ON BOARD
A GUIDE FOR MEMBERS OF MARCH 2017 STATUTORY BOARDS A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 2
Public bodies play an essential role Public bodies come in a variety of forms, depending on their functions and relationship in performing certain functions on with Scottish Ministers and/or the Scottish behalf of, or alongside Government. Parliament. Public bodies are set up for specific They allow the public sector to purposes and there is no set template of what a public body should look like. Annex A benefit from the skills, knowledge, provides an overview of the classification of expertise, experience, perspectives public bodies. This classification has important and commitment of the members implications for accountability and reporting arrangements. Information on individual bodies who sit on their Boards and focus and contact details are available from the in depth on clear and specific National Public Bodies Directory. functions and purposes. This guidance provides the basic information that you will need to understand your role as a member of the Board of a public body in Scotland and to help make your time with the Board fulfilling and effective. It supplements the information contained in your letter of appointment which formally sets out your specific roles and responsibilities as a Board member. This guidance is for all those appointed under statute to be members of the Boards of our public bodies, primarily Non Departmental Public Bodies (NDPBs) and Public Corporations (which are “sponsored” by the Scottish Government and whose Boards are accountable to Ministers for the discharge of their statutory functions) and most Non- Ministerial Offices (whose Boards are directly accountable to the Scottish Parliament, rather than Ministers, for their statutory functions). Where relevant, the guide distinguishes between “sponsored” bodies and Non- Ministerial Offices. As Management Advisory Boards in Executive Agencies and some Non-Ministerial Offices have different responsibilities to statutory Boards, separate guidance has been prepared for members of these Boards. All public bodies should have in place supportive guidance which reflects the specific nature of their work and the extent to which separate arrangements may apply to the work of the Board.
INTRODUCTION A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 3 > Induction and Training FURTHER GUIDANCE When a new Board member joins a public body, they may not have had much direct experience of that body. Effective induction serves as a valuable source of information and should provide material on specific job requirements, roles, responsibilities, policies and purposes. This guidance provides the starting point of your induction into the Key reference materials and contacts are listed public body that you have joined. You should under each of the main sections of this guidance. also receive further induction guidance and The main source of further information and guidance will be the public body that you have just training from your public body on a range of joined, particularly the Chair and Chief Executive. topics, including: Between them, they will be able to provide you ¼¼ the structure, governing legislation and with most of the advice and information that you are likely to need during your time as a Board work of your public body and links with member of a public body in Scotland. the sponsor Directorate (if appropriate), the Scottish Government and the Scottish This guidance has been produced in an interactive Parliament format to allow users to view documents ¼¼ the Ethical Standards Framework and referenced through the use of hyper-links. The guide will be kept under review to ensure that it Code of Conduct for Board members continues to help promote best practice for Board ¼¼ corporate roles and responsibilities as a members. The guide will not be produced in hard Board member copy by the Scottish Government. Annex B provides a checklist of the types of induction guidance and training that may be available from your public body. You should Key to document navigation refer to this checklist when discussing your induction requirements with the Chair and Main contents Chief Executive. Guidance notes contents
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INTRODUCTION A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 4
Guidance notes The guidance is organised into five main Sections:
Public Service Delivery and Reform Guidance Note 1
Principles of Corporate Governance Guidance Note 2
Roles, Responsibilities and Relationships Guidance Note 3
Effective Financial Management Guidance Note 4
Ethics and Standards of Behaviour Guidance Note 5
Annex A Classification of Public Bodies
Annex B Induction and Training for Board Members
Annex C The Organisation of Central Government Over Devolved Matters in Scotland A GUIDE FOR MEMBERS OF CHAPTEROn Board 1 STATUTORY BOARDS 5
Public Service Delivery and Reform Guidance Note 1 A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 6
Public Service Contents Delivery and Reform
Overview
Scottish Ministers, the Scottish Government and the Scottish Administration
Key Messages
Key References and Contacts
Public Service Delivery and Reform
National Performance Framework
Public Service Reform
The Scottish Approach to Government
Government Economic Strategy
Community Empowerment (Scotland) Act 2015
Health and Social Care Integration
Scotland’s Digital Future
Best Value, Efficient Government and Relocation
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Overview Scottish Ministers and all those within the Key Messages wider Scottish Administration* are committed ¼¼ As a Board member, you have a to high quality, continually improving, responsibility to ensure the effective efficient public services that are responsive governance and financial management to local people’s needs. To deliver on this of your public body within the context commitment it is important that public of public service delivery and reform bodies, third sector and private organisations for the benefit of the people of work effectively in partnership with Scotland. communities and each other. ¼¼ Public bodies are required to demonstrate their commitment to This section explains the key policy public service delivery and reform by developments and strategies on the delivery recognising their role in the delivery of and reform of public services in Scotland, the the Programme for Government and relevance of public service delivery and the National Performance Framework. reform to you as a Board member of a public ¼¼ Public service reform is built on four body, and the influential role you can play in pillars: Prevention, Performance, making a real change to the lives of the People and Partnership (supported by people of Scotland. Place) – which should be reflected in public bodies’ corporate strategic priorities and plans. Scottish Ministers, the Scottish ¼¼ The Scottish Government has Government and the Scottish developed a distinct approach to support the achievement of National Administration Outcomes and public service reform. It Throughout this guidance you will see is centred around empowerment and references to Scottish Ministers, the Scottish participation: enabling people to co-design, shape and deliver public Administration or the Scottish Government. services that they use; and building The diagram at Annex C explains the on the strengths of families and organisation of central government in communities. Scotland.
Key References and Contacts
National Performance Framework Scottish Government Economic Strategy Christie Report Scottish Government’s Response to the Christie Report Scotland’s Digital Future – Delivery of Public Services Community Empowerment (Scotland) Act 2015
* The Scotland Act 1998 created the Scottish Parliament and the Scottish Administration. The Scottish Administration consists of the Scottish Ministers, including the Law Officers, and the key Non-Ministerial Offices and Officeholders in Scotland. The Scottish Administration performs its functions on behalf of Her Majesty the Queen and its staff are civil servants. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 8
PUBLIC SERVICE DELIVERY AND NATIONAL PERFORMANCE REFORM FRAMEWORK
In your role as a Board member of a public The Scottish Government’s vision for a body in Scotland, you will be required to successful Scotland is set out in the National discharge specific duties in relation to the Performance Framework. The Framework effective governance and financial actively supports wider engagement between stewardship of the body concerned. These the Scottish Government and its delivery duties are covered in sections three to five of partners, including local government, third this guidance, the body’s Framework sector and public bodies. Document and your letter of appointment. It consists of five main parts which support As a member of a public body in Scotland, and reinforce each other: you also have a general responsibility to ¼¼ The Scottish Government’s Purpose discharge these duties within the context of ¼¼ The Purpose Targets to track progress public service delivery and reform to the towards the Purpose benefit of the people of Scotland. ¼¼ Five Strategic Objectives to focus on The main policy developments and strategies action which have shaped the Scottish ¼¼ 16 National Outcomes describing what Government’s approach to public service the Scottish Government wants to delivery and reform are: achieve ¼¼ The outcomes-based approach of the ¼¼ 50 National Indicators to track progress National Performance Framework towards the Purpose and National ¼¼ The Christie Report and the Scottish Outcomes. Government’s Four Pillars of Public Service Reform ¼¼ The strategic priorities of the Government Economic Strategy ¼¼ Community Planning whereby local authorities, public bodies, the Scottish Government and the third sector work together and with the local community ¼¼ Increased participation and delivery of public services through digital technology as described in Scotland’s Digital Future: Delivery of Public Services ¼¼ The Scottish Approach centred around the core concepts of Participation and Co-production, Assets-based Approaches and Improvement Methodology. The next section expands upon these policy developments and strategies, and their relevance to you as a Board member of a public body in Scotland. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 9
National Outcomes Scotland Performs A shared approach to the achievement of The Scotland Performs website measures and National Outcomes encourages public service reports on the wide range of indicators set providers to direct attention towards the key out in the National Performance Framework. long-term challenges for Scotland. As the As such, it provides an open and transparent achievement of shared outcomes is account of the progress of government in dependent on increased collaboration, Scotland in the creation of a more successful effective partnership working and closer country, with opportunities for all through alignment of service provision, public bodies increasing sustainable economic growth. are required to ensure that their corporate strategies and plans support the National PUBLIC SERVICE REFORM Outcomes described in the National The Christie Commission Performance Framework. In 2010 the Scottish Ministers invited Dr It follows that all public bodies must Campbell Christie to lead a Commission to demonstrate the role that their corporate identify the best ways to address the strategies and plans have in delivering challenges of delivering public services, National Outcome 16 which refers specifically based on evidence of what works. to high quality, continually improving, The Christie Commission concluded that to efficient public services that are responsive achieve the outcomes that matter most to the to local people’s needs. people of Scotland, public, third sector and Public bodies must also demonstrate their private organisations had to work more role in delivering the other National effectively in partnership with communities Outcomes which are relevant to the type of and with each other to design and deliver services they provide, working closely with excellent public services that meet the needs partners to the benefit of the people of of local people. The need for new ways of Scotland. This may involve crossing delivering public services has never been traditional organisational boundaries more important than it is today. between public bodies which have separate The Christie Report provided an assessment and distinct roles but which also have a of the challenges facing public services and shared interest in the delivery and reform of recommended an urgent, sustained and particular areas of public service (e.g. health, coherent programme of public service justice and education). This focus on shared reform. outcomes and partnership working can achieve outcomes which might not otherwise be possible by one body acting alone. It also opens up opportunities for sharing of limited resources to ensure more efficient, effective and sustainable public services. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 10 > THE SCOTTISH GOVERNMENT’S FOUR PILLARS OF PUBLIC SERVICE REFORM
In its response to the Christie Report, the services are consistently well designed, Scottish Government identified four pillars based on the best evidence and are of reform in order to deliver better delivered by the right people to the right outcomes for the people of Scotland, to people at the right time. reduce inequalities and to ensure the People – we need to unlock the full delivery of sustainable services now and in creativity and potential of people at all the future: levels of public service, empowering them Prevention – reduce future demand by to work together in innovative ways. We preventing problems arising or dealing need to help create ways for people and with them early on. To promote a bias communities to co-produce services around towards prevention, help people their skills and networks. understand why this is the right thing to Partnership – we need to develop local do, the choices it implies as well as the partnership and collaboration, bringing benefits it can bring. public, third and private sector partners Performance – to demonstrate a sharp together with communities to deliver focus on continuous improvement of the shared outcomes that really matter National Outcomes, applying reliable to people. improvement methods to ensure that
The Scottish Government’s approach to public In the next sections some of the information service delivery and reform also focuses on provided may not directly impact on your the importance of “place” (locality) in the role as a Board member of a public body. design and delivery of public services. The However, it is essential that Board members focus on place provides the basis for have an awareness of work being taken partnership and stronger community forward by the Scottish Government in participation in the design and delivery of relation to public service reform. local services, harnessing the full spectrum of talents and capacities of public bodies, citizens, third sector organisations and local businesses. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 11
THE SCOTTISH APPROACH TO The Scottish Approach GOVERNMENT The National Performance Framework and the Government’s response to Christie PARTICIPATION ASSETS-BASED describe ‘what’ we are trying to achieve, the and CO- ‘Scottish Approach’ describes ‘how’ it should PRODUCTION be delivered; centering around three core elements of Participation and Co-production, Assets and Improvement, as summarised right. Ú IMPROVEMENT The approach seeks to safeguard essential services, preserve front-line jobs and secure METHODOLOGY higher quality services through, for example: ¼¼ greater integration of health and social care Participation and Co-production – ¼¼ the move to single police, and fire and enabling people to shape and co-design rescue services the services they use. ¼¼ the reform of post-16 education. Assets-based – valuing the strengths of GOVERNMENT ECONOMIC people and communities to build social STRATEGY capital and capacity, rather than focusing solely on perceived deficits. Scotland’s Economic Strategy reaffirms the Scottish Government’s commitment to Improvement Methodology: creating a more successful country, with Creating Conditions for Change opportunities for all of Scotland to flourish, ¼¼ Setting out a compelling vision of through increasing sustainable economic the future to serve as a reference growth. It sets out an overarching framework point as the change process moves for achieving the two mutually supportive forward; goals of increasing competitiveness and ¼¼ Backed by a story which helps tackling inequality in Scotland. It forms the people to recognise where they have strategic plan for existing and all future been and where they are going; Scottish Government policy and prioritises ¼¼ Identifying key actions towards boosting investment and innovation, realising the vision. supporting inclusive growth and maintaining Making the Change a focus on increasing internationalisation. ¼¼ A clear framework for COMMUNITY EMPOWERMENT improvement; ¼¼ A strategy to engage, empower and Community Empowerment (Scotland) motivate the workforce and develop Act 2015 their skills; The Community Empowerment (Scotland) Act ¼¼ An understanding of how the 2015 (the 2015 Act) provides a legal change will work locally, framework that will promote and encourage recognising communities and their assets are different; community empowerment and participation, by creating new rights for community bodies ¼¼ Building the guiding coalitions, and placing new duties on public authorities. governance and data necessary to Part 2 of the 2015 Act includes duties which drive and sustain the change. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 12 further strengthen community planning, SCOTLAND’S DIGITAL FUTURE replacing provisions in the Local Government Scotland’s Digital Future: Delivery of Public in Scotland Act 2003. Services sets out the ambitions and actions The 2015 Act gives Community Planning including a “digital first” approach to service Partnerships (CPPs) a statutory footing for delivery, with public bodies working the first time. It places specific duties on collaboratively with each other and service CPPs, and statutory partner bodies, in users to digitally transform the delivery of relation to improving local priority outcomes public services and to adopt the national and tackling inequalities of outcome across products available through the digital communities within their area. The Act does a ecosystem including mygov.scot, Scottish number of other things including: extending Wide Area Network and others. In addition, the community right to buy, making it simpler the Central Government Digital for communities to take over public sector Transformation Service can support your land and buildings, and strengthening the organisation in understanding your digital statutory base for community planning. It maturity, developing your strategy and also includes a new regulation-making power sourcing the skills and capability to deliver that will in future require that Scottish public on your transformation ambitions. authorities promote and facilitate the Audit Scotland’s report Managing ICT Projects, participation of members of the public in published in August 2012, set out their decisions and activities, including in the recommendations for Senior Responsible allocation of their budget. Owners and Accountable Officers. In June 2015 Audit Scotland considered the Scottish HEALTH AND SOCIAL CARE Government’s progress in strategic oversight INTEGRATION and support of central government ICT Public Bodies (Joint Working) (Scotland) programmes including the revision of the ICT Act 2014 Assurance framework, supporting guidance and templates. Key findings and recommendations The shape of Scottish society is changing. were published in Managing ICT contracts in People are living longer, healthier lives and as central government: An update. the needs of our society change, so too must the nature and form of our public services. BEST VALUE, EFFICIENT New legislation in the form of the Public GOVERNMENT AND RELOCATION Bodies (Joint Working) (Scotland) Act 2014 Best Value, Efficient Government and requires Health Boards and local authorities to Relocation are all essential elements of the integrate their health and social care services. public service reform agenda. These issues Local teams and professionals across health are covered in Guidance Note 4. and social care will work together to deliver FURTHER INFORMATION quality, sustainable care and services resulting in improved outcomes for the people and Community Planning families who use these services. Community Empowerment (Scotland) Act 2015 Improvement Framework Improvement Service Public bodies (Joint Working) (Scotland) Act 2014 McClelland Review Central Government ICT Assurance Framework Scottish Government’s response to the McClelland Review Audit Scotland Managing ICT contracts in central government: An update A GUIDE FOR MEMBERS OF OnOn Board Board STATUTORY BOARDS 1313
