 Hefyd, i mi hwn i ddweud. Rwy'n frydd i'r drwngh yng Nghymru o'r Pwblic Audit yng Nghymru i 2017. Felly, nhw'n gweithio i ddegol i ddeddfodol ar gyfer eich boardsau? Or motherfuckerwyd i ddegol i'r modd fuddii, i ddiweddio i ddigwyd y gydag y Comity ordnig. 1. Dw i ddod i chi i gymredu i ddim yn iawn i ddillawod xiw ym 4 i 5 i gynnydd. Da ffawr i chi? 2. Ietweithio yn ymdyn nhw'n ddiddordeb o'r staff iddyn nhw o'r Moral evidence ond y Auditor General for Scotland's report entitled The 2015-16 Audit of the Scottish Police Authority. I'd like to welcome to the meeting Carline Gardner, Auditor General for Scotland, Gillian Wolman, Assistant Director and Mark Roberts, Senior Manager of Audit Scotland. I now invite the Auditor General to make an opening statement before moving to questions from members. Thank you, convener. Today's report is on the 2015-16 Audit of the Scottish Police Authority under section 22 of the Public Finance and Accountability Act 2000. As you know, 2015-16 was the third year of operation for the SPA and the Police Service of Scotland, and this is the third time I've made a report to Parliament following the annual audit of the SPA. The SPA's accounts include the financial results of the Police Service of Scotland as well. There are two issues I'd like to highlight. First, the Auditor's Opinion on the 2015-16 accounts. The accounts are unqualified, but for the third year running, the Auditor has expressed a modified conclusion on those matters on which she is required to report by exception. She concluded that there was insufficient consideration given to the introduction of a new financial reporting standard, which required the identification and revaluation of surplus assets, and there were numerous errors in the valuation of assets held for sale and investment properties. Overall, the audit of the SPA was again very challenging to complete. We received nine draft versions of the annual reports and accounts to audit, and this is very unusual in our wide experience. Second, the weakness of financial leadership within both the Scottish Police Authority and Police Scotland. Since the establishment of the two organisations in April 2013, there has been an on-going problem and one that has not yet resolved. That would be unacceptable in any public body, let alone in one of the scale and importance of the SPA and Police Scotland. Exceptionally, in 2015-16, the Scottish Government permitted an overspend on the revenue budget to offset against an underspend on the capital budget. Some progress has been made in developing a long-term financial strategy to underpin policing 2026, the long-term vision for policing over the next 10 years. This is encouraging, but it is undermined by the absence of effective financial leadership. To illustrate the scale of the future financial challenge, I have updated my projections of the potential funding gap facing the SPA and Police Scotland. These suggest a cumulative deficit of almost £200 million in real terms by the end of this parliamentary session. I consider this projection to be conservative. I will report to the Parliament again on SPA's progress in managing its finances at the conclusion of the order of the 2016-17 accounts towards the end of this financial year. Alongside me, Gillian Walman, who was the auditor responsible for last year's Audit of the Scottish Police Authority, and Mark Roberts, who leads our work on justice in Audit Scotland, as always, we will do our best to answer the committee's questions. Thank you very much. I invite Colin Beattie to open questions. It is deeply disappointing again to have a weak financial leadership being reported to us. This decision has been taken to merge the two existing financial director roles and have a chief finance officer. Does that imply a unified system of any sort of accounting? To give you more detail about the implications, it is fair to say that we think that it is in advance to have one person responsible for it within Police Scotland with a clear reporting responsibility to the chief executive and accountable officer of the authority. There is a lot of work to do to have in place a single system that does all that is required. Gillian Walman, did you do something on those lines previously? Didn't you have one person who was supposedly acting as a bridge? Until very recently, there have been a chief financial officer or director of finance within both the SPA and Police Scotland. Around 12 months ago, at the time that the committee last took evidence, the SPA announced its intention to have an interim chief financial officer across the two, while it considered the longer term arrangements. The longer term arrangements are what are now being put in place but are not yet in place. Gillian Walman, do you want to talk about the systems? Yes, I am happy to respond to that. Given that this is now the end of year 3, there is still yet much to be done to unify the financial systems, so, while there is one general ledger, there are numerous payroll systems and other underlying systems, so there is still much work to be done in order to bring that all together. As the Auditor General has said, we see the proposal of one key, very senior chief finance officer role as being the right way forward. We know that, in June 2016, that commitment was made publicly that that would happen. It has yet to make a permanent pointy to that role. Is every police area still operating a separate accounting system that feeds back into this general ledger? There is one general ledger and there are certain underlying systems that have been unified, but in other areas there are still multiple systems across the country for subsystems such as payroll. There is mention made here that James Gray was on secondment from PWC. How expensive is that? I am afraid that I do not know the exact figure and that is a cost for the year 2016-17, which is not the year that we have audited 2015-16, so I am afraid that I do not have that figure available. Mention is made in your report on page 5 paragraph 6 about a shortage of capacity and competency in key areas. You gave an example of one area of capital accounting. What are the other areas where there are weaknesses? I will ask Jill to come in with a bit more detail. The overall conclusion was that there simply was not enough capacity at a senior enough level to be providing leadership for the work that needed to be done, particularly in terms of developing a financial strategy and putting in place the actions that flowed from that. The question then is whether people with the particular skills that were needed to do it, and Jill can tell you more about that. Yes, in particular, we have highlighted the need for very good experience-skilled finance professionals in the area of capital accounting. After all, together Police Scotland and the Scottish Police Authority have over £500 million of fixed assets, so you can see how necessary it is there. The other areas, as the Auditor General has highlighted, there were some 19 vacancies at a certain point in the year in the finance team in Police Scotland, and it numbers about 120 in terms of establishment. So there was a shortage of staff there, but also there is the new post. There has been over a period of time over the three years, they have been settling down their establishment for the two finance functions. By this stage that would be the accepted level. I am afraid that I cannot tell you what that is relative to three years ago if you were to take the aggregate of all of the finance posts. Being a layer on top of what is there already. There were definitely, during our planning stage for 15-16, there were acknowledged vacancies in the finance function in that establishment. The other areas of competencies are also to do with senior finance leadership in terms of driving the development of the long-term detailed financial strategy and also in terms of driving a very good level of accounts preparation and staying right up to date with all the technical developments in the world of accounting. Given that the Scottish Police Authority and Police Scotland are among the largest and most important public bodies that we have in Scotland, I think that we would all agree that it is really important that the public has confidence in both. But after three years of very poor audits, we are seeing that there continues to be weak financial leadership and management, would you accept that it is difficult for the public to have confidence right now? I say in my report and I said this morning that I think that the lack of progress that has been made in demonstrating financial leadership is unacceptable for any public body, but particularly for one of the scale and importance of policing in Scotland. I think that we should be able to expect that leadership, making good use of public money, accounting for the use of that public money. I make the point as well that there is scope for more transparency in the way that the billion pound plus budget for delivering policing in Scotland is being used. On the point of transparency, I think that that is very important. When I have been reading to the report, it is very concerning that the way that the Scottish Police Authority seems to conduct some of its meetings and businesses is very much shrouded in secrecy. Is maybe