Agenda Document Pack - Risk and Audit Scrutiny Committee - 30/09/2025
South Lanarkshire Council · 30 September 2025
Back to Risk and Audit Scrutiny Committee — 30 September 2025 and its agenda
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Council Offices, Almada Street Hamilton, ML3 0AA Monday, 22 September 2025 Dear Councillor Risk and Audit Scrutiny Committee The Members listed below are requested to attend a meeting of the above Committee to be held as follows:- Date: Tuesday, 30 September 2025 Time: 10:00 Venue: Hybrid - Committee Room 1, Council Offices, Almada Street, Hamilton, ML3 0AA The business to be considered at the meeting is listed overleaf. Yours sincerely Paul Manning Chief Executive Members Elaine McDougall (Chair), Mary Donnelly (Depute Chair), Mathew Buchanan, Colin Dewar, Alistair Fulton, Ross Gowland, Celine Handibode, Susan Kerr, Richard Lockhart Substitutes Monique Equi, Gavin Keatt, Julia Marrs, Helen Toner 1
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BUSINESS 1 Declaration of Interests 2 Minutes of Previous Meeting Minutes of the meeting of the Risk and Audit Scrutiny Committee held on 25 June 2025 submitted for approval as a correct record. (Copy attached) 5 - 10 Monitoring Item(s) 3a External Auditors' Report 2024/2025 Letter and report dated 30 September 2025 by Audit Scotland, External Auditors to the Council. (Copy attached) 11 - 76 3b Transformation: How Councils Are Redesigning and Delivering More Efficient Services to Achieve Planned Outcomes. Best Value Thematic Work in South Lanarkshire Council 2024/2025 Report dated September 2025 by Audit Scotland, External Auditors to the Council. (Copy attached) 77 - 100 3c External Auditors' Report 2024/2025. South Lanarkshire Council Charitable Trusts Letter and report dated 30 September 2025 by Audit Scotland, External Auditors to the Council. (Copy attached) 101 - 120 Item(s) for Decision 4 Audited Annual Accounts 2024/2025 Report dated 19 September 2025 by the Executive Director (Finance and Corporate Resources). (Copy attached) 121 - 124 5 Internal Audit Activity Report Report dated 5 September 2025 by the Executive Director (Finance and Corporate Resources). (Copy attached) 125 - 142 Item(s) for Noting 6 Financial Resilience and Sustainability Report dated 10 September 2025 by the Executive Director (Finance and Corporate Resources). (Copy attached) 143 - 152 7 Audit Scotland – Local Government Budgets 2025/2026 Report dated 7 August 2025 by the Executive Director (Finance and Corporate Resources). (Copy attached) 153 - 160 8 Fraud Statistics Annual Report 2024/2025 Report dated 28 August 2025 by the Executive Director (Finance and Corporate Resources). (Copy attached) 161 - 172 9 Year End Insured Claims Report – 2024/2025 Report dated 5 September 2025 by the Executive Director (Finance and Corporate Resources). (Copy attached) 173 - 184 2
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10 Year-End Risk Management Report - 2024/2025 and Review of Council's Top Risks - 2025/2026 Report dated 5 September 2025 by the Executive Director (Finance and Corporate Resources). (Copy attached) 185 - 200 11 Annual Update on the Use of Surveillance Powers - The Regulation of Investigatory Powers (Scotland) Act 2000 Report dated 6 August 2025 by the Executive Director (Finance and Corporate Resources). (Copy attached) 201 - 230 12 Forward Programme for Future Meetings Report dated 20 August 2025 by the Executive Director (Finance and Corporate Resources). (Copy attached) 231 - 234 Urgent Business 13 Urgent Business Any other items of business which the Chair decides are urgent. For further information, please contact:- Clerk Name: Elizabeth-Anne McGonigle Clerk Telephone: 07385403101 Clerk Email: elizabeth-anne.mcgonigle@southlanarkshire.gov.uk 3
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RISK AND AUDIT SCRUTINY COMMITTEE Minutes of meeting held via Confero and in Committee Room 1, Council Offices, Almada Street, Hamilton on 25 June 2025 Chair: Councillor Elaine McDougall Councillors Present: Councillor Mathew Buchanan, Councillor Colin Dewar, Councillor Ross Gowland, Councillor Susan Kerr, Councillor Julia Marrs (substitute for Councillor Alistair Fulton), Councillor Helen Toner (substitute for Councillor Mary Donnelly) Councillors' Apologies: Councillor Mary Donnelly (Depute), Councillor Alistair Fulton, Councillor Celine Handibode, Councillor Richard Lockhart Councillor Also Present: Councillor Joe Fagan (for items 3 to 5) Attending: Chief Executive’s Service P Manning, Chief Executive (for items 3 to 5) Finance and Corporate Resources J Taylor, Executive Director; Y Douglas, Audit and Compliance Manager; C Fergusson, Head of Finance (Transactions); E-A McGonigle, Administration Adviser; A Norris, Administration Assistant; L O’Hagan, Head of Finance (Strategy); I Opatha, Administration Officer; I Strachan, Head of Administration and Legal Services Also Attending: Audit Scotland A Barclay and M Ferris, External Auditors 1 Declaration of Interests No interests were declared. 2 Minutes of Previous Meeting The minutes of the meeting of the Risk and Audit Scrutiny Committee held on 6 May 2025 were submitted for approval as a correct record. The Committee decided: that the minutes be approved as a correct record. 3 Internal Audit Annual Assurance Report 2024/2025 A report dated 2 June 2025 by the Audit and Compliance Manager (Finance and Corporate Resources) was submitted providing:- a summary of progress and performance of Internal Audit for the financial year 2024/2025 2 5
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an opinion on the adequacy and effectiveness of the Council’s framework of governance, risk management and control systems based on audit work undertaken in 2024/2025 Internal Audit was noted as forming part of the Council’s wider governance framework, with its primary objective being to evaluate and improve the effectiveness of governance, risk management and control processes. As a function, it did this by delivering a programme of audit assignments and using the output from those reviews to inform an annual audit opinion on the effectiveness of the Council’s framework of governance, risk management and control arrangements. Details were provided on:- compliance with relevant internal audit standards and guidance purpose and approach of the Service link to the Council’s objectives and top risks workload and performance areas of assurance overall assurance and annual audit opinion future year challenges and tasks The overall opinion expressed on the Council’s control environment was that a reasonable level of assurance could be placed on the adequacy and effectiveness of the Council’s framework of governance, risk management and control arrangements for the year ended 31 March 2025. The Internal Audit findings would inform the Council’s 2024/2025 Annual Governance Statement. The 2024/2025 Internal Audit Plan had sought to return to a more routine programme of work, however, this had proved challenging in practice with the implementation of Oracle Fusion, which required significant resource commitment. The momentum of the evolving process would continue after the implementation of Oracle Fusion, with Social Work and Housing systems planning to go-live in 2025/2026. This, together with the financial challenges across the public sector, meant that the Council, like all local authorities, was in a period of transformational change. Investing time to fully develop analytical tools would be increasingly important and was being actively considered as part of post-system implementation reviews. A data strategy had been drafted to provide a structure and focus for future plans, as detailed in paragraph 9.2 of the report. Information was also provided on the new Global Internal Audit Standards (GIAS), which were effective from April 2025. The latest external assessment of the function’s compliance with the PSIAS provided assurance that professional standards were being adhered to. This level of conformance provided a good foundation for the new Standards. The Chair, on behalf of the Committee members, thanked the Audit and Compliance Manager and wider team for the extensive internal audit work undertaken in 2024/2025. The Committee decided: (1) that the performance of Internal Audit during 2024/2025 be noted; (2) that the overall findings from internal audit work be noted, and that it be approved that those would inform the Council’s 2024/2025 Annual Governance Statement; and (3) that the level of assurance on the Council’s control environment be noted. 6
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4 Annual Governance Statement for 2024/2025 and Significant Governance Areas Quarter 4 Progress Report A report dated 3 June 2025 by the Executive Director (Finance and Corporate Resources) was submitted on the Annual Governance Statement for 2024/2025 and progress against significant governance areas identified within the 2023/2024 Annual Governance Statement at Quarter 4. Each year, the Council undertook a review of the governance arrangements required to support its financial and operational controls. This review provided the basis for the Annual Governance Statement, which was included in the Council’s Annual Report and Statement of Accounts. The Council’s governance assurance framework was detailed in Appendix 1 to the report. The resulting Annual Governance Statement for 2024/2025, attached as Appendix 2 to the report, provided information on the Council’s compliance during 2024/2025. The annual review of governance arrangements across the Council demonstrated sufficient evidence that the principles of delivering good governance in local government, contained in the Local Code of Corporate Governance, operated effectively and that the Council complied with its Code. Progress on the significant governance areas highlighted within the Annual Governance Statement 2023/2024 was attached as Appendix 3 to the report. The Head of Finance (Transactions) responded to a member’s question in relation to information governance, which was a new significant governance area identified in 2024/2025. The Committee decided: (1) that the Annual Governance Statement, attached as Appendix 2 to the report, which would be included in the Council’s 2024/2025 Annual Report and Statement of Accounts, be approved; and (2) that the progress against the significant governance areas identified within the Annual Governance Statement 2023/2024, attached as Appendix 3 to the report, be noted. [Reference: Minutes of 25 June 2024 (Paragraph 4)] 5 Unaudited Annual Accounts 2024/2025 A report dated 2 June 2025 by the Executive Director (Finance and Corporate Resources) was submitted on the requirement for members to consider the Unaudited Annual Accounts of the Council and related Charitable Trusts, attached as appendices 1 and 3 to the report, by 30 June 2025. The Council’s Unaudited Annual Accounts detailed key information on the Council’s expenditure and income for the financial year ended 31 March 2025. The accounts also covered the Charitable Trusts managed by the Council. The full Unaudited Annual Accounts would be circulated to all elected members following their submission to the External Auditor by 30 June 2025 and would be advertised as being available for public inspection on the Council’s website from 1 July 2025 until the date the Audited Accounts would be published. The information contained in the Unaudited Accounts took into account the final outturn position, as detailed in Appendix 2 to the report, which was submitted for approval to the Executive Committee meeting on 25 June 2025. Appendix 2 also provided an Expenditure and Funding Analysis, as required by the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Accounting Practice. 7
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Following the audit of the Accounts over the summer months, the Audited Annual Accounts will be brought back to the Committee at its meeting on 30 September 2025 for approval. The Committee decided: that the Unaudited Annual Accounts of the Council and related Charitable Trusts, to be submitted to Audit Scotland by the deadline of 30 June 2025, be noted. [Reference: Minutes of 25 June 2024 (Paragraph 5)] 6 Internal Audit Activity as at 30 May 2025 A report dated 3 June 2025 by the Executive Director (Finance and Corporate Resources) was submitted on work completed by Internal Audit during the period 12 April to 30 May 2025. Findings from internal audit assignments were reported to this Committee throughout the year, and the last progress report was considered by the Committee on 6 May 2025. Information was provided for the Internal Audit work completed during the period from 12 April to 30 May 2025. As at 30 April 2025, 52 of the 54 assignments within the 2024/2025 Audit Plan had reached at least the draft report stage. Two assignments, both relating to investigative work, remained in progress. The assignments completed in the period from 12 April to 30 May 2025, together with a summary of overall assurances, were detailed in Appendix 1 to the report. Key performance indicators for the period to 31 March 2025 were provided in Appendix 2 to the report. The Internal Audit function within the Council would continue to comply with the Public Sector Internal Audit Standards (PSIAS) in the delivery of the Internal Audit Plan 2024/2025. The new Global Internal Audit Standards (GIAS) would apply from 1 April 2025, and future activity reports to the Committee would reflect the requirements of those new standards. Updates were also provided on:- progress against the Audit Strategy, which continued to be monitored and reported to the Committee as part of regular monitoring reports a Position Statement on Sustainability, highlighting challenges and actions related to the Council’s zero emissions targets and the Local Heat and Energy Efficiency Strategy (LHEES), as detailed in Appendix 3 The Committee decided: that progress on Internal Audit activity be noted. [Reference: Minutes of 6 May 2025 (Paragraph 3)] 7 2024 National Fraud Initiative Exercise A report dated 2 June 2025 by the Executive Director (Finance and Corporate Resources) was submitted on the matches resulting from the 2024 National Fraud (NFI) exercise and of the proposed number of investigations to be undertaken in 2024/2025. 8
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The NFI matched similar data across public sector systems and identified possible inconsistencies. Those inconsistencies, known as matches, required to be investigated by participating public bodies to detect fraud. The Council had taken part in NFI exercises since 2004/2005. Those exercises were undertaken every 2 years and included data from benefits, payroll, creditors and blue badge holders. This data was matched to other benefits and payroll data, as well as to the Department for Work and Pensions’ (DWP) deceased persons’ records and the electoral register, along with a match of the electoral register to council tax records, to detect where a single person discount (SPD) had been claimed despite there being more than one person over 18 in the household. There were 9 separate match areas covered in the 2024 NFI exercise, including:- housing benefits blue badge holders Council Tax Reduction Scheme payroll housing tenants waiting lists procurement creditors Council tax SPD The 2024 NFI results were detailed at section 4 of the report and highlighted that:- at 2 April 2025, a total of 32,675 matches had been identified, which represented an increase of 4,674 from the 2022 exercise. of those, 2,887 high-risk matches were identified as an initial target for investigation. Heads of Service were invited to identify any further matches for inclusion, based on risk and local knowledge. for the 9 matched areas, 7 categories had a decrease and 2 an increase in matches:- the greatest decrease in the number of matches related to creditors, housing tenants and waiting lists. In relation to creditor matches, that decrease was, in part, due to the reduced dataset uploaded, covering only the post-implementation period of Oracle Fusion the greatest increase in matches was within the SPD as a result of 2 new match reports, as detailed in paragraph 4.7 of the report councils were still awaiting the release of further matches for 2024, including Small Business Bonus Scheme (SBBS) and HMRC matches. Upon receipt of those, analysis would be undertaken and, where required, target numbers would be increased the Housing Benefit Fraud team had transferred to the DWP Fraud and Error Service (FES), although initial NFI investigations were undertaken by the Council. If this indicated a potential benefit fraud, the case was passed to FES. Matches were closed on the NFI website as “passed to DWP” a deadline for investigations of 31 December 2025 had been proposed; however, it was anticipated that most would be completed ahead of that date The following information was provided in appendices 1 to 3 to the report, respectively:- a list of the matched areas in the 2024 exercise a comparison of 2022 and 2024 NFI exercises a breakdown of the 2,887 initial target investigations and deadlines In February 2025, the NFI published its strategy for 2024 to 2028. The aim of the strategy, which was attached at Appendix 4 to the report, was to commit to, and set out, the NFI’s agenda for the next 4 years. The 2024 to 2028 NFI Strategy set out a vision to ‘better detect and prevent fraud by utilising data and technology from the public and private sector’ and included the following 5 objectives to achieve that vision:- evolving products through innovation increasing data access and insights upholding the highest standards of service quality and data security 9
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improving training and support enhancing engagement to maximise outcomes The Audit and Compliance Manager responded to a member’s question in relation to the risk- based approach used to identify the target number of high-risk matches that would be investigated. The Committee decided: (1) that the results of the matching exercise and the initial target number of investigations resulting from the 2024 National Fraud Initiative (NFI) exercise be noted; and (2) that the 2024 to 2028 NFI Strategy, and associated 5 objectives, be noted. [Reference: Minutes of 27 June 2023 (Paragraph 7) and 24 September 2024 (Paragraph 5)] 8 Forward Programme for Future Meetings A report dated 20 May 2025 by the Executive Director (Finance and Corporate Resources) was submitted on the outline forward programme for the meetings of the Risk and Audit Scrutiny Committee to 25 August 2026. As part of future arrangements, members were invited to suggest topics for inclusion in the Committee’s forward programme. The Committee decided: that the outline forward programme for the meetings of the Risk and Audit Scrutiny Committee to 25 August 2026 be noted. [Reference: Minutes 6 May 2025 (Paragraph 6)] 9 Urgent Business There were no items of urgent business. 10
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102 West Port Edinburgh EH3 9DN 8 Nelson Mandela Place Glasgow G2 1BT The Green House Beechwood Business Park North Inverness IV2 3BL T: 0131 625 1500 E: info@audit-scotland.gov.uk www.audit-scotland.gov.uk Risk and Audit Scrutiny Committee 30 September 2025 South Lanarkshire Council Audit of 2024/25 annual accounts Independent auditor's report 1. Our audit work on the 2024/25 annual accounts is now substantially complete. Subject to receipt of a revised set of annual accounts for final review, we anticipate being able to issue unmodified audit opinions in the independent auditor's report on 30 September 2025 (the proposed report is attached at Appendix A). Annual Audit Report 2. Under International Standards on Auditing in the UK, we report specific matters arising from the audit of the annual accounts to those charged with governance of a body in sufficient time to enable appropriate action. For South Lanarkshire Council, those charged with governance is the Risk and Audit Scrutiny Committee. We present for the committee’s consideration our proposed Annual Audit Report on the 2024/25 audit. The section headed "Significant findings and key audit matters" sets out the issues identified in respect of the annual accounts, including those that we are required to report to you. 3. The Annual Audit Report also sets out conclusions on the wider scope areas that frame public audit as set out in the Code of Audit Practice. 4. The Annual Audit Report will be issued in final form after the audit of the annual accounts has been completed. Unadjusted misstatements 5. We also report to those charged with governance all uncorrected misstatements in the annual accounts which we have identified during the course of our audit, other than those of a trivial nature, and request that these misstatements be corrected. 6. There is one unadjusted misstatement of £3.849 million in relation to peppercorn leases, as detailed within Appendix 2 within our Annual Audit Report. Other ISA (UK) matters 7. In presenting this letter and the Annual Audit Report to the Risk and Audit Scrutiny Committee, we seek confirmation from those charged with governance on the following matters: • if they are aware of any instances of actual, suspected, or alleged fraud, 3a 11
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• if they are aware of any subsequent events that have occurred since the date of the financial statements, • if they are content that the methods, assumptions, and data used in making accounting estimates in the annual accounts are appropriate, • if all related party relationships and transactions they are aware of are reflected in the annual accounts, and • if they are aware of any non-compliance with laws and regulations. 8. Any issues that we have identified from our audit in relation to other ISA (UK) matters that we are required to report to those charged with governance have been reported in the section headed “Other matters to report” in the Annual Audit Report. Representations from Section 95 Officer 9. As part of the completion of our audit, we are seeking written representations from the Executive Director (Finance and Corporate Resources) as Section 95 Officer on aspects of the annual accounts, including the judgements and estimates made. 10. A draft letter of representation is attached at Appendix B. This should be signed and returned to us by the Section 95 Officer with the signed annual accounts prior to the independent auditor’s report being signed. Outstanding matters 11. At the time of issuing our proposed Annual Audit Report supporting audit evidence expenditure sampling remained outstanding. 12
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Appendix A: Proposed Independent Auditor’s Report Independent auditor’s report to the members of South Lanarkshire Council and the Accounts Commission Reporting on the audit of the financial statements Opinion on financial statements I certify that I have audited the financial statements in the annual accounts of South Lanarkshire Council and its group for the year ended 31 March 2025 under Part VII of the Local Government (Scotland) Act 1973. The financial statements comprise the group and Council only Comprehensive Income and Expenditure Statement, the group and Council only Balance Sheets, the group and Council only Movement in Reserves Statements, the group and Council only Cash-Flow Statements, the Housing Revenue Account Income and Expenditure Statement, the National Non-Domestic Rates Income and Expenditure Statement, the Council Tax Income and Expenditure Statement and notes to the financial statements, including Accounting Policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards, as interpreted and adapted by the Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 (the 2024/25 Code). In my opinion the accompanying financial statements: • give a true and fair view of the state of affairs of the council and its group as at 31 March 2025 and of the income and expenditure of the council and its group for the year then ended; • have been properly prepared in accordance with UK adopted international accounting standards, as interpreted and adapted by the 2024/25 Code; and • have been prepared in accordance with the requirements of the Local Government (Scotland) Act 1973, The Local Authority Accounts (Scotland) Regulations 2014, and the Local Government in Scotland Act 2003. Basis for opinion I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Accounts Commission for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Accounts Commission on 2 December 2022. My period of appointment is five years, covering 2022/23 to 2026/27. I am independent of the council and its group in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the council. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Conclusions relating to going concern basis of accounting I have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate. 13
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Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the ability of the council and its group to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue. These conclusions are not intended to, nor do they, provide assurance on the current or future financial sustainability of the council and its group. However, I report on the council’s arrangements for financial sustainability in a separate Annual Audit Report available from the Audit Scotland website. Risks of material misstatement I report in my Annual Audit Report the most significant assessed risks of material misstatement that I identified and my judgements thereon. Responsibilities of Executive Director (Finance and Corporate Resources) and Risk and Audit Scrutiny Committee for the financial statements As explained more fully in the Statement of Responsibilities, the Executive Director (Finance and Corporate Resources) is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Executive Director (Finance and Corporate Resources) determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Executive Director (Finance and Corporate Resources) is responsible for assessing the ability of the council and its group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless there is an intention to discontinue the operations of the council and its group. The Risk and Audit Scrutiny Committee is responsible for overseeing the financial reporting process. Auditor’s responsibilities for the audit of the financial statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include: • using my understanding of the local government sector to identify that the Local Government (Scotland) Act 1973, The Local Authority Accounts (Scotland) Regulations 2014, and the Local Government in Scotland Act 2003 are significant in the context of the council and its group; 14
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• inquiring of the Executive Director (Finance and Corporate Resources) as to other laws or regulations that may be expected to have a fundamental effect on the operations of the council and its group; • inquiring of the Executive Director (Finance and Corporate Resources) concerning the policies and procedures of the councils and its group regarding compliance with the applicable legal and regulatory framework; • discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and • considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the council’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report. Reporting on other requirements Opinion prescribed by the Accounts Commission on the audited parts of the Remuneration Report I have audited the parts of the Remuneration Report described as audited. In my opinion, the audited parts of the Remuneration Report have been properly prepared in accordance with The Local Authority Accounts (Scotland) Regulations 2014. Other information The Executive Director (Finance and Corporate Resources) is responsible for the other information in the annual accounts. The other information comprises the Management Commentary, Annual Governance Statement, Statement of Responsibilities and the unaudited parts of the Remuneration Report. My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. 15
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My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Management Commentary and Annual Governance Statement to the extent explicitly stated in the following opinions prescribed by the Accounts Commission. Opinions prescribed by the Accounts Commission on the Management Commentary and Annual Governance Statement In my opinion, based on the work undertaken in the course of the audit: • the information given in the Management Commentary for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with statutory guidance issued under the Local Government in Scotland Act 2003; and • the information given in the Annual Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Delivering Good Governance in Local Government: Framework (2016). Matters on which I am required to report by exception I am required by the Accounts Commission to report to you if, in my opinion: • adequate accounting records have not been kept; or • the financial statements and the audited parts of the Remuneration Report are not in agreement with the accounting records; or • I have not received all the information and explanations I require for my audit. I have nothing to report in respect of these matters. Conclusions on wider scope responsibilities In addition to my responsibilities for the annual accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice, including those in respect of Best Value, are set out in my Annual Audit Report. Use of my report This report is made solely to the parties to whom it is addressed in accordance with Part VII of the Local Government (Scotland) Act 1973 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties. John Boyd FCPFA Audit Scotland 4th Floor South Suite 16
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The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 17
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Appendix B: Letter of Representation (ISA 580) Mr John Boyd, Audit Director Audit Scotland 4th Floor 8 Nelson Mandela Place Glasgow G2 1BT Dear John South Lanarkshire Council Annual Accounts 2024/25 1. This representation letter is provided in connection with your audit of the annual accounts of South Lanarkshire Council and its group (hereafter referred to as the council ) for the year ended 31 March 2025 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view and have been properly prepared, and for expressing other opinions on the Remuneration Report, Management Commentary, and Annual Governance Statement. 2. I confirm to the best of my knowledge and belief and having made appropriate enquiries of the Chief Executive and Corporate Management Team, the following representations given to you in connection with your audit of South Lanarkshire Council’s annual accounts for the year ended 31 March 2025. General 3. The council and I have fulfilled our statutory responsibilities for the preparation of the 2024/25 annual accounts. All the accounting records, documentation, and other matters which I am aware are relevant to the preparation of the annual accounts have been made available to you for the purposes of your audit. All transactions undertaken by the council have been recorded in the accounting records and are properly reflected in the financial statements. 4. I confirm that the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole. I am not aware of any uncorrected misstatements other than those reported by you. Financial Reporting Framework 5. The annual accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 (2024/25 accounting code), and the requirements of the Local Government (Scotland) Act 1973, the Local Government in Scotland Act 2003, and the Local Authority Accounts (Scotland) Regulations 2014. 6. In accordance with the Local Authority Accounts (Scotland) Regulations 2014, I have ensured that the financial statements give a true and fair view of the financial position of the council and its Group at 31 March 2025 and the transactions for 2024/25. Accounting Policies and Estimates 7. All material accounting policies applied are as shown in the notes to the financial statements. The accounting policies are determined by the 2024/25 Code, where applicable. Where the 2024/25 Code does not specifically apply, I have used judgement in developing and applying an 18
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accounting policy that results in information that is relevant and reliable. All accounting policies applied are appropriate to the council’s circumstances and have been consistently applied. 8. The methodology, significant assumptions, and data used in making accounting estimates are reasonable, and have been properly reflected and disclosed in the financial statements in accordance with the 2024/25 Code. Judgements made in making estimates have been based on the latest available and reliable information. Estimates have been revised where there are changes in the circumstances on which the original estimate was based or as a result of new information or experience. Going Concern Basis of Accounting 9. I have assessed the council’s ability to continue to use the going concern basis of accounting and have concluded that it is appropriate. I am not aware of any material uncertainties that may cast significant doubt on the council’s ability to continue to adopt the going concern basis of accounting. Assets 10. All assets at 31 March 2025 of which I am aware have been reported in the financial statements. 11. Where a rolling programme of asset valuations has been used, I have satisfied myself that the carrying amount of assets at 31 March 2025 does not differ materially from that which would be determined if a revaluation had been carried out at that date. 12. I carried out an assessment at 31 March 2025 as to whether there is any indication that an asset may be impaired and have recognised any impairment losses identified in the financial statements. 13. I have provided you with all information of which I am aware regarding any valuation exercises carried out after 31 March 2025. 14. There are no plans or intentions that are likely to affect the carrying value or classification of the assets recognised in the financial statements. 15. Owned assets are free from any lien, encumbrance, or charge, except as disclosed in the financial statements. 16. The pension assumptions made by the actuary in the IAS 19 report for the council have been reviewed and I confirm that they are consistent with management's own view. The pension asset has been capped to reflect the asset ceiling as determined through IFRIC 14. I am satisfied that the assumptions applied in the calculation are consistent with management’s own view. Liabilities 17. All liabilities at 31 March 2025 of which I am aware have been reported in the financial statements. 18. Provisions have been recognised in the financial statements for all liabilities of uncertain timing or amount at 31 March 2025 of which I am aware where the conditions specified in IAS 37, as adapted by the 2024/25 Code, have been met. The amount recognised as a provision is the best estimate of the expenditure likely to be required to settle the obligation at 31 March 2025. Where the effect of the time value of money is material, the amount of the provision has been discounted to the present value of the expected payments. 19
