SECTION 14: PRINCIPAL ACCOUNTABLE OFFICER FOR THE SCOTTISH ADMINISTRATION

General Purpose

74.      This section provides for the most senior official of the Scottish Administration is to be its principal accountable officer and sets out his/her functions. Together with section 15, it makes the provision required by section 70(1)(e) of the Scotland Act 1998.

Subsection (1)

75.      This sets out that the principal accountable officer of the Scottish Administration its most senior member of staff.

Subsection (2)

76.      This subsection ensures that the principal accountable officer of the Scottish Administration is answerable to the Parliament for the exercise of the functions set out in subsection (3) below.

Subsection (3)

77.      This outlines the functions of the principal accountable officer of the Scottish Administration. These are:

(a)      signing any accounts of the Scottish Administration except where (under the duties of accountable officers of the Scottish Administration set out at subsection 15(1)), the account is to be signed by another accountable officer of the Scottish Administration,

(b)      signing any account prepared by the Scottish Ministers of payments into and out of the Scottish Consolidated Fund. (The requirement for the Scottish Ministers to produce such accounts is set out at section 19(2).)

(c)      ensuring that the finances of the Scottish Administration are managed properly and in accordance with current legislation;

(d)      ensuring the economic, efficient and effective use of the Administration's resources;

(e)      designating accountable officers and their functions in accordance with section 15; (f) ensuring that those functions are carried out by accountable officers for the parts of the Scottish Administration.

Subsection (4)

78.      This requires the principal accountable officer of the Scottish Administration to obtain written authority from Ministers (or other relevant non-ministerial office-holder in the Scottish Administration) before undertaking any action he/she considers is inconsistent with his/her duties as set out in subsections (3)(a) to (f); and to report that to the Auditor General for Scotland.

Subsection (5)

79.      This defines "non-ministerial officeholder" for the purposes of subsection (4). It basically includes the Keeper of the Registers of Scotland, the Keeper of the Records of Scotland, the Registrar General of Births, Deaths and Marriages for Scotland and the office-holders specified in the Scottish Administration (Offices) Order 1999 (S.I. 1999/1127).

SECTION 15: ACCOUNTABLE OFFICERS

General Purpose

80.      This section sets out the procedures for appointing accountable officers for the Scottish Administration and other bodies. It explains how their functions are to be allocated and sets out (in broad terms) their duties.

Subsection (1)

81.      This requires the principal accountable officer for the Scottish Administration to designate members of the staff of the Scottish Administration as accountable officers for such parts of the Scottish Administration as he/she may specify.

Subsection (2)

82.      This provides for the possibility that any part of the Scottish Administration may have more than one accountable officer responsible for it. This would enable, for example an accountable officer to be designated for an Agency within a Department whilst still having a departmental accountable officer.

Subsections (3) and (4)

83.      These subsections allow the principal accountable officer to designate an accountable officer for any other body or office-holder where the bodies have the audit of their accounts regulated by sections 21 and 22. They include health service bodies, and NDPBs whose accounts are audited by the Auditor General.

Subsection (5)

84.      This provides that the powers of the principal accountable officer to appoint other accountable officers as set out in subsection (3) do not apply to bodies for whom the appointment of accountable officers is the subject of specific provision in another enactment. Bodies that are affected include the SPCB and Audit Scotland for whom specific provision is made in sections 16 to 18 of the Act.

Subsection (6)

85.      This subsection states that the functions of accountable officers designated under subsections (1) and (3) are to be specified by the principal accountable officer of the Scottish Administration. They also have the duty specified at subsection (8) (see below). The accountable officers are to be answerable to the Parliament for the performance of their functions.

Subsection (7)

86.      This subsection states that the principal accountable officer of the Scottish Administration may allocate the following functions, among others, to accountable officers:

(a) signing the accounts of the expenditure and receipts of the part of the Scottish Administration, or body or office-holder, in question,

(b) ensuring the finances of that part, body or office-holder are managed properly and in accordance with statute, and

(c) ensuring that the resources of that part, body or office-holder are used economically, efficiently and effectively.

Subsection (8)

87.      This defines the duty referred to in subsection (6). Where the accountable officer considers that any action which he/she is required to take is inconsistent with the proper performance of those functions set out in subsection (6), that officer must:

(a) obtain the written authority of the Scottish Ministers, the Lord Advocate or the body or office-holder in question before taking any action, and

(b) send a copy of this authority to the Auditor General for Scotland as soon as possible.

