The report of the Head of Policy and Governance is attached.

Contact:  Barry Hanson 07990 086409

The Committee received the report of the Head of Policy and Governance which summarised Internal Audit’s 2025/26 work to date. It was reported that twelve final audit reports had been issued since the previous meeting, with assurance ratings and service area breakdowns detailed within the report. Five further draft reports were awaiting management responses. Work had also been undertaken for external clients and in relation to grant claim certifications.

It was noted that 59% of audit opinions issued were assessed as good or reasonable, in line with previous years. However, the year?to?date position showed that 53% of opinions were at lower levels of assurance, representing the highest proportion in six years. This trend was highlighted as a concern. Seventy?five recommendations had been made, including one fundamental recommendation relating to budget monitoring. A number of unplanned and advisory pieces of work had also been completed. Details of audits with limited or unsatisfactory assurance were set out in the appendix, and the Head of Policy and Governance invited members to seek further assurance on any of these areas.

A Member asked how the committee could ensure that audit reports were not treated as a box?ticking exercise and that senior officers were taking appropriate action in response to the findings. The Head of Policy and Governance explained that all lower?level assurance reports were escalated to Service Directors and Executive Directors, who received full reports and had the opportunity to comment prior to finalisation. Recommendations were subject to a follow?up process, with management required to provide assurance on implementation when recommendations became due.

The Chair expressed concern about the increasing number of limited and unsatisfactory opinions, particularly those relating to budget monitoring and project management. The Chair emphasised the significance of the Project Management Office in strengthening future financial control and asked the Interim Section 151 Officer whether changes in financial processes would affect the role of the PMO. The Section 151 Officer responded that the PMO would be central to strengthening financial discipline across the organisation, but cultural change was also required to ensure that all staff understood the financial implications of their decisions. It was stressed that the Council must prioritise projects appropriately to avoid overstretching resources.

Concern was raised about the absence of assurance opinions for two audits, and the potential for summary percentages to mask the significance of critical unsatisfactory audits, such as budget monitoring. The Internal Audit Manager clarified that the items without assurance ratings were briefing notes rather than full audits. She explained the process for tracking recommendations that remained outstanding and confirmed that critical audits were prioritised for follow?up and re?audit activity.

The Chair commended the audit team for achieving full staffing levels but reiterated the concern regarding the rise in lower?level assurance opinions. The Chair proposed that the committee request management updates on the two most critical areas identified: budget monitoring and the project management office.

RESOLVED:

To endorse the revised annual audit plan and request that management provide future updates on budget monitoring and the project management office.