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19. Provisions recognised in previous years have been reviewed and adjusted, where appropriate, to reflect the best estimate at 31 March 2025, or to reflect material changes in the assumptions underlying the calculations of the provisions. 20. The accrual recognised in the financial statements for annual leave untaken by 31 March 2025 has been estimated on a reasonable basis. 21. There are no plans or intentions that are likely to affect the carrying value or classification of the liabilities recognised in the financial statements. Contingent Liabilities 22. There are no significant contingent liabilities, other than those disclosed in Note 31 to the financial statements, arising either under formal agreement or through formal undertakings requiring disclosure in the accounts. All known contingent liabilities have been fully and properly disclosed in accordance with the 2024/25 accounting code and IAS 37. Litigation and Claims 23. All known actual or possible legal claims have been disclosed to you and have been accounted for and disclosed in the financial statements in accordance with the 2024/25 accounting code. Fraud 24. I understand my responsibilities for the design, implementation, and maintenance of internal control to prevent fraud and I believe I have appropriately fulfilled those responsibilities. 25. I have provided you with all information in relation to: • my assessment of the risk that the financial statements may be materially misstated because of fraud • any allegations of fraud or suspected fraud affecting the financial statements, and • fraud or suspected fraud that I am aware of involving management, employees who have a significant role in internal control, or others that could have a material effect on the financial statements. Laws and Regulations 26. I have disclosed to you all known instances of non-compliance or suspected non- compliance with laws and regulations whose effects should be considered when preparing financial statements. Related Party Transactions 27. All material transactions with related parties have been appropriately accounted for and disclosed in the financial statements in accordance with IAS 24, as adopted by the 2024/25 Code. I have made available to you the identity of all the council’s related parties and all the related party relationships and transactions of which I am aware. Remuneration Report 28. The Remuneration Report has been prepared in accordance with the Local Authority Accounts (Scotland) Regulations 2014, and all required information of which I am aware has been provided to you. 20
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Management Commentary 29. I confirm that the Management Commentary has been prepared in accordance with the statutory guidance and the information is consistent with the financial statements. Corporate Governance 30. I confirm that the council has undertaken a review of the system of internal control during 2024/25 to establish the extent to which it complies with proper practices set out in Delivering Good Governance in Local Government: Framework 2016. I have disclosed to you all deficiencies in internal control identified from this review or of which I am otherwise aware. 31. I confirm that the Annual Governance Statement has been prepared in accordance with the Delivering Good Governance in Local Government: Framework 2016 and the information is consistent with the financial statements. There have been no changes in the corporate governance arrangements, or issues identified, since 31 March 2025 which require to be reflected in the Annual Governance Statement or annual accounts. Group Accounts 32. I have identified all the other entities in which the council has an interest and have classified and accounted for them in accordance with the 2024/25 Code. Any significant issues, including those related to fraud and any qualified audit opinions, in relation to the financial statements of group entities, have been provided to you. Common Good Fund 33. I confirm, to the best of my ability, that all material common good assets have been identified and correctly accounted for within the common good fund financial statements and where appropriate, common good assets in use by the council have been assessed and accounted for in line with IAS 17. Events Subsequent to the Date of the Balance Sheet 34. All events subsequent to 31 March 2025 for which IAS 10, as adopted by the 2024/25 Code, requires adjustment or disclosure have been adjusted or disclosed. Yours sincerely Executive Director (Finance and Corporate Resources) Section 95 Officer 21
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South Lanarkshire Council 2024/25 Annual Audit Report Proposed Prepared for South Lanarkshire Council and the Controller of Audit September 2025 22
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South Lanarkshire Council: 2024/25 Annual Audit Report Proposed | 2 Contents Key messages 3 Introduction 5 Audit scope and responsibilities 6 Audit of the annual accounts 8 Wider scope audit 22 Best Value audit 36 Appendix 1 43 Appendix 2 53 Appendix 3 54 Accessibility You can find out more and read this report using assistive technology on our website www.audit.scot/accessibility. 23
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Key messages | 3 Key messages Audit of the annual accounts 1 All audit opinions state that the annual accounts of South Lanarkshire Council, its group and the section 106 charities administered by the council were free from material misstatement for the year ended 31 March 2025. 2 The management commentary, annual governance statement and remuneration report were all consistent with the financial statements and properly prepared in accordance with the relevant regulations and guidance. Wider scope audit 3 The council continues to operate within its annual budget. While facing financial challenges through inflationary pressures on pay and non-pay costs as well as demand on services, the council continues to demonstrate sound financial management maintaining general fund reserves in line with the long- term Revenue Financial Strategy. 4 The council implemented a new financial system at the start of the 2024/25, Oracle’s cloud-based Human Resources (HR) and Finance solution. This was a significant change programme with a focus on delivering significant improvements to processes, workflow, support agile working, employee self- service and engagement as well as greater levels of automation and improved management information. 5 The council’s revenue budget strategy has reported a projected budget surplus for 2025/26 however there remains a budget gap over the medium term. The council continues to undertake scenario planning and transformation reviews to support medium and long term financial plans. 6 The council has effective budget monitoring arrangements. Given the financial pressures, the council is continuing to assess its reserves strategy and review how it assesses, monitors and reports on its financial resilience. 7 The council has sound governance arrangements in place for how it conducts business. To ensure the Risk and Audit Scrutiny Committee is effective in its 24
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Key messages | 4 role an annual review and assessment should be undertaken with the results captured within an annual report. Best Value audit 8 The council has a Transformational Change Programme in place that is clearly linked to its updated Council Plan, financial plans and digital strategy. 9 The council currently focuses on establishing the financial benefits of its transformational activities but does not routinely separately track or report on the impact on service quality or outcomes for service users in relation to these transformational activities. 10 The council has effective and appropriate arrangements in place for securing Best Value. 11 Audit work assessed the arrangements the council has in place for preparing and publishing SPI, including how it has responded to assessments, and concluded the arrangements in place were effective and appropriate. 12 The council has an effective performance management framework in place. 13 The council reviews and reports its performance using a number of measures that are clearly aligned to the priorities and outcomes set out in the Council Plan. 14 The council has an improvement action plan for all indicators, including those reported as being below the Scottish average. 25
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Introduction | 5 Introduction Purpose of the Annual Audit Report 1. The purpose of this Annual Audit Report is to report the significant matters identified from the 2024/25 audit of South Lanarkshire Council’s annual accounts and the wider scope areas specified in the Code of Audit Practice (2021). 2. The Annual Audit Report is addressed to South Lanarkshire Council, hereafter referred to as ‘the council’ and the Controller of Audit, and will be published on Audit Scotland’s website in due course. Appointed auditor and independence 3. John Boyd, of Audit Scotland, has been appointed as external auditor of the council for the period from 2022/23 until 2026/27. As reported in the Annual Audit Plan, John Boyd and the audit team are independent of the council and its group in accordance with relevant ethical requirements, including the Financial Reporting Council’s Ethical Standard. There have been no developments since the issue of the Annual Audit Plan that impact on the continued independence of the engagement lead or the rest of the audit team from the council, including no provision of non-audit services. Acknowledgements 4. We would like to thank the council and its staff, particularly those involved in preparation of the annual accounts, for their cooperation and assistance during the audit. We look forward to working together constructively over the remainder of the five-year audit appointment. 26
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Audit scope and responsibilities | 6 Audit scope and responsibilities Scope of the audit 5. The audit is performed in accordance with the Code of Audit Practice, including supplementary guidance, International Standards on Auditing (ISA) (UK), and relevant legislation. These set out the requirements for the scope of the audit which includes: • An audit of the financial statements and an opinion on whether they give a true and fair view and are free from material misstatement. • An opinion on statutory other information published with the financial statements in the annual accounts, the Management Commentary, and the Annual Governance Statement, and an opinion on the audited part of the Remuneration Report. • Conclusions on the council’s arrangements in relation to the wider scope areas: Financial Management; Financial Sustainability; Vision, Leadership and Governance; and Use of Resources to Improve Outcomes. • Reporting on the council’s arrangements for securing Best Value. • Providing assurance on the Housing Benefit Subsidy Claim, Non- Domestic Rates Return, Whole of Government Accounts return, and summary financial statements. • A review of the council’s arrangements for preparing and publishing statutory performance information. • Provision of this Annual Audit Report. Responsibilities and reporting 6. The Code of Audit Practice sets out the respective responsibilities of the council and the auditor. A summary of the key responsibilities is outlined below. Auditor’s responsibilities 7. The responsibilities of auditors in the public sector are established in the Local Government (Scotland) Act 1973. These include providing an independent opinion on the financial statements and other information reported within the annual accounts, and concluding on the South Lanarkshire Council’s arrangements in place for the wider scope areas and Best Value. 27
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Audit scope and responsibilities | 7 8. The matters reported in the Annual Audit Report are only those that have been identified by the audit team during normal audit work and may not be all that exist. Communicating these does not absolve the council from its responsibilities outlined below. 9. The Annual Audit Report includes an agreed action plan at Appendix 1 setting out specific recommendations to address matters identified and includes details of the responsible officer and dates for implementation. The council’s responsibilities 10. The council has primary responsibility for ensuring proper financial stewardship of public funds, compliance with relevant legislation and establishing effective arrangements for governance, propriety, and regularity that enables it to successfully deliver its objectives. The features of proper financial stewardship include: • Establishing arrangements to ensure the proper conduct of its affairs. • Preparation of annual accounts, comprising financial statements for the council and its group that gives a true and fair view and other specified information. • Establishing arrangements for the prevention and detection of fraud, error and irregularities, and bribery and corruption. • Implementing arrangements to ensure its financial position is soundly based. • Making arrangements to secure Best Value. • Establishing an internal audit function. National performance audit reporting 11. The Auditor General for Scotland and the Accounts Commission regularly publish performance audit reports. These cover a range of matters, many of which may be of interest to the council and the Risk, Audit and Scrutiny Committee. Details of national and performance audit reports published over the last year can be seen in Appendix 3. 28
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Audit of the annual accounts | 8 Audit of the annual accounts Main judgements Our audit opinions on the annual accounts of South Lanarkshire Council, its group and the section 106 charities administered by the council are unmodified, i.e. the financial statements and related reports are free from material misstatement. The management commentary, annual governance statement and remuneration report were all consistent with the financial statements and properly prepared in accordance with the relevant regulations and guidance. Close down procedures should be reviewed by finance to ensure supporting working papers are available in line with the year-end timetable. Audit opinions on the annual accounts are free from material misstatement 12. The council approved the annual accounts for South Lanarkshire Council and its group for the year ended 31 March 2025 by the Risk and Audit Scrutiny Committee on 30 September 2025. In addition to the council the group accounts consolidate the financial results of the council and its subsidiaries and its investments in associates and interests in joint ventures. These include: Strathclyde Partnership for Transport, Strathclyde Concessionary Travel Scheme Joint Committee, Lanarkshire Valuation Joint Board, South Lanarkshire Integration Joint Board, South Lanarkshire Leisure and Culture Limited, Routes to Work South, Clyde Valley Learning and Development Joint Committee and the Common Good Fund. 13. The Independent Auditor’s Report is included in the council’s annual accounts, and this reports that, in the appointed auditor’s opinion, these were free from material misstatement. Close down procedures should be reviewed to by finance to ensure supporting working papers are available in line with the year-end timetable 14. The unaudited annual accounts were received on 26 June 2025 and in accordance with the agreed audit timetable. We received good support 29
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Audit of the annual accounts | 9 during the course of the financial audit from the core finance team. There were delays in the provision of a number of underlying working papers to the audit team to support the financial statements, which was outwith the control of the core finance team. 15. Finance Strategy issue a year end timetable to relevant officers across the council containing year end guidance procedures and timetables for completion of tasks and submission of information for the preparation of the draft annual report and accounts. Section A6 states "It is essential that adequate working papers are available as soon as the Accounts are presented for audit." Recommendation 1 Staff should be reminded of the year end timetable and the importance that working papers for external audit are provided to the Finance Strategy Team in line with the year-end timetable deadlines to ensure these are available with the unaudited accounts. Audit Fee 16. The audit fee for the 2024/25 audit was reported in the Annual Audit Plan and was set at £633,450. There have been no developments that impact on planned audit work required, therefore the audit fee reported in the Annual Audit Plan remains unchanged. Materiality 17. The concept of materiality is applied by auditors in planning and performing an audit, and in evaluating the effect of any uncorrected misstatements on the financial statements or other information reported in the annual accounts. 18. Broadly, the concept of materiality is to determine whether misstatements identified during the audit could reasonably be expected to influence the decisions of users of the annual accounts. Auditors set a monetary threshold when determining materiality, although some issues may be considered material by their nature. Therefore, materiality is ultimately a matter of the auditor’s professional judgement. 19. Materiality levels for the audit of the council and its group were determined at the risk assessment phase of the audit and were reported in the Annual Audit Plan, which also reported the judgements made in determining materiality levels. These were reassessed on receipt of the unaudited annual accounts and summarised in Exhibit 1. 30
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Audit of the annual accounts | 10 Exhibit 1 2024/25 Materiality levels for South Lanarkshire Council and its group Materiality The council Group Materiality – set at 2 per cent of gross expenditure £27.145 million £27.500 million Performance materiality – set at 75 per cent of materiality. As outlined in the Annual Audit Plan, this acts as a trigger point. If the aggregate of misstatements identified during the audit exceeds performance materiality, this could indicate further audit procedures are required. £20.350 million £20.600 million Reporting threshold – set at 5 per cent of materiality. £1.350 million £1.370 million Source: Audit Scotland Significant findings and key audit matters 20. ISA (UK) 260 requires auditors to communicate significant findings from the audit to those charged as governance, which for the council is the Risk, Audit and Scrutiny Committee. 21. The Code of Audit Practice also requires public sector auditors to communicate key audit matters. These are the matters that, in the auditor’s professional judgement, are of most significance to the audit of the financial statements and require most attention when performing the audit. 22. In determining key audit matters, auditors consider: • Areas of higher or significant risk of material misstatement. • Areas where significant judgement is required, including accounting estimates that are subject to a high degree of estimation uncertainty. • Significant events or transactions that occurred during the year. 23. The significant findings and key audit matters to report are outlined in Exhibit 2. 31
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Audit of the annual accounts | 11 Exhibit 2 Significant findings and key audit matters Significant findings and key audit matters Outcome 1. IFRS 16 - Leases Effective from 1 April 2024, IFRS 16 requires Local Authorities to recognise a Right of Use (RoU) asset and corresponding lease liability for all lease types (property, land, vehicles, plant, equipment). On transition, leases are accounted for retrospectively, with the cumulative impact recognised at 1 April 2024. Following the implementation of IFRS 16 Leases from 1 April 2024, several required disclosures were not fully presented in the unaudited annual accounts including: • Disclosures required on initial application of IFRS 16 on 1 April 2024. • Exemptions applied under IFRS 16 and the value of these in relation to short-term and low value leases. • The value of liabilities resulting from service concession arrangements at each Balance Sheet date, and an analysis of the movement in those values. • Peppercorn leases were not disclosed in the unaudited annual accounts. No monetary values or narrative explanation were provided, despite their inclusion under IFRS 16. The council has now reflected all the required IFRS 16 disclosures within the revised annual accounts. 32
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Audit of the annual accounts | 12 Significant findings and key audit matters Outcome 2. Group Accounts: Prior year restatement The 2023/24 South Lanarkshire Council group accounts were prepared using the unaudited South Lanarkshire Leisure and Culture Limited accounts (SLLC). The SLLC unaudited accounts disclosed a net pension asset of £76.959 million (£78.439 million asset for the funded obligations and £1.480 million liability for unfunded obligations). The South Lanarkshire Council annual accounts were approved on 27 September 2024. The audited SLLC accounts, were signed on 13 November 2024 and included a late adjustment, with the application of a pension asset ceiling of £78.439 million, reducing the pension asset to nil, resulting in the audited accounts disclosing a pension liability of £1.480 million for the unfunded obligation. The council has updated the annual accounts to reflect the adjustment as a prior year restatement. Source: Audit Scotland Qualitative aspects of accounting practices 24. ISA (UK) 260 also requires auditors to communicate their view about qualitative aspects of the council’s accounting practices, including accounting policies, accounting estimates, and disclosures in the financial statements. Accounting policies 25. The appropriateness of accounting policies adopted by the council was assessed as part of the audit. These were considered to be appropriate to the circumstances of the council, and there were no significant departures from the accounting policies set out in the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). Accounting estimates 26. Accounting estimates are used in number of areas in the council’s financial statements, including the valuation of land and buildings assets and the valuation of the pension liability. Audit work considered the process management of the council has in place around making accounting estimates, including the assumptions and data used in making the estimates, and the use of any management experts. Audit work concluded: 33
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Audit of the annual accounts | 13 • There were no issues with the selection or application of methods, assumptions, and data used to make the accounting estimates, and these were considered to be reasonable. • There was no evidence of management bias in making the accounting estimates. Disclosures in the financial statements 27. The adequacy of disclosures in the financial statements was assessed as part of the audit. The quality of disclosures was adequate, with additional levels of detail provided for disclosures around areas of greater sensitivity, such as financial instruments and valuation of the pension liability. Group audit 28. South Lanarkshire Council is part of a group and prepares group financial statements. The group is made up of nine components, including South Lanarkshire Council which is the parent of the group. 29. As outlined in the Annual Audit Plan, audit work was required on a number of the group’s components for the purposes of the group audit, and this work was performed by a combination of the audit team and the components’ audit teams. Group financial audit questionnaires were issued to component auditors, where required, to outline the expectations and requirements in performing the audit work for the purposes of the group audit. The audit work performed on the group’s components is summarised in Exhibit 3. Exhibit 3 Summary of audit work on the group’s components Group component Component Auditor and audit work required Summary of audit work performed South Lanarkshire Council Audit Scotland Fully scope audit of the council’s annual accounts. Consolidated on a line-by-line basis. Audit team confirmed correct accounting treatment. The outcome of audit work performed is reported within the Annual Audit Report, with details of significant findings and key audit matters reported in Exhibit 2. South Lanarkshire Leisure and Culture Limited Azets Review accounting treatment Consolidated on a line-by-line basis. Audit team confirmed correct accounting treatment. 34
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Audit of the annual accounts | 14 Group component Component Auditor and audit work required Summary of audit work performed Routes to Work South McDaid & Partners None Consolidated on a line-by-line basis. Audit team confirmed correct accounting treatment. South Lanarkshire Integration Joint Board Audit Scotland None Accounted for on equity basis. Audit team confirmed correct accounting treatment. Lanarkshire Valuation Joint Board Audit Scotland None Accounted for on equity basis. Audit team confirmed correct accounting treatment. Clyde Valley Learning and Development Joint Committee Audit Scotland None Accounted for on equity basis. Audit team confirmed correct accounting treatment. Strathclyde Concessionary Travel Scheme Joint Committee Audit Scotland None Accounted for on equity basis. Audit team confirmed correct accounting treatment. Strathclyde Partnership for Transport Audit Scotland Issue risk assessment questionnaire and undertake analytical procedures. Accounted for on equity basis. Audit team confirmed correct accounting treatment, reviewed risk assessment questionnaire and completed analytical procedures. Common Good Fund Audit Scotland Review accounting treatment Consolidated on a line-by-line basis. Audit team confirmed correct accounting treatment. Source: Audit Scotland Significant matters discussed with management 30. All significant matters identified during the audit and discussed with the council’s management have been reported in the Annual Audit Report. Audit adjustments 31. Audit adjustments were required to the financial statements to correct misstatements that were identified from the audit. Details of all audit adjustments greater than the reporting threshold of £1.350 million are outlined in Exhibit 4. 35
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Audit of the annual accounts | 15 Exhibit 4 Audit adjustments Details Financial statements lines impacted Group Comprehensive Income and Expenditure Statement (CIES) Group Balance Sheet Audit adjustments to financial statements Dr Cr Dr Cr £000 £000 £000 £000 1. Component balances omitted in consolidation Cost of services 1,502 Provision of services 304 Other comprehensive income 2,766 Short-Term creditor 346 2. Component audit adjustments Cost of services 700 Short-term debtors 701 Short-term creditors 89 Cash and cash equivalents 90 3. Classification of pension liability Other long-term liabilities (PPP/finance lease) 1,307 Other long-term liabilities (Pension) 1,307 Total adjustments 1,806 3,466 2,443 1,397 Net impact on financial statements* 1,660 1,046 *The net difference of £614,000 (£1,660 - £1,046) represents the initial difference between the group primary statements within the unaudited annual accounts which has been corrected within the audited annual accounts. 36
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Audit of the annual accounts | 16 Details Financial statements lines impacted Group Comprehensive Income and Expenditure Statement (CIES) Group Balance Sheet Audit adjustments in disclosures 1. Adjustments to Note 17 Leases and Note 28 Public Private Partnerships and Similar Contracts to include IFRS 16 disclosures required by the Code as detailed in Exhibit 2 above. 2. Adjustments to Note 30 Defined Benefit Pension Scheme required to reflect actual fund investment performance for the year and updated IAS 19 report from the actuary. Source: Audit Scotland 32. Management of the council processed audit adjustments for all misstatements identified greater than the reporting threshold. As a result, there are no uncorrected misstatement to report. 33. In addition to the corrected misstatements outlined in Exhibit 4, there were other misstatements identified greater than the reporting threshold. The value, nature, and circumstances of the uncorrected misstatements were considered, individually and in aggregate, by the audit team, and it was concluded these were not material to the financial statements. As a result, these did not have any impact on the audit opinions given in the Independent Auditor’s Report. 34. It is the auditor’s responsibility to request that all misstatements greater than the reporting threshold are corrected, even if they are not material. Management of the council have not processed any audit adjustments to correct these misstatements. However, the final decision on whether an audit adjustment is processed to correct a misstatement rests with the Risk, Audit and Scrutiny Committee as those charged with governance. Details of the uncorrected misstatements can be seen in Appendix 2. Significant risks of material misstatement identified in the Annual Audit Plan 35. Audit work has been performed in response to the significant risks of material misstatement identified in the Annual Audit Plan. The outcome of audit work performed is summarised in Exhibit 5. 37
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Audit of the annual accounts | 17 Exhibit 5 Significant risks of material misstatement to the financial statements Risk of material misstatement Planned audit response Outcome of audit work Fraud caused by management override of controls Management is in a unique position to perpetrate fraud because of management’s ability to override controls that otherwise appear to be operating effectively. The audit team will: • Evaluate the design and implementation of controls over journal entry processing. • Make inquiries of individuals involved in the financial reporting process about inappropriate or unusual activity relating to the processing of journal entries and other adjustments. • Test journals entries, focusing on those that are assessed as higher risk. • Evaluate significant transactions outside the normal course of business. • Assess the adequacy of controls in place for identifying and disclosing related party relationships and transactions in the financial statements. • Assess changes to the methods and underlying assumptions used to prepare accounting estimates and assess these for evidence of management bias. Audit work performed found: • The design and implementation of controls over journal processing were appropriate. • No inappropriate or unusual activity relating to the processing of journal entries was identified from discussions with individuals involved in financial reporting. • No significant issues were identified from testing of journal entries. • No significant issues were identified from transactions outside the normal course of business. • The controls in place for identifying and disclosing related party relationships and transactions were adequate. • No significant issues were identified with changes to methods and underlying assumptions used to prepare accounting estimates and there was no evidence of management bias. Conclusion: no evidence of fraud caused by management override of controls. 38