one way to put it? Are you able to explain the reasons for that? Why that approach has been so prevalent and it is very difficult for the public to see board papers and really scrutinise what is going on? I think that the reasons why are questions that you would need to pursue with the accountable officer perhaps with the chair of the board. We know that there has been a governance review which is still being implemented and I make the point that there is an urgency about getting those recommendations in place. Equally, the reason why I highlight in my section 22 report, for example, the lack of information about the content of the budget for Police Scotland is because I think that any public body should expect more transparency and scrutiny of the money that it spends and what it delivers for that. I do not think that it is acceptable to be simply signing off a one-line budget for 970 million pounds without more clarity about what that is intended to deliver and what it will be spent on, which would then enable greater accountability at the end of the process in what has been achieved against that plan. I was quite struck by what you said in your opening statement about the difficulty in undertaking the audit and there were nine draft versions. Are you able to point to anything that was perhaps frustrating the process? You said that that has been very unusual. I am happy to respond. I have been an auditor for many years and I do audit many other significant public sector bodies. We normally expect a better level of draft report in the first instance, and there are certain public sector bodies in Scotland where there is no change to the accounts between the first draft and the final set of accounts due to the quality of the preparation of the financial statements. That is also based on a very simple and straightforward extraction from the underlying financial statements for the preparation of those accounts and clear standards of very competent experienced finance professionals. It is a combination of all those areas that have added to the challenge for finance professionals within Police Scotland and Scottish Police Authority to prepare the accounts and then for our on-going audit of those accounts. That is quite concerning. Going back to the importance of confidence and trust, I think that that just arouses people's suspicion about why things are not being dealt with more smoothly. Just in terms of the important work that the police do, because we all recognise how hard our police officers are working in the front line in our communities to keep us all safe, but I cannot help ignoring that with the financial context in which they are working and the Scottish Police Federation, in fact I think that Callum Steele gave evidence to the Justice Committee this week. The way that he speaks of the crisis is that police officers are almost at breaking point, so it looks like it is becoming harder and harder for services to be maintained. We have all spoke about this in the past, but we all know through our case working from local circumstances of times where things have gone wrong. Do you recognise the strain and the stress that the police officers are under? In light of the financial deficit, it was £188 million in the report, but you are saying now that £200 million in real terms could be a conservative projection. What message will I send out to police officers serving across the country right now when they cannot see the financial conditions improving? All my reports since 2013 have recognised the great importance of policing to people right across Scotland and, secondly, the efforts of police officers and police staff to continue delivering as good a service as they can for all of us. We have also recognised that policing is facing significant challenges, new types of crime, cyber crime, a focus on domestic abuse, historic sexual abuse and so on, and some real challenges that need to be responded to for policing to stay relevant and able to meet demands. That is why getting this strategic financial management right is so important. The financial strategy that we have been asking for is a way of demonstrating that those demands can be met with the resources that are available, how that will be done or, if necessary, opening up a dialogue with the Government about what other changes are needed. That clarity is a really important starting point. At a slightly more operational level, we have heard concerns over the last few months about the quality of police stations and things like sexual abuse sweeps, where victims can be examined and interviewed not being fit for purpose. If those reports are true and underspend on the capital budget, it is a real missed opportunity to be investing in the assets, the resources, the buildings that the police need to do their job. There is clearly a concern there. We spend a lot of money on policing. It is a very important public service. To make it sustainable for the future, which was one of the objectives of the reform programme, we really need to make sure that the money that is available is being used in the right areas and that there is a tie-up with the strategic policing plan that is being developed. On the issue of police stations, I suppose that brings me to the review of the police estate. That is another example of perhaps a lack of transparency. It took for freedom of information requests and media pressure for that information to get into the public domain. The 58 police stations across the country are under review, and I know that a few of them are in the region that I represent. There seems to be a tension between Police Scotland indicating that we need to have a modern police force and there is a shift towards people dialing 101 and you do not always have to go into a police station, but at the same time there is very much an important role to have a front-line police service in a presence. Given that you have mentioned earlier on that there has been some inconsistency in terms of how assets have been reviewed, how positive can we be that the whole approach to this date review is the right one? It strikes me that there are some police stations that are older buildings and they have not been maintained and therefore some of the sweet symptoms are not fit for purpose, but it looks like the response to that is to close some of them. We are being told at a local level that there could be a shift towards shaved services with local authorities, but local authorities also have their own funding pressures at the moment. It is not very clear, and I know in our area that the consultation has not started yet. Do we have any indication that this estate review properly reflects the strategic priorities for Police Scotland and what checks and balances will there be in terms of scrutiny for the public? I think that it is very hard to answer the question about the estate review without being able to put it in the context of the longer-term vision for policing, policing 2026. It is clear that the way policing is delivered is changing and should change to reflect changes in society and our expectations. That may well mean closing some buildings, perhaps investing in others or investing in new ways of providing policing, but I do not think that you can decide what needs to happen to the estates without having that wider context for the way policing in general will be delivered. If there are changes involved, it is vital that people across Scotland have the chance to comment on that. The explanation is there for what is changing and why what is being proposed will be better than what has come before. It comes back to the need for the policing strategy to be publicly available and consulted on well and underpinned by a very good financial strategy that shows how the money will be used to deliver it. Can I just go back to the draft reports? I think you said there were nine draft reports, is that right? Within the space of what time? We would receive the first draft on 31 July and we signed the accounts in the middle of December. How does that compare to the normal timeframe with the public body? That is far longer than we would expect for a public sector body. Six months, six times longer, twice longer? At least double. If I can just go through these nine drafts, I think from what you said, it wasn't just drafting of text, it was the numbers kept changing. Is that right? That's correct. So if you look at the changes between drafts in terms of the numbers, what kind of numbers were changing, what kind of big ticket items were being changed or big ticket line items in the budget and what kind of order of changes are we talking about? Is it a couple of hundred thousand? Is it a couple of million here and there? More of the latter, but it would both be in terms of corrections that the accountants were identifying as they were doing their own quality reviews on the accounts. There would be items that the audit team had identified and notified the client of, but there was also one significant post-balance sheet transaction, which had the biggest impact on reporting the financial performance and this related to the termination of the I6 contract. And how much was that? So overall, the accounting entries that related to that initially capitalised figure for that project was £19 million. There was