 Mae gynnal i sicrhau i ddiweddion â ddodiau sicr fel y drwsgol gwyd-dyn isgwadol yn 2017. Mae hi seafood digwydd am y cyd. Rhow посмотрим i ddweud'r unigol yna i amser mynd cael eu pryd i'r oedd o Gwrthu Constслиwnol i ddysgu yn 2015-16 mae'r dyfodol a'r ddiwrnod Sgol autobiogol erioed. Roedd friendsbwch yn fydd yw Caroline Gardner, yr кysylltu gyda'r newid, Gillian Willman, cyfnod gyda'r sefydliad, Catherine Young i ddolfa sy'r si languagef, Mark Roberts, senior manager from Audit Scotland. Can I refer members to paper 1, which is a no by the clock, and paper 2, which is a private paper? Can I now invite the auditor general to make a brief opening statement? Thank you for the opportunity to brief the sub-committee on my report on the 2015-16 audit of the Scottish Police Authority. I produced the section 22 reports when I want to highlight to Parliament something that has come out of the annual audit process that happens each year with every public body. As the sub-committee will be aware, I've reported on the audit of the Scottish Police Authority during all three years of its existence, and I will do so again before the end of this calendar year following the audit of the 2016-17 accounts. I'm conscious that we haven't got a lot of time today, so I'd just like to briefly highlight two key issues. First, I've repeatedly emphasised a weak financial leadership within both the SPA and Police Scotland. This has been a continuing problem since the establishment of the two organisations, and it would be unacceptable in any public body, let alone in those of the size and significance of the SPA and Police Scotland. The appointment of a chief operating officer to Police Scotland during 2016-17 and the current recruitment of a chief financial officer have the potential to improve financial leadership and management across both organisations, and this must be a priority in my view. Secondly, we've estimated that the SPA and Police Scotland could face a cumulative funding gap of £188 million by the end of this parliamentary session. Since I published my report in December 2016, policing 2026 has been published for consultation. The strategy recognises the scale of the future financial challenge and the need for investment to allow transformational change that will help to fill the funding gap. One element of that change will be the greater use of technology to transform how police officers and staff do their jobs and to release efficiency savings. With regard to technology, as you'll know, I've recently published a report on the Police's failed I6 programme, and I look forward to discussing that with the sub-committee later in the month or if time allows today. You've named the colleagues who accompany me, but between us we'll do our very best to answer the sub-committee's questions. Okay, thank you very much. I appreciate that. Perhaps I could start the questions then by asking you a more pointed question around the financial expertise. As you've said, you have continually highlighted the weak financial leadership that has been shown in the SPA and Police Scotland in a shortage of capacity and competency. On Tuesday at the Public Audit Committee, the chair of the SPA acknowledged that achieving the necessary levels of financial expertise within policing is taking longer than expected and went on to say that, with recent appointments, he anticipated far more rapid progress. I'd like you to comment on whether you think that that is the case, but before you do that, I wonder if you could also additionally comment on the comment that was made by John Foley, the chief executive of SPA, when he said that they have strengthened the financial team in Police Scotland with the addition of more professionally qualified accountants. They have a complement of around 20, which they are increasing, and they are also improving the experience and skills mix. I'd be interested specifically on your views on whether or not 20 accountants is sufficient too much and if you have any idea of the additional costs that this will incur. They are also in the process of recruiting a permanent chief financial officer, and they hope that that person will be in situ for April. April is only two weeks away. Do you have any indication on whether or not that appointment has been made and that person is ready to take up office? I appreciate that there are a number of questions in there that I've asked you. I'll make a start, convener. I'll ask Julianne Wolman to pick up the more detailed question in a moment, if I may. My understanding is that the chief financial officer has not yet been appointed, although the recruitment process is under way. It's worth me being clear that the concerns that I've stressed in my report since November 2013 have been about financial leadership at the most senior levels of the authority and of Police Scotland. Clearly, there is a need to have enough qualified and competent staff to carry out the work, but the leadership is the issue that I think has been of real concern given the scale of transformation. Julianne, could you give a quick update on the way in which that capacity is built up? I am happy to respond to that particular aspect. I have been involved as the appointed auditor for the past three years. During that time, there has been obviously the merger of the eight former joint boards, but there has also been consideration of the structure of the finance function. There was some protracted discussion at the beginning with the establishment of the two new national bodies where responsibilities would lie. It took some time for that to settle down. There was then the process of establishing the structure within it, as well as assigning where the function would set. That has taken a period of time. There has been recruitment activities over those three years and also a matching process for those individuals that were coming from joint boards into a centralised finance function. I am aware that there has been vacancies during that period of time. When I was carrying out the planning process for the 2015-16 audit, Police Scotland certainly drew to my attention that there were a number of vacancies, particularly at more junior levels within the Police Scotland finance function at that time. In the course of the 2015-16 audit, it became more apparent that there was a lack of strength in particular finance competencies, and we are thinking of capital accounting. They have clearly been on a journey that they have not fulfilled the journey that they might have wished to have done at the time that they embarked upon it to see a good finance function established for the national body. I am also happy to pick up. Before I bring in perhaps other panel members, can I just ask you then, do you get a sense that there has been a recognition that there were a range of problems? There has been an acknowledgement of how they needed to tackle the problems. Do you get any sense that they are now in a far better place to take forward financial leadership and direction? They have certainly acknowledged