North Yorkshire Council
Audit Committee
Minutes of the meeting held on Monday, 29 September 2025 commencing at 1.30pm in the Brierley Room, County Hall, Northallerton.
Councillor Cliff Lunn in the Chair plus Councillors Alyson Baker, Philip Broadbank, Felicity Cunliffe-Lister, Kevin Foster, Sam Gibbs (substitute for Councillor David Chance), George Jabbour, Karin Sedgewick, Neil Swannick, Peter Wilkinson and Independent Co-opted Members Mrs Vicky Buckley and Mr David Portlock.
Officers present: Karen Iveson, Assistant Director Resources; Kerry Metcalfe, Assistant Director Commercial Property and Procurement; Gary Fielding, Corporate Director – Resources; Karl Battersby, Corporate Director – Environment; Vicki Dixon, Assistant Director – Resources; and David Smith, Senior Democratic Services Officer.
Other Attendees: Max Thomas, Stuart Cutts and Daniel Clubb, Veritau; and Mark Kirkham and Cath Andrew, Forvis Mazars.
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Copies of all documents considered are in the Minute Book
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Apologies for absence
Apologies were received from Councillor David Chance, with Councillor Sam Gibbs acting as his substitute, and Mr David Marsh.
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Minutes of the meeting held on 23 June 2025
Resolved
That the minutes of the meeting held on 23 June 2025 be signed by the Chair as a correct record.
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Declarations of interest
There were no declarations of interest.
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Public questions or statements
There were no public questions or statements submitted to the Committee.
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Progress on issues raised by the Committee
Karen Iveson introduced the report and provided an update on training. She confirmed that the session held in advance of the 29 September 2025 meeting had focused on Scrutiny of the Statement of Accounts, in anticipation of the Statement of Accounts being presented to the Committee in October. She also advised that the training on Data Protection and Information Security had been deferred to the 15 December 2025 meeting.
It was noted that the 20 October 2025 meeting was expected to proceed as planned, although no training session would be held.
No follow-up actions were identified by the Committee.
Resolved
a) That the Committee, having considered whether any further action is required, notes the report.
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Commercial Governance Review
Kerry Metcalfe presented the report and highlighted the following key points:
· Overall, the review concluded that the reporting of governance around commercial entities was compliant, robust and appropriate. Some of the eleven recommended actions remain outstanding due to staffing changes and competing priorities. It is the aim that any residual actions will be completed by the end of this calendar year.
· The Brierley Board and Shareholder Committee have continued to operate effectively.
· One of the recommendations concerns elected members serving on boards. To ensure alignment with guidance and to avoid conflicts of interest, it is recommended that such appointments will only be made where City of York Council also has board representation. Oversight will be provided through the Shareholder Committee.
The following points were raised during the discussion.
· A question was raised regarding the winding up of NYNet 100 Limited (referenced in paragraph 3.6 of the report), and it was confirmed that an update would be provided following the meeting.
· Concern was expressed about the limited progress against the recommendations. It was acknowledged that there are gaps, and an update on actions will be brought to a future meeting. An officer group is in place to ensure that the recommendations are enacted.
· Concerns were raised about the proposed reduction in elected member involvement across company boards. It was suggested that Councillors could provide useful insight and that a broader representation could strengthen oversight and alignment with Council objectives. It was also noted that Councillors are directly accountable to the public and therefore may be well placed to take these positions. Some Members raised concerns that Shareholder Committee meetings have been brief, which raised doubts about the Committee’s effectiveness. In response, it was explained that the Conflicts of Interest Policy advises against elected members being appointed as directors. While this does not constitute a formal prohibition, it aims to minimise potential conflicts of interest. It was also noted that CIPFA guidance – “Local Authority Owned Companies – A Good Practice Guide 2022 Edition” provides recommendations regarding elected members holding directorships in wholly owned local authority companies. It was explained that detailed oversight of all active companies is provided through the Brierley Board, where performance is discussed in depth. The Shareholder Committee remains the formal oversight forum and is a public meeting, whereas Brierley Board meetings are private due to commercially sensitive information. Some Committee members suggested that, if Councillors are to be appointed to boards, advice should be sought as this would be a departure from the guidance.
· It was noted that in Appendix A, a director for Yorwaste Ltd was incorrectly listed as ‘Brian White’ instead of ‘Greg White’.
· A query was raised about the timescale for progressing Recommendation 1 concerning the Conflicts of Interest Policy. It was confirmed that the Audit Committee was being invited to comment, and if no comments were received, the recommendation would be implemented as soon as possible.
