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Annual Report and Accounts 2023-2024

1. Introduction

1.1 This paper presents the Annual Report and Accounts 2023-2024 (appendix 1). The accounts have been prepared on a going concern basis, using the technical accounting guide for the preparation of financial statements “The Government Financial Reporting Manual 2024-2025” (FReM). It has been subject to internal review by Senior Leaders, CLT, Audit and Risk Committee (ARC), and Board members and has been subject to external audit by Audit Scotland.

1.2 The draft Annual Report and Accounts 2023-2024 was shared with ARC and Board via Diligent Boards in July with the ARC considering the report at the ARC Finance meeting on 30 July 2024. Feedback was addressed and the report was shared again with ARC and Board in August via Diligent Board for final comments prior to audit commencing on 2 September 2024.

1.3 The external audit is complete, and auditors have confirmed that:

• Their opinion on the Annual Report and Accounts is unmodified.
• No significant matters were identified from the work undertaken in relation to the key risks identified within our Annual Audit Plan.
• No material adjustments have been made to the Annual Report and Accounts as a result of the audit process.

1.4 The covering letter and Audit Report are included as appendices and will be presented by Audit Scotland at this meeting.

2. Overview

2.1 In accordance with the FReM, Annual Report and Accounts must include: a performance report, an accountability report, the financial statements and their associated notes as set out in the figure below:

Performance report:

• Performance overview.
• Performance analysis - financial review.

Accountability report:

• Corporate governance.
• Remuneration and staff.
• Parliamentary accountability.

Financial statements:

• Comprehensive net expenditure.
• Financial position.
• Cash flows.
• Changes in equity.
• Notes to the accounts.

2.2 The Financial Statements: In accordance with the FReM these have been prepared in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standard Board as adapted and interpreted by FReM.

2.3 The Statement of Comprehensive Net Expenditure (SOCNE) shows income and expenditure for the year. Expenditure exceeded income by £25.1m, a £20m increase in the pension fund valuation was offset by expenditure of £45.1m on operational activities. Expenditure on operational activities is funded by Scottish Government through grant in aid. Grant in aid is accounted for as finance in the accounts and is therefore not included in SOCNE but taken directly to reserves.

2.4 The Statement of Financial Position shows the financial position at the year end. As at 31 March 2024, there were net assets of £48.9m (£27.8m 2023). This movement is primarily due to an increase in the pension surplus of £20m, from £1.5m as at 31 March 2023 to £21.5m as at 31 March 2024. A more detailed explanation of the pension movements can be found in note 17 within the Annual Report and Accounts.

2.5 The Statement of Cash Flows shows SEPA had a positive cash balance of £0.9m as at 31 March 2024, (£0.8m 2023).

2.6 The Statement of Change in Taxpayers Equity showed a positive balance of £48.9m; this is due to a positive net expenditure reserve of £30.6m in addition to a revaluation reserve of £18.3m. This compares to a positive balance of £27.8m as at 31st March 2023. The significant movement is primarily due to changes in the pension valuation outlined above.

Outturn against budget 2023/24

2.7 The main financial objective is to operate within the budget allocated by Scottish Ministers. Each year we are allocated a Departmental Expenditure limit by Scottish Government, this is approved at the start of the financial year and can be amended through spring and autumn budget revisions.

2.8 This financial year we reported an outturn of £51.3m, resulting in an overall underspend of £0.4m, the table below provides more detail.

Budget category	Expenditure outturn £'000	Budget £'000	Variance £'000
Resource DEL (cash)	40,324	40,248	(76)
Resource DEL (non-cash)	5,258	5,196	(62)
Total resource DEL	45,582	45,444	(138)
Capital DEL	5,680	6,200	520
Total DEL expenditure	51,262	51,644	382

2.9 Analysis of the variances can be found in the Financial Overview section of the accounts.

3. Timeline of submission

3.1 SEPA has a statutory duty to lay the Annual Report and Accounts 2023-2024 to Scottish Parliament by end of December 2024 and publish on their website shortly after. The timetable for laying the report is as follows:

• CLT notes submission to ARC at its meeting on 6 November 2024.
• Approval by ARC on 11 November 2024 to submit to Board on 26 November 2024.
• Approval by Board on 26 November 2024 to submit to Scottish Parliament.
• Signed off by Audit Scotland, the Chief Executive and Chair following Board approval.
• Submission to Scottish Government on 27 November 2024 for laying at Scottish Parliament (the Scottish Government have been prior informed of our timetable and we await a Scottish Parliament laying date from them).
• Laid at Scottish Parliament some time in early to mid-December, thereafter approval to publish on SEPA’s website is granted.

3.2 Please note that steps a and b above have been completed.

4. Recommendations

4.1 The Board is asked to note Audit Scotland’s Annual Audit Report.

4.2 The Board is asked to approve submission of the Annual Report and Accounts 2023-2024 to Scottish Government for laying at Scottish Parliament.