with the
position and fiscal rules. HM Treasury
department’s internal planning
should use information and evidence from
framework, to reflect new priorities or
government departments and bodies, such
changes in responsibilities
17
• should integrate all aspects of planning use to support planning and performance
and shall follow GovS 002, Project management (see 5.1):
Delivery, GovS 003, Human Resources, • pillar one: pursuing goals focuses on
GovS 004, Property, GovS 008, what overarching goals the public
Commercial in doing so body is aiming to achieve and how it is
• be informed by, and should be linked monitoring the delivery of these
to, the spending review and the Budget • pillar two: managing inputs tests
processes, as part of the planning and the public body’s basic financial
performance framework [8] management
• show how the department intends • pillar three: engaging citizens and
to use its resources (as set in its users highlights the need to convince
departmental settlement and any taxpayers of the value being delivered
adjustments to spending plans made by spending and the importance of
at fiscal events, such as the Budget) to engaging service users
achieve the outputs and outcomes it is
required to deliver • pillar four: developing system capacity
emphasises the long-term sustainability
• should include indicators to monitor how of the system and the importance of
the department is performing on each stewardship
objective during the year
Note: Refer to The Public Value Framework:
Note: Strategic Plan is used to mean an with Supplementary Guidance [27].
“Outcome Delivery Plan (ODP)” in the
current context, formerly known as “Single 5.5 Other fiscal events
Departmental Plan (SDP)”.
5.5.1 The Budget
5.4 Public Value Framework The Budget is a statement the Chancellor
The challenges of assessing public sector of the Exchequer makes to the House of
productivity are well known. Whereas in the Commons on the nation’s finances and
private sector the output of services can be the government’s proposals for changes
valued using their prices, the free-at-the- to taxation and spending. The Budget also
point-of-use or subsidised nature of public includes forecasts for the economy by the
services prevents an equivalent method for Office for Budget Responsibility (see 3.5).
valuing output. Elements of the government’s spending
The challenge, therefore, becomes how plans might change as a result of decisions
to improve public sector productivity announced in the Budget. The Budget is an
performance when it is difficult to define opportunity to consider what changes might
quite what this is. be needed to public spending to respond to
The Public Value Framework should be changes in the wider economic context.
used as a practical tool for maximising the Note: Refer to Annex D Government Financial
value delivered from public spending and Reporting Landscape for a parliamentary
improving outcomes for citizens. accountability timeline and data table with a
The main criteria that contribute to public description of key reports.
value are grouped into four sections or
‘pillars’ that structure the framework and
that public sector organisations should
18
6. Annual planning
Annual planning
Planning
and Supply
budgeting estimates
6.1 Planning and budgeting Managing Public Money [1] provides

further detail on HM Treasury approvals
Medium-term planning should provide the to commit expenditure, regularity and
starting point for each annual plan. The propriety, legal authority and controls
purpose of annual planning is to determine surrounding new proposals.
and set out publicly a department’s funding
Departments:
and how it allocates its budgets.
• should publish budgetary information in
Managing Public Money [1] outlines the
Departmental Reports
process for Parliamentary control of
public resources. Parliament, through the • should publish reconciliations to
estimates process, approves the use of budgets in their Supply Estimates
public funds as in line with the ambit. At the • shall report, in a note to their annual
end of each fiscal year, Parliament expects report and accounts, the outturn
to view spending that has taken place against estimate
against what was authorised at the supply
estimates (see 6.2). 6.2 Supply estimates
The primary means through which HM
The purpose of supply estimates is to
Treasury controls public expenditure is
provide legal authority to the government
multi-year budgets, agreed collectively at
for spending and retention of income. The
spending reviews (see 5.2).
House of Commons has financial privilege
Resources allocated to departments should within Parliament in this area.
be managed in-year using the Budgeting
No resources shall be properly committed,
Framework set out in the Consolidated
or expenditure incurred, by departments
Budgeting Guidance [4], which sets the
without the prior approval of HM Treasury
requirements that departments shall follow
(see also Managing Public Money [1]
to ensure financial and spending control.
Chapter 2, Use of Public Funds).
The aim is to incentivise departments to
manage spending to provide high quality Supply estimates:
public goods and services that demonstrate • should be prepared by the department,
value for money. reflecting the annual budget settlement
with HM Treasury
19
• shall be fully consistent with HM To be legal, spending shall be in

Treasury budgetary controls accordance with the ambit.
• should include all expenditure within Note: There are normally two separate pieces
departmental budgets (including of Supply legislation in each financial year:
spending by core departments and A Supply and Appropriation Act that
any arm’s-length bodies controlled by follows the presentation of Main Estimates
the department and included within its (see 6.2.1). This is known as the Supply and
accounts), though not all would need to Appropriation (Main Estimates) Act.
be voted by Parliament
A Supply and Appropriation Act that follows
Once approved by HM Treasury, supply the presentation of the Supplementary
estimates should be collectively presented Estimates (see 6.2.2), Statement of Excesses
to Parliament. and the Vote on Account. This is known as
The following expenditure should be voted the Supply and Appropriation (Anticipation &
through Parliament: Adjustments) Act.
• the voted limit on departmental These acts provide statutory authority for
spending, in line with budgetary the total amounts of resources, capital and
controls, as relevant covering resource cash sought in the estimates, broken down
and capital departmental expenditure by department.
limits and resource and capital annually
6.2.1 Main Estimates
managed expenditure
Main Estimates should be presented to
• the voted limit on any non-budget Parliament around the start of the financial
expenditure year to which they relate and are normally
• the amount of cash to be issued from approved in July.
(or required to be surrendered to) the 6.2.2 Supplementary Estimates
Consolidated Fund in respect of the net
In addition to the Main Estimates, there is
cash requirement for the estimate
the possibility for a Supplementary Estimate
• a description (known as an ambit) of whereby departments can seek additional
the services or purposes to which resources, capital and/or cash during the
expenditure and income is to be put in financial year. This Supplementary Estimate
respect of each of the relevant control should usually be presented in January and
limits (voted departmental expenditure normally approved in February/March.
limits, voted Annually Managed
When estimates are placed before
Expenditure, voted non-budget)
Parliament, departments shall present an
estimates memorandum to their select
committee. The estimates memorandum
should provide the select committee with
sufficient information to enable scrutiny of
the estimate.
20
6.2.3 Overspends
A public sector organisation shall request
approval for any overspends; overspends
are required to be regularised by
Parliament. Overspending by a department
of the specific limits voted by Parliament is
unauthorised and without legal authority.
Approval of an overspend is known as an
excess vote. Such approval draws critical
attention to overspending so Supplementary
Estimates enable departments to gain
parliamentary approval for in-year changes
to budgets, subject to prior HM Treasury
approval, and avoid an excess vote. A
vote on account shall also be published
alongside the Supplementary Estimate.
Note: For further details refer to Supply
Estimates Guidance Manual [6]. Also refer
Managing Public Money [1], the Consolidated
Budgeting Guidance [4], and the Government
Financial Reporting Manual [5].
Note: Refer to Supply Estimates Guidance
Manual [6] for details on the Clear Line of
Sight (Alignment) Project (setting out the
relationship between estimates, budgets
and accounts).
21
7. Financial processes
Financial processes
Purchase Cash Grants

