 Mae'r rai gwaith. Fy gwaith gydaolaeth yllys i ddechrau mwy o sefyllfa, cyfnod o'i ddegwyddol ffwrdd o'r Cyngorol Cymru o gael. Felly ddim yn meddwl am laptop. Felly himodau hynny i ddweud, ac yn dda ni o'i ddegwyddol y cysyllanıwr, fyddwch i chi gweithio ei ddweud a rhywbeth i chi'n teimlo bod ei arnyntio ei diwetheiddiad. Felly ddim i chi'n ddegwyddol 1, sy'n dechrau g非常 pwynt. A ddegwyddol 1 ddegwyddol 1 o flwyddol i chi ddegwyddogi, any interests that we may have that are relevant to the work of the commission. Background information on that is provided in the declarations of interest paper, paper 1. I will start with myself, and I have no relevant interests to declare. I don't have any declarable interests, but I would draw the commission's attention to my voluntary entry in the register of members' interests. Mark, nothing to declare, chair. Daniel? I would point members to my declaration of interest. In particular, I am a director of a company with retail interests. I am also a trustee and vice chair of a charity, which is the ADHD Foundation. On that point, I was wondering if I could ask for a clarification from the clerks. In terms of declarations of interest, is it not relevant to declare any governance or audit rules that we might have with external organisations? I am just wondering if members might want to reflect in terms of making those declarations. The SCPA is able to make its own procedures, although, in practice, it has generally followed the same procedure as committees. However, it is for each member to determine what they consider to be interests that are relevant to the remit of the commission. I might just request that members reflect on whether they have any audit or governance rules with external organisations and use that as an opportunity to declare those now. In that regard, I am on the audit committee of the Scottish National Mining Museum. Is there anyone else who has any audit that they would request? Agenda 2 is the choice of a chair, so I seek nominations for that position. Are there any other nominations? If members are content with my nomination as chair, we can move on to agenda item 3. I look forward to working with you all. Agenda item 3 is the choice of a deputy chair. I would like to nominate Sharon Dowie. I do not know if there are any other nominations, or if members are content to choose Sharon for the role of deputy chair, and if they are, I will move on to agenda item 4. We move on to agenda item 4, which is a decision on taking business in private. The commission will decide whether to take item 6 in private. Are we content to do so? Then we move on to agenda item 5. I think that we should have witnesses in some place here. Agenda item 5 is evidence on audit Scotland's annual report and accounts for the year to 31 March 2019. That cannot be correct. As well as the auditor's report on those accounts. Members have a copy of the annual report and accounts on their meeting papers. I welcome to the meeting Professor Alan Alexander, who is chair of the board of Audit Scotland. Professor Alexander is accompanied by Stephen Boyle, who is the accountable officer and the Auditor General for Scotland. Diane McGiffin, chief operating officer and Stuart Dennis, corporate finance manager, audit Scotland. As our witnesses are appearing remotely, can I remind members that they should direct their questions to the auditor general who can invite witnesses to speak as appropriate? Should any of the witnesses wish to speak, please type R in the chat function and I will bring you in at the appropriate time. We will welcome our witnesses and perhaps I can invite Professor Alexander and then the Auditor General to make short introductory statements. Thank you very much indeed, chair. Before I introduce our annual report and accounts for 2021, I would like to congratulate you and your colleagues on your appointments to this commission and to welcome you to your posts. Over the years we have had a very constructive relationship with the commission, one that recognises your dual roles in holding Audit Scotland to account and in supporting us to deliver independent public audit that provides assurance to the people of Scotland and the scrutiny support to the Scottish Parliament and all of its committees. On behalf of my board and Audit Scotland's management team and staff, I look forward to working with you. Over the past year, the world that we live in and work in has changed. As we have all gone through the upheavals on a scale not previous to the experience, the importance of public services to the people and the people who deliver could not have become clearer. I want to place on record my deep gratitude to all who have worked so hard during the Covid-19 pandemic. We are all they have done and will continue to do as we recover and rebuild. At Audit Scotland, like many other organisations, we have experienced 18 months of operating as a virtual organisation. We have had to find new ways to communicate, to support public audit. As with many organisations, the pandemic has resulted not just in finding ways to get through but in true innovation and in developments that will result in permanent changes to the ways that we work. I was struck time and again by the professionalism, empathy and resilience of Audit Scotland staff as they pulled together to get the job done and to support each other. We have been clear that our priorities have been the safety and wellbeing of our colleagues and robust independent audits. The board is focused on driving that by ensuring good governance and oversight in these difficult times. Our role as a board is to oversee the exercise of all the functions of Audit Scotland. That means, crucially, ensuring that Audit Scotland effectively supports the Auditor General and the Accounts Commission to provide their scrutiny and assurance about public spending and public services, all of which are vital to everyone in Scotland. We have done that during a time when the board has gone through significant transition. If I may put that in context, chair, of the five members of the board in post at the end of 2019-2020 financial year, I am the sole remaining member. I come into post as chair in April 2020, succeeding Ian Leitch, who I thank for his stewardship over the previous five years. We welcomed Elma Moray, as interim chair of the Accounts Commission, on to the board, as well as new independent members, Colin Crosby and Jackie Mann. I have to say that I look forward in the coming months to meeting both Colin and Jackie in person, but I have to emphasise that we have been very effective while working remotely. As you know, Stephen Boyle began his term as Auditor General in July of last year. I will hand over to Stephen as Auditor General and our accountable officer in a moment. Before I do that, I would like to record my thanks and appreciation for his leadership and direction of Audit Scotland over the past 14 months. It is something of an understatement to say that taking on both the leadership of a high-profile organisation and stepping into a crucial role in Scottish public life would have been a word often used by public servants challenging at the best of times, let alone during a global crisis. Stephen's calm is