Scottish Commission for Public Audit - 18 September 2026

Welcome to the first meeting of session seven of the Scottish Commission for Public Audit Committee. I'm Jenny Mento, uh the MSP for Argu But and in accordance with the previous commission's process, I have the pleasure of convening this meeting for the first two items of business. I would like to take this opportunity to welcome all members and I look forward to working with you on the commission. We have received uh apologies from uh Michael Mara MSP. So agenda item number one is for each of us to declare any interests we have that are relevant to the work of the commission. Uh background information for this is provided in the declaration of interest section of paper one. I uh refer the committee to my declaration of interests um and I have no relevant interests to declare. However, in a former life uh I was a member of the Institute of Charter Accountants of Scotland and have taken part in some audits um along uh in my training but I'm no longer a member. Kate, can I turn to you? Um I believe I have no no interest to declare and Neil >> um no no relevant interest to declare other I'm a member of the public audit committee giving the public audit committee for the record. >> Okay. Thanks and Miles. >> Thank you. No relevant interest to declare and also a member of public audit committee. >> Thank you. Thank you all. The agenda item number two is the choice of chair. The procedure is explained in uh the choice of chair section of paper one and I would seek nominations for this position. Um if I may, I would uh nominate Miles Briggs, MSP, to take on the role of chair. We do not require a seconder. So Miles, would you be content to do so? Great. Well, congratulations um on your appointment and we will uh shift seats. Thanks. >> We'll change our names quickly. >> Quickly as well. >> Thanks. >> Thank you. The commission's next task is to choose a deputy chair and I'd like to seek nominations for that position. Um, and I'd like to nominate Jenny Mento if she's willing to to be deputy chair. >> Yes, I'm willing. >> Thank you, Jenny. Thanks very much. Um, do we all agree? Thank you. Um, can I congratulate you, Jenny, on being elected deputy chair and looking forward to working with all members of the commission as well in this session of parliament. Um the fourth uh item on our agenda today is to take evidence from Audit Scotland's annual report and accounts for the year 31st of March 2026 as well as the auditor's report um on the accounts. Members can find copies of these documents as well as a management letter from TC group in paper two of their uh meeting papers. Um, and I'd like to welcome to the meeting Colin Crosby, the chair of the board of Audit Scotland, Steven Bole, auditor general for Scotland, Vicky Bby, chief operating officer, and Marquez Sanir, head of finance at Audit Scotland. Now, I understand that this is the last meeting of the commission that Colin Crosby will attend before his term of office ends. So, I'd like to specifically express the commission's thanks to Colin for all his hard work during his term in office. I'd also like to put on the record our thanks to Andy Monroe who's the head of internal audit and has been the adviser to the commission over the last few sessions of parliament for all his help and support which she's given to the commission as well. Um and I'd now like to invite Colleen Crosby and then the auditor general to make a short introductory statement. Over to you Stephen. Uh good morning chair and thanks for your your your kind words. Um and good morning to the members of the commission. I was hesitating to see whether I should say chairs but I'll just restrict it to single uh at this point. Um it's great to have this opportunity to speak with you today and to go through our performance during the year 2526. And before that can I congratulate you all for uh your successful election uh to the parliament and indeed uh to this committee um which I hope you'll all see is uh worthy of congratulation. Audit Scotland and the SCPA have had a strong and productive working relationship for many years and I believe this has been built on a clear uh and mutual respect for the importance of open, fair and independent scrutiny of audits uh of audit Scotland and an understanding of each other's roles and aims. Um at a time of sustained and significant pressure on public services and finances and a clear agenda for the major public sector reform, the role of public audit uh has never been more important. It must not only provide assurance but also make uh a clear and positive impact. During the past year uh we undertook an indepth evaluation of that impact. Um this midterm review of our purpose public audit Scotland confirms that our work makes an important and valued contribution in supporting both improvement within public bodies and in parliamentary scrutiny of around 60 billion of public spending. However, we recognize that we need to do more uh to create better understanding and to demonstrate um our impact and the increase thereof. While delivering impact now is essential, we're equally focused on the future. Uh we have been underway with an ambitious program for transformation a transformational change looking at the scope of audit, how we deliver it and the shape of audit Scotland itself. This will ensure that our work remains proportionate, efficient and responsive to technological change with the right skills to meet emerging challenges. During 2526, we laid key foundation stones for that trans transformation. Um we are building on that in the current year to ensure we deliver our long-term ambitions. Uh at the same time, it's quite right in the light of the recent program for government um and other moving external circumstances. We also reflect our on we reflect on our direction of travel to make sure it's where public audit needs to go. I believe we're on the right path. But I know that my colleagues in Northern Scotland's board and executive team will constantly be reviewing and monitoring this as we progress. Um, as you mentioned, this is my final report as chair before leaving uh post at the end of this month. Uh, I'd like to acknowledge the strength of the organization. Audit Scotland is trusted, respected, and increasingly well understood. uh that is testament to a board that provides strong governance, constructive challenge and most of all uh to the dedication and integrity of the audit Scotland staff. On a personal note, it's been a tremendous privilege to be a board to be a board member and latly chair of Audit Scotland, an organization that aims to be an exemplar public body, efficient, effective, independent, and importantly forward-looking. Thank you Colin Steven. [clears throat] >> Thank you very much chair. Um and perhaps firstly just to echo Colin's congratulations to uh you chair and vice chair for your appointment and how much myself colleagues look forward to working with you in your roles as members of the SCPA. Um and not quite my end of term uh chair, but uh is is worth noting that uh my term as both auditor general for Scotland and as audit Scotland's accountable officer um has around um 20 or so months um remaining um and I very much look forward to engaging with the SCPA during the remainder of my term in this role. calling a set of some of the the context for it, but um if you're content here, maybe say a few additional words and touch on some of the content of our annual report and accounts. Public audit brings a unique whole system perspective to the performance of public bodies and their public spending. Public audit in our view is a fundamental cog of a modern democracy through its role in providing independent, objective and robust scrutiny and in supporting Parliament to perform its oversight of the services that the people of Scotland rely upon. In recent years, public audit and many other organizations have helped sharpen the focus on the sustainability of public spending, public services and in and amongst that the need for uh public service reform. As we've all seen, the program for government over the past few weeks has set out an ambition of reform at pace and scale and the priority that that sets. Through our work, we have noted public service reform in the context of major structural, fiscal, and demographic challenges and changes within Scotland. Our public services continue to operate under fiscal pressure, and through our audit work, we've consistently identified risks to long-term sustainability, the implications these have for public services and the opportunities amongst that. Addressing all of this, of course, will require sustained coordinated actions, in particular, a stronger and clearer focus on long-term fiscal sustainability and a move from short-term approaches to medium and longer term systemwide planning, multi-year funding, and alignment of priorities, resources, and delivery. As an organization in Audit Scotland, we face similar pressures of tightening public finances together with increasing demand. Over the past year, we've taken stock of our impact and how we prepare for the future. We've made progress in shaping that future, including the what the future public audit model of Scotland might look like. We've modernized our audit approaches and our operating model, including preparing to harness the opportunities and importantly managing the risks arising from new technologies, especially artificial intelligence. We are clear on the need for fiscal discipline chair and efficiencies today and we ended 202526 with a small operational under spend. As Colin notes, I'd also like to record my thanks to my colleagues in audit Scotland and also to the audit firms that we contract with for the professionalism and dedication that they have shown throughout the year. These people, my colleagues, are fundamental to the value and the work that public audit delivers in the public interest. And I think between Colin, Vicky, Wacas, and myself, we very much look forward to answering your questions. Thank you. >> And thank you, Auditor General. Um, I'd like to start um with some questions and specifically um start with risk management. And could I ask you um what are the top three risks most likely to crystallize do you think for Scotland within the next year or two? um which give greatest concern to your to the board and the executive team. >> I'm I'm happy to start chair actually and certainly