“Financial overview of Scotland's colleges 2006/07”
The second item on the agenda is the Auditor General for Scotland's report "Financial overview of Scotland's colleges 2006/07". The issue has significance throughout Scotland. I invite the Auditor General to brief the committee.
Mr Robert Black (Auditor General for Scotland):
Thank you, convener. I will be assisted in this briefing by Barbara Hurst, who will be master—I am not sure if one says mistress these days; I will say master because one says actor—of all the detail with the team.
The "Financial overview of Scotland's colleges 2006/07" was published on 24 April. I previously published a financial overview of the college sector in December 2003—it is not something we do every year, but we occasionally shine the spotlight on how the sector is performing for the benefit of Parliament and the committee in particular. The commentary on financial performance is drawn mainly from the reports by auditors in each of the 39 incorporated colleges, together with information that is held and supplied by the Scottish Further and Higher Education Funding Council.
My previous report related to the 2001-02 financial year, which is going back a bit. At that time, the sector was only just beginning to emerge from a period of severe financial difficulty. I am pleased to say that, since then, the sector has shown a significant improvement in its overall financial position. Many more colleges are reporting operating surpluses, and the overall surplus held by the sector has increased significantly. That does not mean that there are not still some significant financial challenges, which Barbara Hurst will touch on in a moment.
Of the 39 colleges, 35 reported operating surpluses in their accounts. That compares favourably with the position in 2001-02, when only 24 colleges achieved operating surpluses. The overall surplus on colleges' income and expenditure reserves had grown to £98.9 million by July last year. However, as we say in the report, two colleges account for more than 40 per cent of that.
Barbara Hurst will outline some of the key findings in more detail.
Barbara Hurst (Audit Scotland):
Set against that relatively positive picture of college finances, four colleges—Edinburgh's Telford College, Elmwood College, James Watt College and North Glasgow College—reported operating deficits totalling £1.9 million. However, with the exception of James Watt College, they had sufficient reserves to cover those deficits. The Auditor General has produced two section 22 reports on the 2006-07 accounts of James Watt College and Kilmarnock College. Those have only just been laid before the Parliament, so we will bring them to a future meeting. Six other colleges that have been the subject of section 22 reports in the past five years have, for the most part, improved their financial performance.
Part 2 of the report explains that the overall improvement in financial performance is down to a number of factors. First, there has been an increase in public sector funding. Core grant funding has increased since 2002-03 by around £79 million, in cash terms, to £355 million in 2006-07. Capital funding has increased by £67 million in cash terms over the same period. While there has been some funding for growth in student activity, it has not been substantial. As a result, colleges have been able to concentrate on improving their overall financial position. The Scottish funding council launched a financial security campaign in 2002 and provided associated, ring-fenced funding of around £38 million to support that. In 2002, it launched its further education development directorate, which works largely through peer support. Colleges can draw on the support and experience of their peers in the sector. We spoke to people in different colleges who indicated that they appreciated that support, particularly when dealing with difficult issues or challenges.
Although the improved financial position is encouraging, part 3 of the report outlines challenges for the sector over the next few years. First, while the overall funding that is allocated to colleges will not decrease over the period of the most recent spending review, the increases of recent years will not continue at the same level. The focus now for the college sector will have to be on financial sustainability. Colleges will need to respond to cost pressures associated with limited increases in public sector resources. Other funding sources and income streams are also likely to change, with reductions in European funding and uncertainties surrounding income streams from Scottish Enterprise and Highlands and Islands Enterprise due to the recent structural changes in those organisations. In addition, as we outline in the report, many colleges are proposing major estate or campus developments. That will be a significant area of spend, which presents management and financial challenges for the sector. Our report describes how some estate developments are linked to several colleges forecasting deficits in the next few years. One development that may help to alleviate that is sector-wide procurement. Other sectors in the public sector are aiming to create centres of excellence, and a centre of expertise for the college and university sectors has been established. However, progress has been slower than anticipated, and concerns about the level of subscription fees required to fund the centre's activities will need to be addressed if the sector is to secure the anticipated efficiencies.
Colleges operate within relatively narrow margins. Our analysis found that, across colleges, the average operating surplus has grown in the past few years to around 3 per cent. However, that is relatively low and may not provide sufficient year-end flexibility. The potential consequence of operating within such narrow margins is that even relatively small changes in income or expenditure can move a college from an operating surplus to an operating deficit. That is shown in the report.
