3. Financial Management of Welfare Funds
Financial Management of Welfare Funds 
3.1 In order to achieve consistency of service provision across Scotland, local authorities should apply a financial management approach to managing Community Care Grant and Crisis Grant budgets that shares similar principles.
3.2 It is expected that local authorities should manage expenditure in such a way as to ensure effective budgetary management of funds over the financial year.
3.3 Local authorities should establish and monitor at least two budget headings for 'Community Care Grant Provision' and 'Crisis Grant Provision'. Further derivatives of these may also be of benefit to individual local authorities.
3.4 Local authorities are free to vire between Community Care Grants and Crisis Grant budget headings without restriction. It is, however, an aim of the national scheme over time to seek a real terms reduction in expenditure on Crisis Grants as a result of successful intervention preventing crisis reoccurring, thereby increasing funds available for preventative spend on Community Care Grants.
3.5 Although the application of virement can be helpful for monitoring purposes, local authorities should take decisions to apply priorities and cap spend at SWF level within the authority, i.e. Community Care Grants & Crisis Grants collectively. This means expenditure on Crisis Grants cannot be suspended whilst resources remain within the Community Care Grant budget heading and vice versa.
3.6 It is envisaged that budget holders will assess the demand pattern of actual activity against budget profile throughout the financial year, making operational decisions about whether it is possible to make awards for high priority applications only, high and medium or high, medium and low.
3.7 The priority can be set at different levels for Community Care Grants and Crisis Grants. We would not expect local authorities to reject any application which has been judged to match the priority level applying at the time the application is considered ( i.e. at the time of decision) if funds remain in either the Community Care Grant or the Crisis Grant budget headings. This is further explained in paragraph 5.10 of this Guidance.
3.8 In particular, it is expected that local authorities should manage expenditure to ensure that high priority Crisis Grants can be met over the financial year in accordance with the priority ratings at paragraph 5.6 and 5.7.
3.9 If a local authority was to encounter very high levels of demand, such that there is a real risk that the Funds will be exhausted before the end of the financial year, it may make use of a "high most compelling" priority rating. Under this rating, in order to be successful:
- the applicant's need would be judged to be immediate and extremely severe
- the applicant is judged to be highly vulnerable and at immediate risk
- an award for the item or money requested would have a substantial, immediate and sustained effect in resolving or improving the health and wellbeing of the applicant or their family
- there will be significant and immediate adverse consequences if the item or money is not provided
3.10 Local authorities are expected to manage their budget through-out the year in line with the principles outlined in this guidance. They should avoid being in a situation where they enter into the 'high most compelling' priority rating mid – year. It should only be adopted late in the financial year, or potentially after an event which has increased demand on local authority budgets, for example, flood causing demand to rise significantly in a particular area, in order to be able to maintain payments until the end of the period.
3.11 Local authorities who adopt the high most compelling rating should make the Scottish Government Social Security Directorate and stakeholders in their area aware of the adoption of this priority level, and how long this is likely to be in place, to ensure customers are adequately supported.
3.12 The Act provides for local authorities to augment their Welfare Fund budget should they choose to do so. In so doing, local authorities would require to establish a further budget heading(s) as there will be a need to monitor and report on the monies provided by the Scottish Government separately.
3.13 Local authorities should also avoid being significantly underspent towards the end of the year, unless there are legitimate reasons to explain why. However, they can carry this forward within the Welfare Fund within the context of their own arrangements.
3.14 Local authorities should recognise the potential additional unforeseen expenditure to arise as a result of the first and independent review process, and plan for this accordingly.
Procurement of goods
3.15 The duty of best value is applied to all public bodies in Scotland. It is a statutory duty in local government, and in the rest of the public sector it is a formal duty on Accountable Officers. Local authorities have extensive discretion over how the scheme is delivered in their area including the fulfilment of grants. They should ensure when procuring goods for the Scottish Welfare Fund that due consideration is given to obtaining best value for money. Local authorities must also demonstrate that best value has been achieved and ensure that there is transparency around decision making, with robust mechanisms in place to record such information. Audit Scotland has developed Best Value toolkits which are available at: http://www.audit-scotland.gov.uk/our-work/best-value/best-value-toolkits