Audit Scotland (Annual Report)
Agenda item 2 is a briefing from the Auditor General for Scotland on Audit Scotland's annual report for 2008-09.
Mr Robert Black (Auditor General for Scotland):
It is a pleasure to present to the committee Audit Scotland's annual report for the previous financial year. As we say in the introduction to the report,
"There has never been a greater need for independent assurance about financial performance, risk management and support for improvement in the public sector"
in Scotland.
As we know, we are in a time of recession, with the prospect of severe public spending constraints in the future. It therefore becomes all the more important for all public bodies to focus on their performance and on improving economy and efficiency. We have continued to support that through the performance audit reports that we produce, and by bringing those to the Parliament, mainly through the committee, as part of the process of democratic scrutiny of the public sector.
In the past year, we produced about 30 public performance reports and presented them to the Public Audit Committee. Those included important reports on drug and alcohol services, day surgery, palliative care, the First ScotRail passenger rail franchise, major capital projects, sport in Scotland, prisoner numbers and central Government's use of consultants. That is just a sample of the range. In addition, we completed more than 200 annual audits, each of which involved the preparation of a final report. The reports are available on the Audit Scotland website.
Some of that work led to section 22 reports, which were considered by the committee and which are itemised on the annual report. The committee decided to take evidence on a number of those reports, which, if I may say so, adds greatly to the impact and effectiveness of Audit Scotland's work. In my view, the fact that the committee takes findings that are produced for it in my name, explores the issues and then holds Government to account in various ways is one of the great strengths of the Scottish Parliament model, as I have said on many occasions. Lying behind those 200 or so final audit reports are about 900 separate reports that were produced for the 210 public bodies that we audit. Those cover a wide range of areas, such as financial systems, partnership working and the management of information and communication technology.
Of course, the Public Audit Committee sees only a part of what Audit Scotland does. In addition to all the work that I have just mentioned, which is slightly lower on the horizon, we also support the Accounts Commission. Audit Scotland has now completed all the best-value reports on Scotland's 32 local authorities, and those have been considered by the Accounts Commission, which has made findings. Most councils have now developed improvement plans on the back of their best-value audits. Planning for the next round of best-value work is proceeding well. The annual report outlines the principles that will be applied to the next round of best-value audits. For example, there will be greater emphasis on considering outcomes, partnership working, the experience of service users and economy, efficiency and effectiveness. Finally on the best-value theme, I am pleased that we are making rather good progress in promoting a common best-value framework throughout the rest of the public sector in Scotland.
In the past year, Audit Scotland has also assumed the key role of supporting the Accounts Commission in helping to reduce the overall scrutiny burden on public bodies in Scotland and to increase the impact of scrutiny. The commission has taken on a co-ordinating role in relation to other scrutiny bodies. That includes the development of a shared approach to risk assessment, on which Audit Scotland is leading. I think that that offers the prospect of streamlined scrutiny and of an increased likelihood that the scrutiny activity will address the risk and performance issues that matter in the relevant public bodies, which are principally local authorities.
I will briefly mention two others areas of work that might be of interest to the committee. First, we continue to run the national fraud initiative, which has now identified about £40 million of inappropriate payments and has led to at least 75 successful prosecutions. Secondly, I want to mention our positive relationships with other countries, particularly in Europe. Audit Scotland is increasingly known and recognised for its work. That is reflected in the requests for assistance that we receive from overseas organisations. The annual report contains a brief outline of that work, but a separate report gives much more detail about our activities with European and developing countries. That is a small, but useful, part of our overall work.
We are happy to answer questions or respond to comments.
Thank you very much.
One feature that is worth remarking on, in addition to the number of significant pieces of work that have been undertaken, is the quality of the work that has been done. All committee members have recognised that at different times. The fact that Audit Scotland's reports are of such high quality makes it much easier for us to determine what needs to be followed up and how that should be done. We certainly appreciate the contribution that Audit Scotland makes to public life in Scotland and to ensuring that resources are used effectively and properly.
Do committee members have any comments?
To continue on from the convener's comments, I think that this is a marvellous report that shows that Audit Scotland has grown in strength over the years. On Mr Black's final comments, I think that the requests for assistance from other countries show that Audit Scotland is widely regarded throughout Europe as a body from which people seek advice and guidance. That is very encouraging, and Mr Black should be congratulated on that endeavour.
I want to pick up on the issue of best value. The report reminds us that best value
"is a statutory duty in local government, and in the rest of the public sector it is a formal duty".
How is best value progressing in the wider public sector, outwith the local authorities? Are other public bodies on a par with local authorities, or do they have some catching up to do?
We have the building blocks of best-value reporting in place for the national health service and for central Government bodies. The annual audit reports on each public body in Scotland are increasingly prepared against best-value principles. The reports are public documents and are available on the website. The national reports on performance that we describe in our annual report allow big issues of performance to be brought to Parliament's attention, particularly through the Public Audit Committee. Instead of producing a new, separate report on each health board—we would all agree, I am sure, that there are enough reports around already—we are attempting to ensure that, in future, our audit reports reflect the best-value principles.
