Publication: Code of audit practice 2026

The Code of Audit Practice is issued by the Auditor General and the Accounts Commission and defines the independent external audit of public bodies in Scotland. It sets out the framework for external audit which provides assurance that public bodies properly discharge their responsibilities.

All the auditors appointed by the Auditor General and the Commission to perform annual audits, as well as performance auditors, in Audit Scotland, are required to comply with this Code.

Appointed auditors are independent of the bodies they audit and report their findings in public. In that way, auditors provide independent assurance and promote improvement. This supports democratic scrutiny of how public money is raised and spent, and the outcomes achieved.

The new Code builds on existing principles – independent appointment, public reporting, wider scope and quality – while evolving to meet changing and growing expectations and public sector reform.

The two areas of substantive change are:

• a more proportionate audit approach for smaller bodies, with expenditure below £6.5 million. This allows auditors to carry out more focused procedures while still ensuring a rigorous, independent assessment of public spend
• a stronger focus on Best Value in local government in annual audits with separate reporting to the Accounts Commission on individual councils will change from the current five–year cycle to reporting determined on a risk–basis, assessed by level of concern.

A mixed–market approach to audit appointments means that appointed auditors are either employees of Audit Scotland or private audit firms. Since the establishment of Audit Scotland around one third of the annual audits have been carried out by private audit firms.

The Invitation To Tender for the Code will be issued in August.

In summary, there was strong support for the draft single Code and overall approach from a broad range of public bodies, local government representative bodies, accountancy institutes and audit firms. More than three–quarters of respondents agreed with the proposed changes, including in the two areas of substantive change:

• A more proportionate audit approach for smaller bodies, with expenditure below £6.5 million. This allows auditors to carry out more focused procedures while still ensuring a rigorous, independent assessment of public spend.
• A stronger focus on Best Value in local government. And reporting to the Accounts Commission on individual councils will change from the current five–year cycle to reporting determined on a risk–basis, assessed by level of concern.

There was strong support for the draft single Code and overall approach from a broad range of public bodies, local government representative bodies, accountancy institutes and audit firms.

Following the consultation two main changes have been made:

• The original proposal for smaller bodies was that auditors appointed by the Auditor General should continue to provide reasonable assurance in their conclusions on one wider scope area (financial sustainability), and limited assurance on the remaining three. However, in response to concerns about the practical challenges of applying different assurance levels, the Auditor General decided to simplify the approach. As a result, the Code now requires limited assurance across all wider scope conclusions.
• There was a proposal for local government auditors to provide separate conclusions on financial sustainability and financial management, in addition to the overall conclusion on Best Value. However, after considering comments received, the Commission decided not to proceed with this approach. Instead, auditors will be required to explicitly refer to financial sustainability and financial management within the commentary that supports their overall Best Value conclusion.

There were also some clarifications to wording.

A summary of the changes is available with other files on this page.

Yes. The Auditor General and the Accounts Commission carefully considered whether engagements not conducted in accordance with ISAs can be described as an audit, and sought legal advice on this matter. Senior Counsel confirmed that there is no legal requirement for audits to follow ISAs. Accordingly, the term audit continues to be used to describe the separate assurance framework for smaller bodies.

Audit Scotland’s public consultation on the draft Code of Audit Practice ran for five weeks from the 23 February 2026.

Engagement from stakeholders was strong, with around 60 respondents from a broad range of public bodies, local government representative bodies, accountancy institutes and audit firms. This engagement, along with the extensive engagement undertaken while developing the Code, is essential to inform the Code to ensure it provides an appropriate level of assurance in an ever–changing service delivery and risk environment.

The new Code will come into effect for the 2027/28 audits and will operate for five years.