Meeting of the Commission

Meeting date: Thursday, October 10, 2013

Official Report 184KB pdf

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Audit Scotland Budget Proposal 2014-15

Item 4 is Audit Scotland’s budget proposal for 2014-15. I invite the Auditor General to make any comments that she might have. I would appreciate it if she could touch on the potential impact of the liabilities that we spoke about under the previous item.

Thank you. As chair of Audit Scotland’s board, Ronnie Cleland will kick off, and I will add a few sentences, if I may.

Thank you. I will say a couple of things to give you the context. I appreciate that some technical and procedural issues have been raised that are beyond your and our immediate control.

I will say three things about the budget proposal. I draw your attention to the successful progress that we have made on cost reduction in our four-year plan, which I think is very noteworthy. I reassure the commission of the rigour that the board has applied to reviewing the budget proposals. We met on a number of occasions to go through them and the other board members and I are all content with the document and the presentation that is before you. Equally, we can provide reassurance to the commission that, in our view, the on-going reduction in costs will have no effect on the quality of our work. I know that that is an issue that the commission has raised previously and which it is rightly concerned about, as, indeed, is the board. The quality of our work is paramount to us.

I just wanted to set the context in terms of the board’s role in oversight of what is in the proposals and how we came to be satisfied with them. Caroline Gardner will now say a few words about the submission itself, in line with the information that the commission requires.

10:15

Thank you.

The paper that is before the commission sets out our budget proposal for 2014-15, which, as Ronnie Cleland said, completes our four-year plan to reduce the costs of audit by at least 20 per cent. We are requesting a total resource requirement of £6.6 million, which represents an overall cash increase of just 0.1 per cent on the approved 2013-14 budget. It comprises a slight increase of £64,000, or 1 per cent, in revenue funding, which is partially offset by a £55,000, or 21.6 per cent, decrease in capital funding.

The distinction between those two is important. We are required to account for revenue and capital differently. The increase of £64,000 in revenue funding relates specifically to the shift of responsibility for police and fire bodies from local government. Previously, that money was collected by the central Government sector through fees to those bodies. The £64,000 represents the share that we would welcome from the SCPA in funding our new performance audit responsibilities there under the central Government block.

Over the four-year period of our budget strategy, our proposals will deliver a real-terms reduction in audit fees of 23.5 per cent. In addition, we will deliver gross administrative costs that have been held at 2013-14 levels, which, in real terms, represents a 1.9 per cent reduction; a fourth year of overall cost reductions; and a freeze of most planned audit fees for 2013-14 audits at the 2012-13 levels.

I am pleased to confirm that the submission demonstrates the successful completion of our four-year medium-term financial strategy. We are now starting to look ahead to the period to come. We have made significant savings over the past few years, which, together with those in our proposed project, represent the limit of what we believe can be achieved at the moment in demonstrating that we are applying to ourselves the same financial disciplines that we expect of other public bodies across Scotland, while maintaining the range and the quality of the work that we are required to deliver at a time of significant financial pressures on all public bodies. We will continue to apply real discipline and rigour to ourselves, but the four-year budget strategy is now complete. We will take a longer-term look, in which we expect to consolidate the changes that we have made and to focus on demonstrating the maximum benefits that we can for the Scottish Parliament and for the wider public sector as a whole.

Thank you.

I am not clear where the liabilities that we have been looking at are reflected in the budget. You talk about delivering a four-year cut in fees and budget reductions, but how have you factored in the cost of those extra liabilities?

There are two different liabilities, which it would be helpful for me to take in turn. The first is the VAT liability that relates to the issue of the Accounts Commission’s VAT status, which we discussed at the beginning. At the moment, it is too soon for us to be clear what the likely outcome of that issue is. We have flagged it up at the earliest opportunity with the SCPA, as we did with our board, to ensure transparency, but it is difficult for us to predict what the scale of the outcome might be or how the issue should best be dealt with in the event that we are unsuccessful in explaining to HMRC why we think that its interpretation might not be correct. We will certainly keep the SCPA fully briefed as that process develops.

The second significant issue that we have discussed with the SCPA is the pension accounting adjustment, which comes through at the end of each financial year. For a long period, our position has been that it does not make sense for us to try to build that into our base budget. We are in an unusual position in that there is an overlap between our central Government accounting status and our membership of the local government pension scheme. The liabilities are extremely difficult to predict, as you can see from our submissions. They change significantly year on year from favourable to unfavourable, and there are extremely large variations in the scale of the numbers. They are always retrospective, and very small changes in the interest rates that are applied have a significant impact.