In the case of the NHS, we have had some constructive discussions with the health directorates on how the reports are used. As members will be aware, there is an annual review meeting between the Government and each health board. We have an understanding with the chief executive of the NHS that the final audit reports and any related material will be a standing source of information that can be drawn on to assist and inform the Government in holding health boards to account for their performance. In addition, the auditors will apply, progressively in each health board, the audit support toolkits that deal with matters such as financial management, procurement and management of information technology. We are moving forward on that broad basis throughout the NHS.
The task is somewhat more challenging for us in relation to what might be called discrete audited bodies. For example, Scottish Enterprise is not very similar to Scottish Natural Heritage or a further education college—each organisation has its own agenda, so we cannot produce the same general model. Nevertheless, we will apply the Audit Scotland best-value approach to those bodies and reflect that in our final audit reports. If significant issues arise from that, I will ensure that they are brought to the committee's attention.
That is encouraging—thank you.
This 10-year report card is very impressive. Such work is fundamental to democratic scrutiny, especially as public sector performance and improved efficiency will be crucial in the wider financial environment of recession and budget restriction. The work that Audit Scotland does will be essential in maintaining and improving services. I simply congratulate Audit Scotland on the impressive range of work that it does for Parliament and people and I wish it all success in its continuing good work.
I thank Andrew Welsh for his supportive remarks and the convener for his earlier remarks. Delivery of the work in my name relies wholly on the quality and commitment of people in Audit Scotland, so I will have pleasure in taking members' comments back to the staff.
I will raise an issue that has been a hobby-horse of mine, as members know. Audit Scotland's financial performance figures reflect the work that it does. The committee and the Parliament, which stand at arm's length from the Government, can consider significant issues relatively objectively. When Audit Scotland undertakes work on Scottish Water, transport, further education or health services, we can comment on inefficiencies and weaknesses. As I said, we stand a bit at arm's length from the process.
However, 63 per cent of Audit Scotland's income comes from local government, but there is nothing similar to our committee to enable the vast majority of Audit Scotland's work to be scrutinised in the same way in local government. That is a gap in the process of democratic accountability. I understand that local authorities are independent bodies—that raises an issue—but in the future, perhaps we should all at least consider whether we should require local authorities to have a similar function to our committee that examines objectively and independently of the local authority's administration what is happening. It is all very well for us to make informed comment, but to do so on only 37 per cent of Audit Scotland's work is peculiar, to say the least.
I congratulate Audit Scotland on the report, which is readable and easy to understand. When I first saw the photograph on page 27, I thought that those pictured were perhaps auditioning for a programme such as "Dragons' Den" and that they were the four dragons—
"Britain's Got Talent" would be more like it.
"Britain's Got Talent"—oh well, whatever.
Pages 34 and 35 of the report highlight the organisation's income and expenditure. More public bodies should provide such clear and concise information. If anybody wanted to dig deeper and to find out more information about that, I think that doing so would be quite easy. I commend the organisation for the clarity of the information on those two pages.
Given the situation in the country in relation to costs such as MPs' expenses and the cost of the public sector in general, it is appropriate that salary scales are laid out in the report. That shows that the organisation is open and transparent.
Do you have anything more to say about the national fraud initiative and the proposals in the Criminal Justice and Licensing (Scotland) Bill to provide a system that will allow an exchange of data? I am on the Justice Committee, which is considering the bill, so it would be interesting to hear about that.
I take your remark about the photograph on page 27—that you think that we are fit candidates for "Dragons' Den"—as a compliment. I know that we have age discrimination legislation now, but I suspect that I might be discounted on the ground that I am at least the same age as the person who leads on the "Dragons' Den" assessment.
The Criminal Justice and Licensing (Scotland) Bill contains a number of provisions covering the national fraud initiative and Audit Scotland. The bill will allow us to include more data from public bodies that we audit in the next national fraud initiative exercise. Until now, we have mainly looked at councils and fire and police authorities. We were able to add health authorities in 2006-07. The next national fraud initiative should cover most of the public sector in Scotland. The bill will also give us explicit powers to match data with audit agencies outside Scotland, so that we can look across the whole of the United Kingdom, which is often where some of the inappropriate claims and payments come from. That will enable us to help one another identify fraud and errors that involve public sector bodies elsewhere in the UK. It will also extend the purposes for which we can carry out data matching, so that, working with other authorities, we can help to prevent and detect crime other than fraud and help in the apprehension of offenders, as they say. The bill will widen the powers appropriately and usefully.
This is an excellent report from an outstanding organisation. The professionalism and ability of the team are shown throughout the report. I am very impressed by everything that it sets out.
I have two questions, which might be linked. One is on a topical issue and the other is more to do with strategy and the future—the issues on which the convener commented. The topical question is about the issue that was in the news yesterday. The property transactions in Aberdeen City Council are referred to in your report, but yesterday there were reports on the BBC of serious allegations about a major property transaction in North Lanarkshire. Are you aware of that situation, and would there be a role for you in relation to it?
