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SP Paper 800


4th Report, 2007 (Session 2)

Annual Report of the Audit Committee for the Parliamentary year 7 May 2006 to 2 April 2007

Remit and membership


1. The remit of the Audit Committee is to consider and report on-

(a) any accounts laid before the Parliament;

(b) any report laid before or made to the Parliament by the Auditor General for Scotland; and

(c) any other document laid before the Parliament concerning financial control, accounting and auditing in relation to public expenditure.

2. No member of the Scottish Executive or junior Scottish Minister may be a member of the Committee and no member who represents a political party which is represented in the Scottish Executive may be convener of the Committee.

(Standing Orders of the Scottish Parliament, Rule 6.7)


Mr Brian Monteith (Convener)
Susan Deacon
Robin Harper (from 28 June 2006 - )
Margaret Jamieson
Mrs Mary Mulligan
Eleanor Scott (until 28 June 2006)
Margaret Smith
Mr Andrew Welsh (Deputy Convener)

Committee Clerking Team:

Clerk to the Committee
Shelagh McKinlay

Senior Assistant Clerk
Joanna Hardy

Assistant Clerk
Clare O'Neill

 Annual Report of the Audit Committee for the Parliamentary year 7 May 2006 to 2 April 2007

The Committee reports to the Parliament as follows—


1. The Audit Committee holds to account those who are charged with spending taxpayers’ money and ensures that public funds are spent wisely.

2. The Committee has focussed its work on reports by the Auditor General for Scotland (AGS) and continued its commitment to examining areas of major public expenditure such as the NHS in Scotland.

Inquiries and Reports

3. The Committee published 7 reports over the course of the parliamentary year. Details of the reports published are set out below:

  • Supporting New Initiatives and Leadership Development
  • Tackling waiting times in the NHS in Scotland
  • The 2004/05 Audit of Inverness College
  • Implementing the NHS Consultant Contract in Scotland
  • A mid-term report – a first stage review of the cost and implementation of the teachers’ agreement a Teaching Profession for the 21st Century
  • Relocation of Scottish Executive Departments, Agencies and NDPBs
  • Community Planning

4. The Committee held 9 oral evidence sessions as part of inquiries into 5 AGS reports and received briefings from the Auditor General on 16 other reports, 7 of which were section 22 reports. In addition, the Committee held one evidence session with the Accounts Commission on its overview of local authority audits. The Committee also considered Audit Scotland's Annual Report 2005/06 and, for the first time, submitted a formal response to Audit Scotland's consultation on its forward work programme.

NHS in Scotland
5. As with previous years, the Committee has devoted considerable time to issues affecting the NHS in Scotland and in particular, the Committee continued to focus on pay modernisation in the NHS during its inquiry into the NHS consultant contract. The Committee found that poor information led to a significant underestimate of the costs of the contract and undermined the effectiveness of negotiations to deliver it. The Committee concluded that despite the significant investment in the contract, expected patient benefits were not being demonstrated. The Committee also undertook an inquiry into tackling NHS waiting times. While the Committee commended the Health Service for good progress in reducing the number of people with long waits it expressed doubts that sufficiently robust plans were in place to ensure new targets will be met. The Committee believes that the NHS in Scotland needs to keep waiting times down on an ongoing basis by changing the way services are delivered, for example by treating more patients in non-hospital settings.

Further Education
6. The Committee followed up its work from the previous parliamentary year where it had expressed concerns regarding Inverness College’s failure to keep to its financial recovery plan by conducting a further inquiry into the 2004/05 accounts. In July 2006, the Committee published its report and concluded that management failures at executive and board level were the significant factor in the financial difficulties faced by the college. The Principal has since resigned and the college is currently working with the Further Education Development Directorate (FEDD) to address the issues facing the college. In its report, the Committee strongly supported the work of the FEDD but also commented on the lack of clarity in role of the FEDD in different contexts and the extent to which their involvement and its findings should be made public. The Funding Council accepted the recommendation that this should be reviewed.

Teaching Profession
7. The Committee published a report into the Teachers’ Agreement that arose from the McCrone Committee findings. The Committee acknowledged that a wide range of benefits had arisen as a result of the Agreement and welcomed the improved terms and conditions for teachers and better recruitment and retention rates. However, the Committee believed that the Scottish Executive would find it difficult to demonstrate that the Agreement had achieved value for money due to an absence of outcome measures. In addition, the Committee found weaknesses in costing and financial monitoring of the Agreement. The Committee was also critical of the Department not taking a more hands- on approach to the implementation of the Chartered Teacher Scheme. The Scottish Executive has since announced a review of the Chartered Teacher Scheme.

Community Planning
8. The Committee has continued its scrutiny of the delivery of policy on cross cutting areas and this year undertook an inquiry into community planning based on a joint report by the Auditor General and the Accounts Commission. In the course of its inquiry, the Committee undertook a fact finding visit to East Ayrshire and held a round table evidence session with the individuals involved in delivering community planning services. The Committee wanted to understand the difficulties they faced and how partner agencies work together to ensure adequate and equal provision of community services.

9. The Committee also undertook an inquiry into the relocation of Scottish Executive Departments, Agencies and NDPBs. This was the first time the Committee has conducted an inquiry on an AGS report connected to a Ministerial authority and, in this circumstance, the Committee unusually took evidence from the Minister. The Committee specifically examined what informed the Minister’s decision to overrule official’s advice that the relocation of Scottish Natural Heritage to Inverness did not represent value for money.

Legacy Paper
10. The Committee also published a legacy paper recording its working practices during the second session and will also outline recurring themes emerging and areas of continuing interest. This legacy paper is intended to act as a useful source of information for the successor committee when considering how it wishes to conduct its business.

Comparative Research

11. In March 2006, the Committee undertook a benchmarking exercise to investigate the working practices of Public Accounts Committees (PACs) that follow the Westminster model. The Committee was particularly interested on how PACs monitor their effectiveness in bringing about change as a result of their work. The Scottish Parliament Information Centre (SPICe) surveyed 38 legislatures focussing on how PACs contribute to delivering change and how progress in monitored. The results of the survey provided 2 useful comparators and further research was carried out with these 2 legislatures: the Victorian Public Accounts and Estimates Committee and the Standing Committee on Public Accounts, Legislative Assembly of Ontario. The Committee intends to include this research in its legacy paper.

Subordinate Legislation

12. During the parliamentary year the Committee considered one Scottish Statutory Instrument which was subject to affirmative procedure. The Committee recommended that the Parliament approve the instrument which amended the Construction Contracts (Scotland) Exclusion Amendment Order 1998 to align Scotland with comparable arrangements already in place south of the border.

Bills and Petitions

13. The Committee did not consider any bills or public petitions during the parliamentary year.


14. The Committee met 16 times between 7 May 2006 and 2 April 2007. The majority of Committee time was spent in public session only meeting in private to consider items such as lines of inquiry for witnesses, arrangements for inquiries and consideration of draft reports. Of the 16 meetings, 15 included some private agenda items and one was entirely in private.

15. The Committee held one external meeting in Inverness, the remainder were held in Edinburgh. In addition the Committee held one fact finding visit to East Ayrshire in relation to its inquiry into community planning.