2023 - 2024

Introduction

The purpose of this performance report is to provide an overview of the King’s and Lord Treasurer’s Remembrancer (KLTR) and its performance during 2023-24. This section of the Annual Report and Accounts sets out the purpose, structures, activities, and functions of the KLTR; provides a summary of our operational and financial performance for the year and describes the key issues, risks and trends which influence our work.

Performance Overview

The role of the KLTR is unique and essential. Our main function is deciding whether, and how, to apply Crown rights to Scottish property that has been rendered ownerless which includes assets of dissolved companies, the estates of heirless individuals, and treasure trove. Our function is based on the common law principle that ownerless property may be dealt with by the Crown. If property becomes ownerless and the KLTR is made aware of it, the Crown can choose to deal with it if it wishes to but is not obliged to and has absolute discretion on this point.

The King’s and Lord Treasurer’s Remembrancer (KLTR) is the Crown’s representative in Scotland with authority to deal with ownerless property falling to the Crown by operation of law. The post of KLTR is held by the Crown Agent, John Logue. It is entirely separate from his prosecutorial functions as the KLTR is a public sector organisation, a Non-Ministerial Office, and part of the Scottish Administration, in its own right.

The KLTR’s overall aim is to deliver public benefit for Scotland through the way we approach ownerless property and to achieve the effective administration of the KLTR’s functions so that public enquiries and transactions are dealt with promptly and appropriately. The KLTR is supported by its Advisory Board, details on which are provided in the Governance Statement at paragraphs 54–74.

The KLTR’s principal activities are:

dealing with land, assets and other rights falling to the Crown under the Companies Acts, the property of missing persons and land where an owner cannot be identified. We explain in the next section below how we make decisions in this regard.

administering the property of individuals who die heirless by ingathering funds, paying debts, disposing of heritage, and advertising where appropriate for blood relatives. We are in the process of reviewing and reforming the Crown’s functions in this area in partnership with COPFS who lead on a number of aspects of this important service. This is reported on at paragraphs 32-33.

administering finds of treasure in Scotland, ingathering award payments, and making payments to finders. The day-to-day administration of the treasure trove system is carried out on our behalf by staff in the Treasure Trove Unit based at National Museums Scotland in Edinburgh.

How we deal with ownerless property

When an ownerless property is brought to the attention of the KLTR, we will usually either claim and sell it or choose not to deal with it. This includes deciding whether or not it is appropriate to deal with a property under our new OPTS scheme.

Where we choose not to deal with a property, it is open to the KLTR to do nothing or to waive the Crown’s right by disclaiming the property. The effect of a disclaimer is to remove the Crown interest entirely. Following a disclaimer, it may be possible for an interested party to attempt to take ownership, for example though a prescriptive claim or vesting order processes.

Ultimately, we apply Crown rights only where we are satisfied that to do so is responsible and appropriate, finding a balance between the KLTR priorities and managing potential risk, both to the Crown and to the public funds held by us. Should the risks be considered disproportionately high in claiming a certain property, it is likely not to be claimed as, in doing so, the liabilities inherited by the Crown could be onerous to the public purse compared with the wider benefit of claiming. Therefore, the consideration given to exposure of the Crown to possible risks in each case is directly connected to the benefit that could be realised for Scotland and its inhabitants.

The KLTR’s net receipts from its operations are paid over to the Scottish Consolidated Fund following deduction of its expenses, staffing and other running costs.

Financial and Operational Performance

This section provides a summary outlining the KLTR’s financial and operational performance for 2023-24. Our focus in this reporting year has been on reviewing and reforming of our functions in these key areas and on strengthening our delivery across all our work. We have made a few significant advances in the year, including the launch of our Ownerless Property Transfer Scheme (OPTS), a public interest scheme designed to create new opportunities for communities to acquire ownerless land and launching a comprehensive review of the Scottish treasure trove system. These and our other reforms are noted at paragraphs 27-31.

This year has seen significant governance changes in the KLTR Office. Previously, the KLTR Office structure was focused on carrying out the existing operational functions based on the published policies regarding ownerless property.

New functions have been created and staff numbers increased to support them. These functions have allowed the KLTR Office to create and launch initiatives such as the Ownerless Property Transfer Scheme (OPTS) and an independent review of the Scottish Treasure Trove system. The creation of the Governance & Strategy Team has facilitated a focus on KLTR’s own governance arrangements and strategic planning going forward, feeding into COPFS’ as appropriate.

The updated structure of the Office with supporting bodies is shown in the organogram below.

In November 2023 KLTR established its own Advisory Board which provides independent scrutiny, advice, and guidance to KLTR on its strategic objectives and activities, an Advisory Panel to support the delivery of OPTS and associated decision-making, and an Executive Management Team (EMT) which comprises of the individual heads of departments within the KLTR Office. The EMT supports the Chief Executive and regularly meets to discuss operational delivery and progress against business and strategic plan objectives.