Auditors found that the governance and management arrangements were generally sound both in the funding council and in individual colleges, although some relatively minor weaknesses were identified in some colleges.
We highlight in our report two areas in which the committee has expressed interest previously. First, college boards of management should ensure that they have members with recent, relevant financial experience. Secondly, colleges should prepare good-quality draft accounts so that the audit can be completed smoothly and on time. That sounds very bureaucratic, but it is not meant to be. The issue is not one of auditors being under pressure. Rather, it is about the capacity of the finance function of colleges; the avoidance of additional fees should accounts not be presented in a good way; and, most important, the need for boards of management to have access to good sets of accounts and audit reports, so that they can consider their own role in the management of the college.
The report highlights two colleges where there have been significant delays in the process. We also found that the accuracy of colleges' financial forecasts could be improved. That is important, because inaccurate forecasts could result in college boards of management making the wrong decisions or in the funding council providing support to the wrong colleges.
The report is positive, in that we found that colleges are in better financial shape and that their overall financial performance has improved. That has been achieved through a combination of increased funding and peer support. The sector has genuinely learned some lessons from the difficulties that the previous Audit Committee highlighted. However, the sector faces a number of challenges, and it will have to respond to the cost pressures that are looming before it.
As the Auditor General indicated, we are happy to take questions on the report.
I want to ask about the issue of governance, which you touched on, and about leadership. From my local experience, I am struck by how, in the wider Renfrewshire area, leadership is critical to the health and wellbeing of further education colleges. In the past, there were significant concerns about the financial performance of Reid Kerr College in Paisley and about the quality of the product that the college was offering. Then a new principal was brought in. Under Joe Mooney, the college has been transformed. There is a vitality about it. It is outward looking, positive, well run and well managed. There is a real buzz about the place. Just down the road in Greenock is James Watt College, which had been regarded traditionally as a dynamic, outward-looking college and a trendsetter. In the past few years, it has almost collapsed.
I am struck by the critical role of the principal in both those cases. That must surely apply more widely. A good principal has influence in ensuring that a college is well run and well managed, and that it sticks to its accounts properly and improves the quality of the service that it provides to students. What can we take from the report about the influence of the principal?
The second issue affecting governance and leadership is college boards, which Barbara Hurst also mentioned. I get a feeling—I may be wrong, as this may be a subjective view—that boards are often merely a fig-leaf to allow the principal to do what the principal wants to do. Are boards perhaps incapable of holding to account and challenging the principal to ensure that the college is properly governed?
Where boards have such weaknesses, what is the solution? Do we simply need to ensure, as has been suggested, that boards have sufficient numbers of people with recent financial experience? Do we just need board members who are diligent enough and able enough to look at the detail and to challenge? Do questions need to be asked about the methods by which board members are appointed? Frankly, to an outsider, it looks as though the board is appointed by the principal and there is no objectivity or accountability in the wider process. That is a worry, given the substantial amounts of public resources that are being invested in the sector.
I would be interested to hear the Auditor General's thoughts on those issues.
I will attempt to reply to the convener's questions and thoughts on those extremely important general issues before inviting Barbara Hurst to respond.
I absolutely agree that leadership is an important issue not only in FE but across the public sector. Against that sense of the importance of leadership, we carried out a review of leadership programmes across the whole public sector. That review concluded that there was a lot of activity on leadership in the Scottish public sector but that a lot more needed to be done to develop effective leadership capacity.
It is difficult for auditors to comment on a qualitative issue such as leadership in the FE sector. However, it is not unfair to say that, when I have previously laid before the Parliament the occasional report on the problems and failings of individual colleges, those colleges have had issues of effective leadership. Consideration of those matters will, I think, be on the record of the meetings of the Audit Committee in previous years. Issues of leadership have been very important.
The previous Audit Committee also expressed concerns about the effectiveness of boards and, for example, about how their members are appointed and how the boards are refreshed. In a report that was presented to Parliament some time ago, the committee commented on some of the risks that are associated with the fact that college boards are appointed locally and basically recreate themselves at that level. Accordingly, the role of the principal and the chair was seen to be critical in ensuring that effective appointments are made.
Those findings were taken seriously by the Government at the time. The review that was launched considered how the FE sector was overseen by the then Scottish Executive and the role of the funding council. Certain changes were introduced, but the fundamental governance arrangements did not change. It is really for the current Government to explain its views on those matters but, in view of the governance issues that still exist, part 4 of our report—from page 27 onwards—tries to capture those issues.
