Accountability
Annual Report and Accounts 2022-23
Accountability
Accountability Report
The purpose of the accountability report is to meet key accountability requirements of the HM Treasury's Financial Reporting Manual for 2022-23. It includes the Corporate Governance Report, the Remuneration and Staff Report and the Parliamentary Accountability and Audit Report.
Corporate Governance report
The Corporate Governance Report describes Transport Scotland's governance structures and how they achieve the agency's objectives. It comprises the Directors' Report, the Statement of Accountable Officer's Responsibilities, and the Governance Statement.
Directors' report
Relationship with Scottish Government
Scottish Ministers are responsible for determining the overall policy and resources framework within which Transport Scotland operates. Until 30 March 2023, Jenny Gilruth MSP was the Minister for Transport and supported Michael Matheson MSP in his role as the Cabinet Secretary for Net Zero, Energy and Transport.
Following the new Scottish Cabinet being announced in March 2023, Kevin Stewart MSP was appointed as Minister for Transport on 30 March 2023, supporting Màiri McAllan MSP in her role as the Cabinet Secretary for Net Zero and Just Transition.
Following the resignation of Kevin Stewart MSP on 6 June 2023, the Cabinet Secretary's remit was expanded to include Transport, Net Zero and Just Transition. Màiri McAllan MSP is now supported by Fiona Hyslop MSP as Minister for Transport.
Throughout the period, Patrick Harvie MSP, Minister for Zero Carbon Buildings, Active Travel and Tenants' Rights, has had responsibility for active travel and the Future Transport Fund, which fall within the remit of Transport Scotland.
Transport Scotland forms part of the Net Zero Portfolio overseen by Director General (DG) Net Zero, Roy Brannen. The relationship between Transport Scotland, DG Portfolio and the wider Scottish Government is outlined within the agency's Framework Document.
The Chief Executive
The Chief Executive is the Accountable Officer to Transport Scotland. They are appointed by the Permanent Secretary as Principle Accountable Officer for the Scottish Government under the terms set out in their letter of appointment, in line with the Scottish Public Finance Manual.
The Chief Executive is supported by the Transport Scotland Senior Management Team, comprised of nine Executive Directors with specific responsibilities delegated from the Chief Executive, in addition to a direct support team and secretariat responsible for handling official correspondence. The Executive Directors are, in turn, supported by their own staff, with responsibilities aligned to Transport Scotland's corporate objectives.
Transport Scotland Directors:
- Alison Irvine, interim Chief Executive (from 20 March 2023)
- Michelle Quinn, interim Chief Executive (4 July 2022 - 19 March 2023)
- Hugh Gillies, Director (interim Chief Executive until 3 July 2022; Director since 4 July 2022)
- Kerry Twyman – Finance and Corporate Services
- Bill Reeve – Rail
- Lawrence Shackman – Major Projects
- Bettina Sizeland – Bus Accessibility and Active Travel
- Roddy Macdonald – Ferries (from 19 December 2022)[2]
- Stuart Greig – Low Carbon Economy (until 10 March 2023; director responsibilities lay with the Chief Executive until appointment of Morna Cannon as Interim Director on 1 May 2023)
- Frances Pacitti – Aviation, Maritime, Freight and Canals (until 17 March 2023; director responsibilities lay with the Chief Executive until appointment of Gary Cox as Interim Director on 1 May 2023)
- Fiona Brown – Transport Strategy and Analysis (interim from 11 January 2022)
- Stewart Leggett – Roads (interim from 29 November 2021)
Audit and Risk Committee
The external Members of the Transport Scotland Audit and Risk Committee provide the Chief Executive with further assurance in that role and by being members of major project boards. Throughout the reporting period, the Audit and Risk Committee was chaired by John Matheson. He is joined on the Committee by Lesley MacLeod and Graeme Dickson.