The year has also not been without its challenges as there has been higher demand on our reserves compared with previous years. This is due, in part to the state of the economy with fewer funds being received this year compared with last year, but also due to a significant rise in the values of claims being made to heirless estates (see paragraph 20). We have therefore changed how we calculate our reserve levels as we go into the following financial year since KLTR runs on the basis of being self-funding as far as possible. We have set out the new process at paragraph 40-44.

The main financial risk for KLTR relates to having sufficient funds available to settle claims in the financial year. As can be seen in the performance analysis section, our reserves have come under greater pressure this year and we have reviewed how we will calculate our reserves going forward (see paragraphs 40-44).

The corporate risk register also captures the following corporate risks;

• KLTR fails to deliver effective and efficient operations.
• KLTR fails to maximise staff potential to deliver our key activities and initiatives along with the challenges faced in terms of attracting and retaining people with the necessary skills to support our ambitions. As noted at paragraph 37 we have increased our staffing capacity to enable us to meet these demands and to deliver on the objectives set out in our new strategic plan for 2024-27.
• KLTR IT systems and processes limit efficiency of operations and productivity. KLTR has an ageing case management system which currently requires a lot of manual input to operate, we will be looking to consider a new system longer term.

Performance Analysis

This section of the report provides a review of KLTR’s performance and financial position in the 2023-24 financial year. It covers the progress made regarding the KLTR’s operational and strategic reform and future planning for this. It also provides detail on the KLTR’s finances over the year and internal and external factors which have affected these.

Financial Performance

There have been noticeable changes to KLTR’s cashflow this year. Overall, the KLTR has taken in noticeably fewer receipts, £7.5m, down 33%, compared with last and previous year’s annual total receipts of around £11.2m in both cases. The KLTR had receipts less payments and claims made from operations in 2023-24 of £2m (2022-23: £7m). Net receipts after all payments and administration costs were £0.6 m (2022-23: £5:8m). In 2023-24, £0.17m, was paid to the Scottish Consolidated Fund (SCF) (2022-23: £5m).

The table below sets out the KLTR’s key annual receipts and payment figures for the financial years 2023-24 and 2022-23:

The KLTR’s total gross receipts are 33% lower than the previous years’ figures and include an 87% decrease in receipts from property sales. The relative level of payment returns of company funds has decreased to 30% of funds received this year, compared with 40% last year. The level of heirless estates claims paid has increased to 248%, compared with 66% last year. As can be seen from the chart below, our overall gross receipts have been declining over the last three years against a rising number of claims being paid out each year. See also paragraph 23 heirless estates payments below.

The KLTR’s overall receipts performance this year reflects both the economic situation in Scotland and in the wider UK, which affects our receipts in different ways and to different timescales. Historically, KLTR’s receipts from dissolved companies has tended to a lag around 2-3 years from the relevant economic event before beginning to manifest as general relevant rises or falls in receipts. We observed this in increases to our receipt levels following the 2008 financial crash. The same appears to be true here: this year’s performance likely reflects the various macro events affecting the economy around the beginning of 2021 and onwards: i.e., the COVID pandemic, Brexit, the war in Ukraine, and energy price and bank interest rate increases. This has manifested in less money being in UK registered company accounts at the time of dissolution, and we could well also see a similar level of receipts in the 2024-2025 financial year while interest rates remain higher than in previous years.

Also tied in with interest rate increases, along a more proximate timeline, has been a decline in Scottish residential and commercial property market activity. This in turn has resulted in fewer property referrals to us this financial year. A more positive outlook for the Scottish property market has been forecast by some commentators for 2025 and 2026, including our property advisers Avison Young, on the assumption interest rates will begin to fall towards the end of the 2024-25 financial year.

A significant factor in our overall financial performance this year has been in the value of claims paid out by the KLTR in respect of heirless estates processed by the Crown compared to the proceeds received which have decreased due to the increased ease of traceability of relatives via online digital resources. The total amounts paid out increased significantly this year by 65% over last year’s figures, and as can be seen from the next chart, forms part of a wider rising trend. This activity is principally being driven by professional “heir hunter” firms. For a fee, these firms will identify relatives to deceased individuals whose estates have been wound up by the Crown. The heir hunter market is competitive, so we can expect the appetite for pursuit of claims to continue.

Planning ahead

We have adjusted the way our reserves are calculated to manage these changes in receipts and increased demand for return of funds (see KLTR reserve paragraph 40-44). We have also commissioned a team of economists at Fraser of Allander Institute to help KLTR develop its future years’ reserve and operational forecasting against what is an increasingly complex and challenging macroeconomic background. That work will begin in the early summer of 2024.

