Audit Committee, 14 Sep 2004

Meeting date: Tuesday, September 14, 2004

Official Report 200KB pdf

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Scottish Executive (Format of Accounts)

We move to agenda item 6 and we are beginning to pick up our timing again, which is good. I welcome John Aldridge from the Scottish Executive, who is here to give us a briefing. We are to consider a proposal by the Scottish Executive to discontinue producing and publishing resource accounts covering core departments. John Aldridge, who is a finance director, will give us a short briefing to explain why that is proposed before we discuss our reaction to it.

I am grateful for the opportunity to talk about why we are asking the committee for its agreement to our proposal to cease publication of the Scottish Executive core accounts. I hope that the paper that I submitted explains the rationale behind our proposal; however, it might help if I go over some of the key points.

We want to make the accounts as easy to use as possible. Accounts are never the easiest of documents to understand. Accounting conventions mean that sometimes it is not as straightforward as we would like to set out the figures simply if we are to continue to provide a true and fair view of the financial position of the Scottish public finances and if we are to abide, as far as possible, by generally accepted accountancy practice. We are trying to do what we can to simplify the presentation and to make the accounts as understandable as possible.

At the turn of the year, it was quite gratifying when the accounts hit the headlines for the first time. That does not normally happen—the accounts tend to be ignored—and from that point of view, it was quite gratifying that people were paying attention to them. On the other hand, that event brought home to us the fact that there is an element of confusion between the core and the consolidated accounts, both of which we publish. Inevitably, the two sets of accounts contain different figures for spending against budget, as they relate to a different boundary. Although the two sets of figures could be reconciled, the process is complicated and not straightforward to communicate. We have to produce consolidated accounts because consolidated accounts give a full picture of spending within the whole Scottish Executive accounting boundary. However, the core accounts are, in effect, a subset of that. Therefore, we propose that the core accounts should no longer be published.

I would like to reassure the committee on one point. We are keen to ensure that, in ceasing to publish the core accounts, we do not reduce the amount of useful information that is made available to the public or anybody else who wants to read the accounts. We are working with Audit Scotland to ensure that, if the proposal goes ahead, the same amount of useful information will still be available to those who look at the accounts.

The issue of timing has been raised. I strongly support any move to bring forward the date of publication of the accounts. We have a statutory deadline of 31 December. Last year, we just made it, but I am keen that we do better than that this year. We are working well with colleagues in Audit Scotland to accelerate the audit and are taking a number of steps to do that. We hope to be able to publish the accounts earlier this year; however, I cannot give a firm date as the audit is still under way. We will endeavour to make further progress in future.

I hope that that has helped to give some background to the Executive's position. I am happy to try to answer any questions that members may have.

Thank you very much. Do members have any questions?

I have not a question but a brief comment. I have neither seen nor heard anything that causes me to disagree with the proposal. I note that part of the reason for the change is to make the information more accessible to the public, which I welcome. However, I wonder whether, as well as examining ways of presenting the data in a more accessible way, the Executive is also thinking about the language that is used. Much of the documentation that is produced is still riddled with jargon that could probably be lost or changed without reducing the substance of the data. I wonder whether that is part of what the Executive is thinking about.

Yes, indeed. That is something that we are considering in the same context. The aim is to make the accounts as understandable as possible, which relates to the language as well. We are sometimes constrained by accountancy conventions and rules governing the language that we have to use in the accounts but, in so far as it is within our power, we will try to make the language as simple as we can.

Is it the Executive's intention to discontinue the core accounts completely or just not to publish them?

The work that is currently done in examining the finances of the core departments will still be done—it will have to be done—but it will not be brought together in a single document as it has been in the past.

But the information will still be available to the Finance Committee or to this committee.

Indeed. One of the aims is to ensure that there is no reduction in the amount of useful information that is available.

That is fair enough.

In what way would members or committees be expected to source that information? Would it be simply by writing to departments or by asking parliamentary questions?

A lot of it will be brought together in the consolidated accounts and presented there. If any information is not there to which members wish to have access, they can write to us and we can make that information available to them. However, we hope that there will not be a great need for that.

Okay. Thank you very much. I am conscious that, in about two and a half minutes, we will hold a minute's silence. I intend that we should do that in public rather than in private; therefore, I intend that, with the agreement of the committee, we finish this item just before that. After that, we will move into private session for the next item. As members have no further questions, I ask for observations or comments from the Auditor General regarding the proposed change.

On balance, the presentation of two sets of accounts is more likely to confuse public accountability than to illuminate it. Therefore, I welcome the direction in which John Aldridge suggests that the Executive would like to go. As he mentioned, we understand that there will be no loss in the quality and range of the financial information that is available. Against that background, the proposal has our support.

I share John Aldridge's view—and we hope and expect—that having a single set of consolidated accounts might allow us all to achieve an earlier conclusion of the audit, which has to be in the interests of improved accountability. Therefore, the proposal has our support.

Okay. I would like to clarify one point. If the committee agrees to the change, will it take effect from the next set of accounts that are published?

Yes, indeed.

Okay. Thank you. Does the committee agree to the proposal that the accounts covering the core departments of the Scottish Executive be discontinued?

Members indicated agreement.

I thank Mr Aldridge for answering our questions. That has been most helpful.

We will now observe a minute's silence for the victims of Beslan.

Meeting suspended until 11:22 and thereafter continued in private until 12:16.