The audit process

Auditor

The accounts are audited by the Auditor General for Scotland in accordance with section 22(1) of the Scottish Parliamentary Commissions and Commissioners etc. Act 2010. The Auditor General appointed Audit Scotland as external auditors for a period of five years starting with the year to March 2023.

Auditor's Fees

The external auditor’s remuneration for the year was £18,890 (2022/23: £17,820).  External audit received no fees in relation to non-audit work.

Statement of losses and special payments

We are required to disclose any losses or special payments where the amounts incurred are over £300,000. These include such items as losses due to fraud or overpayment or extra-contractual payments made to contractors. The ESC incurred no such losses and made no such payments above or below the limit in 2023/24 (2022/23: None). 

Gifts made and received

We are required to disclose any gifts made with a value over £300,000 and gifts received or any value where there is a special need to report them. The ESC neither made nor received such gifts either above or below the limit in 2023/24 (2022/23: None).

I authorised these financial statements for issue on 2 October 2024.
 

Authorisation
 

Ian Bruce
Accountable Officer
Date: 03 October 2024

Parliamentary accountability and audit report

Staff report

Staff numbers

The number of full time equivalent (FTE) persons employed by the Commissioner at the end of the reporting year was as follows:

The number of persons employed by the Commissioner at the end of the reporting year, disaggregated by sex, was as follows:

As at the end of the reporting period, all staff members were employed on a permanent contract (2022/23: all permanent contracts).  At 31 March 2024, the organisation was carrying forward one vacancy.

Funding for an additional 7.4 (FTE) roles was approved by the SPCB in October 2022 following a workforce planning exercise.  Five of these roles were recruited in 2022/23, with four of these new employees taking up their posts in 2023/24. Two further roles (1.5 FTE) were recruited and started before the end of the reporting year, leaving one full-time vacancy carried forward at 31 March 2024. The Commissioner has concluded that the work to be completed by that post will instead be done by a contractor by way of a fixed term contract over the next one to two years. This is intended to save public money in the medium to longer term.

Staff costs (Audited)

Salaries include a provision covering the value of outstanding leave (the leave accrual). Staff costs, excluding severance costs and temporary staff, increased by 63.2%. This was due to the filling of pre-existing vacancies and the recruitment of new staff following a workforce planning exercise in October 2022.

Severance payments

No exit packages were required in 2023/24 (2022/23: None). 

Staff pension arrangements

Employee pension benefits are provided through the Civil Service pension arrangements.

The Civil Service pension arrangements are unfunded multi-employer defined benefit schemes in which the Commissioner’s office is unable to identify its share of the underlying assets and liabilities. The scheme actuary valued the Civil Service pension arrangements as at 31 March 2020. You can find details on the Scheme Valuations page of the Civil Service Pensions website.

During 2023/24, the Commissioner paid employer’s contributions of £233,500 to the Civil Service Pension arrangements (2022/23: £136,700) at one of three rates in the range 27.1% to 30.3% (2022/23: 27.1% to 30.3%) of pensionable earnings, based on salary bands.

The Scheme Actuary reviews employer contributions usually every four years following a full scheme valuation.

The contribution rates are set to meet the cost of the benefits accruing during 2023/24 to be paid when the member retires and not the benefits paid during this period to existing pensioners.

Outstanding scheme contributions at 31 March 2024 amounted to £22,562 (2022/23: £13,397). The uplift is due to an increase in staffing levels in the reporting year. Employer contributions for 2024/25 for the Commissioner and employees is budgeted to be £298,000 (2023/24: £215,000).  The increase in budget is primarily due to the introduction of a new flat rate of 28.97% for employer contributions across all salary bands that applies from 1 April 2024.

No persons (2022/23: No persons) retired early on ill-health grounds; the total additional accrued pension liabilities in the year amounted to nil (2022/23: Nil).
 

Average sickness absence

The average sickness absence per person was as follows:

The average sickness absence decreased again during the year as a result of an extended period of leave in the previous year coming to an end. The underlying trend continues to show a gradual decrease and falls well below the organisation’s ten-year average of 4.2 days.

Staff turnover

The figures include any agency staff and employees on fixed term contracts.

Staff turnover, that had been high for a number of years, reduced during 2021/22 and has stabilised. 

Diversity, equality and inclusion

The Commissioner supports the principle of equal opportunities in employment and operating practices.

It is the Commissioner’s policy to treat all job applicants and employees equitably regardless of age, disability, sex, gender reassignment status, marriage or civil partnership status, maternity or pregnancy, race, religion or belief or sexual orientation. As part of standard recruitment practice, applications are encouraged from all people who share protected characteristics that are currently not reflected in our workforce.