that there are weaknesses, and we would identify from our previous reporting that they have previously acknowledged those weaknesses, but the actions that they have taken up until now were not strong enough. Once again, the chief executive of the Scottish Police Authority has recognised that more needs to be done because the need has not yet been met. I do not know if either of the other two panel members want to comment. I have got Stewart Stevens in meeting to come in with a supplementary. You have just made reference to weaknesses in capital accounting. I take it that there will be an asset register that will be a part of how they manage their capital accounting. I recognise that it will be a difficult one to integrate eight schemes of capital assets. How satisfied are you with the up-to-date and correctness of the register itself and how that has managed and what challenges remain there? When we carried out the audit for the year 2014-15, there were a number of significant problems with the asset register for that year. A new system was brought in that was called asset 4000. I must say that members of the external audit team that I lead are very familiar with asset 4000 that is used in other public sector bodies. During the year 2015-16, the most recent audit that has been concluded, the operation of asset 4000 was going considerably better. Much improvement had been made there. However, we did have problems with the valuations of assets. In fact, it was the categorisation of certain assets that led to errors in their valuations and that manifested itself as a problem in our reporting for the 2015-16 audit. So, do you have the consistent categorisation and depreciation policy that applies to different categories? Is that still something where there is a hangover from the variability that there is likely to have been from eight previous forces? Yes. When we consider the accounting policies each year, we are looking precisely at those areas. We have suggested that they tend to amalgamate their previous accounting policies and then keep them rather wide. There is definitely a need to tighten down on those accounting policies, depreciation, asset lives, etc. I wonder if I could direct my first question to Gillian Wolman. I note that you say when the amalgamation took place, a number of individuals, experienced individuals, had left during that period of transition when we were creating a national force. Could you give a little bit more detail about who they were, what they did and how that impacted them? I am afraid that I do not have the precise numbers to hand, but I am very conscious from the first year of their full audit 2013-14 that there were significant cuts to staff numbers and a number of those effects corporate services and the finance function in particular. You can imagine that the voluntary early retirement scheme was key also to maintaining costs at a certain level. We raised questions about business cases for all the departures at various times, but there was certainly a loss of experience at that time with the establishment of the new national force and the new function being established. I would really be hoping to drill down a little bit further things that operated pretty well under the legacy forces. We are now moving to a single police force. Key financial, I take it, expertise was lost. It would be good to learn from the past to see how it worked well and what now was not working in one police force to look at what those people did, at what point they did it, how they talked to each other, if they did indeed talk to each other. Is that information that can be got or that you think is relevant to look at in terms of moving forward to make sure that we are getting things right? What I focus on, Ms Mitchell, is the matters that I reported on in my November 2013 report, which was about, first of all, the disagreement about where responsibility for financial leadership should sit between the SPA and Police Scotland. Once that disagreement had been resolved some time later, about the time it took to establish a permanent financial leadership and finance function across the two organisations. As we said in response to the convener's first question, the appointment of a chief financial officer is still continuing, almost four years after the establishment, and I think it's that lack of clarity about where the responsibility lay and the associated failure to put in place a structure and to recruit the right people to it that has allowed this drift to happen. We've got great sympathy with the staff who were imposed during the period. The challenge, I think, has been that lack of clarity about who is accountable for it at the top of the organisation. I suppose that my difficulty is that we may be looking at the appointment of a chief financial officer being a panacea. Actually, if we looked at the arrangements before, it might have been the arrangements more at ground level, which was making the financial accountability work better, because if we don't kind of know how it worked before and what impact and what those people did when that experience was lost, then are we really even getting it right now, it would be the question. I think that we do know that previously the expertise was located either in the local authorities that took responsibility for the unitary police forces or the joint boards across most of Scotland. There was a process that Julian alluded to for giving people the opportunity to move into the new organisation as it was formed, but without that leadership at the top to say for a brand new organisation that is spending more than a billion pounds of public money a year providing policing right across Scotland, what do we need? It took a very long time for that to happen and for a structure to be put in place. The convener mentioned that this is related to the 20 professional accountants. Now, I presume that they will be spread over at what cost are we looking at and what exactly are those 20 accountants doing? What is the actual cost of employing them? I don't have the actual cost for the employment of the additional 20, but certainly we know that at the planning phase there were at least 16 vacancies, so those posts are filling establishment posts. We're not aware that they're changing the size of the finance workforce, it was the vacancy factor that they were carrying and also they have recognised the competency and the competencies that they now require. There's a very big step change going from eight smaller bodies to one very large public sector body in Scotland and gearing up for that. There's also the need to have a lot of rationalisation of finance systems, there still are numerous payroll accounts payable systems and so on and it needs a particular skill set to see through the introduction and the implementation of national financial systems, so that's all got to be achieved and it needs a particular skill set for that. Sorry to pressure you, but do we know exactly what they're doing and what it costs? Money has not been