I must offer one plea in mitigation of the audit process, in that we have a bit of a difficulty with the colleges. It is generally true throughout the Scottish public sector that the smaller organisations—this is not a criticism of the people who run them or who sit on their boards—tend to have greater risks because they do not have the capacity. That might be said to be relevant to Western Isles NHS Board, which we will consider again later this morning. Given that some of the colleges are comparatively small, the amount of audit resource that we can put into them is quite limited because, otherwise, the approach would become disproportionate and the fee burdensome.
Against that background, we work as closely as we can with the Scottish funding council and seek assurance from it about its oversight of the colleges. It is important to mention to the committee that, in our judgment, the funding council's governance and management arrangements are, in general, effective. Over the past few years, it has introduced many more initiatives to engage with the college sector, which we capture on page 27 of our report. They include a requirement for annual financial returns to be provided, which must cover the underlying position of the business. Annual forecasting returns must also be submitted, and the funding council makes regular visits to all the colleges—each college is visited two or three times a year. Financial performance indicators have been put in place and cost benchmarking data are provided. The funding council is engaged in a great deal of activity with the colleges, so they are not alone; the college system is getting more support than it used to.
Overall, the position is improving, which page 4 of the report says has been achieved "by increases in funding". However, in paragraph 95 on page 20 concern is expressed about the fact that funding will not continue to increase by as much as it did over the past five years. Paragraph 105 says that Scottish Enterprise funding is uncertain, as Barbara Hurst mentioned. Certain colleges—those that focus more on skills development, I presume—do a great deal of co-operative work with Scottish Enterprise. Do we know what impact the restructuring of Scottish Enterprise will have on the funding of those colleges, or is the position still uncertain?
It is still too soon to say. In our report, we say that there is a risk of colleges being affected, but we do not know what will happen. As a result of the restructuring, which will involve some of Scottish Enterprise's responsibilities being transferred to councils, certain colleges—some will be more affected than others—will have to rely on employment contract-type training programmes. We flag up the issue and point out that although some colleges forecast that they will continue to receive increased funding from Scottish Enterprise, they should be careful because we do not yet know how the situation will play out. We should watch that space.
This is an excellent report that shows the value of the whole process. The colleges' financial performance has improved under pressure from the committee and, above all, from the Auditor General and his staff. That is extremely encouraging.
I have two questions. Page 27 deals with corporate governance, which I have some worries about, and mentions that some colleges have boards that do not have members with recent, relevant financial experience. As Robert Black said, we know from our investigation into Western Isles NHS Board that it is extremely important to have board members who hold the executive to account. When we consider our approach to the report later in the meeting, we ought to take that issue into account.
My first question is about appointments to boards. I get the impression that there is a bit of a self-perpetuating situation in colleges, to the extent that the principal has some responsibility for suggesting who should be appointed as governor. That creates problems, given that the governors must hold the principal to account. Perhaps the Auditor General or one of his staff could comment on the independence of governors.
My second question relates to page 21, which mentions the potential loss of charitable status for colleges that is under consideration. The law of unintended consequences has come into effect in the context of charity law. The fact that the Office of the Scottish Charity Regulator questioned the charitable status of John Wheatley College but gave a private school—I think it was Dundee high school—a clean bill of health seems to go totally against the spirit of the legislation that was considered by the Scottish Parliament, as I understand its purpose; I took part in the debate on the reform of charity law elsewhere.
Paragraph 109 states that the Scottish Government has made a commitment to introduce legislation to resolve the situation. Does the Auditor General or one of his staff know where we are on that? It would be outrageous if public colleges that provide educational opportunities for some of the poorest people in the land did not continue to have charitable status while private schools that provide privileged education for some of the richest people in the country did. I invite comments on those issues.
I acknowledge Lord Foulkes's concerns about the performance of the governance function. It is not really possible for us to give members a strong evidence base for what is happening in colleges. Our general impression from the auditors is that most colleges have people who have recent financial experience and that the standard of governance is good. Nevertheless, procedures might not be as robust as they should be in some colleges—for example, if the risk register, fixed-asset registers and compliance with the code of corporate governance are not in place.
As I believe I mentioned earlier, the funding council is much closer to the issues than I am. It is therefore much better placed to comment on them, not least because our engagement at college level is quite limited and we rely heavily on good communication with the funding council.
