FOREWORD
Corporate governance is the way in which organisations are directed and controlled. It defines the distribution of rights and responsibilities among the different stakeholders and participants in the organisation, determines the rules and procedures for making decisions on corporate affairs including the process through which the organisation's objectives are set, and provides the means of attaining those objectives and monitoring performance.
Good practice in relation to corporate governance requires that the Board and/or Accountable Officer of a government organisation should ensure that effective arrangements are in place to provide assurance on risk management, governance and internal control. In this respect, the Board and/or Accountable Officer should be independently advised by an audit committee.
This Handbook* sets out the fundamental principles, with explanatory good practice notes, relating to the role, membership and work of audit committees in those individual accounting entities to which the Scottish Public Finance Manual is directly applicable, including the core Scottish Government, Scottish Government Executive Agencies, non-ministerial Executive Agencies and bodies sponsored by the Scottish Government.
The purpose of the audit committee is not materially affected by the Board or governance structure which it supports, but the size of organisation and specific governance arrangements may well impact on the way in which the audit committee functions.
Effective audit committees are key to a strong corporate governance culture and practices that are based on robust principles are a fundamental part of an audit committee's responsibilities. However, a degree of flexibility will be needed in applying the guidance in this Handbook to individual organisations.
Securing good governance is essential to the Government in Scotland and we commend this Handbook to you.
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Sir John Elvidge
Permanent Secretary for the Scottish Government | Alyson Stafford
Director of Finance for the Scottish Government |
* The Scottish Government Audit Committee Handbook draws on, and is consistent with, generally accepted principles concerning corporate governance and the role of audit committees. Relevant source publications include:
HM Treasury's Audit Committee Handbook (March 2007)
HM Treasury's Corporate Governance Code for Central Government Departments (July 2005)
Financial Reporting Council's Combined Code on Corporate Governance (June 2006)
Scottish Public Finance Manual
On Board: A Guide for Board Members of Public Bodies in Scotland (February 2003)