Scottish Fire and Rescue Service chair Pat Watters says he welcomes the report and accepts the theory behind the figures .

Mr Watters says in the light of the figures the service will reassess its spending plans.

He says the first priority is to protect the front line of communities in Scotland.

Mr Watters says there is work being done on a fire review of cover for Scotland, where the risks are.

Mr Martin introduces Scottish Fire and Rescue Service chair Pat Watters and chief officer Alasdair Hay.

That concludes the second evidence session.

The committee will reconvene at 11:00 when MSPs will quiz Scottish Fire and Rescue Service chair Pat Watters and chief officer Alasdair Hay.

Labour MSP Drew Smith raises the issue of the political interest in police numbers not being to the fore in the fire service.

Ms Gardner says the fixed target for the number of police officers makes their financial management more difficult, the fire service does not have that constraint so can work with the unions and fire service on staffing issues.

Ms Gardner says the Scottish government did not develop a full business case.

The auditor general says, as with police reform, the absence of the full business case makes a full financial strategy being in place by next March even more critical.

Image source, Scottish Fire and Rescue Service via Facebook

SNP MSP Nigel Don says he suspects home safety visits have made a huge difference.

Auditor General Caroline Gardner says Audit Scotland thinks the fire and rescue service are looking in the right areas.

She says Audit Scotland will continue to look at how well the reviews are being carried out.

Ms Gardner says she agrees with the Scottish Fire and Rescue Service on future cost pressures as they have done a good job on those.

Image source, PA

She says Audit Scotland differs on the funding projections and the likely level of budget.

Tory MSP Mary Scanlon asks if there is a consistent level of fire service across Scotland.

The auditor general says in 2012 there was a great deal of unexplained variation in service across Scotland but the new fire service has made a start to addressing these differences.

Ms Gardner says there is still very much to do, she says the work is underway with the reviews.

She says she is not surprised about the risks in the Risk Register.

Mark Roberts from the Scottish government says the merger went very well so it is important the lessons can be learned quickly to help other parts of the public sector.

Image source, Getty Images

Ms Gardner recognises that the Fire Service is "a service that people care about".

She adds: "This is very much a work in progress but the initial stages were handled well."

Conservative MSP Mary Scanlon says the auditor general says there had been no impact on the general public, which is welcome.

However she says we are still waiting for the views of the public and stakeholders on the new service.

Ms Gardner says the information she used to say there has been no impact on the public came from the HM Fire Service Inspectorate in 2013.

Ms Gardner confirms that the funding gap will exist, despite the "significant" savings made in the establishment of the service.

She adds that the allocation of control rooms and shift duties are "challenging things to get right" and must be done while protecting the service and managing the costs.

Ms Gardner says it is clear this has been a challenging period but there has been no impact on the public.

She says: "Although the merger was managed effectively in some respects the hard work is yet to come."

The auditor general says reviews of the service must be conducted as a "matter of urgency".

Auditor General Caroline Gardner opens by saying her findings are summarised based on the formation of the new service, costs and savings and a review of future service delivery.

She adds that the merger of the eight former services was managed "effectively".

The projected cost to establish the new Scottish Fire and Rescue Service was £39.5m. The actual cost was £35.7m, around 10% lower.

Ms Gardner conceded that they expect there to be a finding gap of £43m by 2020.

Auditor General Caroline Gardner is giving evidence, alongside Angela Cullen; Mark Roberts, and Mick Duff from Audit Scotland.

The Scottish Fire and Rescue Service is facing a "significant potential funding gap", according to Audit Scotland.

The public finance watchdog said a long-term financial strategy was urgently needed.

Audit Scotland warned that potential future reductions in funding could mean a budget gap of £42.7m by 2019/20.

The Scottish Fire and Rescue Service (SFRS) said work had already been undertaken to project future costs and savings.

The single national fire service was created two years ago by merging eight regional brigades. Audit Scotland said the merger was managed effectively.

The watchdog said SFRS made £16m of savings in the first year after the merger with no impact on the public and a continued reduction in casualties.

It said the service was on track to exceed expected cumulative savings of £328m by 2027/28.

But it warned that future cost pressures and likely reductions in funding could lead to a potential funding gap of £42.7m by the end of the decade.

The committee will now take evidence on the section 23 report from Audit Scotland - The Scottish Fire and Rescue Service, external.

Auditor General Caroline Gardner will give evidence, alongside Angela Cullen; Mark Roberts, and Mick Duff from Audit Scotland.

MSPs will then quiz Scottish Fire and Rescue Service chair Pat Watters and chief officer Alasdair Hay.

Mr Swinney tells the committee that the issues around the Crown Estate are "not a guddle of my making, but a guddle of Her Majesty's government".

That concludes the first evidence session this morning.

Mr Swinney says the issues that concern him in the short term are that the Smith Commission envisaged the early devolution of the work programme and that will now be late.

The deputy first minister says the scope of the devolution of employment serviceshas not as yet been as wide as he hoped.

Mr Swinney says: "If there is a responsibility that is transferring to the Scottish Parliament in its entirety, my view would be that the existing arrangements would be applied.

"They work well and they are viewed to be of great strength in international standing."

Where there is a "shared responsibility", Mr Swinney says: "We have to take care to ensure the committee is properly able to have available the information it requires to satisfy the authority governance and effectiveness of the public bodies."

He adds: "There has to be some substantive response to that requirement from the UK body and a greater degree of scrutiny from the Auditor General.