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Audit of the annual accounts | 18 Valuation of property, plant and equipment The council held £3,735 million of property, plant, and equipment (PPE) at 31 March 2024, of which £3,324 million was land and building assets. South Lanarkshire Council is required to value land and building assets at existing use value where an active market exists for these assets. Where there is no active market, these assets are valued on a depreciated cost replacement (DRC) basis. As a result, there is a significant degree of subjectivity in these valuations which are based on specialist assumptions, and changes in the assumptions can result in material changes to valuations. The audit team will: • Evaluate the design and implementation of controls over the valuation process. • Review the information provided to the valuer and assess this for completeness and accuracy. • Evaluate the competence, capabilities, and objectivity of the valuer. • Obtain an understanding of management’s involvement in the valuation process to assess if appropriate oversight has occurred. • Review the appropriateness of the key data and assumptions used in the 2024/25 valuation process, and challenge these where required. • Review management’s assessment that the value in the balance sheet of assets not subject to a valuation process in 2024/25 is not materially different to current value at the year-end, and challenge this where required. • Review LASAAC guidance, which specified Scottish authorities should use the beacon approach methodology to value council dwellings, to ensure the council’s valuation process complies with applicable guidance. Audit work performed found: • The design and implementation of controls over the valuation process were appropriate. • The information provided to the valuer was accurate and complete. • The valuer had sufficient competence, capability, and objectivity to perform their work. • Management are involved in the valuation process and have an appropriate level of oversight. • The data and assumptions used in the 2024/25 valuation process were appropriate. • Management’s assessment of assets not subject to a valuation process in 2024/25 was reasonable and concluded there was unlikely to be a material difference to the current value at the year-end. • The council’s valuation process complies with applicable guidance. Conclusion: The council adopt a five year rolling programme for the valuation of other land and buildings. The valuation of these assets for 2024/25 has taken place as at 1 April 2024. Management should consider valuing at 31 March to reduce the risk of adjustments being required as a result of material movements in year. 39
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Audit of the annual accounts | 19 Risk of material misstatement Planned audit response Outcome of audit work Estimation of the pension liability South Lanarkshire Council had a pension liability of £113.666 million at 31 March 2024. South Lanarkshire Council is a member of Strathclyde LGPS, which is a defined benefit pension scheme. Strathclyde LGPS is subject to formal valuation every three years, and this sets out each member’s share of the scheme’s overall pension liability and contributions for the next three years. The last formal valuation was carried out at 31 March 2023. An estimation of South Lanarkshire Council’s share of the overall pension liability is required in each intervening year between formal valuations, and these are carried out by Hymans Robertson. There is a significant degree of subjectivity in the estimation of the pension liability as the estimation is based on specialist assumptions, and changes in the assumptions can result in material changes to the estimation. The audit team will: • Evaluate the design and implementation of controls over the pension liability estimation process. • Review the information provided to the actuary and assess this for completeness and accuracy. • Evaluate the competence, capabilities, and objectivity of the actuary. • Obtain an understanding of the management’s involvement in the estimation process to assess if appropriate oversight has occurred. • Review the appropriateness of the key data and assumptions used by management for the estimation of the pension liability, and challenge these where required. • Audit Scotland uses PwC as an auditor’s expert to inform the planned audit procedures outlined above. Therefore, the audit team will also review the information provided by PwC and reflect this in the planned audit procedures where required. Audit work performed found: • The design and implementation of controls over the pension liability estimation process were appropriate. • The information provided to the actuary was accurate and complete. • The actuary had sufficient competence, capability, and objectivity to perform their work. • Management are involved in the estimation process and have an appropriate level of oversight. • The data and assumptions used in the estimation process were appropriate. • The information provided by PwC was reviewed and this reflected in the planned audit procedures, where required. Conclusion: the recognition of unfunded and funded elements of the pension liability, is not materially misstated. Source: Audit Scotland The council does not undertake valuations as at the year end, but has provided satisfactory evidence to support its approach 36. The council’s valuation team (qualified RICs valuers) have confirmed that they carried out their valuation duties in line with the RICs professional standards, and they have provided a formal year-end report to management. This included a covering report, a Service Level Agreement (SLA) outlining their 40
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Audit of the annual accounts | 20 conditions of engagement, and an asset review paper (impairment review) which focussed on identifying any unusual circumstances which would affect the value of whole categories of assets. They reviewed the NCA that were most subject to risk in terms of economic influence. 37. Bodies should carry out valuations as at the year end, i.e. as at 31 March. However, there is no requirement for this, and bodies may use 1 April (or other date) subject to the standard condition that the carrying amount at the end of the year does not differ materially from the current value at that date. 38. Where a valuation has been carried out at 1 April 2024, a body should evaluate whether: • there have been any movements in value during 2024/25 that should be reflected in the 31 March 2025 carrying amount • there is sufficient evidence that supports the body's consideration of the above is adequate • it has made necessary adjustments to the 31 March 2025 carrying amount to reflect any movements that require to be reflected. 39. The council adopt a five year rolling programme for the valuation of other land and buildings. The valuation of these assets for 2024/25 has taken place as at 1 April 2024. There was a 2.3 per cent increase in the BCIS index year on year to quarter four, that is, 1 March 2024 to 31 March 2025. The valuer did not consider this an unusual variance and therefore considered that a reassessment of the DRC figures was not required out with the 5 year rolling programme. 40. Whilst the council has demonstrated that the current approach of undertaking valuations as at 1 April has resulted in appropriate valuations in accordance with the Code, management should consider valuing at 31 March to reduce the risk of adjustments being required as a result of material movements in year. Whole of Government Accounts (WGA) return 41. The council is part of the WGA boundary and therefore prepares a return that is used by HM Treasury to prepare the WGA. The National Audit Office (NAO) is the auditor for the WGA and issues instructions outlining audit procedures auditors must follow when auditing a WGA return. The threshold for requiring audit procedures to be performed on the WGA return was set at £2 billion. 42. The council is below this threshold and therefore only limited audit procedures are required, and submission of an assurance statement to the NAO. 43. The council has had issues setting up users for portal access to allow completion of the WGA; despite ongoing dialogue the council did not receive a response. The council has now identified a new contact and 41
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Audit of the annual accounts | 21 dialogue is underway to setup users and allow access for the WGA return to be completed going forward. 44. As a result the above, the council has not submitted the WGA return for 2023/24 or 2024/25 financial years. Recommendation 2 The council should continue to engage with HM Treasury to ensure that both prior year and the 2024/25 return is submitted in line with WGA guidance. Prior year recommendations 45. The council has made good progress in implementing the agreed prior year audit recommendations. For actions not yet implemented, revised responses and timescales have been agreed with the body and are outlined in Appendix 1. 42
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Wider scope audit | 22 Wider scope audit Conclusion The council operated within budget in 2024/25. The level of General Fund reserves has increased with the majority of these earmarked for specific council priorities. The council implemented a new financial system at the start of the 2024/25, Oracle’s cloud-based Human Resources (HR) and Finance solution. This was a significant change programme with a focus on delivering significant improvements to processes, workflow, support agile working, employee self-service and engagement as well as greater levels of automation and improved management information. The council’s revenue budget strategy has reported a projected budget surplus for 2025/26 however there remains a budget gap over the medium term. The council continues to undertake scenario planning and transformation reviews to support medium and long term financial plans. The council has effective budget monitoring arrangements. Given the financial pressures, the council is continuing to assess its reserves strategy and review how it assesses, monitors and reports on its financial resilience. The council has sound governance arrangements in place for how it conducts business. To ensure the Risk and Audit Scrutiny Committee is effective in its role an annual review and assessment should be undertaken with the results captured within an annual report. Audit approach to wider scope Wider scope 46. As reported in the Annual Audit Plan, the wider scope audit areas are: • Financial Management. • Financial Sustainability. • Vision, Leadership and Governance. • Use of Resources to Improve Outcomes. 43
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Wider scope audit | 23 47. Audit work is performed on these four areas and a conclusion on the effectiveness and appropriateness of arrangements the council has in place for each of these is reported in this chapter. Significant wider scope risks 48. Audit work has been performed in response to the significant wider scope risks identified in the Annual Audit Plan. The outcome of audit work performed is summarised in Exhibit 6. Exhibit 6 Significant wider scope risks Significant risk Planned audit response Outcome of audit work Financial sustainability South Lanarkshire Council continues to operate in an increasingly complex and challenging environment, aiming to provide the best possible service within the resources available. Although a surplus position of £13.727 million is projected for 2024/25, the council has identified a savings requirement of £77.275 million for the next three years to 2027/28. Management have implemented a programme of reviews to contribute towards addressing the financial pressures. However, there is a risk that the council plans do not deliver the required savings to address the projected shortfall. The audit team will: • Review the council’s annual budget setting arrangements. • Review and assess budget monitoring arrangements. • Review of the council’s medium to longer term financial planning including how the council aligns savings plans and transformation activity with strategic priorities. • Review the council’s financial position and delivery of planned savings. Audit work performed found: • the council’s annual budget setting and monitoring arrangements were appropriate. • The council’s medium and longer term financial planning aligns with their strategic priorities. Conclusion: The council recognise the financial challenges facing the organisation. The council continues to undertake scenario planning and transformational reviews to support medium and long term financial plans. Source: Audit Scotland 44
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Wider scope audit | 24 Conclusions on wider scope audit Financial Management The council operated within budget in 2024/25 49. The council approved its 2024/25 revenue budget of £956.252 million in February 2024. In its 2024/25 annual accounts, the council reported an underspend on the provision of services of £30.090 million. This was mainly as a result of underspends in the corporate items budget, an underspend on loan charges, and an over-recovery of council tax. There were also underspends in each resource level with the exception of education resource. Following a number of agreed transfers to contribute to reserves, the final reported position was break-even. 50. The changes in the budget position were reported in revenue budget monitoring reports presented to the Executive Committee throughout the year. These reports contained a good level of detail on the forecast outturn position. The level of General Fund reserves has increased with the majority of these earmarked for specific council priorities 51. One of the key measures of the financial health of a council is the level of reserves held. The General Fund is the largest usable reserve and is used to fund the delivery of services. 52. The level of usable reserves increased from £133.689 million in 2023/24 to £147.568 million in 2024/25 exhibit 7. The General Fund balance is £118.997 million, however £105.954 million has been earmarked for a specific priority which leaves a residual £13.043 million of uncommitted general reserves. Against a revenue budget of £956.252 million for 2024/2025, this unearmarked element represents a 1.36 per cent reserve. Management considers that this level of reserve reflects a suitable contingency to contribute towards any unanticipated pressures. Exhibit 7 South Lanarkshire Council usable reserves Reserve 31 March 2021 £’million 31 March 2022 £’million 31 March 2023 £’million 31 March 2024 £’million 31 March 2025 £’million General fund 116.980 122.424 150.283 109.773 118.999 Housing revenue account 12.784 16.241 12.861 13.221 10.440 Repair and renewal fund 7.484 6.496 7.610 5.346 5.122 45
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Wider scope audit | 25 Capital fund 6.268 5.730 4.776 3.975 11.195 Insurance fund 2.304 1.295 1.411 0.195 1.812 Total usable reserves 145.820 £152.186 176.941 133.689 147.568 Source: South Lanarkshire Council annual accounts 2020/21 to 2024/25 53. We are satisfied that reserves are being regularly reviewed to confirm that they remain at an appropriate level. However, there are ongoing sustainability challenges of using reserves to fund recurring expenditure. Difficult decisions will need to be taken in the future, with a clear plan and effective management of the Council’s reserves key to maintaining financial sustainability. Capital expenditure was less than originally budgeted in 2024/25 54. The council approved the 2024/25 capital programmes in February 2024. The general services programme for 2024/2025 originally totalled £49.512 million, with the housing capital programme amounting to £77.303 million. 55. At each meeting of the Executive Committee, capital programme monitoring reports are presented to members. Throughout the year these reports detailed the various movements in the general services programme budget. 56. At the June 2024 Executive committee it was noted that since the approval of this the baseline general services programme, additional funding was received resulting in an adjustment to the 2024/2025 Capital Programme. The final general services capital programme budget was £69.832 million. 57. At the June 2025 Executive Committee, the general services outturn capital programme spend was reported as £54.652 million for 2024/25 resulting in an underspend of £15.180 million. 58. The main projects contributing to the underspend reflects the profile of spend across a number of projects including within the multi project and multi- year programmes of Leisure and Culture Transformation Fund and Prioritised Urgent Investment Fund where spend is now falling into the new financial year. 59. The housing capital programme outturn was reported as £71.544 million for 2024/25, against the budget of £77.301 million. This represents slippage of 7.4 per cent against the revised budget (slippage of 2.5 per cent against 2023/24). 60. Officer meetings take place every four weeks to consider each project on its own merit. Any variations in spend anticipated are reported to members through an adjustment to the programme to reflect the revised spend for the year and achievability in terms of the project deliverables if applicable. These adjustments are reported on a four-weekly basis to the Executive Committee and then on an eight weekly basis to the relevant Resources (service) Committee. 46
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Wider scope audit | 26 The council successfully implemented a new financial system at the start of the 2024/25, Oracle’s cloud-based Human Resources (HR) and Finance solution 61. The council successfully implemented a new financial system at the start of the 2024/25, Oracle’s cloud-based Human Resources (HR) and Finance solution. This was a significant change programme affecting the whole workforce, with a focus on delivering significant improvements to processes, workflow, support agile working, employee self-service and engagement as well as greater levels of automation and improved management information. 62. The council will capture the efficiency improvements to support the council’s financial position. This change project will also provide a platform for continuing service improvements and efficiencies. 63. Oracle (as the Cloud provider) are responsible for: • security on the Oracle side, including in respect of internal Oracle staff access to SLC data • service continuity, including disaster recovery on the Oracle side • change management, covering system and service maintenance activities, upgrades and updates, and critical security maintenance • customer support (with the SLC being the customer). 64. Under the Oracle Cloud Hosting and Delivery Policies, Oracle are also responsible for the secure backup of SLC Oracle data and being able to recover and recreate this in the event of a cyber incident. 65. Our consideration of the cyber security arrangements for the new Oracle Cloud platform identified that the SLC data will be stored on the UK Government Cloud. This is a sovereign Cloud created solely for the use of UK Government and Defence customers and designed to reflect the requirements of the UK Government. This arrangement strengthens the security of the data stored for the SLC finance and HR systems. 66. As part of our audit we reviewed the arrangements SLC has in place to obtain assurance on the Oracle Cloud Third-party hosting controls, through the use of a service auditor. The role of a service auditor is to provide a report against recognised standards and provide independent assurance that outsourced service providers are operating effective controls. This gives the users of the service assurance that the system operates as intended. It also delivers efficiencies as it avoids the need for multiple audits and enquiries. 67. The System and Organisation Controls 2 (SOC2) 2024/25 reports covered the period 1 April 2024 to 31 March 2025 (from Oracle Fusion go-live until the end of the 2024/25 financial year) and looked at the UK Government Cloud data centres based in London and Newport. Our review of the service auditor report identified that: 47
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Wider scope audit | 27 • Physical security controls were outlined and tested via access reports with no deviations from expected controls noted through the testing completed. We noted that this testing was all completed remotely with no datacentres physically visited for the review. • Oracle Cloud infrastructure and security controls were found to be operating effectively with event management, vulnerability scanning and penetration testing undertaken with no deviations noted. • Oracle Cloud infrastructure databases and configuration backups are carried out and tested according to the schedules specified by the council. • Change management arrangements related to Oracle’s internal update processes were found to be appropriately designed and operating as expected. The council’s internal change management arrangements relating to Oracle configuration changes were found to be operating as expected. • Full stack disaster recovery procedures are the responsibility of Oracle and policy standards covering business continuity and disaster recovery are outlined within the report. No testing of effectiveness of controls have been undertaken within the report. However, a separate assessment of Oracle business continuity and disaster recovery is carried out annually and no issues were noted. 68. Our high level overview of the Oracle Fusion (Cloud) implementation in relation to General IT Controls noted: • the data migration process for transferring data from the old systems to Oracle Fusion was well planned and executed and the scope of the Finance and HR/ Payroll user acceptance testing plans was sufficient to support the go-live decision dates with no significant issues identified • the cutover process was planned, managed and executed • the helpdesk support tickets for 2024/25 are being managed as part of business as usual. Open support tickets are generally planned to be actioned through Oracle upgrades and policy updates during 2025/26. We plan to monitor the number of open tickets as part of our 2025/26 audit • patch testing and upgrades are being carried out on a regular basis • internal business continuity plans were developed and updated, however, it is unclear whether there any other key finance systems that are not included in the plans or whether in the event of an incident that manual control processes are in place for staff to continue working 48
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Wider scope audit | 28 • the project board approved the decision to go-live, however, we are unable to obtain a minute of the meeting to identify if there was anything relevant that needs to be reported, for example, outstanding issues and risks • that clear supporting documentation was not always available due to the council’s retention policy. 69. Our review also noted that no post implementation or benefits realisation review has been undertaken to capture and consider: • the impact of timescale delays and increased costs compared to original budgets of the project • feedback of council service user experience of the implementation process • the training and post implementation support provided • range of benefits to be realised as part of the original business case • that sufficient resources are available for the project going forward to support the developments required to ensure the anticipated benefits are fully realised. Recommendation 3 Clear supporting documentation for future projects should be kept to back-up the decision making process. The council should undertake both a post-implementation and benefits realisation review of the new Oracle platform to reflect on the overall success of the project in meeting its stated objectives and expected benefits. This should include assessing which aspects of the project went well and what could have gone better, and to identify lessons and insights that can be applied more widely to improve the planning, management and delivery of future projects. National Fraud Initiative 70. The National Fraud Initiative (NFI) is a counter-fraud exercise across the UK public sector which aims to prevent and detect fraud. The council participates in this biennial exercise. 71. The value of outcomes from the NFI, recorded since the last report, total £21.5 million (up from the £14.9 million in 2022). The cumulative value of outcomes from the NFI in Scotland since participation started in 2006/07 now stands at around £180 million. 72. The council has taken part in the NFI exercise since 2004/2005. The full exercise, which takes place every second year, involves council wide comparisons including benefits, payroll, creditors, council tax, licences and blue badge holders. This data is matched to other benefits and payroll data as well as Department of Work and Pensions (DWP) deceased persons’ records and 49
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Wider scope audit | 29 the Electoral Register. Data extracts from council systems were submitted by the due dates in 2024. 73. Internal Audit presented a paper to the Risk and Audit Scrutiny Committee in June 2025 which advised of the matches resulting from the 2024 National Fraud Initiative (NFI) exercise and of the proposed target number of investigations to be undertaken in 2025/26. 74. Investigations have a proposed deadline for investigation of 31 December 2025. The council anticipate that most investigations will have been completed ahead of this date and further updates on progress will be reported during 2025/2026. 75. The council’s arrangements for investigating and reporting data matches identified by the NFI are satisfactory. 76. The audit work performed on the arrangements the council has in place for securing sound financial management found that these were effective and appropriate. This judgement is evidenced by the council: • having a system of internal control in place that is operating effectively and has no significant weaknesses or deficiencies. • having clear and up-to-date policies and procedures, for example, financial regulations and scheme of delegation, in place that ensure effective financial management. • having clear and up-to-date policies in place for preventing and detecting fraud and other irregularities, and participation in fraud prevention and detection activities such as the National Fraud Initiative (NFI). • having suitably qualified and experienced staff leading the finance function, which has sufficient skills, capacity, and capability to effectively fulfil its role. • having effective arrangements in place for the scrutiny of arrangements that support sound financial management. Financial Sustainability The council’s revenue budget strategy has reported a projected budget surplus for 2025/26 however there remains a budget gap over the medium term. The council continues to undertake scenario planning and transformation reviews to support medium and long term financial plans 77. In February 2025 the council reported an expected budget gap of £32.320 million for the financial years 2026/27 (£18.515 million) and 2027/28 (£13.805 million) respectively. 50
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Wider scope audit | 30 78. At the Executive Committee meeting in June 2025 management presented the 2026/27 to 2027/28 Revenue Budget Strategy. The report advised that the revenue budget position, before any corporate solutions, for 2026/27 to 2027/28 was a gap of £24.273 million. 79. The reduction in the projected budget gap was achieved by applying the anticipated budget surplus in 2025/26 of £6.780 million and the full year impact of 2025/2026 approved savings of £1.267 million. This resulted in the anticipated budget gap in 2026/27 reducing to £10.468 million as detailed in Exhibit 8. Exhibit 8 Identified savings requirement 2025/26 to 2027/28 2026/27 £ millions 2027/28 £ millions Total Original budget gap report to Council in February 2025 18.515 13.805 32.320 Budget surplus from 2025/26 (6.780) - (6.780) Full Year Impact of 2025/2026 Approved Savings (1.267) - (1.267) Total budget gap 10.468 13.805 24.273 Source: 2025/2026 to 2027/2028 Revenue Budget Strategy 80. The report also highlighted that the there was a risk that the budget gap could increase to £42 million as a result of pay awards. The pay deal for non- teaching staff has been agreed for 2025/2026 and 2026/27. For teaching staff, there is no pay deal beyond August 2025. 81. Every 1 per cent that the pay offer is higher than the council has budgeted, would cost almost £6 million per annum on a recurring basis with a multi-year pay offer resulting in a recurring funding shortfall of up to £18 million. 82. One way of managing the Budget Gap is the programme of Transformational Reviews ongoing across the Council. Savings from completed reviews have already been factored into the reduction in the projected budget gap for 2026/27, as detailed above. 83. The Transformational Reviews are continuing to progress, and proposals will be presented to elected members for approval as part of the Budget setting process for 2026/2027 and 2027/2028. While any savings from the majority of the Reviews have still to be confirmed, the council recognises that they would not cover the full extent of the Budget Gap over the next two years. 51
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Wider scope audit | 31 84. One of the levers available to councils to assist in reducing their Budget Gap is an increase in council tax levels. The 2025/2026 Council Tax Budget is £171.823 million, therefore every 1 per cent increase in the Band D level means a £1.718 million of additional income. 85. The report presented different scenarios to illustrate how different percentage increases would reduce the budget gap. A five per cent increase would reduce the budget gap over the period by £17.2 million whereas an eight per cent increase would reduce the budget gap by £27.5 million. 86. In addition the report explained that given the financial horizon, there was a need to look at the picture not just for the medium-term and the report outlined that work would continue over the summer with a view to presenting a Long- Term Financial Strategy to Members in the Autumn. This will state the assumptions made, and the risk areas which could impact on the Budget Gap across the years. The council has effective budget monitoring arrangements. Given the financial pressures, the council is continuing to assess its reserves strategy and review how it assesses, monitors and reports on its financial resilience 87. The council recognises the financial challenges it faces in the coming years. As detailed in exhibit 7, as at 31 March 2025, the council had a total General Fund balance of £118.999 million. Of this £105.956 million has been earmarked for a specific priority with a residual balance of £13.043 million of uncommitted general reserves. 88. Councils can hold reserves for a number of reasons. Some reserves are earmarked for identified expenditure which will, or may occur over the short, medium or longer term. In addition to these reserves, there are uncommitted reserves which help manage unforeseen circumstances. 89. The Local Authority Accounting Panel (LAAP) provides guidance on the establishment and maintenance of local authority reserves and balances. The LAAP Bulletin does not prescribe a minimum level of reserves which should be held by a council. It is for the council to consider an appropriate level of reserves taking account of their strategic, operational and financial risks. However, it does state that reserves should not be held without a clear purpose. 90. A Reserves Strategy was presented to the Finance and Corporate Resources Committee on 30 October 2024. This detailed the council’s reserves, their balance at the end of 2023/2024, their purpose, and also a proposed strategy. 91. The Reserves Strategy agreed to an annual review to consider the monies held in the Earmarked/Committed General Fund Reserve, alongside the Council’s Revenue Budget Strategy. This will be undertaken following the completion of the Annual Accounts for 2024/2025 with an update provided to the Finance and Corporate Resources Committee in September 2025. 92. The Chartered Institute of Finance and Public Accountancy (CIPFA) introduced a Financial Management Code for implementation by 31 March 52
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Wider scope audit | 32 2021. This provides “guidance for good and sustainable financial management in local authorities. By complying with the principles and standards within the code, authorities will be able to demonstrate their financial sustainability”. A key goal of the FM Code is to improve and evidence the financial resilience of organisations by embedding enhanced standards of financial management. 93. In our 2022/23 Annual Audit Report we recommended that given the scale of the financial challenges facing the Council it should ensure that in developing its financial strategy and annual budget there is a clear consideration around its financial resilience, including the level of reserves to allow the council to meet unforeseen costs and pressures. We also recommended that the council should also enhance the level of monitoring around financial resilience indicators and risks. 94. A Financial Resilience and Sustainability report was presented to the Risk and Audit Scrutiny Committee on 24 September 2024. This provided a summary of the 2025/26 to 2027/28 Budget Strategy, demonstrating the council’s understanding of the medium-term financial outlook and providing information on the council’s financial resilience and sustainability. 95. This paper demonstrated the council’s financial resilience by explaining its detailed financial planning, its level of reserves and its key financial strengths in term of its balance sheet position. The council recognises that this is about more than the reliance on usable reserves, and that councils need to be more comprehensive in their assessment of their level of financial resilience. 96. The report detailed that the financial resilience of the council looks at its ability to anticipate and respond to changes in the internal and external financial environment. In order to do that, the council recognises it is important to know what resources are available in a time of crisis, and not just reserves. It is also important for the council to understand its exposure to loss of income, level of commitment to expenditure, and to know the flexibility the council has in terms of accessing funds when they are required. 97. It noted that any risks identified through horizon scanning are mitigated where appropriate through the Budget Strategy, which is a key part of the council’s financial resilience framework. An annual update on the Council’s financial sustainability will be presented to the Risk and Audit Scrutiny Committee in September. Through the 2026/2027 to 2027/2028 Revenue Budget Strategy the council demonstrates a clear understanding of the budget pressures it faces. 98. Key financial information considered in forming the judgement on the council’s arrangements for securing financial sustainability is outlined in Exhibit 9. 53