resolved and his quality of being invaluable. As board chair, I am confident that Audit Scotland is in good hands. Convener, thank you. Let me now hand over to Stephen as Auditor General and accountable officer. Thank you for your kind words and just to record my own congratulations to Mr Beattie and Ms Dowie for their respective positions on the commission. Before I talk about Audit Scotland and our activity over the 2021 financial year, I would also like to pause for a moment and record my thanks to key workers in the public sector and elsewhere for saving lives, supporting communities and helping Scotland cope and addressing the impacts of the pandemic. As we became more used to living with Covid-19, it is important that we continue to remember the incredible sacrifices that so many have made on our behalf. As I say in my accountable officer's report, Covid-19 is the biggest challenge facing Scotland's public sector since devolution and will continue to shape our landscape for many years to come. The pandemic has significantly increased both public spending and pressures that public services and public bodies are facing, which were already significant before the pandemic. The existing stresses from inequalities, climate change, increasing demand, new powers and changing demographics have all been exacerbated. That has significant impacts on our work, our priorities and our approaches. Some of those are obvious, while some are still emerging. The assurance that we provide over public spending and the advice that we give public services to help them to improve is more important than it has ever been. Put simply, chair, our job has got bigger, and we have had to change and grow to make sure that we can provide Scotland and the Parliament with the public service that it needs now and in the future. With the support of this commission in the previous Parliament, during 2021, we have begun building and reshaping our capacity, skills and approaches to fit the new world. We reframed our performance audit programme that Audit Scotland delivers on behalf of myself and the Accounts Commission to ensure that it is focused on the key issues that the public sector faces. It is flexible and responsive and follows the significant amounts of public funding that have to address Covid-19's impacts, otherwise known as the pandemic pound. In the face of fundamental disruption to how we work and to how organisations we audit work, we delivered the financial audit of more than 200 public bodies to revise timescales and reshaping the scope of our audits where necessary to reflect the pandemic's rapidly emerging threats. Through all of this, we have prioritised our colleagues' wellbeing and safety and the rigor and independence of our audit work. Finally, chair, I would like to pass on my thanks to all my colleagues at Audit Scotland and on our board for the support that they have provided over the course of the past year, and, as our chair, we look forward to answering the commission's questions this afternoon. Thank you very much. I know that members have a number of questions, but I would ask as if members ask all the questions that they have together. I will call Daniel Johnson to open up. Thank you, convener. Can I begin by sort of asking the big question? Covid-19 has clearly disrupted life over the last 18 months, but it strikes me and has been alluded to by both Professor Alexander and Stephen Boyle. It has had a sort of a fundamental impact on how you conduct an audit. I always think of auditing as requiring it at some level or other to be able to eyeball and assure what is on the accounts is actually there. Now, if you are working remotely, it strikes me that that is fundamentally interrupted. In broad terms, how has this impact on the ability to conduct audit? More importantly, we are all aware that Covid-19 is not just a temporary impact. It has an impact that is likely to alter the way that we work in quite long-lasting ways. What are the changes that you have faced this year? What are the ones that you see persisting? Obviously, that will have an impact on the way that Audit Scotland will organise itself in the future. I am wondering if you could address those points to Stephen Boyle. I will start, Mr Johnson. I invite Diane McGiffin to contribute as well after I say more about the experience of colleagues across Audit Scotland. We absolutely agree that Covid-19 has had a fundamental disruption to how we would have carried out our audit work. That has borne out in a number of places, so we have seen that, essentially, timescales have been extended for the completion of our audit work during the course of 2021. We were keen to set the framework for that. Deadlines could be negotiated, but the audit quality and the wellbeing of our people could not. We have now completed all of our 2021 audit work to extended timescales. Audit Scotland did take longer to varying degrees, partly borne out from the circumstances that audited bodies bring themselves in, to the degree that they had invested in technology to support remote audit activity, and recognising that neither Audit Scotland nor the auditors that we contract with nor public bodies had anticipated that, by the middle of March last year, we would have switched to a remote audit function almost overnight. That was borne out effectively in longer timescales for the completion of the audit work, maintaining high focus on wellbeing and audit quality. We are now thinking about what that means for the future, but, like nothing else in this environment, we are not entirely able to be confident in predictions as to whether we will snap back to how our audit work took place previously or what the future will hold. However, we are treating that carefully, engaging with audited bodies and conducting regular discussions with our colleagues as we plan for the future, framed around our new strategic improvement programme that sets out how we will ready ourselves for the years ahead. We are thinking very carefully on a number of fronts in terms of the investment that we want to make in specialist skills, new technologies or digital auditing work, all of which to set out what will be our stall and probably a realistic assessment as much as I am able to do that. We expect that there will be a position of hybrid working across our audit work in the years to come. I think that that probably gives an overall flavour of our thinking, but I will pass to Dan McGiffin to say a little bit more on how our teams have felt over the past year. I think that the issue that you touched on first is about how we exercise professional skepticism in the environment of remote working. For our teams, reflecting back on the year, one of the things that has been helpful is that we are in the final years of the audit appointments that we have. Teams have already built up strong relationships and understanding about the business of the public bodies that they are auditing without compromising their independence. Those things are key. There is absolutely no doubt that auditors want to taste and smell an organisation to get a feel for what is going on and have found innovative ways to do that remotely, but some of those ways are not ways that would be first choice