The Commissioner is committed to recognising and valuing what everyone has to offer. We are aware of our equality duties under the Equality Act 2010. In our policy development and our decision making we consider the implications for all staff in line with the Equality Act.

Employee participation

The Strategic Plan which concluded in March 2024, incorporated a range of actions designed to improve and develop employee relations. The new Strategic Plan for the period 2024 to 2028 has a specific objective stating:

“We value people and recognise that unless we have staff who are valued and supported to maintain their wellbeing, feel happy in and proud of our work and the way in which we do it, we will have failed.”

A suite of HR and operating policies and procedures are developed and maintained with staff input and consultation. Formal staff surveys on key topics are regularly undertaken.

Organisation wide staff meetings are held on a monthly basis, to supplement those for individual teams. The minutes of all Senior Management Team meetings are published, with updates provided to staff at their monthly meetings. Longer, quarterly meetings allowing for in depth training and consultation sessions began in 2024.

The Commissioner is introducing a range of cross-functional working groups to all staff to participate and have a stake in the development of policy and procedures. The first of these, an FOI Panel, was launched in January 2024.

Learning and development

Over the years, the organisation has developed a comprehensive annual performance review process, where individuals are encouraged and supported to plan for their own development needs and career plans. This performance management system ensures that staff members receive informal and formal external and internal training. During 2023/24, as well as attending a range of internal training sessions and webinars and conferences, staff were given the opportunity to attend 20 external training sessions. Topics ranged from writing in Easy Read to managing sexual misconduct investigations.

Health, safety and wellbeing

The Commissioner is committed to promoting the health, safety and wellbeing of all staff, and to ensuring that our working environment supports this. The Commissioner has moved to a fully hybrid working environment. Appropriate equipment and furniture has been provided to staff. All staff must complete Health and Safety risk assessments of their remote working arrangements. The Commissioner operates a confidential counselling support service for all staff that wish to access it.

Authorisation
 

Ian Bruce
Accountable Officer
Date: 03 October 2024

Remuneration report

The Commissioner for Ethical Standards in Public Life in Scotland is appointed by the SPCB with the agreement of the Scottish Parliament. The Commissioner’s remuneration is set by the SPCB.  

Members of the Senior Management Team are employees. Their terms of employment are set by the Commissioner, are analogous with those of Scottish Parliamentary staff and, in line with the Scottish Parliamentary Commissions and Commissioners etc. Act 2010, are approved by the SPCB.

Single total figure of remuneration (Audited)

Notes

1. Salary covers both pensionable and non-pensionable amounts. It includes gross salary and, if awarded, overtime, recruitment and retention allowances, taxable allowances and any ex-gratia payments. It does not include employer’s national insurance or pension contributions.
   
   The SPCB does not award performance pay or bonuses to office-holders, nor does the Commissioner operate a performance pay or bonus scheme for staff members. No benefits in kind were awarded to the Commissioner or members of the SMT
    
2. The value of pension benefits accrued during the year is calculated as the real increase in pensions and applying the HMRC methodology multiplier of 20 plus the real increase in any lump sum. The real increases exclude increases due to inflation (6.7%) and are net of contributions made by the individual.
   
   Pension benefit figures in 2023/24 are affected by the ‘rollback’ into legacy schemes for members affected by the 2015 Remedy.  See note 2 under the Pension Benefits (Audited) table below for full details.
    
3. Ian Bruce fulfilled the role of Acting Commissioner until 28 February 2022 and was appointed as Commissioner as of 1 March 2023.
   
   Salary for 2023/24 includes an element of backpay relating to the Acting Commissioner role due to a change in grading policy implemented in April but backdated to the prior financial year.  Actual salary as Commissioner only in 2023/24 sits in the salary band £90 - £94k. This salary is used in Figures 21 and 24.
   
   The salary details for 2022/23 reflect the full year equivalent salary and non-pensionable allowance for his role as Acting Commissioner rather than full year equivalent salary for his role as Commissioner, which would sit in the band £90k - £94k. Full details of 2022/23 salary arrangements can be found in the prior year annual report and accounts.
    
4. The Head of Corporate Services (and Accountable Officer until 28 February 2023) received a salary in the band £60-£64k and a non-pensionable allowance in the range £0k - £4k for undertaking their additional responsibilities in the year 2022/23. These allowances are included in the 2022/23 comparison figures in the table above.
    
5. The Hearings and Investigations Officer was appointed in May 2023. The salary and pension details above reflect the actual period of employment from May 2023 onwards. The full year equivalent salary is in the band £50k - £54k.

