09 January 2004
Auditor general Bob Black has criticised the Scottish Parliament for shortcomings and weaknesses in its system of internal financial controls.
He disclosed in a report on the 2002/03 audit of the Parliament, considered by its audit committee this week, that he had qualified his opinion on the regularity of expenditure.
Black said the audit had identified some shortcomings in the system of financial controls operated by the Scottish Parliamentary Corporate Body, the organisation that is responsible for the Parliament's management.
These shortcomings were caused in part by problems over the implementation of a new accounting system operated by the Scottish Executive.
Black added: 'There is sufficient evidence to confirm that the accounts provide a true and fair view. However, my qualification arises because I have been unable to place sufficient reliance on the corporate body's internal controls to form an unqualified opinion regarding the regularity and propriety of transactions relating to the 2002/03 financial year.'
Black emphasised that this did not of itself mean there had been irregular or improper expenditure. However, he said that, in his opinion, the corporate body did not operate satisfactory internal controls and that control activities in important areas were ineffective or missing.
By the final stage of the audit in December 2003, he had identified 290 discrepancies involving items that remained unreconciled between the corporate body's bank account and its ledger. The combined value of these amounted to about £5.3m, though a subsequent reconciliation showed the net discrepancy as only £300.
Black said controls needed strengthening. During 2002/03 there were ill-defined responsibilities and accountabilities and a lack of evidence to show quality control.
The audit showed evidence of weak procedures for the preparation and maintenance of accounts and it was necessary for the corporate body to resubmit its draft accounts for audit.
Audit Scotland had raised 'many issues' about the second set of draft accounts, the report showed. Final accounts testing found continuing errors, including income overstated by almost £2m, two compensating errors of £1m each on fixed assets, and errors in creditor accruals of £1m.
Black said action being taken by the Parliament to improve its internal controls included steps to fill the head of finance post, which had been vacant since April 2003.
He considered action taken by the principal accountable officer in response to the audit findings should significantly improve the Parliament's internal financial controls.
PFjan2004