Principles of Corporate Governance Guidance Note 2 A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 14
Principles of Contents Corporate Governance
Overview
Key Messages
Key References and Contacts
Corporate Governance
Translating Principles into Action
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Overview Key Messages Corporate governance concerns the strategic ¼¼ Corporate governance is concerned direction and effective stewardship of the with the strategic direction and organisation. A number of concerns have effective stewardship of the been raised about corporate governance in organisation; the private and public sectors in recent years, ¼¼ There have been a number of reviews mainly relating to the perceived lack of in the private sector which together led control at the top of some organisations and to the development and publication of inadequately designed systems that failed to a UK Corporate Governance Code; prevent fraudulent, inefficient or ¼¼ There are similarities between the inappropriate behaviour. public and private sectors in terms of corporate governance principles – but A number of initiatives have addressed these Board members should recognise that concerns and strengthened the approach to it is not always possible to draw a corporate governance in both the private and direct parallel between the two; and public sectors. This section explains the main ¼¼ The Nolan Committee set new developments that have led to the principles standards of conduct for Board of corporate governance and how these members of public bodies in 1995 and translate into the conduct and management the Ethical Standards in Public Life etc. of public business. (Scotland) Act 2000 introduced the ethical standards framework, which includes Codes of Conduct for Board Key References and Contacts members, a Chief Investigating Officer and a Standards Commission. UK Corporate Governance Code Ethical Standards in Public Life etc. (Scotland) Act 2000 Good Governance Standard for Public Services A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 16
Corporate Governance Key Developments in the Private Sector Corporate governance is the way in which A number of key corporate governance organisations are directed, controlled and led. reports in the private sector have contributed It defines relationships and the distribution to the development of the UK Corporate of rights and responsibilities among those Governance Code: who work with, and in, the public body, Reports that shaped corporate governance in determines the rules and procedures through the UK which objectives are set, and provides the means of attaining those objectives and Cadbury, 1992 monitoring performance. Importantly, it Greenbury, 1995 defines where accountability lies throughout the public body. Hampel, 1998 Corporate governance has been a high-profile Turnbull, 1999 topic in recent years, principally because of Myners, 2001 concern about ensuring control at the top of, Smith, 2003 and within, organisations. There is a perception that, in certain cases, senior Higgs, 2003 managers appear to have been able to act Tyson, 2003 without restraint and that inadequately Turnbull, updated 2005 designed systems have failed to prevent fraudulent, inefficient or inappropriate Walker, 2009 behaviour. The results of poor corporate Women on Boards, 2011 governance cannot be underestimated. The international financial crisis was partially Francis, 2013 attributed to failures in governance within the Boards of major financial institutions. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 17
The UK Corporate Code – impact on the public Findings from the Financial crisis report – sector lack of diversity and groupthink Although there are elements of the UK Although the Walker Report specifically Corporate Code which are relevant to Board related to the collapse of banks and financial members of public bodies, it applies primarily institutions its findings had significant to companies listed on the London Stock ramifications for the Boards of all types of Exchange. bodies. A key finding of the review was that ‘groupthink’, attributable in turn to a lack of While there are a number of similarities diversity, had been a major contributory between the public and private sectors in factor to the governance failures of the terms of corporate governance principles, relevant Boards. Board members should be aware that it will not always be possible to draw a direct Many subsequent studies have identified that parallel between the two. Whilst public companies with Boards that are apparently bodies face many similar challenges as more diverse, such as in relation to gender, private organisations, they cannot be age and industry background, perform better considered to be exactly the same. than those companies with less diverse Boards. The different perspectives that Effective strategic engagement between the different types of Board members bring mean Scottish Government and the public body is that they are more likely to be able to essential in order that they work together as constructively challenge proposals. If Board effectively as possible to maintain and members are too similar to the executives, a improve public services and deliver improved Board’s decision-making risks being narrow outcomes. There is greater accountability, and blinkered. with control over public services handed in greater measure to those who use them, It is important to understand that a Board while Scottish Ministers take strategic policy made up of people who are ‘visibly diverse’ decisions. The varying size and nature of will not necessarily be immune to groupthink. ‘arm’s length bodies’ and the range of Visible diversity is simply an indicator but no functions they carry out means that there is guarantee that the Board’s members have the no one absolute template for how the diversity of skills, knowledge, experience and relationship between Scottish Government perspectives needed to make it effective. Directorates and the public body operates. Having said that, a lack of diversity on the Further consideration on the relationship Boards of Scotland’s public bodies, which can between Scottish Government Directorates be evidenced in relation to factors ranging and public bodies is examined in Guidance from gender to BME status, employment Note 3. sector and income, is an indicator that our Boards are not yet sufficiently diverse. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 18
The impact for Scottish Public Bodies As in the private sector, there have been a number of developments aimed at improving Scottish Ministers are committed to corporate governance in the public sector: redressing this imbalance with gender parity being a particular area of focus. Boards Nolan Principles themselves should give consideration to establishing a committee to consider matters In 1995, the Committee on Standards in such as planning for succession and Board Public Life (the Nolan Committee) identified performance as this should lead to more seven principles of conduct underpinning diversity at Board level. The aim should be to public life and recommended that public have 50:50 gender balance by 2020. bodies should draw up Codes of Conduct incorporating these principles. Key Developments in the Public Sector > NOLAN COMMITTEE 1995 There have been a number of high-profile reports and inquiries in Scotland highlighting Recommendation inadequacies in the governance of public bodies. In one report, a Parliamentary Public bodies should draw up Codes of Committee concluded that the governance Conduct incorporating seven Nolan arrangements in a public body did not Principles of: identify or prevent a crisis which it should ¼¼ Selflessness have done. Although not the primary factor, ¼¼ Integrity the Committee believed that the Board failed ¼¼ Objectivity sufficiently to challenge the Chief Executive over a significant operational development ¼¼ Accountability that ultimately failed. ¼¼ Openness In another report, the Scottish Parliament’s ¼¼ Honesty Public Audit Committee concluded that, on the ¼¼ Leadership. evidence received, members of the Board of a public body had acted with probity throughout a very difficult period but could not escape criticism for not being aware of problems of which they should have been aware. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 19
The then Scottish Executive took the Nolan International Framework: Good Governance Committee recommendations one step in the Public Sector further with the introduction of the Ethical In 2014 the Chartered Institute of Public Standards in Public Life etc. (Scotland) Act Finance and Accountancy and the 2000 which brought in a statutory Code of International Federation of Accountants Conduct for Board Members of Devolved produced an updated International Public Bodies and set up a Standards Framework: Good Governance in the Public Commission for Scotland to oversee the Sector. ethical standards framework. The 2014 Framework defines and describes The Scottish Executive also identified nine one interpretation of the principles that key principles underpinning public life in should underpin good governance. Scotland, which incorporated the seven Nolan principles and introduced two further
principles, Duty (Public Service) and Respect. > GOOD GOVERNANCE IN THE PUBLIC These nine principles and their practical SECTOR implications for Boards and Board members are explored in Guidance Note 5. Core Principles
> ¼¼ Behave with integrity, demonstrating ETHICAL STANDARDS IN PUBLIC LIFE ETC. strong commitment to ethical values, (SCOTLAND) ACT 2000 and respect the rule of law; ¼¼ Ensure openness and comprehensive Conduct for Board stakeholder engagement; ¼¼ Statutory Code of Conduct for Board ¼¼ Define outcomes in terms of Members of Devolved Public Bodies; sustainable economic, social and ¼¼ Appointment of a Chief Investigating environmental benefits; Officer to investigate and report to ¼¼ Determine the interventions necessary the Standards Commission for to optimise the achievement of the Scotland (the Standards Commission;) intended outcomes; ¼¼ Standards Commission to oversee ¼¼ Develop the entity’s capacity, including ethical standards framework; and the capability of its leadership and the ¼¼ Seven Nolan Principles plus two individuals within it; further principles of Duty (Public ¼¼ Manage risks and performance Service) and Respect. through robust internal control and strong public financial management; and ¼¼ Implement good practices in transparency, reporting and audit to deliver effective accountability. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 20
Translating Principles into Action ¼¼ Roles, Responsibilities and Relationships (Guidance Note 3) The remaining sections of this guidance ¼¼ Effective Financial Management provide the practical advice that is needed to (Guidance Note 4) enable public bodies and Board members to apply the concepts of good corporate ¼¼ Ethics and Standards of Behaviour (Guidance Note 5) governance to their own organisations. They pull together good practice from the private These guidance notes explain the meaning of and public sectors to provide guidance to these dimensions of corporate governance Board members across the three main more fully and their relevance to you as a dimensions of corporate governance: Board member of a public body in Scotland.
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Roles, Responsibilities and Relationships Guidance Note 3 A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 22
Roles, Responsibilities Contents and Relationships
Overview
Key Messages
Key References
Fundamental Principles of Board Life
Role of the Board
Role of the Board as an Employer
Role of the Board Committees
Role and Responsibilities of the Board Member
Role and Responsibilities of the Chair
Role and Responsibilities of the Chief Executive
Role and Responsibilities of the Accountable Officer
Role and Responsibilities of the Minister
Role of the Scottish Government Sponsor Directorate
Managing Relationships
Diversity, Equality and Human Rights
Further information and contacts
March 2017 A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 23
Overview
Every member of a Board of a public body Executive, Scottish Ministers and the Scottish must be clear about their specific roles and Government sponsor Directorate. It explains responsibilities if the Board and the public the importance of managing these relationships body are to operate successfully. effectively, including a clear understanding of the strategic governance and decision-making This section outlines the roles and responsibilities of the Board and the responsibilities of the Board, its committees, operational and statutory accountability individual Board members and key internal and responsibilities of the Chief Executive, external stakeholders, such as the Chief including as the body’s Accountable Officer.
Key Messages
¼¼ The four main functions of the Board of ¼¼ The Chief Executive is accountable to a public body are: to ensure that the the Board for the overall organisation, body delivers its functions in management and staffing of the public accordance with Ministers’ policies and body. Where a public body manages its priorities; to provide strategic own budget, the Chief Executive is leadership; to ensure financial normally designated as its Accountable stewardship; and to hold the Chief Officer with responsibility for the Executive and senior management team proper management of public funds to account. under the public body’s control. The ¼¼ Board members must adhere to Board should have regard to the issues collective corporate responsibility, and concerns of the Accountable Officer. confidentiality and the highest ¼¼ Where an Accountable Officer considers standards of conduct. that any action that he/she is required ¼¼ Individual Board members should to take is inconsistent with the proper contribute fully to Board deliberations performance of his/her duties as and exercise a healthy challenge Accountable Officer, he/she should function. The Chair will ensure that all obtain written authority from the body Board members have an opportunity to for which he/she is designated. contribute to Board discussions. ¼¼ The Board focuses on strategy, ¼¼ Committees are established to deal with performance and behaviour – the Chief particular areas of interest outside main Executive advises the Board on all Board meetings and are required to matters and is solely responsible for submit substantive reports to operational issues. Board members summarise issues, debates and have no authority to instruct the Chief decisions. Executive or any member of staff on operational matters. ¼¼ The Chair has additional responsibilities to Board members, particularly leadership, directing a diverse team and harnessing the benefits of this, and the conduct of Board business. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 24
Key References Principle 3 – Conduct Board members have a responsibility to set Audit Committee Handbook an example by demonstrating the highest Audit Scotland – The Role of Boards standards of behaviour. It is important that Equality Act 2010 nothing you do or say when you are acting NDPB Model Framework Document as a Board member tarnishes in any way the reputation of the public body or the Board. If Scottish Public Finance Manual (Accountability) you have specific concerns about the manner in which the public body is being run, these Fundamental Principles of Board should be raised with the Chair in the first Life instance. If you fail to achieve resolution with There are three fundamental principles of the Chair, it is open to you to take them to Board life to which all Board members the relevant senior civil servant in the (including the Chair) must adhere: Scottish Government (usually a Director or Director-General) – but you should appreciate Principle 1 – Corporate Responsibility that this is a significant step. While Board members must be ready to offer constructive challenge, they must also share Role of the Board collective responsibility for decisions taken The four main functions of the Board are: to by the Board as a whole. If they ensure that the body delivers its functions in fundamentally disagree with the decision accordance with Ministers’ policies and taken by the Board, they have the option of priorities; to provide strategic leadership; to recording their concerns in the minutes. ensure financial stewardship; and to hold the However, ultimately, they must either accept Chief Executive and senior management team and support the collective decision of the to account. It has corporate (collective) Board – or resign. Board decisions should responsibility, under the leadership of the always comply with statute, Ministerial Chair, for the following: directions (where this is provided for in ¼¼ Taking forward the strategic aims and statute), Ministerial guidance and the objectives for the body agreed by the objectives of the sponsor Directorate, as Scottish Ministers; appropriate (noting of course that ¼¼ Determining the steps needed to deal certain bodies are required to demonstrate with changes which are likely to impact independence in order to maintain on the strategic aims and objectives of credibility). the body or on the attainability of its operational targets; Principle 2 – Confidentiality ¼¼ Promoting the efficient, economic and All Board members must respect the effective use of staff and other resources confidentiality of sensitive information held by the public body consistent with the by the public body. This includes commercially principles of Best Value, including, where sensitive information, personal information appropriate, participation in shared and information received in confidence by services and/or collaborative service the organisation. It is also essential that delivery arrangements; debate of a confidential nature inside the ¼¼ Ensuring that effective arrangements Boardroom is not reported outside it. are in place to provide assurance on risk management, governance and internal control; A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 25
¼¼ Taking into account relevant guidance Providing Strategic Leadership issued by Scottish Ministers; The Board usually fulfils its leadership role ¼¼ Receiving and reviewing regularly by developing the public body’s corporate financial information concerning the strategy. The Board then agrees a corporate management and performance of the plan to turn the strategy into action over a public body and being informed in a period of about three years and promotes timely manner about any concerns regarding the activities of the continuous improvements in corporate public body; performance over this period. Both the strategy and corporate plan must align with ¼¼ Ensuring systems are in place to enable early notification to be provided to the the remit of the organisation, the National Scottish Government about emerging Performance Framework and the National issues which will impact on the operation Outcomes and indicate how the public body or reputation of the public body; will contribute to public service reform. ¼¼ Appointing (with the approval of the The corporate plan will usually be approved Scottish Ministers) the public body Chief by the Scottish Ministers. Ministers should Executive and, in consultation with the write to sponsored bodies at least annually Scottish Ministers, setting appropriate setting out the policies and priorities which performance objectives and remuneration terms linked to these they wish them to pursue. objectives which give due weight to the proper management and use of resources within the stewardship of the public body and the delivery of outcomes; and ¼¼ Demonstrating high standards of corporate governance at all times, including openness and transparency in its decision-making.