SECTION 16: PRINCIPAL ACCOUNTABLE OFFICER FOR THE PARLIAMENTARY CORPORATION

General Purpose

88.      This section provides that the Clerk of the Parliament shall be the principal accountable officer of the SPCB and specifies his/her functions. These are broadly equivalent to the functions of the principal accountable officer of the Scottish Administration.

SECTION 17: PARLIAMENTARY CORPORATION: ACCOUNTABLE OFFICERS

General Purpose

89.      This enables the principal accountable officer of the SPCB to designate accountable officers for such parts of the SPCB as he/she may specify. It also sets out the functions of any accountable officers so designated. They are broadly equivalent to the functions of an accountable officer of the Scottish Administration as described in section 15.

SECTION 18: AUDIT SCOTLAND: ACCOUNTABLE OFFICER

General Purpose

90.      This section provides for the appointment of the accountable officer for Audit Scotland and sets out his/her duties.

SECTION 19: DUTY TO PREPARE ACCOUNTS

General Purpose

91.      This section makes, amongst other provision, the provision required by section 70(1)(a) and (b) of the Scotland Act. It explains which bodies and office-holders have a duty to produce accounts under the terms of the Act and makes arrangements for the audit of these accounts.

Subsection (1)

92.      This subsection requires that the Scottish Ministers, the Lord Advocate and every other person who receives payments direct from the Scottish Consolidated Fund (including in particular the direct funded bodies) in any financial year must prepare accounts of their expenditure and receipts for that year.

Subsection (2)

93.      This requires that Scottish Ministers must prepare an account of payments into and out of the Scottish Consolidated Fund for each financial year.

Subsection (3)

94.      This subsection requires that, at the request of the Scottish Ministers, holders of non-ministerial offices in the Scottish Executive must prepare accounts of their expenditure and receipts for each financial year. These office-holders are those mentioned at paragraph 79 above in relation to section 14(5).

Subsection (4)

95.      This ensures that accounts prepared under subsections (1) to (3) above are done so in accordance with the directions of the Scottish Ministers. By virtue of section 27(4), such directions must be given in writing and may be varied or revoked.

Subsection (5)

96.      This provides that subsection (1) does not apply any cross border public authorities to which section 70(6) of the Scotland Act 1998 applies. Section 70(6) expressly precludes provision being made in the Act requiring such an authority to prepare accounts if other legislation requires it to prepare accounts and have them audited by the Auditor General, the Comptroller and Auditor General or a person appointed by either of them. This means that subsection (1) does not apply to any direct funded cross border public authority (eg the Forestry Commission) that has its accounting and/or audit arrangements specified in other legislation.

Subsection (6)

97.      This subsection provides that subsection (3) does not apply to office-holders covered by subsection (1). This avoids double accounting requirements in the case of any non-ministerial office-holder in the Scottish Administration who is direct funded.

Subsection (7)

98.      This ensures that all accounts prepared under subsections (1) and (3), other than the accounts of Audit Scotland, must be sent to the Auditor General for auditing. This attracts the provisions in sections 21 and 22.

Subsection (8)

99.      The accounts of Audit Scotland must be sent to the Scottish Commission for Public Audit for Auditing. The Commission will appoint auditors under section 25. This avoids, in effect, Audit Scotland being involved in the audit of their own accounts.

SECTION 20: CONSOLIDATED PUBLIC ACCOUNTS

General Purpose

100.      This section gives the Scottish Ministers powers to prepare consolidated accounts and also to obtain financial information from bodies outwith the Scottish Administration.

Subsections (1) and (2)

101.      These provides that the Scottish Ministers may prepare for any financial year consolidated accounts for the Scottish Administration as a whole, or the Scottish Administration together with other bodies and office-holders - or a class of bodies or office-holders - who appear to the Scottish Ministers to exercise public functions or be entirely or substantially funded from public money. The format of any consolidated accounts will be directed in writing by the Scottish Ministers.

Subsection (3)

102.      This subsection makes provision for the preparation of financial information by those bodies or office-holders, or a class of such, designated by the Scottish Ministers.

103.      A class or individual body or office-holder which is designated must prepare financial information in the form and manner directed by the Scottish Ministers. Such bodies or office-holders must also arrange for this information to be audited so far as the Scottish Ministers require, and the information must be sent to the Scottish Ministers, together with any required explanation, by such time as they direct.

