Agenda item

The Internal Audit Annual Report and Audit Opinion for 2025/26 was reported to Members.  It was explained that the report was required under the Global Internal Audit Standards and provided the following:

• An annual opinion on the adequacy of internal control, governance and risk management.
• A summary of the work undertaken and the basis for that opinion.
• Commentary on compliance with internal audit standards.

Members were advised that the organisation had been in flux during the year, including a new Chief Executive, numerous Section 151 Officers over a 12-month period and the recent appointment of a permanent Section 151 Officer. 

However, despite this, a number of positive governance developments had taken place including:

• Management proactively inviting internal audit to review areas of concern.
• The creation of a monthly governance focused SLT meeting which he had attended.
• Quarterly compliance reports for Heads of Service.
• Reinstatement of the Strategic Risk Management Group.
• Work on a new risk management strategy and refreshed service risk registers.

Members were informed that the Internal Audit’s overall opinion for 2025/26 was Reasonable assurance for governance but Limited assurance for internal control and risk management.

It was emphasised that while the results showed weaknesses, this also reflected a more open and transparent willingness by management to identify and address problem areas. It was also confirmed that overall internal audit was satisfied that the service had met its performance targets.

In response Members raised the following queries:

• A typographical error was highlighted in the report which detailed the incorrect portfolio holder.
• Members remarked that the report sounded quite damning in places and that the number of limited assurance audits appeared to be increasing over time, which suggested a deteriorating trend. It was queried whether the Committee could expect the position to improve by the next year. – The Head of Internal Audit responded that he did not in fact believe the situation was getting worse.  It was explained matters that had existed but not necessarily been fully exposed before were now being looked at openly and transparently, which were considered a positive.  Members noted that internal audit could not guarantee in advance that scores would improve but all of the limited assurance areas had been included again in the draft audit plan for a follow up review.
• A suggestion that reporting such as “things are getting better” would be more useful if supported by specific comparative information, such as figures showing the reduction in a backlog or delay. – The Head of Internal Audit accepted the suggestion and agreed to review this for future reporting.
• Some Members considered the report to be reassuring, noting in the report that the Chief Executive had established a new dedicated Governance SLT and invited the Head of Internal Audit to the meetings.
• The Chairman queried whether Internal Audit’s involvement in the new governance arrangements was reviewing areas such as the general ledger where progress had been made but reconciliations remained outstanding. – In response the Committee were advised that Internal Audit reviewed all auditable areas and would always perform risk assessments.  The new open governance dialogue did help focus judgement on where the most significant risks were, however, it would take time for results to change significantly.  The Section 151 Officer praised the fact that the Chief Executive and SLT were taking these issues seriously and holding service areas to account. 
• A cultural shift was suggested for ineffective training on Data Protection/GDPR. – The Head of Internal Audit provided further clarification on the matter and explained that the reporting related to the e-learning system with some Officers by-passing the training to the end quiz.  This matter was being addressed with alternative suggestions that new staff and officers requiring further refresher training would be a concentrated target area.

RESOLVED that the Audit, Standards and Governance Committee was assured regarding the Annual Report of Internal Audit for 2025/26.