to pay Order to cash administration
management
Payroll Expenses Investment

Inventory
appraisal
Project Non-current Debt

accounting Tax assets management
7.1 Financial processes

The purpose of defining and following Eleven finance processes, defined in
financial processes is to ensure consistency the Government Finance Global Design
of financial management across government Principles [12], should be adopted and
and to facilitate a greater sharing of followed by departments and arm’s-length
expertise and systems. bodies. These processes relate to:
The senior officer responsible for finance • purchase to pay
should maintain policies and processes to • order to cash
control and manage use of resources in
the organisation’s activities. This includes • cash management
improving the financial literacy of budget • grants administration
holders in the organisation. Similarly, he
• payroll
or she should ensure that there are similar
disciplines in the organisation’s arm’s- • expenses
length bodies (see 4.1.3). • inventory
Note: Financial control responsibilities
• investment appraisal
are detailed in box A4.1C in Managing
Public Money [1]. • project accounting
• tax
• non-current assets
22
Finance processes and related systems Note: Refer to Chapter 2, Supply Estimates
should be designed in accordance with Guidance Manual [6] for further information
the Government Finance Global Design on disclosure and treatment within the
Principles [12] and measured against the estimates process, including the definition of
relevant metrics. For example, when: departmental income.
• moving to a new Enterprise Resource Note: Refer to Consolidated Budgeting
Planning system Guidance [4] for detail on the budgeting and
• reviewing finance processes and making accounting treatment of income.
process improvements Note: Refer to Government Financial
Reporting Manual [5] for guidance on defining
• identifying where a process needs
and accounting for income, including under
amending to improve overall
IAS 18: Income.
performance
7.1.3 Cash management
7.1.1 Purchase to pay
The cash management process should
Purchase to pay is concerned with ensuring be designed and operated to ensure the
the efficient, accurate and timely payment necessary controls are in place to safeguard
of legitimate suppliers. cash and ensure public organisations
The purchase to pay process shall be remain solvent.
designed and operated to underpin Organisations should hold the minimum
the commercial practices in GovS 008, number of bank accounts required to run
Commercial (including sub-processes from the organisation effectively. These should
sourcing and negotiating terms, ordering, be raised through the Government Banking
receipting and payment, through to contract contract.
and relationship management) in order to
increase control and visibility, save costs Cash management principles ensure that
and generate automation efficiency. necessary controls are in place to effectively
manage public money by covering all
7.1.2 Order to cash aspects of cash management, from creation
Order to cash practices should be designed of bank accounts, right through to data
and operated to ensure the efficient, analysis and production of reports.
accurate and timely invoicing and receipting Note: Refer Government Financial Reporting
of cash (including debt) due to public bodies, Manual [5] for application guidance of IAS 21:
in both sterling and foreign currencies. The Effects of Changes in Foreign Exchange
Order to cash principles focus on the Rates and IAS 23: Borrowing Costs.
standardisation and harmonisation of Note: Refer to section 9.2.7 for further detail
processes within the accounts receivable on Government Banking and managing cash.
function. These principles also ensure best
practice in debt management. For debt 7.1.4 Grants administration
management, GovS 014, Debt shall be The purpose of grants administration is to
followed. promote efficient and effective grant making
Note: Refer to Annex 5.3, Treatment of and ensure funding is used as intended.
income and receipts, Managing Public The grants administration process should
Money [1], for categories and treatment of be designed and operated in line with the
income and receipts. principles set out by the Grants Centre of
Excellence which focus on grant giving to
third parties. (They do not cover grant-in-aid.)
23
Grants shall be processed in accordance Inventory principles help implement the

with GovS 015, Grants. necessary International Financial Reporting
Note: Refer to Government Financial Standards (IFRS) applicable to inventory to
Reporting Manual [5] for application guidance ensure a swift process to be able to manage
of IAS 20: Accounting for Government Grants and account for inventory in the most efficient
and Disclosure of Government Assistance. manner. These should be implemented in
discussion with warehouse operators.
Note: Refer to section 9.2.1 for further detail
on Grants – types and treatment. The accounting of inventory shall be aligned
to the International Financial Reporting
7.1.5 Payroll Standards (IFRS) [33]. Inventory shall be
The payroll management process should measured using IAS 2 [37] as interpreted for
be designed and operated to ensure public sector – inventories in line with the
employees are remunerated in accordance Government Financial Reporting Manual [5].
with their contract and that legitimate 7.1.8 Investment appraisal
deductions are made.
The investment appraisal process should
Payroll principles were designed alongside be designed and operated to ensure each
the HR profession to ensure consistency investment is justified, affordable and that
and harmony between corporate functions. the risks are understood and acceptable.
The principles cover a range of topics from
joiners and leavers, transfers and loans to Investment appraisal principles have been
period end accounting and reporting. designed to aid the use of the Central
Payroll should be processed in accordance Government Guidance on Appraisal and
with GovS 003, Human Resources. Evaluation (The Green Book) [17] and acts
as supplementary guidance.
Note: Refer Government Financial Reporting
Manual [5] for application guidance of IAS 19: Major project finance matters shall also
Employee Benefits. follow GovS 002, Project Delivery.
Investment appraisal options shall also
7.1.6 Expenses follow GovS 008, Commercial and
The expenses process should be GovS 010, Analysis.
designed and operated to ensure The HM Treasury Green Book [17] sets
employees are reimbursed in a timely out how to appraise and evaluate policies,
manner for their personal spend in relation projects and programmes. It supports the
to legitimate business. development of transparent, objective,
Expenses principles define the process evidence-based appraisal and evaluation of
for the expense owner and approver for proposals to inform decision making. It also
limits, allocations, approval delegation and provides guidance on the design and use
other standards. of monitoring and evaluation before, during
and after implementation.
7.1.7 Inventory
The Green Book [17] shall be used
The inventory control process should be alongside other HM Treasury guidance:
designed and operated to efficiently manage
the availability of stock for production, sales • Managing Public Money [1]
and delivery, and for the services of an • Orange Book: management of risk –
organisation, to maximise the use of funds principles and concepts [16]
and ensure overall value for money.
24
• Aqua Book: standards for analytical Major project finance matters shall also
modelling and assurance [18] follow GovS 002, Project Delivery.
• Magenta Book: detailed guidance on Managing Public Money [1] sets out what
evaluation methods [19] departments and their arm’s-length bodies
should do if they incur losses or write off the
Green Book [17] guidance shall be applied
values of assets, including details of when
to proposals that concern public spending,
to notify Parliament.
taxation, changes to regulations, and
changes to the use of existing public assets 7.1.10 Tax
and resources.
The tax process should be designed and
Investment appraisal options shall be operated to ensure that government bodies
considered in accordance with GovS 010, account for tax in accordance with their
Analysis. legal status.
Investment assurance and approval Tax policy and best practice is led through
processes for projects following an agile HMRC and the Tax Centre of Excellence [38].
delivery approach should be developed
They should be consulted and informed on
in accordance with HM Treasury’s
the tax implications of complex purchase
supplementary guidance on the
contracts, projects, policy and legislation
development of business cases for agile
changes. They should be involved at the
digital and IT projects [44].
start of the idea pipeline, engaged early
Note: When making outsourcing decisions in policy development and business
and contracting outside suppliers for the cases, and have continuing involvement
delivery of public services, refer to the as necessary as the process develops.
Outsourcing Playbook (see GovS 008, All authorisations, concessions, approvals
Commercial). and/or exemptions from HMRC shall be
Note: when developing business case managed, approved, held and recorded on
proposals for maintenance investment, a log by the relevant organisation:
refer to Office of Government Property: • payroll and expenses – processes
Responsible Maintenance – A guide for should be in place within organisations
Accounting Officers, Executive Committees to capture and report to HMRC
and Boards [43]. taxable transactions, for example, dual
workplace expenses, loans, benefits
7.1.9 Project accounting
The project accounting process should be • asset management – tax implications
designed and operated to ensure consistency of assets when procuring, transferring,
in the capturing of data relating to project moving/returning or selling between
related time, costs, billing and forecasting. countries should be checked centrally.
A process should be in place to
Project accounting principles were designed determine the most tax efficient
to ensure consistency around projects customs procedure is used
undertaken including the organisation
hierarchy, the creation and planning • assurance – a risk-based testing
of projects including templates, and programme should be in place to ensure
accounting of projects including capturing controls are operating effectively, regularly
time and costs, billing and forecasting. testing the quality and accuracy of data
underpinning taxation transactions,
statutory returns and submissions
25
• exception reporting, compliance Note: Examples of non-current assets include