spent well so far, 20 accountants sounds like quite a big bill might be replacing people that were there before, but it would be good to quantify that and I think it would be also very good to pin down exactly what these 20 accountants were responsible for individually. The chief executive of the SPSA undertook after the SPA's appearance before the public audit committee a couple of weeks ago to provide more information about what they're doing around the finance function. We'll have a look at that and see if there's anything we can add to it for the subcommittee if that would be helpful. You mentioned 10, you mentioned eight and in the evidence sometimes Mr Flanagan refers to the amalgamation of 10 organisations, the chief officer, the chief constable says eight, you could almost say 10. What are the two additional for the avoidance of Dan there talking about? There are eight police joint boards and there are two other bodies, one was SPSA and one was SEDEA, centralised functions to support police across Scotland, so eight with constabulary members and two other bodies. I know that John Finnie wants to get in the supplement but there's just two further questions. I think that they said at the beginning that the focus had been operational placing and not financial. I would have thought that the two went hand in hand, it makes sense, you can't have an operational function working well without looking at the finances. My question is the balance right now, what comfort have we got that is actually right and perhaps tagged on to that. I notice even at this stage they're saying we need a corporate response here, we're not there yet, so that seems to me a very big question mark. I would absolutely agree with you that you can't separate financial sustainability from operational considerations. I think I said in my report in November 2013 that the police had focused their attention very much on maintaining policing on the ground right across Scotland and did that successfully. At the same time it's critical that the new leadership of the SPA and Police Scotland understand the finances that they've inherited, understand the way that will develop over the next five to ten years and put in place plans both to bring the finances into balance and to think about how to use the opportunity to transform policing to make it fit for the 21st century and to make sure that it can be delivered within the budget that might need to be available. One of the things that I've reported again in my 2015-16 report is that financial strategy, although some progress has been made, is really still not fully up and running to help them close the funding gap. I forecast a funding gap of about £188 million by the end of the decade, that's a conservative estimate and I note that the policing 2026 strategy that's now been published for consultation again recognises the scale of the financial challenge and sets out a vision for how it will be filled, but we haven't yet seen the underpinning financial plans, IT, estates, vehicles and workforce strategy that will help to make a reality of that and it really is critical that it's in place. It was just because, unless my very last point convener, the chief constable then went on to say, Mr Flanagan having said too much on operational, we could cry out the ball with financial and then the chief constable goes on to say, we know that we haven't looked at the resources properly enough and there's a resource in these areas that we can redirect into operational and you're thinking have they really still got the message that finance must go hand in hand with operational? I would say progress has been made but they're not there yet. Can I just ask you for a bit further clarification on the point that you made about the deficit of £188 million. When you say that that's your estimate, that's your conservative estimate, do you have any figure in mind that you think that that deficit could potentially rise to? No, the £188 million figure is included in my report from December 2016. As always, there is judgment and estimation included in that and that's the figure that I focused on but I do think it's fair to make the committee aware that I think it's conservative, it's not at the top end of what could happen, it's a reasonable estimate. Okay, perhaps maybe in the midpoint. I prefer not to be drawn on it just to give you that idea. Okay, okay, okay. Three supplementaries, John, then Stuart and then Rona. John. It's more a comment and I don't descent from Margaret's line of question, I think it's absolutely vital that we bore into this but I'm not necessarily in favour of revisiting where we were before, not least because there may be an opportunity to pick up on a piece of information that should have informed decision making for the new body. It's right to say that there was 10, there was the eight forces, there was the central services, which were the Scottish Police College effectively and some other technical aspects on the drug enforcement agency but of course in the run-up to the advent of Police Scotland, there was a workstream led by an assistant chief constable that should have informed decision making so that just it might be that that's a point of reference rather than I don't know how informative that workstream would be and it certainly doesn't seem to have delivered clarity around the finance function but it may be that there's a source of information. I think that's absolutely the case in terms of the run-up to April 2013. The situation that I reported on in November of that year was that the different interpretations of what the legislation said about the roles of the SPA and of Police Scotland meant that much of that work wasn't being acted on and it took a while for that to be resolved once it was. There's been a lot of catching up to do both in terms of investing in the corporate centre to make sure that it can do the job and producing the plans that are needed to make policing sustainable for the rest of the century. If I just made that, so there's no debate that the bun fight there was at the advent of Police Scotland is now resolved and there's no debate where responsibility lies between the authority and Police Scotland. I think that there's now much more clarity than there was. The Scottish Government intervened and reached agreement with the SPA and Police Scotland around who would take responsibility for what. We're now seeing more clarity about the financial leadership arrangements but those arrangements are still being filled with recruitment of key posts still underway. I've been looking at the audit risks that are documented in your report and I'm looking at four preparation of financial statements. From the results and conclusions you state, no evidence initially of effective review by the SPA senior management team and PSOS executive team prior to the draft accounts being submitted for audit. You then go on to say that by the end of the audit adjustments have been posted to the accounts and subject to audit. At a mechanical level I'm taking