Cairngorms Nation­al Park Authority

Fin­an­cial year ended 31 March 2021

Pre­pared for the Account­able Officer and the Aud­it­or Gen­er­al for Scotland

Draft Extern­al Audit Report 2 Septem­ber 2021

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Con­tents

Sec­tion	Page
Key Mes­sages	3
Intro­duc­tion	4
Audit of the annu­al report and accounts	5
Wider scope audit – Smal­ler body	14
Appen­dices
Audit adjust­ments	17
Action plan and recommendations	20
Fol­low up of 2019⁄20 recommendations	21
Audit fees and independence	22
Com­mu­nic­a­tion of audit matters	23

Your key Grant Thornton team mem­bers are:

• John Boyd Audit Dir­ect­or T 0141 223 0899 E john.​p.​boyd@​uk.​gt.​com
• Rachel King Audit In-Charge T 0131 223 0873 E Rachel.​x.​king@​uk.​gt.​com

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Key mes­sages

This is our final report to the Account­able Officer and the Aud­it­or Gen­er­al for Scot­land and con­cludes our audit on the fin­an­cial year ended 31 March 2021. We have issued an unmod­i­fied audit opin­ion on the annu­al report and accounts, includ­ing an unmod­i­fied opin­ion on reg­u­lar­ity and the Remu­ner­a­tion Report. We thank man­age­ment for all their assist­ance dur­ing the audit process.

01 Mater­i­al­ity

We re-cal­cu­lated our mater­i­al­ity based on the unaudited annu­al report and accounts. The bench­mark of 2% of gross expendit­ure remained the same. This res­ul­ted in:

• Mater­i­al­ity of £143,680 and a per­form­ance mater­i­al­ity (75% of mater­i­al­ity) of £107,760.
• All audit adjust­ments above £7,200 were repor­ted to man­age­ment and cap­tured in this report.
• Lower mater­i­al­ity of band­ing on Staff Remu­ner­a­tion Report (being £1,000).

02 Fin­an­cial state­ment audit risks

At plan­ning, in accord­ance with the ISAs (UK) and FRC Prac­tice Note 10 we have iden­ti­fied the fol­low­ing sig­ni­fic­ant fin­an­cial state­ment audit risks:

• Man­age­ment over­ride of con­trols (ISA UK 240)
• Risk of fraud in rev­en­ue (cut-off) (ISA UK 240)
• Risk of fraud in expendit­ure (cut-off) (FRC PN10)

We have no mat­ters to bring to your atten­tion arising from our work over these sig­ni­fic­ant audit risks.

03 Oth­er audit matters

Our final report sum­mar­ises a num­ber of oth­er audit mat­ters, including:

• We have con­cluded that CNPA meets the defin­i­tion of a going con­cern, reflect­ing on FRC Prac­tice Note 10 considerations.
• The accounts con­tain areas of estim­a­tion and judge­ment. We did not identi­fy any areas of sig­ni­fic­ant estim­ate or judge­ment. Oth­er areas of estim­a­tion and judge­ment relate to: pro­vi­sions (includ­ing LEAD­ER pro­gramme); depre­ci­ation of prop­erty, plant and equip­ment; and, accru­als. Our test­ing over these did not identi­fy any indic­a­tion of man­age­ment bias.
• We set out our roles and respons­ib­il­it­ies on fraud. Dur­ing the course of our work we did not identi­fy fraud and/​or mater­i­al error.
• We iden­ti­fied one unad­jus­ted mis­state­ment to the draft accounts as well as a num­ber of dis­clos­ure adjust­ments. These are detailed in Appendix 1 and not con­sidered mater­i­al to the accounts.

04 Wider Scope Audit

In accord­ance with the Code we determ­ined that Cairngorms Nation­al Park Author­ity (“CNPA”) meet the defin­i­tion of a smal­ler body. This is based on CNPA’s income and expendit­ure trans­ac­tions and bal­ances held being rel­at­ively smal­ler than oth­er pub­lic bod­ies and the fin­an­cial state­ments are con­sidered less com­plex. In accord­ance with the Code we have con­cluded in this report on your gov­ernance state­ment and CNPA’s fin­an­cial sus­tain­ab­il­ity arrange­ments. Dur­ing our audit we did not identi­fy any fur­ther areas of wider scope risk.

05 Our Audit Fee

Our audit fee, set out in our audit plan, of £11,590 was our final audit fee. There were no non-audit ser­vices (fees) dur­ing the year and we did not need to vary our agreed fee.

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Intro­duc­tion

Scope of our audit work

This report is a sum­mary of our find­ings from our extern­al audit work for the fin­an­cial year ended 31 March 2021 at CNPA. The scope of our audit was set out in our Extern­al Audit Plan com­mu­nic­ated to the Audit and Risk Com­mit­tee on the 3 Feb­ru­ary 2021 and final­ised and sub­mit­ted to CNPA on the 31 March 2021.

The main ele­ments of our audit work in ²⁰²⁰⁄₂₁ have been:

• An audit of CNPA’s annu­al report and accounts for the fin­an­cial year ended 31 March 2021; and
• Con­sid­er­a­tion fin­an­cial sus­tain­ab­il­ity and the Gov­ernance State­ment, as required under the smal­ler body clas­si­fic­a­tion, with­in the Audit Scot­land Code of Prac­tice (2016).

Our work has been under­taken in accord­ance with Inter­na­tion­al Stand­ards of Audit­ing (ISAs) (UK) and the Code. This report is addressed to the Account­able Officer and the Aud­it­or Gen­er­al for Scot­land and will be pub­lished on Audit Scotland’s web­site www​.audit​-scot​land​.gov​.uk in due course.

Respons­ib­il­it­ies

CNPA is respons­ible for pre­par­ing an annu­al report and accounts which show a true and fair view and that are in accord­ance with the accounts dir­ec­tion from Scot­tish Min­is­ters. CNPA is also respons­ible for estab­lish­ing appro­pri­ate and effect­ive arrange­ments for gov­ernance, pro­pri­ety and reg­u­lar­ity that enable it to suc­cess­fully deliv­er its objectives.