and errors – processes should be tangible assets (such as property, plant,
in place to support the correction equipment, IT systems) intangible assets
of errors, compliance with tax (such as intellectual property rights, patents
suspension conditions, capturing and trademarks) and long-term investments.
losses, report tax implications and Note: Refer Government Financial Reporting
recover excise overpayments Manual [5] for application guidance of IAS 16:
• tax-related information and statutory tax Property, Plant and Equipment and IAS 36:
returns – should be system generated Impairment of Assets.
with minimal manual intervention. VAT Knowledge assets (which are intangible
treatment should be determined at the assets such as intellectual property, R&D,
point of procurement and automated software, data, expertise, know-how and
wherever possible other intellectual resources) should also
Tax principles cover setup and be taken into account in this process.
maintenance of tax rates and codes, and Government guidance on how best to
tax reporting requirements. manage these assets should be utilised
by all public sector organisations with an
Note: To access best practice documents
accounting officer and recommends that
and HMRC guidance refer to the Tax
such organisations have a knowledge
Centre of Excellence website at
asset management strategy, as part of
www.taxcentreofexcellence.uk [38].
the wider asset management strategy
Note: Refer Government Financial Reporting required by Managing Public Money, and
Manual [5] for application guidance of IAS 19: appoint a senior responsible owner for
Employee Benefits. knowledge assets who has responsibility
for the organisation’s knowledge asset
7.1.11 Non-current assets
management strategy.
The non-current assets process should
Note: Guidance on knowledge assets in
be designed and operated to enable the
government [50] sets out best practice for
organisation to know, at any point in time, the
knowledge asset management, including how
extent and value of its non-current assets.
to identify, protect and, where appropriate,
The entire practice of acquiring, using, exploit government knowledge assets.
recording, accounting and the disposal
of assets fall under the scope of these 7.2 Data
principles. The specific activities and
goals involved differ among different kinds 7.2.1 Financial master data
of assets, but the use of best practice Master data should be captured, maintained
methods for planning, accounting, and held in a defined and accessible
deployment, usage, and maintenance format. Master data has many purposes
should be applied to all of them. including for the management of, for
example, suppliers (of goods and services),
customers and bank accounts.
26
8. Reporting
Reporting
Other
Management Financial external
accounting accounting reporting
8.1 Introduction 8.2 Management accounting

Note: Refer to Annex D Government Financial 8.2.1 Organisational forecasting
Reporting Landscape for a parliamentary
accountability timeline and data table with a Forecasting should be an honest
description of key reports. assessment, given the best information
available, of the future financial position
The reporting process should be designed of an organisation and its activities. A
and operated to enable performance forecast serves as a prediction of future
monitoring. requirements under differing scenarios,
Reporting principles mainly focus on based on data and assumptions about
the department’s strategic, financial, influencing factors. Accurate forecasting
and operation components, and they in government and elsewhere is essential
provide in-depth ideas on monitoring the and has many benefits including supporting
performance of the department. It involves prioritisation, decision-making, and
various complex processes including modelling the impact on performance over
collecting, converting and supplying data the short and medium term.
to stakeholders who want to know whether Note: For further detail refer to OneFinance
or not their expectations were met. This website [41].
includes various factors like financial
closing and consolidating, master data 8.2.2 Forecast outturn (via OSCAR)
maintenance, budgeting and forecasting. The Online System for Central Accounting
The Common Chart of Accounts is a and Reporting (OSCAR) is used by
single set of codes that shall be used HM Treasury to carry out its financial
across central government for financial management functions in relation to
reporting. It is based on the codes used departmental budgets and estimates for
in the HM Treasury budgeting system, approval by the UK Parliament.
OSCAR (see 8.2.2). It enables consistency Departments shall submit data on a monthly
of reporting and easier communication of basis and together with spending teams,
financial information between departments. this should enable a common understanding
of progress against budgets and the system
provides key management information and
data for public reporting [24].
27
OSCAR supports the application of current Expenditure in respect of grants or subsidy

standards including the Financial Reporting claims should be recognised in financial
Manual [5] and Consolidated Budgeting statements as closely as possible to the
Guidance [4], as well as the publication time of the underlying event or activity that
of external reports including: Whole of gives rise to a liability.
Government Accounts (see 8.3.5); Public Note: For further detail refer to Government
Expenditure Statistical Analysis [21]; Financial Reporting Manual [5], 8 Further
Estimates [6] and the Country and Regional guidance on accounting for income and
Analysis reports [25]. expenditure.
OSCAR data is a part of the government’s
transparency agenda covering plans, 8.2.5 Departmental board and
outturn and in-year data across multiple committee reports
financial years. Departmental boards and their committees
Note: For further detail refer to Consolidated should make use of reports to support their
Budget Guidance [4] Chapter 1. responsibilities and activities (see 4.1.2).
8.2.3 Period end and budget holder 8.3 Financial accounting