Subsections (4) to (7)

104.      Accounts prepared under subsection (1) must be sent with the Scottish Ministers' determination under that subsection to the Auditor General. The Auditor General must then examine such accounts, prepare and send to the Scottish Ministers a report on whether the accounts have been prepared in accordance with the determination. The Scottish Ministers must lay a copy of the accounts and the report before the Parliament.

105.      Subsection (7) ensures that the Auditor General, in examining accounts under this section and in preparing a report, will have access to information as set out in section 24 (1) and (2) of this Act.

SECTION 21: AUDIT OF ACCOUNTS

General Purpose

106.      This is the first of two sections covering the arrangements for the audit of accounts produced by the Scottish Administration and certain other public bodies and office holders. The provisions in these 2 sections are made partly in implementation of the requirements imposed by section 70(1)(c) and (f) and (2)(b) of the Scotland Act. The intention is that the arrangements set out in these sections should be the standard arrangements for public audit of accounts under the control of the Auditor General which may be applied in future legislation.

Subsection (1)

107.      This sets out that this section and section 22 will apply to any account which is required whether under current or future legislation or prerogative instruments, such as Royal Charters, to be audited by the Auditor General or to be sent to the Auditor General for auditing.

Subsection (2)

108.      This subsection requires that such accounts must be sent to the Auditor General within 6 months of the end of the financial year to which the account relates.

Subsection (3)

109.      This states that the account must be audited by the Auditor General or a qualified person appointed by the Auditor General. The Auditor General must take into account not only the person's professional qualifications and experience, but also any other relevant matters.

Subsection (4)

110.      This subsection states that the Auditor General for Scotland will decide personally who should audit an account.

Subsection (5)

111.      This defines the term "qualified person" as set out at subsection (3)(b) above. It states that this means any person who is eligible for appointment as a company auditor under section 25 of the Companies Act 1989, or who is a member of a body of accountants (ie a professional body such as ICAS) established in the United Kingdom or another state in the European Economic Area. Such states are those contracted to the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Brussels Protocol signed on 17 March 1993.

SECTION 22: AUDIT OF ACCOUNTS: FURTHER PROVISIONS

Subsection (1)

112.      This subsection sets out the matters which the auditor must include in his report on an account. It does not apply to an account of the payments into and out of the Scottish Consolidated Fund. In particular, the auditor must report his/her findings on whether the expenditure and receipts shown in the account were incurred in accordance with relevant enactments, the Budget Act or Acts for the period in question, and the provisions of sections 4 to 7 of this Act. These latter provisions set out rules for payments out of the Fund and for the application of receipts.

113.      The auditor must also report on: whether any sums paid out of the Fund were applied in accordance with section 65 of the Scotland Act 1998 (i.e. that they meet the specified conditions for payments out of the Fund); whether expenditure and receipts have been incurred or applied in accordance with any applicable guidance issued by the Scottish Ministers; and whether the account complies with any applicable direction issued under any enactment.

Subsection (2)

114.      This subsection makes specific provision for the report on an audit of an account of payments into and out of the Scottish Consolidated Fund. This requires the auditor to report on his/her findings in relation to whether sums paid out of the fund were paid in accordance with the provisions of section 65 of the 1998 Act (i.e. that they meet the specified conditions for payments out of the Fund), and also as to whether they were paid out in accordance with sections 4 to 6 of this Act, which set out further requirements in relation to payments made from the Fund. The report is also required to set out the auditor's findings on whether the account complies with any applicable direction.

Subsections (3) and (4)

115.      These set out the arrangements for submission of the account and the auditor's report by the auditor to the Auditor General and by the Auditor General to the Scottish Ministers. The provisions also enable the Auditor General to prepare a report on the account and submit this to the Scottish Ministers.

Subsection (5)

116.      This requires the Scottish Ministers to lay copies of accounts and reports on accounts before the Parliament and to publish these. They are required to do so within 9 months of the end of the financial year to which the accounts relate.

Subsection (6)

117.      This deals with the possibility that bodies or office holders whose accounts are being audited have different financial years.

SECTION 23: ECONOMY, EFFICIENCY AND EFFECTIVENESS EXAMINATIONS

General Purpose

118.      This section sets out the powers of the Auditor General for Scotland to initiate and carry out examinations of economy, efficiency and effectiveness (commonly known as value for money or vfm studies). It defines those bodies that may be subject to vfm examination and explains who may carry out a study. It implements the requirements in section 70(2)(c) and (d) of the Scotland Act 1998.

