Audit Committee, 26 Mar 2008
Meeting date: Wednesday, March 26, 2008
Official Report
156KB pdf
Subordinate Legislation
Companies Act 2006 (Scottish public sector companies to be audited by the Auditor General for Scotland) Order 2008 (Draft)
Under agenda item 2, the committee will take evidence from the Cabinet Secretary for Finance and Sustainable Growth, whom I welcome, on the draft Companies Act 2006 (Scottish public sector companies to be audited by the Auditor General for Scotland) Order 2008. The cabinet secretary is accompanied by Richard Dennis, who is a deputy director of finance in the Scottish Government.
Good morning. The committee may find it helpful if I explain briefly the background to the order.
A review of audit and accountability for the United Kingdom Government by Lord Sharman in 2001 recommended that the auditors general for the constituent parts of the United Kingdom should be made eligible to undertake the audit of accounts of non-departmental public bodies established as companies and of company subsidiaries of NDPBs. The audit of companies is a reserved matter. Four years passed before the then Scottish Executive was given the opportunity to agree to the inclusion of a general provision in the Companies Act 2006 to enable the Auditor General for Scotland and the auditors general for the other constituent parts of the United Kingdom to audit the accounts of companies. That provision is scheduled to come into force on 6 April 2008. The then Scottish Executive also sought the inclusion of a separate provision in the Companies Act 2006 to enable Scottish ministers to designate, by order in the Scottish Parliament, qualifying non-profit-making companies as being subject to audit by the Auditor General for Scotland. The draft Companies Act 2006 (Scottish public sector companies to be audited by the Auditor General for Scotland) Order 2008 is the first such order.
The purpose of the order may not be clear, given that the Auditor General will, after all, be eligible to audit any company with effect from 6 April this year. However, designation in the order brings the companies concerned within the scope of the Public Finance and Accountability (Scotland) Act 2000 and allows the Auditor General to undertake the statutory audit of accounts without having to comply with commercial sector audit requirements or the independent supervisory arrangements that are set out in the Companies Act 2006. In essence, it avoids the need for additional bureaucracy and costs relating to the audit of qualifying companies. Audit Scotland, on behalf of the Auditor General, was closely consulted on the inclusion of the order-making provision in the Companies Act 2006 and on the preparation of the order.
Very few on-going Scottish NDPBs have been established as companies, and at the moment it appears that no company subsidiaries of NDPBs could safely be regarded as meeting the non-profit-making requirement that is included in the Companies Act 2006. That has resulted in only three company NDPBs being listed in the schedule to the order, which is available to the committee.
I would be happy to answer any questions from the committee.
Thank you very much. That was riveting stuff, minister. It is the kind of thing that gets us out of bed in the morning.
It definitely does, convener.
Do members have any questions or comments to make?
Given that the order will avoid the need for additional bureaucracy and costs, and that the Subordinate Legislation Committee is satisfied with it, I think that it is fine.
I thank Mr Swinney and move to agenda item 3.
Motion moved,
That the Audit Committee recommends that the draft Companies Act 2006 (Scottish public sector companies to be audited by the Auditor General for Scotland) Order 2008 be approved.—[John Swinney.]
Motion agreed to.