bring Colin actually she have perspective on the board's role and particularly that of the audit committee and how our governance over overseas risks um if it's helpful and I'm sure Vicki and Awakas might want to say a word as well. The top risks in fact the top two risks in audit Scotland um are in respect of cyber security um both both about the likelihood and preparations to avoid a cyber security attack and then very much alongside that is the arrangements we have in place to recover from a cyber security. Our um very dedicated and experienced um uh information management colleagues have hammered home the message to the executive team and the board that we should be preparing and anticipating a cyber attack. The the language of it's when not if and members will have seen the impact that cyber attacks have had both on commercial organizations and public bodies. Indeed, I've done reports to parliament on the impact that a cyber attack has. Um, so in audit Scotland is both of those top two risks. You know, like many organizations, chair, we deploy um risk management arrangements, a rag rating um and so on. Um, and it's always read and you know despite the mitigating actions that that we identified, forgive me perhaps for obvious reasons, maybe won't share what those mitigations are and given we're in public session. Um, but it's a very um clear and present risk to our organization and the delivery of our functions. in terms of the you know what comes next. It's not that I'm racking my brains because we have a few competing risks for for that uh talk but we the management of our finances the experience that we give our colleagues in audit Scotland thinking about some of the changes that are coming through both uh in the audit market changes and and regulatory arrangements the the quality and reliability are all up there but I'll maybe pass to Vicky first of all she wants to say and then uh very briefly bring Colin in as well. Yeah, thank you. Good morning everyone. Um we have um a robust as as Dean says risk management process in place and actually just two weeks ago the audit committee had a risk deep dive into what our top risks are and looking at our risk appetite and really challenging ourselves on what risks do we want to mitigate down but also what risks do we want to operate up to particularly in this transformation um agenda and future planning. Um so um it's it's striking that right balance. I mean fundamentally our quality though of the public audit um is vital for that independence and trust. So we have and I think be discussing later our quality arrangements. So we monitor that very closely as Stephen said um our resources um but we are on a big transformation um journey at the moment like many organizations are and it's looking about how ensuring we are delivering now what we need to do but looking for the future and managing that with our people taking them with us feeling that they're supported but there's quite significant change coming in the profession of audit as a whole and also as an organization to ensure that we are as value for money efficient and impactful as possible. So I would say those are our key risks but I think what is key is that we are actively um speak about risk at the board the audit committee and as an executive team. >> Thank you. Um, I'd like to move on to delays to audit completion because page eight of the annual report on accounts which you provided uh states that continue to work on recovering audit delivery timelines against internal targets following disruptions, truncated timelines and new auditing standards in recent years. So, so can I ask um if you could explain the specific reasons for continuing delays and what risks are there in respect to public confidence um in the audit of our public bodies? >> I think as a as a starter chair I would say we're not yet where we want to be in terms of the delivery of annual audits of of public bodies. Um the some of the history of this um and I I'm reluctant to reference it but it's it's relevant is uh co disrupted quite significantly the completion of annual audits since that period we have been on a a recovery program that the intention was by the end of the current five-year audit appointment we operate in a fivey year cycle of audit appointments uh in public bodies which would take us to at the end of um 26 27 we would have recovered. There has been progress inside that figure. So for example NHS audits and further education college audits are almost all done by the internal target deadlines. The two sectors that are more challenging are local government and central government bodies. Local government especially has some bodies that are [clears throat] behind in the in the preparation and then audit of financial statements and some central government bodies um are not as severe but somewhat in that bracket too. The the two perhaps two piece of information to share with the commission this morning is that um our our expectation is that it will get to 75% next year and then we hope nudging towards 80 90% the year after. An audit is a partnership in terms of its completion which you is that for auditors [clears throat] in order to audit financial statements the public body has to prepare them. They have to be prepared accompanied by clear detailed comprehensive working papers so that auditors can interrogate the system and so forth. And there's a combination of factors. Some is about we're not we don't resource to uh allow for much flexibility in the time scale. So if a public body misses their slot as it were, that can have a knock-on implication for the completion of various other um audits. We work hard. We're communicating effectively with auditors and public bodies on my expectations and similarly that of the accounts commission for local government. We think there's a positive trajectory happening in terms of completion. But I wouldn't want to leave the commission with impression that we're content with where we are. We are actively working and managing this local engagement with with audited bodies and auditors escalation where we need to. Um but just to assure the commission we are very much treating this as a priority by way of recovery and if it's I think Colin would say word this. So >> yeah thanks Stephen. Um the there's a piece about uh the the apparent delay which I think is is worth dwelling on and that twothirds of the the delay is caused by external uh factors along the lines that um Steven has outlined and I think it's probably it's a slightly um strange argument to take but we get terribly concerned as a board when we slip behind our own internal framework. work. That doesn't necessarily mean to say that the actual work in terms of when it has to be delivered statutoily is late although some a very small percentage are. And why do I make that point? Well, that it brings back the risks that you were speaking to in the first item in that time audit impacts on the relevance of what we're seeing. So that the board are very very concerned to be relevant and for timely work to be done and that leads into a risk which I would like to add to the uh the couple which are mentioned which is reputation without audit Scotland having a first rate reputation. we don't have the same impact either with uh those involved in in all matters Hollywood but also with the with the public at large who in some ways uh are a major stakeholder. >> Thank you. And in relation to what you'd highlighted in in what is a process for external organizations preparing for an audit, is that an area which given many of these organizations will be seeing this annually you've put to them so that this is an easier process for you to be able to go and see that information which you're telling us sometimes isn't prepared for your auditors to to access. >> Yeah, [clears throat] very much so. and Vicki can can say a word or two about this I suppose to set out for the commission um what auditors proactively do in a steady state for for public bodies and then maybe perhaps also if you wish what happens when things don't work um >> yeah so we've been working to do a lot more um with um audited bodies about what the expectations are and as Stephen said earlier is a partnership um but actually we've Um we have got a project ongoing at the moment to try and engage on that extra level of detail and also how that links to fees which you might want to come extra fees which you might want to um raise earlier and transparency about if you're not ready there is a consequence to that and understanding why um that is um in terms of the controls we have around this is um delivery is taken very um seriously. It's got to be weighed up against quality because you need to ensure that that just delivery to that target is not your primary objective. Um an audit um and auditors um are signing off in their own name. So they need to know that they have delivered that audit to the quality standards. Um so that um is a driver. However, a lot of the late audits, it's quite a stark figure we have got here. But when we pick look underneath, some of them are maybe days or weeks late. um and and reasons of um audit committee timing and things like that. So we work with the um the audited bodies just to make sure their governance is in place but there are some that are very late um and we have an escalation process that um is quite transparent with the public bodies and where we want to intervene and and the same for the auditor general but also the accounts commission particularly in some of the areas of local government and we are working um with the auditors and um the audited bodies to try and get that back on track. >> Okay, sorry. Thank you, Miles. Um, yeah, just a a slight followup uh on this. Um, I saw uh that um a key change you're proposing is a more proportionate approach for smaller bodies. I was wondering if you could tell us a little bit more about that and how that relates to actually supporting public bodies to be ready >> for their audits. >> Um, you're quite right. This is one of the hallmarks of the uh future public audit model that we're proposing together with the code of audit practice that the council commission and I um consulted on extensively and and published a few months ago. And I think it it recognizes M. evidence that um Scotland has a wide range of of size and scale of public bodies from the Scottish government, very large health boards and councils [clears