Agenda and minutes

Apologies were received from Councillor David Chance, with Councillor Sam Gibbs acting as his substitute, and Mr David Marsh.

Resolved

That the minutes of the meeting held on 23 June 2025 be signed by the Chair as a correct record.

There were no declarations of interest.

Members of the public may ask questions or make statements at this meeting if they have given notice and provided the text to Democratic Services (democraticservices.central@northyorks.gov.uk) no later than midday on Wednesday, 24 September 2025, three working days before the meeting takes place. Each speaker should limit themselves to three minutes on any item. 

If you are exercising your right to speak at this meeting, but do not wish to be recorded, please inform the Chair who will instruct those taking a recording to cease whilst you speak.

There were no public questions or statements submitted to 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.

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  ...  view the full minutes text for item 213.

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.

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  ...  view the full minutes text for item 215.

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.  ...  view the full minutes text for item 216.

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.

Resolved

a)     That the Committee’s programme of work is noted.

Any other items which the Chair agrees should be considered as a matter of urgency because of special circumstances.

There were none.

Monday, 20 October 2025 at 1.30pm.

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.