Representing Ministerial Interests In the majority of cases, Boards of public bodies are appointed by Ministers to ensure delivery of Ministerial policies. Board members should be clear about Ministerial policies and expectations for their public body. If they are in any doubt on this point, they should seek clarification from the Chair or sponsor Directorate. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 26 > PROVIDING STRATEGIC LEADERSHIP
The Board ¼¼ Develops and agrees the organisation’s organisation adopts and complies with strategy; Codes of Conduct for Staff and the Board; ¼¼ Sets cost effective plans to implement the strategy; ¼¼ Ensures that the highest standards of governance are complied with, that the ¼¼ Ensures that the strategy and plans are organisation complies with all aligned with the National Performance Ministerial guidance, its Framework Framework and the public body’s Document and legislation, and that a statutory duties, and the policies and framework of prudent and effective priorities of the Scottish Government; controls is in place to enable risks to be ¼¼ Reviews the public body’s corporate assessed and managed; and business plans and performance on ¼¼ Focuses on the positive impact that the a regular basis, including their own organisation is making in the outside performance as a Board; world, i.e. effects on customers and ¼¼ Establishes a performance management citizens; and framework which enables under- ¼¼ Ensures that the public body is a Best performance of the body to be Value organisation and delivers Value addressed quickly; for Money for the public sector as a ¼¼ Establishes the values and standards of whole. the organisation and ensures that the
Ensuring Financial Stewardship The Board is collectively responsible for complies with the financial requirements ensuring that the organisation adheres to contained in the Framework Document and strict standards of financial propriety, and the Scottish Public Finance Manual. > ENSURING FINANCIAL STEWARDSHIP
The Board ¼¼ Satisfies themselves that financial ¼¼ Has regard to the issues and concerns information is accurate and that of the Accountable Officer; and financial controls and systems of risk ¼¼ Approves high value, novel or management are robust and defensible; contentious expenditure proposals, for ¼¼ Considers and approves forward budget submission to the Scottish Government allocations and financial targets within and Ministers for approval when it is key strategic and planning documents, necessary/appropriate to seek approval such as corporate and operational from the Scottish Government. business plans; ¼¼ Monitors the financial position against budget allocations and key financial targets and takes corrective action where required; A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 27 > Holding the Chief Executive to account HOLDING THE CHIEF EXECUTIVE TO ACCOUNT It is the Board’s duty to hold the Chief Executive (and senior management team) to The Board: account for the operational management of ¼¼ Ensures an effective team and the organisation and the delivery of agreed management arrangements are in plans on time and within budget. place at the top level of the organisation; ¼¼ Oversees the development (and review) of the corporate strategies, plans and policies of the public body; ¼¼ Ensures the operation and work of the public body is closely aligned with the work of other service delivery public bodies in support of the wider aims of public service delivery and reform; ¼¼ Oversees the development of performance and key financial targets; ¼¼ Monitors performance and ensures that corrective action is taken to address any under-performance; and ¼¼ Provides continuity of direction and effective management by making appropriate arrangements for delegation. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 28
Role of the Board as an Employer Role of the Board Committees In most cases the Board is the employer of Many Boards establish committees to deal the individuals who work for the public body, with particular areas of interest outside of although the management of staff, apart from main Board meetings. The extent to which the Chief Executive (whose performance is Boards use committees will be dependent on appraised by the Chair), is a matter for the the size of the organisation. Examples of executive. Board committees include: The Board should be satisfied that the public ¼¼ Remuneration Committee body is meeting its moral and legal obligations ¼¼ Audit Committee to its employees and that the senior ¼¼ Succession Planning Committee management team is fulfilling its obligations ¼ in this regard. ¼ Area or Regional Boards where appropriate. The Board is usually responsible for the recruitment of the Chief Executive and, in Committees may also be set up to deal with some cases, other senior staff. If you take specific aspects of the Board’s role, such as: part in a recruitment exercise, you will need ¼¼ Staff Governance to be familiar with employment legislation ¼¼ Finance and any codes of best practice in relation to ¼ equal opportunities issues. You should ¼ Policy receive training in recruitment and selection ¼¼ Development before serving in that capacity. ¼¼ Clinical Governance (in the NHS). > ROLE OF THE BOARD AS AN EMPLOYER Where appropriate, committees can allow for specialist areas relating to the Board’s role to This includes ensuring that the be debated in detail by members with the body: appropriate knowledge or skills. The key points can then be presented to the full ¼¼ Has policies and procedures that Board for ratification, making more effective comply with employment law; use of scarce time. As the Board cannot be ¼¼ Avoids discrimination of any kind expected to understand the issues dealt with against current or potential by the committee from the minutes alone, it employees and has policies to will generally require substantive reports guarantee equal opportunities and from the committee to summarise issues, value diversity; debates and recommendations. ¼¼ Has in place agreed terms and conditions of employment which For some organisations individuals with should reflect the general standards specific skills and/or expertise may be set out in the Model Code for Staff; invited to serve on committees as co-opted ¼¼ Has in place clear policies and members. Co-opted members do not hold strategies relating to staff; and Board member status and must never constitute a majority of the membership of ¼¼ Complies with all health and safety requirements. any committee. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 29
Role and Responsibilities of the the Code of Conduct adopted by the public Board Member body and with the rules relating to the use of public funds and to conflicts of interest. In this Your specific role as a Board member will context ‘public funds’ means not only any depend on the role of the Board to which you funds provided to the public body by the have been appointed and the capacity in Scottish Ministers but also any other funds which you have been appointed, but will falling within the stewardship of the public normally cover a number of general duties body, including trading and investment and responsibilities. income, gifts, bequests and donations. General Individual Board members should act in guidance on Board members’ responsibilities accordance with the responsibilities of the will be summarised in their letter of Board as a whole and comply at all times with appointment. > ROLE AND RESPONSIBILITIES OF THE BOARD MEMBER
The Board member ¼¼ Understands the operational ¼¼ Monitors the reporting of performance environment in which their public body and holds management to account operates within the context of the through purposeful and constructive wider public service delivery challenge and scrutiny; landscape; ¼¼ As necessary, seeks further information ¼¼ Attends Board meetings on a regular than that which is provided to give basis and is well prepared by reading assurance on organisational relevant papers in advance and, if performance; necessary, seeks further information to ¼¼ Questions and, as necessary, challenges ensure their understanding; proposals made by fellow Board ¼¼ Attends training events and keeps up to members and the executive team date with subjects relevant to the constructively and carefully to reach public body’s work; and articulate a considered view on their suitability; ¼¼ Contributes to the work of any committees that have been established ¼¼ Provides a creative contribution to the by the Board; Board by providing independent oversight on issues of strategy, ¼¼ Represents the Board at meetings and performance and resources; stakeholder events when required; ¼¼ Behaves in accordance with the agreed ¼¼ Contributes to strategic development Code of Conduct; and and decision-making; ¼¼ Establishes and promotes the public ¼¼ Clarifies which decisions are reserved body’s role in the community. for the Board and which should be delegated; A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 30
Performance Appraisal You have been appointed to the Board You may be re-appointed for second and because your personal skills, knowledge and subsequent terms in the same role without experience match the criteria for the post and open competition, if you possess the skills meet the needs of the public body. Your and knowledge required on the Board at the performance as a Board member will be time of re-appointment. You will only be regularly reviewed throughout the term of considered for re-appointment if your your appointment, usually by the Chair of the performance has been properly assessed as public body. All Board members should effective during the initial period of receive a performance appraisal every year appointment. The final decision as to whether that assesses their performance in relation to or not you are re-appointed ultimately rests certain pre-established criteria and with the Minister, subject to the specific objectives, and provides an opportunity for nature of your public body’s constitution, the meaningful dialogue. needs of the Board for the foreseen period of the re-appointment and the terms upon The Chair is responsible for the annual which you are appointed. No member’s total appraisal of the Chief Executive and the Chair period of appointment in the same position will be appraised on an annual basis by the may exceed eight years. This eight year relevant Scottish Government Director or maximum is based on the aggregate time in Deputy Director (as appropriate). post and applies regardless of whether the Re-appointment to the Board time in post was continuous or not. The terms The Scottish Ministers will determine the and conditions of re-appointment should be period for which an appointment, re-appointment outlined in a re-appointment letter. or extension to an appointment term is to be Nomination to the Board of Another made, based on the needs of the public body Organisation concerned. Some public bodies have the right to Ministers will consider whether the needs of nominate one or more Board members to the a Board will most effectively be met by an Board of another organisation. If you are appointment, re-appointment or extension to nominated to be a Board member on a public an appointment term subject to any relevant body which is also a limited company, you provisions in the legislation which will assume personal responsibilities as a established the public body. They will balance Company Director under the Companies Acts. the continuity provided by re-appointment Any breach of your legal responsibilities as a and term extensions with the opportunity to Company Director could have serious increase the diverse range of relevant skills, consequences for you personally. If you knowledge and experience on a Board by are in any doubt as to your position, you making a new appointment through open should take legal advice from the Board’s competition. legal advisers. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 31
Civil Liability as a Board Member The Role of Non-Ministerial Appointed If you, as an individual Board member, incur Members a civil liability in the course of carrying out The vast majority of Board members in your responsibilities for the Board, you will Scotland are appointed by Scottish Ministers; not have to pay anything out of your own however there are instances where Board pocket provided that you have acted honestly composition varies to include a mix of and in good faith. However, this indemnity directly elected or local authority nominated does not protect you if you have acted members. Provision for such arrangements recklessly or in bad faith. will normally be set out in the public body’s enabling legislation. Removal from Office In circumstances where it is considered In many cases, the founding legislation or the appropriate, a mix of Board membership is Board’s standing orders will set out the generally designed to deliver a balance grounds on which you may be removed as a between local and national representation in Board member, such as: the decision-making process. ¼¼ Bankruptcy ¼¼ Becoming incapable of performing your However, regardless of composition, all duties as a Board member Boards are expected to play a key role in the delivery of the Scottish Government’s ¼¼ Consistent absence from Board meetings Purpose through alignment with the National ¼¼ Being convicted of an indictable offence. Performance Framework, and are required to Charity Trustees adhere to the established principles of public sector accountability and governance set out Some public bodies hold charitable status. in this guidance, including collective This has implications for Board members who responsibility for decisions and actions and will also act as charity trustees for the confidentiality. Further clarification about purposes of the Charities and Trustee roles and responsibilities should be provided Investment (Scotland) Act 2005. A charity by the Chair and/or the Chief Executive. trustee is a person who has the general control and management of the administration of a Role and Responsibilities of the charity. A charity may refer to its charity Chair trustees in a number of ways including management committee members, directors The Chair has additional responsibilities over and Board members. If a Board member is and above those of Board members, also the trustee of the charity, they will have particularly in relation to leadership and the the same general duties of any other charity conduct of Board business. The Chair of a trustee as set out at section 66 of the 2005 sponsored body is accountable to the Scottish Act. The Office of the Scottish Charity Ministers and, in common with any individual Regulator’s guidance publication, ‘Guidance with responsibility for devolved functions, for Charity Trustees’, gives further details on may also be held to account by the Scottish the duties of charity trustees. Parliament. The Chair of a Non-Ministerial body is only held to account by the Scottish Parliament. Communications between the public body Board and the Scottish Ministers should normally be through the Chair. They are responsible for ensuring that the public body’s policies and actions support the Scottish Ministers’ wider strategic policies A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 32
if these apply to the body and that its affairs between the Chair and the Scottish are conducted with probity. The Chair is Government sponsor Directorate is important appraised by the relevant Director or Deputy to supporting the effective performance and Director on behalf of Ministers. Mutual delivery of the public body. investment in a constructive relationship > ROLE AND RESPONSIBILITIES OF THE CHAIR
The Chair ¼¼ Leads representation and links with ¼¼ Ensures the Scottish Ministers are Ministers and Scottish Parliament; advised of the body’s needs when Board vacancies arise; ¼¼ Leads the Board, ensures that the Board has the ability to carry out ¼¼ Ensures the Board members are fully functions effectively and chairs Board briefed on terms of appointment, meetings; duties, rights and responsibilities; ¼¼ Leads the Board’s approach to strategic ¼¼ Together with the other Board planning; members, receives appropriate induction training, including on ¼¼ Leads the Board’s approach to the financial management and reporting establishment of committees and requirements and, as appropriate, on ensures the Board considers any differences that may exist between substantive reports from any private and public sector practice; committees established; ¼¼ Ensures there is a Code of Conduct for ¼¼ Ensures that the work of the Board and Board members in place, approved by any committees is subject to regular the Scottish Ministers; self-assessment and that the Board is operating strategically and effectively; ¼¼ Assesses the performance of individual Board members on a continuous basis ¼¼ Leads the Board’s approach to and undertakes a formal appraisal at succession planning to ensure the least annually; and Board is diverse and effective; ¼¼ In consultation with the Board as a ¼¼ Ensures that the Board, in accordance whole, as appropriate, is responsible with recognised good practice in for undertaking an annual appraisal of corporate governance, is diverse both the performance of the Chief Executive. in terms of relevant skills, experience and knowledge appropriate to directing the public body’s business, and in terms of protected characteristics under the Equality Act; A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 33
Role and Responsibilities of the Chief Executive The Chief Executive of the public body is and targets met through effective and employed and appointed by the Board (with properly controlled executive action. The the approval of Scottish Ministers). They are Chief Executive’s general responsibilities will the Board’s principal adviser on the discharge include performance management and of its functions and will be accountable to the staffing of the public body. In summary, the Board. The Chief Executive’s role is to provide Board focuses on strategy, performance and operational leadership to the public body, behaviour – the Chief Executive advises the and ensure that the Board’s aims and Board on all matters and is solely responsible objectives are met and the public body’s for operational issues. functions are delivered > ROLE AND RESPONSIBILITIES OF THE CHIEF EXECUTIVE