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Wider scope audit | 33 Exhibit 9 Key financial information Budget setting 2022/23 (£m) 2023/24 (£m) 2024/25 (£m) 2025/26 (£m) Budget gap 7.260 8.818 20.570 5.264 Planned to be met via: • Savings and flexibilities 6.185 1.950 13.190 6.485 • Use of reserves 3.235 6.565 2.176 11.970 • Additional council tax 3.482 8.050 7.869 9.480 • Recurring investments - - 0.480 3.921 • One-Off investments 5.642 7.747 2.185 18.750 Actual Savings delivered 5.935 1.950 12.667 - Reserves Use of / (contribution to) reserves 43.252 (13.879) - Total usable reserves carried forward 176.941 133.689 147.568 - General Fund: 150.283 109.773 118.999 - • Earmarked 137.240 96.730 105.956 - • Uncommitted 13.043 13.043 13.043 - Source: The council’s 2024/25 annual accounts and Executive Committee papers 99. The audit work performed on the arrangements the council has in place for securing financial sustainability found that these were effective and appropriate. This judgement is evidenced by the council: • making appropriate arrangement to develop medium and longer-term financial plans and linking these to its Corporate Plan and priorities. • having effective arrangements in place for identifying risks to financial sustainability over the medium and longer-term, and understanding medium and longer-term demand pressures that could impact on available resources. 54
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Wider scope audit | 34 • having savings plans in place to manage forecast budget deficits, and a reserves strategy in place to manage the use of reserves if the required level of savings cannot be met. Vision, Leadership and Governance The council has clearly articulated its vision and priorities 100. The Council’s Connect Plan 2022-27 is the strategic document that sets out the Council’s vision, values and objectives and what difference this will make to the residents and communities of South Lanarkshire. 101. The Council’s vision is ‘to improve the lives and prospects of everyone in South Lanarkshire’. It sets out the key actions to be delivered over five years, around a long-term vision with three key priorities and supported by six detailed outcomes. The council has sound governance arrangements in place for how it conducts business. To ensure the Risk and Audit Scrutiny Committee is effective in its role an annual review and assessment should be undertaken with the results captured within an annual report 102. The council’s governance arrangements have been set out in the Annual Governance Statement in the annual accounts. We have reviewed these arrangements and concluded that they are appropriate. This is informed by our regular attendance at the Risk, Audit and Scrutiny Committee and review of Council, Executive Committee and other committee papers as appropriate. 103. The Risk and Audit Scrutiny Committee’s role is to support the council in establishing, maintaining, and improving effective governance, risk management, and internal control arrangements. 104. It is important that elected members understand the financial and other information presented in reports to committees and are equipped with the knowledge and skills needed to scrutinise and challenge effectively. 105. Members need to ensure that all key decisions are subject to an appropriate level of challenge and scrutiny at public meetings. This includes sufficient discussion and scrutiny of performance and financial reports. 106. As detailed in the Chartered Institute of Public Finance (CIPFA) guidance on the audit committee and organisational effectiveness in local authorities Local authority audit committees, recommended practice is for audit committees to review and assess themselves annually or to seek an external review. The results of the assessment should be available in the annual report from the committee. 107. There is also an opportunity for the council to refresh the Terms of Reference of the Risk and Audit Scrutiny Committee to clearly document committee members role in terms of review of risk, controls and audit functions. 55
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Wider scope audit | 35 Recommendation 4 Members should, with the assistance of officers, continue to review their personal training and development needs and agree a plan to ensure that they have the skills required to effectively fulfil their scrutiny and challenge roles. To ensure the Risk and Audit Scrutiny Committee is effective in its role an annual review and assessment should be undertaken with the results captured within an annual report. 108. The audit work performed on the arrangements the council has in place around its Vision, Leadership and Governance found that these were effective and appropriate. This judgement is evidenced by the council: • having a Corporate Plan in place, supported by Operational Plans, that clearly set out its vision, strategy, and priorities and reflect the pace and depth of improvement required to realise these in a sustainable manner. • involving service users, delivery partners, and other stakeholders in the development of its vision, strategy, and priorities to ensure these align to their needs. • having clear financial and performance reporting in place, both internally and externally, that is linked to its Operational Plans. • having effective governance arrangements in place in general, as reflected in the Annual Governance Statement included in the annual accounts. Use of Resources to Improve Outcomes 109. The audit work performed on the arrangements the council has in place around its Use of Resources to Improve Outcomes found that these were effective and appropriate. This judgement is evidenced by the council: • being able to demonstrate a clear link between the use of resources and delivery of its priorities. • having arrangements in place to benchmark its performance to identify areas of improvement. • being able to demonstrate improvements in performance against benchmarks and relative to other comparable organisations. 56
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Best Value audit | 36 Best Value audit Conclusion The council has effective and appropriate arrangements in place for securing Best Value. The council has a Transformational Change Programme in place that is clearly linked to its updated Council Plan, financial plans and digital strategy. The council currently focuses on establishing the financial benefits of its transformational activities but does not routinely separately track or report on the impact on service quality or outcomes for service users in relation to these transformational activities. Audit work assessed the arrangements the council has in place for preparing and publishing SPI, including how it has responded to assessments, and concluded the arrangements in place were effective and appropriate. The council has an improvement action plan for all indicators, including those reported as being below the Scottish average. The council has an effective performance management framework in place. The council reviews and reports its performance using a number of measures that are clearly aligned to the priorities and outcomes set out in the Council Plan. Audit approach to Best Value 110. Under the Code of Audit Practice, the audit of Best Value in councils is fully integrated within the annual audit. As part of the annual audit, auditors are required to take a risk-based approach to assessing and reporting on whether the council has made proper arrangements for securing Best Value, including follow up of findings previously reported in relation to Best Value. 57
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Best Value audit | 37 Themes prescribed by the Accounts Commission 111. The Accounts Commission also reports nationally on thematic aspects of councils’ approaches to, and performance in, meeting their Best Value duties. As part of the annual audit, thematic reviews, as directed by the Accounts Commission, are conducted on the council. The thematic review for 2024/25 is on the subject of service transformation and involves considering how the council is redesigning services to maintain outcomes and deliver services more efficiently. 112. Conclusions and judgements on the council’s approach to service transformation are outlined in a separate Management Report which is available on the Audit Scotland website. A summary of the conclusions and judgments made in the report is outlined below. • The council has a Transformational Change Programme in place that is clearly linked to its updated Council Plan, financial plans and digital strategy. • The council estimates that it has a budget gap of £42 million to 2027/28. To date it has approved savings of £6.485 million for 2025/26, £2.680 million of which is intended to be delivered from transformational reviews. It is aware that it needs to explore further transformation opportunities alongside other measures to help bridge its budget gap and improve outcomes for the people of South Lanarkshire. • The council has effective governance arrangements in place to oversee its transformational reviews through regular progress updates to the Corporate Management Team. Comprehensive updates are provided on a regular basis to elected members through committee updates on transformational reviews and the budget process. • Transformational reviews are the responsibility of senior officers across the council and are mainly taken forward by staff within its resources (the council refers to its services or departments as resources). The council has an officer in place who supports project teams with the administrative tasks of the Transformational Change Programme. Going forward, there is a risk that the council does not have the sufficient dedicated resource to drive future transformational activity required. • The council has actively engaged in partnership working to support the delivery of transformational activity. • The council has provided examples of where it has engaged or consulted with communities in relation to its transformational reviews and budget-setting process. It is unclear what specific changes have been made as a result of its community engagement. 58
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Best Value audit | 38 • The council carries out Integrated Impact Assessments for its transformational reviews to consider the potential changes to services on vulnerable groups and there are examples of community engagement taking place in relation to these. • The council currently focuses on establishing the financial benefits of its transformational activities but does not routinely separately track or report on the impact on service quality or outcomes for service users in relation to these transformational activities. 113. The audit recommendations from the thematic report, together with the management responses, are included in Appendix 1 of this report. Statutory performance information (SPI) and service performance 114. The Accounts Commission issued a Statutory Performance Information Direction which requires the council to report its: • performance in improving services and progress against agreed desired outcomes, and • a self-assessment and audit, scrutiny, and inspection body assessment of how it has responded to these assessments. 115. Auditors have a statutory duty to satisfy themselves that the council has made proper arrangements for preparing and publishing statutory performance information in accordance with the Direction and report a conclusion in the Annual Audit Report. 116. Audit work assessed the arrangements the council has in place for preparing and publishing SPI, including how it has responded to assessments, and concluded the arrangements in place were effective and appropriate. The council has an improvement action plan for all indicators, including those reported as being below the Scottish average 117. The council participates in the Local Government Benchmarking Framework (LGBF). The framework brings together a wide range of information about how all Scottish councils perform in delivering services, including the cost of services and how satisfied citizens are with them. 118. The most recent National Benchmarking Overview Report 2023-24 by the Improvement Service was submitted to the Council’s Performance and Review Scrutiny Forum in April 2025 along with a council specific action plan. Details of the council’s trend over the past three years against these performance indicators can be seen at exhibit 10. 119. Across the 102 indicators in 2023/24, the council’s performance has improved against 41 (40 per cent) and declined against 34 (33 per cent). In terms of the council’s figures relative to the Scottish average, performance was 59
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Best Value audit | 39 better than the Scottish average for 44 (43 per cent) and worse than the Scottish average for 34 (33 per cent) of indicators. 120. There are 22 (22 per cent) indicators for which the results or trend information is not yet available for 2023/2024, including tackling climate change, looked after children, educational attainment and attendance/exclusions. It is hoped that these results will be available when the 2023/2024 data is refreshed over the coming months. Exhibit 10 South Lanarkshire Council analysis of LGBF results Number of indicators (%) 2021/22 Number of indicators (%) 2022/23 Number of indicators (%) 2023/24 Performance Improving performance 39 (39%) 52 (51%) 41 (40%) Declining performance 53 (54%) 36 (35%) 34 (33%) No change in performance 3 (3%) 4 (4%) 5 (5%) Information not available 4 (4%) 9 (9%) 22 (22%) Comparison with Scottish Average Better than Scottish average 50 (51%) 51 (50%) 44 (43%) Worse than Scottish average 43 (43%) 40 (39%) 34 (33%) Same as Scottish average 2 (2%) 2 (2%) 2 (2%) Information not available 4 (4%) 9 (9%) 22 (22%) Source: LGBF 2023/24 (2023/24 Results at January 2025) 121. The council has an improvement action plan for all the indicators, including those reported as being below the Scottish average. The council also undertakes family group analysis, which focuses on those indicators performing worse than the Scottish average. This aims to group councils into a “family group” of councils with similar levels of deprivation and urban profiles, providing better context to the results. 122. At a service level, under-performing LGBF measures are included in the horizon-scanning and self-assessment exercise undertaken each year. This draws attention to poor performance in the LGBF and services are asked to review the figures and provide narrative about reasons why and any actions 60
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Best Value audit | 40 necessary which would feed into Resource Plans and improvement actions throughout the year. 123. The council publish a suite of Public Performance Reports (PPR). Each PPR relates to a service area and are then grouped on the council website by Connect outcome. The reports include information on targets, where applicable, with performance from the prior two financial years detailed for both the council and the Scotland average to allow comparison. Information is given on how the target is measured and links are provided to further information. 124. Alongside overarching and service level performance reporting the council publishes Annual Performance Spotlights, 'bite-sized' performance information, per Connect Outcome which includes: • a case study to illustrate how the council is working towards achieving outcomes • infographics giving a visual presentation of performance; identifying whether or not performance is improving • links to additional more detailed information. 125. The council’s website covers all the requirements set out in the SPI direction issued by the Accounts Commission. The council continues to improve its public reporting of performance information through clear alignment of performance information with its key strategic outcomes. The council has an effective performance management framework in place 126. The Best Value: Revised Statutory Guidance 2020 sets out that councils should be able to demonstrate a trend of improvement over time in delivering its strategic priorities. 127. The Best Value: Revised Statutory Guidance 2020 also sets out that performance management arrangements should be in place to promote the effective use of the local authority’s resource, which includes effective performance reporting. 128. In 2021/22 the council engaged with the Improvement Service to review how it used and reported on the Local Government Benchmarking Framework (LGBF). This resulted in a suite of refined indicators to allow the council to prioritise and allow for scrutiny on its identified improvement areas. 129. In 2024, the Improvement Service (IS) launched an online dashboard as the main portal to access LGBF data and analysis. As part of this, the IS offered to work with interested councils to explore how dashboard technology could be used at a local level to improve engagement with and use of the LGBF. 130. Building on the review of LGBF reporting undertaken in 2021-22, the council has worked with the IS to develop a South Lanarkshire version of the LGBF dashboard. Key features of the dashboard are: 61
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Best Value audit | 41 • based on the 36 “priority indicators” aligned to the council plan outcomes • focuses on SLC vs Scotland vs family group average performance • allows drill-down to examine family group members and their performance • provides at-a-glance time-trend information for each indicator • presents the LGBF data for SLC along with local. 131. Of the 102 LGBF indicators, 36 have been identified as aligning with the outcomes of the Council’s Connect Plan. These are now embedded within the Connect Plan’s reporting to focus attention on how well the council is performing in achieving its strategic outcomes. The council reviews and reports its performance using a number of measures that are clearly aligned to the priorities and outcomes set out in the Council Plan 132. The council reviews its performance using a number of measures that are aligned to the priorities and outcomes set out in the Council Plan. A total of 256 measures were identified within Resource Plans for 2024/2025. Of those 61 are nominated as key strategic measures for reporting progress against the Connect Outcomes detailed in the Council Plan. The measures are detailed within the individual Resource Plans and bi-annual progress reports are publicly reported on the performance pages of the Council’s website. 133. In addition, progress reports on Connect 2022-27 are taken to the Performance and Review Scrutiny Forum. The latest Quarter 4 Progress Report 2024/2025 was considered in August 2025. The progress reports include a summary of performance against measures for each of the Council’s Connect Plan objectives, along with details of the main achievements for that objective. 134. The Connect quarter four progress report for 2024/25 reports that of the council’s 61 strategic performance measures, six projects had been completed; 43 projects, the timescale or target had been met; six projects where there was minor slippage in timescale or target, four projects where there has been major slippage against timescale or target and two where the information was not yet available and would be reported at a later date. 135. Performance management and reporting is well established within the council. This provides members the opportunity to scrutinise the council’s performance against its strategic objectives. Despite the ongoing service pressures the council has achieved or is on track to achieve most of its performance measures as set out in its Connect Plan. 136. From a review of the service performance information reported by the council, this was found to be sufficiently detailed to provide an assessment of progress the council is making against its strategic priorities and allow effective scrutiny of performance. 62
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Best Value audit | 42 Progress against previous Best Value findings and recommendations 137. Best Value findings and recommendations have been made in previous years’ Annual Audit Reports, Management Reports on themes prescribed by the Accounts Commission, and Controller of Audit Reports on the council’s performance in meeting its Best Value duties. 138. Details of previous recommendations and progress the council is making against these can be seen in Appendix 1. The council has implemented the previous recommendations made. Conclusions on Best Value The council’s arrangements and performance in meeting Best Value and community planning duties are effective 139. The audit work performed on the arrangements the council has in place for securing Best Value and its community planning arrangements found these were effective and appropriate. This judgement is evidenced by: • the council having well established and effective governance arrangements in place, with the Best Value being a key aspect of the governance arrangements • the arrangements the council has in place around the four wider scope audit areas, which are effective and appropriate, contribute to it being able to secure Best Value • progress the council is making to embed sustainability into corporate and operational plans and enhance reporting arrangements around sustainability. 63
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Appendix 1 | 43 Appendix 1 Action plan 2024/25 2024/25 recommendations Matter giving rise to recommendation Recommendation Agreed action, officer and timing 1. Close down procedures There were delays in the provision of a number of underlying working papers to the audit team to support the financial statements. Risk: There is a risk that the delivery of the financial audit is inefficient and the resultant delays impact on the agreed sign off by the statutory deadline. Staff should be reminded of the year end timetable and the importance that working papers for external audit are provided to the Finance Strategy Team in line with the year-end timetable deadlines to ensure all working papers are available with the unaudited accounts. Accepted The importance of meeting timelines set will be reiterated to all officers involved in the Accounts process. Head of Finance (Strategy) End March 2026 2. Whole of Government Accounts (WGA) The council has had issues setting up users for portal access to allow completion of the WGA; despite ongoing dialogue the council did not receive a response. Risk: There is a risk the council does not comply with HM Treasury requirements in respect of the submission of WGA information. The council should continue to engage with HM Treasury to ensure that both prior year and the 2024/25 return is submitted in line with WGA guidance. Accepted The Council can now access the HM Treasury portal and the WGA Accounts will be submitted post audit. Head of Finance (Strategy) End October 2025 64
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Appendix 1 | 44 Matter giving rise to recommendation Recommendation Agreed action, officer and timing 3. Oracle Fusion The council successfully implemented a new financial system at the start of the 2024/25, Oracle’s cloud- based Human Resources (HR) and Finance solution. Our review identified that clear supporting documentation was not always available due to the council’s retention policy. We also noted that, as yet, no post implementation or benefits realisation review has been undertaken. Clear supporting documentation for future projects should be kept to back-up the decision making process. The council should undertake both a post-implementation and benefits realisation review of the new Oracle platform to reflect on the overall success of the project in meeting its stated objectives and expected benefits. This should include assessing which aspects of the project went well and what could have gone better, and to identify lessons and insights that can be applied more widely to improve the planning, management and delivery of future projects. Accepted Some supporting information requested was outwith SLC control as we no longer have access to the systems where these are held. Year 1 post go-live focussed on stabilisation. Post- implementation and benefits review are work in progress as Year 2 activity with critical friend approach developed. Head of Information Technology Ongoing 4. Risk and Audit Scrutiny Committee The Risk and Audit Scrutiny Committee’s role is to support the council in establishing, maintaining, and improving effective governance, risk management, and internal control arrangements. Currently no self-assessment review is undertaken on the committee’s performance. Risk: There is a risk members do not reflect on the effectiveness of the committee to identify areas for improvement. Members should, with the assistance of officers, continue to review their personal training and development needs and agree a plan to ensure that they have the skills required to effectively fulfil their scrutiny and challenge roles. To ensure the Risk and Audit Scrutiny Committee is effective in its role an annual review and assessment should be undertaken with the results captured within an annual report. Accepted The annual training needs assessment exercise will continue to ensure members are comfortable in their role. An annual assessment will be considered for the Members of the Risk and Audit Scrutiny Committee. Head of Personnel and Audit Manager End June 2026 65
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Appendix 1 | 45 Matter giving rise to recommendation Recommendation Agreed action, officer and timing 2024/25 recommendations from the BV thematic report 1. Transformation ambition The council has significant budget savings to make over the next three years and beyond and is aware that it must explore further options for transformation to help bridge its funding gap and improve outcomes for the people of South Lanarkshire. There is a risk that the council may not be able to deliver sustainable services if the required savings are not achieved. The council should ensure its plans for transformation are sufficiently ambitious to ensure that it can continue to deliver sustainable services, prioritising transformational activities that will deliver the most impact and contribute to reducing the budget gap. The Council continues to progress a long term schedule of transformational reviews which run in parallel with the Budget process, in order to maximise the impact on the Budget Gap. Executive Director of Finance and Corporate Resources / Corporate Management Team. September 2025 2. Resourcing transformation The council has advised that delivering transformation is part of the jobs of managers, heads of service and directors and the council has periodically hired external support to help capacity. It has an officer in place to support project teams with the administrative tasks of the transformation programme. There is a risk that the council’s Transformational Change Programme will lose momentum if it does not have the sufficient dedicated resource to drive the activity required. The council should assess whether its arrangements for resourcing transformation activities are sufficient to drive the scale and pace of change required in future. The role of senior officers in the Council includes managing change and the work around transformation forms part of that role. The arrangements for resourcing transformation across the Council will continue to be monitored, and as is currently the case, additional resources will be deployed as and when required. Executive Director of Finance and Corporate Resources / Corporate Management Team. Ongoing as required 66
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Appendix 1 | 46 Matter giving rise to recommendation Recommendation Agreed action, officer and timing 3. Demonstrating the impact of community engagement on transformational activities The council has shared examples of how it has engaged or consulted with communities in relation to its transformational reviews and budget process. It is unclear what specific changes have been made as a result of this engagement as this has not been clearly demonstrated. There is a risk that the council is not viewed to have considered community views when prioritising which transformational projects to be taken forward. The council should ensure it demonstrates how engagement with communities, including vulnerable groups, has informed planned changes to services. The Council will consider adding a final stage to the Budget Consultation process for the 2026/2027 exercise, to ensure outcomes are fed back to communities. This will include feedback on the impact of consultation on Transformational Reviews. Head of Finance (Strategy) March 2026 4. Measuring the impact of transformational activities The council currently focuses on establishing the financial benefits of its transformational activities but does not routinely separately track or report on the impact on service quality or outcomes for service users in relation to these transformational activities. There is a risk that, when prioritising which transformational activities to take forward, the council does not have adequate information on impact to make a fully-informed decision. The council should prioritise establishing a framework that identifies and monitors the estimated and realised impact to date of its transformation work, including on service delivery and on outcomes for service users. It should report to CMT and elected members on both the financial and non-financial impact of the full range of its transformational activities. The Council will develop a framework to capture estimated and actual impacts from transformation activities. An annual report will be produced which will provide a summary of the outcomes from the Transformational Review Programme. Executive Director of Finance and Corporate Resources / Corporate Management Team June 2026 67
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Appendix 1 | 47 Follow-up of prior year recommendations Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update 1. Council house valuations The approach taken by the Council draws on elements of Guidance for Valuers issued in 2016, however only one beacon property is used as a basis for the full council house stock held by the Council. Risk: There is a risk that the council house stock is not valued in line with applicable guidance. The valuer should detail the valuation process followed, assumptions that have been made and supporting information so that the entire process, sources of information and assumptions provide suitable assurances to management. In addition the valuer should review the current valuation process against applicable guidance to assure themselves that the valuation process remains fit for purpose. The Head of Property has detailed the process followed and has confirmed that the valuation method used for council house valuations follows the Beacon method. This valuation process matches the applicable guidance and therefore the valuation process is fit for purpose. Responsible officer: Head of Property Implemented. 68
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Appendix 1 | 48 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update 2. IFRS 16 Implementation From 1 April 2024, a new International Financial Reporting Standard, IFRS 16, will come into effect for Local Authorities. The Council is not yet in a position to quantify the likely impact of IFRS 16. Risk: there is a risk that the Council do not progress the implementation of IFRS 16 in line with the project plan. The Council should review the current timetable to ensure that key dates are being achieved to allow implementation in line with the project plan. The Council is aware of the requirements of IFRS 16 and is working towards the implementation date of end March 2025. Responsible officer: Head of Finance Agreed date: End March 2025 Implemented. 3. Statutory override The statutory override relating to valuation of infrastructure assets is due to end for the 2024/25 financial statements. Risk: A permanent solution has not yet been agreed and CIPFA believe that this will continue be an area of enhanced scrutiny for local government auditors. The Council should proactively work with CIPFA and the wider local government sector to arrive at appropriate solution for the implementation of accounting for infrastructure assets. The Council is keeping a watching brief on national discussion on this topic and will continue to engage with CIPFA and other bodies where possible, to arrive at a suitable solution. Responsible officer: Head of Finance Agreed date: End March 2025 Work in progress. The council will continue to engage as required once options are proposed by CIPFA. 69
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Appendix 1 | 49 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update 4. Reserves strategy and financial resilience In our 2022/23 Annual Audit Report we recommended that the Council should enhance the level of monitoring around financial resilience indicators and risks. Risk – This Council is preparing a detailed report on resilience to the Risk and Audit Scrutiny Committee in September 2024. The council should ensure that there is a clear risk assessment and scrutiny of the level of reserves held and how this supports financial resilience and sustainability over the medium term. The council has presented a report to the Risk and Audit Scrutiny Committee detailing the Council’s Resilience Framework. A further report on the council’s Reserves position will be presented to the Finance and Corporate Resources Committee in the Autumn. This will detail the level of reserves held by the council, their purpose, and will note their role in financial resilience. Responsible officer: Head of Finance Agreed date: End November 2024 Implemented 70
