Auditor General for Scotland

AUDITOR GENERAL FOR SCOTLAND: AUDIT OF ACCOUNTS AND 3E EXAMINATIONS

Contents:

Scope

Key Points

Background

Access to Documents and Information

Use of Consultants by Audit Scotland

Disclosure of Information

Annex 1: Audit of Accounts

Annex 2: 3E Examinations


Scope

1. This section gives guidance on matters relating to the audit of accounts and economy, efficiency and effectiveness examinations (3E examinations) undertaken by or on behalf of the Auditor General for Scotland (AGS). The guidance is relevant to all organisations (i) the accounts of which are subject by statute to audit by the AGS and/or (ii) which are subject to 3E examinations. That would normally include all organisations to which the Scottish Public Finance Manual (SPFM) is directly applicable.


Key Points

2. To enable accounts to be certified by the due dates, information or documents requested by auditors should be provided promptly and accounts should be prepared in accordance with a timetable agreed in advance between the auditors and the bodies concerned.

3. Auditors and examiners have rights of access to any document or record in the possession or under the control of the body being audited or examined and may require any assistance or information from any individual holding or accountable for such documents or records.

4. In carrying out 3E examinations the examiner is not entitled to question the merits of the policy objectives of the body in question. This reflects the principle that the merits of government related programmes and projects are primarily a matter for Ministers.

5. Draft 3E related reports should be examined extremely carefully with regard to factual accuracy and any interpretation, opinion or conclusion, whether implicit or explicit, with which bodies disagree should be challenged. The overall presentation and balance of the report should also be challenged where bodies consider that undue or insufficient emphasis is being given to any specific point. It is of course for the examiners to decide what will ultimately appear in published reports.

6. The relevant Accountable Officer should ensure that 3E related reports are formally considered by the body following publication and that all agreed or accepted recommendations are implemented within a reasonable period of time.


Background

7. The AGS was established under section 69 of the Scotland Act 1998 as an individual appointed by the Crown on the recommendation of the Scottish Parliament. In the exercise of any of his/her functions he/she is not subject to the direction or control of either the Scottish Government (SG) or the Parliament. The main functions of the AGS, as determined under section 70 of the Scotland Act and further provided for under the Public Finance and Accountability (Scotland) Act 2000 (the PFA Act), are as follows:

  • auditing the accounts of relevant bodies: see Annex 1; and
  • initiating examinations into the economy, efficiency and effectiveness with which relevant bodies have used their resources in discharging their functions: see Annex 2.

8. Section 13(6) of the PFA Act allows for any function of the AGS to be exercised on his or her behalf by a member of the staff of Audit Scotland or any other person authorised by the AGS to do so. Audit Scotland was established under section 10 of the PFA Act. Its board consists of the AGS, the Chairman of the Accounts Commission and 3 other members appointed by the Scottish Commission for Public Audit. Its primary function is to provide such assistance and support as the AGS and the Accounts Commission require in the exercise of their respective functions.


Access to Documents and Information

9. Under section 24 of the PFA Act the auditor or examiner has - subject to the test of reasonableness - rights of access to any document or record in the possession or under the control of the body being audited or examined and may require any assistance or information from any individual holding or accountable for such documents or records. The rights of access extends to documents and records which might not be subject to release under the Freedom of Information (Scotland) Act 2002 or might be covered by the Data Protection Act 1998, including for example documents and records relating to compromise agreements negotiated with individual members of staff in the context of early severance.

10. Auditors or examiners may examine the arrangements for reaching and documenting policy decisions and consider the effects of their implementation. They cannot, however, question the merits of policy objectives and documents and records primarily concerned with the formation of policy will not normally be relevant to 3E examinations. A request by auditors or examiners for access to such documents or records should be referred to the relevant Accountable Officer for consideration together with an explanation as to why the documents or records are viewed as being relevant to the audit or examination.

11. The rights of access by auditors or examiners should not however be questioned or refused lightly. It may be difficult to separate policy documents and records from those concerned with the implementation and execution of the policy. Indeed, aspects of both may be contained in the same document. Appreciation of the background of policy decisions may help auditors' and examiners' understanding of the situation, and thus the investigation.


Use of Consultants by Audit Scotland

12. Where Audit Scotland undertakes audits or examinations on behalf of the AGS it may employ the assistance of firms of consultants in order, for example, to profit from their individual expertise. While there can be no objection in principle to the use of these consultants, there may be security considerations if classified or commercially confidential material is involved. Bodies being audited or examined should communicate any concerns in this respect to Audit Scotland.

13. Audit Scotland will normally be prepared to consider representations on the need to restrict access by their consultants. Where Audit Scotland agrees to such restrictions, the details should be set out in writing and consultants should only be allowed to see documents specified in the agreement. Where considered appropriate, bodies should in addition seek from Audit Scotland written assurance that its consultants are under contractual obligation not to use information obtained from the body for any purpose other than in relation to the work undertaken on behalf of Audit Scotland.

Disclosure of Information

14. Audit Scotland (including the AGS) is bound by and must act in accordance with relevant provisions in the Freedom of Information (Scotland) Act 2002 and the Data Protection Act 1998. Audit Scotland will consider on their merits, requests under freedom of information (FOI) legislation for copies of reports and correspondence which are not routinely published. Audit Scotland is committed to the principles of the FOI Act and to its successful implementation. Other than information covered by the Data Protection Act 1998, Audit Scotland will make use of relevant exemptions only where it considers that it was provided for in the FOI legislation and necessary in the public interest.

15. If a request is made to Audit Scotland for the disclosure of information obtained from a body in the context of an audit or examination and the information might be regarded by the body as sensitive or exempt under FOI legislation, Audit Scotland will, where reasonably practicable, consult the body before complying with the request. Audit Scotland will similarly consult the body before volunteering such information to a third party or including it in any publication.

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Page Published / Updated: May 2011