The recom­mend­a­tions or risks iden­ti­fied in this report are only those that have come to our atten­tion dur­ing our nor­mal audit work and may not be all that exist. Com­mu­nic­a­tion in this report of mat­ters arising from the audit or of risks or weak­nesses does not absolve man­age­ment from its respons­ib­il­ity to address the issues raised and to main­tain an adequate sys­tem of control.

Adding value through our audit work

We aim to add value to CNPA through­out our audit work. In deliv­er­ing our audit we use a ded­ic­ated pub­lic sec­tor audit team. This ensures our team have a com­pre­hens­ive under­stand­ing of CNPA and the wider pub­lic sec­tor to focus on key areas of risk rel­ev­ant to your fin­an­cial statements.

As a res­ult of the social dis­tan­cing and travel restric­tions imple­men­ted in response to the Cov­id-19 pan­dem­ic our audit work was delivered remotely. We con­tin­ue to share recom­men­ded prac­tices with man­age­ment, where rel­ev­ant, and con­trib­ute to wider dis­cus­sions at the Audit and Risk Com­mit­tee dur­ing the year.

Status of the audit

As at 1 Septem­ber 2021 our audit is sub­stant­ively com­plete sub­ject to the fol­low­ing out­stand­ing audit procedures:

• Final dis­clos­ure review;
• Final pro­cessing of audit evid­ence in rela­tion to pay­ables and receivables;
• Final sub­sequent events and com­ple­tion procedures;
• Final Engage­ment Lead­er review.

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Audit of the annu­al report and accounts

Key mes­sages and judgements

We have issued an unmod­i­fied audit opin­ion on the annu­al report and accounts. There were no adjust­ments to the primary fin­an­cial state­ments. There was one unad­jus­ted mis­state­ment to the primary fin­an­cial state­ments. We raised a num­ber of minor dis­clos­ure adjust­ments iden­ti­fied from our review of the annu­al report and accounts. We do not con­sider these to be mater­i­al. Fur­ther details are provided in Appendix 1. We would like to thank man­age­ment for all their assist­ance dur­ing the year in ensur­ing the deliv­ery of the audit, to the times­cales agreed at the start of the fin­an­cial year.

Our audit opinion

For the fin­an­cial year ended 31 March 2021 we plan to issue an unmod­i­fied opin­ion on the annu­al report and accounts. As repor­ted in the inde­pend­ent auditor’s report:

• the fin­an­cial state­ments give a true and fair view and were prop­erly pre­pared in accord­ance with the fin­an­cial report­ing framework
• expendit­ure and income were reg­u­lar and in accord­ance with applic­able enact­ments and guidance
• the audited part of the remu­ner­a­tion and staff report, per­form­ance report and gov­ernance state­ment were all con­sist­ent with the fin­an­cial state­ments and prop­erly pre­pared in accord­ance with the rel­ev­ant legis­la­tion and dir­ec­tions made by Scot­tish Ministers.

The audit process

In accord­ance with our annu­al extern­al audit plan, our audit work com­menced in June 2021. We received the draft primary fin­an­cial state­ments in line with our agreed timetable. There were no audit adjust­ments to the draft primary fin­an­cial state­ments. There was one unad­jus­ted dif­fer­ence to the draft fin­an­cial state­ments in rela­tion to sep­ar­ate recog­ni­tion of pro­vi­sions. We also iden­ti­fied a num­ber of dis­clos­ure adjust­ments in respect of the draft fin­an­cial state­ments. A full list­ing of dis­clos­ure mis­state­ments is detailed in Appendix 1. We do not con­sider these to be mater­i­al to the fin­an­cial statements.

Mater­i­al­ity

The concept of mater­i­al­ity is fun­da­ment­al to the pre­par­a­tion of the fin­an­cial state­ments and the audit pro­cess and applies not only to the mon­et­ary mis­state­ments but also to dis­clos­ure require­ments and adher­ence to accept­able account­ing prac­tice and applic­able law. Our audit approach was set out in our audit plan com­mu­nic­ated to the Audit and Risk Com­mit­tee on the 3 Feb­ru­ary 2021 and final­ised and sub­mit­ted 31 March 2021. We updated our audit mater­i­al­ity to reflect the ²⁰²⁰⁄₂₁ draft fin­an­cial state­ments. It is set at £143,680, rep­res­ent­ing 2% of gross expendit­ure. Per­form­ance mater­i­al­ity was set at £107,760, rep­res­ent­ing 75% of our cal­cu­lated mater­i­al­ity. We report to man­age­ment any dif­fer­ence iden­ti­fied over £7,200 (Being 5% of over­all mater­i­al­ity). We applied a lower mater­i­al­ity threshold for Dir­ect­ors Remu­ner­a­tion dis­clos­ures with­in the Remu­ner­a­tion and Staff Report to ensure that remu­ner­a­tion has been dis­closed with­in the appro­pri­ate band­ings (being £1,000).

Respond­ing to sig­ni­fic­ant fin­an­cial state­ment risks

Sig­ni­fic­ant risks are defined by ISAs (UK) as risks that, in the judge­ment of the aud­it­or, require spe­cial audit con­sid­er­a­tion. In identi­fy­ing risks, audit teams con­sider the nature of the risk, the poten­tial mag­nitude of mis­state­ment, and its like­li­hood. Sig­ni­fic­ant risks are those risks that have a high­er risk of mater­i­al mis­state­ment. This sec­tion provides com­ment­ary on the sig­ni­fic­ant audit risks com­mu­nic­ated in the Audit Plan.

Man­age­ment over­ride of controls

As set out in ISA 240 there is a pre­sumed risk that man­age­ment over­ride of con­trols is present in all entit­ies. This risk area includes the poten­tial for man­age­ment to use their judge­ment to influ­ence the fin­an­cial state­ments as well as the poten­tial to over­ride CNPA’s con­trols for spe­cif­ic trans­ac­tions. We con­sider those key judge­ments that are most sus­cept­ible to sig­ni­fic­ant audit risk of man­age­ment over­ride are those over expendit­ure recog­ni­tion. These are areas where man­age­ment has the poten­tial to influ­ence the fin­an­cial state­ment through estim­ate and judge­ment. This includes manu­al journ­als as well as crit­ic­al judge­ments or estimates.

