1. Holding to account and helping to improve in times of austerity Robert Black

2. 221 January 2011Holding to account and helping to improve in times of austerity Main themes Audit, inspection and regulation and the new public management The Scottish Public Audit Model (SPAM) Recent developments Questions for the future

3. 321 January 2011Holding to account and helping to improve in times of austerity The New Public Management In the UK… Decentralisation of management authority Market-style frameworks Public choice Accountability to taxpayers and citizens through performance reporting Independent assurance from auditors and regulators In Scotland… High-profile policy divergence A move away from choice and contestability Emphasis on direct service delivery and partnerships Emphasis on outcome agreements Audit reporting to Scottish Parliament

4. 421 January 2011Holding to account and helping to improve in times of austerity Audit, inspection and regulation Reasons for the audit explosion… Asymmetry of information (principal agent problems) Complex accountability in the public sector Public appetite for eliminating risks Media headlines about service failures Reasons for streamlining scrutiny Reducing the burden of regulation Cost savings Stronger risk assessments Commitment to localism

5. 521 January 2011Holding to account and helping to improve in times of austerity The public appetite for regulation Media stories about bad things happening The need for… Protection (eg. failures in childrens services) Assurance on standards of services (eg clinical and cleanliness standards in hospitals) And support for telling the truth to power

6. 621 January 2011Holding to account and helping to improve in times of austerity Audit inspection and regulation Audit covers the whole organisation: corporate governance and management; the financial statements and financial systems; performance and reporting. Inspection is directed at specific services: performance standards, legislative and professional requirements; the needs of service users. Regulation is the authorisation or registration of bodies to undertake regulated activities; monitoring their compliance with statutory requirements and professional standards; may also include the prescription of compulsory activities and price controls. Auditors have a particular focus on the whole organisation and the use of resources; and provide a continuous presence at local level. Inspectors focus on professional staff and standards, and tend to investigate in greater depth on a periodic basis. Audit is independent whereas Inspectorates are directly accountable to Ministers. Economic regulation (Scottish water industry) is concerned with efficiency

7. 721 January 2011Holding to account and helping to improve in times of austerity SPAM Direct reporting line to Scottish Parliament, through AGS Independent appointment, quality control and payment of auditors Auditors apply a Code of Audit Practice approved by AGS and Accounts Commission, and supported by PAC Wide scope of audit… Annual audit reports on the Scottish Government consolidated accounts and on 200+ public bodies Covers financial statements and management, governance and performance systems Over 20 performance audits and Best Value audits last year Performance audits of whole systems and delivery chains

8. 821 January 2011Holding to account and helping to improve in times of austerity Public audit: hierarchy of expectations Facilitating Foresight Increasing Insight Promoting Performance and Efficiency Assuring Accountability Combating Fraud

9. 921 January 2011Holding to account and helping to improve in times of austerity Framework for a BV audit of a public body

10. 1021 January 2011Holding to account and helping to improve in times of austerity Shared Risk Assessments Crerar review of local government scrutiny arrangements: a new gatekeeper to: Improve scheduling and co-ordination of local government scrutiny activity Minimise duplication and overlap in planned scrutiny activity Make better use of shared information and intelligence Jointly identify and promote good practice Promote innovative and flexible scrutiny responses Deliver tailored scrutiny plans which reflect local risks and circumstances (including financial pressures facing councils and partners) This has delivered: National scrutiny plan for local government 32 Local Area Networks in place 32 Assurance and Improvement Plans 2010-13 38% reduction in strategic scrutiny work in councils compared to 2008 Some innovation and changed practices Better understanding of financial and other risks And in the NHS: Audit Scotland priorities and risks framework Stronger audit focus on major risks Almost 20% reduction (real) in audit costs by 2014

11. 1121 January 2011Holding to account and helping to improve in times of austerity Questions for the future The public value of audit where was the auditor? please help us to improve Managing risks in a time of spending cuts – a political as well as an executive challenge? Performance and efficiency incentives in the Scottish public sector – what needs to change? Scotland performs – how to link outcomes to outputs and inputs? Redesign and innovation in Scotlands public sector – how to make it happen on a big scale?