George Foulkes and I have raised issues of governance with you. I described boards as a fig-leaf for many principals. They appoint their board, so they can appoint reflections of themselves and, if they wish, they can appoint people who are less willing to give them a hard time by holding them to account. That system is completely unsatisfactory, and there is no independence or objectivity in it, as far as I can see.
You mentioned that there was a review of the further education sector but there has been no fundamental change. We might wish to return to the review and ask about what is happening with it, given that an element of the public sector is subject to less scrutiny and accountability than other elements of the public sector, which cannot be right.
I want to ask about the points that are mentioned in paragraphs 23 to 27 of the report. I am rather concerned to see from the report—if I am reading it correctly—that four colleges received qualified audit opinions because of the way in which they treated their pension liabilities, despite the fact that they seemed to treat them in the same way as many other colleges treat them. The problem seems to have arisen because of a difference in the approach taken by the external auditors, which appears to have been somewhat less than satisfactory. Do you agree that such an approach to audit for those colleges is unsatisfactory?
The approach is not terribly satisfactory. Our difficulty is that the accounting standards allow different treatments, although we have encouraged the sector to work with us to come to a shared, consistent approach. However, the situation does not significantly affect what you might call the going-concern position of colleges, although I agree that it is not terribly satisfactory. Perhaps Barbara Hurst or one of her team could attempt to explain.
Mark MacPherson could give us an update and explain in a bit more detail.
Mark MacPherson (Audit Scotland):
Members will appreciate that accounting treatment is quite a technical issue. We appoint auditors to provide an independent opinion, so it is perfectly reasonable for different auditors to come to different opinions. However, as the Auditor General said, it is not terribly satisfactory to have such variation across a sector.
We have convened meetings with the individual colleges that were affected along with other experts in the sector such as auditors, and we are using our experience to resolve the situation. The discussions are continuing. We are also engaged with the funding council because it might have a role in facilitating some consistency of approach. We hope that such engagement will have a good outcome. That is as far as we have got at the moment.
When is the situation likely to be resolved?
We cannot say with certainty when it will be resolved. There are still issues to be discussed and opinions to be resolved by different people. However, we can, of course, keep the committee updated on the matter.
Yes. Thank you.
What would be required to ensure consistency? You mentioned that a degree of flexibility is open to people, but it seems rather absurd that different people can treat the same thing in totally different ways. What would be required to ensure that each college and each set of auditors applied the same method?
We have suggested to the funding council that it would be helpful if it introduced a clear sector-wide policy to which the auditors could respond, but that is one of the matters that has not yet been finally concluded with the sector.
Barbara Hurst mentioned two reports—on James Watt College and Kilmarnock College—that have been laid before the Parliament. What are they about? Are they section 22 reports?
They are. They have been laid with the accounts of the two colleges and highlight for the committee issues that arose from the accounts. It is unfortunate that we could not discuss them with the "Financial overview of Scotland's colleges 2006/07", but they have just been laid, so the papers would not have been available in time for the committee.
Do they relate to 2006-07 or 2007-08?
They relate to the 2006-07 accounts. We mentioned them in the report. They will come to the committee.
I was not sure whether they were in addition to what is mentioned in the report.
No. There is a more formal process to ensure that we bring matters to your attention.
I agree with what the convener said about James Watt College. Around a year and a half ago, I spoke at a rally in Greenock in support of the lecturers, staff and students of that college. I realise the importance of good, strong leadership in it and in all the other colleges in Scotland, and the importance of James Watt College to Inverclyde's economy.
I am heartened by case study 1 in the report, which is on James Watt College. It mentions the forecast surpluses for the forthcoming three years. I am sure that many people in the Inverclyde area and the lecturers and students at the college will be happy with what that study says.
I found paragraph 42 of the report, which deals with the buyout of the West Lothian College private finance initiative contract, interesting. Paragraph 49 states:
"The auditor concluded that processes were appropriate and adequate to permit the college and SFC to demonstrate that the buyout of the PFI contract delivered best value for public money."
I was heartened to read that, but a wee bit surprised by an aspect of the contract. I refer to the second bullet point in paragraph 42. The agreement specified that the PFI provider would still own the facility at the end of the contract. I am delighted that the buyout has taken place, but has any more information about it come out?
I do not think that we can add anything to what is described in the report; the position has not changed. It is up to the college to move on and work according to the position that it is in.
Overall, the report is very good. The deficit has moved to a surplus, which is excellent.