Subsection (1)

119.      This subsection allows that the Auditor General may initiate examinations into the economy, efficiency and effectiveness of the use of resources of bodies and office-holders mentioned in subsection (2) below.

Subsection (2)

120.      This defines those bodies and office-holders that fall within the powers set out at subsection (1) above. They are:

(a) any body or office-holder whose accounts are audited by the Auditor General or sent to him or her for auditing;

(b) any other body or office-holder, or body or office-holder of a class, specified by the Scottish Ministers by order made by statutory instrument. By virtue of section 27(3), such a statutory instrument is subject to annulment in pursuance of a resolution of the Parliament and;

(c) any other body or office holder not covered by the above criteria which agrees to such an examination being carried out.

Subsection (3)

121.      This ensures that any order made under subsection (2) may only specify those bodies or office-holders that the Scottish Ministers reasonably believe have either obtained more than a quarter of their income from public funds in any one financial year, or have received more than £500,000 from public funds in the financial year. If the Scottish Ministers are to specify a class of body or office-holder, the Scottish Ministers must reasonably believe that at least half of the bodies or office-holders in that class, in any one financial year, have obtained more than a quarter of their income or have received more that £500,000 from public funds.

Subsection (4)

122.      This subsection ensures that the Auditor General for Scotland may only initiate a vfm study on a body or office holder if he/she reasonably believes that in the period in question, the body or office-holder received more than a quarter of its income, or more than £500,000 from public funds. Any vfm study should endeavour to consider only those activities of the body or office holder that involve the use of public funds.

Subsection (5)

123.      This defines that for the purposes of subsections (3) and (4), income is to be regarded as being from public funds if it is paid out by any body or office holder mentioned in subsection (2)(a) or by any body or office-holder specified by the Scottish Ministers under subsection (2)(b), that received more than half its income from public funds in the financial year concerned. This definition excludes capital receipts and disregards money received from the sale of property, the supply of goods or services and various other benefits.

Subsection (6)

124.      This ensures that, when the Auditor General plans a programme of vfm studies, he/she must take into account any proposals made by the Parliament.

Subsection (7)

125.      This subsection requires the Auditor General to consult the Water Industry Commissioner for Scotland before initiating any vfm examination into any of the three new water and sewerage authorities.

Subsection (8)

126.      This subsection makes it clear that the Auditor General for Scotland is to decide personally whether to initiate a vfm study and who is to undertake any vfm studies that he/she initiates.

Subsection (9)

127.      This allows the person carrying out a vfm study ("the examiner") to consider the appropriateness of any criteria used by the body under examination to assess its use of resources. The examiner may not, however, question the merits of any policy objectives.

Subsection (10)

128. This ensures that the examiner (if not the Auditor General) reports the results to the Auditor General. The Auditor General may in turn report the results of any examination to the Parliament.

SECTION 24: ACCESS TO DOCUMENTS AND INFORMATION

General Purpose

129.      This section sets out the rights of access and explanation of an auditor carrying out the functions specified in sections 21 and 22. It also explains the rights of access for an examiner carrying out an examination of economy, efficiency and effectiveness under the terms set out in section 23. It implements the requirement in section 70(1)(d) of the Scotland Act.

Subsection (1)

130.      This sets out the basic power an auditor has when auditing an account under sections 21 and 22. These are powers exercisable in relation to the body or office-holder whose account is being audited. It states that at all reasonable times, the auditor is entitled to have access to any document in the possession or under the control of the body or office-holder who prepared the account as may be reasonably required for the purpose of the audit. The auditor can also require any assistance, information or explanation necessary from any person holding or accountable for such a document. The body or office-holder who prepared the account may also be required to provide accounts of such of their transactions as the auditor may specify.

Subsection (2)

131.      This subsection outlines additional powers available to an auditor in relation to third persons for the purposes at subsection (1). The auditor, at all reasonable times, is entitled to have access to any document in the possession or under the control of a relevant person as may be reasonably required for the purpose of the audit. The auditor can also require any assistance, information or explanation necessary from any relevant person for those purposes. "Relevant person" is defined in subsection (5).

Subsection (3)

132.      This sets out the basic power of an examiner for the purposes of an examination under section 23. These are powers exercisable in relation to the body or office-holder in respect of whom the examination is being carried out. They are the basically the same as those available to an auditor under subsection (1).

