Audit Scotland Management Contingency update
Letter to the Chair from the Auditor General for Scotland and Chair of Audit Scotland, 8 December 2021
Dear Chair
We write to update you on Audit Scotland’s use of the additional resources that the Scottish Commission for Public Audit 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, you requested that we update you quarterly on our expenditure of the additional funding. We wrote to you on 25 August 2021 and this letter provides our second update for the commission.
Audit Scotland Budget 2021/22
As you are aware 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.
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 remains the most significant risk facing the public sector in Scotland and this is reflected across a broad range of our audit work. Since we wrote to you in August the Auditor General for Scotland/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. This is indicative of how we are looking to ensure the audit work adds value. Since the last update we have issued reports and briefings on:
• A blog on Child and Adolescent Mental Health Services (31 August).
• An update on the strategic risks and issues facing the public sector (2 September).
• A briefing on ‘Tracking the impact of Covid-19 on Scotland’s public finances’ (15 September).
• A briefing on the vaccination programme (30 September).
• A thematic study report on the Impact of Covid-19 on Scottish councils’ benefits services (7 October).
• The 2020/21 audit of NHS National Services Scotland: Response to the Covid-19 pandemic (12 October).
• An update report on Covid-19 and community empowerment (28 October).
With Audit Scotland colleagues the Auditor General has attended parliamentary committees to provide evidence on several reports, a number of which consider/ reference Covid-19. This has included sessions on colleges, educational outcomes, children’s and adolescent’s mental health and sustainable alternatives to custody, the vaccination programme, NHS National Services Scotland and on PPE.
In conjunction with the Accounts Commission we review the dynamic audit work programme on a quarterly basis to ensure that it remains focussed, relevant and flexible.
In addition to work focussed on the pandemic, other recent publications include; Auditing Climate Change and the publication of our own Environment, sustainability and diversity plan 2021-2025, our route to net zero.
Among the publications we will publish in coming weeks and months are: reports on skills investment and the sustainability of social care, the annual overview report on the NHS in Scotland, a financial overview report on IJBs and a briefing on social care.
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.
In our letter in August we advised that over the period of May to July we appointed additional auditors and support service staff, committing £1,299k of the £1,500k additional funding. Having initially prioritised additional audit capacity we have more recently turned attention to ensuring that we have the appropriate specialist and support service capacity in place.
We are currently recruiting to a number of roles with a focus on audit quality, communications, digital audit, digital services and business support. We can confirm that the additional funding is now fully committed on an annualised basis.
The phasing of the in-year building capacity recruitment programme has led to a surplus available for non-recurring expenditure. We plan to use this surplus to secure time limited external support to support the delivery of our strategic improvement programme. This is in a range of areas including, change management, project management, systems procurement and office design. The 2021/22 financial commitment from the additional funding from the SCPA to date in these areas is currently £107k.
In addition to the increased revenue funding our capital budget was increased from £150k to £250k. As mentioned in our previous correspondence this additional capital funding has enabled us to procure an integrated business management system to replace old independent legacy systems.
We hope the information above is helpful and we will continue to provide further updates each quarter as agreed.
Yours sincerely
Stephen Boyle, Auditor General for Scotland and Accountable Officer Professor Alan Alexander, Chair of Audit Scotland