| Name | Position | Interests |
|---|---|---|
| Fiona Brown | Director of Transport Strategy and Analysis (interim) From 11 January 2022 |
|
| Hugh Gillies | Chief Executive Until 3 July 2022 Director from 4 July 2022 |
|
| Stuart Greig | Director of Low Carbon Economy Left post on 10 March 2023 |
|
| Alison Irvine | Chief Executive From 20 March 2023 |
|
| Stewart Leggett | Director of Roads (interim) From 29 November 2021 |
|
| Roddy Macdonald | Director of Ferries From 19 December 2022 |
|
| Frances Pacitti | Director of Aviation, Maritime, Freight and Canals Left post 17 March 2023 |
|
| Michelle Quinn | Chief Executive From 4 July 2022 Left post on 19 March 2023 |
|
| Bill Reeve | Director of Rail |
|
| Lawrence Shackman | Director of Major Projects |
|
| Bettina Sizeland | Director of Bus, Accessibility and Active Travel |
|
| Kerry Twyman | Director of Finance and Corporate Services |
|
| Name | Position | Interests |
|---|---|---|
| John Matheson | Chair; external Member |
|
| Graeme Dickson | External Member |
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| Lesley MacLeod | External Member |
|
Other disclosures
Personal Data Related Incidents
There were no personal data-related incidents reported to the Information Commissioner's Office (ICO) in 2022-23 (2021-22: None).
Supplier Payment Policy
We are committed to prompt payment of bills for goods and services in compliance with the Scottish Government's Public Finance Manual. We aim to settle all undisputed invoices within contract terms and also in line with the Scottish Government 10-day payment policy. We settled 95% of invoices within this timescale within 2022-23 (2021-22: 96%).
Basis of Accounts
The Transport Scotland accounts are prepared in accordance with the Accounts Direction issued by Scottish Ministers under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000. This can be found at page 169.
Departmental Accounting
These accounts reflect the assets and liabilities of Transport Scotland at 31 March 2023, and the financial results of the agency for financial year 2022-23, as required by and defined in the Government Financial Reporting Manual (FReM). As an Executive Agency of the Scottish Government, Transport Scotland falls within the reporting boundary and is consolidated within the Scottish Government accounts, as required by the FReM.
Auditors
The financial statements for 2022-23 were audited by auditors appointed by the Auditor General for Scotland. Audit Scotland carried out this audit and the notional fee for this service was £190,640 (2021-22: £189,960), which related solely to the provision of the statutory audit service. There were no payments made for non-audit work in the year.
Statement of Accountable Officer's responsibilities
Under Section 19(4) of the Public Finance and Accountability (Scotland) Act 2000, the Scottish Ministers have directed Transport Scotland to prepare for each financial year a statement of accounts in the form and on the basis set out in the Accounts Direction. The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of Transport Scotland and of its income and expenditure, statement of financial position and cash flows for the financial year.
In preparing the accounts, the Accountable Officer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:
- observe the Accounts Direction issued by Scottish Ministers, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis
- make judgements and estimates on a reasonable basis
- state whether the applicable accounting standards as set out in the Government Financial Reporting Manual have been followed and disclose and explain any material departures in the financial statements
- prepare the financial statements on a going concern basis
- confirm that the Annual Report and Accounts as a whole is fair, balanced, and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced, and understandable.
The Principal Accountable Officer for the Scottish Administration has designated the Chief Executive of Transport Scotland as Accountable Officer for the agency. The responsibilities of an Accountable Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the assets of Transport Scotland, as set out in the Memorandum to Accountable Officers issued by the Scottish Government.
The Accountable Officer has taken all the steps that she ought to have taken to make herself aware of any relevant audit information and to establish that the auditors of Transport Scotland are aware of that information. As far as she is aware, there is no relevant audit information of which the auditors are unaware.
Under Section 15 of the Public Finance and Accountability (Scotland) Act 2000, the Principal Accountable Officer for the Scottish Administration has designated the Chief Executive of Transport Scotland as its Accountable Officer. She is personally answerable to the Scottish Parliament for the propriety and regularity of Transport Scotland activities and for the economical, efficient, and effective use of all associated resources. The Accountable Officer is also responsible for signing the accounts of Transport Scotland.