Pension benefits (Audited)

Notes:

1. A CETV is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued because of their total membership of the scheme including any benefit transferred from another scheme and not just their service in a senior capacity to which the disclosure applies. The real increase in CETV reflects the increase in CETV effectively funded by the employer. It does not include the increase in accrued pension benefits due to inflation, contributions paid by the employee and uses common market valuation factors for the start and end of the period.
    
2. All the above are members of the Civil Service and Others Pension Scheme (CSOPS) and/or the Principal Civil Service Pension Scheme (PCSPS). Under these Schemes there is no automatic lump sum on retirement.
    
3. When the UK Government introduced new public service pension schemes in 2015, there were transitional arrangements which treated existing scheme members differently based on their age. Older members of the PCSPS remained in that scheme, rather than moving to alpha. In 2018, the Court of Appeal found that the transitional arrangements in the public service pension schemes unlawfully discriminated against younger members. As a result, steps are being taken to remedy those 2015 reforms, making the pension scheme provisions fair to all members. The public service pensions remedy is made up of two parts. The first part closed the PCSPS on 31 March 2022, with all active members becoming members of alpha from 1 April 2022.
   
   The second part removes the age discrimination for the remedy period, between 1 April 2015 and 31 March 2022, by moving the membership of eligible members during this period back into the PCSPS on 1 October 2023. This is known as “rollback”.
   
   For members who are in scope of the public service pension remedy, the calculation of their benefits for the purpose of calculating their Cash Equivalent Transfer Value and their single total figure of remuneration, as of 31 March 2023 and 31 March 2024, reflects the fact that membership between 1 April 2015 and 31 March 2022 has been rolled back into the PCSPS. Although members will in due course get an option to decide whether that period should count towards PCSPS or alpha benefits, the figures show the rolled back position i.e., PCSPS benefits for that period

Fair Pay Disclosure (Audited)

Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation, that being the Commissioner, and the lower quartile, median and upper quartile remuneration of the organisation’s workforce.

Total remuneration includes salary, non-consolidated performance related pay and benefits-in-kind. It does not include severance payments, employer pension contributions or the cash equivalent transfer value (CETV) of pensions. It is based on annualised, full-time equivalent remuneration as at the reporting period date.

As explained under the renumeration report, ESC applies the SCPB grading structure and payscales to its own staff. There were significant changes to both in February 2023 but no further changes before the end of March 2024.  There is therefore little variation in the year on year comparison between the snapshot dates of 31 March 2023 and 31 March 2024.

Minor variations can be attributed to:

• the number of employees at year end increasing by 36% or five staff members
• staff members, including the Commissioner, moving up through their payscales.

During the 2023/24 accounting period, the Commissioner maintained Living Wage Accreditation status. In addition, all employees hold permanent appointments which are open-ended until they retire. Early termination, other than through misconduct, would result in the individual receiving compensation.

Remuneration and staff reports

The sections marked (Audited) in this Remuneration and Staff Report are subject to external audit. The other sections of the Remuneration and Staff Report were reviewed by the external auditors to ensure they were consistent with the financial statements.

Governance statement

As Accountable Officer, I have responsibility for maintaining a sound system of governance and internal control that supports the Ethical Standards Commissioner (ESC) to successfully achieve its objectives, policies and aims. I am also responsible for safeguarding the public funds and assets assigned to the organisation, in accordance with the responsibilities set out in the Memorandum to Accountable Officers for Other Public Bodies. 

Background

The audit for 2020/21 identified serious issues regarding the operation of this office. These issues resulted in the Auditor General for Scotland concluding that a report under section 22 of the Public Finance and Accountability (Scotland) Act 2000 for both 2020/21 and 2021/22 was required. By 2022/23 standard governance and management arrangements had been fully reinstated, resulting in an unqualified audit opinion for that year and we have now entered a period of stability and ongoing improvement.

System of Governance and Internal Control

A system of governance and internal control should both ensure and demonstrate that an organisation is operating effectively, efficiently and economically. The ESC’s system of governance consists of a number of elements.

It is my responsibility to ensure that the functions of the office are fulfilled.

I am supported by the Senior Management Team (SMT), which comprises the Public Appointments Manager, the Head of Corporate Services, the Senior Investigating Officer and the Hearings & Investigations Officer. During the year, the SMT met on 10 occasions to discuss operational and strategic matters. Its actions and decisions are recorded in minutes published on our website.

A Scheme of Delegation relating to the running of the office is in operation. Under the scheme, members of the SMT and individual staff members have delegated authority to make decisions on my behalf. It is available to all staff members and is published on our website. A review of this Scheme and that for Public Appointments rare currently underway. The Scheme of Delegation for complaints handling was updated in 2023.