if we have the option of working in a different environment that we are moving into just now. As a profession, the auditing profession is looking very carefully at what remote working means for exercising professional skepticism and also for the training and development of auditors. We ourselves in our graduate training scheme are looking closely at that and how coaching, mentoring and learning the craft of auditing can be developed and undertaken properly when not everyone is in the same place at the same time and we move into a mode of hybrid working. Among the other issues that we will be taking into account as we look at what we can retain from what we have learned over the past 18 months are the many downsides of travel, balancing that up with the many plus sides of direct engagement with bodies. We have our environmental targets and our environmental goals to meet. We will be thinking very carefully, as the previous commission signalled to us, about our property portfolio for the medium to long term and what some of that means. We will also be thinking very carefully about the use of technology. One of the things that we have learned over the course of the past year is the importance of our own investment in technology but also the limits of the investment in technology that public bodies have made in enabling us to complete accounts effectively. We have engaged closely with colleagues throughout the year. We have conducted 10 pulse surveys to understand how people were finding different elements of working through the pandemic. We have got our third, how people think they want to work type, working preferences survey open. We have a comprehensive quality agenda in the coming year, which will pick up some of those issues as we move forward. I hope that that is an answer in the round. Thinking about professional scepticism and how to exercise it in a hybrid mode, developing our training scheme and the coaching and mentoring of graduate trainees in particular, but thinking long term about our environmental footprint and property portfolio to make sure that we retain the innovations that we have developed over the past year. Thank you very much for the answer. I think that it provides us with a good overview of the challenges and changes that Covid brings. Having started with the macro, I hope that you will forgive me for diving straight into the micro. Looking at your accounts for this year, there are a number of variances that I might expect, decrease in stationery and an increase in IT spend, but two line items just jump out at me. First of all, a 44 per cent increase in rent and rates, and I just would like an explanation, because that is obviously not just in percentage terms, but in actual terms quite a large increase, especially at a time when people were using buildings less. I would be keen to understand why that occurred. Likewise, staff recruitment again up by 44 per cent, which in actual terms may or may not be a significant amount, but I would be concerned if that indicated underlying staff churn or just I would be interested in an explanation as to why staff recruitment costs increased so significantly in the year. Thank you for those questions. I am happy to start, and I will absolutely invite Stuart Denison to supplement any of my contributions. I will maybe kick off on the rent and rates point, Mr Johnson. Essentially, we have limited flexibility, as the commission may be aware, in terms of our rental costs. We lease three of our offices in Edinburgh, in Burness, Glasgow, and that partly reflects our flexibility and alludes to the point that, by an, I mentioned in our previous response about the commission's request as we evolve our thinking into the future about making most efficient use of our office estate. That speaks to the inflexibility that we have in dealing with those costs. We will also, as you have incurred additional expenditure in our staff recruitment over the course of the year. We have embarked upon additional recruitment. I do not recognise the considerable churn in our staff. I think that the market for auditors will always remain difficult at certain grades, but we look to give all of our colleagues the right experience, and we have talked about a real focus on well-being over the course of the past year. However, there are inevitably some costs that we incur as we look to broaden our reach, particularly part of our work over the course of the past year. In our thinking on diversity and equality, as an organisation, we are reaching out to us wider talent pool as possible across the country. All those factors play into those costs, but Stewart can come in and give a little bit more detail behind those two numbers. Thank you. I can add to what the auditor general has said. In respect of recruitment, I will start with that one first. We are in the process of building capacity fees, and that started with additional funding that was approved by the SCPA in January. We were looking to build capacity, and that was the cost of the recruitment campaigns to front-load that, so we would get the staff in at the early point of this new financial year, which we did do with them on-boarding in May and June. That is the reason behind that. As the auditor general said, there is no real underlying churn of staff in respect of that. Why would that, in respect of the rent and rates, be absolutely correct? There is a big increase there. The main reason behind that is that we have provision in the accounts for a rent review in respect of our westport office. The rent review was during 1 April 2020. Just as we were looking to finalise our accounts at the end of April, we heard from the landlord's agent in April 2021 that a proposed significant increase was part of the rent review, so that is a provision at this stage. We are currently in negotiations to finalise what the review will be for westport. Thank you. I will learn my questions there. If you could keep the questions and answers fairly concise, we have a tight time. On Audit Scotland's work programme, we know, because of the impact of the pandemic, the reasons for changing focus. However, if you could give us further information on how parts of the former work programme were identified as suitable to be deferred or cancelled and how the board assures itself that any risks or issues in those areas have not subsequently deteriorated. I am happy to kick off. I am sure that Professor Alexander will want to say about the board's assurance in respect of the work programme. As the commission will be aware, Audit Scotland carries out the work programme on behalf of myself as Auditor General, the Accounts Commission for Scotland. We oversee local government work, and, in the early throes of the pandemic, for a number of fronts we paused the delivery of our work programme. One was in respect of, at that point in March and April 2020, the availability of public bodies to interact and provide us with evidence to clear reporting was compromised. We recognised with sensitivity about the extent to which we were able to meet our responsibilities of providing assurance over public funds, but we were particularly mindful of how life was at that moment, the extent to which the availability of senior people