• We con­sidered the design of con­trols in place over key account­ing estim­ates and judge­ments through per­form­ance of walk­through procedures.
• We reviewed account­ing estim­ates for man­age­ment bias / indic­a­tion of fraud that could res­ult in mater­i­al mis­state­ment. This included review of estim­ates as at 31 March 2021 and ret­ro­spect­ive review of those estim­ates as at 31 March 2020. This included depre­ci­ation and accruals.
• Journ­als test­ing including:
  • Assess­ment of the design of con­trols in place over journ­al entries, includ­ing journ­al pre­par­a­tion, author­isa­tion and pro­cessing onto the fin­an­cial ledger;
  • Risk assess­ment of the journ­als pop­u­la­tion to identi­fy large or unusu­al journ­al entries, such as those that are not incurred in the nor­mal course of busi­ness, or those entries that may be indic­at­ive of fraud or error that could res­ult in mater­i­al mis­state­ment. We tested these journ­als to ensure they are appro­pri­ate and suit­ably recor­ded in the fin­an­cial ledger;
  • Tar­get test­ing of trans­ac­tions around the fin­an­cial year end, review­ing large journ­als and those which appear unusu­al to under­stand the rationale for the transaction.

Con­clu­sion: Through our audit pro­ced­ures per­formed we found that there was no evid­ence of man­age­ment over­ride in our test­ing of trans­ac­tions tested. We did not identi­fy indic­a­tion of fraud or inap­pro­pri­ate man­age­ment bias in account­ing estim­ates that could res­ult in a mater­i­al misstatement.

Risk of fraud in rev­en­ue recog­ni­tion (occur­rence, completeness)

Audit­ing stand­ards require us to con­sider the risk of fraud in Rev­en­ue. This is con­sidered a pre­sumed risk in all entit­ies. In ²⁰¹⁹⁄₂₀, CNPA received £4.87 mil­lion in rev­en­ue fund­ing from the Scot­tish Gov­ern­ment (resource DEL (cash and non-cash)). While mater­i­al, we con­sider this fund­ing to be well fore­cast and dir­ectly agreed to Scot­tish Gov­ern­ment fund­ing let­ter and draw down. We there­fore con­sider the oppor­tun­ity and incent­ive to manip­u­late this fund­ing as low and rebut the pre­sumed risk around rev­en­ue recog­ni­tion over rev­en­ue resource alloc­a­tion. We there­fore con­sider the risk of fraud in rev­en­ue recog­ni­tion to be present in mater­i­al rev­en­ue streams recog­nised with­in con­tract income, being oper­a­tion­al plan income and oth­er income.

As fin­an­cial per­form­ance tar­gets are primar­ily set for year end out­turn pos­i­tion, includ­ing fin­an­cial per­form­ance against the Scot­tish Gov­ern­ment fund­ing, we there­fore con­sider the risk is prom­in­ent around year end rev­en­ue trans­ac­tions and receiv­able bal­ances. In the con­text of medi­um term fin­an­cial pres­sures facing the organ­isa­tion, there is an incent­ive for both over and under­state­ment of rev­en­ue either to sup­port the deliv­ery of in year per­form­ance tar­gets or to sup­port next years. Con­sequently, we attach the risk to both occur­rence and com­plete­ness of rev­en­ue at the year end.

• We per­formed walk­throughs of the con­trols and pro­ced­ures over plan­ning fee income, pro­gramme income and pro­ject income.
• For these income streams, sub­stant­ive test­ing over income recog­nised in the final two months of the year where there is an inher­ently high­er sus­cept­ib­il­ity of fraud­u­lent recognition.
• Sample test­ing of receiv­able bal­ances held at 31 March 2021 through agree­ing bal­ances held to invoices and/​or oth­er sup­port­ing records.
• Reviewed Management’s assess­ment of bad debts includ­ing their assess­ment of out­stand­ing debt and fore­cast recovery.
• Per­formed income cut-off pro­ced­ures and sub­stant­ive test­ing over pre and post year end bal­ances, over non GIA fund­ing income streams.

Con­clu­sion: Through our audit pro­ced­ures per­formed we did not identi­fy any excep­tions in our year end cut-off test­ing of income. We did not identi­fy any excep­tions in the com­plete­ness or occur­rence of income bal­ances at year end and are sat­is­fied that income is free from mater­i­al mis­state­ment. Through our sub­stant­ive pro­ced­ures and sample test­ing we did not identi­fy any income which was not in accord­ance with the nature of the CNPA (reg­u­lar­ity testing).

Risk of fraud in expendit­ure recog­ni­tion (com­plete­ness, occurrence)

As set out in Prac­tice note 10 (revised) which applies to pub­lic sec­tor entit­ies we con­sider there to be an inher­ent risk of fraud in expendit­ure recog­ni­tion. As payroll expendit­ure is well fore­cast and agree­able to under­ly­ing payroll sys­tems, there is less oppor­tun­ity for the risk of mis­state­ment in this expendit­ure stream. In addi­tion, depre­ci­ation rep­res­ents the alloc­a­tion of the cost of an asset over its use­ful eco­nom­ic life. These costs are well fore­cast and stable based on assets use­ful eco­nom­ic lives and there­fore not con­sidered at risk of mater­i­al mis­state­ment. We there­fore focus on non-pay expendit­ure includ­ing oper­a­tion­al plan expendit­ure and oth­er oper­at­ing costs, exclud­ing depreciation.

We con­sider the risk to be par­tic­u­larly pre­val­ent around the year end and there­fore focus on year end cut-off arrange­ments, where it may be advant­age­ous for man­age­ment to show an enhanced/​different fin­an­cial pos­i­tion in the con­text of report­ing in-year to Scot­tish Gov­ern­ment and the need to achieve the fin­an­cial tar­gets set.

