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About the Scottish Parliament

Audit Scotland Budget 2021-22

Joint letter from the Chair of the Board and the Auditor General for Scotland to the Chair of the SCPA, 25 August 2021

Dear Chair,

We write to update you on Audit Scotland’s use of the additional resources that the Scottish Commission for Public Audit kindly approved earlier this year in order to support us in strengthening public audit to address the significant challenges that Scotland’s public sector faces.

In approving those resources, the then SCPA Chair requested that we update you quarterly on our expenditure of the additional funding. This is our first such update to the Commission.

Audit Scotland Budget 2021/22

The SCPA considered Audit Scotland’s 2021/22 budget proposal on 15 January 2021. The papers for that meeting are available here and the Official Report here.

The effects of the Covid-19 global pandemic are likely to be felt for a number of years to come.

In the short term, the delays to some audit work and the (welcome) extension to audit deadlines under the Coronavirus (Scotland) Act and supporting regulations has had an adverse effect on income recognition. This was compounded by the statutory limitations on our ability to hold reserves and this was addressed through our 2020/21 Spring Budget Revision. However, it is likely that the disruption to audited bodies, the audit work and the financial implications of that, will continue to require careful management over the coming years.

The 2021/22 budget proposal included a request for an additional £2,199k in funding compared with 2020/21. This was to ensure that Audit Scotland was in a position to continue to deliver core audit services, expand and enhance the range of audit products, support transparency and scrutiny and to provide assurance on the significant additional new sums of money being spent in Scotland (£8.6billion of public spending in 2020/21 and £3.0 billion in 2021/22).

The budget proposal stated:

‘Our 2021/22 budget proposal reflects the increasingly uncertain and volatile world that we and the bodies we audit are now operating in and that we anticipate will continue for several years to  come. It will enable us to expand audit coverage and invest in flexibility, skills and capacity so that we can maintain and improve our high-quality audit and deliver a programme of work that will support effective parliamentary scrutiny’.

The proposal also stated:

’We will initially hold the increase in our management contingency, allocating it transparently as we invest in skills and capacity throughout the year. This increase from £300k to £2,400k will enable us effectively to develop and implement a sustainable future operating model for public sector audit in Scotland to address new challenges, meet stakeholder expectations within existing financial rules while considering the longer term implications for the funding and fees model’.

Supporting scrutiny of the public sector’s response to Covid-19

The budget proposal included commitments to deliver:

  • Assurance over the significant new sums of public money being spent in Scotland.
  • Independent evidence-based public reporting on how well public money is being used to rebuild the economy, repair the damage to communities, address inequalities and  create a fairer more just society, and how well public bodies demonstrate good governance, transparency, financial management, fraud prevention and long-term planning.
  • Comprehensive tracking of Covid-19 support spending across the public sector to provide a coordinated 'follow the pandemic pound' approach and form a view on the effectiveness of the overall system of Covid-19 financial support.


It is clear that the Covid-19 pandemic is the most significant risk facing the public sector in Scotland and this is reflected across a broad range of our audit work.

Our publication, Covid-19: What it means for public audit in Scotland, sets out the overarching approach Audit Scotland is taking on behalf of the Auditor General and the Accounts Commission. 
Following this, the Auditor General and the Interim Chair of the Accounts Commission agreed our refreshed work programme on 27 April and the programme was published in May 2021. We also agreed to move to a quarterly update of the work programme rather than an annual refresh, to ensure it remains dynamic and flexible.

The work programme contains a range of Covid-19 related work including approaches to ‘following the pandemic pound’, and is structured around five core themes: economic recovery and growth; 
governance and accountability; innovation and transformation; policy priorities and commitments; and inequalities and human rights.

We have also revised our strategic approach to parliamentary engagement to ensure that members have the information they need to scrutinise the public sector’s response to the pandemic and the use of public money in the delivery of services.

In the period since the Commission considered the budget proposal, the Auditor General/ Accounts Commission/ Audit Scotland have published a number of reports and briefings which seek to provide information, insight and assurance on how Scotland’s public bodies have responded to the pandemic and is indicative of how we are looking to ensure the audit work adds value. This has included the overview reports on the NHS in Scotland and local government, reports on tracking the implications of Covid-19 on Scotland’s public finances , a briefing paper on PPE and blogs on skills investment, social care and the provisional Scottish Budget outturn.

Further information on our audit and organisational response to the pandemic is available in the 2020/21 Annual Report and Accounts published on 11 June 2021 and a more detailed listing of 
relevant publications is attached as an appendix to this letter.

Among the publications we will publish in coming weeks and months are: an overview of the strategic risks and issues facing Scotland’s public sector; an update on children and young people’s mental health services; a blog on digital exclusion; a review of the impact of Covid-19 on housing benefit services; an update of Covid-19's financial impact; a briefing on the vaccination programme; an update on Covid-19's impact on community empowerment and a performance audit report on skills investment. We will also publish statutory reports on any matters of public interest which arise 
from our annual audit of public bodies where appropriate.

Investing in capacity and improvement

  • Our budget proposal also set our commitment to deliver:
  • Continued recovery from the disruption to audit work in 2020.
  • Investment in more flexible and agile ways of working and enhancement to our digital and professional support capacity to ensure our audit reporting is keeping pace with the changes in public finances and services and in technological developments.
  •  Additional recruitment to ensure we are able to attract and retain the highest quality of candidates and build the skills and expertise we need to develop public audit.
  • Greater strategic capacity to enable us to respond to the rapidly changing environment, and for public audit to be a clear voice for good governance and improvement as we move towards recovery and renewal.

We have been investing in our capacity and improvement to ensure that we are in a position to deliver on these commitments. In the year to date this has been in two main areas:

  • Building our capacity - to ensure we have the people in place to deliver the audit work and our strategic improvement programme.
  • Investing in technology - to support business efficiency and flexibility.

Over the period of May to July we have appointed additional auditors and support service staff. The 2021/22 financial commitment from the additional funding from the SCPA to date is £1,299K.  At the point the budget proposal was made the Scottish public sector pay award had not been finalised. The financial commitment for this in 2021/22 has now been confirmed as £400k.

In May 2021 the Audit Scotland Management Team approved a business case for the procurement of a new business management system which will provide a more flexible and resilient tool to support the management of our finance, human resources and learning and development functions. This expenditure will cover the initial set-up costs as ongoing license costs will be covered from existing budgets. The financial commitment in 2021/22 is £124k capital investment with the annual costs being funded by legacy system savings. We hope the information above is helpful and we will continue to provide further updates each quarter as agreed.

Yours sincerely

Professor Alan Alexander, Chair of Audit Scotland
Stephen Boyle, Auditor General for Scotland and Accountable Officer

 Appendix

In the period since the Scottish Commission for Public Audit considered the budget proposal in January 2021, the Auditor General/ Accounts Commission/ Audit Scotland have published a number of reports and briefings which seek to provide information, insight and assurance on how Scotland’s public bodies have responded to the pandemic.

These, along with all of our audit reports, are published in the Audit Scotland website.