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Appendix 1 | 50 Progress against previous Best Value findings and recommendations Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update on progress 5. Corporate level workforce strategy supported by clear reporting on actions The Council does not have a corporate level workforce strategy. The Council level workforce plan does not include or refer to workforce data, such as the age profile of its workforce, the number of casual staff used or indicators of staff wellbeing. Nor does it include any information on what it is currently doing to address any workforce capacity issues or how it plans to develop its future workforce. Risk – There is a risk that the Council is not using workforce data to inform workforce planning that links to its strategic priorities. The Council should develop a corporate level workforce strategy to demonstrate a clear link to the Connect Council Plan 2022-27. The Council should build on the workforce planning to date and implement a more strategic, data-driven approach to workforce planning, with SMART action plans, setting out how Council level and service level actions are being progressed. Management response The Council will complete an updated Workforce Strategy for 2025-2027 with accompanying workforce plans to align to the Council Plan Connect Business Planning Cycle. The Council will create a strategic workforce plan for 2025– 2027 to align with the Council plan and will also create workforce plans for this period and reference the data analysis and findings more clearly to show both the high- level actions and specific resource actions. Responsible officer Head of Personnel Services Actioned by 31 March 2025 Implemented 71
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Appendix 1 | 51 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update on progress 6. Digital technology The Council is at an early stage in establishing links between workforce planning and digital technology Risk – There is a risk that the workforce planning is not fully utilising the benefits of digital technology. The Council should develop measures to capture and monitor the impact of digital technology on workforce productivity and service outcomes. It should also set out how it expects digital technology to shape its future workforce. The Council will include links in the 2025-2027 workforce strategy and plans to digital technology. The Council will include measures to capture and monitor the impact of digital technology. Responsible officer Head of Personnel Services Head of IT Services Actioned by 31 March 2025 Implemented 7. Digital Exclusion Digital inclusion is one of 21 principles set out in the Digital Strategy 2022-27 and is also one of eight themes. The Council is progressing a number of initiatives to support digital inclusion. Risk – There is a risk that without a SMART action plan to monitor progress the Council cannot demonstrate it is achieving the principles set out in the Digital Strategy. The Council should develop an action plan to allow it to monitor progress in addressing digital exclusion in its workforce and for its citizens. The Council will develop an action plan within its workforce plans that will detail the next steps in progressing digital inclusion in its workforce. For its citizens, this will be captured within the digital strategy action plans. Responsible officer Head of Personnel Services Head of IT Services Actioned by 31 March 2025 Implemented 72
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Appendix 1 | 52 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update on progress 2022/23 recommendations Transformational change The Council should continue to identify where it can progress transformational change in how its services are delivered. This should identify where recurring savings, rather than temporary solutions, can be made together with proposals to reduce costs. The Council should continue to identify where it can progress transformational change in how services are delivered to address the longer-term financial pressures it faces. Management Response: The Council has a programme of cross-cutting reviews as well as individual Resource Reviews which will assist in bridging the budget gap moving forward. Responsible officer: Executive Director, Finance and Corporate Resources Agreed date: Ongoing Implemented 73
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Appendix 2 | 53 Appendix 2 Summary of uncorrected misstatements Details Financial statements lines impacted Statement of Comprehensive Net Expenditure (SoCNE) Statement of Financial Position (SoFP) Uncorrected misstatements Dr Cr Dr Cr £000 £000 £000 £000 1. Peppercorn leases not included within the financial statements Property, Plant and Equipment 3,849 Surplus/Deficit on provision of services 3,849 74
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Appendix 3 | 54 Appendix 3 Supporting national and performance audit reports Report name Date published Local government budgets 2024/25 15 May 2024 Integration Joint Boards: Finance and performance 2024 25 July 2024 The National Fraud Initiative in Scotland 2024 15 August 2024 Transformation in councils 1 October 2024 Alcohol and drug services 31 October 2024 Fiscal sustainability and reform in Scotland 21 November 2024 Public service reform in Scotland: how do we turn rhetoric into reality? 26 November 2024 Auditing climate change 7 January 2025 Local government in Scotland: Financial bulletin 2023/24 28 January 2025 Transparency, transformation and the sustainability of council services 28 January 2025 Sustainable transport 30 January 2025 A review of Housing Benefit overpayments 2018/19 to 2021/22: A thematic study 20 February 2025 Additional support for learning 27 February 2025 Integration Joint Boards: Finance bulletin 2023/24 6 March 2025 Integration Joint Boards finances continue to be precarious 6 March 2025 Council Tax rises in Scotland 28 March 2025 75
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South Lanarkshire Council 2024/25 Annual Audit Report Proposed Proposed Audit Scotland, 4th Floor, 102 West Port, Edinburgh EH3 9DN Phone: 0131 625 1500 Email: info@audit.scot www.audit.scot AS.5.0 76
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South Lanarkshire Council Best Value thematic management report Transformation: how councils are redesigning and delivering more efficient services to achieve planned outcomes Prepared by Audit Scotland September 2025 3b 77
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Best Value thematic work: | 2 Contents Key messages 3 Introduction 5 Transformation planning 8 Programme management 11 Partnership working and community engagement 14 Impact of transformation 18 Appendix 22 Accessibility You can find out more and read this report using assistive technology on our website www.audit.scot/accessibility. 78
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Key messages | 3 Key messages 1 The council has a Transformational Change Programme in place that is clearly linked to its updated Council Plan, financial plans and digital strategy. 2 The council estimates that it has a budget gap of £42 million to 2027/28. To date it has approved savings of £6.485 million for 2025/26, £2.680 million of which is intended to be delivered from transformational reviews. It is aware that it needs to explore further transformation opportunities alongside other measures to help bridge its budget gap and improve outcomes for the people of South Lanarkshire. 3 The council has effective governance arrangements in place to oversee its transformational reviews through regular progress updates to the Corporate Management Team. Comprehensive updates are provided on a regular basis to elected members through committee updates on transformational reviews and the budget process. 4 Transformational reviews are the responsibility of senior officers across the council and are mainly taken forward by staff within its resources (the council refers to its services or departments as resources). The council has an officer in place who supports project teams with the administrative tasks of the Transformational Change Programme. Going forward, there is a risk that the council does not have the sufficient dedicated resource to drive future transformational activity required. 6 The council has provided examples of where it has engaged or consulted with communities in relation to its transformational reviews and budget-setting process. It is unclear what specific changes have been made as a result of its community engagement. 7 The council carries out Integrated Impact Assessments for its transformational reviews to consider the potential changes to services on 5 The council has actively engaged in partnership working to support the delivery of transformational activity. 79
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Key messages | 4 vulnerable groups and there are examples of community engagement taking place in relation to these. 8 The council currently focuses on establishing the financial benefits of its transformational activities but does not routinely separately track or report on the impact on service quality or outcomes for service users in relation to these transformational activities. 80
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Introduction | 5 Introduction 1. Transformation is about radically changing how councils operate and deliver services to achieve planned outcomes in a financially sustainable way (Transformation in councils, Accounts Commission, October 2024). The Accounts Commission’s Transformation in councils report recognises that, while work has been ongoing in relation to local government transformation for decades, a step change is required and the pace and scale of transformation must increase significantly. 2. Transformation, through greater collaboration with partners, will be key for councils to deliver more sustainable service models in challenging financial climates. 3. This report sets out how the council is redesigning and delivering more efficient services to achieve planned outcomes. 4. The Accounts Commission’s Strategy (2021-26) sets out its priorities to focus on inequalities, funding, communities and recovery. The Code of Audit Practice sets out the Best Value work required to report on these priorities. 5. This report covers the thematic aspect of the Best Value audit requirements. The Commission has directed auditors to report on transformation and how councils are redesigning and delivering more efficient services to achieve planned outcomes. In carrying out the work, auditors have considered the following questions: • To what extent does the council have clear plans for transformation that link to its priorities and support long-term financial sustainability? • To what extent do the council’s programme management arrangements facilitate effective oversight of its transformation plans? • To what extent are partners and communities involved in the development and delivery of the council’s plans for transformation? • To what extent has the council considered the impact of its transformation activity, including on vulnerable or protected groups? 6. An improvement action plan is included at the Appendix of this report. This sets out audit recommendations in key areas, and the council’s planned response including responsible officers and dates for implementation. 81
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Introduction | 6 7. The coverage of the work is in line with the expectations for councils’ arrangements for the seven Best Value themes in the Local Government in Scotland Act 2003, Best Value Statutory Guidance 2020 and we have considered the Accounts Commission’s transformation principles set out in Transformation in councils (Exhibit 1). 82
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Introduction | 7 Exhibit 1 Transformation principles Transformation is about radically changing how councils operate and deliver services to achieve planned outcomes in a financially sustainable way. Principle Vision Have a clear vision that sets out the intended end state of any transformation activity, focused on: • delivering large-scale recurring savings or generating income for the council, contributing to its longer-term financial sustainability • improving outcomes for citizens in line with council priorities • taking a whole-system approach to see and realise opportunities both within councils and more widely • meeting the needs of the people who use services and reduce inequalities • focusing on preventative activity, where applicable, to reduce the demand for services and to make them sustainable in the longer term. Planning • Be clear on the scale of the change required and ensure transformation plans are sufficiently ambitious to credibly respond to the scale of the challenge. • Commit staff with appropriate skills, time, and resources to ensure transformation occurs at the scale and pace required and that there is enough capacity for the changes to be embedded. • Be clear about the timescales, costs, outcomes, and anticipated impacts of transformation projects. • Show urgency and progress projects at pace without compromising appropriate governance on projects. Governance • Have a clear process for monitoring, evaluating, and reporting progress. • Put in place effective governance and escalation processes so that the transformation activities are well managed in their own right, but also able to be given priority alongside other business-as-usual activities. Collaboration • Develop better working relationships with communities and/or partners to achieve a sustainable model of service delivery. • Actively consider the opportunities offered by regional or national sectoral collaboration, or by integrating services locally with partners, or by supporting individuals and communities to achieve desired outcomes in place of an existing service. • Learn from good practice across Scotland and beyond. Innovation • Implement new ways of thinking, including innovation, creativity and a desire, willingness, and action to change and do things in new and different ways that achieve the outcomes needed. • Embed the right culture and behaviours to manage change and help maximise the contribution of all the team. Source: Accounts Commission, Transformation in councils, October 2024 83
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Transformation planning | 8 Transformation planning 8. Councils need to ensure they can deliver sustainable services now and in the future, and difficult decisions will need to be made to achieve this. The Accounts Commission’s Local government budgets 2025/26 briefing noted that councils’ cumulative funding gap to 2027/28 is £997 million. Councils will need to identify and deliver recurring measures such as savings or increased income to be financially sustainable in the short term. 9. In January 2025, the Accounts Commission advised in its Local government in Scotland Financial bulletin 2023/24 that councils need to intensify transformation activity, progressing at scale and pace to ensure their financial sustainability and how councils plan to use their reserves, make savings and transform their services needs to become more transparent. Findings Evidence The council has a Transformational Change Programme in place. Transformational activity is being driven by transformational reviews. • The council has a Transformational Change Programme that aims to help it achieve a balanced budget and support medium and long-term financial plans. This approach consists of transformational reviews that focus on how services are being delivered with a view to identifying efficiency savings and redesigning services. • The council has advised that, for the past three years, its transformation work has been primarily focused on addressing budget pressures. At the June 2024 meeting of the Executive Committee the council set out its approach to identifying savings options through transformational reviews. Some transformational reviews are organisation wide while others are specific to one service (or resource as they are referred to by the council). Reviews include charging, procurement, digital transformation, property and fleet reduction. The council’s Financial Resilience and Sustainability report from September 2024 advised that the transformational reviews would build on past service reviews. • A standard template has been created for the Terms of Reference of each review to include details on the background, identified issues, desired outcomes, scope of the review and key milestones. This is being applied consistently across reviews. 84
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Transformation planning | 9 Findings Evidence The council has significant budget savings to make in 2026/27, 2027/28 and beyond and is aware that it needs to explore further transformation opportunities alongside other measures to help bridge its budget gap and improve outcomes for the people of South Lanarkshire. • The council’s latest projected budget gap is £42 million across 2026/27 and 2027/28 after accounting for additional levers such as council tax and reflecting agreed pay awards to date. • In the April 2025 Performance and Scrutiny Forum update on Transformational Reviews, the council set out that £2.680 million of the approved savings in 2025/26 (£6.485 million) were related to the ongoing transformational reviews on procurement, overtime, management structures and council charges. • The council also sets out its intention for the Transformational Change Programme to reduce its budget gap during 2026/27 and 2027/28. The council is currently quantifying the transformational savings it aims to achieve across these years. • A report to council in February 2025 outlined the impact the 2025/2026 approved savings will have beyond that year. The savings in relation to Waste Permits (£0.875 million) and Sheltered Housing – Housing Support Funding to Registered Social Landlords (£0.392 million) were both approved for 2025/2026 and will have an impact on the budget gap in 2026/2027. This reduces the budget gap by £1.267 million into 2026/2027. • The council regularly highlights (including in its 19 August 2025 update to the Performance and Review Scrutiny Forum on transformational reviews) that there is a need for transformational change to manage the significant budget gaps facing the council over the next three years. 85
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Transformation planning | 10 Findings Evidence The council’s transformational activity is clearly linked to its financial and digital strategies. The council strengthened the links between transformation and its Council Plan through its mid-term review conducted in April 2025. • The council’s 2025/26 to 2027/28 Revenue Budget Strategy from June 2024 includes a section on transformational change. It refers to the importance of the council having a programme of change to deliver a balanced budget and the intention for the Transformational Change Programme to drive continuous improvement as well as efficiencies. • As set out above, the council continues to review its approach to transformation. There was no specific reference to transformation in the Council Plan created in 2022, however the priorities set out are: - ‘People – we need to put people first and reduce inequality’ - ‘Planet – we need to work towards a sustainable future in sustainable places’ - ‘Progress – we need to recover, progress and improve’ • A mid-term review of the Council Plan presented to the Executive Committee on 30 April 2025 recognised the likely demands of the next few years and resulting requirement for transformation and service design work. The document prepared for the mid-term review explains that ‘Given the magnitude of the budget gap, there requires to be a fundamental re-think of what public services in Scotland can do moving forward in order to achieve financial sustainability. That includes what the council can deliver by way of services to the public’. The council outlines it is continuing with its transformational reviews to deliver savings proposals to members. • Transformational activity is also referenced in the Finance and Corporate Resources Plan 2024/25 and Digital Strategy 2022-27. Recommendation 1 The council should ensure its plans for transformation are sufficiently ambitious to ensure that it can continue to deliver sustainable services, prioritising transformational activities that will deliver the most impact and contribute towards reducing its budget gap. 86
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Programme management | 11 Programme management 10. It is essential that councils have good programme management arrangements in place to ensure they are making sufficient progress against their transformation plans. It is important that councils have the structures and the staffing resource in place to deliver their transformation ambitions. In addition, councils must ensure that both senior officers and elected members have appropriate oversight of progress. Findings and evidence relating to the council’s programme management arrangements Findings Evidence The council has an officer in place who supports project teams with the administrative tasks of the Transformational Change Programme. Going forward, there is a risk that the council does not have the sufficient dedicated resource to drive the future transformational activity required. • Oversight of the Transformational Change Programme is led by an Executive Director and CMT meet every two weeks to discuss the programme. • An officer is in place who is responsible for the administration work around the Transformational Change Programme. The officer creates a level of consistency and timeliness around collating all information related to reviews, leaving staff within Resources to focus on the main content of the reviews. • The council has advised that delivering transformation is part of the jobs of managers, heads of service and directors and the council has periodically hired external support to help capacity. The council recognises that it needs to continually monitor whether it has sufficient dedicated resource to drive the scale and pace of transformation required going forward. • The Terms of Reference for reviews set out resourcing and details of who is leading the review. • The council has an IT Development Fund which can be used to support transformational reviews when required. The council has advised that there are also other funds that can be deployed when necessary, for example, there has been £24 million set aside to support the output from the Estates Strategy Review. The council has effective governance arrangements in place to oversee its transformation work. The Corporate Management Team receives regular • There is strong ownership of transformational activity from senior leadership at the council, with the Chief Executive and all directors being members of the Corporate Management Team (CMT) who meet every two weeks to discuss the transformational reviews. 87
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Programme management | 12 Findings Evidence updates on progress against the transformational reviews and a clear schedule of reporting is set out. • Progress on the transformational reviews is reported to the Corporate Management Team through the council’s efficiencies workstream. The efficiencies workstream is focussed solely on transformational change at the council with a view to delivering efficiencies and savings. It also ensures that services are being delivered in line with CMT expectations. The CMT meets on a weekly basis to direct council operations and efficiencies workstream meetings are held on a rolling two-week schedule. • CMT regularly receives progress reports on the revenue budget savings (at least quarterly). These updates detail what savings have been achieved to date along with an estimate of savings still to be achieved in the year and notes any reasons for variances including slippage from the original savings targets. • The council advised that a number of the reviews are in their early stages and resultant savings cannot yet be quantified for all transformational reviews. These need to be established as the work progresses to prioritise which projects to expedite. • As the transformational reviews progress, some updates to CMT have begun to quantify savings where these are known. Examples include additional income from increased charges for bereavement services in 2025/26, increased school meals charging over a three-year period to 2027/28 and savings already realised by changing the scope of cleaning tasks in local schools. • The updates reported to CMT do not clearly show which outcomes have already been realised against those identified for the transformational reviews (per the terms of reference). We cover this in more detail in the Impact of Transformation section of this report. • Examples of good practice demonstrated in reporting to CMT by other local authorities includes reporting on progress with projects using RAG statuses and reporting on slippage and key risks within projects. Some councils use exception reporting, focusing on the most at-risk projects. • The council’s Year End Risk Management Report (2023/2024) and Review of Council’s Top Risks (2024/2025) sets out that monitoring the delivery of transformational reviews will inform whether an overarching ‘transformational change’ risk requires to be developed and added to the top risk register. It also noted that outcomes from the reviews offer mitigation against the top risk on funding. • The council provided the audit team with an example of a risk register for the Customer Engagement Review. This 88
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Programme management | 13 Recommendation 2 The council should assess whether its arrangements for resourcing transformation activities are sufficient to drive the scale and pace of change required in future. Findings Evidence clearly sets out what the risks relating to the review are along with an inherent risk rating, control measures in place, residual risk rating and details of any further mitigations required to control the risk. Risk registers are completed for reviews when deemed necessary based on the stage of the review. Comprehensive updates are provided on a regular basis to elected members through committee updates on transformational reviews and the budget process. • The Performance and Review Scrutiny Forum receives updates on the ongoing transformational reviews every two months. The updates are comprehensive and outline current progress against each review. The updates also provide information on risks associated with each of the reviews and key milestones. • Updates to elected members also include detailed breakdowns of savings identified to date resulting from transformational reviews where this is known. Information on non-financial benefits and outcomes are an integral part of transformational reviews but are often described in qualitative terms. All Performance and Review Scrutiny Forum meeting papers and minutes are publicly available on the council’s website and meetings are live streamed on YouTube and are also available to be viewed after the meeting on the YouTube site. • Elected members receive updates on projects, where appropriate, through relevant committees for example, the Social Work Resources Committee receives updates on projects relating to Social Work. • Updates on the Revenue Budget are presented to the Executive Committee throughout the financial year. 89
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Partnership working and community engagement | 14 Partnership working and community engagement 11. The Best Value in Scotland report noted that councils must now rethink how they work together, and with local partners and communities, to provide financially sustainable services. Few councils provide services jointly or share support services across different councils to a great extent. The scale and nature of the challenge, as set out in the Transformation in councils report, means that it is only by working more collaboratively that councils and their local partners, communities and the third sector will be able to provide sustainable local services. Findings and evidence relating to the council’s partnership working and community engagement arrangement Findings Evidence The council has actively engaged in partnership working to support the delivery of transformation projects, some of which have been jointly funded. • South Lanarkshire Council is undertaking a review of partnership working with the local third sector. The review aims to strengthen collaboration, improve operational relationships, and build on existing initiatives with the third sector. It has engaged with the third sector through a range of workshops throughout the spring and summer of 2025 and is in the process of updating internal processes and guidance for the provision of grants for third sector organisations. • The council is currently undertaking a review of Digital Transformation to create efficiencies across three key areas- business systems and processes, workforce productivity and customer engagement. To date, work has involved partnership working with commercial businesses. • The council has provided two examples of successful transformation projects it has delivered to date. This includes: Analogue to Digital: Shared Cloud-Based Alarm Receiving Centre (ARC) Solution (Case study 1) and South Lanarkshire Futures (Case study 2). Both examples highlight effective partnership working and community engagement and have been jointly funded. • The council has also identified the Marmot Place Programme for South Lanarkshire as a key example of transformational partnership working. This evidence-based initiative brings together partners to tackle inequalities in a 90
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Partnership working and community engagement | 15 Findings Evidence specific place. South Lanarkshire is one of three areas in Scotland piloting the programme with Public Health Scotland and the University College London Institute of Health Equity, led by Professor Sir Michael Marmot. A local data working group is analysing cross-sector data to better understand and address place-based inequalities. Governance is overseen by a leadership group of community planning and third sector partners. Insights from integrated local data will inform future service delivery and prevention strategies, with stakeholder workshops planned for Autumn 2025 to establish actionable responses to the findings. The council has shared examples of how it has engaged or consulted with communities in relation to its transformational reviews and budget-setting process. It is unclear what specific changes have been made as a result of this engagement. • The budget consultation for 2025/26 provided residents with savings options to consider and potential council tax percentage increases, totalling over £11 million. Survey respondents were asked the extent to which they agreed or disagreed with the options, as well as having the opportunity to leave specific comments on each area. Each option clearly set out the financial impact and workforce implications (eg, savings amount and number of posts affected). The consultation also incorporated elements of transformational reviews, such as the council’s proposals to increase charges for its services (eg, burials and cremations). The results of the budget consultation were shared with elected members in January 2025 for consideration when drafting their budget proposals and the results were also factored into integrated impact assessments. It is not clear what impact this had on decisions made by elected members on the 2025/26 budget. • The council also engaged with the community in developing its 10-Year Estate Strategy. A public consultation held in April and May 2025 invited views on the future of council-owned properties and how they could better meet community needs within its financial constraints. An online survey received 298 responses, with 96 per cent supporting a review of the council’s estate and 68 per cent agreeing that the outcome would likely deliver a smaller but higher quality estate. The next round of public consultation is currently being held, and feedback will be used to inform the development of the final strategy. Therefore, it is too early to conclude what impact this had on the strategy. • The council is in the process of carrying out a transformational review of its customer engagement. To date, the work has involved engaging with the Scottish Local Authority Customer Services Managers Group. A survey has been issued to capture information on systems and processes. The council also plans to issue two customer surveys to obtain feedback on the most efficient contact 91