• We per­formed walk­throughs of the con­trols and pro­ced­ures over non-pay expendit­ure streams includ­ing pro­gramme expendit­ure, pro­ject expendit­ure and oth­er oper­at­ing costs;
• Sub­stant­ive test­ing of expendit­ure through­out the year to con­firm its occur­rence and accur­acy of recording;
• Focused sub­stant­ive test­ing of non-pay expendit­ure recog­nised post year end to identi­fy if there is any poten­tial under­state­ment to address the risk of cut-off; and
• Review of accru­als and pay­ables, where mater­i­al, around the year end to con­sider if there is any indic­a­tion of under­state­ment or over­state­ment of bal­ances held through con­sid­er­a­tion of account­ing estimates.

Con­clu­sion: Through our audit pro­ced­ures per­formed we did not identi­fy any excep­tions in our year end cut-off test­ing of expendit­ure. We did not identi­fy any excep­tions in the com­plete­ness and accur­acy of accru­als or pay­ables bal­ances at year end. Through our sub­stant­ive pro­ced­ures and sample test­ing we did not identi­fy any expendit­ure which was not in accord­ance with the nature of the CNPA (reg­u­lar­ity testing).

Sig­ni­fic­ant estim­ates and judgements

CNPA’s annu­al report and accounts con­tain lim­ited areas of estim­a­tion and judge­ment. Man­age­ment have recog­nised a sig­ni­fic­ant estim­ate in the accounts around the LEAD­ER pro­gramme. Giv­en the value of the LEAD­ER pro­gramme pro­vi­sions is below mater­i­al­ity we do not con­sider this to be a sig­ni­fic­ant estim­ate. The only oth­er areas of estim­a­tion relates to depre­ci­ation of prop­erty, plant and equip­ment and accru­als (includ­ing deferred income). We do not con­sider these to rep­res­ent sig­ni­fic­ant estim­ates or judge­ment as the estim­a­tion involved is unlikely to res­ult in a mater­i­al change in the next 12 months. We have raised an unad­jus­ted dis­clos­ure adjust­ment (Appendix 1).

Judge­ment or Estim­ate	Sum­mary of management’s approach	Audit Com­ments	Assess­ment
Pro­vi­sions	Pro­vi­sions are based on Management’s assess­ment of the likely future costs incurred in rela­tion to sums recovered through poten­tial reclaims through the LEAD­ER pro­gramme, or through redec­or­a­tion pro­vi­sion or untaken annu­al leave. Pro­vi­sions are reviewed through­out the year and as part of out­turn assess­ment by Management.	We have reviewed the approach adop­ted by CNPA in arriv­ing at estim­ates for accru­als and deferred income. As at 31 March 2021 total pro­vi­sions were £60,000 and there­fore we do con­sider them to rep­res­ent areas of mater­i­al estim­a­tion and judge­ment. The reduc­tion in the pro­vi­sion reflects the work under­taken in 2021 to remove any redec­or­ate works required on the new lease. There is no indic­a­tion of man­age­ment bias in the estimate.	Light purple
Depre­ci­ation of prop­erty, plant and equipment	Depre­ci­ation is provided on a straight-line basis on all prop­erty, plant and equip­ment (exclud­ing free­hold land and assets under con­struc­tion) at rates cal­cu­lated to reflect expec­ted use­ful eco­nom­ic lives. Peri­od­ic reviews of oth­er NDPB accounts are under­taken too to ensure rates are in line with oth­er NDPBs. review of depre­ci­ation and cap­it­al­ised assets in year through peri­od­ic man­age­ment accounts and dis­cus­sions between the Fin­ance Man­ager and Dir­ect­or of Cor­por­ate Ser­vices. No out­side ser­vice pro­viders or man­age­ment experts are used.	We have reviewed the depre­ci­ation policies applied by CNPA and are sat­is­fied that these are reas­on­able giv­en the nature of the assets held. We have per­formed ana­lyt­ic­al pro­ced­ures to con­firm that the depre­ci­ation charges in the year is in line with our audit expect­a­tion. There us no indic­a­tion of man­age­ment bias in depre­ci­ation rates applied.	Light purple
Accru­als (and deferred income)	Accru­als reflect expendit­ure that has occurred by 31 March 2021 but for which CNPA have not received an invoice at the bal­ance sheet date. These pre­dom­in­antly relate to invoices received after the year end relat­ing to 2020⁄21 or where there is a con­tract in place but invoice is out­stand­ing (mainly oth­er pub­lic bod­ies) or for payroll costs where pay­ment is out­stand­ing at 31 March. Deferred income, reflects bal­ances where cash has been received but for which per­form­ance con­di­tions / restric­tions per­mit recog­ni­tion of the income until future years. As part of the annu­al accounts pro­cess Man­age­ment review income received and assess per­form­ance con­di­tions outstanding.	We have reviewed the approach adop­ted by CNPA in arriv­ing at estim­ates for accru­als and deferred income. Our test­ing found there to be lim­ited areas of estim­a­tion and judge­ment. There is no indic­a­tion of man­age­ment bias through sample test­ing performed.	Light purple

Assess­ment:

• Dark Purple: We dis­agree with the estim­a­tion pro­cess or judge­ments that under­pin the estim­ate and con­sider the estim­ate to be poten­tially mater­i­ally misstated
• Blue: We con­sider the estim­ate is unlikely to be mater­i­ally mis­stated how­ever management’s estim­a­tion pro­cess con­tains assump­tions we con­sider optimistic
• Grey: We con­sider the estim­ate is unlikely to be mater­i­ally mis­stated how­ever management’s estim­a­tion pro­cess con­tains assump­tions we con­sider cautious
• Light Purple: We con­sider management’s pro­cess is appro­pri­ate and key assump­tions are neither optim­ist­ic or cautious

Intern­al con­trol environment

In accord­ance with ISA require­ments we have developed an under­stand­ing of the con­trol envir­on­ment in place with­in CNPA. Our audit is not con­trols based and we have not placed reli­ance on con­trols oper­at­ing effect­ively as our audit is fully sub­stant­ive in nature. We did this through a walk­through of key con­trols with­in CNPA includ­ing payroll, expendit­ure, grant income, income and journ­als. We iden­ti­fied no mater­i­al weak­nesses or areas of con­cern from this work which would have caused us to alter the planned approach as doc­u­mented in our plan.

