Transport Scotland Annual Report and Accounts 2010/11


Scope of Responsibility

As Accountable Officer, I have responsibility for maintaining a sound system of internal control that supports the achievement of Transport Scotland's policies, aims and objectives set by Scottish Ministers, whilst safeguarding the public funds and assets for which I am personally responsible, in accordance with the responsibilities assigned. This is in accordance with the Scottish Public Finance Manual (SPFM) issued by Scottish Ministers to provide guidance on the handling of public funds. It sets out the relevant statutory, parliamentary and administrative requirements, emphasises the need for economy, efficiency and effectiveness, and promotes good practice and high standards of probity.

Shaping Up Review

Following the Scottish Government "Shaping Up" review a decision was taken to merge the former Transport Directorate with Transport Scotland on 1 August 2010. Two new directorates were created within Transport Scotland and the staff undertaking those areas of work remained based in Victoria Quay in Edinburgh. The existing internal control arrangements were also incorporated into the overall controls operated by Transport Scotland, many of which were common in relation to the services provided to Transport Scotland by the Scottish Government such as IT, HR, EASEbuy, SEAS and banking. Transport Scotland also agreed with Ministers to revise the structure of its governance arrangements and discontinue having non executive members on its Board, but continue to have an Audit and Risk Committee with three external members (one of whom Chairs the committee). The Accountable Officer will continue to be supported by the directors and meet regularly with them. Scottish Ministers and in particular the Minister with responsibility for Transport will continue to provide overall direction to Transport Scotland and the Accountable Officer.

The purpose of the system of internal control

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve Transport Scotland's policies, aims and objectives. I can therefore only provide reasonable and not absolute assurance of its effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise these risks, to evaluate the likelihood and impact of them being realised, and to manage them efficiently, economically and effectively. This system of internal control has been in place in Transport Scotland for the year ended 31 March 2011 and up to the date of approval of the Annual Report and Accounts. It is in accordance with the guidance from Scottish Ministers.

The risk and control framework

I have established a framework of responsibility for risk management, in accordance with the SPFM, with appropriate support, guidance and procedures from all parts of the Agency's business:

  • In conjunction with the Directors I reviewed the strategic and operational risks to the Agency's business throughout the year, and this is a regular item at the monthly Board meetings.
  • The Audit and Risk Committee has provided oversight of the Agency's risk management processes and strategy and Corporate Risk Register throughout the year.
  • Managers identify and evaluate risks to successfully deliver the Agency's operation and control objectives when they prepare and monitor directorate and business management plans.
  • I hold regular meetings with Ministers where both strategic and operational risks are discussed.

A high level Risk Strategy is now in place setting out a consistent approach to the implementation of risk management within Transport Scotland at strategic, programme and project levels. The Transport Scotland Risk Management Group is responsible for developing and maintaining the Corporate Risk Register and for facilitating the ongoing production and management of risk registers within project teams and Directorates and for enhancing the management of risk across all areas of the business.

Review of effectiveness

As Accountable Officer, I have responsibility for reviewing the effectiveness of the system of internal control. This is informed by the work of the internal auditors, the executive managers within the Agency, the Audit Committee and the external auditors in their management letter and other reports.

Assurance on the maintenance and review of internal control systems is provided by each of the Directors within Transport Scotland who submit an annual certificate of assurance covering their areas of responsibility to myself as Accountable Officer.

Risks to information are managed and controlled and the Agency is meeting the mandatory requirements set out in the Security Policy Framework developed by the Cabinet Office.

Transport Scotland's Internal Auditors (whose work is undertaken to Government Internal Audit Standards) submit regular reports to the Audit Committee which provide an independent opinion on the adequacy and effectiveness of the organisation's system of internal control together with any recommendations for improvement. The three categories of assurance used in these reports are substantial, reasonable and limited assurance.

I will ensure that any follow up work will be carried out in the coming year to deal with the points raised in the audits where a rating of less than substantial assurance has been awarded.
The Performance Audit Group (Halcrow working in association with Pricewaterhouse Coopers and Scott Wilson Plc) perform an external assurance role for all trunk road maintenance work.


Audit Area & Scope Outcome
1 Edinburgh Glasgow Improvement Programme Assurance Provided: Substantial In general, controls were found to be good, and audit recommendations were intended to strengthen the existing controls. In particular Internal Audit was impressed by the level of detail contained in the Project Execution Plan.
2 Minor Road Improvement Schemes Assurance Provided: Substantial In general, controls were found to be good, and audit recommendations were intended to strengthen the existing controls
3 Forth Estuary Transport Authority and Tay Road Bridge Joint Board Grants Assurance Provided: Reasonable The process for paying and monitoring these grants was transferred to the Trunk Roads and Bus Operations Directorate and it was recognised that there were certain weaknesses within the system. There were also concerns over the lack of clarity for the funding mechanism being used and the lack of associated governance requirements. These issues have now been resolved.
4 Land Valuations Draft Report issued and comments returned Assurance Provided: Reasonable In general, controls were found to be adequate where applied and the recommendations are intended to strengthen existing controls. The report commends the fact that the organisation identified the need for additional information and was proactively addressing this issue. However, certain issues were identified, in particular the lack of sufficiently detailed and accessible guidance, and the absence of some reconciliations.
5 Standing Financial Instructions Consultancy Work Report provided useful recommendations on how Transport Scotland can develop Standing Financial Instructions and an action plan to take this work forward has been developed with a view to completing it in 2011-12.

In addition to the above Reports, Internal Audit conducted follow-up reviews on:

  • Air Discount Scheme 2009/2010 (old Transport Directorate follow-up)
  • Rail Delivery Business Planning & Budgetary Control - 2009/2010 audit
  • Corporate Governance - 2008/2009 audit
  • KPIs - 2009/2010 audit
  • Bridge Maintenance & Data Migration - 2008/2009 audit
  • Road Scheme Design - 2008/2009 audit

I have set objectives for the Directors within Transport Scotland to undertake a regular review process to ensure that improvement to the assurance and control environment within Transport Scotland is monitored closely and, where appropriate, actions are in place to address any weaknesses identified to ensure the continuous improvement of the system.

David Middleton
Chief Executive
14 September 2011