that the outcome was satisfactory but I'm left with the question as to whether the processes that all the senior management team undertake on a regular basis in relation to keeping track of what's going on in accounting I don't get the sense in what you've written here that you're yet satisfied that it's happening and in particular I ask you may not be able to answer whether at the regular meetings there is always a financial statement before the senior management team who can therefore conclude whether they're on ahead or behind of the targets that they have necessity must be managing. I'll ask Gail as the external auditor to answer your question. It's certainly the case that there is a finance and investment committee underneath the board of the Scottish Police Authority and they routinely at every meeting will be receiving high-level summarised management information to assist them in monitoring the financial position of the organisation throughout the year. Because we are focused very much on the financial accounts at the year end and we've invested a lot of time in that area we haven't invested a lot of time at this stage in looking more closely at the in-year management accounts but we are assured that that process is there and we certainly have auditors from time to time observing such committees to see the discharge of the responsibilities of that nature. It may be a question for others rather than you. Have you any sense of how often the finance subcommittee meets? I'm afraid I don't know it exactly so Tommy, it would be at least six times per annum but I don't know this precisely. Okay and are you satisfied that in establishing that subcommittee this isn't simply a mechanism for those who meet in the main board being able to tick the box and then disregard what's going on in finance? No, I don't believe that to be the case at all. I think there's been increasing rigor certainly over the last 18 months ensuring the effectiveness of that committee's operations to support the board and the discharge of their duties. Thank you, Cymru. Rona. Yes, it's just going back to staffing. You mentioned the policing 2026 report states its intention to maintain police officer numbers but it also says that changes in the overall balance and profile of the workforce are expected by 2020. Can you envisage what changes might be necessary to what they might actually be referring to there? I think that that is a question you'd have to ask the SPA. It's worth noting though that my estimate of the £188 million funding gap that I referred to earlier in my exchange with the convener is based on the existing ways of operating, existing numbers of staff and so on. So without something changing that gap will continue. That something could be providing policing in a different way in the way that the 2026 strategy suggests. It could be a different funding arrangement with the Scottish Government but if nothing changes that gap will be there and will be growing. So there is a need to look again at how best to use the police officers, police staff, the money that's spent on policing now to meet the rising and changing demands that are referred to very thoroughly in the draft strategy. The back filling of posts being performed by police staff when office staff were lost. David Page from Police Scotland told the Public Audit Committee that this did not deliver the corporate back-office transformation and it has been more expensive than what it should have been. Basically it hadn't turned out the way they thought it would. Do you have any comment to make on how that could have happened? Yes. I think that it goes back to my report from November 2013 on the way that Police Scotland and the SPA had been formed. The outline business case that had been put in place before the legislation was passed was at a very high level. It didn't contain very much detail. As we moved towards the establishment of the SPA and Police Scotland, that business case was never fully refreshed and updated to reflect the circumstances in 2013. The SPA and Police Scotland knew that they had to reduce costs in order to fit in the budget that was available. In fact, that was one of the objectives of reform, not the only one, but one of them. Against the backdrop of not having a financial strategy and a workforce strategy with the inability to make police officers redundant at all and a no compulsory redundancy policy for other staff, the risk was always that savings would be made in a piecemeal way rather than in a way that reflected where the SPA and Police Scotland wanted to get to for the longer term. I think that that is what Mr Page was referring to when he gave evidence to the Public Audit Committee a couple of weeks ago. I have a question or two on Staffing, but can I take you back to the issue around the deficit that you have said in response to earlier questions? This is a Conservative estimate, the figure of £188 million. Can you just clarify what the position is with regard to that deficit in light of the agreement by the Scottish Government to put in additional, albeit reduced, reform funding in the recent budget, and £25 million was the figure? The absolute up-to-date position, as far as we can. The estimate of £188 million, and when we published that, predated the announcements of the additional £25 million that they went in. It does not reflect that, which is part of the budget for next year. What it does reflect is the Government's 17-18 draft budget that was introduced just before we published in December. It reflected the Scottish Government's commitment to maintain a real-terms increase in the police budget for the duration of this Parliament. At the time, there was the continuing commitment to maintain police numbers, so it reflects that. It is based on office budget responsibility projections for future rises in the cost of living and costs associated with it. Those are the factors that are included. Within that, there was also what we knew about the existing reform funding, change fund. We assumed that that would continue on into the future, because we felt that that was a Conservative estimate and a prudent way of making a projection. Hence, the Auditor General's comments about this being a Conservative estimate. In a circumstance in which you have an organisation that is carrying a debt of around £188 million at a Conservative estimate, the temptation is to use any additional funding to plug gaps rather than necessarily to do the longer-term transformational structural change that will ultimately bring that budget down. What insurances have you got in the sense that this is not just being used to plug gaps? We have reported in the report that, on the basis of Gillian Zaniel's Audit report, that reform funding was being used to support recurring revenue expenditure. Certainly in previous years, it had also not been clear what that reform funding had been used for. There is greater clarity now within the accounts in terms of what it is being used for, but that demonstrates that some of that money is