Draft Code of Audit Practice – invitation to comment

Code of Audit Practice consultation

The Auditor General for Scotland and the Accounts Commission for Scotland revise and approve a new Code of Audit Practice (Code) every five years to clearly set out what they expect from the audit of public bodies. Once approved the Code applies to all types of audit work carried out on behalf of the Auditor General and the Accounts Commission, to all sectors and to all auditors - whether Audit Scotland or accountancy firms.

The Auditor General and the Accounts Commission have agreed to a single Code of Audit Practice. It brings together the requirements placed on the Auditor General for Scotland under the Public Finance and Accountability (Scotland) Act 2000 and; the Accounts Commission under the Local Government (Scotland) Act 1973, together with current professional requirements and best practice to set a framework for public audit in Scotland.

Caroline Gardner

Auditor General for Scotland Caroline Gardner said:

“Independent, reliable and high-quality audit improves the use of public money and helps ensure the services we all rely on are as effective and efficient as they can be. The Code of Audit Practice is central to this, setting the principles of public audit and expectations on auditors. Through this we can maintain and strengthen the distinctive model we have in Scotland that safeguards independence, transparency and quality.

“Our consultation comes at a time of significant changes and pressures in public services. It’s crucial we hear views from as wide and diverse a group of people and organisations as possible.“

Graham Sharp

Accounts Commission chair Graham Sharp said:

“Independent external audit and assurance are essential features of public audit and the effective scrutiny of public services. This is even more important when finances and services are under pressure.

“This Code will help ensure that public audit in Scotland continues to add value to public bodies and supports the public and elected members to understand how public money is spent. The Accounts Commission welcomes your comments, particularly on the integration of best value audit reporting into the annual audit.“

You are invited to comment on the draft Code, which will apply to the audit of over 200 public bodies in Scotland from 1 April 2021, using the form below.

  Download the Code of Audit Practice 2020 consultation draft - PDF 950Kb


Draft Code of Audit Practice response form

Please respond by 27 March 2020. When answering the questions please provide relevant explanations and detail in support of your comments. You do not need to respond to all questions but only those where you have a view.

Audit Scotland may use your responses when explaining how we have acted on the consultation. Your response should therefore be regarded as public.

When submitting this form, you agree to Audit Scotland holding the information you have submitted for the purposes of this consultation.

Fields marked * must be completed.

The Auditor General and the Accounts Commission work together to establish arrangements that provide for independent assurance that public money is spent properly. The draft Code seeks to explain the arrangements for providing assurance that audits are carried out independently and to an appropriately high standard.
The Code is intended as a principles-based document which describes the purpose and scope of public audit in Scotland.
The Code is used to define the work which independently appointed auditors must do as part of their annual audit and do directly on behalf of the Auditor General and the Accounts Commission. The Code is supplemented by guidance to auditors and auditors must follow this guidance under the terms of their appointment. The Code speaks mainly to auditors to provide a framework for their work, for costing the audit and reviewing delivery. It also specifies what information should be communicated by auditors at the conclusion of the audit.
The Code defines the wider scope of public audit in Scotland. This goes beyond the opinion on the financial statements and extends the auditor’s reporting to include consideration of risks to financial management; financial sustainability; vision, leadership and governance; and use of resources to improve outcomes.
The draft Code aims to describe the auditors’ high-level responsibility for auditing best value and explain how this will be integrated with the work the auditor carries out on the annual audit of accounts and wider scope audit work. The Accounts Commission will wish to engage with stakeholders on its proposed approach to auditing Best Value in councils and IJBs. An outline of Best Value work requirements will be included in the Invitation to Tender.
The Auditor General and the Accounts Commission recognise that the cost of some audits based on the work required under the Code may seem disproportionate to the size or risks of an organisation. The draft Code includes provisions which could allow, in specific circumstances at individual audits, a more limited scope audit.
The scale and scope of public bodies vary widely across the public sector in Scotland. Bodies which are similar in size and scope may face different challenges and risks. Auditors have professional obligations to tailor the audit to identify and consider the significant risks at each individual audit.
The Code plays an important role in procuring high-quality cost-effective audits by requiring audit firms to submit tenders that describe how they would deliver audit work under the Code and at what price.
The Auditor General and Accounts Commission have traditionally placed limits on the type and value of work which appointed auditors can perform in addition to carrying out the annual audit of an individual body. This work is termed non-audit services and the process for requiring review and approval of such work is to maintain the independence of appointed auditors and guard against conflicts of interest.