Continued additional funding for the Treasure Trove Unit

The Treasure Trove Unit (TTU), who are members of staff of National Museums Scotland (NMS), support the KLTR by carrying out day to day administration of the treasure trove system in Scotland. As we did in the previous financial year, the KLTR has continued to fund three additional posts in TTU to help tackle the backlog in finds built up over the pandemic following the closure of the museum for much of that time-period. As reported finds are continuing to rise, the future resourcing requirements of TTU are being looked at as part of the Treasure Trove Review and Reform process.

Funding of heirless estates work by COPFS

KLTR currently also continues to fund part of the staffing team in COPFS responsible for investigation of heirless estates, the staff of the National Ultimus Haeres Unit (NUHU) based in Hamilton. The overall functions of COPFS in this area are currently under review and both organisations intend to review the funding routes for the COPFS aspects of heirless estates work in 2024/25 financial year.

Reform

The KLTR has continued the reform work begun in 2022-23 and made a number of advances in these areas.

Reviewing the Scottish Treasure Trove system

In October 2023, KLTR established a team to review, reform and modernise the Scottish Treasure Trove system. The team launched its 12-week public consultation on 19 February 2024. This will inform a report and recommendations on the future of the system, due to be published in September 2024, the first time in 20 years that such a comprehensive review has been undertaken into Treasure Trove in Scotland. As noted at paragraph 25, in tandem with this reform work, we have continued to support delivery through the extension of funding resource at NMS to clear the backlog of treasure trove finds built up during the COVID 19 pandemic.

Rethinking how KLTR deals with ownerless land and buildings in the public interest

We have modernised and diversified our approach to bringing ownerless land back into ownership and use. Traditionally, if the KLTR were to consider it appropriate to deal with a property, we would usually sell it for market value to an interested party or at auction, raising revenue that would go towards running costs and contribute to the Scottish Consolidated Fund.

On 1 March 2024, following a successful public consultation exercise, the KLTR launched its Ownerless Property Transfer Scheme (OPTS), which provides opportunities for public bodies, local authorities, and appropriately constituted community bodies in Scotland to take ownership of ownerless property notified to the KLTR where it will benefit local communities.

We have already undertaken a number of pilot projects, a number of which are now incorporated within the new scheme proper, including the disposal to Falkirk Council of a derelict hotel site in Slamannan, which the Council intend to develop into affordable housing.

Clarifying how KLTR and COPFS deal with heirless estates

KLTR and COPFS are working together to clarify their roles and responsibilities in connection with heirless estates which the Crown becomes aware of. The aim is to have this clarified and in place during 2024-25.

Once agreed, there will be a period of transition to establish these new arrangements and the KLTR will continue to fund the staff of NUHU until the new arrangements are firmly in place.

Improving our governance

At its 9 August 2023 meeting, the COPFS and KLTR Audit and Risk Committee agreed that it was now appropriate to put new, separate, and distinct governance arrangements in place for the KLTR given the evolution and progress of the KLTR office over the past 5 years. This has taken the form of a new KLTR Advisory Board, chaired by the KLTR, together with its own Audit Committee, a delegated function of the Advisory Board.

These new governance arrangements aim to ensure appropriate oversight of the KLTR and to support the KLTR in the development of its strategy, recognising that its purpose, organisation, and strategic direction is very different to that of COPFS.

Taking a new strategic approach to our work over the next 3 years

KLTR published its first formal Strategic Plan at the end of March. This plan outlines our overall vision for the office, our values, and the strategic objectives we have chosen to focus on over the next three financial years from April 2024 – March 2027:

• Improve Scotland’s economy and the wellbeing of its inhabitants by providing opportunities to bring ownerless property back into use. The principal focus of this objective will be the work of our OPTS which we intend to review after two years of its operation.
• Lead a successful, transparent, and adaptive Scottish Treasure Trove system with a focus on preserving and sharing Scotland’s archaeological heritage. As noted earlier at paragraph 28 we have established our review team who are currently conducting a public consultation on these issues and are due to report with a series of recommendations for reform later in 2024.
• Strengthen and modernise our delivery. We aim to travel towards this vision over the next three years by focusing on achieving our strategic objectives and honouring our main values to assist us along the way: integrity, collaboration, respect, and innovation.

Staffing

As noted earlier, we have created a team to conduct a review of the treasure trove system, and to establish the groundwork of reforms over the next two years. We have also increased our capacity to support the work of the OPTS delivery team and to improve our governance.

Key Financial Risk

The main financial risk for the KLTR relates to having sufficient funds available to settle claims in the financial year.

For example, for estates of individuals who die heirless, estates are very often claimed within 1-5 years of referral. To give another example, if a dissolved company is restored to the Companies Register then the KLTR would repay such sums that have been remitted to us in respect of the company’s former bank account.

To cover the possibility of these claims being brought, KLTR retains a cash reserve. This year, in discussion with the Scottish Government, following a decrease in gross receipts and changes in the demand profile for return of funds, we have reviewed the way KLTR’s current and future reserve levels and Scottish Consolidated Fund Contributions are calculated.