and, as I said, they were available to interact with the audit programme was not what it would have been. We also looked at the detail of the work programme and took a view about where our resources were best spent. We had a report due in respect of skills planning, which was due to be completed towards the end of 2020. We also had a report due almost for publication at that point on education outcomes and school education. That report has now been completed, but the main aspiration for pausing the work programme was to reflect the huge sums of public money that were coming to Scotland over £9 billion, as eventually transpired during 2020-21. We were mindful of our role that, as we win the immediacy of the pressures and availability of officials and public bodies, eased that we were able to interact and provide assurance to the Parliament that how well that public money has been spent, the extent of risk and issues that public bodies were facing. We took a little bit of time over the summer to reframe our work programme so that it was both agile and responsive and reflected all of the issues. Myself and the commission now have a quarterly refresh process around our work programme, so that we keep it under regular review and to flex items into the programme, to fair others where we think is necessary and to look at timescales. I look forward to discussing this with the Public Audit Committee tomorrow, when we can say a bit more detail about how we have prioritised and identified our programme. I hope that I will give you a sufficient overview of the thinking at the time. I will maybe hand over to Professor Alexander who may want to say about how the board has reassured himself of that process. The question goes right to the heart of a very important distinction in how we work, and that is a distinction that I am sure the commission will recognise between governance and management. The management of the business, ensuring that it gets the work done, is the responsibility of Stephen as a accountable officer and the rest of the management team and the entire staff. Governance is the responsibility of the board. In overseeing the work programme, we have no input into what is in the work programme. That is the responsibility of the Auditor General and the Accounts Commission. Our responsibility is to ensure that Audit Scotland provides it with the expertise and, quite frankly, the labour that is necessary to do a high-pressure job. In doing that, we rely on a tiered system of scrutiny, utilising both of our committees, the remuneration committee and, particularly, the Audit Committee and the board. In that context, the role of the independent members of the board, which is to say myself, Colin Crossway and Jackie Mann, is particularly important. I say that because the composition of our board means that two members of the board are also, as it were, customers of Audit Scotland. In that context, the extent to which the board, in its various forms, crawls over the work programme and, indeed, everything else about the running of Audit Scotland is very important. The independence, in particular, brings a remarkably wide range of professional experience to that role. I can say with some confidence that our colleagues in management and staff know that they are being scrutinised and appreciate the extent to which board members inform themselves of what is required of Audit Scotland and ensure that that is delivered. I am happy to go into any other detail if members of the commission require it. We need to keep this fairly tight, as far as the length of answers and questions are. Otherwise, we are not going to get through. Diane McGiffen wanted to come in on this. Apologies, chair. It was on a previous question. It was just to say, on turnover, on page 49 of our accounts, you will see our turnover rate was 5 per cent, which was slightly down on last year, just to provide assurance to the commission on the earlier question. If I go into internal audit arrangements, on page 37, Audit Scotland confirms that five of the six internal audits in 2020-21 achieve substantial assurance. If you could give us a bit further information on the reasons for and its response to the one internal audit receiving reasonable assurance conclusion from the BDO. I will pass straight to Diane McGiffen on this point to provide the commission with a bit of detail. Before I do that, I would say that, overall, we recognise the huge value that our internal auditors provide. I am particularly pleased in governance terms about the assurance that provides over the course of five out of the six providing that substantial assurance, recognising the difficulties that are not working and the solidity, as it were, of the control environment during that period. Diane McGiffen can say a bit more about the one that did not quite reach top marks. The internal audit under discussion is the IT procurement internal audit. It received reasonable assurance on design and operational effectiveness. There were three low-level issues for us to adopt and one of medium interest. Those were about updates to the handbook for procurement. They were about having an independent digital procurement policy in practice and about liaison between different parts of Audit Scotland. All of those actions have been completed or are in train. In fact, immediately prior to this meeting, we were in the Audit Committee reporting back on progress against internal audit actions, including those ones. The other audits all received substantial assurance on both design and operational effectiveness and for information, covered business continuity planning, performance audit and best value adoption quality standards, periodness for changes to the Audit Scotland board and for the Auditor General, repainting for responding to reviews of the audit profession and also IT strategy and service capacity. Jumping on to the year-end financial position, if you could give a further explanation on why the final budget position identified as £1.5 million in January 2021 improved significantly by March 2021 and was the funding made available but not then required return to the Scottish Consolidate Fund. Also, whether the £1 million in savings delivered in 2020-21, if you think that that will reoccur in subsequent years, or do you think that it's a one-off? I'm sorry, Ms Dow, but your microphone cuts out for us halfway through your question. I'd be most grateful if you could repeat it. No bother. On the year-end financial position, to see why the final budget position identified as £1.5 million in January 2021 improved significantly by March 2021 and the funding made available but not then required was that return to the Scottish Consolidate Fund and whether the £1 million in savings delivered in 2020-21, on page 30, will reoccur in subsequent years, or is it a one-off underspend perhaps due to the pandemic? Thank you for that. I'm happy to start actually and I'm sure Stuart and maybe also Dan would want to contribute. I think I'll maybe focus my answer on the £1.5 billion additional budget allocation that Audit Scotland requested and gratefully received from the former commission at the end of last year. It was a really difficult point that our finances and our