· A concern was raised regarding the number of incomplete annual declarations of interest. A query followed about whether external audit reviews these, and it was confirmed that this is a requirement. It was also noted that insufficient or incomplete declarations could potentially constitute an offence under the regulations. Members highlighted that Recommendation 3 should read that directors ‘must’ provide annual declarations of interest.
Resolved
a) That the Committee notes the report. b) That comments raised by the Committee are noted by Officers. c) That an update regarding NYNet 100 Limited be provided outside of the meeting. d) That an update on progress against the outstanding recommendations will be brought to a future meeting.
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External Audit - Audit Progress Report: North Yorkshire Council and North Yorkshire Pension Fund
Mark Kirkham and Cath Andrew reported that progress on the North Yorkshire Council audit has not advanced as far as anticipated. The aim had been to complete most of the work by the October meeting, and while approximately 90% of the audit is now complete, several significant aspects have caused delays.
One aspect relates to the external auditors awaiting further clarification on the LAARIG 6 guidance, which was published by the National Audit Office in July 2025. This guidance is intended to support auditors in issuing audit opinions ahead of the statutory backstop date of 27 February 2026 by encouraging audit suppliers to explore alternative assurance methods to facilitate timely audit completion. It was reported that all audit suppliers need to review the implications of this guidance and Mark Kirkham confirmed that Forvis Mazars are currently awaiting clarification regarding the LAARIG 6 guidance. It was noted that if this guidance is not received soon, the completion date for the audit will be delayed.
Another aspect relates to the Whitby Harbour accounts and the two objections received. Karen Iveson reported that work is still ongoing and that a meeting with external audit is scheduled. It was noted that the Whitby Harbour accounts require a high level of scrutiny due to the associated accountability and litigation risks. While it is hoped that the issues can be resolved in time for the October meeting, this will depend on the outcome of discussions with external audit.
The final aspect relates to the introduction of a new auditing standard, which has increased the scope of work required for auditing group accounts. Auditors are now required to undertake more detailed procedures to obtain sufficient and appropriate evidence. This change has made audits of group accounts more complex and time-consuming.
Regarding the North Yorkshire Pension Fund audit, it was reported that the audit began on time, but progress was delayed due to the initial absence of a full set of working papers from officers. Without the necessary information, the audit team was unable to continue as planned and was temporarily stood down. Further documentation has now been provided, and the audit plan will be adjusted around staff availability. Although it is not expected that the audit will be completed by October, it is expected to be finalised by the end of the calendar year.
Mark Kirkham confirmed that any delays in the audit process were due to material items. The materiality threshold for the Council was set at £36.9 million in the audit plan.
Resolved
a) That the Audit Progress Reports for North Yorkshire Council and North Yorkshire Pension Fund are noted.
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Internal Audit and Counter Fraud Progress Report
Stuart Cutts explained that the position of each audit is provided within the appendices and highlighted the recommendations within the report.
A query was raised regarding the process for completing the report on the Scarborough Water Park, noting that despite repeated requests to see the draft version, this was not sent, and it was not reviewed by the Audit Committee before the report was made public. The member queried what occurred during the year and whether the final published report differed from earlier draft versions. It was noted that this query had previously been raised during an informal private briefing.
In response, it was confirmed that the report followed the standard audit process: a draft was shared with officers to allow for comments, clarification, and the identification of any errors or omissions. This was followed by a series of discussions, and once agreement was reached, the report was finalised. It was reported that due to the age of the subject matter, records were sometimes difficult to obtain and recollections varied. The audit team sought to present a comprehensive account of the decision-making process and the rationale behind the actions taken. It was confirmed that Internal Audit were not put under pressure to make changes to the draft reports and that the process followed was consistent with how Internal Audit should operate – objectively and independently. It was also highlighted that North Yorkshire Council is now the owner of Scarborough Water Park following local government reorganisation.
It was explained that once the report was finalised, the Chief Executive decided to publish it, due to the nature of the issues involved. A member briefing was held the day before publication to provide members with an opportunity to hear the findings and ask questions. Following publication, the report has been brought to the Audit Committee for consideration. The Committee was advised that it may now decide how to proceed, whether that be to refer the report to the Executive, consider its conclusions, make recommendations, or request further discussion at a future meeting.
The Committee emphasised that even if no further action is deemed necessary, it is appropriate for the Audit Committee to formally consider the Scarborough Water Park report as a separate agenda item. In response, it was advised that the terms of reference for such a discussion should be agreed in advance, with input from legal officers, to ensure the conversation is appropriately framed and avoids any risk of misunderstanding or legal implications. It was noted that the item could be considered in confidential session if necessary.