throat] to the other end of the spectrum some tiny public bodies you know with only a very small number of employees and very small finance departments. Our approach has been not [clears throat] quite an audit as an audit but perhaps the accounting framework with which public bodies are required to use. So if you're in local government body, you have to follow local government accounting codes. For central government bodies, you follow the financial reporting manual in your preparation. But there is more that we felt we could do as an organization to perhaps bring a more proportionate context to how our audit work. Um we we engage uh widely. we engage particularly with the predecessor public audit committee to reassure that we are still going to carry out an audit but we're going to do it under a different um auditing regime but so it's satisfactory it's robust but it's less ownorous than the international standards on auditing for those small bodies. We set a financial threshold actually so that there's clarity for public bodies that um of turnover level you sit below that you'll have what we think is a more proportionate but still robust approach. It's it's a fine balance but recognizing that size and scale is relevant for the context of what an organization can cope with in its preparation and then its audit and that um with the current cycle will come in as part of the new audit appointment arrangements. That's helpful. Thank Thanks very much. I'm going to now open up the session to questions um from other members. Can I invite Deputy Chair? >> Thank you. Thanks, Miles. Um and thank you for your answers. Um I've got some quite general questions. Um I'm I'm interested that so so much of your work is specifically looking at the numbers, but you've also clearly got um a review of policies as well. and you've set up specific themes when you're looking at best value uh in local government. So I'm I'm interested how how you go about measuring best value in the various topic headlines but then also what followup you do because um in 2526 the theme was transformation. So councils will have done that in year one. what's the continuum for other years because given public service reform that's going to be quite quite a big area. >> Um yes um I can come in. So um audit Scotland um provide the audit work for the auditor general and for the accounts commission. The auditor general's got that the wider scope and in local government there's the wider scope and the best value work. The accounts commission has been looking at at this in detail as part of our re future audit um model and um best value aspects have changed that um over years and there's proposition for it to change again. What used to happen um is that um every council over a cycle would get a detailed um best value um review and without wanting to sound flippant, it sounded like the best value bus had come into town and did a deep dive audit. What was felt was that a more proportionate um review, not proportionate but more continuous look. Um so all councils as part of their annual audit have that best value review and the controller of audit will do a deep dive report once over the fiveyear period. The commission has and the um controller of audit have been looking at recommendations because particularly um in local government a number of very similar recommendations are made repeatedly every year. So there's work that we are doing internally about the focus of the recommendation making sure it's smart and then manageable so that um uh response isn't just ongoing that there's clear actions but from the principle to be helpful and the commission are looking at how they're actually changing their work program to be coming back and following up in more detail on those recommendations as part of the future um of public audit model. The commission is looking at and using some of the benchmark framework that the improvement service have about having a more riskbased approach to best value. So looking at the ones that they maybe have more concern around financial sustainability or whatever reasons and the controller of audit will base um their work on that more riskbased um approach. But um it's not for me to speak on half of the commission but they're actively um looking at this again with the principle that we're adopting for all what is the most impact how can we help but also um what the commission has been doing when they've done a specific best value review on a council what are the lessons learned for the whole sector what you know so financial management ensuring section 95 officers are properly resourced so they're looking at that more >> thank thanks for that Vicki and um I'm very aware that councils across Scotland, local authorities across Scotland are all different shapes and sizes. And I think one of the um important things in the program for government um was that the note that some local authorities are too small to be strategic, but also to and others are too large to be local. I would argue that there are some that fit in both of these boxes. So one um transformational change in one council might not work for another. What what do you have any specific examples as well of what of where where you've been able to spot transformation in one council and shift it to another? >> Yeah, I mean maybe as a followup we can share because there's been specific um reports by the commission and happy to share the specific examples. I don't have them to hand immediately, apologies. Um but for example where um one council has put in a new um um system accounting system how are the lessons been learned the auditor and the controller of audit has been doing specific um work around that the commission is very focused on uh no oneizefits all um I think where they're looking at is ensuring that councilors are deliberate in their decision- making and looking for best practice good practice and sharing that considering that in the um transformation approaches um that they take, but I'd be very happy to share um some specific examples on local government. >> Great. Thank you. I think I think Kate, you've got some questions around deliveries. Do you want to >> Yeah, if that's okay, I follow up. So, I also had some a question around the best value that um Jenny Mento was asking about. I just um you mentioned uh a risk based approach and the improvement framework, but um part of your scope includes how well public bodies use resources to improve outcomes for people. Um I was just wondering if you could tell us a bit more about how central people's outcomes are to determining best value, how you're measuring how you're measuring that. >> Um okay. Um so the it's um I'm not trying to evade the question but um some of this is for the controller of audit and um maybe the accounts commission um but um focusing on the work um that they do that I have got um very outcome focused. We had a strategy seminar with the accounts commission this week and looking at the impact um and their focus is very much not just on the processes in place but looking for council's decision making and actions to be focused in on um the outcomes but um I'm sure um I don't want to speak on behalf of the controller of audit but particularly in her work that she does I'd be very h she would be very happy to follow up for the DPA um with specifically what she's looking at um in relation to outcomes [clears throat] and the best value. >> Thank you. >> Okay. Um thanks. Uh in in your report there's um figures on the review of the sample of audits um carried out through your audit quality framework. So, I'm I'm just interested in the difference between um audits that are performed um internally um but also ones that are performed externally. It's quite a difference 93% um versus 75%. I just wonder you've got any comments or thoughts on that. >> I'm happy to start on that and again we'll um bring colleagues in if anything further they wish to add. Deputy chair chair question about risk and one of the biggest risks to us as an organization is that our work subsequently found to be unreliable. So you know whether we individually as auditors of public bodies produce an opinion that's that's um on the annual accounts is found to be incorrect or more personally for me if I produce uh a performance or value for money audit report that those findings uh again are are proven to be not what they're set out in the report. So in order Scotland probably over the past six, seven years we've invested heavily in quality um management arrangements um some with some direct compliance to comparing to international auditing standards um and then also broadening out um the usability of the reports and the their subsequent impact. We do it two through two main means you're you're referring to. One is we have um a contractual arrangement with the institute of chartered accountants of England in Wales pre before that inst chartered accountants of Scotland and they look at all our work and they look at the audit work that firms undertake on behalf of myself and the accounts commission. They test it against um quality frameworks and [clears throat] auditing standards. Uh and as you also uh reference um we have an internal quality team too that test that work. Um you're right there are there are slight variations between them but where we take assurance where I take assurance the commission the Scotland board um Colin might want to come in on this I'm sure as well both sets of results are reliable >> and the reason we know that categorically is we get our external reviewers to evaluate the work of our internal reviewers as well. So we take assurance from that that inevitably it's a relatively small sample across reliable but not covering the totality of our audit work. Um the main message I take out from it is that our work is reliable. It can so when auditors are giving those opinions they are robust. We are not as an organization seeing a continued uh set of results to suggest the need for significant improvements um in auditor's work and I think we're on a trajectory of improvement um recognize that there might always be blips you know things happen as people that we are dealing with um but there's a sustained underpinning of quality culturally and with arrangements in place in the organization but again I'm keen to bring Colin because this is a a real focus just for the audit committee and the board. >> We're going to come on to item five later which is specifically around quality of audit. So we can maybe expand on some questions then. Yeah. Jenny, anything else? >> I'll hand back. >> Great. Neil, >> thanks chair. Firstly, can I just say that I think this report demonstrates the breadth of the work that Audit Scotland do and also the quality of the work um the share volume and the quality. Um notwithstanding that obviously you recognize where there's where there's areas for for for improvement um and rightly so. On page 19 of the report it it talks about you know some of the pressures that staff are under in terms of producing reports. 