financial reporting is based on an annual cycle. As an organisation, we are not able to hold reserves and we are obliged to break even. Our income, particularly our income from the delivery of audit work, was compromised by the pandemic and the fact that our ability to recognise income was severely constrained. When at the time of the request of the budget uplift from the commission, we are under a significant prospect of not breaking even and all of the ramifications are not complying with legislation qualification of our accounts. As the remainder of the year progressed, part of the restrictions eased and we were able to complete additional work on that meant that we were gratefully able to break even. As we said at the time that any underspend would be returned to the consolidated fund. I'll maybe just say a word before inviting Stuart in about the efficiencies. I think that that goes back to part some of the earlier conversation with Mr Johnson. I really about there are some budget headings in our accounts that we have continued to underspend on. I probably as expected around travel, printing, stationery, subsistence rates as we've moved away from being an audit organisation that's been out and about in public bodies to one that's been delivering our work remotely. We're reviewing all of that and I'm particularly conscious that we as recipients of public funding and as being Scotland's public auditor, we need to be as efficient as we possibly can. We need to demonstrate that to the commission, the Parliament and users of public services. I was very conscious of that as we remodel and change how we will deliver our work, that we continue to be as efficient as we possibly can, but realistic at the same time. Whilst the efficiency savings under those headings are what they are in the accounts that we're looking at, it's probably an expectation that that may continue into next year or it may be other budget headings that we'll look to flex. Nonetheless, we want to be as efficient as we possibly can to deliver public audit through the use of public money that the commission provides us. I'll maybe stop there and invite Stuart just to come in if he wishes to add to that response. Thank you, Stephen. Just a couple of points I can add in respect to the additional £1.5 million. We use robust assumptions to build a forecast of where we thought we would be come the end of the year. What happened is that, based on that forecast of a budget that we spent £29.6 million, the out-turn ended up being just about 2 per cent. We were quite close overall on our forecast assumptions. Obviously, things changed in respect to that. As the Auditor General said, we needed that assurance that we had sufficient to make sure that we broke even at the end of the year, which we did. What I would add in respect to the savings, as the Auditor General said, I would confirm that some of them will be recurring in respect to travel and subsistence will reduce, but, like he said, some things will increase and there are one-off savings incorporated in there. There is a small amount of capital that we did not spend, so moving forward, I think that some will be recurring, but a lot of it will be just a one-off in the year. It has partially been answered, but the reduction in travel and subsistence was very significant—over £0.5 million. I suppose that, in terms of your way of working going forward, how much do you expect to bounce back, if you like, and to be doing much more travel and overnight work to engage with the public bodies that you are auditing? Or do you think that some of the practices that you have developed, which are beneficial, will be sticky going forward? Just a bit of forecasting there in terms of how you intend to work going forward in relation to Covid and whether in-person auditing and the extent of that that you were doing previously is really going to be suitable to the way that you are going forward? How much money do you need to do that? I will maybe start. I am sure that I will want to come in to say a word or two. I think that the short answer is, and I guess that we are thinking about our opening statements, is that we do not expect to snap back to the ways of working that we had been deploying as an audit organisation in previous years. We used to have considerable travel and I personally was regularly using Glasgow to Edinburgh train. Colleagues were travelling to all parts of Scotland by public transport, by cars, to have a physical presence in delivering our audit work. Some of that will still continue, particularly as we need to get the audit evidence on the underlying financial records of public body, the evidence to complete our performance audit programme. However, if anything, the pandemic has taught us that there are alternatives to being there. We have delivered our audit work remotely successfully over the course of the past 16 months. There will be some thinking that we will want to do as we move into the course of the next few years and deploy our green futures agenda, too. There are lots of thinking that we are careful about our sustainability and showing that there are alternatives. We do not have a precise recipe yet as to how we will do one or the other, but it is undoubtedly captured our thinking to be more considerate and careful about our travel arrangements as we move forward. Do you want me to continue all the questions quickly, convener? Is building on the theme and moving on to something else? Okay, briefly. Diane, you mentioned earlier the point about the seamlessness between in terms of IT or the lack of it between yourselves and the bodies that you are auditing. I am just wondering to what extent that will continue to be a challenge going forward, or if you think that that will get better. That could slow down the auditing process, it could mean perhaps more in-person visits because you cannot exchange the data that you need on an online format or whatever. I am just interested in whether that is a bit of a headache at the moment or whether that is something that will resolve itself as we get into this new normal of working more online. Thank you. The first thing to say is that we have the ability to determine our own IT and we invest in that. It is absolutely business critical for us as it is for others. I think that there is a very mixed picture across public bodies. We have reported on that ourselves. We have a very good handle on the issues that technology has brought into all the audits that we do and the audit firms that work with us. We have managed to complete all the audits in March this year, so we have managed to find solutions to everything. We will keep working on that. If it is difficult for us, it is difficult for the public bodies to, and we are very empathetic about that. We have discussions in our audit planning meetings with public bodies about what arrangements we will put in place this week. In terms of your earlier question, when it comes to budgeting, we will be coming back later this year with our budget proposals. My guess at the moment is that we need to retain a bit of flexibility on travel and subsistence in order to build back new working practices, build back confidence in public bodies and in our teams about how to