report
8.3.1 Trial balances
Once the actual costs have been recorded
for each period (usually a month), a process A trial balance is an accounting report which
of in-year out-turn monitoring should take should capture the organisation’s general
place. This involves comparing actual ledger accounts, which includes revenue
expenditure and income with the profiled and capital income and expenditure, and
financial plan (or budget). If the two can be prepared at any time during the year.
differ, then the reason for this should be The most important trial balance is the
established to determine what steps could one extracted at the end of the year
be taken to bring actual expenditure and before preparing the financial accounts of
income back into line. The differences are the organisation.
often referred to as variances.
8.3.2 Key reconciliations
Finance teams are responsible for capturing
the finance activities and they should work Reconciliations are an important part of
with budgets holders to understand the financial reporting and have several uses.
financial position. For example, the accountability report
(see 8.3.4). The accountability report
Note: For further detail refer to OneFinance
should also include a reconciliation of how
website [41].
the department has spent the resources
8.2.4 Operational income and allocated to them by Parliament through the
expenditure management supply estimates process (see 6.2).
Operating income is any income generated Departments should also provide the key
by an entity in pursuit of its activities or reconciliation notes to the Statement of
as part of managing its affairs (examples Parliamentary Supply which is the primary
include rents, interest and dividends parliamentary accountability statement.
receivable). Proceeds arising from the sale of This reports the outturn for the departmental
investments and noncurrent assets should group against the final annual spending
be accounted for as non-operating income. limits authorised through a vote by
Parliament.
28
Note: For further detail refer to Government Position, the (Consolidated) Statement
Financial Reporting Manual [5], 3.2 of Changes in Taxpayers’ Equity and
The Statement of Parliament Supply. the (Consolidated) Statement of Cash
Flows, together with the relevant notes
8.3.3 Disclosure Packs
Annual report and accounts are
Auditors review the accountability report
independently audited to ensure both
for consistency with other information in
Parliament and the public can be confident
the financial statements and provide an
in the figures presented (see 4.3.5).
opinion on the disclosures which should
The audit report on the annual report and
clearly be identified as audited within the
accounts shall be included in the document.
accountability report.
Any material errors in the content or control
Note: For further detail refer to Government breaches (spending money without the
Financial Reporting Manual [5], 5.3 necessary parliamentary or HM Treasury
Accountability Report. approval) are recorded as a qualification
in the annual report and accounts. The
8.3.4 Period end (annual), annual report
accounting officer could be called to
and resource accounts
their parliamentary select committee to
All organisations covered in the supply explain the circumstances that led to
estimates (see 6.2) process shall prepare an the qualification, helping Parliament hold
annual report and accounts. departments to account for their spending.
An annual report and accounts should Note: Refer to the Government Financial
provide an overview of what a government Reporting Manual guidance [5] for the form
organisation has spent, received, owns and and content of annual report and accounts.
owes. Organisations shall prepare an annual
report and accounts at the end of each 8.3.5 Whole of Government Accounts
financial year to report their financial results HM Treasury shall prepare the Whole of
to Parliament. Government Accounts (WGA), being the
The annual report and accounts of reporting consolidation of the audited accounts of
entities (as defined in the Government over six thousand organisations across
Financial Reporting Manual [5]) shall comprise: the public sector. The WGA provides a
comprehensive, accounts-based picture
• the Performance Report which should
of the financial position of the UK public
provide information on the entity, its
sector. The WGA shall be prepared in
main objectives and strategies and the
accordance with IFRS [33], the Government
principal risks that it faces
Financial Reporting Manual [5] and HM
• the Accountability Report which should Treasury’s Whole of Government Accounts
demonstrate how the entity meets guidance for preparers [14].
key accountability requirements to
The WGA shall include a report on financial
Parliament and which should have three
performance through a statement of revenue
sections: a Corporate Governance
and expenditure (or income statement), a
Report; a Staff and Remuneration
statement of financial position (or balance
Report; and a Parliamentary
sheet), a statement of cash flows and a
Accountability and Audit Report
statement of comprehensive income and
• the Financial Statements which should expenditure (other recognised gains and
set out the (Consolidated) Statement of losses), together with associated notes
Comprehensive Net Expenditure, the providing additional detail and analysis [13].
(Consolidated) Statement of Financial
29
The Comptroller and Auditor General 8.4 Other external reporting

(see 4.3.5) examines the accounts and
should be satisfied that they present a true 8.4.1 Transparency reporting
and fair view, consistent with the guidance As set out in the Prime Minister’s 2017 letter
in the Government Financial Reporting on open data and transparency, a wide
Manual [5]. range of transparency data is published by
Under statute, in accordance with an order individual departments. This should include
under section 11(6) of the Government all spending over £25,000, monthly payment
Resources and Accounts Act 2000, card data over £500, information on
HM Treasury shall lay an account before contracts over £10,000 and Gender Pay Gap
Parliament no later than 31 December of the information. The Cabinet Office also produce
following year, although in practice this may cross-government data on Civil Service
be earlier. sickness and absence data, ministers’
Note: Refer Government Financial Reporting interest declarations, ministers’ salary data,
Manual [5] for the specific accounting and senior civil servants’ names, grades, job
disclosure requirements adopted in the titles and annual pay rates, special advisers’
consolidated Whole of Government Accounts. names, grades and annual pay.
GOV.UK registers provide structured
8.3.6 Balance sheet review datasets of government information to help
Effective balance sheet management and users build services on a high-quality data
review can generate efficiencies and reveal infrastructure. Each register only contains
unrealised service potential in underutilised data on a specific subject and is kept up
assets. Compliance with current financial to date by a subject matter expert from the
standards demands that balance sheets are relevant government organisation.
constructed using high quality information
about the service delivery potential of the 8.4.2 Sustainability reporting
assets held by public service organisations. Organisations are strongly encouraged
This information in turn allows better asset to demonstrate, through integrated
management and exposes the potential to reporting, how sustainability is an essential
use assets as leverage to build effective characteristic within strategic objectives,
partnerships. This is especially important operations and policy making. It is also
at a time when the fiscal environment important to reflect what the risks are to
constrains the revenue resources of public achieving integrated reporting and how
service organisations. these risks are being managed. Additional
context should be given to explain areas
of particular focus and those which are the
most material to the organisation.
The Financial Reporting Manual [5] has an
overarching requirement for performance
reporting to be ‘fair, balanced and
understandable’ and this also holds true for
sustainability reporting. It should highlight
both good and bad performance along with
aims and plans to improve areas where
targets are not being met.
30
Note: For further details refer to HM Treasury Departments shall follow GovS 002, Project
public sector annual reports: sustainability Delivery and publish data on the progress
reporting guidance [31]. of projects currently in the Government
Major Projects Portfolio (GMPP), which is
8.4.3 Other performance reporting – updated annually.
PQs, FOIs, etc.
Note: For the latest UK National Accounts,
A range of other financial reports are refer to The Blue Book [20] and related
published that use outturn information. classification guidance [23].
These usually focus on a specific policy
area and often collate information from
across government.
Government organisation answer a large
volume of Freedom of Information (FOI)
requests and Parliamentary Questions (PQs)
throughout the year, and these regularly
contain financial and related information.
The government publishes responses to FOI
requests on GOV.UK and responses to PQs
are published on Parliament’s own website.
Note: For further details refer to Government
Financial Reporting Review [11], 4.74 other
government reporting.
8.4.4 Official statistics and other public

data releases
Further official statistics and public data on
performance, public spending, government
major projects and workforce that the
government uses to monitor performance
shall be routinely released into the public
domain when they become available.
The Office for National Statistics (see 3.6)
issues a variety of releases that cover both
economic and non-economic statistics.
These should include the National
Accounts, and the monthly ‘Public Sector
Finances’ release that is jointly prepared
with HM Treasury.
HM Treasury shall publish Public Spending
Statistics that provide information on
departmental spending over the previous
five years, which should be updated on a
quarterly basis.
31
9. Enablers • resource review – current position of

income and expenditure against the
forecast position
9.1 Management information, • forecast accuracy – how much the
analytics and reporting forecast varies over time
Management information should be • risks and opportunities – the risks and
provided in an accurate, complete and opportunities that exist outside of the
timely manner to ensure those using the forecast
output of finance processes can undertake • committed spend – how much of the
their roles effectively. forecast is committed already, leaving
System workflows and real-time the difference to budget as ability to flex
dashboards should be used to ensure to pressures or new expenditure areas
processes and transactions are progressing.
Subsidiary metrics fall outside the normal
Standard, consistent reports should be reporting cycle and may hold more
available directly from the management relevance to certain departments than
information system to support internal and others for ensuring effective financial
external activity and reporting. management. These should therefore
Reporting requirements shared by multiple be included in the board pack where
customers on the same platform should be appropriate and include:
delivered using the same report definition • balance sheet
and be automatically generated on behalf
of customers. • operational efficiency
Appropriate data should be retained in • ERP vs OSCAR alignment