Governance Statement
Corporate Governance Framework
The corporate governance framework is comprised of the systems, processes, culture, and values by which Transport Scotland is directed and controlled. It is concerned with the structures and procedures of decision making and accountability. It is used to monitor the achievement of corporate outcomes within the organisation.
The framework includes, but is not limited to, the responsibilities of the Chief Executive, the Senior Management Team, the Investment Decision Making Board and the Audit and Risk Committee.
According to the Scottish Government and Executive Agencies Accountability and Governance Policy, the Agency Chief Executive determines the appropriate structures for managing the operations of their Agency. This may take the form of a Management Advisory Board, which includes Non-Executive Directors, or by a Senior Management Team, operating as an advisory board without Non-Executive Directors. Transport Scotland adheres to the latter structure and therefore does not have a Board. Information relating to the Agency's Senior Management Team is available below.
The Chief Executive
The Chief Executive, as the agency's Accountable Officer, is responsible for maintaining a sound system of internal control that supports the achievement of Transport Scotland's policies, aims and objectives as set out by Scottish Ministers, while safeguarding the public funds and departmental assets for which she is responsible, in accordance with the Scottish Public Finance Manual.
The Senior Management Team
The Chief Executive is supported in discharging their duties by a Senior Management Team (SMT), an advisory body of nine Directors. In 2022-23, the SMT met on a weekly basis and provided support, advice, and challenge on a number of areas, including:
- Transport Scotland's values, vision, strategy, and objectives
- Corporate performance, including policy across the remit of Transport Scotland and the operation of the transport network
- Governance and delivery of projects
- Ensuring that Transport Scotland has the necessary financial, human, infrastructural and physical resources to deliver on its objectives
- Assurance on risk management, governance, and internal control.
Investment Decision Making Board
The Investment Decision Making Board (IDM) is a forum where Directors meet to agree on investment decisions within Transport Scotland, providing the Chief Executive Officer with assurances on:
- Value for money
- Financial implications (current year and future commitments)
- Fit with overall transport policy and strategic aims
- Technical assessment of options
- Procurement advice.
IDM is a management forum used to ensure delivery of the business targets and strategic direction agreed by the SMT and Ministers. It is not a sub-committee of the SMT, but minutes of IDM are circulated to SMT members for information.
The Chief Executive, as Accountable Officer, is the Investment Decision Maker within Transport Scotland. They may call on both Transport Scotland Directors and external experts to provide them with advice on the decisions to be made.
Project Boards
Some projects, due to their wider implications beyond Transport Scotland, have separately constructed Projects Boards. These operate within a bespoke Investment Decision Making structure but retain the Chief Executive as the Investment Decision Maker. The decision making process for these structures is consistent with the principles of the IDM Board.
Audit and Risk Committee
The Audit and Risk Committee is comprised of external members who bring constructive challenge and independent judgement to the governance of Transport Scotland. It meets four times per year, although the Chair has the power to convene additional meetings if required. The Chair also meets regularly with the Chief Executive and the Director of Finance and Corporate Services to keep abreast of developments.
In addition to the Committee's members, it is normally attended by the Chief Executive, the Director of Finance and Corporate Services, a representative of internal audit and a representative of Audit Scotland. Other Transport Scotland officials may also attend to support the consideration of specific issues as required.
The Audit and Risk Committee advises on risk management, control and governance, audit and the approval of the annual report and accounts, and assurances on corporate governance. The external members are also invited to participate in boards appointed for the governance, approval and oversight of major projects, investments, and climate change.
The Audit and Risk Committee receives copies of minutes of the weekly Senior Management Team meetings, as well as the monthly finance reports. It also meets with Directors biennially on an individual basis, as well as with representatives of internal and external audit privately on an annual basis.
