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4.9 External Audit
Who are the external auditors of public bodies in Scotland?
The Auditor General for Scotland is the external auditor of a number of public bodies. The Auditor General may appoint himself, a member of the staff of Audit Scotland or an appropriately qualified professional firm as the auditor of your body.
Where a public body is incorporated under the Companies Acts, the auditor is appointed by the members of the company ( i.e. the Board members).
What is a Financial Audit?
A financial audit undertaken by the Auditor General is conducted in accordance with the Public Finance and Accountability (Scotland) Act 2000 and the Code of Audit Practice issued by Audit Scotland on behalf of the Auditor General and the Accounts Commission. The appointed auditor will:
- issue an opinion as to whether the accounts give a true and fair view of the state of affairs of the public body at the year end and of its income and expenditure for the year and whether the accounts have been prepared in accordance with any applicable legislation and accounts direction;
- issue an opinion (known as the "regularity" opinion) as to whether the income and expenditure has been properly received or incurred in accordance with legislation, the Budget Act for the relevant year and any other guidance issued by the Scottish Ministers;
- review the Statement on Internal Control prepared by the body and report if it is not in accordance with the auditor's understanding of the body;
- consider the body's governance arrangements and arrangements for prevention and detection of fraud; and
- provide reports to the Board, Audit Committee and/or management on matters arising during the course of the audit. On completion of the audit, the appointed auditor sends a copy of the accounts and the audit opinion to the Auditor General. The Auditor General may then add a report of his own (for example, on a qualification of the auditor's opinion or other matter drawn to his attention by the auditor) before sending the accounts and reports to the Scottish Ministers for laying before the Parliament.
What is Performance Audit?
Performance audit involves looking at the performance of an audited body and includes VFM audit which is an examination of the economy, efficiency and effectiveness with which a body has used its resources to carry out its functions.
The Auditor General has wide powers to conduct studies and these can include a study of one issue at a public body, a general study of the performance of a public body or a study looking at comparative performance across a group of public bodies. Studies may be conducted by central Audit Scotland staff, the appointed auditor, consultants or any combination thereof.
On completion of a study, the draft report will be discussed with the public body to ensure factual accuracy and, once finalised, the report will be laid before Parliament and published with an accompanying Press Release.
What access does the Auditor General have to information in your organisation?
For many executive NDPBs, the founding legislation provides that the Auditor General will appoint the auditor. In such circumstances, the Auditor General has a statutory right to carry out his VFM examination. Under Section 24 of the Public Finance and Accountability (Scotland) Act 2000, the Auditor General has a statutory right of access at all reasonable times to all the documents that he reasonably requires provided that the documents are in the custody or under the control of the organisation being examined. The Auditor General is also entitled to any assistance, information or explanation which he reasonably thinks necessary for the purposes of an audit or study.
Where the Auditor General is not the auditor of an executive NDPB nor appoints the auditor, he should have rights, either under statute or by agreement, to carry out an inspection of the NDPB's use of its resources. The expenses of most advisory and other non-executive NDPBs will be subject to audit by the Auditor General or auditors appointed by him as they are included in the accounts of their sponsor Department.
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