46% feel they have sufficient time and resources. You've recognized that as an issue because that suggests 54% don't. Um you've you've talked about the new uh resource management approach um in terms of improving that capacity because obviously that's that's key. Um in the report also it talks about the number of sick days increasing the average number of sick days increasing on an upward trajectory over the next three years in terms of uh first of all the the capacity issues in terms of staff feeling they have enough time. Do you want to expand on that uh resource management program uh approach and also to what extent is that the number of sick days having an effect on the the capacity that you've got to produce the volume and the quality of the work that you're doing? >> I'm very happy to be to start. I'm sure Vicky will want to elaborate on it. These are all indicators, I suppose, of the organizational health that I think that you're picking out, our ability to do what we're here to do on behalf of Parliament and the people of Scotland with the resources at our disposal and the and the experts that that we employ. We want to, you know, build careers for people to for them to stay and develop uh for for many many years. Um, and that is the case for for most of our colleagues, but but we we speak to our people regularly. We survey them. We consult with them. We have appropriate line management arrangements to try and nurture people's uh careers with us so that they can perform to the best of their abilities. There's a a couple of points that you mention um which I'll maybe touch on a couple and Vicki can say more. The sickness absence is increasing in the organization. The underlying trend is more around some colleagues for very personal circumstances are dealing with events that are causing them to be off longer term sick. So we we look closely at the data that suggests that um is there a an organizational drift but [clears throat] most of our numbers are being driven by some colleagues off for longer term reasons on the um the feedback from staff. Two things can be right at the same time. And I think it's what what we see from that box of the last uh on page 19, 46% of people uh feel that they have resources. You're right. That would imply 54% of people don't feel they've got sufficient resource resources at times throughout the year. Audits are pressurized. You know, we there's no doubt like anyone else in the public sector, we're operating with a finite amount of resource. Some deadlines are movable and some are not. And that can cause peaks and pressure at different points of the year. The statistic I I think and I'm not no way trying to undermine that or underplay that because it really matters and we can say a bit more what we're doing about it, but is that culturally 89% of people are also telling us that they are continually encouraged to deliver high quality audits. So we're trying to morph both those things. Um at the the same time the resource management that you mentioned is a is a significant organizational development that we're making so that we can deploy our people onto [clears throat] different financial and best value audits in a more sophisticated way than we had previously. So the benefit that we're acrewing from our investment in new technology is making a difference uh in the short period that we've had it already. But again I'll pass to Vicki to say more on those points. >> Um thank you. Um probably nothing more to add on the sick days. We we we but provide assurance that we do look at it in detail because it's a trend and our remuneration committee is particularly um interested in this. It's a trend that's not going in the right direction. So we do get that granularity and unfortunately is people with some long-term uh long-term um we've seen an increase sadly in cancer um diagnosis and things like that. So um and we are very supportive to um our staff and and we have um and and we want to be on the capacity and resources issue. Um this is the fine balance of the delivery and the maintaining the delivery the quality and staff as we have postco been trying to effectively do 15 months audits work 15 months worth of worth of work into 12 months and really just think to get back on track. So it's finding that right balance with staff. At the same time um we are bringing through changes that you know the resourcing system to allow staff to be more agile and move across the organization to where the resource requires it. Staff are signed up to that and know it's right. But in itself that is just a change in a way of doing things for a number of staff and it's a good news. We've had a number of staff that have been with the organization a long time as well which is a positive indicator but for changing the way we do things um that can um we've got to ensure that people feel supported on that um journey. One of our big investments that's ongoing now at the moment is the investment in our new um audit system which we've partnered um we've worked with the NEO. they made the big investment and and and we're very appreciative that they're allowing us to use their system which actually will take a lot of the repetition out. It's much more um automated. Um it is clearer on quality. Um the system requires you to um um um input the things that a good audit requires. So that will help quality but actually it will really help staff in the resourcing of it um as well. Thank you for that and I'm sorry to hear about the circumstances around the long-term sickness since when the organization in terms of that resource and capacity and improving that do you uh take on audit apprenticeships. Do you think there's an opportunity to increase that going forward to build that capacity? Um yes and and um we are very enthusiastic about the apprenticeship approach. So we have um roots in and traditionally it's been um graduates and we take them and support them through the ICAS. We've had a small number of um school lever programs and we want to expand that um like many organizations are doing at the moment. um also looking at graduate um apprenticeships. So you're studying for your degree and working at the same time. We're taking on um and then we have core modern apprentices in terms of our business support and all um coms and um the technology side and we've actually just looking at we've approved um a a role for doing a graduate apprenticeship in the technology side and the data side. So we're actually looking um we'll maybe come on to it but we're doing a lot of workforce planning um at the moment about what the future auditor is and what the future auditor requirements are and what um is a generalist auditor what's a specialist and what data is required. So there are other routes for bringing in um our pipeline um because we are very committed to ensuring um in the advent of technology like a number of industries that is the bit that's getting squeezed um first to to balance finances and we feel we've got um a strong role to play in um ensuring our wider public duty of bringing in a pipeline of um um young um people into the organization but also for having strong financial awareness across the Scottish public sector as well. One things I I sorry I meant to add on just our our people. We do do regular people surveys. Um um we've been doing best companies and we do regular pulsive surveys. Um last year in the best companies we got um a very very strong result that actually was and we really celebrated. Um so that has been improving. So people are under pressure but they're also seeing the benefits of working in Audit Scotland as well. >> Thank you. Thank you. Neil Kate, can I bring you in? >> Um thank you. Actually, some follow-up questions on workforce. Um note that in the report um training costs were underspent against the budget by around 67,000. And I was just wondering if you could um help us understand the reasons for the underspend and um tell us a bit about how you're ensuring that that'll be uh spent on appropriate training arrangements uh in the future. Um and also the report references DEI measures uh and I was wondering if you could elaborate a bit more on how your DEI measures are going. >> Yeah, you happy? >> Yes, thank you. Um so in the training budget which might sound like I'm just contradicting what I just said in the 2526 budget to balance the budget we actually did reduce our um graduate intake by eight. Um so um and that was really clear to us that that was we still have around the 50 um graduates um but on that year um there was a drop and that really gave us a pointer to make sure that this isn't becoming a repeat pattern and it's not that we are. So that is the reason why the training budget because we pay for we do our training through ICAS took a reduction in that year and that really gave us um the sort of prompt to make sure we are not seeing a trend in that direction because that is not where we want to go. Um on the um de and I um we are strong on um gender um pay. We're um pretty um um now slightly moved into women slightly higher pay, but we're pretty equal. Um we um the areas that we're really focusing on are ethnic minorities. Um and the recent stats are that um that is improving but we are looking at our recruitment processes to ensure that we are and we get we work with um expert organizations in this area to make sure we are being inclusive as possible. The area that we are significantly below the national average on is our disability um stats and we're very conscious of that and trying we've been trying to do quite a lot of work to understand why that is. So people and we've done quite a lot of work to ensure that people are declaring they've got a disability um whatever form that may take because not all disabilities are visible. Um so we've been um and we've introduced a um employee passport scheme