going into supporting the revenue budget. In the sense that it is perhaps slowing the rate at which that growth and deficit has happened, but it is not necessarily giving you complete confidence that it is being used in a way that will turn that deficit round over the future. It is not wholly clear to us that that money is being used for what you might term reform activities that might enable the transformation that Vision 2026 foresees and, therefore, helping to plug that funding gap. I was going to say that the reference in policing 2026 to the service-wide transformation to bring our budget into balance in a sustainable way by the end of 2019-20. Is that a realistic timeframe? I know that people want to tell us things to cheer us up, but, given the history, we would rather be told what is a realistic timeframe rather than necessarily what they think they want to hear. I think that it will certainly be challenging. I absolutely agree with the way that Marx described the use of the reform funding. There is another dimension that I think is important. In 2015-16, the SPA's budget was brought broadly into balance by offsetting a revenue overspend against a capital underspend, about £20 million on each side. That £20 million capital is money that could have been used to invest in new estate, new vehicles and new IT equipment that would all help to modernise and develop the way in which policing has been delivered. That was not achieved in 2015-16. We do not know what the outturn for 2016-17 will be yet, but the progress of actually starting to transform policing has been slow across the four-year life of the SPA so far. That, in the sense, gives rise to another concern. I am going back to the point of staffing that Rona Mackay was raising earlier, which is a commitment given for 2017-18. Nonetheless, if you are hung on the hook of delivering this balanced, sustainable budget by 2019-20, it boxes you into a corner, does it not, in terms of staffing to deliver that? Given the cost that you highlighted earlier, is there not a risk that some decisions will be taken around staffing that could be more severe and wide-ranging than they would be if a more tapered trajectory to that balanced, sustainable budget had been identified? Is that a risk? In the absence of a fully worked-through financial strategy, I think that it is always going to be a risk unless you know how your pattern of income from the Scottish Government and expenditure is likely to change over the next few years and what measures you are going to take to bring them into balance, then it is difficult to be sure that you are not making decisions now to balance this year's budget that make it harder to get to a sustainable balance for the longer term. The risk is presumably that you hit your target then, but you leave the organisation less sustainable, a bit more subject to having deficient resources in areas where it needs to resource up given, as you said, the changing nature of the service that needs to be provided. As auditors, would you have concern that in order to hit that artificially set deadline that decisions will be taken by Police Scotland and the SPA that are needlessly severe in terms of staffing levels? I am concerned that there is not a fully worked-through financial strategy yet, because I think that that is the safeguard that helps to mitigate the risk of the wrong decisions being taken for short-term reasons that make it harder in the long term. Can I come back to a point that was made around the reform budget? The reform budget is to be provided for a single transformation portfolio. Now, if I am correct, Mr Roberts, when you answered my colleague Liam's question, you said that it was not clear whether the reform budget was being used or how it was being used. How confident are you that the reform budget will only be used for reform, will provide for this transformation portfolio and will be clear, transparent and will be able to be monitored and will not be able to be pulled down into another budget? I think that what we have seen across the three years that we have reported so far on the SPA's budget is that we have seen greater progress towards transparency and how that reform money has been used. It only became clear to us during the course of the 15-16 audit that there was clear evidence that it had gone into, in inverted commas, a normal revenue budget to support that. Therefore, it was not being used for the transformational change that you have described. Are there the right checks and balances in place now to ensure that that will not happen again? I think that there are significantly more assurance systems in place. I think that it is the fact that the public audit and post-legislative scrutiny committee have asked these questions. You are asking these questions and will put greater emphasis on the importance of transparency about how that is being used. Just to be very specific, you say in audit risk 6 that there was an element of 20 million, simply described as reform, without any breakdown explanation. Although, when I read across the results, you are saying that the first draft of accounts contained limited information, this has now been amended. Are you satisfied that at least the recording of what the reform money has been spent on is now in proper order, even if there may remain doubts about whether it has been allocated to the right expenditure? Picking up from the risk that you have identified from our audit report, we have also followed that through in our action plan to make a recommendation with regard to that. In the recommendations that we say have been discussed here, a significant number of reform costs, when they were made more transparent, it became evident that they formed part of the recurring revenue baseline expenditure. Management responded that they accepted this, and they also accepted the recommendation that it was now timely to carry out a review to determine the amount of reform that had been achieved by the monies invested in that fashion to date. They acknowledge the weaknesses in the monitoring of those very special additional reform monies. They have accepted that, and we, as external auditors, will be following through to see the improvement in the recording of that information going forward. No, no, I am very happy to ask a question. No, because you are next on all this. All right, thank you. I was going to ask about going back to the review of governance that was briefly touched on, please, and the fact that the SPA at its meeting adopted 12 of the 30 recommendations. It is a phrase that you use. Can you explain what, when you say, the process must not continue indefinitely? Is that the process of not—this is in your smaller summary paragraph 24—have you concerns specifically, therefore, about the 18 recommendations that have not been picked up? The reference there is to ensuring that all of the recommendations that have been accepted are in place and are operating. The chair of the SPA, I think, has set out his intention of reviewing the new