Contents

THE SCOTTISH PARLIAMENTARY CORPORATE BODY ANNUAL RESOURCE ACCOUNTS 2001-2002
(12 months ended 31 March 2002)

These resource accounts have been prepared in accordance with the Direction By The Scottish Ministers which is
reproduced in the statement of accounts at page 3.

The Scottish Parliamentary Corporate Body (SPCB) was established in May 1999 under Section 21 of The
Scotland Act 1998 (the Act). The SPCB is made up of the Presiding Officer; and four other members of the
Scottish Parliament elected by the Parliament . The SPCB has appointed a Clerk (who is also the Chief Executive) in
accordance with section 20 of the Act, and other staff of the Parliament. The SPCB is independent of the Scottish Executive.

The SPCB has a duty to provide the Scottish Parliament, or ensure the Parliament is provided with the property,
staff and services required for the Parliament’s purposes. This allows the Parliament to fulfil its constitutional role
of scrutiny over the Scottish Executive.

The SPCB provides the infrastructure which enables MSPs to undertake their duties both at the Parliament and in their
constituencies. It provides the facilities and staff to allow the Parliament and its Committees to meet and encourages
public participation in the process.

The SPCB has ultimate responsibility for the construction of a permanent home for the Parliament at Holyrood.

The main activity of the SPCB and its staff during the year was the continued support of the work of the Parliament.
There has been a continued development of the services in place to help Members conduct their parliamentary duties.
There was a continued increase in staff numbers and additional accommodation was required during the year to
provide the support and services required by the Parliament and the MSPs. During the year Committees continued to
hold meetings across Scotland.

The Scottish Executive moved to a new financial and management information system (SEAS) in the fourth quarter
of the financial year, and the SPCB’s financial systems were included in this.

The most significant current expenditure was on salaries, with staff salaries of £11.5 million and MSP salaries of
£6.9 million. Members costs, which enable MSPs to secure staff and accommodation to assist them in the discharge
of their parliamentary duties were £7.9 million.

The new Holyrood building remains the most significant capital expenditure project for the SPCB. In the light of
progress made during the year the building is scheduled for completion of construction and occupation in the 2003-04
financial year. The Holyrood Project accounted for £45.7 million of the SPCB's capital expenditure during the year.

There were no material events occurring after the year-end that affect the accounts.

INDICATION OF LIKELY FUTURE DEVELOPMENTS

The key future development for the Parliament is the delivery of the permanent home for the Parliament at Holyrood.
There will continue to be significant capital expenditure on the Project. There will also be major staff commitment
required to develop the services provided from the new Holyrood site and to ensure a successful move into the
new Holyrood complex.

SUPPLIER PAYMENT POLICY

The SPCB policy is to comply with the Confederation of British Industry’s Prompt Payers Code. The target is for
payment to be made within agreed payment terms or 30 days of receipt of invoices not in dispute for goods and
services. Payment performance for 2001-02 was 60%.

THE SPCB AND SENIOR MANAGERS

The Members of the SPCB were:

Sir David Steel MSP, Presiding Officer
Robert Brown MSP
Desmond McNulty MSP (resigned 13 December 2001)
Duncan McNeil MSP (appointed 20 December 2001)
Andrew Welsh MSP
John Young MSP

The Senior Management employed by the SPCB during the 2001-02 financial year was:

Paul Grice Clerk to the Parliament and Chief Executive
Carol Devon Director of Clerking and Reporting
Lesley Beddie Director of Communications
Stewart Gilfillan Director of Corporate Affairs
Alan Ezzi Director of Holyrood Project Team (resigned 22 June 2001)
Sarah Davidson Director of Holyrood Project Team (appointed 25 June 2001)
Ann Nelson Director of Legal Services

At the end of the financial year 43 staff were on secondment from the Scottish Executive and other organisations.
All other staff appointed to the SPCB for the year 2001-02 were recruited on the basis of fair and open competition and
in accordance with locally agreed arrangements.

The SPCB is an equal opportunities employer. It is firmly committed to providing equal opportunities for all of our staff irrespective of age, disability, gender, marital status, sexual orientation, race, colour, religion, nationality, ethnic or national origin.

