Audit and Assurance committees
Scope
This section gives general guidance on establishing and operating audit and assurance committees and providing members of audit and assurance committees with support in their roles.
Applicability
The guidance is relevant to all organisations to which the Scottish Public Finance Manual (SPFM) is directly applicable, including the core Scottish Government (SG), the Crown Office and Procurator Fiscal Service (COPFS), SG Executive Agencies, non-ministerial departments, and bodies sponsored by the SG.
Definitions:
Shall/must: denotes a requirement; a mandatory element
Should: denotes a recommendation; an advisory element
May: denotes approval
Might: denotes a possibility
Can: denotes both capability and possibility
Is/are: denotes a description
Links to guidance:
Principles:
- Defined in the Public Finance and Accountability Act (PFA Act) under sectons 1-20
SG guidance:
- Is available on the SG intranet
- the below Public sector guidance
Public sector bodies guidance:
-
HM Treasury Corporate Governance in Central Government: Code of good practice
-
HM Treasury: Audit and Risk Assurance Committee Handbook (April 2025)
Review/update
Lead area: Scottish Government Finance Directorate; Risk Control and Assurance Division – Governance and Accountability Branch.
For update/review of this principle please refer to the Guidance and Procedure available on the SG intranet or from the Governance and Accountability team, this includes information on ministerial approval.
Accessibility guidance is available on the SG intranet.
Audit and assurance committee
The Audit and Assurance Committee support the Accountable Officer and Board by reviewing the comprehensiveness and reliability of assurances on governance, risk management, the control environment and the integrity of financial statements and the annual report.
Good practice, in relation to corporate governance, requires that an organisation should be independently supported by an audit and assurance committee and all accounting entities to which the SPFM is directly applicable should establish audit committees. The board (or Accountable Officer) should establish an audit and assurance committee of at least three members, who should be either non-executive directors or, if there are insufficient non-executives, independent external members. Committees must be chaired by a suitably experienced non-executive director and at least one of the committee members must have recent and relevant financial experience.
The audit and assurance committee does not have authority in its own right over the management of risk, control, governance etc or over the operations of those bodies which conduct audit and assurance work in the organisation. Its overarching purpose is to advise the Accountable Officer and the Board, so they are able to make relevant decisions. It may offer opinions or recommendations on the way in which management of risk, control, governance etc is conducted. An audit and assurance committee should not take up the executive risk management function and must maintain its independence.
The Accountable Officer and the Finance Director should routinely attend the Audit and Assurance Committee. It is also normal for the Head of Internal Audit and a representative of the External Auditor to attend, and where relevant representatives of sponsoring or sponsored bodies. The terms of reference of the audit and assurance committee, including its role and the authority delegated to it by the board or Accountable Officer, should be made publicly available.
Audit committee handbook
All audit and assurance committees in organisations to which the SPFM is directly applicable are subject to the guidance in the Audit and Assurance Committee Handbook published by the Scottish Government setting out the fundamental principles of membership and work of audit and assurance committees, including explanatory good practice notes. A degree of flexibility will be appropriate in applying the guidance in the Handbook, particularly with regard to smaller accounting entities.
Reporting significant problems
Audit and assurance committees in the COPFS, SG Executive Agencies, non-ministerial departments and bodies sponsored by the Scottish Government service the specific assurance needs of their Accountable Officers and boards. They also have a role in providing the assurance required to underpin the governance statement provided by the Principal Accountable Officer (the Scottish Government Permanent Secretary) as part of the consolidated accounts of the Scottish Government. Audit and assurance committees must, at the earliest opportunity, notify the relevant Director General (Portfolio Accountable Officer) and Director General Assurance Meetings if they have identified a significant problem which may have wider implications. Where the Scottish Government sponsorship role is undertaken by an SG Executive Agency it is the Agency audit and assurance committee that should be notified in the first instance. Director General Assurance meetings will in turn report relevant issues to Scottish Government Audit and Assurance Committee (SGAAC).
Page updated: August 2026