A member queried why no audit opinion was provided for the Council Companies audit listed in the 2025/26 internal audit work programme (page 55 of the Audit Committee papers), noting that while the absence of an opinion for the Scarborough Water Park audit might be expected, the rationale for excluding an opinion on Council Companies was unclear.
In response, members were directed to page 72 of the Audit Committee papers, which outlines the four possible audit opinions. It was noted that in certain cases – such as projects, investigations, targeted support, consultancy, grant certification, and follow-up work – it is not appropriate to give an assurance level, and a ‘No opinion’ is recorded. The Council Companies audit fell into this category. It was explained that the audit team took a different approach due to the lack of sufficiently developed internal arrangements at the time and therefore auditors obtained information directly from the council-owned companies. A key finding was that the Council’s internal arrangements need further development to provide ongoing assurance on the governance of its companies and this approach was agreed with officers.
It was highlighted that on page 73 of the Audit Committee papers, ‘Council companies and other commercial operations’ was marked as ‘Do later.’ It was queried whether the intention was to revisit council companies in future. It was confirmed that this is the case and that the audit of council companies is intended to be scheduled in due course. Items marked as “Do later” will be re-evaluated during Quarter 4 of the 2025/26 financial year to determine their timing within the 2026/27 audit planning cycle.
It was noted that page 74 of the Audit Committee papers does not specify when audit work on ‘Harbours’ will commence. In response, it was reported that this work is expected to be scheduled either as a “Do next” or “Do later” item.
Daniel Clubb then highlighted the key points from the Counter Fraud Progress Report. The following queries were raised in the discussion.
· The figures presented in the table on page 82 of the Audit Committee papers were clarified, and it was confirmed that the first column reflects actual results up to 31 August 2025 (58%), while the second column shows the full-year target (30%), which has already been exceeded. A query was raised regarding the reason for the improved results. In response, it was explained that the percentage reflects the proportion of cases resulting in positive outcomes for the Council, such as fraud detection, sanctions, or savings. It was reported that the uplift is due to the effectiveness of the work undertaken, rather than an increase in the number of cases. A further query was raised about how the 30% target was set, and it was confirmed that targets are agreed with officers at the beginning of the year. It was noted that the target is generally based on historic performance, but given the significant uplift in outcomes this year, a review of the target may be appropriate. It was also acknowledged that the nature and mix of fraud cases can vary significantly from year to year, and that targets should not be established in isolation.
· A query was raised regarding the Council’s efforts to prevent cyber attacks. In response, it was noted that the Counter Fraud team supports the Council in responding to cyber-related incidents and works with the IT department to regularly test cyber security arrangements. Awareness-raising is part of the team’s annual activity, including planned communications for Cyber Crime Awareness Month in October. Cyber security is recognised as a key corporate risk, with resources invested to mitigate threats. While risks cannot be fully eliminated, efforts focus on minimising exposure and ensuring recovery plans are in place. Audit work is undertaken on these arrangements and reported accordingly. It was acknowledged that cyber threats continue to evolve, and that user behaviour – such as avoiding unsafe email links – remains a critical factor in maintaining security.
Resolved
a) That report is noted. b) That an item covering the Scarborough Waterpark Report is brought to the Audit Committee.
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Assessment of Effectiveness of Governance Arrangements - Environment Directorate
Karl Battersby explained that the report shows that the directorate is well governed. The following additional points were made when the report was introduced.
· It was reported that the Major Schemes risk carries a high score due to the significant financial exposure and complexity associated with delivering large-scale projects. · Risks associated with climate change are Council-wide and require coordinated action across multiple Directorates and partners. The scale of the challenge – including the ambition to become carbon negative by 2040 – contributes to the elevated risk rating.
The following points were raised during the discussion.
· Members acknowledged that the Directorate appears to be managing harbour-related work effectively and hoped that this would continue.
· Members highlighted that the Audit Committee has not reviewed the Kex Gill project and the additional costs associated with the scheme.
Officers explained the factors that had contributed to the increased cost. - A delay in signing the contract due to the Department for Transport not having signed the business case resulted in a compensation event, with an estimated cost of £2.5 million. - Unexpected ground conditions required the movement of material to ensure the road would settle properly and to avoid future issues. - The design of the scheme was revised from a piled foundation approach to an earthworks-based solution. This reduced the risk of delays but allowed the contractor to revisit original assumptions.
