Funding External Bodies and Following the Public Pound - Code of Practice
Argyll and Bute Council · 9 October 2025
Back to Policy and Resources Committee — 9 October 2025 and its agenda
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE FINANCIAL SERVICES 9 OCTOBER 2025 FUNDING EXTERNAL BODIES AND FOLLOWING THE PUBLIC POUND – CODE OF PRACTICE 1.0 EXECUTIVE SUMMARY 1.1 The purpose of this report is to seek approval from the Policy and Resources Committee for the adoption of a local Code of Practice on Funding External Bodies and Following the Public Pound, providing a consistent and structured framework for ensuring robust governance and accountability in the use of public funds. 1.2 The concept of ‘following the public pound’ is to ensure that the principles of openness, integrity and accountability, which apply to councils in their decisions on spending public money, apply equally to funds to external bodies. Local authorities are required to comply with the Code of Guidance on Funding External Bodies and Following the Public Pound (the Code), published jointly by the Accounts Commission and the Convention of Scottish Local Authorities. 1.3 There is an opportunity to strengthen existing governance arrangements through the development and implementation of a local council-wide Code of Practice, reflecting the principles of the Code. A local Code of Practice has been developed for implementation across the council to provide a consistent and more structured approach to the funding of external bodies and ‘following the public pound’. 1.4 It is recommended that the Policy and Resources Committee: a) Approve the adoption of a local Code of Practice for Funding External Bodies and Following the Public Pound; b) Instruct officers to implement the Code of Practice across all relevant funding arrangements; and c) Request future reporting on compliance and effectiveness of the Code of Practice.
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE FINANCIAL SERVICES 9 OCTOBER 2025 FUNDING EXTERNAL BODIES AND FOLLOWING THE PUBLIC POUND – CODE OF PRACTICE 2.0 DETAIL 2.1 Purpose of Report To seek approval from the Policy and Resources Committee for the adoption of a local Code of Practice on Funding External Bodies and Following the Public Pound, providing a consistent and structured framework for ensuring robust governance and accountability in the use of public funds. 2.2 Background 2.2.1 The concept of ‘following the public pound’ is to ensure that the principles of openness, integrity and accountability, which apply to councils in their decisions on spending public money, apply equally to funds or other resources transferred by councils to arms-length or external bodies. Essentially, to ensure that public money is used properly and achieves value for money, it must be possible to trace funds from the council to where they are ultimately spent – to ‘follow the public pound’ across organisational boundaries. 2.2.2 When agreeing to transfer funds or provide financial assistance or assistance in kind to an external body, including an individual, the council should ensure clear auditable decision making. The primary purpose of arrangements entered into with external bodies or individuals should be the achievement of the council’s strategic objectives in the most efficient, effective and economic manner. 2.2.3 The Code of Guidance on Funding External Bodies and Following the Public Pound (the Code) was published jointly by the Accounts Commission and the Convention of Scottish Local Authorities in 1996. In 2005, the Code was given statutory backing in the form of a Ministerial Direction under the Local Government (Scotland) Act 2003, which required every local authority to comply with the Code when entering into any such arrangement.
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2.2.4 The Code provides a framework for councils to manage funding relationships with external bodies in a way that ensures: • Clear public accountability • Proper financial oversight • Alignment with council objectives • Risk management and performance monitoring. Audit Scotland has endorsed this approach as a key component of Best Value and financial stewardship. 2.3 Council Governance Arrangements 2.3.1 The concept of ‘following the public pound’ is not new and there are a range of arrangements currently in place across the council that follow the principles of the Code to varying degrees. However, it is good practice to review and continue to improve existing governance arrangements. 2.3.2 There is an opportunity to strengthen existing governance arrangements through the development and implementation of a local council-wide Code of Practice, reflecting the principles of the Code. As such, a local Code of Practice has been developed for implementation across the council and this is given as Appendix 1 to this report. 2.3.3 The key benefits of the council’s Code of Practice include: • A consistent and more structured approach to the funding of external bodies and ‘following the public pound’, more closely aligned to the principles of the Code; and • The creation of a central repository for funding agreement documentation. 2.4 Scope of the Council’s Code of Practice 2.3.1 The council’s Code of Practice will apply to: • All external bodies or individuals receiving funding from the council; and • Any arrangement where council resources are used to support external service delivery. It will not apply to contracts for goods and services, governed by procurement strategy and arrangements. 2.4 Key Principles 2.4.1 The council’s Code of Practice sets out the following core principles: • Transparency: Clear documentation of funding agreements and decision- making;
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• Accountability: Defined roles and responsibilities for council officers and funded bodies; • Proportionality: Scrutiny levels based on funding amount and risk; • Performance: Monitoring of outcomes and financial reporting; and • Termination and review: Clear exit strategies and periodic evaluations. 2.5 IMPLEMENTATION 2.5.1 The council’s Code of Practice will be incorporated into council funding procedures and shared with all relevant departments and external partners. 3.0 RECOMMENDATIONS 3.1 It is recommended that the Policy and Resources Committee: a) Approve the adoption of a local council Code of Practice for Funding External Bodies and Following the Public Pound; b) Instruct officers to implement the Code of Practice across all relevant funding arrangements; and c) Request future reporting on compliance and effectiveness of the Code of Practice. 4.0 IMPLICATIONS 4.1 Policy - None 4.2 Financial - Guidance will support financial oversight and governance. 4.3 Legal – Guidance will support the council in ensuring and evidencing Best Value when awarding funding. 4.4 HR - None 4.5 Customer Service - None 4.6 Risk – Guidance outlines measures and controls to mitigate financial risks. 4.7 Climate Change - None 4.8 Fairer Scotland Duty - None 4.9 Equalities - protected characteristics - None 4.10 Consumer Duty - None 4.11 Island Communities - None 4.12 Children’s Rights and Wellbeing - None
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Kirsty Flanagan Executive Director /Section 95 Officer with responsibility for Financial Services 20 August 2025 Councillor Ross Moreland, Policy Lead for Finance and Commercial Services For further information contact: Carolyn Earl, Interim Head of Financial Services carolyn.earl@argyll-bute.gov.uk Appendix 1 – Funding External Bodies and Following the Public Pound - Code of Practice.