The Auditor General has welcomed steps taken by the Scottish Government to strengthen transparency of public finances, but says there's more work to do as new financial powers are introduced at a time of uncertainty created by the EU referendum result.
The Scottish Budget for 2015/16 reflected new tax and borrowing powers for the first time. With further powers flowing from the Scotland Act 2016, it's increasingly important that the Scottish Parliament and the public have comprehensive, transparent and timely information on how public money is used and what has been achieved.
In her report on the Scottish Government’s consolidated accounts, the Auditor General notes that progress has been made to improve reporting of the Scottish Government's budget and spending decisions. Her independent audit opinion on the 2015/16 accounts is unqualified.
She has identified a number of areas for further improvement to support the Parliament's scrutiny of the draft budget and new powers. These include making it clearer what spending aims to achieve and how this contributes to the Scottish Government’s overall purpose and outcomes.
The report highlights risks to the management and control of European funding which, for the foreseeable future, will continue to be an important income stream for the Scottish Government.
Other significant matters from the 2015/16 audit include:
- The continuing risks in the delivery of the Common Agricultural Policy Futures Programme, established to implement reforms and deliver financial support to farmers and rural businesses.
- The need to ensure that management of European Structural Funds, which provide financial assistance in areas such as transport links and business growth, comply fully with European Commission requirements. During 2015/16, three of the four programmes managed by the Scottish Government were suspended by the Commission. While the Scottish Government has taken action to have the suspensions lifted, the accounts show that it may not be able to recover an estimated £14 million in grant funding.
The Office for National Statistics' decision to classify the Aberdeen Western Peripheral Route as a public sector project and the Scottish Government's decision to adopt a similar treatment for three further projects reduced its capital spending power in 2015/16, though this was successfully managed within overall budget limits.
Caroline Gardner said:
"The construction and management of the Scottish budget is becoming increasingly complex and the Scottish Government has established a strong base to address the substantial changes and uncertainty affecting public finances.
"While recent developments show the Scottish Government is heading in the right direction, there's much still to do to ensure that the Scottish Parliament, and the public, have the information they need to fully understand and scrutinise the implementation of the new powers, especially the new tax and spending choices."