SNP auditors make unprecedented fraud statement in party accounts

The accountancy firm revealed it had been reading the minutes of the party’s ruling body and audit & finance committee to check for “events that may impact the financial statements”.

Three members of the finance committee resigned earlier this year in protest over a lack of transparency, as did the then party treasurer, MP Douglas Chapman.

The auditors also said they had “obtained an understanding of the legal and regulatory frameworks that the party operates in”, with a focus on “material amounts and disclosures”.

READ MORE: SNP publishes salary of Nicola Sturgeon's husband Peter Murrell in accounts

The statement includes text adopted as part of a new industry-wide standard, but also specific steps relating to the SNP.

It comes as police officers investigate complaints about the fate of more than £660,000 raised by the party since 2017 for a second independence referendum.

After the force launched the probe last month following a consultation with prosecutors, the SNP said it would "cooperate fully" with the investigation.

However the development was a still huge blow to Nicola Sturgeon, as SNP leader, and her husband, SNP chief executive Peter Murrell.

It followed the SNP admitting it had spent some of the Indyref2 money on other things in the absence of another independence vote.

The party has now pledged to spend an “equivalent” sum, and insists the money is earmarked for Indyref2, although it is not formally identified as such in its accounts.

The SNP accounts for 2020 were published today.

READ MORE: Police Scotland launch 'fraud' probe into SNP fundraising for Indyref2

The auditors' statement underlines their procedures to detect fraud, but also the possibility of failing to do so because of the “inherent limitations of an audit”.

The ext states: “We considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following area: revenue recognition. 

“We also obtained an understanding of the legal and regulatory frameworks that the party operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. 

“The key laws and regulations we considered in this context included the Political Parties, Elections and Referendums Act 2000 and tax legislation.

“Our procedures to respond to risks identified included the following:

· agreeing income received to bank receipts and supporting documentation;

· reviewing the financial statement disclosures to assess compliance with the laws and regulations described as having a direct effect on the financial statements;

· enquiring of management regarding the potential existence and extent of any litigation claims;

· performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

· reading National Executive Committee and Audit & Finance Committee minutes for events that may impact the financial statements.”

It concluded: “Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or noncompliance with regulation." 

The new statement is also included in the 2020 accounts of the SNP Westminster Group.

It is unclear if any of the measures are new for 2020, or simply stated for the first time. 

In March, three members of the SNP’s finance and audit commmittee quit amid complaints about being denied access to the accounts.

In May, Mr Chapman also quit as the new SNP treasurer, complaining a lack of transparency had stopped him carrying out his “fiduciary duties”.

SNP MP Joanna Cherry QC quit the party’s ruling body, the National Executive Committee, the same month, again citing issues with transparency and scrutiny. 

MSP Colin Beattie, who returned as Treasurer after Mr Chapman left, gives an assurance in the 2020 accounts that “all of the amounts raised will be spent directly on the campaign to win independence”.

READ MORE: Tom Gordon: SNP-Green deal contains poison for independence

He said that by the end of 2020 a total of £666,953 had been raised for Indyref2, of which £51,760 jhad been spent, with much of the remainder due to be spent this year.

He said he, Mr Murrell and Johnston Carmichael were in discussions about improving the transparency around the money in future years in the accounts.

The accounts show that in 2020, the SNP had an income of £4.4m, compared to £5.3m in 2019, and an expenditure of £3.3m compared to £5.6m in 2019.

This left it with a surplus last year of £1.1m, compared to a deficit of £319,000 in 2019.

Its reserves were £1.4m at the end of 2020, compared to £272,000 in 2019.

The SNP was the only major party to have a surplus last year. The UK Conservatives, UK Labour and UK Liberal Democrats all had losses in 2020.

For the first time since the 2012 accounts, the SNP also revealed Mr Murrell's salary in its accounts.

It said it was £79,750 a year as of May 31 this year.

In 2012 it was £77,024.

A spokesperson for Johnston Carmichael said: “Client confidentiality is paramount in all that we do, and we do not discuss individual cases.

"However, in line with the revised International Standards on Auditing (ISAs), effective for periods commencing on or after 15 December 2019 and beyond, all audit reports now require to include a bespoke section which addresses the extent to which the audit was considered capable of detecting irregularities including fraud.”

An SNP spokesperson said: "The SNP publishes the most extensive and transparent accounts of any major political party, despite having the lowest turnover, with 39 pages of detailed information."