Audit Scotland (Annual Report and Corporate Plan)
Agenda item 4 is a briefing from the Auditor General for Scotland on Audit Scotland's annual report for 2004-05 and its corporate plan for 2005-08.
Mr Robert Black (Auditor General for Scotland):
It is now some five years since Audit Scotland was created and our work now covers more than 200 public bodies in Scotland and spending of more than £26 billion a year. We recently published Audit Scotland's annual report and the corporate plan looking forward—one of today's committee papers summarises the main elements of our work over the past year and considers the key priorities in our corporate plan for the next three years.
In the past year—2004-05—I made 12 performance audit reports to the Parliament and 20 reports to accompany audited accounts. I shall talk about the performance audit reports first. The year started with a follow-up report on day surgery in Scotland. There was then a report on local economic forums, followed by a report on account management services delivered by Scottish Enterprise to high-growth businesses.
Those three reports were followed in late June 2004 by my third report on the management and control of the Holyrood building project. I had been asked by both the Presiding Officer and the First Minister to work closely with Lord Fraser's inquiry, which they had independently commissioned. I reached an agreement with Lord Fraser that my audit would concentrate on the project management and control, subsequent to the first report that I made back in September 2000, and that Lord Fraser's inquiry would cover all other aspects of the project, from its inception before devolution through to the summer of last year.
By working together in that way, we were able to avoid duplication and reduce the amount of information that we needed to seek from project management. I also believe that we made good and effective use of the analytical strengths of Audit Scotland in complementing the inquiry that Lord Fraser undertook, which centred on taking evidence from witnesses. I am pleased to say that the audit of project management was available to Lord Fraser just in time for his report, which was published in September 2004. I am equally pleased to say that Lord Fraser agreed with the analysis and conclusions of my report.
As members know, the committee took preliminary evidence on my report. However, in view of the debate in the Parliament on Lord Fraser's report, the committee decided in late September not to conduct a further inquiry or to make findings of its own. That is clearly understandable, but it had the consequence of leaving a few loose ends that were not tied up. One of those related to whether my report was factually accurate. Audit Scotland checked that out in great detail over the summer of 2004 and I welcome this opportunity just to record the fact that I am satisfied that there were no errors of any significance in the report that I made to the Parliament, which was considered by the committee.
Last summer was a busy period. Following the Holyrood report, we published the report "Commissioning community care services for older people". That was followed by our first Audit Scotland report on the overall performance of the national health service in Scotland. The rest of the year saw reports on the management of community equipment and adaptations, on the contract for the provision of prison escort, court and custody services by the Scottish Prison Service and on maintaining Scotland's roads. In December, I produced the report "Overview of the financial performance of the NHS in Scotland 2003/04".
In the early months of this year, there were two more performance audit reports: the report on correctional opportunities for prisons in the SPS and the review of bowel cancer services, which is on today's agenda. Throughout the year there were 20 reports on audited accounts. It is fair to say that by far the most significant of those related to the 2003-04 audit of Argyll and Clyde NHS Board, which led the committee to take extensive evidence and make its own report.
I turn briefly to the Audit Scotland corporate plan for 2005-08. I have always been of the view that the first priority of Audit Scotland is to support democratic scrutiny and that view is reflected in our corporate plan. We provide the objective evidence that enables the Scottish Parliament, principally through this committee, to hold the Executive to account for the proper, efficient and effective spending of public money. Our latest corporate plan provides for a performance audit programme of 12 reports during the autumn and winter of 2005 through to 2006 and 14 reports from the spring of 2006 onwards.
In that context of supporting democratic scrutiny, I mention the new best-value regime for local government, because it, too, helps to strengthen democratic scrutiny. The integrated reports on the overall performance of individual councils that will be produced in a three-year cycle by Audit Scotland for the Accounts Commission are intended to provide not only the public but, equally important, local councils and ministers with objective evidence on the performance of an individual local authority in the round. I like to think that the best-value regime will strengthen democratic scrutiny by providing a further source of objective evidence on how councils are performing.