Chief Executive ¼¼ Advises the Board on the discharge of Scottish Government; that the Scottish its responsibilities – as set out in the Government is notified promptly if Framework Document, in the founding overspends or underspends are likely legislation and in any other relevant and that corrective action is taken; and instructions and guidance issued by or that any significant problems, whether on behalf of the Scottish Ministers – and financial or otherwise, and whether implements the decisions of the Board; detected by internal audit or by other means, are promptly notified to the ¼¼ Ensures that financial considerations Scottish Government; are taken fully into account by the Board at all stages in reaching and ¼¼ Ensures robust performance and risk executing its decisions, and that management arrangements, consistent appropriate financial appraisal and with the Scottish Public Finance evaluation techniques, consistent with Manual, are in place to support the the Scottish Public Finance Manual, are achievement of the public body’s aims followed; and objectives and facilitate comprehensive reporting to the Board, ¼¼ Prepares the public body’s corporate the Scottish Government and the wider and business plans, in the light of the public; strategic aims and objectives agreed by the Scottish Ministers where the body ¼¼ Ensures that the public body adheres, is sponsored; where appropriate, to the Scottish Government’s Programme and Project ¼¼ Advises the Board on the performance Management Principles; of the public body compared with its aims and objectives; ¼¼ Ensures that adequate systems of internal control are maintained by the ¼¼ Ensures effective relationships with public body, including effective Scottish Government officials – across measures against fraud and theft the wider organisation, as necessary, consistent with the Scottish Public and with the sponsor Directorate in Finance Manual; and particular; ¼¼ Establishes appropriate documented ¼¼ Ensures that timely forecasts and internal delegated authority monitoring information on performance arrangements consistent with the and finance are provided to the Scottish Public Finance Manual. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 34
Role and Responsibilities of the Accountable Officer The Permanent Secretary to the Scottish Executive at the time of formal designation Government is the Principal Accountable (normally at the same time as they are Officer of the Scottish Administration. The appointed as Chief Executive). Principal Accountable Officer designates It is incumbent on the Chief Executive to Directors-General as Portfolio Accountable combine their Accountable Officer Officers. The Portfolio Accountable Officer responsibilities to the Scottish Parliament has specific responsibilities with regard to a with their wider responsibilities to the Board. sponsored public body with its own The Board and Chair should be fully aware of, Accountable Officer. These are set out in a and have regard to, the Accountable Officer Memorandum sent by the Principal responsibilities placed upon the Chief Accountable Officer on appointment. The Executive. Portfolio Accountable Officer has no responsibilities in respect of Non-Ministerial If the Board has serious concerns about the bodies. actions and performance of the public body’s Accountable Officer, it can recommend to the Where a public body manages its own Principal Accountable Officer that budget, the Chief Executive will normally be Accountable Officer status should be designated as its Accountable Officer. withdrawn or suspended. The same option is Accountable Officers are personally open to the Principal Accountable Officer in answerable to the Scottish Parliament for the the exercise of their own responsibilities. exercise of their functions, as set out in the Memorandum to Accountable Officers for Other Public Bodies issued to the Chief > ROLE AND RESPONSIBILITIES OF THE ACCOUNTABLE OFFICER
The Accountable Officer ¼¼ Signs the annual accounts and ¼¼ Has a statutory duty to obtain written associated governance statements; authority from the Board/Chair before taking any action which they consider ¼¼ Ensures the propriety and regularity of would be inconsistent with the proper the public body’s finances and that performance of the Accountable Officer there are sound and effective functions. The Accountable Officer arrangements for internal control and should also notify, where considered risk management; appropriate, the relevant Portfolio ¼¼ Ensures that the resources of the public Accountable Officer; body are used economically, efficiently ¼¼ Represents the public body before the and effectively, and that arrangements Public Audit Committee of the Scottish are in place to secure Best Value for the Parliament; and organisation and deliver Value for Money for the public sector as a whole; ¼¼ May have their Accountable Officer status withdrawn or suspended if the ¼¼ Ensures compliance with applicable Principal Accountable Officer has guidance issued by the Scottish serious concerns about their actions Ministers, in particular the Scottish and performance. Public Finance Manual; A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 35 > Role and Responsibilities of the ROLE AND RESPONSIBILITIES OF THE Minister MINISTER Every public body is expected to be aware of, and work within, a strategic and operational The Minister framework determined by the Scottish Ministers. Most fall within the portfolio of a ¼¼ Considers and approves the public body’s strategic objectives and the specific Scottish Minister who will set overall policy and performance framework policy aims, define expected outcomes arising within which it operates; from implementation of that policy and ¼¼ Secures and approves the allocation review progress against outcomes. of public funds for public bodies; Public bodies are sometimes described as ¼¼ Approves key documents such as the operating at ’arm’s length‘ from Ministers but Framework Document and corporate this does not mean that they are outwith plan for most public bodies; Ministerial control. The Minister will decide ¼¼ Makes appointments to the Board; how much independence and flexibility the ¼¼ Approves the terms, conditions and public body should have, depending on its remuneration of the Chair and Board size, constitution, the nature of its functions members; and the legislation under which it operates. ¼¼ Approves the Chief Executive’s and Ministers may seek to increase their staff pay remit in line with Scottish understanding of the public body through Government Pay Policy; formal meetings with the public body’s Chair ¼¼ Lays accounts, together with the and Board and other more informal events. annual report, of sponsored public The founding legislation for a public body bodies before Parliament (Non- may also give Ministers the power to issue a Ministerial public bodies do this formal direction requiring it to take particular themselves); action. However, the use of such formal ¼¼ Fulfils any responsibilities specified powers is extremely rare. in the founding legislation, charter or articles of association, such as As Ministers are responsible to the Scottish approving the appointment of the Parliament, they may be asked at any time to Chief Executive; and attend Parliament or one of its Committees to ¼¼ Issues letters of strategic guidance to answer questions from Members of the sponsored public bodies. Scottish Parliament (MSPs) about the activities of public bodies within their remit. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 36 > The Role of the Scottish MODEL FRAMEWORK DOCUMENT Government Sponsor Directorate Contents: The day-to-day link between a sponsored body and the Minister is provided by the sponsor ¼¼ The legislative basis under which the Directorate. Within the sponsor Directorate, a public body was established and its sponsor team will ensure that the public body statutory functions, duties and is adequately briefed about the Scottish powers; Government’s policies and priorities. That team ¼¼ Aims and objectives, how these are will monitor the body’s activities on behalf of to be delivered and the key targets the Minister. However, civil servants from the to be achieved; sponsor Directorate will not normally attend ¼¼ The roles and responsibilities of Board meetings of the public body. On any Ministers, a sponsor Directorate, the occasion that they do, they should do so as Chair, Board members, the Chief observers, not participants, and are not party Executive and other senior officials; to decisions taken by the Board. and the public body’s accountability to Ministers (where appropriate) and Responsibility for ensuring Non-Ministerial to the Scottish Parliament; public bodies are appropriately briefed about ¼¼ Arrangements for the planning, the Scottish Government’s policies lies with the budgeting and control of the public relevant Director-General. body’s activities and expenditure, including funding, preparation of The sponsor team prepares a Framework corporate and business plans and Document which sets out formally the setting of performance targets; relationship between the public body and the ¼ Minister and officials. While Framework ¼ Arrangements for preparation and publication of the annual report and Documents vary according to the functions, accounts and external audit powers and finances of the public body, the procedures; and Model Framework in the Scottish Public ¼¼ Responsibilities of the public body Finance Manual provides a useful template. for recruitment, pay, grading and The Framework Document for a Non-Ministerial other personnel matters. public body is prepared by the body itself based on good practice examples in existence. Where appropriate the Framework Document will be drawn up by the Scottish Government, in consultation with the public body, and it will be reviewed at least every two to three years. The key focus for much of the sponsorship role is to support sponsored bodies in being accountable, high performing organisations, delivering Value for Money services, which meet people’s needs, as outlined in their business plan. An excellent sponsorship function is underpinned by two key elements: ¼¼ good governance structures and processes; and ¼¼ good relationships with the public body, based on openness, trust, respect and mutual support. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 37
Managing Relationships As a Board member, you should support the Chair in their efforts to conduct Board Strategic and Operational Responsibility business in an efficient and effective manner. It is important that the Board maintains a However, you should not hesitate to focus on strategy, performance and challenge the Chair if you believe that a behaviour and is not diverted by detailed decision is wrong (even illegal) or is in operational matters which are the contravention of the Framework Document responsibility of the Chief Executive and the or formal instruction from Ministers, or has Senior Executive Management Team. been taken without a full and proper debate. The Board should clearly differentiate their Relationships with Stakeholders role in strategic governance and leadership The Board needs to consider the concerns from that of operational management. The and needs of all stakeholders and actively Board should protect the Chief Executive and manage its relationships with them. Senior Executive Management Team from Stakeholders – and the general public – individual Board members becoming should have access to full and accurate involved in operational matters. Individual information on the decision-making Board members have no authority to instruct processes and activities of each public the Chief Executive or any member of their body and have the opportunity to influence staff on such matters. decisions and actions. Decision-Making Scottish Ministers expect all public bodies to The Board should give all matters reserved to communicate clearly with their stakeholders, them due consideration and take ownership make information widely available, consult of the decisions taken. For instance, the thoroughly and imaginatively and seek Board should not simply ‘rubber stamp’ feedback on the public body’s performance, strategy proposals or a draft corporate plan acting on it as appropriate. put forward by the Chief Executive. It is important that both the Chief Executive and > the Board understand the distinct nature of COMMUNICATION WITH STAKEHOLDERS their roles. The Board should consider: Audit Scotland’s report on The Role of Boards provides useful information about the ¼¼ Holding an Annual Open Meeting; operation of Boards in the public sector, ¼¼ Holding Board meetings in public, including a series of questions at Annex 3 for unless there is a good reason not to; Boards and individual Board members to ask ¼¼ Publishing summary reports and/or themselves about how well they are working. minutes of meetings; The Chair and Board Members ¼¼ Inviting evidence from members of Individual Board members should contribute the public in relation to matters of fully to Board deliberations and exercise a public concern; healthy challenge function. This expectation ¼¼ Consulting stakeholders and users on extends to Executive Directors (where, as is a wide range of issues; and the case in many NHS bodies, they are Board ¼¼ Making business and corporate plans members). However, it is important that no and the Annual Report and Accounts individual Board member (or Chair) dominates widely available. the debates or has an excessive influence on Board decision-making. The Chair has an important role to play in ensuring that all Board members are enabled and encouraged to contribute to Board discussions. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 38
Diversity, Equality and Human ¼¼ providing mentoring, shadowing and Rights training opportunities for potential Board members; and Diversity ¼¼ establishing a succession planning The Scottish Ministers expect all public committee. bodies to champion diversity and mainstream From April 2017, public authorities are equal opportunities. Equality, diversity and required to report on the steps they are inclusion need to become central to the work taking towards diversity amongst their and the way the public bodies operate. The members in terms of relevant protected Board should give specific consideration to characteristics. This will be through the the impact on equality of opportunity when mainstreaming reports that are published developing policies and making decisions. every two years as part of the requirements The Board should also look at how of the Equality Act 2010 (Specific Duties) information can be presented to different (Scotland) Regulations 2012 and should form groups in formats that best suit their needs part of Board succession planning. and find ways of consulting effectively with people with different needs and backgrounds. Equality Scottish Ministers particularly welcome Equality and fairness are at the heart of the applications for public appointments from Scottish Government’s ambition for a socially groups that are under-represented on just and inclusive Scotland. They are central Scotland’s public bodies, with the aim of to its purpose, outcomes and approach to ensuring that Boards of public bodies are public service reform. broadly reflective of the wider Scottish The public sector equality duty in the population and have a gender balance by Equality Act 2010 came into force in April 2020. Public bodies are expected to take 2011 – this is often referred to as the general positive action to support and enable greater duty. Scottish public authorities must have diversity of Ministerial appointments, ‘due regard’ to the need to eliminate unlawful through: discrimination, advance equality of ¼¼ taking an active role in succession opportunity and foster good relations. planning, and providing advice to Scottish Ministers made regulations in May Ministers about the Board’s membership 2012 placing specific duties on Scottish needs, both for new and re-appointments; public authorities, as defined in the ¼¼ ensuring that suggested criteria for the regulations, to enable the better performance selection of new Board members meet of the public sector equality duty. These are the needs of the body, are unbiased and also known as the Scottish Specific Duties. are not unnecessarily restrictive; Public bodies should ensure that they operate ¼¼ taking action both during and between in a way which promotes equality of Board member recruitment exercises to attract the broadest range of candidates opportunity and all policies must meet the to the work of the Board; requirements of equality legislation. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 39 > Human Rights FURTHER INFORMATION AND CONTACTS Under the Human Rights Act 1998, it is unlawful for a public body to act in a way that is incompatible with a right under the European Convention on Human Rights. The Board should seek assurances from the Chief Executive that the policies and procedures in place within the public body are compatible with Convention rights. The Board should The Data Protection Act 1998 also be committed to protecting the privacy of individuals in relation to how personal Equality Act 2010 information is used as required by the Data Equality Act 2010 (Specific Duties) (Scotland) Protection Act 1998. Regulations 2012 Guidance on Succession Planning for Public Bodies Freedom of Information (Scotland) Act 2002 Information Commissioner’s Office (Data Protection) Human Rights Act 1998 Principles of Strategic Engagement – December 2011 The Commissioner for Ethical Standards in Public Life Scottish Information Commissioner (FOI) Standards Commission for Scotland A GUIDE FOR MEMBERS OF OnOn Board Board STATUTORY BOARDS 40
Effective Financial Management Guidance Note 4 A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 41
Effective Financial Contents Management
Overview
Key Messages
Key References and Contacts
Scottish Public Finance Manual
Budgeting in a Public Body
Best Value
Efficient Government
Relocation
Annual Reports and Accounts
Performance Measurement and Reporting
Risk Management and Internal Controls
Audit Committee
Internal Audit
External Audit
The Public Audit and Post-legislative Scrutiny Committee of the Scottish Parliament
Further Information
March 2017 A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 42
Overview
The Board, Chief Executive and senior This section explains key aspects of the management team must demonstrate Scottish Public Finance Manual which aim to effective financial stewardship of public ensure proper stewardship of public funds. It funds. They must meet the requirements of covers the allocation of funds to public the Public Finance and Accountability bodies by Scottish Ministers, the requirement (Scotland) Act 2000 and the Scottish Public for robust financial monitoring and reporting Finance Manual, including the need to systems, the importance of effective risk account for the use of public money and the management and internal controls, and the safe keeping of public assets. processes by which internal and external audit provide assurance on the proper management of public funds and resources.
