Water Industry Commission for Scotland - independent review: financial transactions

Appendix D – Scope

We have set out the approach and work executed at each stage of the review together with key findings and observations.

Approach

Assess the approach to the internal review carried out by WICS of their financial transactions for 2022-23 and the first three quarters of 2023-24. This included:

• Existence and clarity of governance structures, lines of reporting, and accountability for the review and its outputs.
• Adherence to a documented scope of work/terms of reference for the review, including processes for communicating this and review and oversight controls to assure coverage of all scope points.
• Appropriateness and robustness of the methods and tools used for the delivery of the review – for example, risk identification, sampling methodology, data stratification and analytics.
• Identification of any areas of compliance testing that we would expect to have been covered by the WICS review but were not carried out.
• Existence of controls to assure the completeness and accuracy of the data used to inform the review.
• Execution of appropriate, timely quality reviews, to assure that the testing outputs were scrutinised and interrogated before the conclusion of the work.
• Existence of processes to assure a complete and accurate issues log was compiled following the review, and that this formed the basis of a clear, documented action plan.
• Existence of follow-up protocols to facilitate tracking of progress against the action plan.
• Completeness of the audit trail evidencing the planning, execution, review and reporting of the work.

We also completed a review of financial transactions prior to the 2022-23 financial year. We obtained a transaction listing, which detailed all expenses from 1 October 2018 – 31 March 2024, and selected samples by value and risk factors as agreed with Scottish Government.

Exclusions from Scope

• This is not an assurance exercise, and we did not opine on the completeness, accuracy or appropriateness of WICS data, transactions or controls.
• We did not re-perform any testing or verification carried out by WICS as part of their internal review, except as necessary to assess the quality and robustness of the testing performed.
• We did not review any scope area not specifically noted above.
• Our work did not include re-performing any of the work undertaken by Audit Scotland as part of the Section 22 report or by Grant Thornton as part of their internal audit of governance and financial management arrangements.