Agenda and draft minutes

Apologies for absence were received from Councillor David Chance, with Councillor Yvonne Peacock acting as his substitute, and Independent Co-opted Member David Marsh.

Councillor Michelle Donohue-Moncrieff joined the meeting virtually. It was highlighted that she could take part in the discussion but could not propose, second, amend or vote on any motions.

Resolved

a)     That the minutes of the meeting held on 16 March 2026 were approved as a correct record and signed by the Chair.

Independent Co-opted Member David Portlock declared an interest in Item 13: Assessment of Effectiveness Governance Arrangements - Children and Young People's Service as he is Chair of Governors of an Academy School. He stated that the interest may not be directly relevant to the item under consideration but wished to declare it for transparency and therefore remained in the meeting and took part in the discussion.

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, 17 June 2026, 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.

No public questions or statements were received.

The Chair informed the Committee that correspondence had been received from the School Transport Action Group (STAG) raising several governance-related concerns and requesting that the matter be brought to the attention of the Audit Committee. As the correspondence had been received after publication of the papers, there had been insufficient time to add a formal item at this meeting. Members were advised that a response had been prepared by the Assistant Chief Executive (Legal and Democratic Services) and would be circulated to Committee Members following the meeting.

During discussion, Members raised concerns that the response had not been circulated in advance of the meeting to allow Members an opportunity to review its contents. The Chair advised that the response had only been received shortly before the meeting and that arrangements would be made for it to be circulated.

It was also noted that the report stated that Gary Fielding had signed off the report and it was highlighted that this should be amended to reflect the current Corporate Director, Anton Hodge.

Resolved

a)     That the report be noted and that no further follow-up actions are required at this stage.

Cath Andrew, Forvis Mazars, introduced the Audit Strategy Memorandum for the 2025/26 audit. She explained that the report set out the proposed audit approach, timetable, materiality levels, audit fees, independence arrangements and value for money work. She highlighted that the significant audit risks remained consistent with previous years and it was noted that the report included a section on rebuilding assurance following the recent disclaimed opinions.

During discussion, the following points were raised.

·        Members queried the section of the report relating to rebuilding assurance for the 2025/26 audit and sought clarification on progress towards achieving an unmodified opinion. Cath explained that rebuilding assurance had taken longer than expected as the process was more complex than first anticipated. It was reported that progress had been made through previous audit cycles and it was hoped that the remaining uncertainty would be resolved as part of the 2025/26 audit.

·        Members sought reassurance that the Committee would be informed promptly if any issues arose which could affect the audit timetable or the ability to rebuild assurance. External audit confirmed that there were no such concerns at present and that any significant issues would be raised with the Chair outside of the Committee cycle if necessary.

·        A query was raised regarding a reference within the report to a table outlining identified risks of significant weaknesses in arrangements. External audit confirmed that, as no risks of significant weaknesses in arrangements had been identified, the table was not required, but that reference to the table within the report was an error and should have been amended.

·        Members noted that the Audit Strategy Memorandum for the North Yorkshire Pension Fund had not been included within the meeting papers. External audit explained that this had been omitted in error due to an administrative oversight and confirmed that the document would be circulated to Members following the meeting.

·        Following a query regarding the Value for Money arrangements set out in the report, clarification was sought on the circumstances in which additional audit procedures would be undertaken. External audit explained that additional work would only be required where audit planning identified a potential significant weakness in the Council's arrangements. It was confirmed that no such risks had currently been identified and therefore the normal Value for Money work programme would be undertaken.

Resolved

a)     That the Audit Strategy Memorandum be noted.

Stuart Cutts, Assistant Director of Audit Assurance at Veritau, introduced the report and explained that it fulfilled the requirement to provide an independent opinion on the Council’s governance, risk management and internal control arrangements. He reported that, based on the audit work completed during the year and ongoing engagement with officers, it had been concluded that the Council’s framework provided Reasonable Assurance. He explained that this indicated generally sound arrangements were in place, but with some areas requiring further strengthening and improvement.

Stuart highlighted that one significant control weakness had been identified in relation to Housing Stock and that officers had accepted the recommendation to include this within the 2025/26 Annual Governance Statement. He also reported that whilst a number of agreed audit actions remained overdue, these were being actively monitored and none were considered sufficiently significant to require escalation to the Committee.