Key Messages
¼¼ The Board satisfies itself that the public ¼¼ The Board is responsible for approving body has proper processes, systems and the annual accounts; controls in place and receives assurances ¼¼ The Board of a sponsored body is from the Chief Executive that the responsible for ensuring the Minister is Scottish Public Finance Manual is being provided with the annual report and complied with. The Board also seeks accounts to be laid before the Scottish assurance that systems are in place to Parliament. In the case of a Non-Ministerial provide accurate and timely information body, the Board is responsible for ensuring to the Scottish Government as part of the the annual report and accounts are laid management of the Scottish Budget. before Parliament. The Chief Executive as ¼¼ The Board receives regular financial the Accountable Officer of the public body reports showing expenditure against is responsible for signing the accounts and planned budgets and progress towards ultimately responsible to the Scottish financial targets and efficiency savings. Parliament for their actions. ¼¼ The Board scrutinises financial and ¼¼ On completion of the external audit of corporate plans and provides challenge the annual accounts, the appointed on performance against these plans and auditor sends a copy of the accounts any underlying assumptions. and the audit opinion to the Auditor General, who may add a report of their ¼¼ The Board satisfies itself that the public own, before the accounts and reports are body has systems in place to secure Best laid before the Parliament. Value in the performance of its functions. ¼¼ The Public Audit and Post-legislative ¼¼ The Board satisfies itself that systems Scrutiny Committee uses reports of the are in place for risk management and Auditor General as the basis for internal control extending from front- conducting enquiries. line services through to the Board. ¼¼ Where an organisation is responsible for expenditure, an Audit Committee must be established to advise the Board on internal control (including corporate governance) and audit matters. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 43
Key References and Contacts
Scottish Public Finance Manual Audit Scotland (Improving Public Service Efficiency) Scottish Public Finance Manual (Best Value) Public Finance Accountability (Scotland) Act 2000 Audit Scotland Scottish Parliament (Public Audit and Post- legislative Scrutiny Committee)
The Scottish Public Finance Manual It is important to recognise that the Accountable Officer’s role in relation to Value The primary document that governs all for Money is not a narrow one, restricted to matters relating to public finance and considerations affecting that body, but, as reporting in Scottish public bodies is the defined by the SPFM, Value for Money is to Scottish Public Finance Manual (SPFM). be judged for the public sector as a whole. The SPFM provides guidance to your public This wider consideration of Value for Money body and its sponsor Directorate on the would be relevant to considerations of proper handling of public funds. It is mainly property and accommodation, for example, in designed to ensure compliance with statutory relation to shared services. and parliamentary requirements (in particular, the Public Finance and Budgeting in a Public Body Accountability (Scotland) Act 2000) to The resources allocated to bodies by Scottish promote Value for Money and high Ministers are determined as part of the standards of propriety, and to secure Spending Review process. Spending Reviews effective accountability and good systems take place every few years. of internal control. This process dovetails with the United The Board must ensure that the public body Kingdom Spending Review which largely sets has processes and systems in place to ensure the overall Scottish budget for each Spending compliance with the SPFM. Board members Review period. After deduction has been should look to the Chief Executive made for the costs of the Scotland Office plus (Accountable Officer) and staff of the public the Scottish Parliamentary Corporate Body body for advice and assurance that the SPFM and Audit Scotland, the Scottish Government is being complied with. has full discretion to decide how the Scottish The Accountable Officer has a personal budget should be divided between its various responsibility for the propriety and portfolios, Non-Ministerial Offices and regularity of the finances under their programmes. The grant-in-aid necessary to stewardship and for the economic, efficient support the agreed budgets of sponsored and effective use of all related resources. bodies is authorised by the Scottish Accountable Officers are personally Parliament in the annual Budget Act. answerable to the Parliament for the exercise Sponsored bodies are expected to provide of their functions and have a statutory duty supporting material to the sponsor to obtain written authority from, as the case Directorate as part of the latter’s contribution may be, the Scottish Ministers or relevant to both the Spending Review and the annual governing body before taking any action that budgetary process. Non-Ministerial Offices they consider may be inconsistent with the provide supporting material to the Finance proper performance of their functions. The Directorate within the Scottish Government. system is designed to promote good Wherever possible, this should be done as governance. part of their own annual planning arrangements and they should therefore take A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 44 all reasonable steps to harmonise the Best Value, Efficient Government planning process with those of the Spending and Relocation Review and annual budgetary process. Best Value The Scottish Government should write to Best Value provides a common framework sponsored bodies at least annually setting for continuous improvement in public out the policies and priorities which services in Scotland, and is a key foundation Ministers wish them to pursue. Where a of the Scottish Government’s public service public body receives grant-in-aid, this is most reform agenda. commonly done through a Budget Allocation and Monitoring letter issued in advance of The principles of Best Value complement the financial year. This letter confirms the good governance standards and offer a sound resources that Ministers have allocated to the approach to running a public service body and sets out the priority areas of work organisation. that Ministers wish the body to pursue. The duty of Best Value, as set out in the Where a sponsored body does not receive SPFM, is to make arrangements to secure grant-in-aid, an equivalent letter should continuous improvement in performance be received from the Scottish Government whilst maintaining an appropriate balance covering the priority areas to be pursued. between quality and cost and in making The letter should draw on material from the those arrangements and securing that corporate plan and the Spending Review and balance, to have regard to economy, any further instructions from Ministers. efficiency, effectiveness, the equal opportunities requirements and to contribute Typically the Board of a sponsored body will to the achievement of sustainable be responsible for the approval of the development. Best Value ultimately is about corporate plan (and possibly operational creating an effective organisational context plans) before submission to the sponsor from which public bodies can deliver their Directorate. The Board should receive regular key outcomes. financial reports (at least quarterly) showing expenditure/use of resources against planned budgets and progress towards financial targets including projected efficiency savings. Board members should provide the ‘challenge function’, carefully scrutinising plans, performance against plans and underlying assumptions. The Board will also approve high value, novel or contentious expenditure proposals for submission to the Scottish Government and Ministers for approval when it is necessary/ appropriate to seek approval from the Scottish Government. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 45
Accountable Officers appointed by the Efficient Government Principal Accountable Officer for the Scottish The Public Services Reform (Scotland) Act Administration have a specific responsibility 2010, section 32(1)(b) provides that as soon to ensure that arrangements have been made as is reasonably practicable after the end of to secure Best Value. The Scottish Ministers each financial year each listed public body expect all Accountable Officers to comply must publish a statement of the steps it has with the duty of Best Value and for any taken during that financial year to improve associated matters relating to Value for efficiency, effectiveness and economy in the Money, judged for the public sector as a exercise of its functions. Efficiency is not whole placed upon them. In addition the about making cuts, it is about enhancing Value Boards (or equivalents) of relevant public for Money, improving public service and service organisations have corporate raising productivity and as such efficient responsibility for promoting the efficient and Government is focused on the sound effective use of staff and other resources by management of resources and ensuring that the organisations in accordance with the public bodies continually review their principles of Best Value. Under the terms of operations to identify opportunities for the Public Finance and Accountability efficiency improvements. Efficiency (Scotland) Act 2000 the implementation of improvements are about improving the ratio the duty of Best Value by relevant public of resource inputs to outputs and can be made service organisations is subject to scrutiny in any area, including the administration and by the Auditor General for Scotland. delivery of services and in the procurement of As a Board member, you should always bear goods and services. By making efficiency in mind the need for your public body to savings, more resources are available for continually secure Best Value in the re-investing in the delivery of public services. performance of its functions. In a tight Opportunities for efficiency improvements financial climate, service improvements may within your body should be identified as part need to be funded from internal efficiencies. of the corporate and business planning Audit Scotland has adopted a generic processes. As a Board member you should framework for Best Value for all public ensure that such opportunities are being bodies. This enables a consistent approach to identified and that arrangements are in place auditing against Best Value principles across for measuring, monitoring, and reporting on the public sector. Sustainable development the delivery of efficiency savings and equalities are themes that run through to the Board. the framework. It is a risk-based approach, This should include having efficiency recognising the increasing focus on performance indicators (such as a range of partnership working, with the specific aim of: input/output ratios) that will allow you to ¼¼ Reporting on overall governance and routinely monitor the efficiency of your management arrangements public body’s operations. ¼¼ Reporting on the delivery of outcomes ¼¼ Protecting taxpayers’ interests by examining the use of resources ¼¼ Increasing the emphasis on self- assessment by public bodies with audit support and validation. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 46
Audit Scotland’s report on Improving Public for the provision of those funds in the Service Efficiency identified that public Scottish Government’s annual accounts. A bodies will need to improve productivity and body which is a separate accounting entity, efficiency in the delivery of public services such as a Non-Ministerial body, will account to meet continued demands on public for the use of those funds (and of other spending. Audit Scotland concluded that funds in its stewardship) in its own annual public bodies will need to take a more accounts. fundamental approach to identifying The Board of a sponsored body is responsible priorities, improving the productivity of for approving the body’s annual accounts and public services, and improving collaboration ensuring that the Minister is provided with and joint working. A Good Practice Checklist the annual report and accounts to be laid was produced to help leaders in public before the Scottish Parliament. The Chief bodies check and challenge their approach Executive as the Accountable Officer of the and ultimately support better productivity public body is responsible for signing the and efficiency. accounts and ultimately responsible to the Relocation Scottish Parliament for their actions. Relocation policy is related to Best Value and The accounting requirements for a public Efficient Government. Location reviews are body will normally be set out in its founding triggered by the creation or reorganisation of legislation and/or its Framework Document. bodies, as well as by property events (such Performance Measurement and Reporting as lease breaks). Relocation remains an option as part of streamlining the public Key targets for efficiency and effectiveness bodies landscape, but should only be pursued of operations and quality of service provided following a rigorous and transparent process will be agreed as part of the planning that shows any move provides best possible process. The Board should ensure that robust Value for Money for the public finances and systems are in place to monitor performance optimum service delivery. Ministers will against these targets. A report on the extent expect Board members to have regard to this to which performance targets have been policy in decisions they make on the most achieved should be incorporated in the efficient and effective way of delivering Annual Report, where appropriate giving a services. summary of trends over a five-year period. Annual Report and Accounts Risk Management and Internal Controls The accounting guidance issued to those bodies that are subject to reporting Risk concerns uncertainty of outcome. The requirements set by the Scottish Ministers delivery of an organisation’s objectives is will set out the applicable accounting policies surrounded by uncertainty which both poses and principles and disclosure requirements. threats to success and offers opportunities for increasing success. Risk is defined as this Where the Scottish Government makes funds uncertainty of outcome, whether positive available to a sponsored body the Scottish opportunity or negative threat, of actions Government will account to the Parliament and events. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 47
