Audit Committee Handbook - Scottish Government

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PART 2: OPERATION OF CORE SCOTTISH GOVERNMENT AUDIT COMMITTEES 2.24 SGAC approves the over-arching internal audit strategy and allocation of resources. Flowing from this periodic plans are drawn up and approved by each PAC. PACs will not routinely receive every Internal Audit Division report, although they will receive summary information about each. A summary of the main findings of each audit is also included in the annual Internal Audit assurance statement provided to PACs, and it is open to PAC members to ask to see any specific reports at any time. It is also crucial that the PACs are satisfied that management has in place appropriate procedures for dealing with the audit reports received. Internal Audit Division provides a report to each meeting of the various PACs on the implementation of recommendations contained within its reports. PACs have the authority to ask Internal Audit Division to undertake or revisit programmes of work. External Audit 2.25 Although the work of External Audit (the Auditor General for Scotland (AGS)/Audit Scotland) is primarily conducted for the benefit of the Parliament, it is still of significant benefit to the Scottish Government. Audit Scotland’s work programme is decided by the AGS following consultation with stakeholders, including the Scottish Government. SGAC/PACs, however, are entitled and encouraged to raise questions about the purpose and scope of examinations and should expect Audit Scotland, on behalf of the AGS, to provide a full explanation. 2.26 As well as considering the results of external audit work, the core Scottish Government audit committees should enquire about and consider Audit Scotland’s planned approach and the way in which Audit Scotland is co-operating with Internal Audit Division to maximise overall audit efficiency, capture opportunities to derive a greater level of assurance and minimise unnecessary duplication of work. Finance 2.27 It is not a function of core Scottish Government audit committees to manage or monitor budgets but they should be satisfied that proper systems are in place to do so. Financial Reporting 2.28 Only SGAC and the PAC for the Crown Office and Procurator Fiscal Service within the core Scottish Government will have a role in reviewing annual accounts in order to advise the Accountable Officer. They will not, however, be able to review the accounts in detail and in reaching a view on the accounts the following should be considered: • key accounting policies and disclosures; • assurances about the financial systems which provide the figures for the accounts; • the quality of the control arrangements over the preparation of the accounts; • key judgements made in preparing the accounts; and • any disputes arising between those responsible for preparing the accounts and the auditors. 7
8 Fraud AUDIT COMMITTEE HANDBOOK: Guidance for audit committee members in the core Scottish Government 2.29 Cases of actual or attempted fraud within a PAC’s area of responsibility should be reported to the committee for information and consideration. PACs should also consider, at least annually, whether or not any local arrangements – as opposed to the Scottish Government corporate arrangements – for the reporting and handling of cases of actual and suspected fraud are sufficiently robust. A report on fraud across the Scottish Government is submitted annually to SGAC, at which point the SGAC considers the approach to fraud in the Scottish Government as a whole. Assurance 2.30 Core Scottish Government audit committees have a key role in the annual assurance exercise undertaken in support of the Statement on Internal Control (SIC) provided by the Principal Accountable Officer alongside the consolidated accounts of the Scottish Government. (See the Scottish Government Assurance Framework at Annex H and Certificates of Assurance Map at Annex I.) PACs advise Portfolio Accountable Officers (PAOs) on the content of the PAO assurances to the Principal Accountable Officer. In doing so PACs must take into account all matters and intelligence falling within their remits, including the assurances provided by relevant Directors to PAOs. 2.31 In relation to assurance core Scottish Government audit committees should constructively challenge: • assurance providers as to whether the scope of their activity meets the assurance need of the Principal/Portfolio Accountable Officer; and • the actual assurances to test that they are founded on sufficient reliable evidence and that the conclusions are reasonable in the context of the evidence. 2.32 This adds to the value and usefulness of assurances by enhancing confidence in their reliability. Core Scottish Government audit committees should also be proactive in commissioning assurance work from appropriate sources if they identify any significant risk, governance and control issues which are not being subjected to sufficient review, and in seeking assurance that weaknesses identified by reviews that have been conducted are actually remedied. Self Assessment 2.33 Core Scottish Government audit committees should periodically review their own effectiveness using the Audit Committee Self-Assessment Checklist adopted by SGAC and report the results of that review to the Principal/Portfolio Accountable Officer. Secretariats 2.34 The secretariat function could be biased if provided by Internal Audit or Finance. The SGAC secretariat is therefore provided by the Strategy and Ministerial Support Directorate while support for PACs is supervised by the appropriate DG Co-ordination Unit or equivalent.
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Audit Committee Handbook - Scottish Government

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