I have a couple of questions, one of which follows on from the questions about college boards that were asked by the convener and George Foulkes. Barbara Hurst mentioned major estate and campus developments, or buyouts and amalgamations. I have concerns about what will happen in the Glasgow area in particular. Glasgow Metropolitan College, the Central College of Commerce, Glasgow College of Nautical Studies and Stow College are amalgamating, so that they will be under one umbrella.
Has Audit Scotland or the Scottish funding council had any input on the roles of those colleges' boards? It has been mentioned that the sizes of the boards are different. What role will the boards have in the amalgamation? My question touches on Murdo Fraser's comment on the situation. How will things work if the colleges are amalgamated, given that they have different pension funds and audit arrangements? How will those things be manageable when the amalgamation eventually takes place?
One benefit of amalgamation is that the new body will have the critical mass to ensure that it has strong finance and leadership skills and stronger boards. However, the funding council will be much better able to tell you the current position and the thinking about the composition of the bodies.
On pension funds, it is important that we do not mislead you. The pension funds exist on a consistent basis. Generally speaking, they are part of the local authority pension scheme. The point that has been raised concerns how they are accounted for at a small number of colleges that differ from the rest. Therefore, it is highly unlikely that the pension arrangements will be significantly affected by the amalgamation of the colleges.
Our understanding is that the option is a shared campus and not an amalgamation of the colleges. What happens when the colleges share a campus is a matter for their consideration, but I make it clear that the proposal is for a shared campus rather than an amalgamation or merger.
I have heard talk in the colleges of amalgamation. We will see what happens. Given what the Auditor General said, perhaps it would be a good idea for the committee to get a report from the funding council.
George Foulkes asked about charitable status, but I do not think that we got an answer on that. Perhaps you could clarify the position.
The European regional development funding that colleges receive has been cut from £1.1 billion to £540 million. The colleges say that they will receive funding based on social deprivation, but I do not know how that will be determined. If such funding is focused on areas that are more socially deprived, not all the colleges that benefit at the moment will receive it. How will that work?
We can contact the Minister for Parliamentary Business to find out about the parliamentary process and charities. I do not think that it is fair to ask the Auditor General and his colleagues from Audit Scotland about that.
Do you have any comments on European funding?
The figures that Sandra White quoted are for the whole of Scotland. Obviously, colleges receive a proportion of that funding. As we say in the report, some colleges receive more than others because they are better placed to use the funding in line with European aims and objectives.
Colleges across the piece forecast a reduction in European funding, with the exception of a couple of colleges that receive relatively small amounts. The challenge will be for colleges to seek alternative means of raising funds to maintain the programmes that they have run with European funding up to now.
I seek clarification of paragraphs 95 and 96 of your report. Paragraph 95 mentions
"an average increase of 0.9 per cent per year … over the next three years".
Can you break that down into annual percentage increases or decreases? Are there any implications for the funding of the colleges?
Secondly, can you give us more information on how the sequence of events that is described in paragraph 96 came about? It seems to be back to front. I do not know whether that is to do with the timing of the budget proposals in 2007, or whether there were other problems.
On your first question, we cannot give such a breakdown because it is for the Scottish funding council to decide how much is released in each year. The funding council is better placed to advise you on that.
On your second point, the funding council requires colleges to submit forecasts in June each year for that year and the next three years. The timing depends on when the Government announces its spending review proposals. Things were not deliberately done out of kilter. Obviously, it is for the Government to decide when to announce its budget.
Paragraph 95 of the report states:
"The funding increases experienced in recent years will not continue."
Paragraph 96 states:
"a number of colleges' forecasts of future SFC funding may be too high."
If that is the case, can we reasonably assume either that deficits will increase or that there will have to be cutbacks in service provision?
I do not think that I can answer that. It will be up to individual colleges to decide how they cope with any reductions in increases, which is a bit of a difficult term.
Given the historical management of funds, would it be possible to retain the present level of service on the basis of reduced funding?
If colleges can deliver efficiencies, that would be possible. Again, the onus is on the colleges to try to deliver efficiencies with whatever money they have.
I want to pick up on the key issues of governance in the report in relation to risk assessment processes in the colleges and financial planning. This time next year, how will we know whether any improvements have been made in those areas? Will you revisit the matter and report to us on whether improvements have been made?
You reported that several of the colleges are planning major capital investments over the coming period. You also reported that some colleges are forecasting deficits. Will you clarify whether the colleges that are planning major capital investments are also forecasting deficits? We would be concerned if that were the case.