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Partnership working and community engagement | 16 Case study 1 Digital telecare transformation The Analogue to Digital: Shared Cloud-Based Alarm Receiving Centre (ARC) Solution project ensures the continued delivery of community alarms services ahead of the UK-wide analogue switch off in October 2025, replacing outdated systems with a more resilient cloud-based digital solution. South Lanarkshire Council’s social work department led on delivering the community alarms locally and were supported through partnership working with Scottish Government’s Digital Office and Scotland Excel who led on procurement and development of the national ARC solution. The council also worked in collaboration with a range of other stakeholders including Chubb, Sky response, TEC Scotland and 16 other local authority RSLs. The council was actively involved in the project steering group and co-design workshops and has engaged with the community in a variety of ways, including outreach through social media, direct messaging and publishing articles to prepare users for the transition. The design process was shaped by service users, carers and stakeholders and the project prioritised continuity of service for vulnerable users, ensuring no disruption during the transition. The project has achieved significant milestones, including the deployment of digital-ready devices to over 50 per cent of users and recognition through a Bronze Digital Telecare Implementation Award. The project focuses on service improvement rather than cost savings. However, the cloud-based system offers efficiencies through flexible working and better data access. A key outcome for the project is for the use of digital solutions to assist in preventing hospital admissions or the need for long-term care for sheltered housing tenants. A project closure report has been prepared that sets out nine follow-up actions. These include agreeing and realising community benefits following completion of the first year after going live and developing a suite of management reports. The council received a total of £0.116 million from the Scottish Local Government Digital Office for this project. Source: South Lanarkshire Council Findings Evidence methods. It is not yet clear how council services will change as a result of the engagement. 92
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Partnership working and community engagement | 17 Case study 2 South Lanarkshire Futures The SLC Futures project is a transformational initiative led by South Lanarkshire Council, in partnership with Barnardo’s and local services to support young people transitioning from care to independent living. It provides tailored housing support, life skills development, and a structured pathway to tenancy, aiming to reduce inequality and prevent homelessness through early intervention. Young people with experience of care have played a key role in shaping the service, which was co-developed with stakeholders including Barnardo’s Health and Homeless Team, high school pupils and those living in temporary accommodation. The project draws on insights from The Promise Design School and the Scottish Service Design Toolkit, to ensure a user-centred approach. Funding of £0.166 million was provided by The Big Lottery and £0.126 million by SLC Social Work, through the provision of four training flats and a dedicated Throughcare Housing Officer. By January 2025, five young people had been supported to independent living, generating £0.230 million in savings for 2024/25. The initiative has reduced out-of-area placements and homelessness presentations, with projected recurring savings of £0.8 million annually from 2025/26 onwards. The model demonstrates innovation, collaboration, and a scalable approach to youth housing support. Source: South Lanarkshire Council Recommendation 3 The council should ensure it demonstrates how engagement with communities, including vulnerable groups, has informed planned changes to services. 93
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Impact of transformation | 18 Impact of transformation 12. It is important that councils have success measures in place to demonstrate the impact of their transformational activity on service quality; outcomes for people who use services, inequalities and/or savings. Findings and evidence relating to the impact of the council’s transformation activity Findings Evidence The council currently focuses on establishing the financial benefits of its transformational activities but does not routinely separately track or report on the impact on service quality or outcomes for service users in relation to these transformational activities. • South Lanarkshire Council reports publicly twice a year on progress against the six key outcome areas identified in the Council Plan Connect 2022-2027 (communities and environment, education and learning, health and wellbeing, children and young people, housing and land, and our economy). These reports draw on the latest available data to provide a summary of progress, key achievements and areas for improvement. The council also produces annual public performance reports which focus on the performance of key areas of council business, such as finance, budgeting and workforce, and comparing performance against the Scottish average. Reporting does not separately cover outcomes resulting from the transformational review programme, but the council’s transformation work contributes to the delivery of these broader outcomes. • The council has advised that transformation impact is tracked through budget reporting, focussing on savings targets. Broader service areas report separately to committees using tailored metrics. Interviewees noted that success is often defined by the ability to continue operating and delivering services within a reduced budget. • As set out in the Programme Management section of this report, regular updates on the progress of reviews are reported to the CMT efficiencies workstream alongside updates to elected members through the Performance and Review Scrutiny Forum. Our analysis shows that the impact of transformational activity on outcomes and non- financial benefits is not being monitored or reported on, and that updates to CMT and elected members lack 94
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Impact of transformation | 19 Findings Evidence specific examples of quantified benefits already realised or metrics in place to measure success. • The council acknowledges that as transformation work matures, there is a need to track and report outcomes. The Performance and Review Scrutiny Forum will become the main platform for this. • We note the council’s ongoing work to develop a benefits tracker in relation to its review of Digital Transformation to ensure both cashable and non-cashable benefits are identified, tracked and realised through the programme. We welcome this recent development and recommend the approach is broadened to include all of South Lanarkshire Council’s transformational work. • As set out in the Partnership Working section of the report above, the council has provided two examples of successful transformation projects. The impacts to date from the two projects are set out below: - Analogue to Digital ARC solutions project – The council has reported improvements in service quality through better data visibility and system performance. The key outcome is helping people stay in their homes and avoiding long-term care or hospital admissions, though this impact is not yet quantified. The aim of the project was service improvement, therefore there are no cost savings associated with the project. - SLC Futures Project - In January 2025, the council reported £0.230 million in savings for 2024/25, with projected savings of £1 million in 2025/26 and £1.6 million annually by the end of the programme. Key non-financial benefits include improved tenancy sustainment and enhanced life skills for young people The council has adopted The Scottish Housing Regulator Annual Return on Charter Indicator 16 (Percentage of new tenancies sustained for more than a year) as a key baseline measure of success in relation to tenancy sustainment for this project. The council carries out Integrated Impact Assessments for its transformational reviews to consider the potential changes to services on vulnerable groups and there are examples of community engagement • The council carries out Integrated Impact Assessments for its transformational reviews and there are examples of community engagement taking place in relation to these. These are publicly available on the council’s website. Some examples are highlighted below: - The Integrated Impact Assessment for the Council’s proposed charges policy aims to apply a 14.4 per cent inflationary increase across all non-statutory council charges, in addition to a 1.5 per cent year on year inflationary increase from 2025/26. The aim is to 95
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Impact of transformation | 20 Findings Evidence taking place in relation to these. achieve full cost recovery for the services it provides, as well as providing financial sustainability and protecting frontline services going forward. A public consultation was undertaken between November 2024 and January 2025, widely promoted through various channels. It received over 3,000 responses, with the majority of respondents supporting the proposed increases. A separate consultation was also designed for children and young people to ensure their views were considered. The IIA considers groups which may experience greater impact such as unemployed people, single parents and those living in areas of deprivation. To address potential negative impacts the council has sets out mitigation strategies, such as concessions, exemptions for disabled blue badge holders and access to travel schemes for young and elderly groups. The council commits to ongoing monitoring and consultation to assess the impact of the proposed changes going forward. - The Integrated Impact Assessment for the council’s cross-cutting review of Loans Fund and Service Concessions aims to implement changes in accounting practice for loan charges (council debt) and service concessions (PPP payments for secondary schools) to reduce costs over the next three years. The council carried out consultation on this proposal as part of the engagement for its annual budget process and the results showed 60 per cent of responders agreed with the proposal. The IIA considers the impact of the proposed changes on vulnerable groups but concludes there is no impact on them given the proposal is a technical accounting change and is not related to service delivery. It also notes that not implementing the proposal could lead to greater service reductions, which might inadvertently affect vulnerable groups. - The Integrated Impact Assessment for the 2025/26 Financial Savings Budget Strategy identifies cumulative impacts of the council’s budget savings on those with protected characteristics. The IIA identifies age, disability and sex as the characteristics most likely to be affected, as well as socio-economic groups such as low-income households, those experiencing deprivation and children and young people, particularly those additional support needs. A range of specific proposals are identified as having negative impacts, such as charging for early years services and school meals. A public consultation was carried out in relation 96
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Impact of transformation | 21 Recommendation 4 The council should prioritise establishing a framework that identifies and monitors the estimated and realised impact to date of its transformation work, including on service delivery and on outcomes for service users. It should report to CMT and elected members on both the financial and non-financial impact of the full range of its transformational activities. Findings Evidence to this as part of the council’s annual budget process and changes made as a result of the impact assessment will include mitigations in the form of exemptions for households meeting eligibility criteria for school meals and early years charges. 97
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Appendix | 22 Appendix Improvement action plan Issue/risk Recommendation Agreed management action/timing 1. Transformation ambition The council has significant budget savings to make over the next three years and beyond and is aware that it must explore further options for transformation to help bridge its funding gap and improve outcomes for the people of South Lanarkshire. There is a risk that the council may not be able to deliver sustainable services if the required savings are not achieved. The council should ensure its plans for transformation are sufficiently ambitious to ensure that it can continue to deliver sustainable services, prioritising transformational activities that will deliver the most impact and contribute to reducing the budget gap. The Council continues to progress a long term schedule of transformational reviews which run in parallel with the Budget process, in order to maximise the impact on the Budget Gap. Executive Director of Finance and Corporate Resources / Corporate Management Team. September 2025 2. Resourcing transformation The council has advised that delivering transformation is part of the jobs of managers, heads of service and directors and the council has periodically hired external support to help capacity. It has an officer in place to support project teams with the administrative tasks of the transformation programme. There is a risk that the council’s Transformational Change Programme will lose momentum if it does not have the sufficient dedicated resource to drive the activity required. The council should assess whether its arrangements for resourcing transformation activities are sufficient to drive the scale and pace of change required in future. The role of senior officers in the Council includes managing change and the work around transformation forms part of that role. The arrangements for resourcing transformation across the Council will continue to be monitored, and as is currently the case, additional resources will be deployed as and when required. Executive Director of Finance and Corporate Resources / Corporate Management Team. Ongoing as required 98
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Appendix | 23 Issue/risk Recommendation Agreed management action/timing 3. Demonstrating the impact of community engagement on transformational activities The council has shared examples of how it has engaged or consulted with communities in relation to its transformational reviews and budget process. It is unclear what specific changes have been made as a result of this engagement as this has not been clearly demonstrated. There is a risk that the council is not viewed to have considered community views when prioritising which transformational projects to be taken forward. The council should ensure it demonstrates how engagement with communities, including vulnerable groups, has informed planned changes to services. The Council will consider adding a final stage to the Budget Consultation process for the 2026/2027 exercise, to ensure outcomes are fed back to communities. This will include feedback on the impact of consultation on Transformational Reviews. Head of Finance (Strategy) March 2026 4. Measuring the impact of transformational activities The council currently focuses on establishing the financial benefits of its transformational activities but does not track or report separately on the impact on service quality or outcomes for service users in relation to these transformational activities. There is a risk that, when prioritising which transformational activities to take forward, the council does not have adequate information on impact to make a fully-informed decision. The council should prioritise establishing a framework that identifies and monitors the estimated and realised impact to date of its transformation work, including on service delivery and on outcomes for service users. It should report to CMT and elected members on both the financial and non- financial impact of the full range of its transformational activities. The Council will develop a framework to capture estimated and actual impacts from transformation activities. An annual report will be produced which will provide a summary of the outcomes from the Transformational Review Programme. Executive Director of Finance and Corporate Resources / Corporate Management Team June 2026 99
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South Lanarkshire Council Best Value thematic management report Transformation: how councils are redesigning and delivering more efficient services to achieve planned outcomes Audit Scotland, 4th Floor, 102 West Port, Edinburgh EH3 9DN Phone: 0131 625 1500 Email: info@audit.scot www.audit.scot AS.5.0 100
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8 Nelson Mandela Place Glasgow G2 1BT T: 0131 625 1500 E: info@audit-scotland.gov.uk www.audit-scotland.gov.uk Risk and Audit Scrutiny Committee 30 September 2025 South Lanarkshire Council Charitable Trusts (SC025089) Audit of 2024/25 annual accounts Independent Auditor’s Report Our audit work on the 2024/25 annual accounts is now substantially complete. Subject to receipt of a revised set of annual accounts for final review, we anticipate being able to issue unmodified audit opinions in the independent auditor's report on 30 September 2025 (the proposed report is attached at (Appendix A). Annual Audit Report Under International Standards on Auditing in the UK, we report specific matters arising from the audit of the financial statements to those charged with governance of a body in sufficient time to enable appropriate action. We present for the trustees’ consideration our proposed annual audit report for South Lanarkshire Council Charitable Trusts (SC025089) on the 2024/25 audit. There are no significant findings or key audit matters to report. The Annual Audit Report also sets out conclusions on the wider scope areas that frame public audit as set out in the Code of Audit Practice. The Annual Audit Report will be issued in final form after the audit of the annual accounts has been completed. Uncorrected misstatements We also report to those charged with governance all uncorrected misstatements in the annual accounts which we have identified during the course of our audit, other than those of a trivial nature, and request that these misstatements be corrected. There are no uncorrected misstatements to report. Other ISA (UK) matters In presenting this letter and the Annual Audit Report to the Risk and Audit Scrutiny Committee, we seek confirmation from those charged with governance on the following matters: • if they are aware of any instances of actual, suspected, or alleged fraud, • if they are aware of any subsequent events that have occurred since the date of the financial statements, • if they are content that the methods, assumptions, and data used in making accounting estimates in the annual accounts are appropriate, • if all related party relationships and transactions they are aware of are reflected in the annual accounts, and 3c 101
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• if they are aware of any non-compliance with laws and regulations. Any issues that we have identified from our audit in relation to other ISA (UK) matters that we are required to report to those charged with governance have been reported in the section headed “Other matters to report” in the Annual Audit Report. Representations from the Section 95 Officer As part of the completion of the audit, we are seeking written representations from the Executive Director (Finance and Corporate Resources), who is the Section 95 Officer, on aspects of the annual accounts, including the judgements and estimates made. A draft letter of representations is attached at Appendix B. This should be signed and returned to us by the Section 95 Officer with the signed annual accounts prior to the Independent Auditor’s Report being signed. 102
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Appendix A: Proposed Independent Auditor’s Report Independent auditor’s report to the trustees of South Lanarkshire Council Charitable Trusts (SC025089) and the Accounts Commission Reporting on the audit of the financial statements Opinion on financial statements I certify that I have audited the financial statements in the statement of accounts of South Lanarkshire Council Charitable Trusts (SC025089) for the year ended 31 March 2025 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Receipts and Payments, the Statement of Balances, and notes to the financial statements. The financial reporting framework that has been applied in their preparation is applicable law and a receipts and payments basis. In my opinion the accompanying financial statements: • properly present the receipts and payments of the charity for the year ended 31 March 2025 and its statement of balances at that date; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulations 9(1),(2) and (3) of The Charities Accounts (Scotland) Regulations 2006. Basis for opinion I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Accounts Commission for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I am independent of the charity in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of the trustees for the financial statements The trustees are responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibilities for the audit of the financial statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 103
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Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include: • using my understanding of the local government sector and charity sector to identify that the Local Government (Scotland) Act 1973, Charities and Trustee Investment (Scotland) Act 2005 and The Charities Accounts (Scotland) Regulations 2006 are significant in the context of the charity; • inquiring of the Trustees as to other laws or regulations that may be expected to have a fundamental effect on the operations of the charity; • inquiring of the Trustees concerning the charity’s policies and procedures regarding compliance with the applicable legal and regulatory framework; • discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and • considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the charity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report. Reporting on other requirements Other information The trustees are responsible for the other information in the statement of accounts. The other information comprises the Trustees’ Annual Report. My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. 104
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My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Opinions prescribed by the Accounts Commission on the Trustees’ Annual Report In my opinion, based on the work undertaken in the course of the audit, the information given in the Trustees' Annual Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with The Charity Accounts (Scotland) Regulations 2006. Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements are not in agreement with the accounting records; or • I have not received all the information and explanations I require for my audit. I have nothing to report in respect of these matters. Use of my report This report is made solely to the parties to whom it is addressed in accordance with Part VII of the Local Government (Scotland) Act 1973 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties. Mark Ferris FCCA Senior Audit Manager Audit Scotland 4th Floor South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT Mark Ferris is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. 105
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Appendix B: Letter of Representations (ISA (UK) 580) Mark Ferris, Senior Audit Manager Audit Scotland 4th Floor 8 Nelson Mandela Place Glasgow G2 1BT Dear Mark South Lanarkshire Council Charitable Trusts (SC025089) Annual accounts 2024/25 1. This representation letter is provided in connection with your audit of the annual accounts of South Lanarkshire Council Charitable Trusts for the year ended 31 March 2025 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view and for expressing other opinions on the information within the annual report and financial statements. 2. I confirm to the best of my knowledge and belief and having made appropriate enquiries of the trustees of the registered charities where South Lanarkshire Council is the sole trustee, the following representations given to you in connection with your audit of annual accounts for the year ended 31 March 2025. General 3. I have fulfilled my responsibilities for the preparation of the 2024/25 annual accounts as set out in your 2024/25 Annual Audit Plan. All the accounting records, documentation, and other matters which I am aware are relevant to the preparation of the annual accounts have been made available to you for the purposes of your audit. All transactions undertaken by South Lanarkshire Council Charitable Trusts have been recorded in the accounting records and are properly reflected in the financial statements. 4. I confirm that the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole. As you have reported, there are no uncorrected misstatements. Financial Reporting Framework 5. The annual accounts have been prepared under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and regulations 9(1),(2) and (3) of The Charities Accounts (Scotland) Regulations 2006. 6. In accordance with the Local Authority Accounts (Scotland) Regulations 2014, I have ensured that the financial statements give a true and fair view of the financial position of South Lanarkshire Council Charitable Trusts at 31 March 2025 and the transactions for 2024/25. Accounting Policies and Estimates 7. All material accounting policies applied are as shown in the note included in the financial statements. The accounting policies are determined by the 2024/25 Code, where applicable. Where the 2024/25 Code does not specifically apply, I have used judgement in developing and applying an accounting policy that results in information that is relevant and reliable. All accounting policies applied are appropriate to South Lanarkshire Council Charitable Trusts circumstances and have been consistently applied. 106
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8. The methodology, significant assumptions, and data used in making accounting estimates are reasonable, and have been properly reflected and disclosed in the financial statements in accordance with the 2024/25 Code. Judgements made in making estimates have been based on the latest available and reliable information. Estimates have been revised where there are changes in the circumstances on which the original estimate was based or as a result of new information or experience. Going Concern Basis of Accounting 9. I have assessed South Lanarkshire Council Charitable Trusts’ ability to continue to use the going concern basis of accounting and have concluded that it is appropriate. I am not aware of any material uncertainties that may cast significant doubt on South Lanarkshire Council Charitable Trusts’ ability to continue to adopt the going concern basis of accounting. Fraud 10. I understand my responsibilities for the design, implementation, and maintenance of internal control to prevent fraud and I believe I have appropriately fulfilled those responsibilities. 11. I have provided you with all information in relation to: • my assessment of the risk that the financial statements may be materially misstated as a result of fraud, • any allegations of fraud or suspected fraud affecting the financial statements, and • fraud or suspected fraud that I am aware of involving management, employees who have a significant role in internal control, or others that could have a material effect on the financial statements. Laws and Regulations 12. I have disclosed to you all known instances of non-compliance or suspected non- compliance with laws and regulations whose effects should be considered when preparing financial statements. Related Party Transactions 13. All material transactions with related parties have been appropriately accounted for and disclosed in the financial statements in accordance with IAS 24, as adopted by the 2024/25 Code. I have made available to you the identity of all of South Lanarkshire Council Charitable Trusts’ related parties and all the related party transactions of which I am aware. Corporate Governance 14. The business of the charitable trust is recorded in the systems of South Lanarkshire Council. As section 95 officer for South Lanarkshire Council, I confirm that there are no issues or deficiencies in internal control that require to be disclosed within the annual accounts of the charitable trust. Events Subsequent to the Date of the Balance Sheet 15. All events subsequent to 31 March 2025 for which IAS 10, as adopted by the 2024/25 Code, requires adjustment or disclosure have been adjusted or disclosed. Yours sincerely Accountable Officer 107
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South Lanarkshire Council Charitable Trusts (SC025089) 2024/25 Annual Audit Report - Proposed Prepared for South Lanarkshire Council Charitable Trust September 2025 108
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South Lanarkshire Council Charitable Trusts (SC025089): 2024/25 Annual Audit Report - Proposed | 2 Contents Key messages 3 Introduction 4 Audit scope and responsibilities 5 Audit of the annual accounts 7 Financial Sustainability and Best Value audit 11 Accessibility You can find out more and read this report using assistive technology on our website www.audit.scot/accessibility. 109
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Key messages | 3 Key messages Audit of the annual accounts 1 All audit opinions stated that the annual accounts were free from material misstatement. 2 There were no significant findings or key audit matters to report. All audit adjustments required to correct the financial statements were processed by South Lanarkshire Council Charitable Trusts. Wider scope and Best Value audit 3 South Lanarkshire Council Charitable Trusts has effective and appropriate arrangements in place for Financial Sustainability and for securing Best Value. 110
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Introduction | 4 Introduction Purpose of the Annual Audit Report 1. The purpose of this Annual Audit Report is to report the significant matters identified from the 2024/25 audit of South Lanarkshire Council Charitable Trusts annual accounts and the wider scope areas specified in the Code of Audit Practice (2021). 2. The Annual Audit Report is addressed to South Lanarkshire Council Charitable Trusts and the Controller of Audit, and will be published on Audit Scotland’s website in due course. Appointed auditor and independence 3. Mark Ferris, of Audit Scotland, has been appointed as external auditor of South Lanarkshire Council Charitable Trusts for the period from 2022/23 until 2026/27. As reported in the Annual Audit Plan, Mark Ferris as engagement lead and the audit team are independent of South Lanarkshire Council Charitable Trusts in accordance with relevant ethical requirements, including the Financial Reporting Council’s Ethical Standard. There have been no developments since the issue of the Annual Audit Plan that impact on the continued independence of the engagement lead or the rest of the audit team from South Lanarkshire Council Charitable Trusts, including no provision of non-audit services. Acknowledgements 4. We would like to thank the Charitable Trust and its staff, particularly those involved in preparation of the annual accounts, for their cooperation and assistance during the audit. We look forward to working together constructively over the remainder of the five-year audit appointment. 111
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Audit scope and responsibilities | 5 Audit scope and responsibilities Scope of the audit 5. The audit is performed in accordance with the Code of Audit Practice, including supplementary guidance, International Standards on Auditing (ISA) (UK), and relevant legislation. These set out the requirements for the scope of the audit which includes: • An audit of the financial statements and an opinion on whether they give a true and fair view and are free from material misstatement. • An opinion on statutory other information published with the financial statements in the annual accounts and the Trustees Report. • Concluding on the financial sustainability of South Lanarkshire Council Charitable Trusts. • Reporting on South Lanarkshire Council Charitable Trusts arrangements for securing Best Value. • Provision of this Annual Audit Report. Responsibilities and reporting 6. The Code of Audit Practice sets out the respective responsibilities of the body and the auditor. A summary of the key responsibilities is outlined below. Auditor’s responsibilities 7. The responsibilities of auditors in the public sector are established in the Local Government (Scotland) Act 1973. These include providing an independent opinion on the financial statements and other information reported within the annual accounts, and concluding on South Lanarkshire Council Charitable Trusts arrangements in place for the wider scope areas and Best Value. 8. The matters reported in the Annual Audit Report are only those that have been identified by the audit team during normal audit work and may not be all that exist. Communicating these does not absolve the body from its responsibilities outlined below. 9. The Annual Audit Report includes an agreed action plan at Appendix 1 setting out specific recommendations to address matters identified and includes details of the responsible officer and dates for implementation. 112
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Audit scope and responsibilities | 6 South Lanarkshire Council Charitable Trusts responsibilities 10. South Lanarkshire Council Charitable Trusts has primary responsibility for ensuring proper financial stewardship of public funds, compliance with relevant legislation and establishing effective arrangements for governance, propriety, and regularity that enables it to successfully deliver its objectives. The features of proper financial stewardship include: • Establishing arrangements to ensure the proper conduct of its affairs. • Preparation of annual accounts, comprising financial statements for the body that gives a true and fair view and other specified information. • Establishing arrangements for the prevention and detection of fraud, error and irregularities, and bribery and corruption. • Implementing arrangements to ensure its financial position is soundly based. • Making arrangements to secure Best Value. • Establishing an internal audit function. 113