A member raised concerns about the original assumptions, querying whether the initial site surveys had been inadequate. In response, it was confirmed that ground surveys were carried out prior to the start of the scheme, but due to the size and complexity of the site, only specific areas were surveyed. As the Council didn’t have the necessary expertise, a company called WSP was appointed as the external project manager and technical advisor. It was acknowledged that ground conditions in some areas were worse than anticipated, and a review is underway to assess whether the support provided met the required standards.
It was reported that a compensation event has gone to adjudication, and the outcome is expected to set a precedent for other claims. The Council has brought in external expertise to assist with these events and ensure robust handling of contractual matters.
Officers clarified that the figures reported to date reflect anticipated, not actual, expenditure. The final cost will depend on the compensation events. It was also noted that the original business case, approved by the Executive, acknowledged the likelihood of cost increases due to the complex terrain and engineering requirements.
It was reported that the scheme is progressing well, and the road is expected to open earlier than anticipated.
It was confirmed that Internal Audit is currently undertaking a lessons learned review of the project. This audit is intended to provide feedback while the project is still ongoing, rather than retrospectively, and aims to inform future capital projects.
· Members observed that some risks listed in Appendix A, such as climate change and passenger transport market resilience, are not expected to reduce. It was reported that risks with higher initial scores, such as major schemes, offer greater scope for reduction through targeted mitigation, particularly as they are largely technical in nature and within the Council’s control. It was also highlighted that some mitigation actions for the major schemes risk are already underway, contributing to the reduced score. In contrast, risks such as climate change and passenger transport market resilience remain high due to their broader scope and reliance on external factors. Climate change mitigation requires coordinated action across multiple Directorates and partners, while passenger transport resilience is affected by market conditions such as fuel prices and vehicle cost inflation, which are outside the Council’s control.
· A member asked for clarification on how the capital funding for car park machine replacement and lighting upgrades had been secured. It was reported that the upgrades were funded through a capital investment business case, following a member query about improving car park lighting. The funding was provided from the Council’s capital programme.
· Members queried the current delegation of transport functions from the York and North Yorkshire Combined Authority to the Council. It was confirmed that the Combined Authority is responsible for bus services, but due to limited capacity, NYC and City of York Council have continued to deliver this service. This agreement was extended to 30 June 2025, and can be extended further should the Bus Service Improvement Plan for 2025/26 not be in place. It was noted that NYC’s transport teams deliver a range of functions beyond bus services, and any formal transfer of responsibilities would require appropriate time to manage staffing implications.
· A member queried whether savings were yet being made by charging holiday properties for waste collection. In response, it was reported that progress is being made, with manual interventions underway and collaboration with Revenues and Benefits colleagues. The Scarborough area had previously implemented a system, and efforts are ongoing to introduce a countywide approach. The necessary IT systems are part of a wider programme and were reported to be a lower priority. It was reported that the target is to make the savings in the next financial year.
· A member queried whether the Council’s score from the Carbon Disclosure Project reflects only its own operations or includes scope 1, 2, and 3 emissions. The question was raised in the context of policy changes, such as the Home to School Transport Policy, which may reduce emissions from Council vehicles but potentially increase private car journeys. The member expressed concern that excluding wider impacts could present an incomplete picture of the Council’s environmental footprint. In response, officers stated that they believed the score currently reflects only the Council’s own operations. They assured that the Council does not intend to externalise services to artificially reduce its reported emissions and is committed to full and complete measurement. It was noted that the two largest areas of emissions under the Council’s control are buildings and transport.
Resolved
a) That the review of the effectiveness of governance arrangements in the Environment Directorate are noted. b) That the Environment Directorate Risk Register is noted.
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Draft Annual Report of the Audit Committee
A member noted that, due to the delay in the external audit, as discussed earlier in the meeting, the final paragraph in the Financial Statements section at the top of page 119 of the Audit Committee papers requires updating. It was suggested that the paragraph should reflect the fact that the accounts were not received at the 29 September 2025 meeting.
Resolved
a) That, subject to the amendment agreed above, the draft Annual Report of the Audit Committee for the year ended 30 September 2025 is approved by the Committee and submitted to Full Council.
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Programme of work
Resolved
a) That the Committee’s programme of work is noted.
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Any other items
There were none.
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Date of next meeting
Monday, 20 October 2025 at 1:30pm (subject to completion of the 2024/25 External Audit)
It was highlighted that no training would take place prior to the meeting in October.
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The meeting concluded at 3.18 pm.