The Committee produces an Annual Report, which supports this Governance Statement. This report summarises the Committee's work over the reporting period and assesses:
- The reliability and comprehensiveness of assurances received
- Issues pertinent to this governance statement
- Financial reporting
- The quality of both internal and external audit
- Its view of its own effectiveness.
The Audit and Risk Committee met five times over the reporting period on 26 April 2022, 22 August 2022, 6 October 2022, 21 November 2022, and 23 January 2023. Its members over this period were:
- John Matheson – Chair (attended four of five meetings)
- Lesley MacLeod – Member (attended all meetings)
- Graeme Dickson – Member (attended three of five meetings).
The Committee has considered the annual report and accounts and the Accountable Officer has taken account of, and confidence from, their comments and observations prior to signing this governance statement and the other parts of the annual report and accounts.
Best value
All public bodies in Scotland are responsible for achieving Best Value through sound governance, good management, public reporting on performance and a focus on improvement. Best Value provides a common framework for continuous improvement in public services in Scotland and is a key foundation of the Scottish Government's Public Service Reform agenda.
Transport Scotland operates on the basis of continuous improvement and progress continues to be made across all business areas to improve, document, and enhance systems and processes.
Risk management
Risks are managed at the level most able to deal with them, with the most serious risks being escalated to the Senior Management Team, and where appropriate, to the Director General Net Zero.
Our Risk Management Framework seeks to set out our approach to risk management and it continues to be reviewed and enhanced (in line with arrangements in Scottish Government) to improve the transparency of our systematic approach, identify risks and to link them to Corporate Planning and Objectives. The Risk Framework provides additional guidance on assessing risks and their impact, with a scoring system that recognises both likelihood and impact.
There is a robust framework of responsibility for risk management in accordance with the Scottish Public Finance Manual. The system for assessment and control of risk is as follows:
- The Chief Executive reviews the strategic and operational risks to achieving the objectives of Transport Scotland, in conjunction with the Directors, regularly at Senior Management Team meetings
- The Audit and Risk Committee provides oversight of our risk management processes and strategy and Corporate Risk Register
- Managers identify and evaluate risks to delivering objectives successfully when they prepare and review their plans
- The Chief Executive meets regularly with the Directors and Ministers, where both strategic and operational matters are discussed.
Risk Management Group
The Risk Management Group is appointed by the Senior Management Team to review, oversee and advise the SMT on the Transport Scotland Risk Register and risk management processes. Chaired by the Director of Finance and Corporate Services, it has representation from each of the Directorates and meets every three months, aligned to Directorate SMTs and the DG Assurance process.
Risk Review Group
Members of the Risk Management Group also attend the Risk Review Group. This is chaired by the Transport Scotland Risk Champion and meets on a monthly basis. The role of this group is to provide a forum for members to discuss the approach to risk in their Directorate, horizon scanning for potential emerging risks that may impact the organisation as a whole and identifying risks for recommendation for urgent escalation to the Transport Scotland Corporate Risk Register in between Risk Management Group meetings via the Director of Finance and Corporate Services.
Risk appetite
Transport Scotland aligns with the agreed risk appetite for the wider Director General Net Zero Portfolio.
Key risks
Throughout the financial year 2022-23, we have continued to identify and manage organisational risks. The most significant risks identified were as follows:
Financial - Budgeting
Operational - Trunk Road Maintenance Clyde-Hebrides Ferry Services Significant Incidents Asset Management - Sponsored Bodies
- Project and Programme - Climate Change Plan
- Reputational - Future Transport
- Security - Cyber Resilience
- People - Wellbeing.
Further detail on these risks is included in the performance report (pages 38-39)
Managing information and information security
We are committed to ensuring information is managed and valued, with appropriate protection and use of our information assets. The handling of data and information carries significant risks, and we take information security very seriously, in compliance with Scottish Government sponsored and adopted Security Frameworks and Data Handling policies.