a degree, there was some compensation recognised during the year 15-16. There was also residual value, but there was an impairment, a charge to the I&E of £6 million in connection with that. So was the correction needed then £19 million or £25 million or £6 million? So there would be a whole series of adjustments associated with that, but the actual impact on the financial results was a cost of £6 million to the I&E. And who's responsible for preparing, making sure who's responsible is responsible within SPA? Cos am I right to interpreting what you said is that the mistakes were found by people out with SPA? So ultimately the chief executive of the SPA is the accountable officer for the whole set of accounts within SPA. You may recall that an interim chief finance officer was engaged from February of this year, largely not with a focus on the preparation of the financial statements, more associated with the development of the long-term financial strategy. So key personnel involved in the preparation of the accounts were largely within Police Scotland and the director of finance departed there and there was a head of finance and then in June of this year this was supplemented with the interim chief finance officer already referred to. So it was more those two individuals in Police Scotland that it felt to them to be involved with the preparation of the financial statements. So there wasn't the level of detailed scrutiny by a very senior permanent director of finance that we would see elsewhere across the public sector in Scotland. But I mean, these discrepancies, differences, whatever you like to call them, these are huge amounts of money, public money. I mean, you would be left with nine drafts and that's kind of scale of change being made. I mean, have we any confidence in the figures that were finally agreed? I have given an unqualified opinion on the true and fair view that is shown in the final set of accounts. So we did do a lot of audit work and we also work within the realms of materiality to gain assurance that what is represented for all readers of the accounts to have a confidence about the true and fair set of the accounts that was finally agreed. You make the fair point about the weakness of the financial leadership but as well as leadership there's an issue of basic confidence here, isn't it? And we also capture that in our report. So what measures have been put in place other than the change of personnel at the very top? What measures have been put in place to rectify the situation? Because clearly this is totally unacceptable. It's a very, very weak financial resource that appears to be operating within Police Scotland and within the SPA. So what further changes have been made or are being made or are planned to be made to rectify? Because surely if in year four we're still at this stage, then clearly there was something still far, far wrong in both Police Scotland and in the SPA. So we know that measures have been taken to recruit approximately 15 new accountants on an interim basis at this stage to the Police Scotland finance function and importantly an experienced individual has been recruited as the capital accountant just recently to take forward the fixed assets area. Those 15 recruits have they actually been recruited or are they included in the 19 vacancies? That is in response to having identified those vacancies, they're now filling those posts. They're filling the posts. Do you know how many are filled? No, the last number that was mentioned to me was that they were progressing with recruiting 15 additional people. I mean I take the point about the weakness, incompetence and leadership in finance but at the end of the day the senior management team, i.e. the chief constable and the chief executive of SPA and the chair and the board of SPA are the people who are supposed to provide the direction to monitor progress and all the rest of it. So it seems to me it's not just weakness in financial leadership, it's weakness in terms of the total management of the organisation. I have no doubt that the accountable officer is responsible for making sure that there is the capacity that's needed to provide that strategic financial leadership. The board has oversight of the accountable officer's responsibilities and in the case of SPA the chief constable obviously has a part to play as well. That failing is the reason for bringing my report to you again this year. We know what the responsibilities are but the whole point is they fail to live up to the responsibilities and carry out the responsibilities competently and satisfactorily and to an acceptable standard. That's why I've reported to the Parliament through this committee. I definitely think that the auditor general's suggestion of bringing the chair and the chief executive and the chief constable should all be invited together to come to this committee because this is a totally unacceptable performance. As has already been pointed out, there's a general lack of confidence in policing in Scotland at the moment. We know that morale is rock bottom amongst the police force and we know that the chief constable believes that he's 60 million short of the money that he needs to do the job that he thinks he's been asked to do. We've got to give them their say to see if that's all part and parcel of the same problem. That strikes me that this is an organisation in crisis in terms of the management of their finances. Would that be a fair description? I've been reporting since 2013 on the difficulties that policing in Scotland has faced in forming a single police service and putting in place a strategy underpinned by a financial strategy that shows that policing will be sustainable for the future. That was one of the objectives of reform and it's clearly unacceptable that we're now three years on without that strategy in place. What's the update on the IT systems because it seems to be equally shambolic? Yes, as I say in my section 22 report, we are doing some very specific work looking at what's happened at ICICS and I'm expecting to report that to Parliament in March of this year. We're dealing with another NHS 24 cat type crisis in IT as well? We know that the Scottish Police Authority took the decision last year to stop making progress with this system and as Jill has said, they reached agreement with Accenture, their provider, to bring that to a close. I'll be reporting on the circumstances around that and the consequences in March of this year. Do we yet know the cost of that shambles? I would prefer to hold back my comments until I report you in full. We talk in the report and Jill gave you a bit more information earlier this morning that around 19 million was written off at the end of 2015-16 accounts. There clearly are wider consequences than simply that write-off and that's why I'm doing it further. Is there a further write-off still to be done? There may be other costs associated with the decision to end the project and that's why I'm looking at the project as a whole. I mean, it obviously leaves you without being able to describe how bad the financial management is in Police Scotland and the SPA. It just goes from one crisis to another in terms of financial and IT management. There's certainly been a problem with the ICICS system that we shall report on. I think it's worth being clear at this stage that the failure to deliver that system is likely to have wider financial implications since some of the savings that were expected to come from reform were predicated on having a system that could deliver policing in new ways. Will that best now be delayed? The final question, without pre-empting, is what you're going to tell us later in the year, Auditor General. Clearly, when IT systems are not working in a police service, the worry is that that has a direct impact on the performance of the service. When you report to us, will you be telling us that there has been an impact on the performance of the service as a result of their IT shambles? I'm not prepared to pre-empt what I conclude in my report. We're in the process of finalising the audit work and clearing the facts with those affected by it. You're looking at the impact on performance and service level. I think that we say in the section 22 report what the coverage, what the scope of that work is, and we'll be reporting as fully as we can based on the evidence that we find. Can I suggest that we ask the Auditor General to include the impact on performance and service level, because that's what the public needs to know? And as far as we're able to do that, we will, but it will depend on the evidence that's available to us. Mr General, to go back to Alex Neil's point on accounting records, the chair of the SPA appeared before this committee last year. The previous committee said that because of a new system, there wouldn't be problems with keeping accounting records, but you've just told us that adequate accounting records have not been kept. Do you have any sense of why that progress hasn't been made, Gillian Willman? Yes, I'm happy to respond to that. With respect to the Audit of the Year 2014-15, when there was also a section 22 report, we particularly highlighted asset 4000, which was a new system to maintain their fixed assets records on. Things have improved with respect to that particular