During the year, the office has been working to our Revised Strategic Plan for 2021 to 2024. Following extensive consultation, a Strategic Plan for the period 2024-2028 launched on 1 April 2024. These plans set out our purpose and strategic objectives as well as the values the ESC will work to.

We operate a biennial business plan. This sets out the actions we will take to achieve the organisation’s strategic objectives. Biennial business plans and associated progress updates are available on our website.

Each function prepares action plans to support the biennial business plan. These outline the specific steps required to complete each action, capture key operational requirements and address recommendations arising from external and internal audit and risk assessment.

The ESC operates a set of standing orders. These describe the organisation’s key operating requirements. An updated set of Standing Orders were approved by the SMT in March 2024.

Managing finances

The ESC is funded through the SPCB and, each year, submits an evidence-based budget bid for scrutiny and approval. The budget is based on the requirements of strategic and biennial business plans as well as projections of anticipated activity and prior year performance. The budget bid is scrutinised and approved by the SMT.

Performance against budget is analysed and reviewed on a monthly basis. Key issues are raised with the Head of Corporate Services and myself, as they occur and at SMT meetings. This allows any financial concerns to be promptly identified and resolved.

The Scheme of Delegation provides clear guidelines for the ESC’s financial management and is supported by a set of financial instructions.
 

Managing staff

A performance management system fully underpinned by the Strategic Plan, biennial business plans and annual action plans is in operation. Staff members agree a series of specific objectives directly related to and designed to achieve the organisation-wide objectives outlined in these plans. As a result, staff objectives are aligned to business plans.

As well as the performance management system, the ESC maintains a number of staff policy documents. These reflect both statutory duties to staff, as well as terms and conditions and HR-related procedures. A full suite of updated HR policies, fully reflecting ESC’s values, are regularly reviewed. Staff members are consulted on and informed about any revisions and also trained on their responsibilities. This ensures that staff members are fully aware of the rights and responsibilities they have.

The ESC maintains a register of interests. All staff members, members of the Advisory Audit Board and key contractors must complete a declaration of interests form. No significant company directorships or other interests were held which may have conflicted with their responsibilities.

The ESC operates a whistle-blowing policy. The Commissioner recognises that the underlying structure of the organisation, with power concentrated in a single individual, may makes it difficult for staff to report concerns. The policy requires staff to first report internally but with the additional option of reporting issues directly to the Chair of the Advisory Audit Board (AAB).

The Commissioner has developed and published a set of core organisational values. These are incorporated into strategic and business plans and into all policy development. Staff members are actively encouraged to consider them when interacting with colleagues and stakeholders. Staff members are encouraged both formally through the performance management system and informally to build strong internal and external networks. The whole team meets on a monthly basis where organisational decisions, challenges and successes are shared. Organisational information and plans are widely shared and staff are encouraged to contribute to them.

Following the approval of our business case for an increased staff complement, work to recruit and induct these additional posts was undertaken throughout the year. The ESC now has a full staff complement, other than one vacancy which the Commissioner has decided not to fill in order to save public money in the medium to long term. The work to be completed by that post will instead be done by a contractor by way of a fixed term contract over the next one to two years.

Managing risk

We operate a full risk management system. The Risk Management Policy is available on our website. Its key principles are:

• ESC will foster a culture that embeds risk management into all aspects of its business.
• Risk management should be a key feature of corporate decision-making processes to ensure that the impact of policy decisions on risk is considered each time a strategic decision is taken or a policy is approved.
• Risk management should be embedded in strategic, financial and business planning.
• Risk management policies will be clearly communicated to all staff.
• All processes and procedures should be designed to take account of, manage, treat or tolerate risk and the impact of risk, in a manner that is proportionate and affordable.
• ESC will maintain, review and update the risk register regularly.
• ESC’s risk management policy and procedures will operate without prejudice to the statutory functions of the Commissioner.

All staff members are encouraged to identify risks on an ongoing basis and at key points in the business cycle. These are documented in our risk register along with any mitigating actions. The risk register is reviewed on a quarterly basis by the SMT, at each AAB meeting and by internal audit.

The key risks to the organisation are detailed in the Key Issues and Risks section of this report. In summary, the most significant risks to the organisation were identified as being:

1. Complete disruption to our IT systems
2. Compliance with SCS directions
3. Lengthy waiting times impacts complainer confidence
4. Worsening economic climate leads to reduction in funding
5. Migration to cloud-based system (M365) fails or is significantly delayed or requires additional resources.