The new approach recognises that:

• • The KLTR is self-funding, principally through the receipts of dissolved company funds.
  • The KLTR’s income streams are reactive and can be affected by changes in the economy, technology, demographics and changes in external policies and practices. There is therefore a significant element of unpredictability and volatility to the KLTR’s income streams.
  • The KLTR’s surpluses, and the reserves which they fund, also have an element of unpredictability and volatility, and depend on the level of claims brought in any given period.

To enable the KLTR to continue to operate on a self-funding basis, the KLTR needs to provision for its reserves in a dynamic way, taking into consideration: the KLTR’s operating costs, any known claims, and claims that are likely to occur within the current and following financial year with a high degree of probability.

For completeness, the KLTR has no financial liabilities arising from finds of treasure. Where finds are allocated to a museum, the amount paid to the finder is found by the museum itself. The KLTR’s role in this regard is limited to acting as the conduit for passing the funds to the finder.

If we experience similar levels of receipts to the previous financial year and a similar increase in claims to funds, KLTR’s reserves could well be put under pressure during the later parts of this financial year. We will continue to monitor the situation closely and we will work jointly with the Scottish Government in any case where KLTR is, or is likely to face, any reasonable unfunded pressure arising during its function in the next financial year.

Payment policy

The KLTR requires that all suppliers’ invoices not in dispute are paid within the terms of the relevant contract. We aim to have 100% of invoices, including disputed invoices once the dispute has been settled, paid on time in these terms. Moreover, the Scottish Government has set a 30-day payment performance target with an aspiration to pay within 10 working days of receipt. Suppliers’ invoices are paid by the Crown Office and Procurator Fiscal Service which then recharges the KLTR (see Note 5). In 2023-24, performance against the 30-day target was 100% (2022-23: 97.3%). The KLTR aspires to pay all undisputed invoices within 10 days. During 2023-24, the KLTR paid 100% within the 10-day aspiration period (2022-23: 95.9%). In 2023-24, in line with the government policy, no interest was paid under the terms of the Late Payment of Commercial Debt (Interest) Act.

Environmental and Sustainability

In terms of the impact of our in-office working space on the environment, the KLTR rents office space at Victoria Quay from the Scottish Government which adheres to the Scottish Government environmental policies applicable to the office. We also adhere to COPFS environmental policies. In addition, the KLTR Office has implemented changes to become a paperless office. Our filing system, which was traditionally hard copy, is now principally digital with printing kept to a minimum. KLTR staff attend training seminars and courses online, where possible.

Impact of our work on communities

As noted earlier in this report, the KLTR launched the new Ownerless Property Transfer Scheme (OPTS) on 1 March 2024, providing opportunities for public bodies, local authorities, and appropriately constituted community bodies in Scotland, to take ownership of ownerless property notified to the KLTR, where it will benefit local communities.

A key criterion in this scheme relates to sustainable development, a pillar of which considers environmental benefits. Many areas across Scotland continue to be blighted by ownerless property and OPTS seeks to create opportunities to bring ownerless property back into productive use. The KLTR’s business through OPTS will, therefore, have a positive impact on the environment by ensuring ownerless properties are brought back into local ownership and the restoration and use of these properties will enhance the local environment and create spaces in which local aspirations can be delivered. This should have a positive impact on the local environment for both present and future generations.

This section is provided to meet the accountability requirements to Parliament. It is made up of the Corporate Governance Report, Remuneration and Staff Report, and Parliamentary Accountability and Audit Report.

Corporate Governance Report

The Director’s Report

The Chief Executive is the Accountable Officer for the KLTR and is supported by the Advisory Board and Executive Management Team. Full details of the governance and risk management arrangements in operation are provided as part of the Governance Statement at paragraphs 54-74.

The Advisory Board is made up of the following members:

John Logue (Chair)                                     KLTR 

Robert Sandeman                                                        Chief Executive and Accountable Officer 

Vanessa Davies                                             Non-Executive Director 

Annie Gunner Logan                                  Non-Executive Director 

David Watt                                                       Non-Executive Director  

Kyle McAra                                                      Legal Director 

Richard Frew                                                            Head of Policy, Communications & Stakeholder Relations 

            Marlene Anderson                                      Director of Finance & Procurement for COPFS 

A register of interests for KLTR is published on our website.

There were no personal data related incidents reported to the Information Commissioner (ICO) in 2022-23 or 2023-24.

Governance Statement

Purpose

The Governance Statement is intended to not only outline the KLTR governance framework but to comment on its effectiveness.

Scope of Responsibility

As Accountable Officer for KLTR, I have responsibility for maintaining an adequate and effective system of internal control, which supports the achievement of the King’s and Lord Treasurer’s Remembrancer’s aims, objectives and policies, whilst safeguarding the public funds and the King’s and Lord Treasurer’s Remembrancer’s assets for which I am personally responsible, in accordance with the responsibilities assigned to me.

