Update on developing financial reporting podcast transcript

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Update on developing financial reporting - podcast transcript

I'm speaking today with audit manager Morag Campsie about our latest report which provides an update on developing financial reporting for Scotland.

  1. Morag, what is this report about?

Well in 2013, we published Developing financial reporting in Scotland, which highlighted the importance of comprehensive, transparent and reliable financial reporting to aid accountability and decision-making.

The financial environment in Scotland is changing substantially, so this update report highlights principles of public financial management and provides an update on actions the Scottish Government is taking to further develop financial reporting.

And what have you found?

Well, we found that the Scottish Government and the Scottish public sector generally has a good record of financial management and reporting. The Scottish Government has continued to improve and develop its reporting framework since we last published in July 2013.

The financial environment in Scotland is undergoing fundamental change. The Scotland Act 2012 introduces new financial powers for the Scottish Parliament, and of course with the Smith Commission Agreement this will lead to further devolution in the future.

So all of this means that the Scottish Government will have more control over, and responsibility for, its finances. The case for developing financial reporting has never been stronger.

The Scottish Government acknowledges the need to review and build on how it currently manages and reports its finances and we note it is building on current good practice to further develop its approach to financial reporting.

So what does good financial reporting look like?

  1. Public reporting of financial information can take a number of forms such as annual reports and accounts that show what a public body has spent and received and also what it owns and owes.

Our report highlights some good practice examples of transparent financial reporting in the Scottish public sector, such as the annual accounts being prepared to International Financial Reporting Standards and they're also audited by independent auditors who give assurance that the figures within the accounts give a true and fair picture of how that money has been spent.

In our report we highlight the case for consolidated Scottish public sector accounts, which would provide a better understanding of the overall financial position of the public sector - that basically means, what it owns and owes. Right now, it's difficult for the Scottish Parliament, taxpayers and others to get a full picture and understanding about where their money is spent and the longer-term implications for public finances.

We welcome that the Scottish Government has recognised the benefits of a full understanding of the overall financial position and the associated risks and opportunities.

So why should the public be interested in this report?

Well, the public sector in Scotland provides vital public services, including education, health, care services for people at all stages of their lives. Delivering these services involves a substantial amount of public money - for example in 2015/16 the Scottish Budget was around £37.5 billion.

Public finances are under increasing pressure; the money available for public services is falling while the demand for services is rising, so difficult decisions need to be made raising and spending this money.

So given this, it's important that the public is able to easily access clear, reliable and timely financial information so that they can be involved in and understand these choices. Financial transparency and a strong fiscal framework will support that aim.

So what happens now?

Well, the Scottish Government now needs to set out details of how it proposes to further develop and enhance its financial reporting in this fast-changing environment.

Audit Scotland is committed to contributing to developing this fiscal framework and we will continue to monitor progress and report as the Scottish Government develops its plans and as the new financial powers are introduced.

Morag, thank you.

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