For that reason, we do not think that it makes sense to try to build those amounts into our standing budget for you. We would run the risk of either windfalls that we had done nothing to deserve or costs that we were required to meet that would have a big impact on our ability to deliver our business. Instead, we would like to continue the process of using end-year flexibility to cover them with you. As Russell Frith has outlined, the Government suggests that, in the future, that should be done through the AME process for Scotland as a whole rather than through the autumn budget revision DEL process. I hope that that helps to explain why you are not seeing those figures in the budget submission.

You have stated that you expect that those pension deficits will continue in the years to come. I realise that there is no certainty of that, but it is a strongly held opinion. Does that not indicate that you should at least be considering whether there is provision for that?

We think that it is not sensible to try to build the amounts into our base budget for a couple of reasons. First, they are likely to continue to fluctuate significantly because of the scale of small changes in the interest rate that is applied on the accounting adjustment that is needed. Secondly, it is simply an accounting adjustment, and the AME process is designed to cover those sorts of issues that are outside the control of either individual bodies or the Scottish Government as a whole. Our view is that that continues to be the best treatment for them, as it has been in past years in which we have had significantly favourable adjustments from which we have not benefited.

On page 6 of your budget proposal, you note:

“Continuing reform of the Further Education sector will also have an impact on audit work, as will the requirement to audit local authority charities.”

Can you provide further information regarding those two issues and advise us of any impact on future resources?

Certainly. I ask Russell Frith to pick that up.

As you will be aware, as part of the further education reform, a significant number of colleges are involved in mergers—in fact, all the planned mergers will take place during 2013-14—so we will have a smaller number of larger FE college audits to do. At the moment, virtually all the FE college audits are carried out by firms; therefore, there is a reduction in our fee income and an offsetting reduction in the cost of using firms in that area.

On the local authority charities, we are still establishing with each council the precise number of charities that will require to be audited. If councils are able to complete their reorganisation processes before March next year, that will significantly reduce the number of those charities. A year ago, there were around 1,200 individual registered charities among the 32 local authorities, which at that point would all have been required to be audited. Many authorities have made significant progress in merging those charities and bringing their number down to something much smaller, and we anticipate being able to cover them. We are separately agreeing the costs with each local authority, depending on their circumstances, so it will be cost neutral for us.

Thank you. I had not realised that there were 1,200 charities out there in schools. I presume that some of those will be new charities that have been formed through the non-profit-distributing organisation school building programmes.

Actually, none of the 1,200 is. They are, in the main, very old legacy or endowment-type charities that were formed around the turn of the previous century when individuals left money in the care of the structure of local government at that time to—to use a frequent example—pay for school prizes.

The bulk of Audit Scotland’s income comes from fees charged to public bodies. Table 3 on page 9 of your budget proposal shows that the budgeted income from charges to further education colleges has fallen from £512,000 to £408,000. Can Audit Scotland explain that change in forecast income in that sector? I ask the question particularly because you state on the same page:

“For Further Education colleges, charges will rise by 1% reflecting the terms of the competitive tender undertaken in 2010.”

The drop from £512,000 in 2013-14 to £408,000 in 2014-15 reflects the reduction in the volume of work as a result of the mergers, which is offset to some extent by a 1 per cent increase in the price of the work being done.

The same table shows that income from local authorities will fall by £295,000 at the same time as the income from Scottish Government departments and sponsored bodies will increase by £319,000. Can you provide an explanation for those year-on-year movements?

Yes. The local authority decrease is entirely the result of the abolition of the individual police and fire joint boards, and the increase in central Government income is largely the cost of auditing the new single Scottish Police Authority and the Scottish Fire and Rescue Service.

You have more or less answered the question that I was going to ask. Given the changes that are happening to the police and the fire and rescue services, do you anticipate further future efficiency savings over time, or are you accounting for all the efficiency savings that will be achieved by those changes?

We envisage that, from an audit point of view, there will be more work to be done in the first year than when the new organisations have fully settled down. During the first year, in several cases, they will have numerous legacy systems in place. For example, there will be several payroll systems still in operation for at least part of the year.

Do you see the changes contributing a major efficiency saving like the one that you have described in the colleges sector?