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Audit of the annual accounts | 7 Audit of the annual accounts Main judgements All audit opinions stated that the annual accounts were free from material misstatement. There were no significant findings or key audit matters to report. All audit adjustments required to correct the financial statements were processed by South Lanarkshire Council Charitable Trusts. Audit opinions on the annual accounts 11. South Lanarkshire Council Charitable Trusts annual accounts were approved by the Risk and Audit Scrutiny Committee on 30 September 2025 and certified by the appointed auditor on 30 September 2025. The Independent Auditor’s Report is included in South Lanarkshire Council Charitable Trusts annual accounts, and this reports that, in the appointed auditor’s opinion, these were free from material misstatement. Audit timetable 12. The unaudited annual accounts and all working papers were received on 26 June 2025 in accordance with the agreed audit timetable. Audit Fee 13. The audit fee for the 2024/25 audit was reported in the Annual Audit Plan and was set at £2,000. There have been no developments that impact on planned audit work required, therefore the audit fee reported in the Annual Audit Plan remains unchanged. Materiality 14. The concept of materiality is applied by auditors in planning and performing an audit, and in evaluating the effect of any uncorrected misstatements on the financial statements or other information reported in the annual accounts. 15. Broadly, the concept of materiality is to determine whether misstatements identified during the audit could reasonably be expected to influence the decisions of users of the annual accounts. Auditors set a monetary threshold when determining materiality, although some issues 114
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Audit of the annual accounts | 8 may be considered material by their nature. Therefore, materiality is ultimately a matter of the auditor’s professional judgement. 16. Materiality levels for the audit of South Lanarkshire Council Charitable Trusts were determined at the risk assessment phase of the audit and were reported in the Annual Audit Plan, which also reported the judgements made in determining materiality levels. These were reassessed on receipt of the unaudited annual accounts. No changes were required to the materiality levels, which are outlined in Exhibit 1. Exhibit 1 2024/25 Materiality levels for the body Materiality Charitable Trust Materiality – set at 2 per cent of the benchmark. £24,210 Performance materiality – set at 75 per cent of planning materiality. As outlined in the Annual Audit Plan, this acts as a trigger point. If the aggregate of misstatements identified during the audit exceeds performance materiality, this could indicate further audit procedures are required. £18,158 Reporting threshold – all misstatements greater than the reporting threshold will be reported. £1,210 Source: Audit Scotland Significant findings and key audit matters 17. ISA (UK) 260 requires auditors to communicate significant findings from the audit to those charged as governance, which for South Lanarkshire Council Charitable Trusts is the Risk and Audit Scrutiny Committee. 18. The Code of Audit Practice also requires public sector auditors to communicate key audit matters. These are the matters that, in the auditor’s professional judgement, are of most significance to the audit of the financial statements and require most attention when performing the audit. 19. In determining key audit matters, auditors consider: • Areas of higher or significant risk of material misstatement. • Areas where significant judgement is required, including accounting estimates that are subject to a high degree of estimation uncertainty. • Significant events or transactions that occurred during the year. 115
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Audit of the annual accounts | 9 20. There are no significant findings or key audit matters to report. Qualitative aspects of accounting practices 21. ISA (UK) 260 also requires auditors to communicate their view about qualitative aspects of the body’s accounting practices, including accounting policies, accounting estimates, and disclosures in the financial statements. Accounting policies 22. The appropriateness of accounting policies adopted by South Lanarkshire Council Charitable Trusts was assessed as part of the audit. These were considered to be appropriate to the circumstances of South Lanarkshire Council Charitable Trusts, and there were no significant departures from the accounting policies set out in the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). Disclosures in the financial statements 23. The adequacy of disclosures in the financial statements was assessed as part of the audit. The quality of disclosures was adequate. Significant matters discussed with management 24. All significant matters identified during the audit and discussed with the Charitable Trust’s management have been reported in the Annual Audit Report. Audit adjustments 25. There was one audit adjustment required to the financial statements to include £1,297 for cash and short-term maturity bonds in the investments balance which had been omitted from the unaudited accounts. Significant risks of material misstatement identified in the Annual Audit Plan 26. Audit work has been performed in response to the significant risks of material misstatement identified in the Annual Audit Plan. The outcome of audit work performed is summarised in Exhibit , (page 10). 116
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Audit of the annual accounts | 10 Exhibit 2 Significant risks of material misstatement to the financial statements Risk of material misstatement Planned audit response Outcome of audit work Fraud caused by management override of controls Management is in a unique position to perpetrate fraud because of management’s ability to override controls that otherwise appear to be operating effectively. The audit team will: • Evaluate the design and implementation of controls over journal entry processing. • Make inquiries of individuals involved in the financial reporting process about inappropriate or unusual activity relating to the processing of journal entries and other adjustments. • Test journals entries, focusing on those that are assessed as higher risk. • Evaluate significant transactions outside the normal course of business. • Assess the adequacy of controls in place for identifying and disclosing related party relationships and transactions in the financial statements. Audit work performed found: • The design and implementation of controls over journal processing were appropriate. • No inappropriate or unusual activity relating to the processing of journal entries was identified from discussions with individuals involved in financial reporting. • No significant issues were identified from testing of journal entries. • No significant issues were identified from transactions outside the normal course of business. • The controls in place for identifying and disclosing related party relationships and transactions were adequate. Conclusion: no evidence of fraud caused by management override of controls. Source: Audit Scotland 117
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Financial Sustainability and Best Value audit | 11 Financial Sustainability and Best Value audit Conclusion The Charitable Trust has effective and appropriate arrangements in place for Financial Sustainability and for securing Best Value. Audit approach to wider scope and Best Value Wider scope 27. The Annual Audit Plan reported South Lanarkshire Council Charitable Trusts was considered to be a less complex body for the wider scope audit. Therefore, the wider scope audit does not cover all four wider scope areas and is instead limited to concluding on the financial sustainability of South Lanarkshire Council Charitable Trusts. Duty of Best Value 28. The duty on auditors to consider the arrangements in place to secure Best Value applies to the body as it falls within section 106 of the Local Government (Scotland) Act 1973. 29. Consideration of the arrangements South Lanarkshire Council Charitable Trusts has in place to secure Best Value has been carried out alongside the wider scope audit. Conclusions on Financial Sustainability 30. The audit work performed on the arrangements South Lanarkshire Council Charitable Trusts has in place for securing financial sustainability found that these were effective and appropriate. This judgement is evidenced by South Lanarkshire Council Charitable Trusts: • having effective arrangements in place for identifying risks to financial sustainability over the medium and longer-term, and understanding medium and longer-term demand pressures that could impact on available resources. 118
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Financial Sustainability and Best Value audit | 12 Conclusions on Duty of Best Value 31. The audit work performed on the arrangements South Lanarkshire Council Charitable Trusts has in place for securing Best Value found these were effective and appropriate. This judgement is evidenced by: • South Lanarkshire Council Charitable Trusts having well established and effective governance arrangements in place. • the arrangements South Lanarkshire Council Charitable Trusts has in place to secure financial sustainability which help ensure the effective use of available resources. 119
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South Lanarkshire Council Charitable Trusts (SC025089) 2024/25 Annual Audit Report - Proposed Audit Scotland, 4th Floor, 102 West Port, Edinburgh EH3 9DN Phone: 0131 625 1500 Email: info@audit.scot www.audit.scot AS.5.0 120
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 30 September 2025 Report by: Executive Director (Finance and Corporate Resources) Subject: Audited Annual Accounts 2024/2025 1. Purpose of Report 1.1. The purpose of the report is to:- [purpose] advise members of the requirement to approve the Annual Accounts 2024/2025 for signature, both Council and related Charitable Trusts [1purpose] 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- [recs] (1) that it be noted that the South Lanarkshire Council Accounts 2024/2025 and the Charitable Accounts have received a clean audit certificate; (2) that the audited South Lanarkshire Council Accounts 2024/2025 and the Charitable Trusts’ Accounts be approved for signature; (3) that it be noted that the External Auditor’s Report will be referred to South Lanarkshire Council for information; and (4) that it be noted that the Audited Accounts 2024/2025 will be available on the Council’s website (paragraph 3.6). [1recs] 3. Background 3.1. Following the publication of The Local Authority Accounts (Scotland) Regulations 2014, the members of the Committee are required to meet to consider approval of the Audited Accounts for signature. 3.2. The submission date for local government is generally set to be consistent with the date specified in accounts regulations by which a body is required to approve its audited annual accounts. For 2024/2025, the submission date is 30 September 2025. 3.3. The members are also required to have regard to any report made or advice provided on the Annual Accounts by the External Auditor. 3.4. The External Auditor’s Report was included as an earlier report to this meeting and will be referred to a meeting of South Lanarkshire Council for information. 3.5. Copies of the (unsigned) Audited Accounts 2024/2025, for both the Council and Related Charities, have been emailed to members of this Committee under separate cover. Copies of the Council’s Audited Accounts, the Charitable Trusts’ Audited Accounts and the External Auditor’s Report will be issued to all Elected Members for their information. 4 121
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3.6. Once signed, the Audited Accounts will be available to the general public on the Council’s website and we can arrange to send a copy out to anyone who requests them. 4. Audited Accounts – South Lanarkshire Council 4.1. As noted in paragraph 3.1, members of the Committee are required to approve the Audited Accounts for signature. A copy of the Audited Accounts for 2024/2025 are being emailed to Members of this Committee under separate cover. 4.2. As detailed in an earlier report to this Committee, at the time of writing, the Council’s External Auditors, Audit Scotland, are in the process of completing the audit which extends across the 2024/2025 Accounts and related matters. 4.3. The report notes that, at the time of writing, the External Auditor has provided a clear Audit Certificate with no qualifications on the Council’s Accounts. 4.4. The External Auditor’s Report also includes an agreed action plan at Appendix 1. Officers of the Council will work to ensure that these actions are implemented during 2025/2026. 5. Audited Accounts – Charitable Trusts 5.1. Members of the Committee are required to approve the Charitable Trusts’ Audited Accounts for signature. A copy of the Audited Accounts for 2024/2025 have been emailed to Members of this Committee under separate cover. 5.2. The External Auditor also reports on the 2 Charitable Trusts managed by the Council: South Lanarkshire Council Educational Trust and South Lanarkshire Council Charitable Trust. 5.3. The External Auditor’s report shows a clear audit certificate for each Trust. 6. Employee Implications 6.1. There are no direct employee implications from this report. 7. Financial Implications 7.1. There are no direct financial implications arising from this report. The Annual Accounts received a clear audit certificate. Any changes identified in the External Auditor’s report have been made and the impact on the Council’s outturn reflected in the Audited Accounts. 8. Climate Change, Sustainability and Environmental Implications 8.1. There are no implications for climate change, sustainability or the environment in terms of the information contained in this report. 9. Other Implications 9.1. The main risk associated with the Council and Charitable Annual Accounts is a qualified audit report. The risk has been assessed as low due to the detailed preparation in relation to the year end process, technical training undertaken by key finance staff and the roll out of this to Resource finance staff as appropriate. Finance and Resources work together to achieve key deadlines and actions set from timetables. 122
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10. Integrated Impact Assessment and Consultation Requirements 10.1. This report does not introduce a new policy, function or strategy or recommend a change to an existing policy, function or strategy and, therefore, no impact assessment is required. 10.2. There is also no requirement to undertake any consultation in terms of the information contained in this report. Jackie Taylor Executive Director (Finance and Corporate Resources) 19 September 2025 Link(s) to Council Values/Priorities/Outcomes Accountable, effective, efficient and transparent Previous References None List of Background Papers South Lanarkshire Council Annual Accounts 2024/2025 and External Auditor’s Report. Charitable Trusts’ Annual Accounts 2024/2025 and External Auditor’s Report. Financial Ledger 2024/2025 and associated working papers. Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Lorraine O'Hagan, Head of Finance (Strategy) Ext: 2601 (Tel: 01698 452601) E-mail: lorraine.o’hagan@southlanarkshire.gov.uk 123
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 30 September 2025 Report by: Executive Director (Finance and Corporate Resources) Subject: Internal Audit Activity Report 1. Purpose of Report 1.1. The purpose of the report is to:- update the Risk and Audit Scrutiny Committee (RASC) on the progress, performance and output from the Internal Audit service in the period 1 June to 31 August 2025. 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- (1) that progress with delivering the 2025/2026 Internal Audit Plan be noted; (2) that performance in the period to 31 August 2025, as detailed in Appendix 1, be noted; (3) that the proposed amendment to the Audit Plan, as set out in paragraph 4.3, be approved; (4) that audit output from assignments completed in the period, as detailed in appendices 2 and 3, be noted; and (5) that the responses to the Accounts Commission Consultation, as detailed in Appendix 4, be noted. 3. Executive Summary 3.1. The Internal Audit Plan for 2025/2026 was approved by the Risk and Audit Scrutiny Committee (RASC) in February 2025. A copy of this plan can be found here. Good progress has been made with 74% of the Plan in progress at the end of August 2025. A final report has been issued for 14% of assignments in the Plan, representing reasonable progress at this point in the year. The following targets have been set to progress the Plan for the remainder of the year:- RASC meeting Assignments to Draft Report Stage December 2025 29% March 2026 59% May 2026 100%1 3.2. There are no significant concerns at the end of August 2025 around the overall deliverability of the Plan but, there remains, inherent risks around unforeseen service demands and, potentially, responding timeously to team up-skilling requirements, particularly around the development of digital skills. These risks are mitigated by 1 This pattern of delivery reflects that the nature of some audit assignments is such that they are delivered across the financial year and cannot be closed until the end of this period. 5 125
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inclusion of contingency time within the annual plan, a focus on coaching and training and setting realistic expectations around the extent to which data analytics can begin to be incorporated more widely within audit assignments. 3.3. The risk of significant, subsequent amendments to the Plan, arising from a change in the Council’s priorities or risks, is managed by a regular re-assessment of capacity and Audit Plan content to allow incremental adjustments and reporting to the RASC as the year progresses. 3.4. Having provided the mandate for an internal audit service to be delivered within South Lanarkshire Council (which includes the authority, role and responsibilities under which Internal Audit operates), the Committee should satisfy itself that the function is fulfilling its mandate. One element of this is to review how the Service has performed in the period under review. 3.5. To assist the Committee in scrutinising performance, a new suite of performance indicators has been developed. These are set out in Appendix 1 alongside targets and an overall assessment as to whether it is anticipated that these will be met by 31 March 2026. All indicators have been included for completeness, but some are not reported until the end of the financial year. The table notes how these are being progressed in the interim to provide assurance that all aspects of performance are being managed. 3.6. There are currently 5 indicators assessed as amber. A list of these indicators and planned corrective action is as follows:- Indicator Corrective Action number of processes where we use continuous control monitoring to be developed as part of Fusion programme of testing through to 31 March 2026 number of training days per employee plans to be formalised in Q2 plan completed to draft report stage by 30 April targets to complete set out at 3.1 Internal Audit recommendations followed up planned work in Q3 and Q4 3.7. Members are asked to note progress with delivering the approved Plan in the period, and that overall performance against delivery targets is positive in the period to 31 August 2025. 4. Audit Plan Progress 4.1. The last progress report to the Committee was in June 2025 and reported on work completed in the period 12 April to 30 May 2025. This report covers all work completed in the period 1 June to 31 August 2025. 4.2. All assignments from 1 April 2025 will be conducted in conformance with the Global Internal Audit Standards. Three assignments from 2024/2025 and 7 assignments from 2025/2026 were completed or closed in the period to 31 August 2025. These are as follows:- Audit Assignment Scope of Assignment Data Breach review of controls Capital Monitoring Arrangements review of controls Primary School Cash Review review of controls External Audit provision of a full extract of transactions for the year ended 31 March 2025 Self-Directed Support see paragraph 4.3 126
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Audit Assignment Scope of Assignment Governance Statement participation in process to draft 2024/2025 annual governance statement Economic Crime and Corporate Transparency Act 2023 review requirements of new legislation, assess current practice and identify any further actions to be taken Housing Allocation review of controls 2024/2025 Annual Assurance Report preparation of the annual assurance report Accounts Commission Consultation prepare and submit response to consultation exercise 4.3. All of these assignments, except Self Direct Support, were progressed to a final report. It is proposed that the planned assignment reviewing Self-Directed Support arrangements is deferred to 2026/2027 to align with the implementation of Liquid Logic, a new IT system being implemented by Social Work Resources. It is intended that the allocated days for this assignment should be assigned to a substitute audit to review direct payment arrangements within Social Work Resources. This audit has been chosen as some adhoc reviews of the process have been undertaken in recent years to respond to specific concerns and it is considered that a wider audit of the process would allow a fuller assessment of all risks and the controls in place to mitigate. 4.4. A summary of the audit output for each assignment (listed at 4.2) is detailed in Appendix 2. Further information in relation to the one, more significant assignment, Economic Crime and Corporate Transparency Act 2023, is set out at Appendix 3. The key points from this include the introduction of a new ‘failure to prevent fraud’ offence from 1 September 2025, which will hold large organisations, including the Council, to account if they profit from fraud. To ensure compliance with the new legislation, the Council is taking proactive steps to understand its fraud risk exposure and review the effectiveness of the measures in place to prevent, detect and respond to fraud, which should mitigate the risk of corporate criminal liability. Members should note the detail of this new offence outlined in Appendix 3. 4.5. Included in Appendix 4 is South Lanarkshire Council’s response to a recent consultation exercise conducted by the Accounts Commission. 4.6. In addition to these assignments, 8 assignments were finalised in the same period for external clients. Output from these audits will be reported to their respective audit committees and Boards. 4.7. Members are asked to note the assignments completed and closed in the period and approve the proposal to defer one assignment to 2026/2027, replacing with an assignment to review the process around direct payments. 5. Key Findings and Recommendations 5.1. Across all the assignments concluded in the period, Council Resources have demonstrated a good level of engagement and, where required, an action plan has been developed and agreed to address areas for improvement. These actions have now been logged together with a ‘responsible owner’ and a due date. Verbal updates will be obtained when the action falls due. This is classed as an informal follow up and included within routine performance indicators reported to RASC. Separately, actions will be formally followed up to confirm that there is evidence of action being taken and the findings of these reviews reported to RASC throughout the year. 127
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5.2. 36 internal audit actions fell due in the period to 31 August 2025. These are related to 6 special investigation assignments and a review of capital monitoring arrangements. 88% have been verbally advised and implemented on time. 6. Emerging Risks and Issues 6.1. The annual process to review the Council’s top risks has concluded and is being reported to this meeting of the RASC. 6.2. These revised risks have been mapped to the approved 2025/2026 Internal Audit Plan, with 4 from 5 of the top risks (categorised as very high) within the scope of planned assignments in 2025/2026. A further 3 from 11 of the top risks (categorised as high) are within the scope of planned assignments in 2025/2026. 6.3. New and emerging risks will continue to develop as the year progresses, and there will be periodic re-assessments of the Plan to ensure that it continues to be risk- based and aligned to the organisation’s objectives. Any proposed amendments to the Plan will be presented to RASC for approval. 7. Compliance and Standards Update 7.1. A report that set out the requirements and responsibilities of the new Global Internal Audit Standards (GIAS), which were effective from 1 April 2025, was presented to this Committee on 18 February 2025. A copy of this report can be found here. 7.2. As an audit committee, the RASC have a key role to play in ensuring that the internal audit function adheres to the Standards and fulfils its mandate effectively and efficiently. The RASC demonstrates support for the Service by engaging constructively with internal audit’s findings, conclusions and advice. 7.3. The role of audit committees is set out in some detail in Domain 3 “governance of the Internal Audit function”, the main elements of which are to:- provide the mandate setting out the authority, role and responsibilities under which Internal Audit operates obtain assurance that Internal Audit is fulfilling its mandate review and approve the internal audit charter as reflecting the Committee’s expectations of the internal audit service that will be delivered within the Council meet with the Chief Internal Auditor on a periodic basis ‘champion’ and demonstrate support for Internal Audit review the governance, management and reporting arrangements of the internal audit function assist with setting audit priorities review and approve arrangements for the external assessment 7.4. The Code of Practice for the Governance of Internal Audit in UK Local Government Code assists with the interpretation of the new GIAS, but specifically, in relation to these activity updates, the Committee should be satisfied that the content is such as to allow them to effectively scrutinise and challenge. 7.5. A process to map current practice to all elements of the new GIAS is underway, and in December 2025, a detailed Audit Strategy will be presented to the Committee ahead of the proposed Audit Plan for 2026/2027 in March 2026. Progress to align to the new GIAS can be seen in the revised and extended suite of performance indicators as set out in Appendix 2 and, together with the presentation of a detailed Audit Strategy later in the year, will address the 2 main gaps in compliance with GIAS. 128
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8. Governance and Committee Engagement 8.1. The Council’s Internal Audit Manager attends all meetings of the RASC. The authority of the internal audit function is established through its direct reporting relationship to the Council’s audit committee, which allows for unrestricted access. 8.2. Arrangements to allow members of the RASC to meet privately with the Internal Audit Manager, as required by GIAS, are being finalised and will allow an opportunity to provide feedback around the revised format of the activity report and to share suggestions for areas for inclusion in the 2026/2027 Internal Audit Plan. 8.3. Further one-to-one or group support will continue to be available to Members should this be required to allow Members to ensure appropriate scrutiny can be undertaken by them in their role. 9. Employee Implications 9.1. There have been no changes to the team in the period to 31 August 2025, and there are no vacancies within the Service. Training arrangements are being formalised, which include regular team briefs, internal training sessions, attendance at professional body conferences and external seminars and briefings. 10. Financial Implications 10.1. The Internal Audit plan for the year aligns to the budget that has been set, and sufficient resources are in place to deliver the approved programme of audit assignments. 11. Other Implications 11.1. There are no implications for sustainability in terms of the information contained in this report. 12. Integrated Impact Assessment and Consultation Requirements 12.1. There is no requirement to equality assess the contents of this report. Heads of Service are consulted on each and every audit assignment. Jackie Taylor Executive Director (Finance and Corporate Resources) 5 September 2025 Link(s) to Council Values/Priorities/Outcomes Accountable, effective, efficient and transparent Previous References Risk and Audit Scrutiny Committee - 30 January 2025 Risk and Audit Scrutiny Committee – 6 May 2025 Risk and Audit Scrutiny Committee – 25 June 2025 List of Background Papers Figtree extracts of Action Plans 129
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Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Yvonne Douglas, Internal Audit Manager Ext: 2618 (Tel: 01698 452618) E-mail: yvonne.douglas@southlanarkshire.gov.uk 130
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Key audit performance indicators Appendix 1 Measures reported during financial year Area Monthly Measure Target Actual Status Operation Number of open vacancies 0 0 Operation Employees holding a qualification from a recognised CCAB body or Institute of Internal Auditors 75% 75% Operation Number of audits completed that comply with the requirements of Global Internal Audit Standards 100% 100% Operation Number of processes where we use continuous control monitoring 3 1 Operation Number of training days per employee 5 2 Operation Plan completed to draft report stage by 30 April 100% 14% Performance Internal Audit recommendations delivered on time 80% 88% Performance Utilisation of contingency time by 30 April 100% 29% Performance Meetings with Heads of Service during each audit 2 2 Performance Planned assignments deferred to a future year to accommodate unplanned work 0 0 Performance Draft reports issued by target date 80% 100% Performance Audit assignments completed within budget days 80% 100% Performance Internal Audit recommendations followed up 80% 0% Performance Top risks covered in the audit plan on an annual basis 33% 44% Performance Number of Council Services covered by Audit Plan on an annual basis 33% 62% Strategic Number of audits where objectivity or independence is impaired 0 0 131
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Area Monthly Measure Target Actual Status Strategic Audits that align to the Council's values 100% 100% Strategic Internal Audit Manager attendance at meetings of the RASC 100% 100% Strategic Number of formal complaints about the Service 0 0 Strategic Audit Plan presented to Risk and Audit Scrutiny Committee March 2025 February 2025 Strategic Annual Internal Audit Report presented to Risk and Audit Scrutiny Committee June 2025 June 2025 Measures to be reported at the end of the financial year Area Monthly Measure Target Actual Status Operation Number of key performance indicators achieved 100% March 2026 Performance Planned annual audit days delivered by 30 April 100% March 2026 Strategic Issue of Service questionnaires to support audit planning process and assess levels of satisfaction with the Service March 2026 March 2026 Strategic Audit Strategy presented to Risk and Audit Scrutiny Committee Ahead of 2026/2027 IA Plan Scheduled December 2025 Strategic Meetings with 5 Executive Directors and Chief Executive each financial year 1 Scheduled Q3 Strategic Meeting with members of the Risk and Audit Scrutiny Committee (in private and without senior management) 1 Scheduled Q3 132
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Definition of Measures AREA DEFINITION Operation measures that assess day to day operational targets for the Service Performance measures the effectiveness of the Service in its delivery of core objectives Strategic measures as to how activity aligns to wider organisational objectives STATUS DEFINITION anticipate that target will not be met by 31 March 2026 anticipate that target will be met by 31 March 2026 but some slippage that requires corrective action anticipate that target will be met by 31 March 2026 133
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Assignments completed 1 June to 31 August 2025 Appendix 2 Number Assignment name Draft Issue Final Issue Audit Conclusion I672211 Data Breach 01/06/2025 01/06/2025 Review of arrangements and identification of series of actions. An action plan has been agreed. I674225 Capital Monitoring Arrangements 09/04/2025 11/07/2025 Review of arrangements and identification of series of actions. An action plan has been agreed. I674233 Primary School Cash Review 22/04/2025 12/06/2025 Theft of cash. Review of arrangements and identification of series of actions. An action plan has been agreed. I261122 External Audit Work 05/09/2025 05/09/2025 Provision of financial ledger data to the External Audit for the year ended 31 March 2025. I342127 Self-Directed Support 05/09/2025 05/09/2025 Proposed deferment of assignment to 2026/2027. I350125 Governance Statement 25/06/2025 25/06/2025 Participation in process to draft 2024/2025 Annual Governance Statement. I620240 Economic Crime and Corporate Transparency Act 2023 05/09/2025 05/09/2025 See Appendix 3. I672241 Housing Allocation 20/06/2025 20/06/2025 Review of arrangements and identification of series of actions. An action plan has been agreed. I821047 2024/2025 Annual Assurance Report 25/06/2025 25/06/2025 Preparation and presentation of the 2024/2025 Internal Audit Annual Assurance report. I710105 Accounts Commission – Response to Consultation 08/08/2025 08/08/2025 See Appendix 4. assignments with action plans 134
