Some practical considerations

Spending public money wisely and well: how to put basic principles into practice.

The principles are deliberately at a high level. They are a starting point, and a reminder of the basic obligations on those spending public money. In any particular public entity or situation, they need to be applied flexibly and practically, to achieve the goals of the public entity or of the particular funding arrangement through the most sensible means. We have previously described this as taking a risk-based approach.

For example, the principle of accountability at its simplest means that a public entity has to be able to explain what public money has been used for. For a very minor and simple purchase, this may require no more than a receipt for a bottle of milk or a note on the back of a taxi receipt recording the purpose of the travel. For major contracts, such as for a new information technology system, much more would be needed to reflect the same principle, such as fully developed business cases, formal documented approvals at the appropriate level, detailed contracts, ongoing and systematic monitoring of progress under the contracts, and full documentation of the whole procurement process.

When deciding how to give effect to these principles in any particular situation, public entities should consider:

  • The goal – It is important for the public entity to focus on what it is trying to achieve. Process should not dominate at the expense of the outcome.
  • Simplicity and proportionality – The requirements put in place for the funding arrangement should be as simple and practical as possible, considering the amounts involved, the complexity, and the level of risk. It is appropriate to consider compliance costs for the parties, and seek to reduce them where possible.
  • The context – The arrangements need to fit with the overall context of the funding arrangement, including any more general relationship that the external party has with the entity or with other relevant government organisations. For example, a funding arrangement between a department and a non-government organisation may need to take account of any general government policy on relationships with the community and voluntary sector.
  • The risk – Public entities need to identify risks in or around the funding arrangement and to consider how to manage those risks. This should not be seen as encouragement to be overly risk averse. The key is to get the right balance between risk and expected benefit, and to do so consciously.
  • The nature of the parties – The needs and standards of public entities – for example, for accountability or transparency – may be quite different from those that the external party usually encounters. Equally, the external party’s needs may be quite different from those of the public entity. For example, a non-government organisation may have unique obligations to constituent groups or members. Relationships are likely to proceed more constructively and effectively if each party understands the needs of the other and the consequences of those needs for them.

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