In terms of audit fees, yes. In the information that we gave to the Scottish Government for the financial memorandum to the Police and Fire Reform (Scotland) Bill, we suggested that the total cost of audit would fall by about half once the new bodies had fully settled in.

Over the years, we have recognised the efforts made by Audit Scotland to implement budget and fee reductions. Table 6 on page 14 highlights the progress that has been made over a number of years. Do those figures include any EYF that has been sought as a result of autumn budget revisions? What impact would they have had on the table?

The high-level answer is that the reductions that are shown there are not related to EYF but are instead related to the progress that we have made in restructuring our workforce and reducing staff numbers, changing the way that we work to ensure that those reductions do not limit our ability to carry out our role; to the tendering exercise that was carried out in 2010 for the audit firms appointed by Audit Scotland on behalf of me and the Accounts Commission; and to the savings coming from our property strategy, which is reducing the number and cost of the properties that we have to accommodate our staff around Scotland. On top of those things, there are a range of smaller efficiencies that we will continue to bear down on. I ask Russell Frith to clarify the impact of EYF on the figures in the table to which you refer.

Table 6 shows the total approved SCPA funding for the year. The figures in table 7, which shows the fee reductions, are independent of SCPA funding.

In some cases, the fee reductions are affected by EYF where we have specifically sought EYF for smoothing funding movements between years.

Are they already adjusted for that?

Russell Frith is telling me that I am misleading you, so I will stop and let him give you the detail before I go any further.

10:30

The fee reductions are the fee reductions that we have notified to each audited body for that audit year. In addition to those, we have given fee rebates when we have used money that you have previously approved under autumn budget revisions to provide a cash return, if you like, to the bodies concerned. The fee reductions are in addition to those.

Where are they reflected in the figure?

In effect, we are talking about timing differences. The overall reduction of 23.5 per cent, as shown in the bottom right-hand corner of table 7, is the correct overall figure. The meaning of the rebates is that, in effect, we have moved towards that total faster than we envisaged and so have been able to give money back in some of the intermediate years, but the overall figure of 23.5 per cent is the accurate total.

So the rebates are reflected in the fee figures.

No, convener. As page 14 says, the fee reductions are the average fee reductions that are baked into the fees charged. On top of that, as we say a couple of lines above, we have rebated fees totalling £2.5 million to audited bodies when our total expenditure in any given year was less than we expected. Because we are not able to carry that forward as reserves and use it to smooth, we have handled it through rebates, and that is accounted for you through our annual accounts, which you scrutinise, and through EYF when we have made use of it to carry cash forward for that purpose. The two together tie the 19.1 per cent to the 23.5 per cent, as Russell Frith said.

So the percentage increase is correct.

The percentage decrease is correct.

The percentage decrease is correct at 23.5 per cent.

That is right, yes.

At the top of page 18 of the budget proposal, you indicate that you are likely to seek £1.280 million as part of your budget proposals for 2015-16 to fit out a new office. Can you offer assurances to the commission at this early stage that that potential request for capital resources will be supported by a business case that will clearly demonstrate the longer-term saving that will flow from the initial investment?

The short answer is yes, we can certainly provide that assurance. I will ask Diane McGiffen to talk you through how we are planning for that at the moment.

We have been working under our property strategy for some time to rationalise our offices. The plans that we are working with at the moment take advantage of the expiry of the leases on our two remaining Edinburgh properties. The leases expire at different points and we are looking at minimising the cost of transition to a new property. We are actively looking across the whole range of property that is available at the moment and taking account of our needs, our desire to reduce our overall footprint, and our wish to secure an efficient and easy-to-run office environment that meets our business need to bring our teams of colleagues together to work across different sectors.

We have been developing our own specification for that. We have already moved from having three properties in Edinburgh to having two, which has generated significant savings for us, and we hope that the move that we make, which we see as being a long-term investment, will deliver revenue savings and operational efficiencies. To achieve that will require up-front capital investment and, obviously, we will be looking to get best value in everything we do.

The projections in the budget proposal are based on our best estimates of our experience of moving recently from our East Kilbride office to our Glasgow office, and we will refine and revise those projections as we approach the definite budget proposals that we will make to the commission.

Just for information, the East Kilbride offices are now closed; is that right?

Yes.

Successive administrations have encouraged the relocation of offices away from Edinburgh. Given that much of your work is done across Scotland, are you looking at relocating the Edinburgh office space to other parts of Scotland?