Detect­ing Irreg­u­lar­it­ies, includ­ing fraud

Irreg­u­lar­it­ies, includ­ing fraud, are instances of non-com­pli­ance with laws and reg­u­la­tions. We design pro­ced­ures in line with our respons­ib­il­it­ies, to detect mater­i­al mis­state­ments in respect of irreg­u­lar­it­ies, includ­ing fraud. Owing to the inher­ent lim­it­a­tions of an audit, there is an unavoid­able risk that mater­i­al mis­state­ments in the fin­an­cial state­ments may not be detec­ted, even though the audit is prop­erly planned and per­formed in accord­ance with the ISAs (UK).

The extent to which our pro­ced­ures are cap­able of detect­ing irreg­u­lar­it­ies, includ­ing fraud is detailed below:

• We obtained an under­stand­ing of the leg­al and reg­u­lat­ory frame­works that are applic­able to CNPA and determ­ined that the most sig­ni­fic­ant which are dir­ectly rel­ev­ant to spe­cif­ic asser­tions in the fin­an­cial state­ments are those related to the report­ing frame­works; Inter­na­tion­al Fin­an­cial Report­ing Stand­ards and the ²⁰²⁰⁄₂₁ HM Treas­ury Fin­an­cial Report­ing Manu­al (FReM).
• We enquired of man­age­ment and the Audit and Risk Com­mit­tee, con­cern­ing CNPA’s policies and pro­ced­ures relat­ing to the iden­ti­fic­a­tion, eval­u­ation and com­pli­ance with laws and reg­u­la­tions; the detec­tion and response to the risks of fraud; and the estab­lish­ment of intern­al con­trols to mit­ig­ate risks related to fraud or non-com­pli­ance with laws and regulations.
• We enquired of man­age­ment and the Audit and Risk Com­mit­tee, wheth­er they were aware of any instances of non-com­pli­ance with laws and reg­u­la­tions or wheth­er they had any know­ledge of actu­al, sus­pec­ted or alleged fraud.
• We assessed the sus­cept­ib­il­ity of CNPA’s fin­an­cial state­ments to mater­i­al mis­state­ment, includ­ing how fraud might occur, by eval­u­at­ing management’s incent­ives and oppor­tun­it­ies for manip­u­la­tion of the fin­an­cial state­ments. This included the eval­u­ation of the risk of man­age­ment over­ride of con­trols. We determ­ined that the prin­cip­al risks were in rela­tion to journ­al entries that altered CNPA’s fin­an­cial per­form­ance for the year and poten­tial man­age­ment bias in determ­in­ing account­ing estim­ates. Our audit pro­ced­ures involved are doc­u­mented with­in our response to the sig­ni­fic­ant risk of man­age­ment over­ride of con­trols on Page 6.
• These audit pro­ced­ures were designed to provide reas­on­able assur­ance that the fin­an­cial state­ments were free from fraud or error. How­ever, detect­ing irreg­u­lar­it­ies that res­ult from fraud is inher­ently more dif­fi­cult than detect­ing those that res­ult from error, as those irreg­u­lar­it­ies that res­ult from fraud may involve col­lu­sion, delib­er­ate con­ceal­ment, for­gery or inten­tion­al mis­rep­res­ent­a­tions. Also, the fur­ther removed non-com­pli­ance with laws and reg­u­la­tions is from events and trans­ac­tions reflec­ted in the fin­an­cial state­ments, the less likely we would become aware of it.
• The team com­mu­nic­a­tions in respect of poten­tial non-com­pli­ance with rel­ev­ant laws and reg­u­la­tions, included the poten­tial for fraud in expendit­ure recog­ni­tion and sig­ni­fic­ant account­ing estimates.
• In assess­ing the poten­tial risks of mater­i­al mis­state­ment, we obtained an under­stand­ing of:
  • CNPA’s oper­a­tions, includ­ing the nature of its oper­at­ing rev­en­ue and expendit­ure and its ser­vices and of its object­ives and strategies to under­stand the classes of trans­ac­tions, account bal­ances, expec­ted fin­an­cial state­ment dis­clos­ures and busi­ness risks that may res­ult in risks of mater­i­al misstatement.
  • CNPA’s con­trol envir­on­ment, includ­ing the policies and pro­ced­ures imple­men­ted to ensure com­pli­ance with the require­ments of the fin­an­cial report­ing framework.

Oth­er key ele­ments of the fin­an­cial statements

As part of our audit there were oth­er key areas of focus dur­ing the course of our audit. Whilst not con­sidered a sig­ni­fic­ant risk, these are areas of focus either in accord­ance with the Audit Scot­land Code of Audit Prac­tice or ISAs or through due to their com­plex­ity or import­ance to the user of the accounts.