system, asset 4000, so we have seen improvements in respect of that. This year it was a different problem in connection with fixed assets and this is where the competency and experience of the finance professionals is really important. There was a new accounting standard that came in this year that the organisation, or at least the team of capital of accountants, should have geared up for. It did affect particular categories of assets. We're discussing investment properties, surplus assets and assets held for sale. All of those had to be correctly categorised in order for the revaluation process to be appropriately instigated and accounted for. I have to say that it's a slight shift in the problem this year. It was a new problem and it's not so much associated with systems, which was the issue last year, and to do with the competency and experience of the team at managing that system. Okay, that's interesting. That's twice in your evidence this morning that you've mentioned the competency of the financial professionals at the SPA, but you've said in your evidence today that other public bodies that you audit have—I'm sure that it's not exactly the same across the board—but that there are highly competent financial professionals in other public bodies. Why is it that the SPA seems to be your opinion, correct me if I'm wrong, that there is perhaps a lack of professional expertise in finance in the SPA? Is that correct? Yes, I'm conscious that over the three years that we've carried out the audit, there clearly has been a period of transition with the merger of all the predecessor bodies and there has been a revision and a reorganisation of the key personnel who are there. Certain experienced individuals have left as a result of the downsizing of the establishment of the rule. Really what's key is leadership to get the right structure functioning appropriately and the right recruits in place. I do feel that it's a combination of all those factors and the two bodies at the SPA and Police Scotland have not reached a satisfactory position in that regard. Do you feel that leadership lacks the financial experience or expertise to do that? We know that an important new appointment was made during 2016 to the leadership group in Police Scotland and a new chief operating officer was appointed in August 2016 and a new chief finance officer in Police Scotland will sit underneath that individual for going forward. That's quite an important structural change to the leadership group at Police Scotland, and that seems to be heading in the right direction for ensuring corporate services as a whole has a very high profile going forward. Colin Beattie. Thank you, convener. Just a quick question to clarify in my own mind. Reference has been made to the chief executive of SPAs being the accountable officer in terms of the finances. Doesn't Police Scotland have an accountable officer who is responsible for finance? The SPAs financial accounts include the expenditure and any income of Police Scotland, and the chief executive of the SPAs is the accountable officer for all of that expenditure. Clearly, the SPAs and Police Scotland need to work well together to enable that accountability to be delivered. We have been reporting since 2013 that understanding of roles and responsibilities and putting in place people who can deliver it effectively is still not properly in place. Clearly, it's not working. Should there be somebody within Police Scotland who has that accountability for the piece of the finances that are within Police Scotland? Absolutely, in terms of delivering the accountability, but in terms of the legislation that sets up the new structures of policing in Scotland, it's very clear that the chief executive of the SPAs is accountable for the overall budget, including the sum that's then handed on to Police Scotland. There's no doubt that within Police Scotland you need to have people who can deliver the assurance and the levels of financial management and control that the accountable officer needs to fulfil his responsibilities, but the formal line of accountability is from the chief executive of the SPAs to this Parliament for the money that's spent. Thank you for that clarification. Ross Thomson Thank you very much, convener. The first question is one of process. Obviously, being a new member of this Parliament, but more so a new member of this committee as well, just to help my own understanding. Your report came to Parliament two hours before Parliament went into recess. We've spoken about transparency, accountability and scrutiny and how important that is. To help my understanding, in terms of the decision-making process about when reports are presented to Parliament so that they can be properly scrutinised, what is that and who makes the decision as to when we can see it? The legislation requires that the annual report and accounts together with the auditor's opinion must be laid for most central government bodies and NHS bodies, must be laid in Parliament by 31 December following the end of the financial year to which they relate. As Gill has already said, for most public bodies that happens well in advance of that. We have some that I think are laid before the summer recess starts, most of them are laid September, October in most years. Because of the difficulties that Gill experienced in auditing the accounts of the SPAs to which we've referred this morning, the annual report wasn't signed off by the accountable officer until the Thursday before recess started here. There was a long delay in the process because of that. If I decide that I want to add a report to the annual report and accounts and the auditor's opinion using my powers under section 22 of the Public Finance and Accountability Act, that is done at that point. Section 22 reports are laid in Parliament by the Scottish Government. So there is a short delay between the signing of the annual report and accounts and the auditor's opinion and them being laid in Parliament. We liaised with the Scottish Government around when that was likely to happen to make sure that we were able to manage it as well as we were able to, but that happened as you say on the Thursday that the Parliament went into recess before the Christmas holiday. The final decision of the date and time of when it's tabled in section 22 lies with the Scottish Government in terms of when. We liais with them so that we can alert the committee clerks, the media and so on in a normal way, but formally the laying is done by the Scottish Government. Well thank you for that. That's helped with the clarity around about that. Obviously we've been discussing the financial situation of Police Scotland and my understanding is from figures that have been produced that Police Scotland actually paid out a record level of compensation payments. It was about £1.27 million in damages for 15, 16, it had been £1.17 million the previous year and that covers things from employment liability, public liability claims, motor liability claims and given the pressure that clearly Police Scotland is under financially and we're seeing this increase and it's obviously works out at almost every single day there is a claim when you look at the figures. Is this something which you've looked at yourself and have you any recommendations on what Police Scotland could do to make progress on this to reduce the amount of taxpayers money that's being used in claims? It's not something we've looked at in any detail and obviously the level of claims is likely to change from year to year depending on circumstances. I'd say first of all it's a question you may well want to explore with the SPA, but secondly I think it's another example of why a policing strategy and a financial strategy is so important. We've said in the past that trying to balance the budget in the absence of that strategy risks making decisions that have unintended consequences and there is at least a possibility that some of those claims come from that sort of action. Without having looked at it I don't know that's the case but there is a risk. Following on from questions by Monica Lennon round about staffing but staff welfare and officers who work day and day out and actually following on from Alex Neil as well who talked about competencies again my understanding is about 1400 officers have actually departed from Police Scotland since its creation and the equivalent in terms of experience is of about 40,000 years worth which is absolutely huge and given that we have in a quote the report a shortage of competency and capacity it is deeply worrying that we are losing people from the work that you've done do you think that that highlights that there's maybe something deeper in relation to Police Scotland that people are wanting to leave in the new setup and is there more that Police Scotland could never do to recruit and retain members of staff? I obviously can't speculate on the motivations of people who are choosing to leave my report in 2013 though did highlight that in the absence of a financial strategy there was a risk of expenditure being reduced in ways that weren't in the long-term interests of the force and particularly of the fact that in the context of a no compulsory redundancy policy and a commitment to maintaining a minimum number of officers at 17,234 