We are looking at where our client base is for the staff who work in the Edinburgh office. Although there is a move to relocate away from Edinburgh, much of our audit work is located in Edinburgh—for example, the Scottish Government accounts, the local authorities and other services, the Scottish Parliament and so on—so we need to balance accessible transport links, the nature of the work that people do, the available property and so on. We take all of that into account. However, I must lodge with you that a significant amount of the work of our staff who are based here is Edinburgh based.

It is also worth saying that, in addition to our Glasgow office, we have permanent office bases in Aberdeen and Inverness, as well as staff based in clients’ premises around Scotland. Our Edinburgh base is a relatively small proportion of our total staffing, reflecting the distribution of work across Scotland.

But your headquarters function does not need to be in Edinburgh, because it does not directly serve the clients.

As part of the business case process and the business strategy for property that Diane McGiffen described, we look at all our business needs. I think that we have two issues, one of which is that the size of our headquarters staff is relatively small in terms of people who are purely administrative, which is a small element of our work. Most of the staff who work in audit in Edinburgh audit bodies that are based in Edinburgh, such as the Scottish Government, other public bodies and the Scottish Parliament, or are performance audit staff who are currently mobile right across Scotland anyway. That is part of the reason why we think that we can reduce the footprint in Edinburgh. However, we think that we need to keep a base here in Edinburgh.

On page 19 of the budget proposal, you indicate that you will incur an additional 25 per cent on staff recruitment. Which posts are involved in that and why is there a need for an increase?

I ask Diane McGiffen to pick up on that.

We have been doing some restructuring and, at the end of quarter 2 this year, we were at about 94 per cent of our establishment, so we have some recruitment to carry out this year. We anticipate that, because our natural turnover rate has picked up and we have achieved our four-year plan, we will move into a scenario whereby we will need to replace many, if not most, of the staff who leave. We had a recruitment freeze for a period of time while we implemented the restructuring, and our recruitment costs went down. In addition, we annually recruit to our graduate training scheme, using assessment-centre methodology and other activities to attract the best-quality graduates that we can. The cost increases in the table on page 19 reflect our anticipation of the need to ensure that we replace any departures of staff and maintain a good recruitment strategy to continue our graduate recruitment scheme.

How many posts are involved in total?

I do not have the exact figure, but it will be based on the projection of our turnover. We are at about 94 per cent of our establishment at the moment.

That seems quite a sum of money—£125,000—to spend on recruiting people. Indeed, in 2012-13, there was a spike of nearly 65 per cent in the cost compared with the cost for 2011-12. Why is it so expensive to recruit staff?

We now extensively use online recruitment methods to reduce costs. Some of the previous costs that are reflected in our budget included the relatively expensive cost of widespread print advertising. However, we now use a smaller amount of print advertising alongside online resourcing and recruitment. We need to continue to advertise widely enough to attract the best-quality candidates into the mix that we have, which has some costs. The fluctuation in recruitment costs just reflects different points in the restructuring of the business.

Over the three-year period from 2011-12 to the proposed budget for 2014-15, there is an 80 per cent increase in the line for “Audit support—external fees”. Given the state of external markets and that many financial, accounting and legal firms have been laying off staff and struggling, why has there been such a spike in fees?

I ask Russell Frith to pick up that question.

In previous years, the lines that are now shown as “Audit support” and “Legal & other professional fees” have been shown as one. This year, we tried to break that out and be clear by distinguishing the two very different sets of professional support that we engage.

It is probably fair to say that the actual figure for 2011-12 of £390,000 was very much a low point. I seem to remember being questioned at the time by the SCPA on why we had not spent the budget for that year. In recent years, we have got better at planning when we are going to use the resource and which audits we will need it on, and we have got closer to the budget. As you can see, we envisage £731,000 in 2013-14, and the figure of £705,000 in 2014-15 will be a little bit down on that. That reflects a long-term process. The £390,000 figure was artificially low and the figures for 2013-14 and 2014-15 are a more realistic long-term trend.

I understand that the 2011-12 figure might have been unrealistically low, but between 2012-13 and 2013-14 there was an increase of almost 30 per cent, albeit that the figure is coming down for 2014-15. There was a significant increase in inflation, but it was nowhere near that figure, so why was there that increase and what was it for?

The 2012-13 figure was part of the journey to improve our planning and use of the resource. I do not have the budget figure for 2012-13 with me, but it would have been at least the same as that for 2013-14 and probably higher, so at that point we were still on a journey of improving our planning and budget management in the area.

