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Agenda item

External Auditors Annual Report 2025/26

Minutes:

Alex Walling, an Auditor from Bishop Fleming, attended the Committee to introduce and discuss the report and explained that this item was one of the reports required to be provided to the Council as part of the National Audit Office (NAO) Code of Audit Practice. The report remained in draft format for the Committee due to the timings set by the NAO. Principally the report covered the findings of the accounts audit, as well as Value-For-Money (VFM) commentary under three key areas; financial sustainability, governance, and the three ‘E’s of Economy, Efficiency and Effectiveness, chosen due to ongoing concerns on these areas across the wider public sector. The Auditor noted that staff losses had limited the pace of completion for these reports and that the full accounts audit would be presented at the next Committee in January, before the statutory backstop date, but no significant concerns had been identified yet.

 

The Auditor explained that Page 13 included a traffic light system, noting that on ‘governance’ one significant issue had been identified, with a recommendation having been issued to the Council to address this. Two additional recommendations from previous reviews remained partially but not fully implemented. The report itself covered the 2024/25 financial year only, and any actions from after 1 April 2025 would be included in the following year’s report. The main concern identified by Bishop Fleming concerned the Council’s procurement process as highlighted by the recent Counter-Fraud Enforcement Unit investigation. The Auditor explained that although no funds were lost, the concern arose over senior individuals being involved in the process, potentially indicating issues with internal culture or processes. The Auditor approved of the Council’s action plan in response to these concerns and would review the progress of officers and members in the following year.

 

The Committee queried the subject of witnesses, and whether the Auditor would need to see evidence from the Council over the next financial year to ensure all concerns had been addressed. The Auditor responded that they had found the Council’s current action plan acceptable, and would be revisiting it in future to check whether all points had been implemented to satisfaction. On the suggestion of witnesses, evidence, and reviewing internal audit activities, the Auditor clarified that auditors were not investigators in that sense and added that this situation and its fallout in fact suggested that the whistleblowing process worked.

 

The Committee asked if the Council should anticipate further issues regarding procurement. The Deputy CEO answered that he was confident that the Council’s response to this issue had so far been robust, citing the introduction of a dedicated procurement board, officer and member training, and procurement toolkits, all to ensure a similar case would not reoccur, as well as noting that the report highlighted where controls where circumvented and how, and that the action plan now existed to address these weaknesses.


The Committee noted with concern that no further action was taken on individuals relevant to the investigation. The Deputy CEO explained that the officers in question were no longer employed by the Council and that the member was no longer in a senior position. The Committee further queried if the Committee had any blame for the situation as it could have been considered a “failure of governance”. The Deputy CEO explained that it was not the role of the Committee to review every single case of, for example, procurement; and that this would not be possible due to the Council’s ongoing works and the periodic nature of the Committee’s meetings. The Deputy CEO continued that he believed the right considerations for the Committee would be whether they felt they had received sufficient information to be assured that controls were in place. The Chair added that at the following Committee date the CFEU investigations would be revisited and explained that their role as Committee members would be to ensure that the overarching control scheme was in place.

 

The Committee highlighted the remaining actions listed in the report as incomplete and queried at what point do these become serious issues and on what timeline must they be resolved. The Auditor from Bishop Fleming responded that this depended on the nature and severity of each issue but auditors actively monitored progress and would raise concerns about an outstanding issue that was not being sufficiently actioned.

 

The Committee observed that there were no changes to the Council’s policies regarding accounts requested by the auditors, which members felt indicated effective finance team controls.

 

RESOLVED: The Committee noted the external auditor’s report.

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