I must apologise. I am slightly behind in my knowledge of current affairs at the moment, because I have been exceptionally busy for the past two days. I am sorry that I cannot help you with the North Lanarkshire matter. Did it relate to the local authority?
Yes, it was a local authority issue.
In that case, I am confident that the auditors will be fully aware of it and will be monitoring it. If you would appreciate a note of the position on that, I would be happy to provide it.
That would be helpful. There were serious allegations about a property transaction. A change to the local plan had been announced within 24 hours of the transaction going through, and the value of the property involved increased substantially. The story was running on the BBC yesterday.
Linked to that and to the local authority issues to which Hugh Henry referred and the wider strategy for Audit Scotland and the Public Audit Committee in the future is the approach taken by the Public Accounts Committee of the Danish Parliament, which we found very interesting—we met representatives of that committee last week. I am extremely pleased that people come to Scotland to learn about our system and approach, but I wonder whether, 10 years into devolution and the Scottish Parliament, we should review how we consider public audit issues—for example, not only the Public Audit Committee's successes but areas that could be strengthened. Clearly, we would want to do that jointly with Audit Scotland, but I wonder whether the organisation would welcome that opportunity. Although Audit Scotland's reports are consistently excellent and we try very hard to follow up on them, there is a sense of frustration at times that we do not see the change, or the scale or pace of change, that we would all wish for the delivery of public services in Scotland. I would like to think that, if we approach matters correctly at this stage, we could set out firm foundations for the next 10 years and beyond through strengthening the roles of the Public Audit Committee and Audit Scotland.
Other members have covered most of the report. Like them, I believe that it is an excellent report and that, as Nicol Stephen said, Audit Scotland is an excellent organisation. I became a member of the Public Audit Committee in, I think, March. Since then, I have been blown away by the fact that every member of Mr Black's team can answer every question that we ask, giving substantive answers rather than a politician's answers. If this is beginning to sound like a bit of a love-in, there is good reason for that.
I was particularly pleased to read in the report that Audit Scotland's website had
"achieved the Shaw Trust ‘Accessible Plus' accreditation".
I was also pleased to read that instead of just doing a tick-box paper exercise John Robertson, Audit Scotland's web officer, went along to the Shaw Trust to understand what restrictions people with learning disabilities and physical disabilities faced when using the Audit Scotland website and what needed to be done to open it up for them. That indicates not only how accessible Audit Scotland is but that it understands that everybody, regardless of their ability or disability, has the right to scrutinise how public money is spent. The whole report is excellent, but the information about the Shaw Trust accreditation is particularly significant, because it tells us a lot about Audit Scotland.
We are in public session, are we not?
Yes.
That has never stopped you.
That sounds ominous.
Well, although they are not here, some of the reptiles nevertheless sit up in their offices and listen to what we say.
I agree with what has been said about supporting further the very good work of democratic scrutiny—I made the same point at a previous committee meeting.
I have just come back from Egypt, where people were talking about a public accounts committee in the Egyptian Parliament and the kind of work that we and Audit Scotland do. Every place we go to where new Parliaments have been set up or are developing, the issue arises. Unfortunately, some of the reptiles from the newspapers twist matters to make it look like we go on jollies—as if it is fun to go to those places, sit down and talk about strategies for ensuring that public money is spent effectively and efficiently. We should keep that up, no matter whether the Sunday Herald twists it or not.
That brings me to what Nicol Stephen said about the visitors from the Danish Parliament. We had an interesting and useful dialogue with them. I have spoken to the convener—I think that he lunched with the visitors or met them otherwise—about a particular fact that we learned from the visitors. Two or three members of the Danish Parliament's Public Accounts Committee, who are full-time and do nothing else, go with someone from their auditor general's office to, say, a university or college, or another kind of establishment, to undertake scrutiny work together.
Nicol Stephen is right; we must not get complacent. I underline all the nice things that everyone has said about Audit Scotland, but we should always try to find ways of improving things. In that respect, I wonder whether we can use the Danish experience to address, for example, the issue of the accountability of colleges with regard to their governance and expenditure, which is something that the convener and other members have expressed concern about.
As a final point, I have to say that I have not visited Audit Scotland's headquarters at 110 George Street and, having looked at the photographs in the annual report, I have not met some members of staff or board members. Perhaps one Wednesday morning when we do not have a lot of work on the agenda we could go down to 110 George Street to get a presentation, meet other staff members, see what the working conditions are like and so on.
We will certainly note that suggestion.
The Auditor General and I have briefly discussed some of the issues that emerged from our meeting with the Danish committee. The systems in the two countries are different, but nevertheless I think that there are a number of ideas that we can reflect on. I have spoken to Tracey White, the committee clerk, about how some of those ideas might be reflected in future work, and we can discuss under a future agenda item whether George Foulkes's proposal might be worthy of consideration in that respect.
I thank all committee members for their comments and Audit Scotland for its work. We look forward to another year of robust activity.