accordance with the organisation’s data Note: Further guidance on these metrics
retention policy and The General Data can be found on One Finance,
Protection Regulation. https://gff.civilservice.gov.uk/standards-
Appropriate self-service tools should be policy-and-procedures/finance-insight/
available to provide finance business partners finance-board-pack-reporting-project/
and budget holders with spend analytics and The six key lenses identified should be used
advanced reporting, including insight. to enhance the organisation’s finance board
pack. These are:
9.1.1 Finance board pack reporting
• targeting – board packs should be
To support effective decision making, developed to meet users’ needs and to
organisations shall produce finance guide and influence decision making
dashboards or reports for their boards
which are fed by data from their financial • positioning – board packs should
system. These board packs will comprise provide context by aligning spend
several metrics, which can be broken down with planning and performance, and
into key metrics and subsidiary metrics. quantifying risks and opportunities
Key metrics are essential to the board’s • consistency – board packs should retain
understanding of the financial health of the the same relevance, style and contents
organisation and subsequent ability to make across time and should be consistent
effective financial decisions. Organisations with other organisational and cross-
shall ensure they report the key metrics to government reports
their board; these include:
32
• standardising – board packs should Note: See Annex 5.1 Grants in Managing
provide clear definitions of key terms Public Money [1] and Grants Centre of
underpinned by trustworthy data Excellence website [45].
• visualising – board packs should Grants shall be managed in accordance
provide navigable and engaging visual with GovS 015, Grants.
presentation, enhancing accessibility for
9.2.2 Corporate finance
all users
For major corporate finance matters,
• narrating – board packs should
including all major UK government financial
provide clear, simple narrative with
interventions into corporate structures
actionable insight
and on major UK government corporate
finance negotiations, the UK Government
9.2 Centres of excellence Investments centre of excellence
in corporate finance and corporate
9.2.1 Grants
governance should be engaged.
Central government departments may
Note: Refer to www.ukgi.org.uk. [47]
normally offer two kinds of financial support
to third parties, using statutory powers: 9.2.3 Project finance
• grants – made for specific purposes, For major project finance matters, including
under statute, and satisfying specific all complex and high-risk projects and their
conditions, e.g. about project terms, or financing and assurance, the Infrastructure
with other detailed control and Projects Authority shall be engaged
• grants-in-aid – providing more general in accordance with GovS 002, Project
support, usually for an NDPB, with Delivery.
fewer specific, but more general
9.2.4 Debt
controls on the body, and less oversight
by the funder The Debt Centre of Excellence (DCoE) is a
single point of access to professional and
Grants should not be confused with value for money debt services, and a central
contracts. A public sector organisation resource for information and advice.
funds by grant as a matter of policy, not in
return for services provided under contract. Debt shall be considered in accordance
with GovS 014, Debt.
Managing Public Money [1] provides an
overview of how and why grants should Note: Refer to https://gff.civilservice.gov.uk [41]
be paid, including controls that should be 9.2.5 Tax
in place.
The Tax Centre of Excellence (TCoE) is
Grants are voted through the estimates a central resource for departmental tax
process, including for both resource and advice and services available to government
capital grants. Refer to Supply Estimates departments.
Guidance Manual [6].
Note: Refer to https://taxcentreofexcellence.uk
The Consolidated Budgeting Guidance [38]
[4] headlines the different types of grants
(including debt repayment grants), how
this is distinguished within the National
Accounts principles and the budgeting
treatment that should be adhered to.
33
9.2.6 Technical accounting Public sector organisations should run

The Technical Accounting Centre of their cash management processes to
Excellence consists of five delivery partners: provide good value for the Exchequer as a
MOD, BEIS, DWP, DFID and DHSC. It whole. This means that each shall use the
aims to add value and drive improvements Government Banking Service, limit the use
across the technical accounting landscape of commercial banking (with HM Treasury
by sharing best practice, providing policy consent in each instance), and provide
advice and knowledge sharing. HM Treasury with accurate forecasts
of cashflows. Any use of non-standard
Note: Refer to https://gff.civilservice.gov.uk/ techniques should be kept within defined
communities/centres-of-excellence/technical- bounds and controlled effectively.
accounting-centre-of-excellence/ [40]
Note: See Managing Public Money [1]
9.2.7 Government banking and Annex 5.6, Banking and managing cash,
managing cash and www.gov.uk/government/groups/
Government banking provide a shared government-banking-service-gbs
banking service across central government Government banking and managing cash
and wider public sector customers. It is shall follow GovS 014, Debt.
responsible for:
9.2.8 Risk management
• consulting government departments
on their banking and payment needs The Risk Management Centre of Excellence
and supporting them with delivery is a professional and expert resource
of payment strategy/transformation, established to progress activities that
ensuring they are using the most cost- drive continual improvements in risk
effective payment methods management, in and across central
government organisations. Alongside
• centralised procurement, management maintaining the Orange Book, the team lead
and security assurance of contracts the development and delivery of activities,
and suppliers to save cost and resource guidance, toolkits and learning materials
for government that support professionalism, good practice
• monitoring supplier performance and the process capability maturity. They
against their contractual commitments also support collaboration and knowledge
and ensure that their service levels sharing through co-ordination of the central
meet expectations government risk management community.
• providing HM Treasury with a selection of Note: Refer to https://gff.civilservice.gov.uk/
accurate and detailed reports that include communities/centres-of-excellence/technical-
customers’ payments and receipts accounting-centre-of-excellence/
• supporting government departments
with their non-standard and foreign
currency payments
• being the voice of government into the
payment industry
• providing advice to departments on
appropriate financial controls and
sharing information on cyber security to
minimise risk of fraud to government
34
A. References
All references are correct at the time of publication, users should check for updated versions.
I.D. Description
1 HM Treasury; Managing Public Money; 2021
2 HM Treasury; Corporate Governance in Central Government Departments: Code

of Good Practice; 2017
3 HM Treasury; Dear Accounting Officer Letters; (updated as needed)
4 HM Treasury; Consolidated Budgeting Guidance 2021 to 2022; 2021

(updated yearly)
5 HM Treasury; Government Financial Reporting Manual 2020 to 2021; 2020

(updated yearly)
6 HM Treasury; Supply Estimates Guidance Manual; 2011
7 Government Finance Function; Excellence in Finance Business Partnering

Handbook; 2018
8 HM Treasury and Cabinet Office; The Government’s Planning and Performance

Framework; 2017
9 Cabinet Office; Cabinet Office controls: version 5; 2018
10 HM Treasury and IPA; Public Private Partnerships Collection; updated 2018
11 HM Treasury; Government Financial Reporting Review; 2019
12 Government Finance Function; Finance Global Design Principles; 2018
13 HM Treasury; Whole of Government Accounts 2016 to 2017; 2018 (updated yearly)
14 HM Treasury; Whole of Government Accounts 2017 to 2018: guidance for

preparers; 2018
15 HM Treasury; Assurance Frameworks Guidance; 2014
16 HM Treasury; Orange Book – Management of Risk – Principles and Concepts; 2020
17 HM Treasury; The Green Book: Central Government Guidance on Appraisal

and Evaluation; updated 2018
18 HM Treasury; The Aqua Book: guidance on producing quality analysis

for government; 2015
35
I.D. Description
19 HM Treasury; The Magenta Book; 2020
20 ONS; UK National Accounts, the Blue Book; yearly
21 HM Treasury; Public Expenditure – Statistical Analyses; (yearly)
22 HM Treasury; Joint Ventures: a guidance note for public sector bodies forming
joint ventures with the private sector; 2010
23 HM Treasury; Classification guidance notes that cover National Accounting