The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide guidance to the Scottish Government and other relevant bodies on the proper handling of public funds. It sets out the relevant statutory, parliamentary, and administrative requirements, emphasises the need for economy, efficiency, effectiveness, and equality, and promotes good practice and high standards of propriety.

Governance Framework

The KLTR’s Governance Framework is currently being developed. This will comprise details of the systems, processes, culture, and values by which the KLTR is directed and controlled. It will enable the organisation to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate services and value for money.

The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the KLTR’s policies, aims and objectives, to evaluate the likelihood and potential impact of those risks being realised, and to manage them efficiently, effectively, and economically.

The KLTR Executive Management Team carried out a review of the KLTR Office internal control systems using the Internal Control Checklist. The Head of Governance and Strategy provided the Accountable Officer with the Certificate of Assurance on behalf of the Executive Management Team. The overall assurance opinion for KLTR was noted as reasonable, and no significant matters arising or for noting were identified.

As noted earlier (paragraphs 34-35) KLTR has reformed its governance arrangements in this reporting year. Up until August 2023, the KLTR shared an Audit and Risk Committee (ARC) with COPFS, whose members are all Non-Executive Directors. Now, the KLTR Office is supported by its own Advisory Board, which is chaired by the KLTR and contains both internal and external members as set out in the table below.

The purpose of the Advisory Board is to provide independent advice, guidance, and views on the strategic direction of the KLTR and delivery of its strategic objectives and key activities. The Advisory Board does so regarding the content of KLTR initiatives and will act as a sounding board and provide views on issues relating to any work as determined by the KLTR. As well as supporting the KLTR’s strategic direction, the Advisory Board advises on the effectiveness of the KLTR’s corporate governance arrangements which includes the KLTR’s systems of internal control and assurance, risk management and financial reporting.

The newly formed KLTR Advisory Board held its first meeting in February 2024.

In the first half of the next financial year, a separate Audit Committee (AC), will be created to support the KLTR Accountable Officer. This will be a sub-committee of the KLTR Advisory Board, whose members will all be Non-Executive Members. The AC will support the Accountable Officer in his responsibilities for issues of risk, control, and governance across the organisation. The AC will be chaired by a Non-Executive Director of the KLTR Advisory Board and will meet at least twice in a financial year with additional meetings to consider and approve the annual accounts and other matters, as necessary.

In addition, the KLTR operates risk management strategies in accordance with the Scottish Public Finance Manual. Responsibility for managing risks at a corporate level is taken by the Executive Management Team. Paragraphs 15-16 provides more detail on the risks faced by the KLTR.

Counter fraud activity

The KLTR does not have its own policies on counter fraud, whistleblowing and anti-bribery but follows the policies and practices in force in COPFS. These are set out in the annual report and accounts of COPFS which can be found on the COPFS website http://www.copfs.gov.uk.

Internal Audit

Each year a programme of internal audit work is conducted by the Scottish Government Internal Audit Directorate. During 2023-24, the annual audit plan was agreed by the COPFS Audit and Risk Committee ahead of the financial year.

In 2023-24 SG Internal Audit completed an audit on the National Ultimus Haeres Unit. The level of assurance was shown as Insufficient Assurance, controls are not acceptable and have notable weaknesses. The recommendations made were accepted by COPFS management and actions taken to address these. A follow up to the audit will take place in 2024-25.

KLTR currently use COPFS systems to generate the Annual Accounts, the final Annual Assurance Report for COPFS was presented to their May 2024 Audit and Risk Committee and the overall opinion during the year was Reasonable Assurance.

Review of Adequacy and Effectiveness

As Accountable Officer, I also have responsibility for reviewing the effectiveness of the system of internal control. My review is informed by:

• comments made by the external auditors in their management letter and other reports;
• reports from managers on the steps they are taking to manage risks in their areas of responsibility including progress reports on key objectives;
• monthly meetings with appropriate KLTR staff to discuss relevant issues;
• The COPFS Audit and Risk Committee up until August 2023 at which point the KLTR Advisory Board was appointed and took over this function of assurance; and
• The annual certificate of assurance process and internal control review by the EMT.

Appropriate action is in train to ensure the continuous improvement of the system, there were no weaknesses identified which required further action.

Significant Governance Issues

As noted at paragraphs 57-64 above, KLTR has made a number of changes to its governance during the course of this year. The KLTR is committed to a process of continuous development and improvement, and with the support of our Advisory Board we continue to develop our processes and respond to developments in best practice in this area.

Other than these changes, there have been no significant governance issues during 2023-24 or 2022-23.

There were no significant personal data related incidents reported in 2023-24 or 2022-23.

Conclusion

During 2023-24, no significant control weaknesses or issues have arisen, and no significant failures have arisen in the expected standards for good governance, risk management and control. The systems have been in place for the year under review and up to the date of approval of the annual report and accounts. As Accountable Officer, I am satisfied with the adequacy of the internal control and governance arrangements of the KLTR.

