Fast changing environment for public finances strengthens need for transparent and comprehensive reporting

A substantially changed environment for public finances means that the case for financial transparency within a robust fiscal framework has never been stronger, Audit Scotland reports today.

With new devolved taxes and borrowing powers coming into force from April 2015, and further financial devolution expected from the Smith Commission Agreement, Audit Scotland has published an update on the Scottish Government's actions to further develop its financial reporting.

The report notes that the Scottish Government has a good record of financial management, and has continued to improve and develop its financial reporting framework since Audit Scotland's last report on this area in July 2013.

As well as setting out the principles and examples of good financial reporting, the update report also highlights that consolidated accounts for the whole of the Scottish public sector would help provide an overall picture of its financial position to strengthen understanding and transparency.

Caroline Gardner, Auditor General for Scotland, said:

"Scotland's public finances are on the cusp of significant change, at a time when services are facing considerable pressures from falling budgets and increasing demand.

"A transparent financial reporting framework to support these changes is more important than ever to safeguard public confidence and ensure accountability. This position was echoed by the Smith Commission in its recommendation that the Scottish Parliament should expand and strengthen independent financial scrutiny to support further devolution.

"It's encouraging that the Scottish Government has recognised the benefits of having a full picture of the public sector's financial position, and we welcome their efforts to build upon good practice to continue developing their financial reporting. The next step for the Scottish Government should be setting out details of how it proposes to improve and enhance its financial reporting."

Audit Scotland will continue to monitor the Scottish Government's progress and remains committed to helping develop a high quality fiscal framework which lays the foundations for sustainable public finances, and supports the Scottish Government to make policy decisions that are affordable in the long-term.