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spfm

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Governance Statements

GOVERNANCE STATEMENTS 

Scope

Background

Format

Preparation

Significant Issues

External Audit

Scope

1. This section gives guidance on the governance statements to be provided by Accountable Officers as part of the annual accounts of all organisations to which the Scottish Public Finance Manual (SPFM) is directly applicable.

Background

2. A governance statement, for which the Accountable Officer takes personal responsibility, is a key feature of the organisation’s annual report and accounts.  It should cover the accounting period and the period up to the date of signature and provide the reader with a clear understanding of the organisation’s internal control structure and its management of resources.  The statement should be informed by work undertaken throughout the period to gain assurance about performance and risk management, providing an insight into the organisation’s risk profile and its responses to identified and emerging risks.

Format

3. There is no set format for a governance statement.  Essential features, however, are as follows:

  • the governance framework of the organisation, including information about the committee structure of the governing board (or equivalent) and the coverage of its work;
  • the operation of the governing board (or equivalent) during the period;
  • an assessment of corporate governance with reference to compliance with generally accepted best practice principles and relevant guidance*, and explanations where a different approach has been adopted;
  • an assessment of the organisation’s risk management arrangements and risk profile, including, subject to a public interest test, details of significant risk-related matters arising during the period;
  • a record of any written authorities provided to the Accountable Officer; and
  • details of any significant lapses of data security.

4. Any personal or confidential matters should be mentioned in suitably careful terms, with details reported to the external auditor.

Preparation

5. Preparation of the governance statement should be informed by: 

  • the views of the organisation’s audit (and risk) committee on the assurance arrangements;
  • the opinion of internal (and external) audit on the quality of the systems of governance, management and risk control;
  • assurances from senior staff along the lines of the framework described in the section of the SPFM on Certificates of Assurance; and
  • feedback from the delegation chain(s) within the organisation about its business, its use of resources, its responses to risks, and the extent to which in-year budgets and other targets have been met. 

Significant Issues

6. In putting together the governance statement the Accountable Officer needs to take a view on the extent to which issues are significant enough to warrant recording.  Questions that may be helpful in exercising that judgement include:

  • might the issue prejudice achievement of the business plan or other priorities?
  • could the issue undermine the integrity or reputation of the organisation?
  • what view does the audit committee take on the issue?
  • what advice or opinions have internal audit and/or external audit given?
  • might the issue make it harder to resist fraud or other misuse of resources?
  • does the issue put a significant programme or project at risk?
  • could the issue divert resources from another significant aspect of the business?
  • could the issue have a material impact on the accounts?
  • might financial stability, security or data integrity be put at risk?

External Audit

7. The organisation’s external auditor (normally persons acting on behalf of the Auditor General for Scotland) will review the governance statement for its consistency with evidence collected in the course of auditing the financial statement and with other work undertaken by the external auditor during the period.

*includes relevant guidance in the SPFM and any sector specific guidance such as Section 2 of On Board: A Guide for Board Members of Public Bodies in Scotland

 

 

 

Page Published / Updated: August 2018