governance arrangements after they have been in place for a period. Her Majesty's Inspectorate of Constabulary is committed to reviewing externally and will contribute to that. I think that what we are concerned to see is that they are all implemented so that it is then possible to review how well they are working in practice. Of course, it was the new chair that did the review of governance. It did, yes. He did it, and it was agreed on the basis that it would be implemented, and then reviewed after a period of operation to see if it needed fine-tuning or if anything needed to change. My comment here is that it is important that all of the recommendations are implemented so that that review is looking at the full picture. Are you able to say in general terms which of the recommendations have not been implemented and what the implications of those are, please? I think that the chair's review contained recommendations for the Scottish Government, the Scottish Police Authority and Police Scotland. As the process of implementing the review has gone on, some of those have been combined, some of those on reflection have been tweaked to reflect further reflection and things. As the Auditor General says, there is a commitment to review governance arrangements in the round later on this year. I could not say specifically, I am afraid off the top of my head, what are the details of the ones that have not been implemented in December 2016. We are connected with the HM Inspector of Constabulary's review of an inspection of the SPA and the governance elements to that, and we will be very happy to support him in that work. Is there any linkage between that and your comment about greater transparency in what Police Scotland is funded and expected to deliver? Is there any relationship between the— The reference to transparency there was a reflection of the fact that when the budget for 1516 was set, the publicly available information that was provided to the Scottish Police Authority consisted of one line, which was supposed to cover the transfer of £972 million to Police Scotland. Our experience of other public bodies suggests that, in most other cases, there is significantly more detail about what that money and that budget is going to deliver. We think that that is an important element of transparency. Does that, in any way, take us back to the earlier one fights from the early days about who— I know that it is not about who is doing what, but about what it is they are doing perhaps? I do not think that I could really speculate on whether it was a reflection of that history or not. I think that our observation would be that, relative to what we see elsewhere in the public sector, that is not a good example of transparent reporting and transparent decision making. Are you able to comment at all on—I will use the term personnel or human resource matters, but I really want to ask you about relationships and openness and transparency about relationships within the authority. If you ask the question, I will answer it as far as I am able, and I will tell you what I cannot answer. Do you have any concerns about the openness and transparency of the Scottish Police Authority and the relationships that the members have with some of the management? I would not have anything to say at this point about relationships between members of the board and management. It is clear from matters that are in the public domain at the moment and have been over the last few weeks that there are some tensions among board members about issues of openness and transparency, about how the board conducts its business and the way in which those differences have been resolved or not. That is clearly not a good position for the board to be in, given the importance of the public services that it oversees and the scale of the budget that it manages. There are clearly different views being expressed by two particular individuals there. The Public Audit Committee will be investigating what is behind that further, and I am sure that it will be an important part of Her Majesty's Chief Inspector of Constabulary's review of governance. However, there are indications of tensions that do not indicate good governance happening at the moment in that area. I appreciate that there is a time frame in which the report refers to. Those concerns were not evident during that time frame. Bill, do you want to comment? The recent developments are very new and were not evident at the time of carrying out the 2015-16 audit. In relation to the example given on transparency and the budget documents at the time of the board meeting in March 2016, at the absence of detailed robust information to enable members to make a very informed conclusion on the budget, was more indicative of the lack of financial leadership in both of the parties at that time? That specific concern that you believe will be picked up by the appointment of people taking leadership in the areas of finance. It is due to the structural change with the new chief operating officer in Police Scotland under whom there will be the new chief finance officer that has previously been referred to, and that individual, while sitting in Police Scotland, will also have a line of accountability to the chief executive of the Scottish Police Authority who is the accountable officer for the full sum of money that is spent on those two bodies. That is a structural change that we welcome and we can see the potential for that being successful. Okay, thank you all. Yes, it was on that line, I think, it's absolutely staggering that it was a one-line budget for a 970 million amount of funding. As well as just who's responsible, just what has been put into place to itemise what's been spent, why it was spent and what the outcome of that spending was, because that seems to me absolutely fundamental and it's a bit unclear if, even at this stage, that's going to be delivered. Over to Gill in a moment. Our concern expressed in this report was about the lack of transparency. There clearly was more information behind the 972 million available to Police Scotland and to management to understand what was in there. As Gill said earlier, it has been monitored, but for any public body to be approving a one-line budget would be unusual and, in my view, unacceptable. For it to be nearly £1 billion is remarkable. That is the case. There were other supplementary papers with far greater detail and breakdown for that particular figure and it will have been discussed in some detail at the finance and investment committee, but our point was to do with the paper that came forward at the public meeting of the board to approve the budget and that's what lacked the detail. Has Audit Scotland got an example of perhaps another public body that has good practice, where the money is spent, there's a clear, if you like, link from where it's spent, to what was purchased, to what was achieved, that they could perhaps site that would be useful? I think our experience is that most public bodies provide much more detail than that about