The first four best-value reports were delivered to the Accounts Commission in 2004-05. The target in the corporate plan is to deliver best-value audits of 11 councils and one police authority in 2005-06 and of a further 14 councils and two police authorities in 2006-07. That will be a challenging programme, but that is the commitment that we have given in the corporate plan.
A second priority in the corporate plan is to maximise the value of the significant resources that go into audit. We are modernising the audit processes to support improvements in the management and performance of public bodies. For example, in the NHS, this year's audit concentrates on clearly identified key priorities and risks. We have identified those systematically and they will be the focus of audit analysis and reporting. That risk-based approach will be applied across the whole public sector from 2005-06.
For the strategy that I published in the spring of last year, I used the title "Holding to account and helping to improve". Five years after the creation of Audit Scotland, I am satisfied that public audit can fulfil the two roles of holding to account and helping to improve without compromising the independence and objectivity of the audit process.
On the theme of holding to account, Audit Scotland endeavours to provide support to effective democratic scrutiny of how public money is spent and what it achieves. One of the most significant benefits of having the Scottish Parliament is that the process of holding public servants to account has become much more transparent, robust and comprehensive than it was before devolution.
On the related theme of helping to improve, we have been able to produce reports that have challenged but also supported improvements in public services in Scotland. The unique practice that we have in Scotland, with the support of the Audit Committee, of sometimes having baseline reports that identify the scope for improvement and then producing a follow-up report to the Parliament on whether improvements have taken place provides a real incentive for management to address areas of weakness quickly and effectively.
In parallel with that approach, I now require all the auditors of the individual 200 public bodies, as part of the annual cycle of audit activity, to work closely with management in those bodies without compromising their independence to address areas of weak management and poor performance.
I am happy to answer questions that committee members might have.
Thank you. I add for the benefit of committee members that the report and corporate plan have already been considered by the Scottish Commission for Public Audit, with particular reference to budgeting for Audit Scotland in pursuit of its aims and objectives. Do members have questions for the Auditor General, or are there are points on which they would like to seek clarification?
In your comments, Auditor General, you referred to modernising the audit process. The corporate plan contains a number of specific references to a new modernised audit—a pilot is to be run in two councils. Can you elaborate on what that means and on the stage of development that the modernised audit has reached?
I would be pleased to do that. I will take the health sector as an example. For the current audit year—the financial year that has just ended—Audit Scotland has developed a priorities and risks framework, in which we have attempted to capture the major priorities for the health service and the major risks that we think the health service faces. We have done that in consultation with partner firms and have involved interests in the health service, to ensure that the document is accurate and focused on the real issues.
The document is made available to all the auditors and guides the work that they do in individual health boards. That means that the range of major issues—for example, all the work that is being done on pay deals and so on—is being addressed consistently in all audits. I hope and expect that that will have two beneficial consequences. First, the audit reports that are produced locally for individual health boards will be helpful in addressing and reporting on the issues of real concern to the local NHS management. Secondly, they will help to provide a more consistent framework for Audit Scotland, on my behalf, to produce overview reports that address consistently across the whole health service the key issues of the day in the service. We are rolling out our priorities and risks framework in the health service as we speak. We are piloting it in local government and, from next year, the approach will be rolled out across the whole NHS.
It is important that I mention the fact that we have reorganised Audit Scotland into specialist groups. We have teams of people, both in performance audit activity and in financial audit, who are expert in health service matters and local government matters. We will also have a team that is dedicated to central Government and agency work. That will give us a much better basis of understanding and knowledge and it will enable us to interact well and positively with local management, because auditors will understand their issues better. In turn, that will lead to more informed reporting to the committee. I like to think that the committee saw some of the initial benefits of the new approach in the briefing that it received a few months ago on the situation in Argyll and Clyde NHS Board, which was based on the pilot in Argyll and Clyde. I am confident that that level of rich information and knowledge will be available in the future.
As there are no further questions, I thank the Auditor General for his briefing. The committee will note the annual report and corporate plan.