Subsection (4)

133.      This subsection outlines additional powers available to an examiner in relation to third persons for the purposes of an examination under section 23. They are basically the same as those available to an auditor under subsection (2).

Subsection (5)

134.      This defines the term "relevant person" in subsections (2) and (4). This means a person or a class that has been specified, by the Scottish Ministers in an order made by statutory instrument. By virtue of section 27(3) such a statutory instrument is subject to annulment in pursuance of a resolution of the Parliament.

Subsection (6)

135.      This subsection makes it possible for the Scottish Ministers to specify one group of persons/classes who are to be subject to access arrangements for audit purposes and another to be subject to access arrangements for examinations of economy, efficiency and effectiveness. It also enables the powers in subsections (2) and (4) to be modified in relation to particular specified persons.

Subsection (7)

136.      This defines the term "document" used in this section. A document is anything in which information is recorded in any form. For example, it includes information that is stored electronically.

SECTION 25: AUDIT AND EXAMINATION: AUDIT SCOTLAND

Subsection (1)

137.      This provides that, when required to do so by the Auditor General, the Scottish Commission for Public Audit will appoint a qualified person to audit any account of Audit Scotland which has been sent to the Commission for auditing under section 19(8). This provision is to ensure that the Auditor General for Scotland does not audit, or appoint the auditor for, Audit Scotland.

Subsection (2)

138.      This defines the term "qualified" in subsection (1), which has the same meaning as in section 21(5).

Subsection (3)

139.     This requires the auditor to examine, certify and report on the account to the Commission, and include in the report the auditor's findings on the matters set out in section 22(1)(a) and (b).

Subsection (4)

140.     This enables the Commission to initiate an examination into the economy, efficiency and effectiveness of Audit Scotland's use of resources. It enables it to appoint a person to carry out the examination and report on it to the Commission.

Subsection (5)

141.     This applies the provisions of section 23(9) to any examination carried out under subsection (4). The effect is to ensure that the examiner cannot question the merits of Audit Scotland's policy objectives, but is able to consider the appropriateness of any criteria Audit Scotland may use to assess its use of resources.

Subsection (6)

142.     This requires the Commission to lay before Parliament a copy of the account and any report by the auditor, and to publish the account and report(s).

Subsection (7)

143.     This provision gives the auditor access to documents and information in relation to the audit of Audit Scotland's account. It makes similar provision in relation to an examination into the economy, efficiency and effectiveness of Audit Scotland's use of resources.

Subsection (8)

144.     This enables the Commission to appoint an auditor or an examiner on terms and conditions determined by the Commission. It also makes provision for the auditor's and examiner's remuneration to be met by Audit Scotland.

SECTION 26: MODIFICATION OF ENACTMENTS

Subsection (2)

145.     This enables the Scottish Ministers to modify by order any enactment, prerogative instrument or other instrument or document as deemed necessary or expedient by them in consequence of Part 1 of this Act.

SECTION 27: ORDERS AND DIRECTIONS

Subsection (1)

146.     This provides that powers to make orders under the Act are to be exercised by statutory instrument.

Subsection (2)

147.     This provides that any order under section 26(2) textually amending an Act consequent on Part 2 of the Act must be approved in draft by resolution of the Parliament.

Subsection (3)

148.     This specifies that a statutory instrument containing an order under the Act is subject to annulment by resolution of the Parliament. This procedure does not apply to orders under section 26(2), which are subject to the procedures described in subsection (2) above, or to orders under section 30, which concern the commencement of provisions of the Act. The latter orders will not be subject to Parliamentary procedure as is usual.

Subsection (4)

149.     This provides that certain directions must be given in writing and that directions may be varied or revoked. The directions referred to are directions by the Auditor General or by the Accounts Commission given to Audit Scotland; directions by Scottish Ministers in relation to the preparation of accounts; and directions given by the Scottish Commission for Public Audit to the SPCB.

SECTION 28: TRANSITIONAL, TRANSITORY AND SAVING PROVISION

General Purpose

150.     This section enables transitory, transitional and saving provision to be made. These will be necessary for various matters, including: providing for the phased introduction of resource accounting and budgeting; transferring existing contracts for audit of some NDPBs and health service bodies to Audit Scotland; and providing for audits and value for money studies that may be in progress when Part 2 of the Act comes into force.