Issue	Com­ment­ary
Mat­ters in rela­tion to fraud and irregularity	It is CNPA’s respons­ib­il­ity to estab­lish arrange­ments to pre­vent and detect fraud and oth­er irreg­u­lar­ity. As aud­it­ors, we obtain reas­on­able assur­ance that the fin­an­cial state­ments as a whole are free from mater­i­al mis­state­ment, wheth­er due to fraud or error. We obtain annu­al rep­res­ent­a­tion from man­age­ment regard­ing man­age­ments assess­ment of fraud risk, includ­ing intern­al con­trols, and any known or sus­pec­ted fraud or mis­state­ment. We have also made inquires of intern­al audit around intern­al con­trol, fraud risk and any known or sus­pec­ted frauds in year. We have not been made aware of any oth­er incid­ents in the peri­od and no oth­er issues have been iden­ti­fied dur­ing the course of our audit procedures.
Account­ing practices	We have eval­u­ated the appro­pri­ate­ness of CNPA’s account­ing policies, account­ing estim­ates and fin­an­cial state­ment dis­clos­ures. Dis­clos­ures and account­ing policies are in line with the FReM and we have no mat­ters to report.
Mat­ters in rela­tion to related parties	We are not aware of any related parties or related party trans­ac­tions which have not been disclosed.
Mat­ters in rela­tion to laws and regulations	You have not made us aware of any sig­ni­fic­ant incid­ences of non-com­pli­ance with rel­ev­ant laws and reg­u­la­tions and we have not iden­ti­fied any incid­ences from our audit work.
Oth­er information	We are required to give an opin­ion on wheth­er the oth­er inform­a­tion pub­lished togeth­er with the audited fin­an­cial state­ments (includ­ing the Annu­al Report), is mater­i­ally incon­sist­ent with the fin­an­cial state­ments or our know­ledge obtained in the audit or oth­er­wise appears to be mater­i­ally mis­stated. No incon­sist­en­cies have been iden­ti­fied and we plan to issue an unmod­i­fied opin­ion in this respect.
Opin­ion on oth­er aspects of the annu­al report and accounts	We are required to give an opin­ion on wheth­er the parts of the Remu­ner­a­tion Report and Staff Report sub­ject to audit have been pre­pared prop­erly in accord­ance with the require­ments of the FReM, and the Accounts dir­ec­tions there­un­der. We have audited the ele­ments of the Remu­ner­a­tion Report and Staff Report , as required and are sat­is­fied that these have been prop­erly pre­pared in accord­ance with applic­able legis­la­tion. The inform­a­tion giv­en in the Per­form­ance Report is con­sist­ent with the fin­an­cial state­ments and that report has been pre­pared in accord­ance with the FReM and dir­ec­tions made there­un­der by the Scot­tish Min­is­ters. The inform­a­tion giv­en in the Gov­ernance State­ment is con­sist­ent with the fin­an­cial state­ments and that report has been pre­pared in accord­ance with the dir­ec­tions made there­un­der by the Scot­tish Ministers.

Mat­ters on which we report by exception

We are required by the Aud­it­or Gen­er­al for Scot­land to report to you if, in our opin­ion: adequate account­ing records have not been kept; or the fin­an­cial state­ments and the audited part of the Remu­ner­a­tion and Staff Report are not in agree­ment with the account­ing records; or we have not received all the inform­a­tion and explan­a­tions we require for our audit; or there has been a fail­ure to achieve a pre­scribed fin­an­cial object­ive. We have noth­ing to report in respect of these matters.

Gov­ernance statement

The gov­ernance state­ment is included with­in the Account­ab­il­ity Report. The report out­lines the gov­ernance frame­work in place at CNPA. The Report includes the State­ment of the Account­able Officer’s respons­ib­il­it­ies and had been pre­pared in accord­ance with the FReM. In accord­ance with the Scot­tish Pub­lic Fin­ance Manu­al (SPFM), the Account­able Officer has a spe­cif­ic respons­ib­il­ity to ensure that arrange­ments have been made to secure Best Value and this is con­firmed in the nar­rat­ive in the annu­al report and accounts. There were no mat­ters arising from our review of the gov­ernance state­ment that we want to draw atten­tion to.

Writ­ten representations

A let­ter of rep­res­ent­a­tion has been reques­ted from the Account­able Officer, includ­ing spe­cif­ic rep­res­ent­a­tions, which is included in the Audit and Risk Com­mit­tee papers. Spe­cif­ic rep­res­ent­a­tions have been reques­ted from man­age­ment in line with pri­or years and con­firms as aud­it­ors all records have been made avail­able to us.

Going con­cern

In per­form­ing our work on going con­cern, we have had ref­er­ence to State­ment of Recom­men­ded Prac­tice – Prac­tice Note 10: Audit of fin­an­cial state­ments of pub­lic sec­tor bod­ies in the United King­dom (Revised 2020). The Fin­an­cial Report­ing Coun­cil recog­nises that for par­tic­u­lar sec­tors, it may be neces­sary to cla­ri­fy how audit­ing stand­ards are applied to an entity in a man­ner that is rel­ev­ant and provides use­ful inform­a­tion to the users of fin­an­cial state­ments in that sec­tor. Prac­tice Note 10 provides that cla­ri­fic­a­tion for audits of pub­lic sec­tor bodies.

Prac­tice Note 10 states that if the fin­an­cial report­ing frame­work provides for the adop­tion of the going con­cern basis of account­ing on the basis of the anti­cip­ated con­tinu­ation of the pro­vi­sion of a ser­vice in the future, the aud­it­or applies the con­tin­ued pro­vi­sion of ser­vice approach set out in Prac­tice Note 10. The fin­an­cial report­ing frame­work adop­ted by CNPA meets this cri­ter­ia, and so we have applied the con­tin­ued pro­vi­sion of ser­vice approach. In accord­ance with Audit Scot­land guid­ance: Going con­cern in the pub­lic sec­tor, we have there­fore con­sidered Management’s assess­ment of the appro­pri­ate­ness of the going con­cern basis of account­ing and con­clude that:

• a mater­i­al uncer­tainty related to going con­cern has not been identified
• management’s use of the going con­cern basis of account­ing in the pre­par­a­tion of the fin­an­cial state­ments is appropriate.

Reg­u­lar­ity

The Account­able Officer is respons­ible for ensur­ing the reg­u­lar­ity of expendit­ure and income. We are respons­ible for express­ing an opin­ion on the reg­u­lar­ity of expendit­ure and income in accord­ance with the Pub­lic Fin­ance and Account­ab­il­ity (Scot­land) Act 2000. In our opin­ion in all mater­i­al respects the expendit­ure and income in the fin­an­cial state­ments were incurred or applied in accord­ance with any applic­able enact­ments and guid­ance issued by the Scot­tish Ministers.

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Wider scope audit – Smal­ler body

As set out in our Audit Plan, CNPA meets the defin­i­tion of a smal­ler body in accord­ance with the Audit Scot­land Code of Prac­tice (2016). There­fore, as aud­it­ors we are required to include in our annu­al report com­ment­ary on arrange­ments as they relate to fin­an­cial sus­tain­ab­il­ity and the Gov­ernance State­ment. Our work on the gov­ernance state­ment, and con­clu­sions are set out on page 13 of this report. Below we have cap­tured our com­ment­ary and con­clu­sions on fin­an­cial sus­tain­ab­il­ity and oth­er mat­ters of interest dur­ing the year.