Each public sector organisation’s internal All Audit Committees in organisations to control systems should include arrangements which the SPFM is directly applicable are for identifying, assessing and managing risks. subject to the guidance in the Audit Risk management should be closely linked to Committee Handbook published by the the business planning process and performance Scottish Government. A degree of flexibility monitoring arrangements. will be appropriate in applying the guidance in the Handbook, particularly with regard to Public bodies are required to provide a smaller accounting entities. Governance Statement in order to comply with best practice as recommended by the The exact role of the Audit Committee will Turnbull Committee Report. As part of that depend on the particular circumstances of process, Directors (in the case of public the organisation. Examples of issues affecting bodies, the Board) are required to review, at the role of the Audit Committee include the least annually, the effectiveness of all strategic risk management arrangements that controls, including financial, operational and the Board and/or Accountable Officer have compliance controls. Organisations need to established, whether or not there is a show that they have established and separate Risk Committee and the maintained effective and on-going whistleblowing arrangements which have procedures for identifying, evaluating and been put in place as part of the anti-fraud managing business risks. and corruption arrangements. An Audit Committee should not have any executive The Board must ensure that there is a system responsibilities or be charged with making or in place for continuous risk management endorsing any decisions, although it may which extends from the front-line services draw attention to strengths and weaknesses through to the Board. This involves having a in control and make suggestions for how framework of prudent and effective controls weaknesses might be dealt with. The in place to enable risks to be identified, overarching purpose of the Audit Committee assessed and managed. The Board itself is to advise the Board and/or Accountable should regularly review key business risks Officer; it is then the Board and/or affecting the organisation. Accountable Officer who makes the Audit Committee relevant decisions. Where a body is responsible for a budget, an To fulfil its role, an Audit Committee should Audit Committee must be established to generally meet around three or four times advise the Board and Accountable Officer on per year. Additional meetings should be internal control (including corporate convened as deemed necessary, reflecting governance) and audit matters. the needs of the organisation. All accounting entities to which the SPFM is All Audit Committee members, whatever directly applicable should establish an Audit their status or background, will have training Committee. The Board (or Accountable and development needs. Those who have Officer) should establish an Audit Committee recently joined the Audit Committee will of at least three members, all of whom need induction training, either to help them should be either Board members or understand their role; or if they have audit independent external members. committee experience elsewhere, to help A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 48
them understand the organisation. In sector standards, especially those relating to particular, those joining a public sector Audit governance and accountability. Committee for the first time will need training to help them understand public > AUDIT COMMITTEE
The Audit Committee should: ¼¼ Have written terms of reference from ¼¼ Have a Chair who is involved in the the Board, which encompass all the appointment of new Committee assurance needs of the Board and members, including providing advice on Accountable Officer. Within this, the the skills and experience being sought Audit Committee should have particular by the Committee, and is responsible engagement with the work of Internal for ensuring that the work of the Audit Audit, the work of the External Auditor Committee is appropriately resourced; and with financial reporting issues; ¼¼ Be independent and objective; in ¼¼ Support the Board and Accountable addition each member should have a Officer by reviewing the scope, good understanding of the objectives reliability and integrity of the and priorities of the organisation and assurances provided to them; of their role as an Audit Committee member; ¼¼ Highlight those aspects of risk management, governance and internal ¼¼ Encourage the Accountable Officer, control that are functioning effectively Head of Internal Audit and Director of and, just as importantly, those that Finance to attend meetings (though not need to be improved; as members of the Audit Committee); ¼¼ Have at least three non-executive ¼¼ Should have regular and on-going members, under the chairmanship of a liaison with External Auditors; and non-executive member who should be ¼¼ Should ensure it has effective someone other than the Chair of the communication with the Board and public body or of any other sub- Accountable Officer, the Head of committee of the Board; Internal Audit, the External Auditor, and ¼¼ Own corporately an appropriate skills other stakeholders. In addition, the role mix to allow it to carry out its overall of the Chair and provision of function. At least one of the Committee appropriate secretariat support are members should have recent and important elements in achieving Audit relevant financial experience; Committee effectiveness. ¼¼ Have a Chair whose role goes beyond chairing meetings – this is key to achieving Committee effectiveness. The additional workload should be taken into account in the appointment of the Chair; A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 49
Internal Audit The work of Internal Audit is likely to be the In any government related organisation there single most significant resource used by the will be two significant sources of assurance Audit Committee in discharging its that the Audit Committee can be certain will responsibilities. This is because the Head of be present: Internal Audit and External Audit. Internal Audit, in accordance with the Public Internal Audit provides an independent, Sector Internal Audit Standards, has a objective assurance and consulting activity responsibility to offer an annual opinion on designed to add value and improve an the overall adequacy and effectiveness of the organisations operations. organisation’s risk management, control and governance processes. There is consequently Internal Audit is an internal appraisal service, a major synergy between the purpose of the established by the management of an Head of Internal Audit and the role of the organisation, to review the internal control Audit Committee. system. It objectively examines, evaluates and reports on the adequacy of internal The role of the Audit Committee in relation to control as a contribution to the proper, Internal Audit should include advising the economic, efficient and effective use of Board and Accountable Officer on: resources. The scope of the Internal Audit ¼¼ The Audit Strategy and periodic Audit service should be unrestricted across the Plans, forming a view on how well they organisation’s operations. The Internal support the Head of Internal Audit’s Auditors should have sufficient authority responsibility to provide an annual opinion on the overall adequacy and to access assets, records and personnel effectiveness of the organisation’s risk as necessary for the discharge of management, control and governance their responsibilities. processes; ¼¼ The results of Internal Audit work and the management response to Internal Audit findings; and ¼¼ Internal Audit coverage. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 50
External Audit for laying before the Parliament. Non- External Audit provides independent scrutiny Ministerial bodies lay their accounts directly of an organisation’s finances, performing an before the Parliament.
audit of the financial statement of an > EXTERNAL AUDIT OF THE ANNUAL ACCOUNTS organisation. External Audit can also give assurance that organisations have used their The appointed auditor will: resources in discharging their functions properly, efficiently and effectively e.g. ¼¼ Issue an opinion as to whether the through a performance audit. The Audit accounts give a true and fair view of Committee should engage with the activity of the state of affairs of the public body at the year end and of its income and the External Auditor, ensuring that expenditure for the year and whether examinations are carried out effectively. As the accounts have been prepared in well as considering the results of External accordance with any applicable Audit work, they should enquire about and legislation and accounts direction; consider the External Auditor’s planned ¼¼ Issue an opinion (known as the approach and the way in which the External “regularity” opinion) as to whether Auditor is co-operating with Internal Audit to the income and expenditure has been maximise overall audit efficiency, capture properly received or incurred in opportunities to derive a greater level of accordance with legislation, the assurance and minimise unnecessary Budget Act for the relevant year and any other guidance issued by the duplication of work. Scottish Ministers; The Auditor General for Scotland is the ¼¼ Review the Governance Statement External Auditor of a number of public bodies. prepared by the body and report if it The Auditor General may appoint a member is not in accordance with the of the staff of Audit Scotland or an auditor’s understanding of the body; appropriately qualified professional firm as ¼¼ Review the body’s arrangements in the auditor of your body. Where a public relation to financial sustainability, body is incorporated under the Companies financial management, governance and transparency and Value for Money; Act, the auditor is appointed by the members of the company (i.e. the Board members). ¼¼ Consider the body’s governance arrangements and arrangements for External Audit of the Annual Accounts prevention and detection of fraud; and An External Audit of the annual accounts ¼¼ Provide reports to the Board, Audit undertaken by the Auditor General is Committee and/or management on conducted in accordance with the Public matters arising during the course of Finance and Accountability (Scotland) Act the audit. 2000 and the Code of Audit Practice issued by Audit Scotland on behalf of the Auditor General. On completion of the External Audit, the appointed auditor sends a copy of the accounts and the audit opinion to the Auditor General. The Auditor General may then add a report (for example, on a qualification of the auditor’s opinion or other matter drawn to their attention by the auditor) before sponsored bodies send their accounts and reports to the Scottish Ministers A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 51
Performance Audit For many public bodies, the founding Performance audits look at the performance legislation provides that the Auditor General of a public body and include a Value for will appoint the auditor. In such Money audit which is an examination of the circumstances, the Auditor General has a economy, efficiency and effectiveness with statutory right to carry out a Value for which a body has used its resources to carry Money examination. out its functions. Where the Auditor General is not the auditor The Auditor General has powers to conduct of a public body and has not appointed the performance audits. These audits examine auditor, they should have rights under statute the economy, efficiency and effectiveness of or by agreement to carry out an inspection of aspects of the public sector. They can assess: the use of resources by those bodies. ¼¼ performance across several public bodies The Public Audit and Post- in a particular theme – for example, legislative Scrutiny Committee managing changes in the workforce; or of the Scottish Parliament ¼¼ performance of an individual public body or a particular aspect of that body’s The Public Audit and Post-legislative Scrutiny performance. Committee of the Scottish Parliament is one of the committees established under the Performance audits may be conducted by Standing Orders of the Parliament. The Public Audit Scotland staff, the appointed auditor, Audit and Post-legislative Scrutiny Committee consultants or any combination of these. A uses the reports of the Auditor General, which draft report on the audit will be discussed are laid before the Parliament, as the basis for with the public body (or bodies) to ensure conducting enquiries. It is chaired by a senior factual accuracy. Once finalised, the report member of the Opposition and conducts its will be laid before the Scottish Parliament business on non-party political lines. and published with an accompanying news release. In most cases, the Auditor General will present the report to the Scottish Parliament’s Public Audit and Post-legislative Scrutiny Committee. Performance audit reports may contain material such as checklists to assist non-executive Board members in holding management to account. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 52 > > PUBLIC AUDIT AND POST-LEGISLATIVE FURTHER INFORMATION SCRUTINY COMMITTEE
The key stages:
¼¼ The Auditor General’s report is discussed with the body concerned and the facts are agreed; ¼¼ The report is laid before Parliament and published together with a Press Release; Audit Committee Handbook ¼¼ If an enquiry is to be conducted by the Audit Scotland (Auditing Best Value in Central Public Audit and Post-legislative Government Bodies) Scrutiny Committee, witnesses are Audit Scotland (Code of Audit Practice) called to give evidence – usually the Audit Scotland (Efficient Public Services Good Accountable Officer of the public body Practice Checklist) and the Accountable Officer of the sponsor Directorate. It is possible that Public Finance Accountability (Scotland) Act 2000 the Chair or a Board member of a Public Services Reform (Scotland) Act 2010 public body will be required to appear Scottish Public Finance Manual (Best Value) as a witness, where appropriate; Scottish Public Finance Manual (Risk Management) ¼¼ After the evidence session, the Committee drafts and approves a Scottish Public Finance Manual (Spending Reviews) report which is published; and ¼¼ A formal response to the Committee’s report is provided by the Scottish Government (or by the body in consultation with the Scottish Government) within two months of the Committee’s report being published. > ISSUES ON WHICH BOARD MEMBERS SHOULD SEEK ASSURANCE
Typically the range of issues on which Board ¼¼ information management systems, members should seek assurance will include: including in relation to protection of personal data and compliance with ¼¼ compliance with the SPFM, Framework Freedom of Information legislation; Document and legislation (e.g. founding legislation, Equality Act 2010); ¼¼ propriety and regularity of public finances; ¼¼ financial monitoring and reporting ¼¼ management systems that have clear arrangements and arrangements for lines of delegation and accountability; delivering and reporting on efficiency ¼¼ arrangements for meeting procurement savings; requirements; ¼¼ arrangements for securing Best Value ¼¼ arrangements for meeting the body’s for the organisation and Value for moral and legal obligations to its Money for the public sector as a whole; employees; and ¼¼ systems for identifying, assessing and ¼¼ complaints handling procedures. managing risks; Boards will require to supplement these ¼¼ processes for preventing and detecting fraud, and, linked to this, areas of assurance having regard to the whistleblowing procedures; purpose of the organisation and the nature ¼¼ arrangements for business continuity of the business conducted. and disaster recovery; A GUIDE FOR MEMBERS OF OnOn Board Board STATUTORY BOARDS 53
Ethics and Standards of Behaviour Guidance Note 5 A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 54
Ethics and Standards Contents of Behaviour
Overview
Key Messages
Key References and Contacts
Introduction to Ethical Standards in Public Life
The Commissioner for Ethical Standards in Public Life in Scotland
The Standards Commission for Scotland
Key Principles of the Model Code of Conduct
Code of Conduct for Board Members
Gifts and Hospitality
Bribery
Conflicts of Interest
Handling Conflicts of Interest
Registration of Interests
Dispensations
Confidentiality
Lobbying
Use of Social Media
Whistleblowing
Complaints Handling
Further information
March 2017 A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 55
Overview
The Scottish public has high expectations of It describes the ethical framework introduced those who serve on the Boards of public by the Ethical Standards in Public Life etc. bodies and the way in which they conduct (Scotland) Act 2000, particularly the nine key themselves in undertaking their duties. As a principles of the Model Code of Conduct Board member, it is your personal responsibility which all Board members are required to to ensure that you meet these expectations by observe when discharging public duties. ensuring that your conduct is above reproach. Through this framework, the Scottish Ministers aim to ensure confidence in Scottish This section outlines how the Board exercises public bodies, the Boards of those bodies and leadership in determining the values and individual Board members. standards of the organisation.
