Letter to Stephen Boyle, the Auditor General for Scotland from the Chair, 14 January 2022
Dear Auditor General
Thank you to you and your colleagues for providing evidence to the Scottish Commission for Public Audit (SCPA) on 22 December. At that meeting the Commission considered Audit Scotland’s budget proposal for 2022/23 and it will publish its report on that budget proposal in due course.
In the meantime the Commission agreed that I should write to you and seek a response on the following matters.
The Commission recognises that the pandemic has impacted on all aspects of Audit Scotland’s work as well as its staff. In response to the challenges the pandemic has brought, Audit Scotland has sought additional funding to address the impact of COVID on its work.
In 2020/21 Audit Scotland sought an additional £1.5 million to address the impacts of the pandemic on Audit Scotland’s fee income and to provide for additional overspend on people costs.
In 2021/22 Audit Scotland increased its management contingency from £300K in 2020/21 to £2.4 million in 2021/22. Part of this was to address the ongoing impact of the pandemic including on Audit Scotland’s productivity, the time it takes to complete audits, and the additional complexity and financial risk exposure experienced by the public bodies that you audit. This additional funding was also to enable Audit Scotland to support Parliament in scrutinising the delivery of value for money of the additional £8 billion made available by the Scottish Government in 2020/21 to respond to Covid-19.
As the Auditor General for Scotland has previously commented, transparency over COVID spending is vital and we welcome the quarterly updates provided by Audit Scotland in relation to the 2021/22 increase to management contingency. We would, however, seek a more detailed breakdown of how this additional funding was spent in 2020/21 (£1.5 million) and in 2021/22 (£2.1 million) and on what. In particular we would welcome identification of:
In that regard you committed to respond in writing to the Commission on the extent that it is possible to assess the numbers of additional posts which arose in response to COVID-19 issues and those that arose for other purposes such as catching up on other audit related work.
Going forward we would seek more detailed identification in future budget bids of what is COVID related funding and the extent to which any requests for additional funding are for recurring or nonrecurring expenditure including in relation to the management contingency.
Whilst the impact of the pandemic is not yet over, looking ahead to the 2022/23 budget and beyond we seek greater clarity on what the ‘new’ normal for the delivery of Audit Scotland’s work could look like. A discussion with the Board on this at our business planning meeting would be most helpful.
We also recognise that the way in which audit work has been undertaken during the pandemic has changed considerably with more virtual working. We therefore seek more information on how the Board has assessed the risks that this changed approach could pose to the quality of audits and any mitigation measures introduced to minimise those risks where possible.
Appendix 3 on page 21 of Audit Scotland’s 2022/23 budget proposal shows that the chargeable rate for an ‘Audit/support officer’ has decreased from £41 per hour in 2021/22 to £38 per hour in 2022/23 whereas the hourly rates for all other grades of staff is increasing in line with pay cost expectations. Please can you explain the reasons for this decrease?
The Commission notes that Audit Scotland’s bid for capital funding in 2022/23 is identical to the bid for 2021/22 – that is: IT Hardware £125K, Software £25K and Digital strategy and office configuration £100K. We would welcome further detail on what items of potential spend were identified for 2022/23 to inform this bid. We also seek a breakdown of what this budget was spent on in 2021/22 as part of the commentary which accompanies the 2021/22 annual report and accounts.
Finally we would welcome sight of Audit Scotland’s risk register and a discussion at our forthcoming business planning meeting to better understand how those and other challenges such as carbon management are overseen by the Board, particularly given the ongoing impact of the pandemic.
I look forward to receiving a response from you by Friday 5 February.
Yours sincerely
Colin Beattie
Chair