Wider scope dimen­sion	Wider scope risk iden­ti­fied in our audit plan	Wider scope audit response and find­ings	Grant Thornton conclusion
Gov­ernance arrange­ments (Audit Scot­land plan­ning guid­ance consideration)	No sig­ni­fic­ant risks iden­ti­fied with­in our audit planning.	Gov­ernance: Dur­ing 2020⁄21 CNPA’s gov­ernance arrange­ments con­tin­ued to oper­ate as inten­ded, and as in pri­or year. CNPA respon­ded to the Cov­id-19 pan­dem­ic through con­tinu­ing with exist­ing gov­ernance arrange­ments, work­ing remotely through hold­ing Board and sup­port­ing Com­mit­tees via video con­fer­en­cing. Dur­ing 2020⁄21 there was a degree of change at the organ­isa­tion with the Dir­ect­or of Cor­por­ate Ser­vice tak­ing the role as Deputy Chief Exec­ut­ive and Dir­ect­or of Cor­por­ate Ser­vices reflect­ing the role he had been under­tak­ing for a num­ber of years. CNPA con­tin­ue to look to devel­op and enhance its gov­ernance arrange­ments. Build­ing on the Board mem­bers ​“On Board” train­ing ses­sion in 2019⁄20, the Board have held fur­ther work­shops around areas of enhan­cing gov­ernance arrange­ments. A key aspect for CNPA is ensur­ing the Board and com­mit­tee busi­ness con­tin­ues to retain a focus on the Authority’s key stra­tegic pri­or­it­ies, enabling Man­age­ment to focus on the deliv­ery of these.	We did not identi­fy any con­cerns around CNPA’s gov­ernance arrange­ments or dis­clos­ures with­in the draft Gov­ernance Statement.
Fin­an­cial Sus­tain­ab­il­ity, (as applic­able to a smal­ler body)	No sig­ni­fic­ant risks iden­ti­fied with­in our audit planning.	For 2020⁄21 CNPA repor­ted net expendit­ure of £5.473 mil­lion. The fin­an­cial pos­i­tion was broadly in line with budget with a small over­all under­spend against resource depart­ment­al expendit­ure lim­its (DEL) of £221,000 con­sist­ing of an under­spend against cash DEL of £65,000 and an under­spend of £156,000 against non cash DEL. The out­turn pos­i­tion reflec­ted rel­at­ively strong per­form­ance dur­ing a peri­od where ser­vice deliv­ery and oper­a­tions were impacted through cov­id-19. Over­all oper­at­ing activ­ity reduced sig­ni­fic­antly, see­ing a year on year reduc­tion from £3.469 mil­lion to £1.711 mil­lion. How­ever this was off­set through reduc­tions in costs, par­tic­u­larly in rela­tion to oper­a­tion­al plan expendit­ure. The CNPA Cor­por­ate Plan (2018−22) out­lines the organ­isa­tions’ key pri­or­it­ies for the 5 year peri­od. The plan is under­pinned by Fin­an­cial pro­jec­tions detail­ing how income and fund­ing gen­er­ated would sup­port the spend incurred in deliv­er­ing these object­ives. Annu­ally the Board set an annu­al oper­at­ing budget. For 2021⁄22 CNPA have fore­cast avail­able income resources of £9.585 mil­lion, includ­ing Peat­land Res­tor­a­tion fund­ing of £2.285 mil­lion. Man­age­ment have estim­ated core run­ning costs of £4.994 mil­lion and oper­a­tion­al plan pro­vi­sions of £1.739 mil­lion leav­ing the resid­ual bal­ance for the deliv­ery of new pro­grammes, includ­ing the Peat­land Res­tor­a­tion, demon­strat­ing that CNPA con­tin­ues to oper­ate with­in fin­an­cial resources avail­able. Over the longer term, CNPA has had a fur­ther sig­ni­fic­ant award of resources to sup­port fur­ther innov­a­tion and work on con­ser­va­tion and cli­mate action from the Nation­al Lot­tery Her­it­age Fund (NLHF). In July 2021, the NLHF announced an alloc­a­tion of £12.6 mil­lion toward the Her­it­age Hori­zons (Cairngorms 2030) pro­gramme with total budgeted expendit­ure of £43.2 mil­lion. This rep­res­ents a sig­ni­fic­ant invest­ment for CNPA and it is there­fore import­ant that Man­age­ment ensure that it has in place effect­ive pro­cesses and con­trols as well as resources to ensure the funds are admin­istered appropriately.	Through our audit pro­ced­ures we have not iden­ti­fied any sig­ni­fic­ant risks in rela­tion to CNPA’s fin­an­cial sus­tain­ab­il­ity. CNPA’s oper­at­ing expendit­ure is fun­ded through a com­bin­a­tion of pro­gramme, pro­ject and oth­er income as well as grant-in-aid fund­ing. Fol­low­ing the announce­ment of sig­ni­fic­ant invest­ment in Her­it­age Hori­zons, it is import­ant that Man­age­ment ensure that it has the appro­pri­ate pro­cesses and con­trols as well as resources in place to ensure the funds are admin­istered appro­pri­ately. In addi­tion, as the fund­ing arrange­ments become clear, it is import­ant there is early con­sid­er­a­tion of the account­ing treat­ment of these funds to ensure appro­pri­ately recog­nised in accord­ance with the FReM.

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Appen­dices

1. Audit Adjustments

We are required to report all non trivi­al mis­state­ments to those charged with gov­ernance, wheth­er or not the accounts have been adjus­ted by man­age­ment. There were no cor­rec­ted mis­state­ments to the primary fin­an­cial state­ments. There was one uncor­rec­ted mis­state­ment to the primary fin­an­cial state­ments in rela­tion to sep­ar­ately dis­clos­ing pro­vi­sions from trade and oth­er payables.

Impact of unad­jus­ted mis­state­ments: All adjus­ted mis­state­ments are set out in detail below along with the impact on the key state­ments and the repor­ted net expendit­ure for the year end­ing 31 March 2021.

