Scottish Canals’ Finance and Business Director, Sarah Jane Hannah, said: “It is naturally disappointing for the organisation to receive a disclaimer of opinion in relation to the valuation of our canal infrastructure for the second year from Grant Thornton since the change in financial reporting requirements imposed on Scottish Canals from 1 April 2020.
Although we are pleased with Grant Thornton’s assurance that ‘no matters of significance were identified out with audit testing of PPE,’ as Audit Scotland’s Section 22 report indicates, the necessity to value our unique canal network for the first time in our history has presented challenges.
Scotland’s Canal network has a combined length of 140 miles with over 2,500 supporting infrastructure assets, such as dams, weirs, bridges, and reservoirs. Many of those assets are more than 200 years old, and unlike the road, rail and council infrastructure networks, there has been no established agreed and previously audited methodology for the valuation of a canal network. Neither has there been generally accepted and audited historical cost data on record to use as the basis of the valuation.
We have made significant progress since the ambitious timelines set at the Public Audit Committee in March 2022. A cross-sector working group with experts both in our own organisation and independent accounting advisors began the work to identify the initial requirements and assess the categories of assets, and then together with a team of independent valuation specialists, we developed a robust methodology to establish the canal infrastructure valuation. With Grant Thornton fully accepting the methodology as reasonable in August 2022, the draft valuation was completed October 2022 for external audit.
With audit work taking up a considerable period from October 2022 to May 2023, additional work can now continue to improve the valuation records and establish a full fixed asset register before our audit for the 2022/23 financial year begins.
We look forward to working closely with our new auditors, Audit Scotland, to agree the judgements and estimates in the valuation are reasonable and meet reporting requirements. We are incredibly grateful to our teams across the organisation who have worked hard over the last year to make significant progress with this complex piece of work.”
View the full Audit Scotland report here