The Transport Scotland Agency Data Protection Officer oversees the process for handling security incidents and staff guidance is available on what to do in the event of a breach. All information security incidents are logged, and lessons learned exercises are carried out for all reported security incidents.
In addition, we follow the Scottish Government key principles for good information management in that:
- We treat information as a Scottish Government resource.
- We are all responsible for our information.
- We make information accessible to others who have a need to use it.
- We keep records of what we do.
- Our information is accurate and fit for purpose.
- Our information complies with regulations and legal requirements.
All our users of Information Technology must comply with the Scottish Government Code of Conduct.
All staff are required to complete a mandatory General Data Protection Regulation (GDPR) e-learning course on an annual basis. The Information Governance and Data Protection team regularly monitors completion rates and issues reminders where required.
During the year 2022-23, no incidents relating to personal data were reported to the Information Commissioner's Office (ICO) (2021-22: None).
Counter fraud
All cases of actual or suspected fraud are investigated promptly and appropriate action is taken, in accordance with our fraud, bribery and whistleblowing procedures, which specify how cases will be dealt with and how staff can report suspicions or concerns.
Our Fraud Officer updates these procedures in our Fraud Response Plan, which is reviewed annually, with updates communicated through staff notices and awareness sessions.
The Plan also includes a bespoke section on Cyber Resilience, in order to recognise its importance. Our ICT Team reviews and develops best practice, improves staff awareness, and monitors our bespoke systems against exposure. We are a pilot organisation for Cyber Resilience within Scottish Government and have achieved Cyber Essentials accreditation. Preparations began within 2022-23 to obtain Cyber Essentials Plus accreditation.
The Plan also contains further guidance and advice in relation to emerging and increasing fraud risks as a consequence of the Covid-19 pandemic and the transition out of it. This has resulted in many significant new challenges for the public sector. We recognise that the need for heightened controls and robust governance is now greater than ever, so we continue to develop and to review mitigations in relation to potential Procurement and Mandate Fraud, as well as ensuring robust controls across all new ways of working and raising staff awareness.
We have continued to encourage staff to undertake training and review regular updates and staff notices distributed by the Fraud Officer, guiding colleagues, particularly to counter fraud eLearning training courses available on the Civil Service Learning website.
Details of cases of actual or attempted fraud that become known during the financial year are reported within the Fraud Log that is reviewed by the Audit and Risk Committee, together with responses and any further mitigation. There were three cases of suspected fraud highlighted during the year (2021-22: three). However, these continue to be investigated to ascertain if there is evidence of wrong doing or malpractice, or if these can safely be closed. Information continues to be shared with Police Scotland whether this is deemed appropriate.
There is a separate Concessionary Fares Fraud Team due its unique operating environment. We participate in the National Fraud Initiative (NFI) in Scotland, led by Audit Scotland, which matches electronic data within and between public and private sector bodies to prevent and detect fraud.
Business continuity
Our Business Continuity Plan sets out our approach to dealing with events that could cause business interruption in our response to:
- Identify risks
- Establish clear areas of responsibility
- Ensure we can continue to provide essential functions and services
- Identify measures to recover /repair assets damaged or lost
- Identify a medium- and long-term recovery strategy.
The plan was reviewed in response to the Covid-19 pandemic to ensure that it remained fit for purpose and provided sufficient assurance.
We continued to mitigate the impact of EU withdrawal, following the preparation and communications between Ministers, Scottish Government, UK Government, and key partners in the process. This will involve staff across Directorates implementing the revised arrangements reflected in the UK Withdrawal Agreement that have an impact on procurement and international travel and freight.
Our Business Continuity Plan has been successfully deployed and demonstrated to operate effectively, with lessons learned reflected in updated plans. We also have a Cyber Incident Response Plan, which details how we will respond to any live cyber threat and provides guidance on processes and procedures that should be followed in response to any cyber incident.