Statement of the Accountable Officer’s Responsibilities

Under the accounts direction issued under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000, the KLTR is required to prepare accounts for each financial year detailing the resources acquired, held, or disposed of during the year and the use of resources by the KLTR during the year.

The accounts are prepared on a receipts and payments basis and must properly present the state of affairs of the KLTR.

In preparing the accounts the Accountable Officer is required to comply with the SPFM and in particular to:

• observe the accounts direction issued by the Scottish Ministers in accordance with section 19(4) of the Public Finance and Accountability (Scotland) Act 2000 including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;
• make judgements and estimates on a reasonable basis;
• state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed and disclose and explain any material departures in the accounts.

The Permanent Secretary to the Scottish Government, as Principal Accountable Officer appointed the Chief Executive, Robert Sandeman, as Accountable Officer for the KLTR.

The responsibilities of an Accountable Officer, including responsibility for the propriety and regularity of the public finances for which the Accountable Officer is answerable, for keeping proper records and safeguarding the KLTR’s assets, are set out in the ‘Memorandum to Accountable Officers’ from the Principal Accountable Officer.

As Accountable Officer, I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the auditors are aware of that information. So far as I am aware, there is no relevant audit information of which the auditors are unaware.

I confirm that the annual report and accounts, as a whole, are fair, balanced and understandable, and take responsibility for the annual report and accounts and the judgements required for determining that it is fair, balanced, and understandable.

The KLTR does not employ staff directly. All staff within the department are seconded to KLTR from the Crown Office and Procurator Fiscal Service (COPFS) and the wider Scottish and UK civil service.

Remuneration Policy

COPFS has a separate pay bargaining unit under Scottish Government Pay Policy and negotiates pay levels within guidance and limits determined by Scottish Government for posts excluding those of the Senior Civil Service. The level of remuneration received by all members of staff is dependent on satisfactory performance.

Employment Policies

The KLTR does not have its own policies on the employment of people with disabilities, staff relations or equal opportunities but follows the policies and practices in force in COPFS. These are set out in the annual report and accounts of COPFS which can be found on the COPFS website http://www.copfs.gov.uk.

In line with Scottish Government pay policy no bonus/performance pay was paid during 2023-24 or 2022-23.

In the year to 31 March 2024, the KLTR department lost 3.5% of total available working days to sickness (2022-23: 2.9% restated).

There was no expenditure on consultancy during 2023-24 or 2022-23.

Staff Survey

Given the small size of the KLTR Office, we do not have our own code for the Civil Service People Survey and therefore cannot extract KLTR specific data from the results provided. During 2023-24 we pursued and ran a version of the Survey just for KLTR staff, 89% of KLTR staff engaged with this survey.

Remuneration

Staff who are seconded to the KLTR are paid at the rates in force for COPFS during the time of their secondments.

Senior Officials

The KLTR post is currently held by John Logue. A recharge of 5% of John Logue’s time has been made to reflect their time associated with this role as the KLTR. The recharge from COPFS for the Crown Agent’s time was £9,633. Disclosure of their remuneration is included within COPFS Annual Report and Accounts.

Robert Sandeman is the Accountable Officer.

The Senior Officials’ salaries are detailed in the following table:

Notes: Salary is based on the amount earned in the financial year and not on the amount recharged by COPFS.

The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) less (the contributions made by the individual). The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.

Fair Pay Disclosure

KLTR is required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the lower quartile, median and upper quartile remuneration of the organisation’s workforce. Total remuneration includes salary, non-consolidated performance-related pay, and benefits-in-kind. It does not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions.

Note: Salaries are based on the amount earned within the financial year and not on the amount recharged by COPFS.  The increase in average salary is due to an increase in the number of employees and overall pay award from 2022-23 to 2023-24. The median pay and 75 percentile have increased from 2022-23 due to the increase in overall pay for KLTR employees compared to highest paid Director.  The 25 percentile has decreased due to the additional staff being at a lower grade. This is consistent with the COPFS pay, reward, and progression policy.

Staff Numbers and Costs

Total staff costs charged for the KLTR are split as follows:

Note: These costs are recharged by COPFS quarterly in arrears.

Note: The gender split is not subject to audit

Pensions

COPFS and the Scottish Government are the employers for KLTR staff and as such administer their pensions. Full disclosure of the pension schemes is included in COPFS Annual Report and Accounts.

The Senior Officials’ pensions are detailed below:

Note: MyCSP CETV factors were updated in May 2023. The Disclosure Calculator holds the updated CETV factors and by using the May 2023 factors to calculate the CETV at the start and end date results in updated values for prior year (2022-23).

Renumeration of Non-Executive Directors

Our Non-Executive Directors are non-salaried but receive a fee and expenses in line with their duties. There was no recharge from COPFS for Non-Executive Directors in 2023-24

Severance Payments

Redundancy and other departure costs are paid in accordance with the Provisions of the Civil Service Compensation Scheme, a statutory scheme made under the Superannuation Act 1972. Exit costs are accounted for in full, in the year of agreement. Where the department has agreed any early retirements, the additional costs are met by the department and not by the Civil Service Pension Scheme. There were no exit packages in 2023-24 or 2022-23.