The reason that it is volatile from year to year reflects the nature of the work for which we use the support. We do not have a particular level of support that we constantly use. We look for specific specialist help for the performance audits that we do in any given year.

It is also worth noting that within those figures is the cost of the national fraud initiative, which is carried out every other year and which builds in volatility. That is a UK-wide exercise, which in the past has been administered across the UK by the Audit Commission in England and Wales, and we buy into it. In future, it will be run by the Cabinet Office. Because it is a biennial exercise, volatility is built in by its nature.

That is in addition to our taking a much more business-focused approach, as Russell Frith said, to setting the budget for the other work in which we buy in specialist expertise to support our audit work, particularly the performance audit programme.

Notwithstanding that, I am not sure that I understand Mr Frith’s explanation. If improving budget management performance means a significant increase in costs, surely the logic would be that the more that you improve, the more expensive it becomes. Should improvement in managing performance and costs not mean stability or reductions, rather than significant increases?

Not necessarily, no. What I mean by improving planning and management is that, when we look at how much we will need in the next year and provisionally identify where we are going to use it, we follow that through and use it where we have planned to use it. In some earlier years, we planned to use external support and did not move sufficiently quickly to use it during the year. In some cases, it slipped over into future years.

10:45

So does the increase in the budget line during the period since 2011-12 reflect higher activity or higher charges by the external providers?

It is higher activity.

Okay.

I have a supplementary question. Diane McGiffen identified the anticipated spend on training. How much does Audit Scotland set aside for absences from its total budget?

Our absence figures for last year were about five days per person per year, which is very good when compared with wider absence figures. We presented those in our annual report and accounts, along with previous years’ figures. We do not set aside a provision for absence, but we actively manage absence and support colleagues to return to work.

How much then does absence cost in your budget?

You are asking me to do some hard maths when I am loaded with the cold. I would have to multiply the absence figures by the average daily rate which, if you give me a few minutes, I could seek some help to do.

Have the absence levels improved over the years, or are you still setting aside the same 3, 4 or 5 per cent of your overall budget?

In the past five years, our absence level has improved, although last year there was a slight increase because of a few cases of long-term sickness absence that we actively manage and support. Because our absence figures are relatively low, a small number of long-term sickness absence cases will impact significantly on the overall figure. We discussed that with our audit committee and board in our quarterly monitoring reporting, and we will report on the underlying trends and reasons for that at the end of the year. The figure was looked at closely during this year’s discussions because of that slight increase.

It would be good to get a figure for the past two or three years.

Certainly, Mr Pentland.

My other question is about the budget lines. My understanding is that you cannot carry over a surplus to the following year. I think that Hugh Henry touched on this. For example, the budget for training has increased to £405,000 for 2014-15. Am I to assume that, for the previous years, the total figure that was allocated was spent on training?

First of all, you are absolutely right that we cannot carry forward an overall surplus year on year. We can ask the commission to allow us to carry forward any underspend against our budget through EYF under the autumn and spring budget revisions. Any overspend against our budget is extremely bad news for me as Auditor General, because it means that our accounts get qualified and we go to great lengths to make sure that that never happens. Within individual budget lines, we obviously have overspends and underspends for a range of reasons. We manage them actively and they are subject to continual review by my management team and the board in their quarterly financial monitoring.

I ask Diane McGiffen to pick up the specific question about the training budget and the way in which it has developed over the years.

We have a series of detailed training plans with each business group and we have our annual performance appraisal and development process. We take a strategic look at our workforce and what we need to do and we have a workforce plan that informs the investment in training that we want to make because we are looking at our capacity and the shift in skills requirements. An example of that would be that we are keen to look at the ways in which we can enhance a more diverse range of data analysis skills that are available to support audit work and use through audit work.

Through the individual performance development programme, each member of staff sits down with their manager twice a year to discuss training, and to look at their development needs in their role and how they anticipate their role changing. We plan a programme of activities based on that. Some activities are tailored to meet individual needs and some of them look across the business at all the requirements. It means that we can achieve economies of scale and put on training programmes that meet the needs of a range of staff at the same time.

We have been active in training in the current financial year and we have offered a broad range of training and development opportunities for staff. Some of the training and development that we do has multiple benefits. This year, we have introduced a mentoring scheme. We have 25 pairs of mentors in the organisation, who are helping to look at development needs and other things in the organisation.