conduct the audits. What we can guarantee to do is to make the assumptions that we are building our budgets on very clear for you. I am guessing that on a number of points about budgeting, we will need to be thinking about flexibility to accommodate unexpected changes. The question about the home nation Covid-19 group that you have been part of sharing the experiences of public audit across these islands, can you tell us what the main areas of learning have been from that? Is that something that is going to continue going forward? Is that group also benchmarking experiences outside of the UK? Thank you for that question. We flame our engagement with the other UK audit agencies and also with the Republic of Ireland as part of the UK and Ireland public audit forum. That manifests itself across a number of different groups within those organisations. I myself and the other auditors general meet twice a year by Anne and the other chief operating officers. Business leads across all of our functions. We have that opportunity for shared learning and experience. As you would expect, the main focus has been on Covid and the extent to which one organisation is sharing good practice. We find it to be an open and really helpful grouping that, as public auditors, we, as distinct from the auditing profession, have focused exclusively on delivering public audit. That is a very helpful group. It has been in place before the pandemic and it will continue to do so. As I mentioned, the Covid-19 has been the real focus of those discussions. How to flex our programme—I am supposed to touch on the answer to Ms Dowie—that, like the other audit agencies, Audit Scotland paused its forward work programme and flexed it to become agile, flexible and responsive. It is very similar to the products and the assurance that have come from that, particularly the Covid trackers. The briefing papers model, supplemented by the more traditional performance audit reporting, have all been discussed with ideas exchanged across the public audit forum. The other thing is that you have asked about our reach beyond the UK and Ireland. We have had in Audit Scotland a fairly well-embedded international engagement programme for many years now. That has clearly been curtailed in terms of travel and face-to-face engagement over the course of the pandemic, but we have still engaged with online arrangements with many other audit agencies that are appropriate over the course of the pandemic about sharing and learning as we aspire to be a learning organisation that can draw on the experiences of other organisations. We supplement that with colleagues' engagement and auditing accounting institutes across the world. We are tapped into both development and accounting and the auditing profession in the UK, Ireland and beyond. Thank you very much, chair. One of the things that struck me about the report was on page 20, which was looking at both internal and external quality assurance review. The conclusion was drawn that only four of the 11 financial audits achieved the target standard of quality. Of the remaining seven, three were graded as improvements required and four were graded significant improvements required. My question is, could you give us further details of these mixed results? What are the particular areas for improvement? What is the seriousness of those and what is the work plan to address them? Thank you. I will look to answer your question, Mr Leonard, but Diane McEath and me equally wish to come in to supplement and even Professor Alexander about the assurance that Audit Scotland's board has received on these matters. I think that, as I say in my Accountable Officers report, that, in essence, the results weren't what we had hoped they would be from the external quality assessment that took place on our financial audit. I will step back for a moment and say that, first of all, we have a quality framework in Audit Scotland that covers our financial and all of our performance audit work. Its breadth is unique in the UK audit agencies and allows us to provide assurance to the commission to Audit Scotland's board across all aspects of our work. In respect of the work that we report through our transparency and quality report each year, the results of the independent assessments that the Institute of Chartered Accountants for Scotland undertakes comprise one component of it. I will come back to that in a bit more detail in a second, but we also reflect in that report the results of surveys that we undertook with audited bodies on the experience of the audit and from Audit Scotland staff and the staff and firms who conduct public audit. They play back that they have had more time to conduct public audit work this year and the satisfaction of audited bodies has increased. Nonetheless, the results from some of our financial audits weren't what we would have wanted this year. We have implemented an improvement programme of 15 actions, captured the feedback that we received from ICAS, 13 of which have now been completed. We talked earlier about the additional investment that the commission has provided to Audit Scotland this year, and we have used some of that money to invest in our quality arrangements. We have enhanced our team of in-year quality assessors so that we have an early warning of any issues that are coming up. The essence of the issues that were identified by ICAS is that none of which compromised the integrity of the audit and, importantly, the audit judgments, the conclusion that the auditors were making. Some of it was about process, some of it was about documentation that we have in our audit files. I hope that the commission can be assured that we take this really seriously. If we wish to, as part of our corporate plan, profess to be world-class audit auditors, we need to receive feedback like this and action it. We will continue to report publicly through our Transparency and Quality report about the results of the independent assessments that will take place following the conclusion of this year's audit and will start within the next few weeks. I am delighted to keep the commission updated on our progress. I am sure that it is something that we will come back to and keep an eye on. The other area that struck me—I am sorry, I am dwelling on more of the negative than the positive today—was the section on professional training for audit that struck me a couple of pages later, which had the statistics in there of pass rates. The pattern is 2018-19 a pass rate of 85.7 per cent, 2019-20 a pass rate down to 84 per cent and 2020-21 a pass rate down to 79 per cent. I think that, at a previous point, there had been some suggestion that the reason for the variation might have been a change to the new exam, I think, that was introduced a couple of years ago. I wonder whether you could explore with us the reasons why you think that this pattern is, as it is, again what you are doing to try and address it. Do you have any insight into why you think that the pattern is going in the direction that it is? Thank you for that question. I am sure that Diane Will will want to come in and invite her to do so in a moment. I think that the thing that I would say is that we are not sure that it is a long-term