Detail	State­ment of Com­pre­hens­ive Net Expendit­ure £’000	State­ment of Fin­an­cial Pos­i­tion £’000
Being adjust­ment to sep­ar­ately recog­nise pro­vi­sions from trade and oth­er pay­ables and oth­er cur­rent liab­il­it­ies on the primary fin­an­cial state­ments (Note required dis­clos­ures around pro­vi­sions also required)	-	Cr Pro­vi­sions (60) Dr Trade and oth­er pay­ables 60
Over­all impact	-	-

Mis­clas­si­fic­a­tion and dis­clos­ure changes

The table below provides details of sub­stant­ive mis­clas­si­fic­a­tion and dis­clos­ure changes iden­ti­fied dur­ing the audit which have been made in the final set of fin­an­cial statements.

Dis­clos­ure	Aud­it­or recom­mend­a­tions	Adjus­ted?
Annu­al Report	Per­form­ance and Gov­ernance sec­tions amended to reflect NLHF award as well as for­ward look­ing aspects of the accounts. Minor changes to per­form­ance report to incor­por­ate com­par­at­ive information.	✅
Chief Exec­ut­ive Foreword	The FReM requires the annu­al report and accounts to com­prise three main areas: the fin­an­cial state­ments; the Per­form­ance Report and Account­ab­il­ity Report. While we are sat­is­fied the fore­word does not con­tain any spe­cif­ic inform­a­tion required under the FReM we have reques­ted to be included as part of the Per­form­ance Report.	✅
Fin­an­cial instruments	Fin­an­cial instru­ments dis­clos­ure in the accounts should dis­close fin­an­cial instru­ments based on how the valu­ation is held. This would be Fair Value Through Profit and Loss or amort­ised cost. The cur­rent note does not make this dis­tinc­tion and should be updated to reflect the require­ments of the fin­an­cial report­ing standards.	No – The fin­an­cial instru­ments note does not cat­egor­ise the Authority’s fin­an­cial assets and fin­an­cial liab­il­it­ies in accord­ance with the require­ments of FReM and report­ing stand­ards. The major­ity of assets and liab­il­it­ies are held at amort­ised cost. We are sat­is­fied this does not rep­res­ent a mater­i­al omis­sion from the accounts.
Intan­gible assets account­ing policy	Intan­gible asset account­ing policy updated to reflect require­ment of the FReM and cur­rent account­ing treat­ment. Where an act­ive (homo­gen­eous) mar­ket exists, intan­gible assets oth­er than those that are held for sale should be car­ried at cur­rent value in exist­ing use at the report­ing peri­od date. Where no act­ive mar­ket exists, entit­ies should revalue the asset, using indices or some suit­able mod­el, to the lower of depre­ci­ated replace­ment cost and value in use where the asset is income gen­er­at­ing. Where there is no value in use, the asset should be val­ued using depre­ci­ated replace­ment cost.	✅
Crit­ic­al judgements	Inter­na­tion­al Fin­an­cial Report­ing stand­ards pre­scribe the required dis­clos­ures in rela­tion to crit­ic­al judge­ments. It also requires sep­ar­ate con­sid­er­a­tion of account­ing estim­ates. CNPA should dis­close judge­ments that Man­age­ment makes when apply­ing its account­ing policies that have the most sig­ni­fic­ant effect on car­ry­ing amounts in the fin­an­cial state­ments. Sig­ni­fic­ant Estim­ates relate to assump­tions and estim­ates at 31 March that have a sig­ni­fic­ant risk of res­ult­ing in a mater­i­al adjust­ment to the car­ry­ing amounts of assets and liab­il­it­ies with­in the next fin­an­cial year. In the draft accounts, Man­age­ment have dis­closed the LEAD­ER pro­vi­sion as a sig­ni­fic­ant estim­ate. We would not con­sider this to rep­res­ent a sig­ni­fic­ant estim­ate or crit­ic­al judge­ment as it is not mater­i­al and there is not a sig­ni­fic­ant risk of a mater­i­al change in the next 12 months. In addi­tion, where a sig­ni­fic­ant estim­ate is dis­closed, there is an oppor­tun­ity to enhance the dis­clos­ure to focus on those key areas of estim­a­tion that may have a sig­ni­fic­ant risk of mater­i­al mis­state­ment in the next 12 months.	No — While we do not con­sider the LEAD­ER pro­vi­sion to rep­res­ent a sig­ni­fic­ant estim­ate or crit­ic­al judge­ment, we have not iden­ti­fied any oth­er areas of estim­ate or judge­ment in pre­par­ing the fin­an­cial state­ments that would require dis­clos­ure. Fur­ther­more, we are sat­is­fied that the dis­clos­ure of the LEAD­ER pro­vi­sion estim­a­tion does not rep­res­ent a mater­i­al error in the accounts.

There were minor present­a­tion­al (round­ing / format­ting) changes recom­men­ded to Man­age­ment. These are not con­sidered mater­i­al to the accounts.

2. Action plan and recommendations

We have set out below, based on our audit work under­taken in ²⁰²⁰⁄₂₁, the one sig­ni­fic­ant recom­mend­a­tion arising from our audit work.

Recom­mend­a­tion

Agreed man­age­ment response

1. Nation­al Lot­tery Her­it­age Fund admin­is­tra­tion CNPA has had a fur­ther sig­ni­fic­ant award of resources to sup­port fur­ther innov­a­tion and work on con­ser­va­tion and cli­mate action from the Nation­al Lot­tery Her­it­age Fund (NLHF). In July 2021, the NLHF announced an alloc­a­tion of £12.6 mil­lion toward the Her­it­age Hori­zons (Cairngorms 2030) pro­gramme with total budgeted expendit­ure of £43.2 mil­lion. This rep­res­ents a sig­ni­fic­ant invest­ment for CNPA and it is there­fore import­ant that Man­age­ment ensure that it has in place effect­ive pro­cesses and con­trols as well as resources to ensure the funds are admin­istered appro­pri­ately. In addi­tion, as the fund­ing arrange­ments become clear, it is import­ant there is early con­sid­er­a­tion of the account­ing treat­ment of these funds to ensure appro­pri­ately recog­nised in accord­ance with