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On Board: A Guide for Board Members of Public Bodies in Scotland


4.8 Audit Committees

Where a Board is responsible for budget expenditure, best practice dictates that Audit Committees must be established to advise the Board on internal control (including corporate governance) and audit matters.

An Audit Committee can:

  • promote the understanding of audit's role and status within the organisation;
  • enhance the independence and perceived value of internal audit;
  • provide a forum for senior management to discuss internal control including issues raised by internal and external audits;
  • assist the Head of Internal Audit in judging priorities; and
  • aid the co-ordination of internal audit, external audit and any other consultancy and inspection reviews.

The Audit Committee should:

  • be a formal sub-committee of the Board;
  • have at least three non-executive members, under the chairmanship of a non-executive member who should be someone other than the Chair of the public body or of any other sub-Committee of the Board;
  • have a clear programme of work and arrange its meetings to ensure effective delivery of that programme;
  • ensure that the Accountable Officer, Head of Internal Audit, Director of Finance and External Audit (as necessary) attend meetings (though not as members of the Audit Committee); and
  • have written terms of reference.

Items for discussion at committee meetings should include:

  • the Head of Internal Audit's annual report to the Accountable Officer;
  • the adequacy of governance and risk management arrangements;
  • the audit needs assessment and the resource implications arising there from;
  • findings from audit assignments;
  • major policy issues and their implications for internal control;
  • the plans and findings of external audit;
  • corporate governance compliance;
  • arrangements for securing Best Value, regularity and propriety; and
  • arrangements for delivering efficiency savings.

An example of a checklist is attached at Appendix 4.1 and there is also extensive guidance on Audit Committees contained within the Scottish Public Finance Manual. This will help you evaluate the adequacy and effectiveness of your organisation's Audit Committee.