Key Messages significant that it is likely to prejudice your discussion or decision-making. ¼ ¼ Board members of bodies listed in ¼¼ You must ensure that the reputation of Schedule 3 of the Ethical Standards Act your public body is not damaged by the are subject to the nine key principles receipt (or provision) of inappropriate outlined in the Model Code of Conduct. gifts and hospitality. ¼ ¼ It is important to take care when ¼¼ The Commissioner for Ethical Standards expressing views so you do not in Public Life in Scotland (the compromise your position as a member Commissioner) considers complaints of a public body. about members of devolved public ¼¼ All public bodies have a duty to publish bodies who are alleged to have a Register of Board Member Interests. contravened the Code of Conduct. On There are specific interests which you finding a contravention of the Code, the must register and it is your personal Commissioner reports to the Standards responsibility to ensure that your Commission for adjudication. Where a entries are current. hearing is held by the Standards Commission and a contravention of the ¼¼ Board members must declare financial Code is established, the Standards and non-financial interests which might Commission determines the level of be perceived to influence their sanction to be applied. contribution to a discussion or decision in Board proceedings. This requirement ¼¼ Part 4 of The Ethical Standards in Public also applies to interests held by your Life etc. (Scotland) Act 2000 makes close family, friends and business provision for Codes of Conduct for associates. bodies not listed in Schedule 3 – such bodies and Board members are not ¼¼ The test on making a declaration is subject to investigation by the whether a member of the public, with Commissioner, or sanction by the knowledge of the relevant facts, would Standards Commission. reasonably regard the interest as so
Key References and Contacts
The Commissioner for Ethical Standards in Public Model Code of Conduct for Board Members Life in Scotland Standards Commission Guidance Note The Standards Commission for Scotland A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 56
Introduction to Ethical Standards in Objectivity Public Life You must make decisions solely on merit and The Ethical Standards in Public Life etc. in a way that is consistent with the functions (Scotland) Act 2000 (Ethical Standards Act) of the public body when carrying out public introduced the power to specify the business including making appointments, principles and rules that underpin public life awarding contracts or recommending in Scotland, putting ethical standards and individuals for rewards and benefits. probity at the heart of decision-making in Accountability and Stewardship public service. The principles set out below You are accountable for your decisions and should be observed by all Board members of actions to the public. You have a duty to public bodies in Scotland. consider issues on their merits, taking Key Principles account of the views of others and must ensure that the public body uses its Duty resources prudently and in accordance with You have a duty to uphold the law and act in the law. accordance with the law and the public trust Openness placed in you. You have a duty to act in the interests of the public body of which you are You have a duty to be as open as possible a member and in accordance with the core about your decisions and actions, giving functions and duties of that body. reasons for your decisions and restricting information only when the wider public Selflessness interest clearly demands. You have a duty to take decisions solely in Honesty terms of public interest. You must not act in order to gain financial or other material You have a duty to act honestly. You must benefit for yourself, family or friends. declare any private interests relating to your public duties and take steps to resolve any Integrity conflicts arising in a way that protects the You must not place yourself under any public interest. financial, or other, obligation to any Leadership individual or organisation that might reasonably be thought to influence you in You have a duty to promote and support the performance of your duties. these principles by leadership and example, and to maintain and strengthen the public’s trust and confidence in the integrity of the public body and its members in conducting public business. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 57
Respect The Commissioner for Ethical You must respect fellow members of your Standards in Public Life in Scotland public body and employees of the body and The Public Services Reform (Commissioner the role they play, treating them with for Ethical Standards in Public Life in courtesy at all times. Similarly you must Scotland etc.) Order 2013 came into force on respect members of the public when 1 July 2013. The Order transferred the performing duties as a member of your functions of the Public Standards public body. Commissioner for Scotland and the Public Board members should apply these principles Appointments Commissioner for Scotland to a in their dealings with fellow members of single Commissioner for Ethical Standards in their public body, its employees and other Public Life in Scotland (the Commissioner). stakeholders. Similarly Board members The Commissioner is an independent office should also observe these principles in their holder who works in two areas: dealings with the public when performing duties as a member of a public body. ¼¼ Public appointments, regulating how The Ethical Standards Framework people are appointed to the Boards of public bodies in Scotland; and The key elements of the ethical framework ¼¼ Public standards, where the introduced by the Ethical Standards in Public Commissioner can investigate a Life etc. (Scotland) Act 2000 are: complaint about a councillor or a member of a devolved public body who is alleged to have contravened ¼¼ A Standards Commission for Scotland the councillors’ or the appropriate (Standards Commission) and a Chief public body’s Code of Conduct. Investigating Officer (now the Commissioner for Ethical Standards in Public Life in Scotland) to oversee the ethical framework; ¼¼ A Model Code of Conduct for Members of Devolved Public Bodies on a statutory basis for those bodies listed in Schedule 3 of the Act; ¼¼ Codes for smaller bodies; and ¼¼ Publicly available Registers of Members’ Interests.
Through this ethical framework, the Scottish Ministers aim to ensure that Scottish public bodies and all who serve on them conduct their business in a way which merits and sustains public confidence. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 58
Where the Commissioner identifies that a On finding a contravention of a Code of breach or breaches of a Code or Codes may Conduct for bodies listed in Schedule 3 of the have occurred, the Commissioner will report Ethical Standards in Public Life etc. (Scotland) on the outcome of these investigations to Act 2000, the Standards Commission can the Standards Commission for adjudicatory impose sanctions ranging from censure, or action and application of sanctions, suspension from meetings of the public body where appropriate. for up to one year, to disqualification for up to five years. Details of the full range of The Standards Commission for sanctions available to the Commission are Scotland listed in Annex A of the Members’ Model The Standards Commission is an independent Code of Conduct. statutory body which has responsibility for The Standards Commission can also consider enforcing compliance with the Codes of particular circumstances where it would be Conduct and providing general guidance on contrary to the spirit of the Code for it to be their interpretation. It adjudicates on cases of applied. In exceptional circumstances, it can alleged contravention of the Codes of issue dispensations to allow Members of Conduct referred to it after investigation by public bodies, including councillors, to the Commissioner and, where a hearing is participate in discussion and vote on certain held, has the power to impose sanctions. The matters where, due to financial or non-financial Standards Commission has responsibility interests, they would otherwise be prohibited for various aspects of the ethical from such participation. framework including: Code of Conduct for Board Members ¼¼ adjudicating on cases of alleged contravention of the Codes of Upon appointment to the Board, you should Conduct for Members of Devolved have been provided with a copy of your Public Bodies reported to it by the public body’s Code of Conduct for Board Commissioner following investigation Members, which forms part of your terms of a complaint; and conditions. ¼¼ promoting and enforcing Codes of Conduct and providing guidance on You must not at any time advocate or the operation of Registers of encourage any action contrary to the Code of Interests; Conduct. It is your personal responsibility to ¼¼ providing guidance to public bodies make sure that your actions comply with the on: provisions of the Code at all times as the Code contains the standards against which ¼¼ the promotion and observance of high standards of conduct by your conduct will be measured. You should members of devolved public review regularly, and at least annually, your bodies and assisting them in that personal circumstances against the task; requirements of the Code. ¼¼ the Commission’s relationship If you are uncertain about any aspect of the with public bodies in carrying Code, you should seek advice from the out its functions; and Standards Officer in your public body. You ¼¼ the Registers of Interests for Members of Devolved Public Bodies. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 59 > may also choose to consult your own legal GIFTS AND HOSPITALITY and financial advisers. The Standards Commission also provides advice and ¼¼ Do not canvass or actively seek gifts guidance on the Code. or hospitality; The nine key principles of public life are ¼¼ Your conduct should not foster the mentioned earlier in this section. The suspicion of any conflict between Standards Commission guidance to devolved your official duties and your private interests; public bodies will provide you with more detailed information on these principles. The ¼¼ Your actions, when acting in an following paragraphs provide a brief snap- official capacity, should not give the impression of having been influenced shot of information about parts of the Model by a gift or consideration to show Code of Conduct which Board members will favour or disfavour to any person or require to give care and consideration to organisation; when undertaking their duties. ¼¼ Do not accept any offer of a gift or Gifts and Hospitality hospitality from any individual or organisation that stands to gain from As a Board member, you should ensure that a decision that your public body may the reputation of your public body is not be involved in determining or that is damaged through the receipt (or provision) of seeking to do business with your inappropriate gifts and hospitality. public body; ¼¼ You should usually refuse offers of Bribery gifts and/or hospitality except in the Board members must be familiar with the following cases: gifts of an isolated and trivial character under £50; provisions of the Bribery Act 2010 which normal hospitality associated with came into force on 1 July 2011 and their your duties and reasonably regarded organisation’s policy in this area. The Act as appropriate; or gifts received on makes it a criminal offence for a person to behalf of the public body; take part in active bribery (making a bribe) ¼¼ Do not accept repeated hospitality or or passive bribery (receiving a bribe). All repeated gifts from the same source; public bodies operate a zero tolerance and approach to bribery, with any allegations ¼¼ If you are in doubt about the investigated in accordance with the relevant propriety of accepting a gift or an procedures and reported to the appropriate item of hospitality you should authorities. contact the Standards Officer and/or the Chair for advice. Conflicts of Interest Public bodies should have in place clear rules and procedures for managing conflicts of interests. Together with the rules on registration of interests, this ensures transparency of your interests which might influence, or be thought to influence, your actions. You should note that the appearance of a conflict of interest in terms of public perception can be every bit as damaging as an actual conflict – both should be avoided. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 60
Handling Conflicts of Interest Your Code of Conduct will contain definitions Public confidence in your public body and its of what is required under each of these Board members depends on it being clearly categories and if you are in any doubt as to understood that decisions are taken in the what you should or should not be registering, public interest and not for any other reason. you should discuss this with the Standards In deciding whether to declare an interest, Officer, the Chair and/or the Standards the key test is whether a member of the Commission. public, acting reasonably, might think that a The Register should also be available for particular interest could influence you. inspection by the public (electronic and paper version). Public bodies should prepare Registration of Interests a page for this purpose on their website and All devolved public bodies subject to the ensure that it is operational. The electronic Ethical Standards in Public Life etc. (Scotland) version of the Register does not need to Act 2000 (Register of Interests) Regulations include any personal information that would 2003, as amended, have a duty to set up, compromise personal security although the maintain and make available for public full details would be made available for inspection a register of Board member public inspection in hard copy. interests. The regulations describe the detail Board members are required to keep their and timescale for registering. The Model Code entries in the Register of Interests up-to-date is very specific about the interests that you, and this involves notifying the Standards as a Board member, must register and these Officer of any new interest or change to an include: existing interest within one month of > REGISTRATION OF INTERESTS the change.
¼¼ Remuneration from employment, Declaration of Interests self-employment or directorships; In deciding whether to declare an interest, ¼¼ Related undertakings i.e. certain the key test is whether a member of the unremunerated directorships; public, with knowledge of the relevant facts, ¼¼ Contracts with the public body; would reasonably regard the interest as so significant that it is likely to prejudice your ¼¼ Gifts and hospitality; discussion or decision-making in your role as ¼¼ Houses, land and buildings that you a member of a public body. own or have an interest in which are of significance or relevance to, or If you have a financial, or non-financial, bear upon the work and operation of, interest you must declare your interest at the public body; Board meetings and withdraw from decision- ¼¼ Shares and securities – holdings in a making on the basis of such an interest when company or organisation which are it is appropriate to do so. of significance or relevance to, or bear upon the work and operation of, the public body; and ¼¼ Non-financial interests including membership or holding office in other public bodies, clubs, societies and organisations such as Trade Unions and voluntary organisations. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 61
Non-Declaration of Interest Confidentiality Where a material conflict of interest exists On occasions, Board members will be and a Board member does not declare their required to treat discussions, documents and interest and withdraw, the Chair should take other information relating to the work of the appropriate action to ensure that the Board body in a confidential manner. It is (and the Board member concerned) is not imperative that Board members respect this compromised. In the event that a Board duty of confidentiality at all times. In member refuses to leave the room when particular, as a Board member you should asked by the Chair to do so, the Chair should never use information to which you have suspend the meeting and reconvene without privileged access for personal or financial the Board member concerned being present. gain or in a way that brings the public body Board members should bear in mind that any into disrepute. such action on their part may lead to an investigation by the Commissioner and the Lobbying matter thereafter referred to the Standards The Code of Conduct sets out clear guidance Commission, which may apply a sanction in in respect of dealing with lobbyists and the event that it determines a breach of the lobbying. If you have any concerns over the Code of Conduct has occurred. approach or methods used by anyone in their Frequent Declarations of Interest contacts with you, you should discuss the If as a Board member you are frequently matter with your body’s Standards Officer declaring interests at meetings, you should and/or the Chair. consider whether it is appropriate for you to Use of Social Media continue in your role. In such circumstances, you may wish to discuss your continued When using social media the distinction appointment as a Board member with between work and private life can become the Chair. blurred, and speedily made comments can be misconstrued. It is important to take special Dispensations care when expressing views on social media The Standards Commission does have the not to compromise your position as a power to issue dispensation (where it is member of a public body. Social media offers deemed to be in the public interest) to allow many benefits in communicating with Board members to participate in a discussion stakeholders and interested parties. However, and vote, despite the fact they have financial you should always remember that hastily or non-financial interests which would expressed views through social media can normally prevent them from participating in reach large (sometimes unintended) discussion and voting. audiences instantaneously and can be In addition to general dispensations, difficult to retract if required to do so. Your individual applications for dispensations in public body should have a policy in place exceptional circumstances can be made to about the use of social media. You should the Standards Commission and may be familiarise yourself with the content of that granted where it is in the public interest to policy to protect the public body’s reputation, do so. However, Board members must not its legal obligations, its information and its take part in any discussion or vote on a systems. You will be expected to approach matter (in which they are conflicted) unless any use of social media platforms and until they have actually received a responsibly and with care. dispensation. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 62