pattern, particularly the results of our trainees. To be just shy of 80 per cent, we think that that is holding up pretty well and benchmarks well against the overall pass rate of ICAS trainees, of which all of our trainees are now completing compared to other providers. There is no doubt that 2020-21 was a tough year for all of our trainees. Specifically, all of the exams were sat remotely using laptops and technology, as opposed to being physically in an exam setting. Our trainees have told us that that did affect some of them, and there were instances in which the quality of home broadband facilities was not reliable on the day that allowed or impacted our trainees' performance. As an employer, we are determined to be supportive and look after the wellbeing of our trainees. We have high expectations and standards of them, but none the less we particularly recognise in this year that any conclusions would be too soon to draw, based on exam performance. We wanted to give them the right environment and support to be successful as they progress through their training contracts with us. I think that what the commission can hopefully be reassured is that we treat the success and wellbeing of our trainees with the highest priority. We are one of Scotland's biggest training providers for the ICAS profession. We want to look after them and look closely at the results as we move in across the rest of the year. Our main focus is on their success and the support that we provide them, but Dan may wish to say a little bit more about any more of the actions that we are taking. Thank you. We have looked at the results in the round both at the snapshot at the end of the year and also the first quarter results for this year. We have met with ICAS to understand what issues there are, if any, about the new curriculum that is under way, the new style of exams. We are thinking about our own support for trainees and how we learn and build on that. Our trainee cohorts have operated very strongly pre-Covid, and we are thinking about, as an early action as we return to office working in some way, rebuilding those connections for trainees so that they get that mentoring and relationship going. That is a very early priority for us as we move into the next phase of work. We are getting right under the skin of it, but we are not sure yet that there is enough data to suggest that this is a systemic problem for us, but it is definitely one that we take very seriously. We want to give people an absolutely brilliant experience as graduate trainees, and that is what we are focused on. We have a team of people across the business who support and mentor trainees, and we are working very closely on that, and we are very happy to give you updates later in the year. I have one or two questions. I am conscious that we may not get through them all by 1.30, which is our drop dead time. I will ask you the first one about working remotely. You have touched on that already, but what is the impact that this is had on staff and their ability to deliver the financial audits and the performance audit work programme to a level that is of a high standard? It is no doubt that it has been challenging, it has been tough for our people. We have all lived through the pandemic, and we have all had different experiences of it. It has been particularly challenging, and we know that from our own personal lives and from what our colleagues have told us, where they have done so whilst dealing with caring responsibilities, particularly homeschooling, and the impact that that has had. We knew really early on that that was going to have an impact on the deliverability and the timescales that we had been operating across the piece, and that led us to part of that earlier conversation about the need for the financial support in order for Audit Scotland to break even. As Diane Lamont mentioned earlier, we have had extensive communication and engagement so that we are living up to our professions that we are prioritising the wellbeing and quality of our colleagues and the quality of our work—regular pulse surveys, communication through our incident management team on a weekly basis, blogging, feedback sessions—all of which to make sure that we understand and take the necessary responses. It has been a disruptive challenging year, and I think that we are still as many organisations figuring out about what the future now brings as restrictions ease across the country. I assume that the board is overseeing the evaluation of the robustness and effectiveness of remote working both in terms of the quality and so on of the work done and the wellbeing of the staff concerned. Is there a reporting mechanism to the board for this? I will let Professor Alexander say it in a minute. Yes, we have reported every meeting of the board and the Audit Committee. Covid-19 is a standing item on our agenda and, in those conversations, we update the board and we answer their questions and feedback about how remote working is impacting upon all of our colleagues. We touched briefly on the pulse surveys, the engagement sessions that we have had and we have also continued to carry out our annual survey of colleagues through our best companies. We were delighted in that regard to receive our best-ever result from Audit Scotland colleagues and to be categorised for the first time as a one-star organisation. Much of that is based on the experience that people have had over the course of the year, but Professor Alexander may have to say a word or two more. Thank you, Stephen. Maybe the best way into this, chair, is to say that at the beginning of the pandemic, when we were all feeling our way through a dark tunnel, it seemed to me that we did not have enough meetings to give the kind of scrutiny that was required. By that, I mean that we normally have a gap between June and September. I insisted on a board meeting taking place in August in order that we could immediately monitor how well we were doing, where we were doing things well, where we were doing things less well and what we had to do to change the pattern. That approach has continued and, as Stephen said, we have looked at all aspects of the impact of Covid at every meeting, not only of the also of the Audit Committee and we are relevant to astremit the remuneration committee. I mentioned in my introduction or in this question the breadth of experience that I have access to with my two co-independent members. I think that, over the last year, that has been remarkable in the experience of other organisations under other kinds of pressure to ask the kind of questions that do not put the management under undue pressure but ask the kinds of questions that allow us to be confident that we are giving good governance to a very difficult set of management decisions. Thank you very much for that. We have run to the end of the time for this particular session. There is still one or two questions that I would like to ask and I propose to send them up to you in writing if you would be so kind as to come back to us on them. At this point, I will thank all the witnesses and draw this session to our close and suspend for a few minutes for the next panel. We now have our second panel and I welcome the witnesses from