External scrutiny

Our AAB provides advice on governance and financial issues.  Members of the AAB are drawn from the independent members of the SPCB’s Advisory Audit Board. The AAB met formally on four occasions during 2023/24 and otherwise provided advice and support.

The ESC contracts for the services of an internal auditor. Work undertaken during the year comprised a review of our data protection, workforce planning and cyber security arrangements. The systems of control in respect of the first two was considered strong and in respect of the last it was given a rating of substantial.

External oversight of our work is provided by the Auditor General for Scotland, the SCS, the SPCB and Committees of the Scottish Parliament. Extensive work has been undertaken to build relationships with these bodies and a range of other stakeholders.

We actively seek further external oversight of our working arrangements. For example, we retained our Cyber Essentials Plus accreditation in August 2023.

Fraud, bribery and corruption

The ESC requires all staff at all times to act honestly and with integrity and to safeguard the public resources for which they are responsible. I will not accept any level of fraud, bribery or corruption; consequently, any case will be thoroughly investigated and dealt with appropriately. The ESC is committed to ensuring that opportunities for fraud, bribery and corruption are reduced to the lowest possible level of risk.

The ESC’s policies and procedures on fraud, corruption and bribery include the anti-fraud policy, code of conduct, terms and conditions for the supply of goods and services and broader financial governance arrangements. 
    
The ESC’s standard procedure is to declare any fraud, whistleblowing or control failure incidents to the AAB and this forms part of the annual assurance process. 

In 2023/24 and 2022/23 there were no instances of fraud or bribery identified or detected.

Information security

Sound management of the information we hold is essential to our business.

The ESC operates a programme to maintain its Cyber Essentials Plus accreditation ensuring that cyber security arrangements are assessed externally. The ESC also subscribes to the National Cyber Security Centre’s early warning systems which flags security gaps and potential threats.

During the year the ESC reported one minor data breach to the Information Commissioner (2022/23: One; no further action). The Information Commissioner decided no further action was required. 

Effectiveness of governance arrangements

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

I am satisfied that an effective system of internal control for ensuring that finances are managed appropriately was in place during 2023/24. I am satisfied that overall an effective system for ensuring appropriate governance of the organisation was in place during the year.
 

Authorisation
 

Ian Bruce
Accountable Officer
Date: 03 October 2024

Statement of Accountable Officer's responsibilities

Under paragraph 22 of the Scottish Parliamentary Commissions and Commissioners etc. Act 2010 the Commissioner must prepare annual accounts for each financial year, in accordance with any directions given by the Scottish Ministers. The Scottish Ministers have directed the Commissioner to prepare accounts in the form and on the basis set out in the Accounts Direction (Appendix 1).

The annual accounts are prepared on an accruals basis and must give a true and fair view of state of affairs of the Ethical Standards Commissioner, its income and expenditure, statement of financial position, changes in taxpayers’ equity and cash flows for the financial year.

The SPCB has appointed the Commissioner as Accountable Officer, with responsibility for preparing the accounts of the Ethical Standards Commissioner and for submitting them for audit.

In preparing the accounts, the Accountable Officer is required to comply with the Government Financial Reporting Manual (FReM) and has:

• observed the Accounts Direction issued by the Scottish Ministers, including the relevant accounting and disclosure requirements, and applied suitable accounting policies on a consistent basis
• made judgements and estimates on a reasonable basis
• stated whether applicable accounting standards, as set out in the FReM, have been followed; and disclosed and explained any material departures in the accounts
• prepared the accounts on a “going concern” basis; and 

The Accountable Officer confirms that so far as he is aware, there is no relevant audit information of which the Commissioner’s auditors are unaware and that he has taken all the steps that he ought to have taken to make himself aware of any relevant audit information and to establish that the Commissioner’s auditors are aware of that information.

The Accountable Officer confirms that this annual report and accounts taken as a whole is fair, balanced and understandable. The Accountable Officer takes personal responsibility for the annual report and accounts and the judgements required for determining that it is fair, balanced and understandable.

The full responsibilities of an Accountable Officer are set out in the Memorandum to Accountable Officers of other Public Bodies.

Commissioner's report

Officeholders

Ian Bruce was appointed as Commissioner and Accountable Officer from 1 March 2023 for a period of six years.

Senior Management Team (SMT)

The Commissioner leads a senior management team which oversees the operation and development of the office. During 2023/24, this comprised:

Register of interests

The Commissioner and members of the Senior Management Team (SMT) must declare any interests. No significant company directorships or other interests were held which may have conflicted with their management responsibilities and neither the Commissioner nor any member of the SMT had any other related party interests which conflicted with their responsibilities.

Corporate governance

Accountability report