Treatments; 2013/14
24 HM Treasury; OSCAR Annual Data Release; yearly
25 HM Treasury; Country and Regional Analysis; yearly
26 Cabinet Office; The Cabinet Manual; 2010
27 HM Treasury, Public Value Framework: with supplementary guidance; 2019
28 HM Treasury, Accounting Officer System Statements; 2017
29 HM Treasury and others; Public Sector Internal Audit Standards; 2017
30 HM Treasury; Audit and Risk Assurance Committee Handbook; 2016
31 HM Treasury; Public sector annual reports: sustainability reporting guidance; 2020
32 Cabinet Office and Department for Environment, Food & Rural Affairs; Greening
Government Commitments 2016 to 2020; 2020
33 International Financial Reporting Standards
34 European system of national and regional accounts – ESA 2010
35 Companies Act
36 The Charities SORP: new SORPs and SORP 2005
37 IFRS; IAS2 Inventories
38 Tax Centre of Excellence website
39 Cabinet Office; Outsourcing Playbook
40 Technical Accounting Centre of Excellence website
41 OneFinance website
42 UKGI: UK Government arm’s-length bodies
36
I.D. Description
43 Available on request from Office of Government Property:
govs.property@cabinetoffice.gov.uk
44 HM Treasury; Supplementary guidance on the development of business cases for

Agile digital and IT projects
45 Grants Centre of Excellence website
46 National Audit Office website
47 UK Government Investments website
48 Counter Fraud Standards and Profession
49 HM Treasury; Accounting Officer Assessments: Guidance
50 HM Treasury; Draft guidance on knowledge assets in government
37
B. Glossary
See also the common glossary of definitions which includes a list of defined terms and
phrases used across the suite of government functional standards. The glossary includes
the term and definition.
Term Definition
accounting officer A person appointed by HM Treasury or designated by a department
to be accountable for the operations of an organisation and the
preparation of its accounts. The appointee is the head of a department
or other organisation or the Chief Executive of a non-departmental
public body (NDPB) or other arm’s length body. Source: Managing
Public Money [1].
accounts direction A direction issued setting out the accounts which a body should
prepare, and the form and content of those accounts. Source:
Managing Public Money [1].
ambit A description of the services or purposes to which expenditure and

income is to be put in respect of each of the relevant control limits
(voted DEL, voted AME, voted non-budget). Source: Supply Estimates:
a guidance manual [6].
annually managed Spending included in Total Managed Expenditure (TME), which does
expenditure (AME) not fall within Departmental Expenditure Limits (DELs). Expenditure
in AME is generally less predictable and controllable than expenditure
in DEL. Source: Managing Public Money [1].
arm’s-length body Central government bodies that carry out discrete functions on
behalf of departments, but which are controlled or owned by them.
They include executive agencies, NDPBs and government- owned
companies. Source: Managing Public Money [1].
assurance A general term for the confidence that can be derived from objective
information over the successful conduct of activities, the efficient and
effective design and operation of internal control, compliance with
internal and external requirements, and the production of insightful
and credible information to support decision-making. Confidence
diminishes when there are uncertainties around the integrity of
information or of underlying processes. Source: The Orange Book [17].
Barnett formula The Barnett formula is a mechanism used by the HM Treasury in

the United Kingdom to automatically adjust the amounts of public
expenditure allocated to Northern Ireland, Scotland and Wales to
reflect changes in spending levels allocated to public services in
England, England and Wales or Great Britain, as appropriate.
38
Term Definition
capital spending/ Spending on the purchase of assets (including buildings, equipment and
investment land), above a certain threshold (set by the body concerned), which are
expected to be used for a period of at least one year. Items valued below
it are not counted as capital assets, even where they have a productive
life of more than one year. Source: Managing Public Money [1].
committee of A committee of the House of Commons which examines the

Public Accounts accounting for, and the regularity and propriety of, government
expenditure. It also examines the economy, efficiency and
effectiveness, and feasibility of expenditure. Commonly known as the
Public Accounts Committee (PAC). Source: Managing Public Money [1].
comptroller and The chief executive of the National Audit Office, appointed by the
auditor general Crown, and an Officer of the House of Commons. As Comptroller,
(C&AG) the C&AG’s duties are to authorise the issue by the Treasury of public
funds from the Consolidated Fund and the National Loans Fund to
government departments and others: As Auditor General, the C&AG
certifies the accounts of all government departments and some
other public bodies, and carries out value-for-money examinations.
Source: Managing Public Money [1].
consolidated fund, The Consolidated Fund, operated by HM Treasury, is central

CF government’s current account into which most revenue from taxation,
fines and penalties and certain departmental income is paid. Payments
made out of this account are in respect of general government
expenditure, which includes funding for departments’ budgetary
Supply Estimates approved by Parliament and settlement of specific
liabilities that legislation charges directly on the Consolidated Fund.
dear accounting ‘Dear Accounting Officer’ (DAO) letters are used to provide specific
officer (DAO) advice on issues of accountability, regularity and propriety and
letters annual accounting exercises. They supplement guidance published in
defined (way of In the context of standards, ‘defined’ denotes a documented way

working) of working which people are expected to use. This can apply to any
aspect of a governance or management framework for example
processes, codes of practice, methods, templates, tools and guides.
delegated A standing authorisation by HM Treasury under which a body

authority and may commit resources or incur expenditure from money voted
delegation letter by Parliament without specific prior approval from HM Treasury.
Delegated authorities may also authorise commitments to spend
(including the acceptance of contingent liabilities) and to deal with
special transactions (such as write-offs) without prior approval.
Source: Managing Public Money [1].
39
Term Definition
departmental DEL limits are set in the spending review. Departments may not
expenditure limit exceed the limits that they have been set. Source: Consolidated
(DEL) Budgeting Guidance [4].
depreciation A measure of the wearing out, consumption or other reduction in the

useful life of a fixed asset whether arising from use, passage of time
or obsolescence through technological or market changes. Source:
established (way In the context of standards, ‘established’ denotes a way of working

of working) that is implemented and used throughout the organisation. This can
apply to any aspect of a governance or management framework for
example processes, codes of practice, methods, templates, tools
and guides.
estimates An explanation of how provision sought in the estimate is intended to

memorandum be used and the relationship with other spending controls. Primarily
provided for the departmental select committee but made freely
available online. Source: Managing Public Money [1].
excess vote The means by which excess expenditure, or otherwise unauthorised

expenditure, of cash, capital or resources, is regularised through an
additional vote by Parliament. Source: Managing Public Money [1].
feasibility The principle that proposals with public expenditure implications

should be implemented accurately, sustainable and to the intended
timetable. Source: Managing Public Money [1].
financial privilege The House of Commons has financial primacy in Parliament. Only the
Commons may decide on public taxes and public spending, and it
may overrule any House of Lords proposal with cost implications.
fiscal targets Targets for economic performance and public finance management.
governance Governance is the system by which organisations are directed and

controlled. It defines accountabilities, relationships and the distribution
of rights and responsibilities among those who work with and in the
organisation, determines the rules and procedures through which the
organisation's objectives are set, and provides the means of attaining
those objectives and monitoring performance. This includes establishing,
supporting and overseeing the risk management framework.
governance and A governance and management framework sets out the authority
management limits, decision making roles and rules, degrees of autonomy,
framework assurance needs, reporting structure, accountabilities and roles,
together with the appropriate management practices and associated
documentation needed to meet this standard.
40
Term Definition
governance A key feature of the organisation’s annual report and accounts,
statement which manifests how the accounting officer has carried out their
responsibilities to manage and control the resources used in his or her
organisation. Source: Managing Public Money [1].
grants-in-aid Regular payments by departments to outside bodies to finance their

