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The Scottish Commission for Public Audit

1st Report 2002

Audit Scotland Budget 2003-2004

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SP Paper 704

Session 1 (2002)

 

Presented to Parliament and published on 28 November 2002.

Membership:

Annabel Goldie (Convener)

Margaret Jamieson

Tom McCabe (Appointed 7 March 2002)

Keith Raffan

Andrew Welsh

Secretary to the Commission:

Terry Shevlin

Assistant Secretary to the Commission:

Seán Wixted

 

The Commission reports to the Parliament as follows-

1. In terms of section 11(9) of the Public Finance and Accountability (Scotland) Act 2000, the Scottish Commission for Public Audit ("the Commission") must examine Audit Scotland's proposals for its use of resources and expenditure for each financial year, and report on them to the Parliament.

2. The Commission met on 20 November 2002 to take evidence from Mr Robert Black, Auditor General for Scotland; Mr Russell Frith, Director of Audit Strategy, Audit Scotland; and Ms Diane McGiffen, Director of Corporate Services, Audit Scotland. In reaction to points of clarification which arose from this meeting, Audit Scotland submitted further briefings on 26 November 2002. The SCPA met on 27 November 2002 to consider its draft report on Audit Scotland's budget proposals for 2003/04.

3. The Commission received an initial budget submission from Audit Scotland on 2 September 2002 and a revised submission on 12 November 2002. Audit Scotland made it clear in providing oral evidence that the budget submission dated 2 September should not have been considered as its formal budget submission for 2003/04.

4. In its revised submission of 12 November, Audit Scotland estimated that its resource requirement for 2003/04 will be £6.424m. This is an increase from £5.899m for 2002/03, although this figure included a sum of £1.25m to be ring-fenced for VAT. In reality, a more accurate comparison would be between £6.424m for 2003/04 and £4.649m for 2002/03 (i.e. £5.899m minus £1.25m). This equates to a budget increase of £1.775m or 38.1%.

5. Audit Scotland explained that there were three main reasons for the increase:

· Statutory work (e.g. inflation, pay settlements, additional work etc) - £920,000

· Provision for VAT - £325,000

· Implementation of Best Value in Local Government - £500,000.

6. The Commission sought clarification of the bid for resources of £500,000, to enable Audit Scotland to deal with increased demands which will arise from the Local Government in Scotland Bill. The Bill, which has just completed stage 2 and is expected to come into force in April 2003, provides for new duties for the audit of best value, most of which will fall to Audit Scotland on behalf of the Accounts Commission.

7. Following investigation, the Commission is satisfied that, provided the Act comes into force as expected, Audit Scotland is entitled to provide for expenditure on this function. The Commission considers, however, that Audit Scotland should pursue with the Scottish Executive the extent to which all or part of this expenditure should be charged out to local authorities.

8. A second matter on which we sought further clarification, related to a request in Audit Scotland's budget submission for a contingency allowance of £135,000.

9. Audit Scotland explained that the difference between the audit year (November - October) and the financial year (April - March) created severe budgetary pressures at the financial year end. Audit Scotland confirmed however, that the provision it had incorporated in its proposals represented their best estimate of the additional costs which would arise at that time and is contingent only to the degree that Audit Scotland could not identify at this point in time the individual audits on which such costs would arise. The Commission is content to approve the provision on this basis.

10. The Commission notes that in each of its financial years to date, Audit Scotland underspent its approved budgets. Indeed, in 2001-02, a sum of £217,000 remained undrawn from the Consolidated Fund. For the future, the Commission recommends that, in its budget proposals, Audit Scotland should explain how such balances are treated, either carried forward under end-year flexibility procedures or surrendered to the Consolidated Fund.

11. One final point of concern to the Commission relates to the fact that Audit Scotland made an initial budget submission on 2 September, as discussed in paragraph 3.

12. In accordance with the Budgeting Process Agreement between the SCPA and the Finance Committee (SP Paper 157), a copy of Audit Scotland's budget submission dated 2 September was provided to the Members of the Finance Committee and to the Minister for Finance and Public Services. The revised submission of 12 November was also sent to the Convener of the Finance Committee and the Minister for Finance and Public Services. In both cases, Audit Scotland was made aware that the Finance Committee and the Executive had been informed. The SCPA informed both parties, because the Executive needs to have advance warning of Audit Scotland's budget, as this has prior call on the Scottish Consolidated Fund.

13. Given the existing agreements between the SCPA and the Finance Committee, we are keen to establish that there should only be one budget submission from Audit Scotland considered by the Commission, as was the case last year. Although we acknowledge Audit Scotland's evidence which stated that there was a great deal of activity which resulted in the revised submission being made to the SCPA, we are also pleased to note the Auditor General's assurances that, in terms of next year's submission, it should be possible to adhere to the timescales that are presently set.

14. Finally, we would like to acknowledge and compliment Audit Scotland on the fact that it is attempting to manage a zero-based budget, in a context where its workload is increasing greatly without the organisation necessarily showing a corresponding growth in its manpower.

Conclusions

15. We draw the Parliament's attention to the observations made and recommend that Audit Scotland's bid for a budget of £6.424m for the year 2003/04 should be approved by the Parliament.

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