which is again voluntary but particularly um if somebody >> I use this one because um is dyslexic for example they can have and they it's difficult to say get a report that's track changes they can say on their passport so they don't need to keep repeating it to if they're moving around with different managers how that works. So, we're actively trying to um ensure that we're inclusive as possible, but I think we recognize we have still got a way to go. And you look at particularly on our disability statistics. Um we also do a reverse mentoring um program. Um my mentor um is um just qualified and they um have a disability. So actually they've been um >> telling me actually how supportive they've felt but interestingly they felt that their disability maybe results in a peak that they wouldn't necessarily go further. Um [snorts] so we're wanting to make sure that that p because that's not we don't feel that but if that's perceived so we're actively looking at ways to ensure that we can be as inclusive as possible. >> Thank you. >> Thanks chair. Um the one or two points which I think probably um I can sweep off sweep up on slightly. Um I think the board as a whole is is uh pretty content with its position with regard to DEI. Um in the majority the vast majority of the situations were a we're above the demographic uh percentage for the particular uh issue. Disability I suspect will always be a slight challenge for us because of the age profile of our of our staff. We don't match the national demographic in terms of that, but we're conscious of doing absolutely everything we can. The the situation which I think is is important to to get when when we're looking at a broad suite of of entrance points to training. What we have to be conscious of is that regardless of the entrance point, we can be as broad as as we like. We have to get people who can get to a particular professional skill level. And that will be even more important to achieve if AI takes out a base load of repetitive work. So we have to get to the point where the people we're taking in can get this judgmental skills they require um in the way that's that's going to be required with regard to AI. Uh and I was laughing in a contract laughing I don't know whether I was crying but looking in a contract which said no output will go out without having been human oversight which I never thought in my life I would see in a contract but that's the measure of of the skill that we have to get to with regard to that and coming back to uh a point with regard to um performance uh which Neans was speaking about bear in mind that some of our report performance reporting isn't only in local authority goes across other areas and reports and you're speaking about reach and people being at the heart of it reports like the GP services which was a whole of Scotland report is very much people and patient focused so we do very much think of where the output of the work is meant to to to lie >> Kate do you have any more questions >> um I have a couple more if we have time um so um the report mentions that 91% of your recommendations are being taken which is great. Uh but that there's a slow pace of change at public bodies. I was wondering if you have identified any recurring reasons for the slow pace of change, any recurring themes around which recommendations aren't being taken up. Um yeah, >> I'm happy to start on that. So we're happy that our recommendations are are accepted. Um which matters from the audits that we looked at. You're right. they are not being implemented at the pace that we would want them to be. That feels really important. You know, our audit reports, yes, they provide assurance, but the recommendations that are integral to them are designed to support sustained improvement, stronger controls, better assurance on public spending and and public services. So, we're doing a bit of work to to look at, you know, um allows us to preserve our independence. We're not in this space. I don't I don't think I would have ever a sense of feeling comfortable of co-designing or co-creating recommendations. Like auditors have to preserve that independence. They make the recommendations on the the work that they see. >> But we think there's probably space for for better engagement uh with public bodies. So we craft recommendations that are realistic in terms of those that can be implemented. um we're all trained to be skeptical as auditors. So I do have a you know just to preserve that that actually we can sustain our impact beyond the completion of an audit that it's you know built in follow-up work and for for example as some members will know you know yesterday at the public audit committee we had a follow-up report on post school education uh reform arrangements that's an example of how we can deploy quite a significant you know piece of additional audit work on follow-up so that whilst the original recommendations might not have been implemented. You know, we can still bring a further audit lens. And there's other ways we can do it through the annual audits as well. >> So that the audit recommendations, they're reasonable. They make sense. But ultimately, um what we don't have nor I think we should have are powers to enforce the application of a recommendation. our recommendations uh are are that it is for the public body, their governance, their use of resources ultimately to determine whether the recommendations um are something that they want to take forward. But we're alert to just to reassure the commission. It's something we're looking closely at that we have recommendations that can go further than some of the statistics that from the recent samples that we've had. >> Do I have time for >> Yes. So, this one's a little bit niche. >> Apologies. Um, I was just interesting interested to read about the work you've been doing with the Scottish Human Rights Commission, uh, and the UN Commission of Human Rights. Um, and just interested to hear a bit more about the practical toolkit and how you feel the human rights framework can strengthen your audit methodologies. >> Yeah, very I'm happy to start actually welcome to come in as well. We've um we've been deploying a human rights based approach um in our particularly our our performance and best value audits now for a few years. Um and as as one part of our other is how are we as an organization um performing? We've got appropriate outcomes along those lines too. But particularly um engaging and learning with others. We held an event um in the autumn of last year with the Scottish Human Rights Commission um to can set out how we can as scrutiny bodies work together so that you know first of all any appropriate guidance or um good practice that we can identify and share with public bodies about the application of public services and public spending effectively and then what we'll do as organizations through our audit work. Um perhaps one of the strongest example that sticks in my mind of late is um an audit we did on digital exclusion uh in the last session of parliament particularly looking at the pace of change of public services the rapid adoption of technology um is that that will work for many people but not everybody and so just think how are people's rights being preserved with the changing nature of public services. So we looked at that and then I think per perhaps alongside that we've done quite a lot of auditing of social security. Yeah. >> Um in the last session and then we've got a report pending on uh the Scottish child payment over the course of the next few weeks again setting out an understanding through our audit work what human rights and how they're being supported through the delivery of public service then where we come into that too. >> Thank you. >> Thanks very much Kate. Um I'll bring Jenny back in. >> Thanks J. Um we you you touched on it a bit earlier but um the fees paid additional fees paid to audit firms. So on page 34 it's indicated that fees and expenses paid to firms was 1.55 million more than budget. So I'm interested to understand um if that's something that's going to be ongoing or if you believe um that this won't I suppose won't continue and also um what systems and processes you have in place to ensure that these additional costs represent value for money to the audited bodies and taxpayers who fund them. Um because I think there's always that key thing that audit fees should be reasonable. Yeah, you're you're right. Audit fees um should be reasonable. Um I could without going into all of the kind of the nature of the appointment model, but the accounts commission and myself appoint auditors either people who work for Audit Scotland or um from six audit firms following a a procurement exercise. Um the audit fee assumes a few things that um as as we've touched on earlier this morning the public body is ready to be audited. They have prepared uh a comprehensive annual report and accounts with the appropriate working papers. That happens most of the time but not all of the time. And I think that's some of the examples of why some auditors say that um have come to the view that additional fees were needed for time lost or additional audit work beyond what would reasonably be expected um from an audit. I'll bring back in in a moment uh deputy chair just to say about some of the scrutiny that we apply as the system leader for um public audit in Scotland. So that but fundamentally the audit fee is agreed between the public body and the auditor is that is the relationship that exists. It's not for audit Scotland to set what the additional fee should be and that consensus and agreement is what happens. Yes, after discussion between the public body but it's but it's clear it's important for auditors to set out with a bit of granularity if they need to to the public body why additional fees. Couple of other examples. Um there are new standards. There are new compliance arrangements that come in either from accounts preparation or from auditing standards that auditors and public bodies have to follow. But it's primarily the extent to which the public body is ready to support the audit is the main contributor to additional fees. But again Vicki can can say more on that point. >> Yes. Um so that's true. So we'll set the fee framework at the start of the appointment period and and everybody has their core fees and um in those appointment letters it it is set out what is expected for a good partnership audit. um