there were limits to the ways in which the workforce could be reshaped and savings made from that large area of the budget. I feel I'm sounding like a stuck record with the committee and I apologise for that but all of that is a reason why the policing strategy and the financial strategy are so important to help those decisions to be made for the right long-term reasons rather than just to balance the budget this year. Mark, do you want to add to that? No, I mean just to reiterate that's the reason why ever since November 2013 we've been recommending that there was development of a long-term financial strategy underpinned in particular in the circumstance by a workforce strategy that looked for the longer-term needs of policing. I don't expect to see some of that within the policing 2026 documents which is expected to be put out for consultation in the early part of this year. I know that colleagues have mentioned community confidence in Police Scotland and I know in my own region in the north-east there's been real issues where the police are struggling to recruit people and when you are stretched staff-wise and resource-wise it makes it therefore unlikely you're going to see the bobby on the beat or they could attend the community council and things that the community have enjoyed for so long. I know that in the north-east again there's a recruitment drive going on and the feedback that we keep getting is that it's really difficult and I know that's a case in other parts of the public sector as well. From the work that you've done, do you see scope for Police Scotland to work more collaboratively with other public sector partners and any recommendations within that about how they can work closer together to recruit and I don't know if there's a role again there for Scottish Government to play in helping to support that, whether there's issues in about affordability, about housing, which can be identified that can help to meet some of the real recruitment challenges that we've got? I guess I'd say two things and then ask Mark to come in if he wants to add to it. The first is that I say two things and I've immediately forgotten what one of them is. The first is that the policing strategy I think provides a great basis for involving, engaging with consulting members of the public, local councils, the whole range of players who need to have that confidence in policing, not just at a national level but at a local level and we all expect that the way policing is delivered will need to change for a whole host of reasons, some of them positive, reflecting changes in society but without the strategy it's very hard to do that, to get people to think about what we're trying to achieve and what might be the different ways of doing it. The second is that Her Majesty's chief inspector of constabulary has found that following the governance review that local engagement has improved, that there's better engagement with local authorities and with community planning partnerships and that should be a really great base for looking at opportunities to work, to share premises, perhaps to look at what roles police officers play relative to social workers or other people in the criminal justice system. So there's something to build on there but it needs to be part of that bigger conversation about the way policing will change. Mark. Just very briefly, I mean I'm aware that there are conversations that go on at a senior level kind of between police, the fire and rescue service and the ambulance service about where there are opportunities for shared services and the Auditor General reported to your predecessor committee about progress with the integrated fire and rescue service last year and then that we identified that were examples of shared services and shared use of buildings and things but those were relatively few and far between at the moment and again that's something that we would be expecting to see developed further in the future. And lastly, I apologize if the question sounds in a way repetitive from what's been asked but in terms of transparency and again in the report that's highlighted in little transparency about the spending. Having read it I'm really personally not very clear where our one billion goes and in what way it's spent and that's a lot of money. What are your recommendations about how reported could be improved and that not just members of the public but members of government as well, members of the Parliament can be clearer on exactly how the taxpayers money is being spent? It's a really good question and one I feel strongly about so I think in terms of confidence in public spending and public services we should all be expecting a greater level of transparency. We try to think of it in terms of the budget cycle as a whole so at the beginning of the process where the SPA is approving the budget for Police Scotland I think there's room for more transparency about what has been approved and what it's expected to be spent on, what it's expected to achieve and at the end of the process the annual report and accounts should be comparing what actually happened with what that budget expected to happen again in terms of the money and what it was spent on and what we achieved for it, what services were delivered and what progress towards the planned outcomes to use that jargon was made as well. The Gillian makes the point in her annual report that there were shortcomings at both ends of that so the SPA approved a one-line budget for Police Scotland of I think £972 million with very little detail below that of what it would be spent on and the annual report and accounts in the early drafts didn't provide a clear readback to the budget that had been approved more than 12 months earlier and both ends of that I think needs serious attention to provide that transparency to allow accountability and to build confidence. In terms of doing that and I think that that's absolutely spot on what teeth is there to ensure that that does happen what teeth do you have I know you can make recommendations and suggestions but when we see clearly the improvements can be made for accountability sake and transparency sake how can we enforce that I know if that maybe sounds maybe a daff question but it was just if you could help me understand how you can actually meet those improvements and that they don't just sit in another report and never get an act to done. Where we have most leverage is in making sure that the annual report and accounts fulfil the requirements that are set by the financial reporting manual the responsibilities of the accountable officer and a range of other things and I think you can see that Jill has done that through her audit in making sure that the final version of the annual report and accounts met what it was required to do. Beyond that audit can only publicise what's happened it's not our job to make people do things because we need to maintain that independence. I think this committee plays a very important role in providing the scrutiny and accountability and really pushing for change where that's needed and the Parliament as a whole does I think in setting standards setting the expectation for what it wants to see and living up to it in its own budget and reporting cycle. Thank you very much. Good morning. I want to talk about people leaving the full accounts first of all note that exit packages were paid to 127 staff in the relevant year at a cost of £5.6 million, one of which was £200,000 plus, so an average of £44,000. Do you have any oversight of why we're spending so much on exit packages? Are these voluntary redundancies? Are these severance packages? I'll ask Gill to talk you through what we're seeing specifically in a moment. I think that it's important to set the context, which is to say that given we've gone from eight police services, police authorities and boards to a single one, there was always an expectation that there would be some departures. There were some services and functions that were duplicated that are being brought together and part of the purpose of reform was to generate some of those savings that could be reinvested in making policing more sustainable for the future. We've talked in this committee in the past about what the auditor's responsibility is there, which is about making sure that the scheme as a whole is fit for purpose, and then looking at the individual packages for members of the senior management of the organisation. I think that Gill can give you a bit more detail about what audit work she did in 1516. Yes, I can confirm that the Scottish Police Authority and Police Scotland have what they call a VRER scheme in place for the last three years. That's a voluntary redundancy and early retirement scheme. We have seen numerous large numbers of people leaving the newly combined organisations as a result. That was an objective at the front end of the establishment of the organisations and has continued to be important for remaining within budget for minimising costs. There are business cases for each of those arrangements to ensure that there is the appropriate payback over an appropriate period of time. There is also consideration of business need as to who can be released and from where across the organisation. Early days, we did participate and we did raise at a particular