Audit Scotland, the overarching body in charge of public sector audits, found that its own teams – and those of external firms – have completed audits in a timely fashion. All local government audits were completed on time, with just one of 106 annual reports missing the auditing deadline.

Two bodies were ‘insufficiently prepared’ at the start of the audit, leading to delays throughout the process. The sixth body was a startup, and had experienced ‘a number of accounting and management difficulties’.

Audit Scotland also conducted seven reviews covering 6% of the 2015/16 financial audits, all of which were ‘satisfactorily concluded’. The reviews were set out to meet international auditing standards.

Six of 76 central government departments missed their audit opinion deadline, with eight auditors failing to sign off their annual reports on time. Audit Scotland said three of the central government bodies ‘were unable to schedule meetings to sign the accounts by the deadline despite the auditors being able to do so’.

A sample of completed financial audits was reviewed by Audit Scotland and the firms themselves, amounting to 8% of their work. The overall conclusion was the audit work was ‘a good standard, supported key judgments and resulted in the correct audit opinions being issued’.

Some issues were identified around audit documentation and evidence, however they were not of sufficient severity to affect the audit opinions.

It also found that, in reviewing a performance audit and ‘best value’ audit, a culture among the audit teams of ‘learning and improvement’.

‘We were able to place a high level of reliance on audit teams’ own post-project reviews which had already identified areas where either the Audit Management Framework had not been fully applied or where improvements could be made for future audits as part of their post-project review discussions,’ Audit Scotland stated in its report.

The organisation is looking to evolve its audit quality regime. Audit Scotland wants to ‘enhance our measurement of audit quality and provide a stronger evidence base through greater use of KPIs and application of the Financial Reporting Council's widely recognised audit file scoring system’.

Key aspects of this process includes: sourcing external assurance over all audit work; adopting scoring assessment criteria to allow greater comparison and identify areas for development and improvement; and develop performance indicators to measure audit quality.

Audit Scotland’s Audit quality annual report is available here. 

Report by Kevin Reed