where additional work is required. Um the profession um has the requirements of the profession have increased significantly over um recent years which requires an order with all the um compliance of what is required particularly on the balance sheet which I think really frustrates a number of public bodies because actually um a lot of the risk is potentially around some of the expenditure in the um income and expenditure account but auditor are required. I mean the balance sheet is important. Please don't hear but where the um valuation of non-current assets for example a lot of work goes in there to comply with accounting standards. Um the audited bodies are aware of these but if they've not got controls and systems in place that require extra work um that um does result in additional fees. Um as Steven said those additional fees are agreed between the public body and the auditor now um they will come to audit Scotland particularly if it's over a threshold needs to come to myself to approve discussion happening there is um sometimes I think that gets um misinterpreted that audit Scotland has approved the additional fee so we are very aware of this and we are doing work within the team to ensure just more transparency as much as possible that actually the agreement is between the audited body and the auditor. And we're working with um auditors to ensure that they're having these conversations upfront. So there's an expectation rather than at the end of the audit. Here's a lot of additional um fees because absolutely it's public money. Um which um thinking about ensuring that's spent on frontline services is better than audit fees. But we need to ensure there's a rigor and quality and protect that in public audit for an audit to be signed off. >> On the future of public audit model, we are looking at what are the requirements of um audit going forward. That's why we sort wanted to bring in start with this proportionate for the smaller bodies. But there's also work we want to do around um engaging with the relevant parties on the financial reporting framework particularly in local government. it um the financial accounts are really really complex um and with all the statutory adjustments we and that's a UK level we need to work and we really are putting energy into trying to work there's a new local audit office being set up down in England work with them work with sit lassac that's the technical body to try and improve the financial reporting framework and then that will require less audit on top of that so that's the current arrangement but there's a future that we think we can improve improve this going forward. >> That that's really helpful Vicki because is that um what you pointed out you're better spending money on frontline services whether that's in health board or in local authorities. So it's it's helpful to hear about that work that's being done to perhaps um around making sure there the audits perhaps are more fit for purpose. It is there a time frame for that? No, what we so we did our um as a part of our future public audit model work, we engaged extensively across parliament, across public bodies um and very strongly came back saying ensure that you have a strong quality regime sticking to the international auditing standards. Um so we do have that rigor um around that and that came across very >> strongly from the previous public audit committee your predecessors um as well but on the work it requires a lot of work with um um the local audit particularly if you're taking on local government the local audit office down south for LASAC but actually Scottish government as well and we want to engage so I can't um put um a timeline on it. I would cavit particularly on some of the assets and the balance sheet work. This has been discussed for a long time. We have had particular discussions in audit Scotland that we want to see much greater momentum and we will do everything we can um but it's not within our gift. That doesn't mean we won't um pursue. >> That's helpful. I think the one thing I would add deputy chair is that the model that we have for um annual audits in Scotland is a wider scope one. So auditors give an opinion on the financial statements which is is the absolute underpinning but they go further. So the accounts commissioner and I ask auditors to give judgments >> on financial management, sustainability, value for money, use of resources, governance and leadership. Um we think that model works. I believe it works. I think it gives assurance to people who use public services, parliament, elected members and local authorities about a much wider gambit. So you've got an independent perspective on how the organization is performing. Not just important as it is, but not just the balance sheet, the notes, the accounts and the performance report. Um the feedback that we got from the consultation echoed that view from the accounts commission that this is felt as one of the real unique selling points. don't have a crystal ball of what the future might hold for the profession more widely but I think especially if it h transpires that artificial intelligence is deployed within a commercial audit and commercial accounts preparation environment the role of auditors is going to change and it will be much more about organizational performance and how the money's been used what outcomes were coming from that as opposed to the numbers on the page >> yeah and I I think as well just um auditing has continually evolved um I remember when I was doing it it was tolerable error was the calculation that we had to use when now it's reviewing uh AI I suppose that helped um uh collecting information to be checked by that human eye. >> Great. >> If I could just Yes. add a a small point to that in that in my um time spent out with Audit Scotland occasionally I get um into situations where audited bodies are present and the the feedback which comes from them is uniformly positive about the non-financial commentary in terms of how our observations have helped them in terms of organizing the the way they do things the priority they give to things etc etc so the in a very nice way the feedback is actually remarkably positive as to what we're achieving uh in terms of impact for the audited bodies >> which again must go back to what Vicki was talking about earlier about the importance of the the staff that you have and the team that they can actually understand the bodies that you are you're auditing and recognize where improvements could be made. >> Oh absolutely they need to do that. Um, and they need to be able to uh relate to the people they're they're informing. They have to have an ability to communicate. Um, I would add given I'm a certain age beyond that of an AI screed, but that's by the buy. Thank >> uh thank you Jenny. Um I had a final question in relation to well it's a theme I think we've we've touched upon quite a bit and and it's in information technology and noted from the reports that costs were higher in 2526 um than in 2425 by £101,000 or equivalent of 49% and just wondered uh reasons for that. We've touched upon quite a few things from cyber attacks to uh potential development for AI. So just wondered if we could explain that and and maybe also then move on to potential future expected costs around information technology. >> Yeah, thank you chair. Actually can give wackers um an opportunity to set some of that detail up for the commission. Thank you. >> Yeah, good morning. Um so the main reason for that increase in 2526 was um as the auditor [clears throat] general and VK have highlighted previously, one of the key risks on a risk register currently is cyber security. So we invested quite heavily in 2526 um in cyber security which is why you're seeing that jump um and in terms of the trajectory for future periods. We do expect those costs to increase uh not only because of cyber security but also because we have now started implementing our new audit software um and the development costs related to that will flow through in those um line items moving forward. >> That's helpful. Thank you. It would be useful as well if the commission could be kept a breast of those projected costs going forward as well. Kate, can I bring back? >> Yeah, if I could come in on AI if that's okay. Um, yeah, I was wanting to ask about your note in the report about incorporating AI into your future work and would like to know if these discussions have progressed since the report was published and any risks you've identified around this. >> We are pro progressing with caution in in the use of of AI. Um the technology is changing rapidly. The amount of investment is eye watering that some of the large um audit organizations are investing in technology. From audit Scotland's perspective, we have made quite considered careful use of AI um with appropriate boundaries particularly in reference to um cyber security that the information that we are given that we use from public bodies >> is ringfenced within our own system. >> But as the chair quite rightly mentions that our colleagues are people are making the judgments not AI. Um wackers was quite right to mention too that we're using uh and Vicky covered this as well to a degree. Um we're investing in our IT equipment, the audit skills and systems that our colleagues are using. It's not an AI system that the national audit office have developed that we're partnering with, but there's a scope for it to evolve so that it could use um AI more care carefully in future. The main assurance I want to give uh the commission this morning though is that we're treating this with caution. We're putting the right governance scrutiny around it. We've set up a special project within the organization. How and when and at what what pace we are we are using AI uh within the organization. Most fundamental of all our colleagues will make the judgments um the decisions the opinions that we give on public spending um in Scotland. Um so it's with caution. I think probably about like chair keen to be updated on on our IT. I suspect AI and our use of it will be a regular feature of the engagement that we have with the SCPA. But I think Colin, you might want to say a word or two. >> Yeah. Thanks, Stephen. A year or so back um the board was perplexed by AI and we convened what we describes a a deep dive into the risks associated with that and there was a very intriguing point made uh comparing AA and AI and AA in fact which