committee meeting to ensure that business needs had been considered in all cases with respect to key finance professionals who were departing under those schemes. This is a fairly standard area of audit work that external audit has had to look at across public sector bodies across Scotland now for the last few years in view of many of the transformation strategies that public sector bodies have in place due to financial austerity measures. Presumably, not all of the 127 people that exited under a VRER scheme. Is it fair to say that some at least may have exited as a result of a negotiated settlement? I'm not familiar with those cases. In respect of designing our audit work, we look at areas of materiality both in terms of value and of nature, but it did not arise that we were coming across significant cases of that nature. What I'm getting at, we've talked at length about to use the report's words, weak financial leadership. There have obviously been some senior financial people leaving the organisation in the past year. Presumably they didn't leave under a voluntary redundancy scheme or did they? Any key departures did not happen during the audit year 2015-16, which is what the audit is subject to. There was a departure subsequent to that year that would fall into the year 2016-17. That wouldn't be picked up in this report, so we'll have to ask the question next year then. That's what you're saying to me. I also want to follow up on a point raised by Mr Neill on the I6. I appreciate what you say about the report coming in March. On a more general level, the committee has heard quite a lot about I.T. We've heard about the CAP payments I.T. scheme. We've heard about the NHS 24 scheme. Now we're hearing about this I6 scheme. Do you have any comment on what confidence we can have in procurement procedures in general? That seems rather to be a pattern. You're absolutely right that I've reported more times than I would want to on significant problems with big I.T. systems across the public sector. We've reported on a number of individual cases over the last couple of years. Going back to my early days in this job in 2013, we produced a report then that looked back over experience over previous years and what had gone wrong. We have revisited that report several times and we think that the recommendations that we made were the right ones. The question is what's getting in the way of Government and Public Services being able to achieve, put into effect, those recommendations. We've said to this committee and its predecessors that we think that some of the changes that Government has made around strengthening the Office of the Chief Information Officer, strengthening their oversight of I.T. projects and programmes across the public sector are the right ones and we're not yet seeing the effect of those in terms of projects that in many cases started some years ago, given the lead time of it. I genuinely don't want to prejudge the conclusions that I come to in my report on I6, but there's no doubt there is a systemic issue here and the changes that we're seeing have not yet avoided those problems happening. In relation specifically to I6, and I do appreciate what you're saying about the March report, but presumably we already have an awareness, at least within the police service, of who's responsible for the system not having come into action. What's happened to those people? That's the question that I would very much prefer to hold off answering until you have in front of me my reports on what I think happened. You don't yet have that. That's fine. Thank you. Gail Ross. Thank you, convener. Good morning. First of all, when the creation of Police Scotland first came about, the aim and you've stated it yourself was to bring everything under one umbrella, so therefore we didn't have eight chief constables. We had one. Certainly from the feedback that I've had from local inspectors in my area, it's made things a lot easier for them with shared services and things like that. We touched on the IT and I really, with trepidation, look forward to your report in March. Again, I'm really disappointed that we're here talking about another IT failure in a public body. Ross Thomson made an important point. I look at the report and I look at the money that's being spent. We've got capital, revenue and the offset. We're looking at 188248 by the time of the end of this term and that terrifies me. I don't have any information as to why we're going to get to that stage and what needs to be done for us to stop getting to that stage, if you like. I think that it's really important that we have that information. Is there any information available? I know that it's an audit of SPA and Police Scotland as a whole, but they do have different divisions still. Are there any discrepancies between the divisions in their financial reports, or is it just as a whole? Gail's audit is of the SPA's accounts as a whole, which includes the expenditure of Police Scotland. I think that I would see the problem not as being differences in policing around Scotland, but first of all, the lack of progress in doing the long-term planning for what policing needs to achieve and how that will be afforded over the 10 years ahead, and then having financial management in place that makes sure that people are able to manage the budget and make savings in ways that live up to that plan. Gail may want to contradict me there, but I think that we see those as being the problems that need to be addressed, rather than at this stage differences in the divisions and the areas across Scotland. Thank you for that opportunity. I was reflecting on the long-term annual audit report that I present to the board at the end of the audit process. In the 2015-16 report here, I reminded them that the main financial objective for the SPA is to ensure that the financial out-turn for the year is within the budget allocated by Scottish ministers. I conclude in that report that it was evidence that service delivery is not being managed within overall budget availability. I am doing the report for the year 2015-16, and I was also at the time of concluding the report looking at the forecast deficit for the year 2016-17 at the current financial year. That also fits in with the Auditor General's overall emphasis about the importance of having a long-term financial strategy in place for management together to demonstrate how they are managing service delivery within the funds that have been allocated to them. I also reflect that in the report I tried to capture the extent to which the two interim chief finance officers have worked very hard to engage the highest levels of the leadership group across Police Scotland, because it is everybody's decisions that affect how money is being spent, and it is really important that the whole of the leadership group has a shared sense of responsibility about meeting that main financial objective. Who has the final say on where money is being spent? For example, if one of the local forces needs a new police car, who signs that off? Importantly, going back to the particular observation that we made, according to the Act by March 31 of each year, a budget must be set and agreed for Police Scotland, and that comes to the SPA board for approval. That would be the top of the hierarchy of all of the budgets that you refer to, that budget holders throughout this very large organisation should be working towards. That should be cascading up into a very clear budget for the whole of Police Scotland. What we did see on March 31 was a one-line figure of some £900 million so lacking the detail at the highest level and therefore one would have concerns about the confidence of all of the management budgets and accounts that are important for local decision makers to know the funds available for applying funds for the purchase of replacement assets. It might be worth just adding to that that from that overall budget, as Jill says, it cascades down to a number of budget holders right across the organisation. There is alongside it a set of standing orders and a scheme of delegation that gives an individual officer or member of police staff the authority to place orders up to a certain value perhaps in certain areas. Each of those budgets are being managed at quite a local level. The job of the financial leadership is to make sure that when you add all of that up it comes to the overall budget and not more than that. Lots of individual decisions have to be made by the budget holders. It is important that all of that holds together for the organisation's budget as a whole. I like that you use the word, it should happen, because it obviously hasn't been happening. Therefore, we have a top line, they have gone over that, but we have no way of seeing just where exactly that overspend has happened as you go down and down and down. It would be useful for us to know that. It is more of a comment, convener, with your indulgence really quickly, about the review of governance on page 8. It says about the report that focuses on strengthening governance, particularly interactions with local elected representatives, and I am glad to hear that that is improving. Certainly, in my five years as a local councillor, we have had very, very good local interactions with our force. We have a central