"The SPCB is committed to promoting health and safety as a priority issue. Its aim is to take appropriate and reasonable steps to ensure that it conducts its business in such a way that employees and other people who may be affected by its work are not exposed to risks to their health and safety. "

To deliver this policy, the SPCB has established a Health and Safety Committee; developed procedures necessary to form a robust Health & Safety management systems; and is currently delivering a comprehensive training programme to enable all staff and other users of the Parliament accommodation to meet their Health & Safety responsibilities

The accounts are audited by auditors appointed by the Auditor General for Scotland in accordance
with section 10(5) of the Public Finance and Accountability (Scotland) Act 2000.

SCOTTISH PARLIAMENTARY CORPORATE BODY

DIRECTION BY THE SCOTTISH MINISTERS
in accordance with section 19(4) of the Public Finance and Accountability (Scotland) Act 2000

1. The statement of accounts for the financial year ended 31 March 2002, and subsequent financial years, shall comply with the accounting principles and disclosure requirements of the edition of the Resource Accounting Manual which is in force for the year for which the statement of accounts are prepared.

2. The statement of accounts shall give a true and fair view of the net resource outturn and cash flows for the financial year, and the state of affairs as at the end of the financial year.

3. This direction shall be reproduced as an appendix to the statement of accounts. This direction supersedes the one given on 29th March 2001.

Signed by the authority of the Scottish Ministers

Statement of the SPCB’s Responsibilities and the Clerk to the Parliament and Chief Executive’s Responsibilities as the Principal Accountable Officer for the SPCB

The Scottish Parliamentary Corporate Body has prepared the statement of accounts in accordance with the
Direction By The Scottish Ministers reproduced at page 3 and with the accounting principles and disclosure
requirements set out in the Resource Accounting Manual. The resource accounts are prepared on an
accrual basis and give a true and fair view of the SPCB's state of affairs at the year-end, the net resource
outturn, resources applied to objectives, operating cost statement, total recognised gains and losses and cash
flows for the financial year.

In preparing the accounts the SPCB has:

• observed relevant accounting and disclosure requirements, and applied suitable
  accounting policies on a consistent basis;
  
  
• made judgements and estimates which are reasonable and prudent; and
  
  
• stated whether applicable accounting standards have been followed, subject to any
  material departures disclosed and explained in the accounts.
  
  
• prepared the accounts on a going concern basis

The Clerk to the Parliament and Chief Executive is, by virtue of his appointment, Principal Accountable Officer for
the SPCB. The relevant responsibilities of the Principle Accountable Officer, including the responsibility for the
propriety and regularity of the finances of the SPCB, and for the keeping of proper records, are set out in section 16
of the Public Finance and Accountability (Scotland) Act 2000.

Independent Auditor’s report

Report of the Auditor General for Scotland to the Scottish Parliament

I have audited the financial statements on pages 8 to 19 under the Public Finance and Accountability (Scotland) Act 2000. These financial statements have been prepared under the historical cost convention as modified by the revaluation of certain fixed assets and the accounting policies set out on pages 13 to 15.

Respective responsibilities of the Principal Accountable Officer and Auditor

As described on page 4 the Principal Accountable Officer is responsible for the preparation of the financial statements and for ensuring the regularity of financial transactions. The Principal Accountable Officer is also responsible for the preparation of the other contents of the annual accounts. My responsibilities, as independent auditor, are established by the Public Finance and Accountability (Scotland) Act 2000 and the Code of Audit Practice, which was prepared by Audit Scotland and approved by me, and guided by the auditing profession’s ethical guidance.

I report my opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers and whether, in all material respects:

• the expenditure and receipts shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers, the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public Finance and Accountability (Scotland) Act 2000;
  
• the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the expenditure shown in the financial statements were applied in accordance with section 65 of the Scotland Act 1998.

I also report if, in my opinion, the Foreword is not consistent with the audited financial statements, if proper accounting records have not been kept, or if I have not received all the information and explanations I require for my audit.

I review whether the statement on page 7 reflects the Scottish Parliamentary Corporate Body’s compliance with its own guidance on statements on the system of internal control. I report if the statement does not comply with the guidance, or if the statement is misleading or inconsistent with other information I am aware of from my audit.

Basis of audit opinions

I conducted my audit in accordance with the Public Finance and Accountability (Scotland) Act 2000 and the Code of Audit Practice, which requires compliance with relevant United Kingdom Auditing Standards issued by the Auditing Practices Board.

An audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of expenditure and receipts shown in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Scottish Parliamentary Corporate Body and the Principle Accountable Officer in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Scottish Parliamentary Corporate Body’s circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error, and that, in all material respects, the expenditure and receipts shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinions

Financial statements
In my opinion the financial statements give a true and fair view of the state of affairs of the Scottish Parliamentary Corporate Body at 31 March 2002 and of the net cost of operations, recognised gains and losses and cash flows for the year then ended and have been properly prepared in accordance with the Public Finance and Accountability Act (Scotland) 2000 and directions made thereunder by the Scottish Ministers.

Regularity

In my opinion, in all material respects:

• the expenditure and receipts shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers, the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public Finance and Accountability (Scotland) Act 2000; and
  
  
• the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the expenditure shown in the financial statements were applied in accordance with section 65 of the Scotland Act 1998.

As Principal Accountable Officer of the SPCB, I acknowledge my responsibility for ensuring that an effective system of internal control is maintained and operated to safeguard the public funds and assets for which I am personally responsible in accordance with the responsibilities assigned to me.

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve the organisation’s policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.

The system of internal control is based on an ongoing process designed to identify the principal risks to the achievement of the organisation’s policies, aims and objectives, to evaluate the nature and extent of those risks and to manage them efficiently, effectively and economically. I expect to have in place by March 2003, the procedures necessary to implement fully the guidance set down in the Scottish Public Finance Manual. This target takes account of the time needed to embed fully the processes which the organisation has agreed should be established and to improve their robustness.

The SPCB receives an internal audit service under contract from Deloitte & Touche as external providers. The work of the internal auditors is informed by an analysis of the risks to which the SPCB is exposed, and the internal audit programme was based on this analysis. The internal audit programme was approved by me.

My review of the effectiveness of the system of internal control is informed by the work of the internal auditors and the senior managers within the organisation who have responsibility for the development and maintenance of the internal control framework, and comments made by the external auditors in their management letters and other reports. Deloitte and Touche have provided an annual report which contains a positive opinion on the adequacy of the SPCB’s financial systems. The SPCB Audit Advisory Board was established with a lay component after the year-end to provide guidance to the Accountable Officer on corporate governance issues and held its first meeting on 21 October 2002.

The following procedures to identify, evaluate and manage significant risks have already been implemented:

• Guidance on Risk Management has been prepared and issued. The SPCB has held risk management workshops and the output of these were risk registers together with the determination of a control strategy for each risk investigated.
• The SPCB has ensured that risk management and internal control will be considered on a regular basis at its meetings.
• A policy on fraud prevention and fraud prevention guidance have been approved and communicated to all staff.
• The SPCB formally agreed to comply with the principles of the Scottish Public Finance Manual.

For the financial year 2002-03 the SPCB has plans to:

• continue regular review of processes to identify and keep up to date the risk registers and related control strategies;
• promote good practice in risk management through regular awareness training;
• further develop key performance and risk indicators;
• run a development training programme for senior managers, which will include corporate governance and risk management;

As regards the Holyrood Building Project, I rely on our Construction Manager to apply appropriate day to day controls in accordance with a detailed Construction Management Agreement and on the Holyrood Project Team to monitor the Construction Manager's performance. I recognise that, in the course of this financial year, delays in securing trade contracts, performance bonds and parent company guarantees indicate that these controls did not operate as effectively as they should have. Action taken in response to an audit observation regularised the position and in the event none of the risks to which the SPCB had been exposed by these failures materialised.

The Scottish Executive moved to a new financial and management information system (SEAS) in the fourth quarter of the financial year, and the SPCB’s financial systems were included in this. Initial difficulties adversely affected both the Scottish Executive’s and SPCB’s payment and recording systems. A significant number of transactions were processed manually during the fourth quarter to ensure that the SPCB’s financial obligations were met. Action was taken to correctly account for these transactions and to identify weaknesses and strengthen controls and procedures to minimise the risks to the SPCB during this period.

The subsequent recording of these manual transactions on SEAS after the year-end date created difficulties with the reconciliation of the bank accounts, creditors and accruals. Significant additional work was required in order to rectify the accounting treatment of these balances. These problems arose specifically out of the implementation of the new financial system. They do not affect our on-going payment and recording procedures.