advanced automation was really just making proper use of all the digital facilities there were in terms of data analysis data retrieval which enabled for people to to deal with work much more quickly. That's not the AI part which is so that a significant part of this gets swept into the banner of AI but in fact advanced automation so that we get into what meantime is a relatively small proportion of what we're proposing which is the AI part and that's the bit we're um looking at very carefully as a board for all the judgmental reasons we've just discussed. Uh but there's no doubt it's here. There's no doubt it's going to to enable us to do uh more detailed work quicker with with uh I suspect the same number of people as opposed to fewer people. Um and on the cost front, we'll increase our costs on on uh on IT and and licenses and and software. That will become an integral part of of the budget which will change. There may be slightly fewer people, but there'll be more IT cost. >> Thank you. Um, do any members have any other questions they want to ask? In that case, can I thank you for the evidence you've given us this morning and I'm going to take a short suspension for a change over of witnesses. Thank you. Welcome back. Um I'd like to welcome to this section of the meeting David Jeffcoat partner and Jillian so audit and accounts manager from the CT group and can I ask if David or Jillian if you'd like to make any comments before we move to questions. >> Yes. Thank you. Uh good morning um chair and the commission. Um I would like to give a summary of our work um to accompany our audit opinion and our audit summary report. Um we're appointed to carry out the external audit of the financial statements of audit Scotland for the year to 31st of March 2026. Our audit work commenced uh with the planning and interim work in February and our main audit field work started in early May. I signed the audit report on the 12th of June 2026. Our audit was carried out in accordance with international standards on auditing. Our audit opinion is contained within the audit report in the accounts and it confirms that the financial statements of Audit Scotland give a true and fair view as at 31st of March 2026 that they've been properly prepared in accordance with international financial reporting standards and the government's financial reporting manual and in accordance with the public finance and accountability act 2000. Our opinion also covers sections of the remuneration report and confirms that these have been properly prepared. Um for the record I can confirm that adequate accounting record records have been kept by Audit Scotland and that we received all the information um and explanation to be required before issuing the audit opinion. Our audit opinion confirms that expenditure has been incurred and receipts applied in accordance with PFA act 2000. As part of our audit work, we have prepared an audit summary report uh for the management of Audit Scotland. Uh and a copy of this has been sent to the commission. Uh the audit summary report notes our responses to key audit areas and where applicable reports on any weaknesses in the accounting systems and internal controls uh that may come to our attention during the audit. If I could summarize our response to the key areas, um our audit work on management override of controls uh considers the authorization, appropriateness, accuracy of bookkeeping um and accounting journals and related financial controls. Um and we identified no issues to bring to the attention of the commission. Our audit work on revenue recognition uh considered the accuracy of recording income in the appropriate accounting period and is linked uh to our auditing of work in progress balances. uh we are satisfied the accounting estimate uh for work in progress adopts a consistent approach with prior years. It's based on sound assumptions and accurately account calculated and we um uh believe there's no material misstatement of revenue uh of or work in progress balances. Our audit work also considered the appropriateness of pension accounting. Our review of the accounting treatment for pensions on the statement of financial position and the notes to the accounts identified no issues. uh and we are satisfied that the treatment of the pension balance uh being nil on the financial a statement of financial position is consistent with recent previous years and consistent with the acturies reports uh and uh all the disclosures have been noted appropriately in the financial statements. An audit summary report also notes actual or potential accounting adjustments identified during the audit. Um whilst there were adjustments identified and updated of a presentational nature um to some narrative uh in the disclosures within the annual report, our audit work did not identify uh any um accounting adjustments to the draft accounts themselves. We did identify two minor potential adjustments um but neither had a material impact on the statement of net comprehensive expenditure. So we were content for these to be unadjusted. Uh our audit summary report is also an opportunity to propose recommendations to internal controls or financial controls in operation. Uh and I'm happy to confirm that we did not identify any matters that we needed to raise to management or the commission. Um finally, on behalf of me and my audit team, uh I would like to record our thanks and appreciation to the staff at Audit Scotland uh for their continued uh continued helpful and prompt cooperation during the audit. Happy to take any questions from the commission. Thank you. >> Thank you very much, David. That was they're very thorough indeed as you've covered a lot of the questions I had noted down this morning which is good. Um you mentioned two minor adjustments. Could you outline what they were in relation to? >> Yeah. So this is on page seven of our audit summary report. Um one was to do with class 1A NIC. So when this is calculated again you've got to imagine that the uh council prepared end of April. It's quite an early audit in that sense. We we we start our our main fieldwork in the start of May. Um, so I think there was a an element of estimation in there as well. And then as we sort of progressed identified that there was a maybe miscalculation if you like of just just 28,000. So just over what we would call trivial but certainly not material. Um the the second point on that page there was around the lease liability prepayments. This goes back to this uh accounting standard that got brought in about three years ago with your your lease liabilities and your right of use assets. Um, and I think what happened here is that some rent had been paid early and been allocated to uh prepayments where we think actually they probably should have been into lease liabilities. But again, the number there just 67,000 um pounds. So in the context of the um financial statements overall uh not considered to be material um and happy for it to be unadjusted which actually just really means that there's so less work but you start changing small balances has lock on impact to to other work. So content overall um with both of those. That's that's helpful. Um, can I ask other members if they have any questions they'd like to ask? Jillian, is there anything you'd like to add to this? Otherwise, can I thank you very much for >> attending today and for your evidence and we'll have a short suspension for another change over witnesses. Thank you. Welcome back. Our final evidence session this morning is agenda item two which is on Audit Scotland's quality of public audit in Scotland's annual report 2526. And can I welcome back Colin Crosby, chair of the board of audits Scotland, Steven Bole, auditor general for Scotland, Vicky Bby, chief operating officer, along with Johnny Ste, director um of audit quality appointments, Audit Scotland. Um and also we have uh Wasanir, head of finance from Audit Scotland as well on the panel. Thank you all for for joining us today. And I'd like to invite Johnny Stein to make a short um opening statement. >> Johnny, >> thanks so much. >> Um yes, this presents our quality of public audit in Scotland report um for 2526. We believe we've uh this shows a a positive um story this year. Very good um quality results for both financial audit and performance audit. Um as we mentioned earlier, still some work to do around audit delivery. Happy to discuss any of that with you today. The report also covers importantly our feedback from stakeholders. So we send a survey out each year to um the audited bodies themselves and again you'll see we've consistently um achieved strong um stakeholder feedback from our our survey and our the people we work with as well on the audits. Um I think that's all I probably want to say by way of introduction. Happy to take any questions. Thank you. >> That's helpful. Thank you. Um you mentioned feedback. Um could you outline some of um the potential changes people are auditing have fed back to you in terms of how that's delivered? We've obviously heard evidence uh this morning in relation to some of the reasonings around delays and wondered what feedback you've got from different uh organizations on that. Yeah. So broadly um the chapter five in the report sets out we measure the survey results from one to five four being a level where stakeholders feel um they have a kind of usefulness of the annual audit overall. So across the board most of those indicators are showing between a between a score of four and five which is obviously showing a good good engagement with with audited bodies. as well. As we touched on earlier, we do have some audits uh in our portfolio where there's late delivery h and and quite often those are the sort of survey responses where there might be lower responses where there've been challenges um particular audit um dealing with adjustments required to the audit. Again, perhaps the the feedback is slightly lower where there's been a more protracted audit process, more complications and and and more kind of larger audits as well. So, that's a kind of broad steer of the the feedback we're getting. But overall, as I say, the feedback we've consistently had for a number of years has been has been a positive one. >> Thank you. Thanks for that. I'm going to open up uh this session to to other members. Does anyone have questions they'd like to ask? >> Yeah, Jenny. >> Um I think I jumped into this in the in the