During discussion, the following points were raised.

·        Members highlighted the significant control weaknesses identified in relation to housing stock management and stressed the importance of maintaining oversight of this area. Concerns were raised regarding the completeness and reliability of housing stock information and compliance data and Members sought assurance that progress in addressing the issues would continue to be monitored. In response, officers confirmed that the issue had been included within the Annual Governance Statement, which would ensure that progress in addressing the weaknesses would be monitored.

·        Clarification was sought regarding the relationship between the Limited Assurance opinion relating to Housing Stock and the Council's self-referral to the Regulator of Social Housing. Internal Audit explained that the audit opinion was based on the findings of its own work, although previously identified issues and the self-referral had informed the focus of audit activity in this area. It was noted that further weaknesses had been identified through the audit process, however, progress had been made since earlier reviews

·        Members also discussed the Limited Assurance opinion relating to Transitions (Children's to Adults). Concerns were raised about the potential service and financial implications arising from weaknesses in the transition process. Internal Audit advised that officers had engaged positively with the review, recognised the issues identified and were working together to improve arrangements.

·        The importance of procurement arrangements was emphasised and it was suggested that Members would benefit from further information regarding procurement processes, the Procurement Act and the Council's procurement strategy.

·        Members queried the conclusions of the recent Kex Gill review, noting the significant costs associated with the project and the absence of a formal audit opinion in the report. Internal Audit explained that the review had been advisory, focusing on lessons learnt and actions taken by officers in response to identified issues. The review considered whether the Council had recognised the underlying causes of issues and implemented appropriate improvements. As the purpose of the review was to identify organisational learning rather than provide assurance on the effectiveness of controls, an audit opinion had not been provided.

·        A query was raised regarding the audit work undertaken in relation to Council-owned companies  ...  view the full minutes text for item 272.

Daniel Clubb, Assistant Director of Corporate Fraud at Veritau, introduced the report and highlighted the key outcomes from counter fraud activity during 2025/26. Members were advised that counter fraud work had generated savings of approximately £337k during the year, with 581 referrals received and 82 investigations completed. Daniel highlighted the continued increase in referral numbers since the creation of North Yorkshire Council and noted that Adult Social Care accounted for a significant proportion of the savings achieved, including one case which had resulted in the recovery of over £134k.

Daniel also highlighted work undertaken to raise awareness of whistleblowing arrangements, including publicity campaigns linked to World Whistleblowers' Day and the updating of the Council's Whistleblowing Policy in March 2026. In addition, proactive work had been undertaken throughout the year including fraud awareness training, cyber security awareness campaigns and the sharing of intelligence relating to emerging fraud risks.

During the discussion, the following points were raised.

·        Members sought clarification regarding potential council tax fraud involving second homes, particularly where individuals may incorrectly claim a property as their primary residence. It was confirmed that this formed part of ongoing work undertaken with the Revenues service and that investigations were undertaken where referrals were received. Whilst no specific proactive exercise was currently underway, situations were identified through routine reviews, the National Fraud Initiative and referrals from members of the public, which remained an important source of intelligence.

·        Concerns were raised regarding the level of fraud identified within Adult Social Care and clarification was sought regarding the most common types of fraud encountered. Officers explained that investigations commonly related to the misuse of direct payments and inaccuracies in financial assessment information provided by individuals. It was noted that Adult Social Care fraud work had produced significant savings and that North Yorkshire Council had contributed to wider sector learning in this area.

·        Members highlighted concerns regarding social housing fraud, including situations where individuals may retain social housing tenancies despite no longer residing at the property as their main home. It was noted that reports from members of the public play an important role in identifying potential cases.

·        A query was raised regarding school admissions fraud and whether the number of cases involving incorrect addresses was increasing. Officers advised that the number of cases identified was broadly consistent with previous years and did not currently indicate any significant increase.

·        Members emphasised the importance of deterrence as a key outcome of counter fraud work and welcomed the continued promotion of whistleblowing and anti-fraud awareness initiatives.

Resolved

a)     That the Annual Counter Fraud Report be noted.

Max Thomas, Head of Internal Audit at Veritau, introduced the report and highlighted that the overall number of reported data breaches had decreased compared to the previous year. In particular, the number of breaches categorised as high or very high risk had reduced significantly, and it was hoped that this positive trend would continue.