the way that the money will be spent on what it will be spent, staff and other lines of the budget and also what it's looking to achieve. As you'll know, this Parliament is itself looking at what information it wants in the Scottish Government's draft budget in future, so I think that we're not looking for anything that's unusual or very challenging, but it is critical for a budget this size and a public service that's this important to people. You've talked earlier about what you see as a improved relationship and probably a clarity of roles between Police Scotland and SPA, but as you were saying in response to John's earlier questions about the recent controversy amongst members in the SPA, is it your view that because of some of the adverse publicity surrounding the SPA and the Police Scotland in the past, there is still a bit of a tendency to be wary of transparency for fear of what exposure to the public glare may bring in terms of either scrutiny or indeed media attention or public attention. Is that a legitimate concern for us to hold? My sense is that that's probably still an element of that and I don't think it would be terribly surprising. Given the history of the last four years, it will take a while for people to come to a settled way of working and a settled shared understanding of what level of openness and transparency is required. In particular, though, the information that's been aired in the last few weeks has made it clear that the board itself doesn't yet have that shared view of what's an appropriate level of transparency and openness and how it balances that with the need for space to do its business and to have private discussions before reaching significant decisions about future directions. Is that something that your colleagues would be able to advise them on in terms of how to strike that balance? Clearly, as you say, there will be occasions where full and frank discussions need to take place, but those can only really happen with a degree of buying from the public if they feel that, to the extent possible, information is being made available ahead of time as appropriate. In general terms, yes, and we always aim to be helpful to the bodies that we audit. In terms of specific advice, that's something that we try to avoid getting to involved in, because we do need to step back and reach our own conclusion about the quality and effectiveness of governance arrangements. I mentioned earlier that we'll be contributing to Her Majesty's chief inspector's review of governance, which he's announced will happen this year. Mark is actually meeting the chief inspector and his team later to talk about what they'll be looking at and how we contribute. I think that that's probably a more effective way of us helping to develop a shared view of what's appropriate, both to carry out the scrutiny and governance that's very important and to build public confidence in policing. Much of the area that I wanted to cover has already been touched on by Rona and Liam, but perhaps there's some more information that can be provided. Obviously, it's been outlined by yourself under the general that there's a weak financial leadership issue here, that there's a need to think strategically about deficit reduction moving forward. In terms of taking action and looking to the future, you've highlighted the importance of a long-term financial strategy that is underpinned by a wider strategy for policing and identified the policing 2026 as having the potential for transformational, or certainly it's envisaged within that document for transformational change around technology and efficiency and corporate services and productivity. Given the challenges that are being faced, do you think that the policing 2026 consultation provides the necessary foundations for an effective financial strategy or is further initiative required in order to meet those challenges? I think that the strategy that's been published for consultation provides a very clear vision of policing in 10 years' time and of how it will be different from what Police Scotland inherited. What I don't think exists yet though is the series of plans for how we get from where we are here to what that vision sets out. Because I'm an auditor, I think that financial strategy is a really important part of that, but that financial strategy will draw together things like a workforce plan, an estates plan, an ICT plan, a fleet plan, a whole range of things that set out how each of the elements of policing will need to change over that period how it will be afforded, what needs to happen and in what sequence to make it work effectively. It's that level that needs to be put in place next and I think very quickly if the funding app is to be managed over the period that's there. A lot of that is operational strategising and the appointment of the chief financial officer will obviously be a key element of that. Will there be an ongoing dialogue and collaboration between your office and Police Scotland on taking us forward or is that will it be just when you audit next that we'll be able to see progress on that? The starting point for all of my reports to Parliament is the annual audit work that goes on in every public body and in the SPA in Police Scotland. We're obviously just coming to the end of the current financial year now. Gill's successor, as the auditor of the SPA, is currently carrying out the planning that you see reflected in last year's audit report and the audit work will be concluded over the next six months or so, so it is a continuing engagement with them, but we are looking for evidence about what they are doing to respond to the recommendations that I've made in my reports to Parliament and that Gill's made in her reports out of their auditor over the last four years. Just before I bring in Margaret again, can I just follow up the question that Ben asked? In relation to the long-term financial strategy and there is an acknowledgement that the long-term financial strategy, there is a link between that and the policing 2026 consultation document. Since November 2013, Audit Scotland has been recommending the development of the long-term financial strategy and we've touched on a lot of the elements that will make up part of that long-term financial strategy. I'm looking from assurances from yourselves that there is enough of a sense of urgency and a full understanding of the need to have a proper long-term financial strategy because by the time the consultation exercise on the policing 2026 is completed, that could perhaps be another year, another 18 months, and then there's a number of other elements that need to be tied into this. Do you have any idea when we might get sight of that long-term financial strategy? One of my professional frustrations is that, as you say, I've been recommending it for nearly four years now and some progress has been made, but we're still some way from having a detailed strategy in place. The new chief constable, chair of the board and chief executive have given assurances to the public