Alexander Sloan, Steve Cunningham, partner, Gillian Soe, Audit and Accounts Manager, both from Alexander Sloan. Can we just pause for a second? I think that there is somebody missing, is there? Okay. We are good again. I welcome you both to the meeting and I invite members to direct questions to Stephen, as he can bring in Gillian as appropriate. I have got a couple of questions that I will ask you initially, just for the official record. Can Alexander Sloan confirm that you have received all the necessary information and explanations that you require to form your opinion on the financial statements? Good afternoon, chair and committee. Yes, I can confirm that that is the case and I can confirm that the audit of Audit Scotland was completed without any limitation in the scope of the audit work. If I may, I would just like to give a quick overview of the work. Alexander Sloan was appointed by the committee to carry out the external audit of the 2018-21 financial statements of Audit Scotland. During the year, we attended all audit committee meetings of Audit Scotland. With Covid restrictions, our work was done remotely this year, but I can assure the committee that working remotely did not impact us in gaining sufficient evidence and audit was completed without any significant problems. As part of our work, we have also reviewed all-in-turn audit reports during the year and held discussions with Audit Scotland's in-turn watchers, PDO, in accordance with the forms of quality control procedures. The audit file was also subject to a second part of the year. The review was carried out by our senior partner, Thyatris, signing of the audit report. All our audit was carried out in accordance with international standards in Auditon, and, as I mentioned earlier, we received all the information and explanations that we required to form our opinion. Based on our audit work, we formed an opinion on whether the accounts were delivered in the same way of year, whether they have been prepared in accordance with international financial reporting standards, as interpreted and adapted by the financial reporting manual, and that they have been prepared in accordance with the Public Finance and Accountability Scotland Act and the actions by Scottish ministers. We were satisfied with all three points and issued an unmodified audit report. In other words, we were satisfied with the accounts to give us air in fair view and in accordance with legislation and accounting standards, and the audit report and accounts were signed on the 8th of June. We also prepared a management method based on our audit findings and the purpose is to summarise the key issues that are added from our audit, and to support any weaknesses in accounting systems and internal consoles that come to our attention. I can confirm those two such weaknesses and identify them in the closer to the audit. Finally, I would like to thank the staff at Audit Scotland and the support staff of the SCPA just for their assistance to the audit this year. Thank you for that additional reassurance. Audit Scotland has made certain accounting estimates that are material to the overall income and expenditure in 2020-21. Work in progress of £1.287 million is included as income on the basis of a judgment of work completed but not yet charged to audited bodies. Audit Scotland also created a Covid-19 provision at a cost of £886,000, which is a judgment again of extra fees payable to external firms due to the additional time spent on the audit of certain public bodies. Those require detailed consideration and scrutiny by the auditors. I would just like you to confirm that you are content with the judgments made by Audit Scotland and the disclosure of those in the annual report and accounts. Yes, we are. A significant proportion of the audit is looking at post and leave areas, post, work and service and service divisions. We need to make sure that the work is carried out in accordance with international standards in order to ensure that we are happy with the work that is performed. If I could speak to them again. If members have any questions, they would like to ask Alexander Sloan. Alexander Sloan's work on the audit of Audit Scotland's annual report and accounts was delivered remotely during the period of government restrictions and guidance to work at home where possible. Could you tell us about the changes to Alexander Sloan's approach to the audit so that we can understand the challenges that remote auditing presented and the impact that it had on the audit approach? Yes, I will start off but I might want to come in and add points to that. This is the second audit that we have had to carry out for Audit Scotland working remotely. Last year, we could carry it up into them but the final audit field work was done remotely. We have made use of technology so that we can meet them remotely and view screens after Audit Scotland. We can assure you that we have managed to get all of the audit evidence that we require. There are certainly no changes in what we require as auditors to be able to sign off the audit report. We were happy that we still managed to get all of the evidence that we required. Do you have anything that you want to add to that? This is the second year that we have been working remotely with Audit Scotland and any information that we requested was provided to allow the smooth flow of audit information. We did not experience any issues with remote working on the Audit Scotland audit. With your work remotely, has it led to any beneficial innovations in the audit process that should be adapted? It has been partly to the use of technology. Those aspects will carry on in terms of Audit going forward. We have had the use of photos and things to help to save time for the information but the use of technologies for meetings and being able to use screens remotely has helped to audit this year. There will be aspects on that getting carried on forward for future audits. Do any members have any other questions? Yes, Mark. I mean, just briefly, convener, on the back of that. Previous discussions that we have had with Audit Scotland, they have talked about the importance of being able to audit an organisation, get a taste and smell of the organisation in their words. Are you confident that you are able to get a taste and smell of them through doing this work remotely? Do you think that there are things where, in hindsight, you think that we could have gone with going in there and spending a bit more time on X or Y or doing things slightly differently? I think that certainly some of Audit Scotland is once, I mean, we have been audited for a number of years, so we do have a good understanding of the organisation, so that's certainly helped. We also employ a very senior team to carry out this audit, so I think that with that and the use of technology, we're happy that we did get that assurance and, yes, we did in our organisation in case we had the proper feel for carrying out that audit. Okay, thank you. Stephen, is there anything that you would like to add before we draw this session to a close? Nothing, Father. In that case, I'll thank both of you for your attendance, and I'll draw this session to a close, and we will move into private session.