Whistleblowing Complaints Handling Although not directly covered by the Ethical The Scottish Public Services Ombudsman Standards Framework, Board members have (SPSO) is the independent body that provides a responsibility to ensure that staff have the final stage for complaints from members confidence in the fairness and impartiality of of the public about devolved public services procedures for registering and dealing with in Scotland. their concerns and interests. The Public As a Board member, you have a Interest Disclosure Act 1998 gives legal responsibility to ensure that complaints are protection to employees who raise certain considered as part of your organisation’s matters or concerns, known as ‘qualifying overall governance and assurance disclosures’, without fear of reprisal. As a arrangements. Board member, you should ensure that your You should be aware of the importance of public body has a whistleblowing policy and having an effective complaints policy in appropriate procedures in place. This will place. You can also help to promote a culture allow staff to raise concerns on a range of which values complaints and has a proactive issues such as fraud, health and safety etc. approach to effective resolution, monitoring without having to go through the normal and learning from complaints. management structure. Audit Scotland has published guidance on employers’ and The Board has a collective responsibility and employees’ responsibilities in relation Board members, the Chair and the Chief to whistleblowing. Executive are also individually responsible for ensuring the public body has an effective, Public Bodies not covered by the Ethical efficient, customer-focused approach to Standards in Public Life etc. (Scotland) Act complaints resolution in place. 2000 You should also be aware of the issues and The Ethical Standards in Public Life etc. concerns people are raising in their (Scotland) Act 2000 makes provision for complaints. Your scrutiny of these issues will Scottish Ministers to introduce a Code or help to ensure that service users receive a Codes of Conduct under the Public high quality service and that taxpayers Authorities Regime for bodies not listed in receive value for money. Schedule 3 to the Act. While such public bodies and their Board members will be The SPSO has a duty to publish model expected to act in accordance with this Code Complaints Handling Procedures (CHP) which of Conduct, they will not be subject to public bodies have a statutory requirement investigation by the Commissioner or to to adopt. The CHP includes a commitment for sanctions by the Standards Commission. public bodies to publish information against performance indicators, which will provide Irrespective of the extent to which a public consistent complaints data across the various body is covered by the Ethical Standards Act, sectors of the public service in Scotland. Board members are required to adhere to the principles that underpin the ethical standards The SPSO has produced a short briefing note framework and have regard to the provisions for Board members which will help you to set out in the Model Code of Conduct in consider complaints as part of your carrying out their public duties. organisation’s governance arrangements. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 63 > > COMPLAINTS HANDLING FURTHER INFORMATION
¼¼ Ensure the public body and executive team are learning from service failures and customer insight provided by complaints, with systems in place to record, analyse and report on complaints outcomes, trends and actions taken; ¼ ¼ Ensure that processes are in place for Audit Scotland – Employer’s Guide to Whistle the public body and executive team Blowing to identify and respond immediately to critical or systemic service failures Bribery Act 2010 identified from complaints handling; Ethical Standards in Public Life Etc. (Scotland) Act 2000 ¼¼ Take an active role in monitoring and reviewing learning from complaints Ethical Standards Registration of Interests and reviewing individual complaints (Regulations) 2003 to obtain an understanding of how Scottish Parliamentary Commissions and any failures occurred and have been Commissioners etc. Act 2010 addressed; The Scottish Public Services Ombudsman ¼¼ Provide the necessary challenge and The model Complaints Handling Procedure (CHP) hold the senior officer(s) to account for the Scottish Government, Scottish Parliament for the public body’s performance in and associated public authorities in Scotland complaints handling, with Board / SPSO’s Valuing Complaints Board members themselves regularly monitoring and reviewing the complaints handling performance of the public body; and ¼¼ Ensure that service improvements are agreed, actioned and reviewed, possibly on a quarterly basis. A GUIDE FOR MEMBERS OF OnOn Board Board STATUTORY BOARDS 64
Annex A Classification of Public Bodies A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 65
There are occasions where bodies carrying Executive Agencies – although an integral out public functions should operate more at part of the Scottish Government, Executive ‘arm’s-length’ from Government. This may be Agencies generally have a strong focus on the appropriate for a variety of reasons. This can management and direct delivery of public be to provide independent advice and services which do not require day-to-day expertise on technical, scientific or other ministerial oversight; in some cases they may complex issues and take this outside the also have responsibility for a discrete area of political arena, e.g. on ethical issues, or government policy. They are staffed by civil funding decisions. Tribunals and other quasi- servants, including the Chief Executive who is judicial bodies are set up to meet specific directly accountable to Ministers. They are requirements for separation of decision- not statutory bodies but operate in making and appeals. Public bodies carry out a accordance with a Framework Document wide range of functions such as independent approved by Ministers, which may be regulation, advice, investigation, adjudication, reviewed, amended or revoked at any time. ombudsman services, appeal, funding, This has the advantage that they can partnership, commercial and health services. normally be set up by administrative action without the need for legislation. Such ‘arm’s-length bodies’ focus in depth on clear and specific functions and purposes. Executive Non Departmental Public Bodies These bodies have been established to meet (NDPBs) – are not part of the Scottish particular needs and situations. This flexibility Government or the Scottish Administration. and responsiveness means that the landscape They perform administrative, commercial, of public bodies is necessarily both complex executive or regulatory functions on behalf and diverse. of Government and operate within a framework of governance and accountability The following provides a snapshot of the set by Ministers. They are funded by the features of public bodies operating in Scotland. Scottish Government through grant or grant- in-aid, but many generate additional income through provision of services. They are normally established by statute, employ staff (who are not civil servants) on their own terms and conditions subject to Scottish Public Sector Pay Policy, and manage their own budgets. They are accountable to a Board whose members are normally appointed by Ministers and publish their own annual report and accounts. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 66
Advisory NDPBs – provide independent Public Corporations – are industrial or expert advice to Ministers and others or input commercial enterprises under Government into the policy-making process in relation to control which recover more than 50% of their a particular subject. They are normally costs through fees charged for services established by Ministers on a non-statutory provided to customers. They employ their basis, do not normally employ staff own staff, who are not civil servants, manage (administrative support is usually provided their own budgets and report to a Board by the Scottish Government) and are not whose members are appointed by Ministers. normally responsible for budgets or Health Bodies – currently comprise 14 expenditure other than remuneration for territorial health boards, 8 special health Board members. They are accountable to a boards and the Mental Welfare Commission Board whose members are normally for Scotland (MWCS). With the exception of appointed by Ministers. Ministers are MWCS, health bodies are part of NHSScotland answerable to Parliament for the activities of and provide healthcare services or the body and can dissolve the body at any management, technical or advisory services. time. Parliamentary Commissions, Commissioners Tribunals – are established by statute and and Ombudsman – are typically responsible have specific responsibilities for prescribed for safeguarding the rights of individuals, judicial functions. They are not part of the monitoring and reporting on the handling of court system and are independent of the complaints about public bodies, providing an Scottish Government. They have both adjudicatory role in disputes and reporting on specialist and lay members, do not employ the activities and conduct of public Boards staff and are not responsible for budgets or and their members. Commission Members, expenditure other than the remuneration of Commissioners and Ombudsmen are Tribunal members. appointed by the Parliamentary Corporation. Non Ministerial Departments (NMDs) - are They are accountable, and report directly, to headed by non-ministerial offices (NMOs) the Scottish Parliament. (Boards or statutory officeholders) who are Other Significant Bodies – do not fall within not part of the Scottish Government but are the recognised categories of public bodies set part of the Scottish Administration in their out above but they have a direct relationship own right. Staff are civil servants. The NMOs with either the Scottish Government or the are generally funded by Parliament and are Parliament and operate within a framework required to publish their own annual report set by Ministers. and accounts. They are directly accountable to the Scottish Parliament, not Ministers, for the discharge of their statutory functions. A GUIDE FOR MEMBERS OF OnOn Board Board STATUTORY BOARDS 67
Annex B Induction and Training for Board Members A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 68
Induction programmes, events and material ¼¼ Links between the public body/Board should be a standard feature, with a public and the Scottish Government and the body providing information on a range of Scottish Parliament. This should include topics, e.g. policies, procedures, roles, details of where the sponsor Directorate fits within the Scottish Government responsibilities, rules and key personnel. structure, details of sponsor Minister(s) etc The following list of induction guidance and ¼¼ Links to other key partner organisations training is not prescriptive but is designed to and an outline of who the key give you an idea of the type of support that stakeholders and customers are may be provided by your public body. ¼¼ Arrangements for Board members’ remuneration and expenses Meetings ¼ A one-to-one meeting should take place with ¼ The organisation’s Code of Conduct for Board members and Code of Conduct the Chair immediately following appointment issues, including policies on the to discuss in broad terms what is expected of registration and declaration of interests, a Board member in the first year and any gifts and hospitality, use of social media individual role he or she is expected to play. by Board members etc. This should (The Chair and Board member should meet on include guidance on completing the a regular basis as part of the appraisal Register of Interests process.) ¼¼ Whistleblowing procedures – how to raise concerns and how to respond to An induction session within one month of concerns being raised appointment should explain: ¼¼ The legislative framework for the ¼¼ Details of arrangements for monitoring organisation and its remit and reporting on the performance of Board members ¼¼ Organisational structure ¼¼ The collective role of the Board ¼¼ The Corporate Risk Register and approach to risk management ¼¼ Arrangements, formats etc. of Board meetings including agenda Ideally, this session should be attended by all planning new Board members and by some existing ¼¼ Details of any subsidiary Boards and Board members to allow the latter to pass on committees (e.g. Regional Boards, Audit experience. Some other members of the Committee) and their responsibilities senior management team may also attend, ¼¼ The long-term strategy of the including the Board secretary. organisation New Board members may require support in ¼¼ The corporate planning system certain areas. The induction process should ¼¼ The role of the Chief Executive as the explore development needs for all new Board Accountable Officer members and agree a development plan. ¼¼ Current priority areas of work It may also be appropriate for a Board ¼¼ Budget and financial information, member to meet with other key staff in the including the monitoring role of organisation – for example the Chief Executive the Board who will be able to advise of their role in their ¼¼ The public body’s policies on openness – capacity as the Accountable Officer and, where where appropriate, including the role of the Board member is to sit on the Audit Board members in promoting the public Committee, they may wish to meet audit and body to the public and in the media finance staff. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 69
Obtaining feedback from new Board members ¼¼ Copy of the organisation’s Data on the induction they received will provide a Protection, Freedom of Information and useful source of information and will help other relevant policies and procedures ensure the process remains effective. relating to corporate governance and accountability – and if they exist: Publications ¼¼ Policy for Board members in dealing ¼¼ The latest Annual Report and Accounts with the media ¼¼ The latest Corporate Plan and ¼¼ List of acronyms relating to the Operational/Business Plan public body’s area of work, partner ¼¼ The Corporate Strategy or similar organisations etc. strategic document ¼¼ The Corporate Risk Register ¼¼ Any significant recent policy or ¼¼ Schedule of Matters Reserved for consultation documents which the public the Decision of the Board and Scheme body has published. of Delegation Written Material ¼¼ Action plan arising from most recent review of Board effectiveness ¼¼ Guide to any legislation under which the public body was established ¼¼ The Scottish Public Services Ombudsman model Complaints Handling procedure ¼¼ Copy of the Budget Allocation and and briefing note for Board members Monitoring letter from the sponsor Minister for the coming year ¼¼ Minutes from at least the last four Board ¼¼ National Performance Framework and Audit Committee meetings ¼ ¼ Strategic guidance from the ¼¼ Copy of Corporate Parent Plan (should the Scottish Government public body be classified as a Corporate ¼¼ Copy of the public body’s current Parent in Schedule 4 of the Children and Framework Document Young People (Scotland) Act 2014
¼¼ Standing Orders for the conduct of Terms and Conditions Board meetings ¼¼ Guidance on claiming travel and ¼¼ Organisational structure, staff directory, subsistence expenses office addresses etc ¼¼ Guidance on claiming other allowances ¼¼ Biographical and contact details of where appropriate (e.g. child care) other Board members (and, where ¼¼ Guidance on tax issues (e.g. for home to appropriate, those in subsidiary Boards office travel) and Committees) ¼¼ Guidance on Register of Interests, and ¼¼ Summary of key roles and Gifts and Hospitality responsibilities within the organisation – Board, subsidiary Boards and committees, Chief Executive/ First Board Meeting Accountable Officer, management team, Time should be included so that the new other senior staff Board member can be formally introduced to ¼¼ Forward programme of Board meeting all present. In advance of this meeting, the dates and any other key events (press new member should be made aware of any launches, conferences etc.) protocols, for example in relation to making ¼¼ The organisation’s Code of Conduct for points at meetings, presenting information Board members and overall expectations as to behaviour ¼¼ The Standards Commission Guidance on (being inclusive, respecting others etc.). At the the Model Code for Members of Devolved end of the Board meeting, the Chair should Public Bodies spend a few minutes with the new Board A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 70
member to allow them the opportunity to ask When a new Chair is appointed, sponsor any questions or raise concerns that they teams should ensure that an early meeting is may have. arranged with the appropriate Director-General, Deputy or Deputy Director to ensure that Training there is mutual agreement about what is The public body should consider providing expected of the body. It may also be any further training deemed necessary to appropriate for an early meeting to be assist the Board, individually or collectively, arranged between the Chair and the Minister. to carry out its duties, particularly covering The induction of the new Chair should cover areas such as their roles and responsibilities, all the topics already mentioned. In addition, the financial management and reporting there are some topics that are specific to new requirements of public bodies, appraisal Chairs including: systems both for individual members and collective functionality, ethical standards and Appraisal any other differences which may exist The relevant Scottish Government Director or between private and public sector practice. Deputy Director (as appropriate) is To complement the induction that a Board responsible for setting objectives for the member will have received from their own Chair and conducting their appraisal. There is public body, they will find it beneficial to also guidance on appraisal for Chair and Board attend any induction workshops for newly members. appointed members organised by the Scottish Leadership Government Public Bodies Unit and the Public Appointments Team. An important part of the induction process will be to explore with the Chair the Induction for Board Chair experience they have, any training that is The induction of a new Chair is the required and any development opportunities responsibility of the sponsor division and the which may be appropriate for them. Chief Executive of the body in question. Recruitment and Selection It is likely that the Chair will be involved in the selection of other Board members. It is important to ensure that he/she has undertaken appropriate training in conducting interviews, including equality awareness training. A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 71
Annex C The organisation of central government over devolved matters in Scotland A GUIDE FOR MEMBERS OF On Board STATUTORY BOARDS 72
The organisation of central government over devolved matters in Scotland: The Scottish Parliament, the Scottish Administration and bodies outwith the Scottish Administration
Parliamentary Bodies and Commissioners e.g. Commissioner for Ethical Auditor General The Scottish Parliament Standards, Scottish Information for Scotland Commissioner and the Scottish Public Services Ombudsman
The Scottish Administration
The Scottish Government Offices of the Scottish Administration Members: First Minister, other Ministers and e.g. Registrar General, Keeper of the the Law Officers. Records and the Keeper of the Collectively known as ‘the Scottish Ministers’ Registers
Executive Agencies Non Ministerial Offices Crown Office Directorates of e.g. Accountant e.g. Food Standards Scotland, and Procurator the Scottish in Bankruptcy, Revenue Scotland, Scottish Housing Fiscal Service Government Education Regulator Scotland
Public Bodies Outwith the Scottish Administration
Scottish Government Sponsored Bodies Non-Departmental Public Bodies e.g. the Other significant national bodies Accounts Commission, Children’s Hearings e.g. Scottish Police Authority and the Scottish Scotland, Scottish Legal Aid Board; NHS Fire and Rescue Service Boards; Public Corporations e.g. Scottish Water, Caledonian Maritime Assets Ltd Photo credits: Cover and content pages Architecture and Design Scotland Creative Scotland – photographer Michael Wolchover Loch Lomond & The Trossachs National Park Authority Scottish Qualifications Authority Scottish Canals Sportscotland All other images courtesy of iStockphoto and Scottish Viewpoint
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