audit committee that they do recognise the need for it and that work is under way. I think that the only assurance that I can give you, convener, is that we will continue to monitor progress and to report it to this Parliament through the statutory powers that are available to me. Mark was something that you wanted to add to that. No, I don't think so. As the Auditor General said, we've been recommending this since November 2013, as you said, convener. Work has been going on and we've seen that work and what's going on. That's now been rolled into the wider policing 2026 development. I'm clearly not starting from scratch on doing that, but the vision that 2026 outlines alters some of the parameters in which they're thinking about the finances. Of course, new information is always coming on, so the work is in progress, but I couldn't say for sure exactly how long that would take. I suppose that it's following on from both Ben and the convener's question. The chief constable is very clear that he must have a corporate approach under certain systems that need to be in place and dealt with. I think that you may be answered what those systems were with Ben, but is it not the case that if they don't have the long-term financial strategy in place right at the very top, they're never ever going to reach the corporate approach that is necessary to deliver what the chief constable says must be done. He needs to stand to make an effective police force. I think that we'd see it as being an iterative approach. There is an acknowledgement that the £188 million funding app that we've identified is a reasonable estimate. The policing 2026 strategy that's for consultation sets out what policing might look like in 10 years' time. There's then a job of matching what that would cost with the funding that's available in each year in between, looking at where there might be a shortfall or indeed room to invest, looking at what investment plans would be needed to change the shape of the workforce overall, or to invest in different IT or in different estates to make it possible, and that will feed back into the financial strategy. I don't think that one comes before the other. I think that they need to be developed in parallel and to take account each of the other, of the picture that evolves as you dig down into the detail around that. So, if they haven't got one element of it, even on-going just now, then clearly the other element is going to fall. If the financial long-term financial start isn't in place alongside, not even up there and decided before, then the corporate approach isn't going to work. I guess the way I'd try and describe it is that if you have a vision of what the workforce might look like as we're starting to develop through the 2026 strategy, the next step is to look at how affordable that is, with the likely level of revenue from the Scottish Government and the costs of employing police officers and staff, to look at what the shape of the workforce would look like over time to how you might be able to change those to where you can find money to invest to make savings, all of those questions need to follow having the broad picture, so it's the next stage of the work that's required. Can ask one last question. Communication, how's this all being communicated for any holistic approach or corporate identity that you want to try or function that you want to achieve? Good lines of communication are absolutely fundamental. Are you confident that that's in place? I think the public communication of the draft strategy has started well over the last couple of weeks. I know for this committee and its subcommittee and its predecessor communication with the various staff and police staff bodies has been an area of concern. I think you would need to ask them how it looks from their point of view. I'm not sure we're in a position to give you any assurance over that. Okay, thank you. Stuart. To be a technical point, since we're operating under IFRS, have the authority got any contingent assets? And if so, how are they dealing with that? Are they part of the fixed asset system or are they dealt with otherwise or just don't we know, or are there none? Any items of significance would be in the annual audit report, which you've had the opportunity to have sight of. From recollection, there are no significant contingent assets associated with this audit. We spend a significant amount of time, as you can imagine, with contingent liabilities and all sorts of liabilities, but contingent assets are not a significant element of this particular audit. There are no PFI contracts going to crystallise in the near horizon that would transfer assets from a PFI contractor to Police Scotland? If there were to be any significant PFI elements, they would be sitting within liabilities and crystallising the balance sheet, but there are not significant PFI assets associated with this particular audit, unlike any other public sector audit. That's fine. I may return to the subject. The papers for the SPA board meeting on 24 February included a report on actions to address the key findings of your 2015-16 report. Does it contain anything that we've not covered today that you would like to comment on? I don't think so. I think that, as Jill said, we are pleased that they have accepted both the recommendations in the action plan in Jill's report and, with the Public Audit Committee, the conclusions in my section 22 report. Our interest is in implementation of those actions now, and we'll be following that up through the 1617 audit. Do you have any concerns about the SPA's board's decision to meet in private? I'll preface my remarks by saying that we haven't yet reviewed the governance arrangements, which are now in place, and we will do that along with HMI constabulary. We've obviously been keeping a close eye on both the governance review and the events that have happened in the last few weeks around it. The on-board guidance for public bodies is clear about the expectations around openness and transparency. They don't go as far as requiring boards to meet in public, but for boards that are providing public services, I think that that's increasingly common and is seen as being good practice. Equally, I think that it's important that each board strikes the right balance between what happens in public and is genuinely accountable in that way to the public and builds confidence. Having space to have full and frank discussions about difficult issues where there will be preliminary reviews that need to be worked through, I don't want to prejudge the outcome, but I think that it is quite a nuanced question. As there are no further questions from the committee to the panel of witnesses, I thank you all for attending and for the evidence that you have given us today. The next sub-committee meeting will be on Thursday 30 March, when we will again hear from the Auditor General for Scotland this time in Audit Scotland's recent review of the I6 programme. I now close the fifth meeting of the Justice Sub-Committee on Policing.