Regularity of Expenditure 

1. Receipts arise from proceeds of sale by the KLTR of property, assets and other rights claimed by the KLTR on behalf of the Crown; the ingathering of funds from heirless personal estates; and from other funds remitted to the KLTR falling to the Crown by operation of law such as the bank accounts of dissolved companies.
2. Due to increases in claims of heirless estates gathered in previous years, balances are retained for potential liabilities from the last five years. A minimum reserve of £3.5m is held against these, and other, potential liabilities and any surplus over that figure is surrendered to the Scottish Consolidated Fund (refer to paragraph 9).
3. All receipts and subsequent transfers to the Scottish Consolidated Fund or beneficiaries are made in accordance with our Accounts Direction by the Scottish Ministers.

Fees and Charges

4. The KLTR main source of income comes directly from operational activities, any payments, fees, charges and departmental running costs are deducted prior to any surplus being distributed to the Scottish Consolidated Fund. The financial performance of the KLTR is considered at paragraphs 18-23.
5. There were no losses or special payments during 2023-24 or 2022-23.
6. There were no gifts made during 2023-24 or 2022-23.
7. There were no remote contingent liabilities during 2023-24 or 2022-23.

Reporting on the audit of the financial statements

Opinion on financial statements

I have audited the financial statements in the annual report and accounts of the King's and Lord Treasurer's Remembrancer for the year ended 31 March 2024 under the Public Finance and Accountability (Scotland) Act 2000. The financial statements comprise the Receipts and Payments Account, Summary Note of Balances Held and the notes to the accounts. The financial reporting framework that has been applied in their preparation is applicable law and the receipts and payments basis.

In my opinion the accompanying financial statements:

• properly present the receipts and payments of the body for the year ended 31 March 2024 and the balances held at that date; and
• have been prepared in accordance with the requirements of the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Basis for opinion

I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Auditor General for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Auditor General on 3 April 2023. My period of appointment is five years, covering 2022/23 to 2026/27. I am independent of the body in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the body. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Risks of material misstatement

I report in a separate Annual Audit Report, available from the Audit Scotland website, the most significant assessed risks of material misstatement that I identified and my judgements thereon.

Responsibilities of the Accountable Officer for the financial statements

As explained more fully in the Statement of the Accountable Officer’s Responsibilities, the Accountable Officer is responsible for the preparation and proper presentation of financial statements in accordance with the financial reporting framework, and for such internal control as the Accountable Officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilities for the audit of the financial statements

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include:

• using my understanding of the central government sector to identify that the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers are significant in the context of the body;
• inquiring of the Accountable Officer as to other laws or regulations that may be expected to have a fundamental effect on the operations of the body;
• inquiring of the Accountable Officer concerning the body’s policies and procedures regarding compliance with the applicable legal and regulatory framework;
• discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and
• considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations.

The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the body’s controls, and the nature, timing and extent of the audit procedures performed.

Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved.

A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report.

Reporting on regularity of receipts and payments

Opinion on regularity

In my opinion in all material respects the receipts and payments in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers, the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public Finance and Accountability (Scotland) Act 2000.

Responsibilities for regularity

The Accountable Officer is responsible for ensuring the regularity of receipts and payments. In addition to my responsibilities in respect of irregularities explained in the audit of the financial statements section of my report, I am responsible for expressing an opinion on the regularity of receipts and payments in accordance with the Public Finance and Accountability (Scotland) Act 2000.

Reporting on other requirements

Opinion prescribed by the Auditor General for Scotland on audited parts of the Remuneration and Staff Report

I have audited the parts of the Remuneration and Staff Report described as audited. In my opinion, the audited parts of the Remuneration and Staff Report have been properly prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Other information

The Accountable Officer is responsible for the other information in the annual report and accounts. The other information comprises the Performance Report and the Accountability Report excluding the audited parts of the Remuneration and Staff Report.

My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Performance Report and Governance Statement to the extent explicitly stated in the following opinions prescribed by the Auditor General for Scotland.

Opinions prescribed by the Auditor General for Scotland on the Performance Report and Governance Statement

In my opinion, based on the work undertaken in the course of the audit:

• the information given in the Performance Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers; and
• the information given in the Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Matters on which I am required to report by exception

I am required by the Auditor General for Scotland to report to you if, in my opinion:

• adequate accounting records have not been kept; or
• the financial statements and the audited parts of the Remuneration and Staff Report are not in agreement with the accounting records; or
• I have not received all the information and explanations I require for my audit.

I have nothing to report in respect of these matters.

Conclusions on wider scope responsibilities

In addition to my responsibilities for the annual report and accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice are set out in my Annual Audit Report.