operating expenditure. Source: Managing Public Money [1].
impairment Where the carrying amount of an asset exceeds its recoverable

amount departments should recognise an impairment loss.
Departments need to establish whether any of the impairment loss is
as a result of:
• consumption of economic benefit or reduction in service potential; or
• a change in market price
Examples of impairments resulting from a consumption of economic
benefit or service potential include losses as a result of loss or
damage, abandonment of projects, goldplating and use of the asset
for a lower specification purpose. Source: Financial Reporting Manual.
national accounts Accounts produced by the Office for National Statistics in accordance
with the European System of Accounts 1995, which promotes
standardisation in the way in which public sector income and
expenditure is measured. Source: Managing Public Money [1].
organisation An organisation, in the context of government functional standards,

is the generic term used to describe a government department, arm's
length body, or any other entity that is identified as being within scope
of a functional standard
41
Term Definition
OSCAR Online System for Central Accounting and Reporting (OSCAR)
supplies information for a wide range of users and uses:
• the HM Treasury’s planning and control of public spending
• the HM Treasury’s monitoring and forecasting of spending against
the fiscal framework
• HM Treasury publications, such as Public Expenditure
Statistical Analyses
• operational publications, such as Main and Supplementary
Estimates
• departmental publications, such as the common core tables in
Departmental Reports
• ONS publications based on the National Accounts, including
Public Sector Finances which contains information for the fiscal
aggregates and
• the input side of ONS’ measures of public sector productivity
Source: Consolidated Budgeting Guidance
plan A plan sets out how objectives, outcomes and outputs are to be
delivered within defined constraints, in accordance with the strategy.
propriety The principles that patterns of resource consumption should meet

high standards of public conduct, and robust governance and respect
Parliament's intentions, conventions and control procedures, including
any laid down by the Public Accounts Committee. Source: Managing
Public Money [1].
regularity Compliant with the relevant legislation and wider legal principles such
as subsidy control and procurement law, delegated authorities and
following the guidance in Managing Public Money. Source: Managing
Public Money [1].
resource Current expenditure such as pay or procurement and including

depreciation, which is the current cost associated with the ownership
of asset. Source: Consolidated Budgeting Guidance.
42
Term Definition
risk The effect of uncertainty on objectives. Risk is usually expressed in
terms of causes, potential events, and their consequences:
• a cause is an element which alone or in combination has the
potential to give rise to risk
• an event is an occurrence or change of a set of circumstances
and can be something that is expected which does not happen or
something that is not expected which does happen. Events can have
multiple causes and consequences and can affect multiple objectives
• the consequences should the event happen – consequences are
the outcome of an event affecting objectives, which can be certain
or uncertain, can have positive or negative direct or indirect effects
on objectives, can be expressed qualitatively or quantitatively, and
can escalate through cascading and cumulative effects.
Source: The Orange Book.
spending teams HM Treasury spending teams are the first point of contact for
departments and are best placed to compare estimates with agreed
priorities and spending limits. Spending Teams are responsible for
checking their departments’ supply estimates in detail in accordance
with the set timetable. Source: Estimates Manual.
statement of A formal statement detailing departments' overspends and irregular

excesses spending as identified by the Comptroller and Auditor General as a
result of undertaking annual audits. Source: Estimates Manual.
strategy A strategy outlines longer term objectives, outcomes and outputs, and
the means to achieve them, to inform future decisions and planning.
supply estimates Estimates are the mechanism by which Parliament authorises

departmental spending. Estimates require Parliament to vote limits for
resource DEL, resource AME, capital DEL and capital AME, as well
as any voted spending outside of budgets and the department’s net
cash requirement. These voted limits may differ from the figures in
departmental budgets and estimates, as elements of the department’s
budgets may fall within non-voted spending. Source Consolidated
Budgeting Guidance.
value for money The process under which organisation's procurements, projects and
processes are systematically evaluated and assessed to provide
confidence about suitability, effectiveness, prudence, quality, value
and avoidance of error and other waste, judged for the Exchequer as
a whole. Source: Managing Public Money [1].
whole of Consolidates all central and local government organisations’ accounts

government and comparisons of outturn with budgets. Source: Managing Public
accounts Money [1].
43
C. Key documentation
Managing Public Money [1]
Managing Public Money sets out the main principles for dealing with resources in UK public
sector organisations. The key requirements are regularity, propriety, value for money and
feasibility. Some of the specifics, especially those in the annexes, relate to England rather than
the devolved administrations, which have their own detailed rulebooks, but the same basic
principles generally apply in all parts of the UK public sector, with adjustments for context.
Consolidated Budgeting Guidance [4]

The consolidated budgeting guidance is a document that is produced annually for
government departments, and sets out the budgeting framework to be applied to expenditure
control. The guidance highlights the detail of budgeting policies including clear definitions of
resource, capital and administration budgets, how this splits into departmental expenditure
limits (DEL) and annually managed expenditure (AME), and direct links to the purpose of
controls in each of these areas.
Supply Estimates Guidance Manual [6]

This manual is intended to serve as a practical reference guide for anyone with direct
or indirect responsibility for the control of public spending in general and for the supply
estimates process in particular. It is aimed principally at officials in government departments
but should also be of use to anyone with an interest in the process by which Parliament
authorises the Government’s expenditure plans.
Government Financial Reporting Manual [5]

The Government Financial Reporting Manual (FReM) is the technical accounting guide to the
preparation of financial statements.
It complements guidance on the handling of public funds published separately by the relevant
authorities in England and Wales, Scotland and Northern Ireland. The Manual is prepared
following consultation with the Financial Reporting Advisory Board (FRAB) and is issued by
the relevant authorities.
The Finance Global Design Principles [12]

The Finance Global Design Principles are a set of common processes and procedures that:
• are based on leading practice from the public and private sectors
• have been developed collaboratively with colleagues across core government
departments and special interest groups.
• are system ‘agnostic’ – i.e. do not depend on a specific system
• are mandatory for all core government departments
Finance Global Design Principles have been developed for 12 areas of the finance taxonomy.
Principles for each area can be found in this document.
44
Sustainability Reporting Guidance (HMT) [31]

The purpose of this guidance is to assist with the completion of sustainability reports in the
public sector. It sets out the minimum requirements, some best practice guidance and the
underlying principles to be adopted in preparing the information.
Greening Government Commitments [32]

The Greening Government Commitments set out the actions UK government departments
and their agencies should take to reduce their impacts on the environment.
45
D. Government financial reporting landscape