earlier session um about uh the the feedback and the reviews that uh the Institute of Chartered Accountants in England and Wales do. So be really helpful to hear a bit more information about that and where where you've learned I suppose from their recommendation recommendations and how you share them with external auditors as well. >> Yeah, absolutely. So it's a it's an absolutely crucial part of the quality process where as the auditors general explained earlier we have a contract with ICW who specialize in in quality monitoring across the UK not just in audit Scotland. So they have the ability to share their knowledge of what's going on elsewhere in the UK with audit agencies. They also review um and also we mentioned we have a strong internal quality team we've built up over the last four or five years as well. My previous role was head of quality and helping to establish that so that our quality monitoring arrangements are continual throughout the year. They're not they're no longer an annual process where whereby the results we have here are what we call code reviews. There are the graded reviews of completed audit engagements but our internal team also carry out series of hot reviews thematic reviews throughout the year to support audit teams um as well which is a very constructive supportive process especially for you know new engagement leads managers and directors but going back to the ICW feedback that's an absolute crucial part as I say to to learning from areas of improvement we need to make um and those we have a very strong connection with quality findings and how that informs our training offering and the delivery of of things like our audit approaches, methodologies, systems and tools that may need to be developed. So, it's a it's a crucial indicator that we use at Audit Scotland to improve. See, thank I would echo all that Johnny has said, I think what I witness so as as well as being the recipient of audit work, I'm also directly involved in two audits uh personally. The audit the Scottish parliamentary corporate body and the Scottish government um both hugely important organizations and two of the most high profile that we audit. The Scottish government by its nature and its scale is a particularly complex, you know, it's a consolidator. It's a group audit. Um, and I think some of the the work that Johnny and his colleagues and and and also in our innovation and quality team brings some of the learning from quality reviews back into what happens the following year. So improvement plans, but also technical panels and seen some of the the work that is happening currently and as as we're concluding our audit of the Scottish government, the technical panel really benefiting from uh recommendations and judgments that were made through quality reviews, whether it's by ICW or the internal teams. So we're living the results of quality. you know, it's not it's not an abstract thing that you know, we'll have our improvement plan and we'll report it to the executive team and the board can see in day in day out that organization we want to maintain high standards and where we don't get it right, we make those necessary changes for the following year. >> Thank you. Did did I notice when I was reading um the papers that you're al there's also quite a connection with um uh audit uh across the world and you've been you're involved in that and possibly taking on um I think you're you're uh deputy leaders on that. Can you talk a bit about that and again what learnings is coming into Scotland from that pan? I'm very happy to say that actually Vicky and Johnny might want to say a word or two. It's the two main vehicles. We want to be an outward facing organization um that you know learns from elsewhere in in Scotland and the UK, Europe and beyond. Um it's actually it's a stance that Audit Scotland's had for a long time. We've we've undertaken international work. We've engaged internationally for for many many years. Um currently the two main vehicles. One is audit Scotland is a member of the public audit forum um which encompasses the national audit office audit Wales the Northern Ireland audit office and ourselves. Um I meet with my contemporaries a couple of times a year to um exchange insight and learning and we have connections across different roles and responsibilities throughout the organization. So the public audit forum is a really important vehicle for us. we're all dealing with relatively similar issues and to share resources. What we've touched on it already this morning, but one of [clears throat] the really important benefits from that has been the technology that we've uh been able to access and share from some of the development the national audit office has done. That's served us in very goodstead. Vicky's touched on some of the engagement we're having with the creation of the local audit office. So the the the desire for um local government accounting in England um to uh address some of the many challenges that that sector has faced now for best part of 10 years. Uh so we are playing our part in helping them establish that organization. But you mentioned also um some of the European engagement that we have. So um we are members of Eurai. Forgive me there are a lot of uh an acronyms in in audit space. Well, this is >> Yeah. So, Euroise effectively the European regional audit institutions. Um, Audit Scotland um is currently part the the the management arrangements for that. We hold the deputy um again some of the titles are quite grand deputy presidency I think it's referred to and in 2028 audit Scotland will become the president of um Eurai. Um it's a tremendous accolade for us as an organization. allows us to engage with organizations uh at regional audit status or or national status across Europe. We learn from that. We're learning about their application of international standards into our performance audit and best value work and you know Johnny if I can say we're too but some of the results that we're having in terms of quality on performance audit have been sustained very high quality. So again there's plenty of assurance for me and the accounts commission on the work that's been undertaken and then I hope back into parliament and users over of our work too but again I think a few of us want want to come in this time but maybe come to Johnny first. >> Yeah I think just a kind of wider context of quality monitoring the views as well it's not only to identify the issues it's also to share and best practice good practice as well. So we have a number of results this year that grade one audits. Excellent results. Again, we we carry out root cause analysis for both the good and areas of improvement audits as well to share that learning and that happens within audit Scotland but with the other agencies which which um the auditor general just described as well. So that that learning with with staff and with other agencies is crucial. That's >> thanks chair. Um I'm never quite sure what is defined as international but one of the things that has been instigated over the past 12 24 months has been essentially a twice a year meeting of the chairs of the four audit organizations within the UK um which has proved to be wellreceived and actually very very useful. There's no really formal agenda but the exchange of issues and problems is shared and and that's actually hugely useful. I think the other thing which comes out of that um and it it sits ill with me to be immodest but to say that Scotland isn't um one of the thought leaders of that group would be quite wrong um in that we're actually ahead of the curve in many things and we should be quite proud of that and it's also good to be at the head of things because if we can be the instigator of change then it's a heck of a sight easier to implement that within ourselves than trying to implement under somebody else's terms. >> Thank you. You're allowed to sing your praises. >> Absolutely. [laughter] >> Maybe don't do that enough in Scotland to be quite honest. Um are there any other questions from members on this? I I had a final question I was interested in because earlier we discussed a development of um a potential new model for smaller auditing audits. And I just wondered in terms of um guaranteeing and maintaining the quality of that and what you've mentioned and outlined in relation to other UK auditors, is there something they're also looking to do and is there a model which is in development what this would potentially look like? So I think it would be quite useful for us to to see what that looks like. >> Yeah. Um so we cast our net widely to to explore um how other jurisdictions we're we're tackling I guess this challenge of proportionality so that audit can still provide assurance but feels manageable and reasonable especially for those small bodies. There've been a lot of talk about it in different places the need to do so. Um but to to echo Colin to agree I think we are further ahead than other places in bringing in uh this approach. We know that there are discussions happening uh broadly in parallel. I think HM Treasury and the National Audit Office and others are also looking in um to this and there's been considerable discussion within the profession about varying standards of assurance for um smaller organizations lower thresholds within the companies act um for audit as well. We've tried to strike this balance between still we think public spending should be held to a higher level of assurance than in a in a commercial setting. So still giving assurance to uh parliament and taxpayers but making it feel like a more manageable approach here. But again I'll pause if Johnny wants to add anything. I think just to add one quick point um a report is underpinned by an audit quality framework which we um which sets out high quality uh public audit work for all of our audit providers. That framework um we'll need to revise as a result of the the changes that are coming in the code of audit practice and the smaller bodies you've referred to. So that that'll be something that we have in our our uh activities next year. >> That's helpful. Thanks very much. Um if we have no more questions, can I just thank you all for the evidence you've given uh to us this morning and others who have also provided evidence. Um can I also thank our clarking team and also Spice for their support today. And I now close this meeting of the Scottish Commission on Public Audit. Thank you.