In 2022-23, our staff moved to a more hybrid form of working. This comes after a few years of most staff working from home as a result of the Covid-19 pandemic. Our approach to hybrid working will continue to be phased and collaborative, and we have sought discussion and feedback from colleagues in order to make the transition safe and successful.
Internal audit
The Scottish Government's Directorate for Internal Audit and Assurance (DIAA) reviews specific areas within Transport Scotland as identified and agreed in the Annual Audit Plan. After reviews have been undertaken, reports are submitted which provide an assurance rating to the Chief Executive.
The annual rating of Reasonable Assurance Controls provided by DIAA were reported as 'reasonable'. This is defined as 'controls are adequate but require improvement'. The annual rating was based on the assurance reviews and advisory activity undertaken over the year, the findings and actions put in place to address recommendations. A total of three assurance reviews were completed in-year as follows:
- Cyber resilience – Limited Assurance (three high, one medium and three low recommendations)
- Governance of Climate Change – Reasonable Assurance (5 medium and one low recommendation)
- Asset management – Substantial Assurance (one medium recommendation)
Transport Scotland continues to work with DIAA to progress and build actions to implement the recommendations, received in-year, as well as those carried forward from previous years, into our future work programme.
External audit
Audit Scotland prepared an Annual Audit Report in November 2022 as part of their audit of the Annual Report and Accounts 2021-22 for Transport Scotland. The matters and recommendations found therein were raised and have either been addressed by management or actions have been put in place to address these within Transport Scotland.
Whistleblowing
We are committed to ensuring a high standard of conduct in all that we do, with a duty to identify and remedy any area of malpractice. We achieve this through encouraging a culture in which employees feel confident to raise their concerns about potential wrongdoing. Employees can report any suspected wrongdoing through their own line management or via a Nominated Officer. All whistleblowing cases are investigated thoroughly, ensuring that lessons are learned to encourage continuous improvement. Transport Scotland follows the Scottish Government's Raising a Concern under the Civil Service Code and Whistleblowing Policy.
In 2022-23, there were no cases reported under the Whistleblowing Policy within Transport Scotland (2021-22: none).
Review of effectiveness
I, as the Accountable Officer, have responsibility for reviewing the effectiveness of the system of internal control. This is informed by the work of Internal Audit, Directors' assurance, the Audit and Risk Committee and external auditors.
Directors provide annual certificates of assurance covering their areas of responsibility. These are supported by completion of an internal control checklist on an annual basis, covering all areas of corporate governance.
In addition, we maintain an assurance map, which sets out both corporate and directorate processes that provide assurance on achievement of our objectives and identifies officers responsible for ensuring these are accurate and up to date. This document is shared with internal and external audit and reviewed by the Audit and Risk Committee.
Our internal audit is provided by the Scottish Government Internal Audit Directorate, and they submit regular reports to the Audit and Risk Committee on the adequacy and effectiveness of the organisation's system of internal control, together with any recommendations for improvement. Follow-up work is carried out to confirm the effective implementation of recommendations agreed as a result of the audits.
The Performance Audit Group (Turner and Townsend working in association with The Waterman Group, WSP and PriceWaterhouseCoopers) audits, monitors, and reports on an independent basis on the financial, technical and performance aspects of the work carried out by the Trunk Roads Operating Companies, and this provides external assurance for trunk road maintenance.
The Office for Road and Rail also reviews and reports on an independent basis on the financial, technical and performance aspects of Network Rail undertaking the operation, maintenance, and renewal of railway infrastructure in Scotland to provide assurance on the adequacy and value for money of the discharge of these obligations.
Audit Scotland external auditors assess the extent to which they can place reliance on the individual reviews undertaken by Internal Audit to inform their opinion on the financial statements, depending on their relevance.
On the basis of these assurances, I can confirm that sound systems of governance, risk management and internal control, consistent with the requirements of the Scottish Public Finance Manual (SPFM) were operational over the year ended 31 March 2023 and up to the date of approval of the Annual Report and Accounts.