Spending review: sets targets for departments for up to 5 years
Strategic plan: how departments use resources to achieve objectives
Spring Whole of
Annual government
reports & accounts
accounts
Summer Main
estimate Expenditure
statistical
analyses
Select
Autumn committee
The budget
Supplementary hearings
estimate
Winter Annual
budget Excess vote
Year x-1 Year x Year x+1 Year x+2
46
Produced Covers time Reporting When Laid in
Report name Description Category Main user
by? period? cycle produced? Parliament?
Spending The Treasury carries Treasury Usually Usually every No set date Medium Term Yes Parliament
Review out Spending Reviews multiple years 3 – 5 years Planning
to determine how to
spend public money –
usually over a multi-year
period – in line with the
government’s priorities.
Strategic Strategic plans set out a Departments Set out Usually every No set date Medium Term No Internal,
plans department’s objectives, objectives for 3 – 5 years Planning Government,
Version 2.0 – September 2021
resource allocations, how the duration Public,

its risk will be managed, of Parliament, Parliament
and its performance and updated
measured. annually
The Budget The Budget is a statement Treasury Financial year Annual Autumn Annual Yes Parliament
the Chancellor of the Planning
Exchequer makes to the
House of Commons on the
nation’s finances and the
government’s proposals
for changes to taxation and
spending. The Budget also
includes forecasts for the
economy by the Office for
Budget Responsibility.
Office for Five year forecasts for Office for 5 years Twice Spring and Annual No Government,
Budgetary the UK economy and Budgetary outturn and annually Autumn Planning Public,
Responsibility public finances and an Responsibility remainder of Parliament
Reports – assessment of whether the Spending
Economic the Government is likely to Review
and fiscal achieve its fiscal targets
outlook
GovS 006: Finance
47
48
Office for Long-term projections of Office for 50 years Every two Summer Annual No Government,
Budgetary the UK public finances Budgetary years Planning Public,
Responsibility and public sector balance Responsibility Parliament
Reports sheet analysis.
– Fiscal
sustainability
report
Supply Supply Estimates are Treasury / Annual, Twice Spring and Annual Yes Parliament
Estimates the bi-annual process independents financial year annually Summer Planning
by which the Treasury (April XY-
presents the government’s March XZ)
spending plans, based on
departmental settlements
allocated at the Spending
Review, to Parliament
for approval. This covers
‘Main Estimates’ and
‘Supplementary Estimates’.
Estimates Government departments Departments Annual, Twice Spring and Annual No but Parliament
memoranda are required to produce an and financial year annually Summer Planning shared
Estimates Memorandum independents (April XY- with select
for the relevant select March XZ) committees
committee to explain
what is proposed in their
Main Estimate and how
proposals compare to past
spending plans.
Accounting Accounting Officer Departments Forward Annual Summer In-year No Internal,
Officer System Statements set looking – reporting Government,
System out to Parliament all of the assessing Public,
Statements accountability relationships the system Parliament
and processes within a at time of
department. publication
OSCAR data The dataset provides The Year to date Quarterly Quarterly In-year No Public,
quarterly updates to Treasury via spending by reporting analysts
monthly outturn data. departments, month
The outturn information is arms’-length
taken from OSCAR data bodies and
submitted by departments. independents
The public will be able to
see monthly patterns in
spend by organisations
reporting data on OSCAR.
At the same time, users

will be able to drill down
beneath previously
released high-level
aggregates.
Annual report Annual reports and Departments, Annual, Annual Summer Outturn Yes Parliament
and accounts accounts present a arms-length financial year reporting
department’s performance bodies, (April XY-
against its objectives, independents March XZ)
its governance and
management of risks
and the outcomes it has
achieved as a result of its
spending.
GovS 006: Finance
49
50
Whole of The Whole of Government Treasury Annual, Annual Spring Outturn Yes Parliament
Government Accounts is a consolidated financial year reporting
Accounts set of financial statements (April XY-
for the UK public sector. March XZ)
The Treasury prepares it
annually, bringing together
the audited financial results
of over 6000 entities. The
Whole of Government
Accounts includes central
government departments,
academies, devolved
administrations, NHS
trusts, local authorities and
public corporations such
as the Bank of England.
Public Public Expenditure Treasury 5 years Annual Summer Outturn Yes Parliament
Expenditure Statistical Analyses is outturn and reporting

Statistical the yearly publication of remainder of
Analyses information on government SR
spending. It brings
together recent outturn
data, estimates for the
latest year, and spending
plans for the rest of the
current spending review
period. It also shows
spending by region.
Office for Employment statistics Office for Snapshot as Annual Summer Outturn No Government,
National for the Civil Service National at 31 March reporting Public,
Statistics population, providing Statistics Parliament
Civil Service regional analyses, diversity
Statistics and earnings data.
National Audit Each study examines a National Audit The National Regularly Regularly Independent Reports Government,
Office Value major area of government Office Audit Office scrutiny form the Public,
for Money expenditure, and our undertakes basis of Parliament
Studies objective is to form a around Public
judgement on whether 60 value Accounts
value for money has been for money Committee
achieved, which Parliament studies each inquiries
use to hold government to year.
account for how it spends
public money
GovS 006: Finance
51

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Government

GovS 006: Finance

shall denotes a requirement: a mandatory element.

should denotes a recommendation: an advisory element.

may denotes approval.

might denotes a possibility.

can denotes both capability and possibility.

is/are denotes a description.

1 Structure and scope of this standard

4 Governance and management framework, Strategy

Medium Planning and performance framework, Spending

Purchase to pay, Order to cash, Cash

Management accounting, Financial

Figure 1 Core Structure: Finance Standard

1. About this 1.2 Scope of this government

1.3 Government standards 2. Principles

• GovS 015, Grants 4. operate openly, as is compatible with

3. Context The Public Accounts Committee (PAC)

Statistics in most tables cover five years

3.5 Office for Budget

3.6 Office for National Statistics

4.1 Governance and The governance of financial management

they should be put in place to promote 4.1.4 Joint ventures

4.2 Strategy and planning

4.3 Risk management and of governance, risk management,

4.3.3 Counter fraud of all government departments and many

• external recruitment Only total Resource DEL and total Capital

4.4.2.3 The control of annually managed • Government Finance Global Design

collaborating and supporting budget financial controller, management accountant,

Planning and Other fiscal

5.1 Planning and performance as the Office for Budget Responsibility

6.1 Planning and budgeting Managing Public Money [1] provides

• shall be fully consistent with HM To be legal, spending shall be in

Purchase Cash Grants

Payroll Expenses Investment

Project Non-current Debt

7.1 Financial processes

Grants shall be processed in accordance Inventory principles help implement the

• exception reporting, compliance Note: Examples of non-current assets include

8.1 Introduction 8.2 Management accounting

OSCAR supports the application of current Expenditure in respect of grants or subsidy

8.2.3 Period end and budget holder 8.3 Financial accounting

The Comptroller and Auditor General 8.4 Other external reporting

8.4.4 Official statistics and other public

9. Enablers • resource review – current position of

Appropriate data should be retained in • ERP vs OSCAR alignment

9.2.6 Technical accounting Public sector organisations should run

2 HM Treasury; Corporate Governance in Central Government Departments: Code

3 HM Treasury; Dear Accounting Officer Letters; (updated as needed)

4 HM Treasury; Consolidated Budgeting Guidance 2021 to 2022; 2021

5 HM Treasury; Government Financial Reporting Manual 2020 to 2021; 2020

6 HM Treasury; Supply Estimates Guidance Manual; 2011

7 Government Finance Function; Excellence in Finance Business Partnering

8 HM Treasury and Cabinet Office; The Government’s Planning and Performance

9 Cabinet Office; Cabinet Office controls: version 5; 2018

10 HM Treasury and IPA; Public Private Partnerships Collection; updated 2018

11 HM Treasury; Government Financial Reporting Review; 2019

12 Government Finance Function; Finance Global Design Principles; 2018

13 HM Treasury; Whole of Government Accounts 2016 to 2017; 2018 (updated yearly)

14 HM Treasury; Whole of Government Accounts 2017 to 2018: guidance for

15 HM Treasury; Assurance Frameworks Guidance; 2014

16 HM Treasury; Orange Book – Management of Risk – Principles and Concepts; 2020

17 HM Treasury; The Green Book: Central Government Guidance on Appraisal

18 HM Treasury; The Aqua Book: guidance on producing quality analysis