THE Scottish Government managed its budget effectively last year, but must make further improvements to aid the scrutiny of public finances, the Auditor General has said.
The annual review of its consolidated accounts found the government had produced a sound financial report for 2016/17, reporting an £85 million underspend from its £33.96 billion budget.
For the second year, the Scottish budget included new tax and borrowing powers.
A £54m shortfall in estimated revenue from Land and Buildings Transactions Tax was managed through underspend in the overall budget.
Meanwhile, Scottish Landfill Tax produced £16m more in revenue than had been estimated.
The Auditor General has recommended a number of measures the government can take to improve scrutiny of its tax and spending decisions.
These include the introduction of a medium-term financial strategy to outline "high-level" financial plans for the next five years.
The Government should also publish a consolidated account for the whole public sector to outline total assets, liabilities, borrowing and investments.
It should also finalise policies and principles for using new borrowing and reserves powers, the Auditor General said.
"The Scottish Government's consolidated accounts are a key component of its accountability to the Parliament and the public," Caroline Gardner said.
"The arrival of substantial new financial powers and potential changes arising from Brexit mean it is critical that it continues to strengthen its approach to public financial management and reporting.
"I hope my recommendations will support that vital work moving forward."
Finance Secretary Derek Mackay said the underspend for 2016/17 was the lowest since devolution.
"These accounts show the Scottish Government has once again demonstrated we have control over our public finances and I welcome the Auditor General's report," he added.
"We will continue to work with the Scottish Parliament and key stakeholders as we take forward the implementation of new powers and the associated financial management frameworks."
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