committee, they come along to community safety meetings, community partnerships, area committees, ward forums, they are available, they come to our community councils. We feed into their local policing plan with our objectives, so I would just like to place that on the record that, certainly in my area, their interactions are excellent, so I don't know if you've got any comment on that, it's not really a question. We were also pleased to see HMI's conclusion that that local engagement had improved, and I think that he made the point that it's not just telling people at a local level what policing is doing, it's listening to what the local priorities are, getting them into the local policing plan and making sure that they can influence the national priorities as well, so it's a two-way straight. While we're on governance, just to follow that up, the chair of the SPA published his report on governance review, which contained 30 recommendations for the SPA Police Scotland and the Scottish Government. I think that 12 were completed by December. Do you know how many recommendations are aimed at each of the three bodies and how many have completed it? Off the top of my head, I'm afraid I can't remember what the distribution of the recommendations were. Some of them were to several bodies. They weren't necessarily directed to a single organisation. The last update that we had, which was very, very shortly before this report was finalised, was that 12 of those 30 had been completed. Some had been consolidated into others, which is why that number doesn't give a totally clear impression of what's happening, and implementation of some of them will be on-going into the future. Have a date been set for the implementation of the outstanding amount? No, I don't, but that would be something that I would expect that the chief inspector of constabulary is review to look at later in the year. He is committed to carry out an inspection of the Scottish Police Authority, which will no doubt pick up on the governance issues raised in that. Just looking back at the report, paragraphs 18 to 20, this is the section headlined financial sustainability. Over the page, we have an exhibit 1, which shows projected SPA deficits for a period currently to 2021, totaling nearly £200 million. We can see that this year's deficit is £17.5 million and next year's £59.5 million. Can you give us any indication of why the SPA is operating at this deficit, what you feel to be the implications and could this deficit have any impact on day-to-day policing? I'll start by telling you what this projection is and I'll smart to come in and answer the specific questions. In the absence of the SPA having produced its financial strategy, we thought that it was important for public accountability and for this committee's scrutiny to have a sense of the scale of the problem that's there. These are our projections based on current levels of planned expenditure, current levels of government funding for policing and some of the known pressures that we highlight over the page in paragraph 19. I think that what this boils down to is a recognition, as Jill said, that we think that at the moment the SPA is not managing its operations within the expenditure budget that's agreed for it and we're trying to give you an indication of the scale of that, the scale of the problem that needs to be addressed. Mark, can you tell us a bit more about the content of it? I don't have a great deal more to add to that. What we have done and, as the Auditor General said in her opening comments, we think that these are fairly conservative projections. We've also been in discussion with the Scottish Police Authority in the development of their long-term financial strategy that will underpin policing in 2026. Those projections are of a similar magnitude to the ones that they've been looking at. They do have slightly different assumptions underpinning them about, for example, cost of living rises for staff and officer costs, but broadly speaking, they're of the same order of magnitude. Can I just ask you—you said that these are conservative projections. By that, specifically, do you mean that it could be worse? You have underplayed the scale of the problem. We've made assumptions that there'll be a continuation of reform funding and things that the Scottish Government has provided to the Scottish Police Authority to date. Obviously, that's a matter for the Scottish Government whether that continues into the future, but our assumption has been that that would extend for the next five years. We've also reflected the Government's commitment to maintain a real-terms increase across the duration of that Parliament and made that again quite a conservative assessment in terms of what that increase will be. Just going back to those two years—the current year deficit is £17.5 million and it pretty much trebles on your projections next year—are you able to just clarify what are the factors behind you making that assessment? Is there any role in that from the Government's draft budget? It reflects what the details of the draft budget that was published just before Christmas contain, but then, as the Auditor General said, we've extrapolated on the basis of existing costs and existing income in terms of what is projected by the Office of Budget Responsibility in terms of future changes. It's an extrapolation from what we know about this current year, what we know about the budget and some assumptions about what might happen in the future. Police Scotland is expected to achieve £1.1 billion efficiency savings by 2025-26. Those are considerable deficit figures. How do you expect those deficit figures to impact on those efficiency savings? I'll start off, if I may, with a new reader's start here for new members of this committee, which is most of you apart from Mr Beattie. My report in 2013 was looking at the overall approach to police reform at that stage. It made the point then that the £1.1 billion was the figure that was in the outline business case when the reform programme was first brought to Parliament and has never been updated for changes that have happened since then. The SPA in previous sessions with your predecessor committee have given assurances that savings have been identified, which would, across the period of the reform programme, generate that £1.1 billion saving. We have been making the point since November 2013 that other cost pressures come into the mix at the same time. Again, it is one of the reasons why this financial strategy is so important. If we look at the 2016-17 forecast deficit there, that comes from the SPA's own forecast as of October 2016. We know that the revenue overspend is attributed to an overspending officer and staff pay costs and the slower progress that is planned in achieving savings in some of those areas. It may well be the case that the £1.1 billion in savings over the period is achieved, but there is still a financial gap between the resources available and what is needed to deliver policing. That is again why the policing strategy underpinned by a very strong financial strategy is so important. Just one final thing on that. The resources are required to deliver policing. We are looking at a cumulative deficit of, call it, £200 million. Can you tell me who plugs that hole? It seems to me that, with a deficit like that, either you deliver less service to avoid spending the money that you do not have, or you spend the money to deliver the service and then there is a £200 million hole. Who fills that hole if the latter decision is taken? Is that the Scottish Government? If the funding gaps that we are forecasting—and it is only a forecast—happens in practice, then the only people who can plug the hole are the Scottish Government. That would obviously require difficult decisions to be made about other areas of spend or about using the new taxation powers or the revenue borrowing powers that are in place. At a level below that, it is clearly not good practice for any public service, any public body to be operating without a financial strategy for how it will bring its income and its expenditure in line while delivering what it is expected to do. Having that clear line of sight that says either yes, we can do it and here is how, or no, there is a real problem and we need to go back and engage with Governments about it is the problem really that I am bringing to the attention of this committee. Colin Beattie. Thank you very much. Just a couple of quick questions. I am looking at paragraph 12 of the report. The capital allocated to the police was £38 million. There is a £19.4 million underspend. That is a huge proportion of the budget. Is it a question of timing and disbursement, or was it that they did not spend it? If not, what did they not spend it on? One of the contributing factors to the underspend is that they stopped a particular IT project from progressing during the year 2015-16, the same one that we have mentioned earlier. That would be one of the contributing factors to the underspend. Would it be the major one? I have to say that I do not know off the top of my head if it would be the major one. I would be interested in seeing a breakdown of that just out of interest to see what was not done. The second thing is paragraph 13. We have been talking about reform