Use of my report

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.

Maggie Bruce CA

Senior Audit Manager

Audit Scotland

1^st Floor, Room 03

The Green House

Beechwood Business Park

Inverness

IV2 3BL

Receipts and Payments Account For the year ended 31 March 2024

The receipts and payments account statement has been prepared on a cash basis.

*Remuneration and Staff Report (page 23).

The notes on pages 34 – 36 form part of these accounts.

Summary Note of Balances held as at 31 March 2024

* All Sundry Estate and unallocated receipts are subject to future claim and treated as a liability in this table.

The notes on pages 34 – 36 form part of these accounts.

The Accountable Officer authorised these financial statements for issue on the 13 September 2024.

1.    Statement of Accounting Policies

In accordance with the accounts direction issued by the Scottish Ministers under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000 these accounts have been prepared in compliance with the relevant principles and disclosure requirements of the Scottish Public Finance Manual. The particular accounting policies adopted by the KLTR are described below. They have been applied consistently in dealing with items considered material in relation to the accounts.

The accounts are prepared using accounting policies, and, where necessary, estimation techniques, which are selected as the most appropriate for the purpose of properly presenting the expenditure and receipts in accordance with the principles, set out in International Financial Reporting Standard (IFRS) 18 Accounting Policies.

1.1       Accounting Convention

These accounts have been prepared in accordance with the historic cost convention. As in previous years, income and expenditure are recognised on the basis of cash received and paid out.

1.2      Going Concern

A going concern approach has been adopted in the preparation of these financial statements.  

1.3      Basis of Accounting

These accounts reflect the receipts and payments and a summary of the balances held for the year of the KLTR.

1.4      Non-Current Assets

The only non-current assets utilised by the KLTR are computer equipment and these are accounted for by the COPFS.

1.5      Foreign Exchange

Transactions which are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the date of each transaction.            

1.6     Value Added Tax (VAT)

The majority of services provided by the KLTR fall out-with the scope of VAT. The KLTR is not separately registered for VAT.

2.         Office and Administration Costs

*Audit fees of £4,520 (2022-23: £4,270) are notional/non-cash and therefore are in addition to the administrative costs outlined above.

3.         Disposal of Assets

Disposal of assets falling to the Crown either at common law or statute has been in a manner consistent with the Scottish Public Finance Manual, for the benefit of the Scottish Consolidated Fund.

4.         Contingent Liabilities

The KLTR receives claims for which, due to their nature, no figure can be disclosed. These payments are accounted for when the payments are made. Liabilities may also arise in respect of property where a Crown interest may arise and where a disclaimer of the Crown interest is no longer available, and a disposal has not proved possible. Due to their nature, it is not possible to show a figure of what the liability might be and they will be accounted for if and when any payment is made.

5.         Related Party Transactions

COPFS, which is headed by the KLTR in his capacity as Crown Agent, processes administrative payments on behalf of the KLTR.

COPFS then recharge the KLTR for all payments made on their behalf.

A unit within the COPFS (known as the National Ultimus Haeres Unit (NUHU)) undertakes initial investigation work where individuals have died in non-suspicious circumstances and have been identified as possibly having no next of kin or heirs.

NUHU’s costs are currently recovered by COPFS from the KLTR as there is a degree of overlap in interest at the end of the administration of an estate where the Crown is the ultimate beneficiary. As noted earlier (see paragraphs 32-33) the interrelationship between COPFS and KLTR is in the process of being reviewed. This will include the funding of the unit.

None of the Senior Officers or staff entered into transactions with the KLTR during the year.                      

As reported at paragraph 25, KLTR has continued to support National Museum Scotland through funding additional members of the Treasure Trove Unit to assist with clearing their backlog of cases.

6.         Audit fee

The accounts of the KLTR are audited by auditors appointed by the Auditor General for Scotland. Audit Scotland carried out the audit of the KLTR’s accounts for the financial year ended 31 March 2024.

The notional audit fees applied for services during the year 2023-24 was £4,520 an increase from £4,270 applied in 2022-23.    

7. Events After the Reporting Period

There have been no material events between 31 March 2024 and the publication of the statements that require adjustments to the accounts to be disclosed.

Queens & Lord Treasurer's Remembrancer

DIRECTION BY THE SCOTTISH MINISTERS

in accordance with section 19(4) of the Public Finance and Accountability (Scotland) Act 2000

1. An account of the Queen’s & Lord Treasurer's Remembrancer for the year ended 31 March 2013 and subsequent years shall be prepared, in the form of an Annual Report, and shall include a receipts and payments account and a summary note of balances held.
2. The accounts shall comply with the relevant accounting principles and disclosure requirements of the edition of the Scottish Public Finance Manual in force for that period.
3. This direction shall be reproduced as an appendix to the statement of accounts.

Signed by the authority of the Scottish Ministers

Dated 29 August 2013