There is a rich mix of things going on. Not all of them have a financial cost that is met in the training heading in the budget. For example, the mentoring scheme is more of a time issue, which is reflected in our time budgets and so on. There is a range of ways in which we plan and manage learning and development. We then look at the flow of work and how we can organise to ensure that training and development happens. We review that at the end of every year and look at what people said they needed to support them in doing their job and whether it actually happened, and the extent of that gap. We then explore that with managers and staff.

I do not doubt for a minute that training is made available, but I am asking whether the budget request is solely spent on training. I would not like to think that some of the £405,000 that is earmarked for training next year will be spent somewhere else.

It is primarily spent on training. In previous years, we sometimes supplemented internally the training budget with other budgets rather than an outflow the other way round, as you are suggesting.

It would be good if you could provide the commission with a couple of examples of how the training budget is spent.

Certainly. I would be delighted to do that.

Auditor General, I am well aware of your time constraints, which have now been reached. There are a few more questions left. If you feel that you need to leave at this point, that is fine.

The commission is my first priority, convener. Thank you.

We will move on to Audit Scotland’s fee strategy, although Hugh Henry has already touched on the first question.

Yes, to an extent. Page 8 of the fee strategy indicates that there is a requirement for external firms to perform 37 per cent of annual audit work, but the figures show that external firms are paid 20.6 per cent of Audit Scotland’s budget. Can you explain the difference between the proportion of work that is performed by those firms and the resources that are paid over to them?

I will kick off and I suspect that Russell Frith will want to give you more detail. The 37 per cent relates to the annual audit work for the 200 or so public bodies for which I and the Accounts Commission are responsible. In terms of volume, 30 per cent of that work is carried out by firms and 63 per cent by in-house teams. We think that a mixed market is important, both for the ability to challenge the cost and quality between the different providers that we have, and because it allows us to learn from each other right across the sector.

The difference that you are referring to in the overall budget reflects that the annual audit work is not the only work that we do. We also have a programme of performance audit work that is carried out right across the public sector. There are audits of best value and community planning, primarily for the Accounts Commission, and there is also a significant and growing volume of work in investigating issues of public concern that are drawn to our attention by MSPs or members of the public. The balance there is closer to 20 per cent, as you said.

On page 14 of the fee strategy document, Audit Scotland advises:

“Total audit charges for a body comprise two elements ... the amount paid to the appointed auditor for the annual audit work ... and a fixed charge which covers the cost of performance audits, best value audits, National Fraud Initiative”,

et cetera, and

“a contribution to the central costs of running Audit Scotland.”

Can Audit Scotland give an estimate of the relative proportions of the annual audit costs versus the fixed charges?

It will vary between sectors, but I ask Russell Frith to give you an indication of that.

As Caroline Gardner said, it varies significantly between sectors according to whether the sector pays for all of the audit work. In the example of local government, if I remember correctly, the part for local government that is not paid directly to the auditor is now up at around 25 or 28 per cent, but that covers the local government element of performance audit work and all the best value audit work. So we recover fees from a local authority for a significant chunk of audit work, but that is not paid over to the individual appointed auditor because the work is done by the central Audit Scotland teams. The fees come down to below 10 per cent for areas such as further education or the bulk of central Government, where the performance audit work is paid for through the funding from the consolidated fund rather than being charged to audited bodies.

Thank you. I have a couple of other questions. On page 7 of the budget proposal under the heading “Pensions”, you state:

“Our proposals continue to include pension costs of £25k for the previous Auditor General”.

How long does that continue?

I will ask Russell Frith to keep me straight on the arrangement for the pension for the previous Auditor General. I preface my answer by saying that the arrangement is unusual. When the first Auditor General was appointed, it was not possible for him to be admitted to either the local government pension scheme or the civil service pension scheme for his period of service as Auditor General. He therefore has a specific arrangement that was put in place by the Scottish Parliament but administered and paid for by Audit Scotland. That arrangement does not apply to me or to future Auditor Generals, because the technical difficulties have now been resolved. I think that Russell Frith knows the background to the arrangement very well.

Yes. Under the arrangement agreed with the Parliament for the previous Auditor General, we pay the pension that he earned from his time as Auditor General, which is currently £25,000 a year. That will continue for as long as he lives.

As you said, the arrangement is unusual.

Very much so.

Members have no further questions, so I thank all the witnesses for their attendance. We now move into private session.

10:58 Meeting continued in private until 11:14.