funding. It says here that a portion of the reform funds have simply been incorporated into recurring revenue expenditure. Was that done with the approval of the Government? Our understanding is that yes, it was. The fact that it has gone into recurring revenue expenditure masks how much the actual deficit is, do we know how much of reform funding went into revenue? Jill, to give you that figure in a moment, it is included in the annual report and accounts this year, as we say. More importantly, I entirely concur. The purpose of the reform funding was to enable reform to take place to help to bridge that funding gap. I think there has been £200 million worth of reform spending so far, and it is not clear what reforms have been achieved with it. Jill, have you got the figure to hand? I do not have the exact figure to hand, but there are three elements to how the reform monies have been applied. One area is with respect to VAT, one area is with respect to VRER and one area is the voluntary redundancy early retirement scheme, and the third area was intended for reform activity in discussion with key finance officers in the preparation of the accounts. As we saw a particular amendment with greater transparency in the annual accounts, there was recognition that that third element of reform monies, a lot of it was spent on current staff who were in post and had always been in post, but were working on activities that will lead to reform in the future. That was the discussion that was held with the Scottish Government to receive their approval for the application of reform monies in that respect. Saying that although it went to recurring revenue expenditure, it was, however, tenuously used towards the reform. The staff who were funded through those reform monies were working on activities that will lead to reform in the future. Those staff are going to stay there and be a recurring cost in the future, presumably. They are currently a recurring cost. On the back of that, is it common for the Scottish Government to allow capital budget under spends to be offset against revenue over spends? It is not common. Would approval be given for this at ministerial level? I think that it was given at official level within the accounting requirements of the financial reporting manual. Mark, do you want it? Yes, official level. Would the capital budget be deliberately underspent to reduce the over spend? I think that it is a question that you would need to address to the SPA, but you have heard from Jill that the major contributor to that was the cancellation of the I6 project and therefore not. So it did result in certain capital projects not being pursued? I think that the I6 project was cancelled for reasons that were not to do with the finances, but instead the likelihood that what was required could be delivered at a reasonable cost. Did it result in any other capital projects not being pursued? I do not think that we are aware of any others for which that was the case. That is possible. Something that we can pursue when we get the SPA in. On the I6, I know that you are bringing a report on this, Auditor General, but let me ask this anyway in case you can answer it. Has the SPA provided any projected savings that the police expected to realise during this in future years as a result of efficiencies arising from I6? There was a business case for I6 that set out both the expected costs and benefits, and that will be part of the report that I bring to you in due course. Okay, and what steps are they taking to develop ICT to achieve at least some of the hope for efficiency savings associated with the I6 project? I think that that is the question that you have made to ask of the SPA. Let me ask you one final question unless the other colleagues want to come back in. Rick Gilross. How much do Police Scotland pay on VAT? I think that it is around £20 million a year every year. Do other police forces in the UK pay VAT as far as we are aware not? No, not. Police Scotland are the only police force in the UK as far as we are aware, yes. Okay, thank you. Alex Neil. Just a quick factual question, and you may have mentioned it, but I haven't picked it up. You referred Auditor General to a cumulative loss of £200 million, I think. Shortfall, yes. Shortfall, right. Okay, shortfall. And that's up to 2020-21, is it? Yes. So what is the profile of that shortfall this financial year up for each year up until then? You'll find that in Exhibit 1 of my report on page 8. There's a short table that shows the projected shortfall in each of the five years. You couldn't just read it out for the record, could you? For the record, of course, I'm happy to help the committee. 2016-17, the projected deficit is £17.5 million, 2017-18, £59.66 million, 2018-19, £45.835 million, 2019-20, £37.436 million, and 2020-21, £27.811 million, giving a cumulative deficit by that point forecast at around £188 million. So particularly 2017-18 onwards, that is bound to have an impact on service provision and performance. If the SPA and Police Scotland don't find a way of addressing that projected shortfall through the policing strategy and the financial strategy, I think it would be hard to see how it could avoid having an effect on the delivery of policing. Will you, at some stage, be making an assessment of, if you can't come up with the resources to address that shortfall? Will you be, at some point, in one of your reports, making an assessment of the impact in terms of performance and service delivery of those shortfalls? I will certainly report to the Parliament and this committee at the end of the 2016-17 financial year on what the current position is. I will continue to do that for as long as I think there is something to be brought to this committee's attention. In terms of looking at the impact on performance and service delivery, I will continue to work closely with Her Majesty's chief inspector of constabulary to make sure that we are playing together to the best of our strengths and professional expertise to make sure that Parliament has that picture. In addition to having the chief executive of the SPA and the chief constable, we should also have a separate session with the director general for justice, because those figures are horrendous in terms of their impact on the provision of police services. We are very worrying, Mr Neil. We will decide later in this meeting who to invite back, if members want to invite people back. I think that we do on this report. Let me conclude, auditor general, by saying that this is the third year in a row that you have prepared a section 22 report on the SPA. Have you ever prepared three reports in a row on any other public body? I certainly haven't prepared a report in consecutive years which have had to report on such a relative lack of progress in such a significant area. I hesitate to give an absolute answer because I sometimes report on progress and it's a very positive report, and clearly that's a different situation. In the report, I said in my opening remarks that this is very unusual and I think that it's unacceptable. We'll take that to the relevant people when they come in. It's also the third consecutive year that the SPA's accounts have received a modified conclusion. The ramifications of that aren't 100 per cent clear. Other than reputational risk, what are the consequences of that? The purpose of the auditor's report is to provide assurance to Parliament and to people across Scotland that public money is being well spent. As Gill said, after a lot of hard work, the annual report and accounts received an unqualified opinion. They presented a true and fair view, but in each case there has been a particular area where Gill's auditor is required to report by exception where the expectations of good financial management have not been met in a very specific way. We bring that to your attention and we expect the audited body to put its house in order and, as we said, the progress in doing that has been slow. Is it your opinion that the public money under the SPA is not being well spent? I think that it's clear that the levels of financial management that we've seen so far don't meet my expectations as auditor general and the expectations that are set out in the financial reporting manual and other sources by government for public bodies. Did the public be concerned about that? The starting point for me doing my job is that it's very important that public money is spent well and accounted for well. It's a precondition for trust in public services and for a society that raises tax in a way that improves the lot of everybody that lives here. I think that this is an important public service and so far the SPA has not been able to demonstrate that it's living up to those standards that are expected of people responsible for spending public money. Thank you all three of you very much for your evidence this morning. Can I ask you please to stay seated for item number three to which we now move? Agenda item three, we have a response from the Scottish Government on the Auditor General for Scotland's report entitled Superfast Broadband for Scotland, a progress update. Can I ask members are we content to note this response and close our consideration of this report? Thank you very much and now move the committee into private session.