FINANCE GUIDANCE NOTE 2012-01
GOVERNANCE OF PUBLIC-PRIVATE SECTOR PROJECTS
Purpose
The purpose of this note is to promote good practice in the governance of public-private sector projects. It will have relevance to all organisations to which the Scottish Public Finance Manual (SPFM) is directly applicable.
Background
In their reports on “The Gathering 2009” both the Auditor General for Scotland and the Public Audit Committee of the Scottish Parliament raised concerns about the governance arrangements of public-private sector projects. The Auditor General highlighted the importance of public bodies protecting their interests and taxpayers’ money and recommended that they should:
- ensure good communication between joint funding bodies through regular exchange of information and agreeing roles and responsibilities;
- consider carefully the role, membership and reporting line of steering groups, including the balance between advisory and decision-making roles;
- establish clear remits for steering groups;
- ensure that the accountability for spending public money is always clearly understood, with an explicit statement of the degree of financial risk being assumed by each of the partners;
- set out clear expectations for financial reports and add these to the key performance indicators which are required to be met for payments to be released; and
- where relevant company history exists, consider the circumstances when due diligence checks on private sector companies should be undertaken prior to offers of funding being made.
As and when appropriate, all organisations to which the SPFM is directly applicable will wish to give due consideration the Auditor General’s recommendations. Consideration should also be given to the recommendation by the Public Audit Committee that relevant financial reports should include details of all actual income and expenditure to date.
Steering Groups and the SG
The SG would not normally seek membership of steering groups for public-private sector projects unless it was providing, directly, a significant proportion of the core funding. Consideration should however be given to SG membership, regardless of the level of direct funding, where the project is of national significance. Where the SG is reliant on a sponsored body member of a steering group for relevant information on the delivery of a project the relevant SG sponsor team will be responsible for ensuring that clear lines of communication are established and maintained. The SG shall ensure that steering groups are made aware, at the earliest opportunity, of any form of financial assistance provided directly by the SG to such projects.
SG Finance Directorate
January 2012