Members were advised that two data breaches during 2025/26 had been considered sufficiently serious to require reporting to the Information Commissioner's Office (ICO). However, following investigation, the ICO had concluded that no further action was required in either case and was satisfied with the steps taken by the Council in response.

The Chair noted the continuing focus on strengthening information governance arrangements across the Council.

Resolved

a)     That the Information Governance Annual Report be noted.

John Raine, Head of Finance – Corporate and Technical, introduced the report and advised Members that the draft Statement of Accounts had been circulated for consideration in advance of the meeting. Members were advised that there was no requirement for the Audit Committee to approve the draft accounts and that the audited Statement of Accounts would be presented to a future meeting of the Committee for formal approval following completion of the external audit.

It was reported that the statutory deadline for publication of the draft accounts is 30 June 2026 and that officers anticipated publication before that date. Members were also advised that, whilst the statutory backstop date for completion of the audit was 31 January 2027, officers were working with the Council's external auditor, Mazars, with the aim of presenting the audited accounts to the September 2026 meeting of the Committee.

Members considered proposals to establish a Corporate Governance Working Group to undertake a detailed review of the accounts and report its findings back to the Committee.

During the discussion, the following points were raised.

·        Members queried the scale of the Private Finance Initiative (PFI) liabilities disclosed within the accounts, particularly those relating to Allerton Waste Recovery Park. Concerns were expressed regarding the long-term financial commitments associated with such arrangements, whether opportunities existed to review elements of the contractual arrangements and how lessons learnt from historic PFI contracts informed decision-making. It was noted that the Statement of Accounts was reporting the financial implications of the contractual arrangements, rather than assessing the merits of these contracts themselves. The Committee also noted that its role is to consider the governance and financial reporting implications reflected within the accounts, rather than undertake a detailed review of the contractual arrangements themselves.

·        Clarification was sought regarding the loan provided to Brierley Homes and how assurance is obtained over this loan, given that Brierley Homes operates as a separate company. Officers explained that the Statement of Accounts reported the Council's financial position, including loans made by the Council. The purpose of the accounts was to disclose such arrangements as part of the Council's overall financial position, rather than provide a detailed examination of individual loans. It was also highlighted that the accounts would be subject to external audit.

Members welcomed the circulation of the draft accounts in advance of the meeting and noted the intention to present the audited accounts to the Committee in September 2026, subject to completion of the external audit process.

Resolved

a)     That the creation of the Corporate Governance Working Group be approved, with a membership of Councillors Cliff Lunn, Philip Broadbank, David Chance and Neil Swannick, as well as Independent Co-opted Member David Portlock.

b)     That the draft Statement of Accounts for 2025/26 be noted.

Max Thomas, Head of Internal Audit at Veritau, introduced the report and advised Members that the Committee was required to review its Terms of Reference on an annual basis. Members were informed that the Terms of Reference had been updated recently and no further amendments were proposed at this time. Members were invited to comment on whether they considered the current arrangements continued to enable the Committee to discharge its responsibilities.

Members also considered a proposal to undertake a further review of the Committee's effectiveness. It was reported that, in previous years, this had been achieved through a questionnaire issued to Committee Members and officers who regularly attend meetings. Officers proposed that a further questionnaire exercise be undertaken, with the results reported back to a future meeting of the Committee.

During discussion, Members supported the importance of regularly reviewing the Committee's effectiveness, particularly as membership can change over time.

Resolved

a)     That no changes to the Audit Committee Terms of Reference are required.

b)     That the review of the Committee's effectiveness should proceed as proposed.

Stuart Cutts, Assistant Director of Audit Assurance at Veritau, introduced the report and outlined the purpose of the two documents presented for consideration.

Members were advised that the Local Code of Corporate Governance set out the principles and governance arrangements through which the Council conducts its business, makes decisions and ensures accountability, together with the evidence supporting those arrangements.

Members considered the Annual Governance Statement (AGS), which reviewed the effectiveness of the Council's governance arrangements during 2025/26. It was explained that the AGS drew upon assurance obtained through internal audit work, directorate governance and risk reviews, and other governance activity undertaken across the Council. The AGS identified a number of areas where further improvement was required and which would continue to be monitored by officers, Members and the Council's external auditor.

