Audit Scotland is predicting an increase in demand for services in the next financial year as Scotland moves towards increasingly devolved powers, folliowing a record spend on public sector audits and associated costs and services of £25.3m in 2014/15
According to its annual report, Audit Scotland, the independent body providing public audit in Scotland, conducted over 300 annual audits in 2014/15, but this is expected to grow significantly in the next 12 months. The challenge for regulator is to meet its wider remit and role to support parliament in developing a new fiscal framework for Scotland in light of new devolved powers.
However, the audit regulator highlights ‘a lack of transparency and clarity about current government expenditure’. For example, gaps currently exist in aggregate pension liabilities and there is no clear overall picture of the government's exposure to investments in assets such as hospitals and schools.
Particular areas of concern include the Scottish Police Authority and Police Scotland, which Audit Scotland said 'must collectively provide stronger leadership in strategic and operational financial management. There is a need to improve a number of aspects of governance arrangements and financial statements'.
Over the year, Audit Scotland released a new code of audit practice for public audit in Scotland. This has a focus on financial sustainability and management, governance and transparency, and value for money and will apply from the 2016/17 audits.
Alongside the 323 audits completed in the year, Audit Scotland published nine Section 22 reports looking at specific areas of concern, highlight poor financial management, governance issues and lack of oversight. These were on the Scottish Police Authority, NHS 24, NHS Tayside, NHS Highland, the Scottish Government’s Consolidated Accounts, Glasgow Clyde College, Edinburgh College, Glasgow Colleges Regional Board and one from the 2013/14 audit of Coatbridge College.
The majority of funding, £17.6m, came from fee charges and other income. the remainder (£7.7m) in direct funding from the Scottish parliament, which also provided £1.4m in capital for the move to a new Edinburgh office, which Audit Scotland says will bring £2.8m in revenue savings over ten years. Operating costs were down by £700,000 on budget, of which £100,000 related to favourable movements on unfunded pension provisions as a result of changes in actuarial assumptions. Audit Scotland also delivered £900,000 of efficiency savings, over twice the target of £400,000. This represented 3.6% of the budget, with the majority of savings coming from staff costs, travel and subsistence and property.
However, operating income was £400,000 more than budget because of additional audit work undertaken. This related to a series of audit investigations following further education college mergers, the establishment of Police Scotland and the expansion of European Agricultural Fund audits.
People costs were £200,000 more than budget mainly because of a provision of £300,000 made for 11 staff who have accepted voluntary early retirement and severance – as a result, annual recurring savings of £300,000 will accrue from April 2017.
Other administration costs were £500,000 below budget, with the majority of the savings arising from property costs as a result of settling dilapidation liabilities on closed offices in Edinburgh at £300,000 less than the provision held together with savings in respect of travel and subsistence £200,000.
The Audit Scotland annual report 2015/16 is here