On the first point, on the basis of the audit activity, it would be possible for us to advise the committee on some of the basic issues around compliance with the corporate code of governance; the development of risk management systems; registers of board members' interests; and asset registers. As we said in an earlier exchange, that would not do more than give you a broad indication of how a college is moving. It is difficult for us to keep in touch with how governance is developing in each college. The responsibility is primarily with the funding council to satisfy itself on those matters. As I explained, it makes regular visits at least twice and sometimes three times a year to each college to look at the financial position. It should have a good sense of how the colleges are developing. Therefore, you might want to take up with the funding council the extent to which it can give you an assurance about what is happening, not only now but in the future.
Your second question was about the relationship between forecast deficits and capital programmes, which is interesting. I wonder whether the Audit Scotland team can help us.
In paragraph 75 and the following paragraphs, we highlight that seven colleges are forecasting deficits over the next three years. Five or six of them have proposals for major capital developments. We have said that that is the main reason for the forecast deficits. However, I do not think that you can assume that all colleges that are about to undertake major capital developments will be forecasting deficits, because some have built up revaluation reserves that allow them to cover the costs.
I have some concerns. Obviously, we are seeing European funding reduce significantly. It is more than likely that Scottish Enterprise funding will reduce significantly. As a previous local enterprise board member, I know that a lot of Scottish Enterprise money was used to lever in European match funding.
Paragraph 95 of the report says that the Scottish Government's budget is reducing significantly the funding increases to colleges. I hope that we get such a good report in the future.
I have concerns about the pension reserves that are shown in appendix 3. If I read it correctly, there seems to be a total deficit of £8.436 million in pension reserves, and Borders College and Forth Valley College are both round about £2.3 million in deficit. Is that a ticking time bomb?
It is a concern, although I would not use phrases such as "ticking time bomb" at this point. Although the deficits are there, and although they are significant relative to some of the small colleges, at least they are well known and understood.
Paragraph 37, which discusses pension reserves, explains that the way in which accounting treatment changed a few years ago had an impact and created higher deficits in the reserves. However, there has been an improvement over the past few years, so you would hope that the improvement would continue. However, it is not possible to gaze into a crystal ball and know that things will go right. We will continue to monitor the situation, as will the individual auditors in the colleges. If issues arise, I am sure that they will raise them.
There has been a change since 2004-05. Are the pension deficits increasing or are they improving? As you say in paragraph 37, the accounting system has changed over the past three years.
The position is improving. When the new treatment was first introduced, the effect was negative. However, as colleges have adjusted to the changes, there has been an improvement, back to the levels that we show in the report. However, we are keeping a close eye on things.
The only qualification to that is that we have to consider what is happening in the financial markets. We are talking about funded schemes. If there is an adverse movement, it will be due to factors that are outwith the control of individual colleges. It will be due to what is happening in capital markets and investment markets generally.
But that does not mean that there is not a problem.
I want to follow up on what Jim Hume and Claire Baker have been saying. Scottish Enterprise money is going down; European funding is going down; the new Scottish Government is giving substantially less than the previous Administration—in real terms, the increase now will be a third of what it was; and pensions are in deficit. Taking all that into account, a crisis could be looming.
The previous report was five years ago. Have you any plans to keep an eye on the situation? Rather than wait another five years, will you do another report next year, or relatively quickly, to ensure that the looming crisis that Claire Baker and Jim Hume fear does not happen? We should do something to avert it.
I would add another factor to Lord Foulkes's list—the trend in demographics. There are fewer people in their late teens and early twenties, and they are still the prime client group for further and higher education institutions. That factor has not yet fully bottomed out. Colleges are obviously trying to extend into continuing education markets and into retraining, but nevertheless there is a risk.
At the end of each year, in the normal way, we will have final reports from the auditors and we will have the audited accounts. The Audit Scotland team will monitor that. We would not normally prepare a financial overview each year, but if the signs are that the risks are crystallising or becoming more serious, it is very possible that we will come back to you with a further report sooner than we have planned.
We still have not answered the question on charities. That is not because we are being evasive; it is because you have been firing so many questions at us.
We do not know any more than is in the report, which gave as up-to-date a position as we could get at the time of drafting.
We will ask the Minister for Parliamentary Business about the timescales.
I thank the witnesses for their contributions. Later on today's agenda, we will consider the report again.