During the discussion, Members noted that a number of significant governance issues discussed elsewhere on the agenda were reflected within the AGS and would continue to be monitored through the Council's governance framework.

Resolved

a)     That the Local Code of Corporate Governance for the authority be recommended for approval by the Chief Executive Officer (under paragraph 5.15 of the Officers’ Delegation Scheme), in consultation with the Leader of the Council, the Executive Member for Finance and Resources, the Corporate Director of Resources and the Assistant Chief Executive Legal and Democratic Services.

b)     That the Annual Governance Statement for 2025/26, as included within the Statement of Accounts, be approved by the Chair of the Audit Committee.

Howard Emmett, Assistant Director - Resources, introduced the report and presented the annual review of governance arrangements within the Children and Young People's Services (CYPS) Directorate. Members were advised that the review was informed by external inspections, partnership arrangements, internal audit activity and the Directorate Risk Register.

Howard highlighted the scale and pace of national reform affecting the directorate, including developments relating to SEND, children's social care and regional care co-operatives. He also updated Members on developments relating to the Dedicated Schools Grant (DSG) deficit and advised that the statutory override had been extended until March 2028. Members were informed that the Council had submitted its Local SEND Reform Plan and that, subject to approval by the Department for Education, this could provide access to the High Needs Stability Grant. It was anticipated that the outcome of the submission would be known in the autumn.

During the discussion, the following points were raised.

·        Members noted that a number of risks within the Directorate Risk Register had remained at the same level despite mitigation measures being implemented. Officers explained that, whilst mitigating actions remained important and helped manage risks, the underlying impacts associated with some risks remained significant and therefore did not always result in a reduction in the overall score.

·        Clarification was sought regarding the extent to which the Directorate Risk Register was shared with the relevant Executive Member. Officers advised that, whilst Executive Members received regular updates on key strategic and operational risks, the full Directorate Risk Register was not routinely shared. Members suggested that consideration be given to sharing Directorate Risk Registers more formally with Executive Members across all directorates and officers agreed to review the matter.

·        Members referred to the recent Limited Assurance internal audit opinion relating to Transitions (Children's to Adults) and queried how this aligned with the report's conclusion that no significant governance weaknesses had been identified. Officers explained that, whilst the audit had identified areas requiring improvement within the transition process, it had also highlighted positive joint working between Children and Young People's Services and Health and Adult Services. The issues identified were not considered indicative of a wider governance failure within the directorate and improvement work was already underway. It was reported that the Director of Health and Adult Services would provide senior oversight of the improvement work. Members emphasised the importance of ensuring that the risks associated with transitions from Children's to Adult Services continued to be appropriately identified, managed and monitored.

Resolved

a)     That the review of the effectiveness of governance arrangements in the Children and Young People's Directorate is noted.

Councillor Cliff Lunn, Chair of the Audit Committee, introduced the report, which provided a summary of the work undertaken by the Committee during the period 1 October 2025 to 30 April 2026 and outlined how it had discharged its responsibilities under its Terms of Reference. It was noted that the reporting period had been amended to align with the municipal year and that this report represented a transitional position.

During discussion, Mr David Portlock highlighted a drafting amendment within the Pension Fund section of the report, noting that the reference to ‘the current year’ could be misleading given that the report was referring to the 2024/25 audit period. It was agreed that the wording would be amended for clarity before submission to Full Council.

Mr Portlock also queried whether the section of the report relating to the Scarborough Waterpark Internal Audit Review could come as a surprise to some Members when considered at Full Council. In response, it was noted that the matter had already been considered publicly by the Audit Committee, discussed at the relevant Area Committee and circulated to all councillors. Members were therefore satisfied that the content was appropriately included within the annual report.

Resolved

a)    That, subject to the amendment discussed at the meeting, the draft Annual Report of the Audit Committee for the year ended 30 April 2026 be approved and submitted to Full Council.

Karen Iveson, Assistant Director – Resources, introduced the Committee's work programme. It was highlighted that the Review of Financial Procedure Rules had been deferred to a future meeting, as no further changes were currently proposed.

Resolved

a)     That the work programme be noted.

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

There were no other items to discuss.

Monday, 21 September 2026 at 1.30pm.

Monday, 21 September 2026 at 1:30pm in the Brierley Room, County Hall, Northallerton. A training session on Scrutiny of the Statement of Accounts to take place at 12:30pm.