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Appendix 3 The Economic Crime and Corporate Transparency Act (ECCTA) 2023 Background 1.1 The Economic Crime and Corporate Transparency Act (ECCTA) 2023 is a UK law aimed at combating economic crime, improving corporate transparency, and reforming Companies House. The Act introduces new measures to prevent fraud, money laundering, and other financial crimes, as well as reforms as to how companies are registered and regulated. Specifically on 1 September 2025, a new offence failure to prevent fraud is created that is intended to hold large organisations to account if they profit from fraud. 1.2. Home Office guidance notes that, under the offence, an organisation may be criminally liable where an employee, agent, subsidiary, or other ‘associated person2’, commits a fraud3 intending to benefit the organisation and the organisation does not have reasonable fraud prevention procedures in place. In certain circumstances, the offence will also apply where the fraud offence is committed with the intention of benefitting a client of the organisation. It does not need to be demonstrated that directors or senior managers ordered or knew about the fraud. 1.3. The offence sits alongside existing law; for example, the person who committed the fraud may be prosecuted individually for that fraud, while the organisation may be prosecuted for failing to prevent it. 1.4. The offence is intended to hold organisations to account for fraud committed by employees, or other associated persons, which may benefit the organisation, or, in certain circumstances, their clients. It applies to large organisations4, such as South Lanarkshire Council, where 2 of the following apply: more than a £36 million turnover; more than £18 million in assets; more than 250 employees. 1.5. Organisations may face criminal prosecution and unlimited fines if they fail to prevent fraud, which overlaps with existing obligations under the failure to prevent tax evasion offences introduced under the Criminal Finances Act 2017. 1.6. The question of whether an organisation has reasonable procedures in place to prevent fraud will be decided by the courts and the onus will be on the organisation to prove that it had reasonable procedures in place to prevent fraud at the time the fraud was committed or the court is satisfied that it was not reasonable to expect the organisation to have any prevention procedures in place. 1.7. To ensure compliance with the legislation, the Council must now take proactive steps to understand its fraud risk exposure and review the effectiveness of the measures in 2 An employee, an agent or a subsidiary of the relevant body is automatically an ‘associated person’ for the purposes of this offence. A person who provides services for or on behalf of the relevant body is also an associated person while they are providing those services. 3 This includes fraud by false representation, fraud by failing to disclose information, fraud by abuse of position, false accounting / false statements, fraudulent trading, participation in a fraudulent business, cheating the public revenue and obtaining services dishonestly 4 All large, incorporated bodies, subsidiaries and partnerships; large not-for-profit organisations (such as incorporated charities); incorporated public bodies 135
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place to prevent, detect, and respond to fraud and, by doing so, mitigate the risk of corporate criminal liability. 2 Compliance 2.1. The Council’s defence, in the event of such a fraud, will be to have fraud prevention procedures in place that are deemed to be reasonable by a Court. Home Office guidance around ECCTA 2023 has been used to review existing fraud arrangements and to identify further actions that should be taken. The findings from this exercise are set out in paragraphs 4.2 to 4.24 below. 2.2. Recently published government guidance included several key considerations if an organisation is to be reliant on the reasonable procedures defence. There will be an onus on the Council to prove that it had reasonable procedures in place to prevent fraud at the time the fraud was committed, albeit procedures to prevent fraud should be proportionate to the risk. Public sector organisations are already required to implement the recommendations of the Public Sector Fraud Authority and the government counter fraud profession, and, as such, are therefore recognised as likely to have many of the elements of a robust fraud prevention framework in place. 2.3. The guidance issued by the Home Office sets out how compliance can be demonstrated across 6 broad headings: 2.4. Top level commitment: Home Office guidance notes that the responsibility for the prevention and detection of fraud sits with senior management and those charged with governance, and requires a demonstration of their commitment to prevent fraud. This is evidenced within South Lanarkshire Council by the RASC approving anti-fraud policies, ensuring fraud prevention is embedded within Service procedures and promoting training and encouraging an open culture founded on a zero-tolerance approach to fraud. 2.5. In May 2023, a revised Counter Fraud, Bribery and Corruption Policy was approved by RASC together with new Due Diligence and Anti-Tax Evasion Polices. These reflect the key principles and processes around the Council’s response to and management of fraud risk. A refreshed Conflict of Interest approach will now form part of the annual self-assessment governance process. 2.6. Oversight of fraud risk management is also achieved through RASC receiving reports on fraud statistics, trends and patterns on a bi-annual basis alongside reports on participation, progress and outcomes from the NFI Exercise. 2.7. To further embed a culture of zero-tolerance, it is intended to: make more direct reference within the Code of Conduct to the obligations and responsibilities of employees regarding fraud reflect this in the induction process for all new employees and require this to form part of the required ‘behaviours’ set out within annual performance appraisal forms roll out the fraud awareness programme (see below) undertake an annual review of the Council’s fraud policy and assess ongoing levels of compliance review the format of 6-monthly and annual fraud reports to provide a more comprehensive update on anti-fraud activity annual publishing of the Council’s conflict of interest policy and a reminder of an employee’s responsibility to declare 136
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Fraud Awareness Programme Current practices are assessed as meeting all of the requirements of a best practice fraud prevention framework but it is recognised that there would be a benefit in a more structured programme of communication to further embed a zero-tolerance approach to fraud, raise awareness of existing policies and procedures that manage the risk and demonstrate reasonable fraud prevention procedures are in place. Communications are issued to employees when policies are revised and ahead of data extraction for the NFI exercise when employees and South Lanarkshire residents are advised that a new Exercise is about to begin. It is suggested that this is supplemented by further communications. In summary, the programme includes an annual reminder of the fraud policy and of employee’s responsibility to declare any conflict of interest, an annual presentation on fraud risk to the Risk Sponsor’s Group to inform their review of the Council’s top risks and a yearly update on the NFI Exercise, including the sharing of broad outcomes from the investigation of matches. In both years, it is intended that fraud awareness bulletins will be posted daily (over the course of 1 week on the intranet). 2.8. Risk assessment: fraud is recognised as one of the Council’s top risks that is mitigated via a series of controls that are set out within risk control cards reviewed on an annual basis. Separately, more detailed fraud risk registers are maintained by Resources and, again, reviewed annually. These processes have now been merged in 2025/2026 to improve efficiency and ensure alignment between top risk and Resource-specific fraud risk registers. 2.9. To provide assurance around the adequacy of fraud risk assessments, these are now being reviewed to provide assurance that these: identify where the Council could be susceptible to fraud across its key business operations determine the level of exposure in an objective, consistent and proportionate manner enable the Council to effectively prioritise its resources in mitigating fraud risks identify what processes are in place within the Council to detect instances of fraud and how data is used to enable timely detection put in place a robust Counter Fraud Forward Plan integrated and aligned with the wider Internal Audit Plan to provide assurance over the internal controls in respect of fraud set out a fraud awareness and training programme to promote a culture of integrity where employees feel empowered and responsible for preventing fraud make best use of the resources and expertise within Internal Audit to emphasise the need to counter fraud develop a communication plan in respect of Counter Fraud signpost staff and services not only to their own operational procedures and guidance which references fraud prevention but also to the Council’s specific Counter Fraud Policies develop a Counter Fraud Forward Plan (work programme) for 2025/2026 map the Counter Fraud Forward Plan to the new Global Internal Audit Standards ensure that the RASC receive periodic updates in fraud reports that are presented 137
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2.10. Proportionate risk-based prevention procedures: the guidance defines these as being procedures that are proportionate to the fraud risk that the organisation faces and being reflective of the nature, scale and complexity of operations. Council Services have developed detailed procedures that include controls to minimise the opportunities for fraud and processes to detect fraud, should this occur. Wider corporate procedures5 set out the process and consequences if fraud is committed by an employee. 2.11. Audit programmes include a standard suite of fraud checks where a process or procedure is being reviewed. 2.12. To support the ongoing review of anti-fraud procedures, it is intended to:- review the fraud audit programme on an annual basis and amend as appropriate capture data around how many of these checks have been undertaken over the course of a year and report within the annual fraud report require all Resources to review Service specific procedures to ensure these incorporate fraud prevention measures and that there is evidence of a periodic briefing of employees 2.13. Due diligence: fraud risks extend beyond internal threats to also include those persons who perform or will perform services for or on behalf of the Council. The Council seeks to mitigate such risks through financial appraisals, declarations and compliance clauses within contracts. 2.14. Actions in response to due diligence requirements are to: review current vetting of employees, agents, contractors, and subsidiaries who act “for or on behalf of” the organisation. 2.15. Communication (including training): the prevention of fraud is the responsibility of every employee of the Council, so it is key that prevention policy and procedures are communicated, embedded and understood. Awareness and understanding of policies and procedures are key to ensuring that these effectively manage the risk of fraud and, where required, provide a clear route for reporting concerns. Training is broadly via Personnel Circulars or, at times, more targeted briefings. Wider fraud awareness training is recommended, if required within a specific Service. Although fraud control measures are embedded within processes, investigative work undertaken by Internal Audit has identified that levels of fraud awareness could be improved so that all employees are mindful of fraud risks, how these are managed and controlled and how concerns should be reported. A whistle-blowing process is included within the Counter Fraud, Bribery and Corruption Policy but is noted, on review, as not being formally re-publicised on a periodic basis. To address gaps, a formal fraud awareness programme has been developed. 2.16. Although current practices were assessed as meeting all of the requirements of a best practice fraud prevention framework it was recognised that there would be a benefit in a more structured programme of communication to further embed a zero- tolerance approach to fraud, raise awareness of existing policies and procedures that manage the risk and demonstrate reasonable fraud prevention procedures are in place. 5 Counter Fraud, Bribery and Corruption Policy (January 2023) 138
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2.17. Communications were noted as issued to employees when policies are revised and ahead of data extraction for the NFI exercise when employees and South Lanarkshire residents are advised that a new Exercise is about to begin. This will now be supplemented by further communications in the agreed programme. 2.18. In summary, the programme includes an annual reminder re the fraud policy and of employee’s responsibility to declare any conflict of interest, an annual presentation on fraud risk to the Risk Sponsor’s Group to inform their review of the Council’s top risks and a yearly update on the NFI Exercise, including the sharing of broad outcomes from the investigation of matches. In both years, a week of fraud awareness bulletins will be posted daily on the intranet. 2.19. The content of the programme will be reviewed after 2026/2027, and a further programme for the next 2 years developed. 2.20. Only one other action has been identified in this area to:- develop a formal programme of Learn fraud modules on Fusion 2.21. Monitoring and Review: this is the final principle in the fraud prevention framework and is around the monitoring and review of fraud detection and prevention procedures, making improvements where necessary. As required by this principle, South Lanarkshire Council can demonstrate that it learns from investigations and whistleblowing incidents with action plans developed and improvements tracked. 2.22. Whistleblowing is recognised as one of the most effective ways to uncover corruption, fraud, mismanagement and other wrongdoing. An action to review whistle-blowing arrangements against the requirements of Home Office guidance and wider best practice has been included in the action plan. 2.23. Detection of attempted fraud is an area where new digital processes are being developed to analyse data on a regular, cyclical basis. This has the benefit of being able to test significant volumes of data using pre-determined risk criteria. Time to extend the use of such tools, along with a review of the reporting functionality within Oracle Fusion, is included within the 2025/2026 Internal Audit Plan. Again, an action has been included in the action plan to track progress with developing this form of analysis. 2.24. The guidance notes that the court will consider adherence to the principles set out in the guidance. More detailed risk assessments, fraud prevention plans which are adhered to and monitored, and additional resource allocation are a clear expectation. Notwithstanding that existing arrangements establish a sound foundation, actions set out above would further strengthen arrangements. These have been included in an action plan. Each action has a responsible owner and timescale for completion and progress with delivery will be reported periodically to RASC. 139
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Appendix 4 South Lanarkshire Council response to “Our work, your views – Consultation on the Accounts Commission’s work and priorities” consultation: 1. To what extent have our recent reports and recommendations been considered or used within your organisation or across your sector to support improvement? All reports are reviewed, and where there are relevant points for South Lanarkshire Council, an action plan is developed. If appropriate, a report is presented to senior management and to Council Committees. 2. If applicable, can you provide any examples? (Optional) The recent report on the Council Tax fraud at Aberdeen City Council led to a review of controls around the processing of refunds within South Lanarkshire Council. Learning points were taken around how the fraud had been perpetuated, and additional data payment validation is now undertaken. 3. Do you have any comments or feedback about the formats of our recent publications? The format is generally helpful, reports are clear and concise with the summary of key points particularly useful. 4. In which of our current areas of work do you think the Accounts Commission can have the most impact? All current areas of work are in areas that the Council would consider to be significant risks. 5. What else could the Commission do, alongside publication of our reports, to maximise impact and support improvement in these areas? Bench-marking and sharing best practice is helpful as this supports a review of the Council’s existing policy and processes. Sharing lessons learned from fraud is also helpful. Whilst it is important to summarise the nature, challenges, and risks around the subject area, these are often already known and recognised within South Lanarkshire Council. It is helpful when there is a focus on suggested actions and pragmatic next steps. 6. Please provide any comments relating to this section. (Optional) None. 140
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7. Which of the areas under consideration for our future work do you think most urgently require attention from the Accounts Commission to highlight issues and support improvement? We agree that the over-arching themes of financial sustainability and transformation/reform are very relevant. Specific areas that link to identified top risks within the Council relate to local taxation; digital transformation; housing and homelessness and health and social care. 8. In what ways could we best support you or your organisation in the areas you selected in answer to the question above? It is helpful to provide a concise summary of issues; a benchmarking of approaches across local government (and across sectors); and an identification of good practice and suggested actions. 9. Please provide any comments relating to this section. (Optional) None. 141
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 30 September 2025 Report by: Executive Director (Finance and Corporate Resources) Subject: Financial Resilience and Sustainability 1. Purpose of Report 1.1. The purpose of the report is to:- provide a position on the Council’s Financial Outlook, financial resilience and sustainability, and how we can respond to the risks posed by the financial challenges ahead 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- (1) that the Financial Position and Plan for 2026/2027 and 2027/2028 (section 4), be noted; and (2) that the Financial Resilience Framework (section 5 and Appendix 1), be noted. 3. Background 3.1. A report on the Council’s Financial Resilience and Sustainability was presented to the Committee on 24 September 2024. This provided a summary of the 2025/2026 to 2026/2027 Budget Strategy, demonstrating the Council’s understanding of the medium-term financial outlook and providing information on the Council’s Financial Resilience and Sustainability. 3.2. A report titled 2026/2027 to 2027/2028 Revenue Budget Strategy was presented to the Executive Committee on 25 June 2025. 3.3. Section 9 of the June 2025 Revenue Budget Strategy report to the Executive Committee (link above) noted that an annual update on the Council’s financial sustainability would be presented to the Committee later in the year. 3.4. This report will, therefore, provide a summary of the 2026/2027 to 2027/2028 Budget Strategy reported in June, demonstrating the Council’s understanding of the medium- term financial outlook (section 4) and section 5 will provide information on the Council’s Financial Resilience and Sustainability. 4. Financial Position and Plan for 2026/2027 to 2027/2028 4.1. The report to Council in June covered the current estimates and assumptions resulting in the budget gap of £24.273 million for the next 2 years. This gap is the result of estimations around grant levels, cost increases, and the impact of temporary solutions previously put in place to manage pressures. This gap did not include any assumption around an increase in Council Tax. 6 143
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4.2. In addition, the report highlighted the significant risk that a pay award is set at a level that is higher than the Budget Strategy assumptions. A multi-year pay offer could result in a funding shortfall of up to £18 million (recurring) which would mean that the Budget Gap potentially increases from £24.273 million to a figure in excess of £42 million. This demonstrates the Council’s understanding of the medium-term financial outlook. 4.3. The June 2025 paper highlighted that one way of managing the Budget Gap is the programme of Transformational Reviews ongoing across the Council. The 2025/2026 approved Budget included savings of £6.485 million arising from completed Reviews. In addition, 2 of the savings approved for 2025/2026 have an impact of £1.267 million on the Budget Gap in 2026/2027. 4.4. The Transformational Reviews continue to progress, and as they do so, proposals will be presented to Members for approval as part of the budget-setting process for 2026/2027 and 2027/2028. This demonstrates a structured approach to identifying savings proposals for members’ consideration and will assist in managing the Budget Gap. 4.5. While any savings from the majority of the Reviews have still to be confirmed, it is acknowledged that it is unlikely that they would cover the full extent of the Budget Gap over the next 2 years, given that the Gap could potentially be in excess of £42 million (section 4.2). 4.6. The June 2025 paper outlined that another levers available to the Council to reduce the Budget Gap is an increase in Council Tax levels. 4.7. In South Lanarkshire, our comparatively low level of Council Tax (the lowest in Scotland) sets us apart from other councils and provides options for consideration when addressing the significant Budget Gap for future years. 4.8. A strategy could be developed to consider increasing South Lanarkshire Council’s Council Tax to a level more in line with the Scottish average. An option could be to develop plans to help reduce the Budget Gap through a planned movement to the Scottish Average Council tax level. Such a strategy could look to take the increase in Council Tax to a higher level, over a period of years, with the aim of moving to the average Council Tax level. This again demonstrates the structured approach presented for Members’ consideration, as part of assisting in managing the Budget Gap. 4.9. As part of the process of managing the Council’s finances over the coming 2 years, especially given the financial challenges that lie ahead and the Budget Gaps being faced by the Council, consideration again must be given to the Council’s position on resilience. More than ever, the Council needs to be able to demonstrate our strong financial management and how we will manage financially in these difficult times. Financial resilience is covered in the next section of this report. 5. Financial Resilience 5.1. It is acknowledged that financial resilience is a crucial aspect of financial management and is particularly important in light of the financial pressures facing local government especially following years of inflationary cost increases. It is recognised that this is about more than the reliance on usable reserves, and that councils need to be more comprehensive in their assessment of their level of financial resilience. 144
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5.2. This paper will detail how councils can demonstrate financial resilience, by explaining key aspects of financial strength as well as highlighting the areas that should continue to be monitored or examined further. 5.3. The financial resilience of the Council looks at its ability to anticipate and respond to changes in the internal and external financial environment. In order to do that, it is important to know what resources are available in a time of crisis and not just reserves. It is also important to understand the Council’s exposure to loss of income, your level of commitment to expenditure, and to know what flexibility the Council has in terms of accessing funds when they are required. Appendix 1 provides a framework which looks at:- a review of the balance sheet (Appendix 1, sections 4 to 17, including Council Reserves and Liquidity, Debt and Investment exposure to risk (Appendix 1, sections 18 to 23, including Significant Income Areas, Top Expenditure Commitments and Group Risk) 5.4. A summary of the Council’s performance in terms of the Financial Sustainability element of the Local Government Benchmarks is also included in Appendix 1 (sections 24 to 30) for consideration. 5.5. As with any set of indicators, there is not necessarily a right or a wrong answer. It is more important that they are used to provide financial context, and it may be that the trend in these figures over a number of years is more of an indicator for action as on an annual basis only, an issue might not be visible or may be overlooked. These indicators will continue to be monitored across time, and we will report these to the Committee on an annual basis. 5.6. Summary of Financial Resilience Framework: The financial resilience framework demonstrates the level of the Council’s financial resilience in a number of ways. The Council holds an uncommitted General Fund Reserve to protect against unforeseen events. This sits alongside a level of earmarked reserves which can be used in a managed way to smooth the impact of pressures across years – for example, the Loans Fund Review, Service Concessions and the reduced Pension Fund Contributions. This aligns with the Council’s medium-term financial strategy, which has been approved by Members and demonstrates good financial management through planning and managing key budget pressures. 5.7. The framework shows that the level of debt costs compared to the net income for the Council has increased from the previous year. An important point to note that these debt costs are the result of the planned borrowing undertaken by the Council and that the debt repayments are considered affordable as part of our Revenue Budget. 5.8. As well as looking at what resources are available in times of crisis, the financial resilience of the Council also looks at its ability to anticipate and respond to changes in the internal and external financial environment. In order to do that, it is important to understand the Council’s exposure to loss of income and key areas of budget pressure. The financial resilience framework details the significant income areas and also the areas of high spend / high risk that the Council acknowledges and will continue to monitor. 5.9. The Council participates in the Local Government Benchmarking Framework in relation to assessing sustainability. The Improvement Service note that a direct comparison cannot be drawn due to the nuances of individual councils and their own financial plans. However, reviewing the trend in the Council’s position over time will 145
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give context. From the Council’s own perspective, analysis of the ratios demonstrates the level of reserves held by the Council was lower than the Scottish average, as is the unearmarked element. However, at a value of £13.043 million, this is deemed an appropriate level but will continue to be monitored. The sustainability indicators also note that the Council finished its year-end in a break-even outturn position (after approved transfers to Reserves) which is a positive outturn. 5.10. This paper demonstrates the Council’s financial resilience by explaining its detailed financial planning, its level of reserves and its key financial strengths in terms of its balance sheet position. Any risks identified through horizon scanning are mitigated where appropriate through the Budget Strategy, a key part of the Council’s financial resilience framework. 6. Employee Implications 6.1. There are no direct employee implications from this report. 7. Financial Implications 7.1. The financial implications are summarised within the report. 8. Climate Change, Sustainability and Environmental Implications 8.1. There are no implications for climate change, sustainability or the environment in terms of the information contained in this report. 8.2. Climate Change targets will have an impact on the Council’s future financial strategies. This will be included in future Budget Strategy papers as appropriate. 9. Other Implications 9.1. The review of financial resilience is a way of understanding the key financial risks to the Council. The financial strategy is the way in which the Council can manage a number of these key risks which directly impact the money available to deliver Council outcomes. 9.2. The resilience indicators will continue to be monitored and will be reported on as appropriate. 10. Integrated Impact Assessment and Consultation Requirements 10.1. This report does not introduce a new policy, function or strategy or recommend a change to an existing policy, function or strategy and, therefore, no impact assessment is required. 10.2. There is no requirement to undertake any consultation in terms of the information contained in this report. 10.3. However, as the process to identify savings continues, and with proposals to be presented to members later in the year, stakeholder consultation and equality impact assessments will be carried out. The results will be provided to members to inform their decision-making process. 146
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Jackie Taylor Executive Director (Finance and Corporate Resources) 10 September 2025 Link(s) to Council Values/Priorities/Outcomes Accountable, Effective, Efficient and Transparent Previous References Risk and Audit Scrutiny Committee - 24 September 2024 Executive Committee - 25 June 2025 List of Background Papers None Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Jackie Taylor, Executive Director, Finance and Corporate Resources Ext: 4637 (Tel: 01698 454637) E-mail : jakie.taylor@southlanarkshire.gov.uk 147
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Appendix 1 Financial Resilience – A Framework 1. It is acknowledged that financial resilience is a crucial aspect of financial management and is particularly important in light of the financial pressures facing local government especially following years of inflationary increases in costs. It is recognised that this is not about the reliance on usable reserves, and that councils need to be more comprehensive in their assessment of their level of financial resilience. 2. This paper will detail how councils can demonstrate financial resilience by explaining key aspects of financial strength as well as highlighting the areas that should continue to be monitored or examined further. 3. The financial resilience of the Council should look at its ability to anticipate and respond to changes in the internal and external financial environment. In order to do that, it is important to know what resources are available in a time of crisis and not just reserves. It is also important to understand the Council’s exposure to loss of income, your level of commitment to expenditure, and to know what flexibility the Council has in terms of accessing funds when they are required. 4. A Review of the Balance Sheet: Taking information from the Council’s Balance Sheet at the end of the financial year is a way to assess resilience. Maintaining a strong balance sheet provides the assurance that the Council can respond in time of crisis and that it can meet its obligations. The Balance Sheet Review considers the following:- council reserves and liquidity, and debt and investment. 5. Council Reserves and Liquidity: It is the responsibility of the Executive Director (Finance and Corporate Resources) to advise the Council on the level of reserves it should hold and to ensure that there are clear protocols for their establishment and use. 6. The Local Authority Accounting Panel (LAAP) provide guidance to the Council’s Section 95 Officer (the Executive Director of Finance and Corporate Resources), on the establishment and maintenance of local authority reserves and balances. The LAAP Bulletin does not prescribe a minimum level of reserves which should be held by a council. It is for the Council to consider an appropriate level of reserves taking cognisance of strategic, operational and financial risks facing the authority at a local level. It does, however, say that Reserves should not be held without a clear purpose. 7. The Council keeps an Uncommitted General Fund Reserves to protect against the risk of unforeseen events. This is considered best practice and demonstrates sound financial planning. As has been advised to members previously, the use of Reserves is not a permanent budget solution but can be used to smooth the impact of pressures across years – for example as we have employed with the monies released by the Loans Fund Review, Service Concessions and the reduced Pension Contributions. If necessary, Reserves can be used to absorb one-off costs to avoid an impact on Resource budgets in-year or can facilitate the rollover of unused elements of grant into the next financial year. 8. Table 1 provides information on the level of Reserves across the past 3 years and looks at these Reserve levels in light of total expenditure commitments. It also looks at the ratio of current assets to current liabilities (Liquidity) in order to determine whether the Council could use its current assets to cover its current liabilities, if required. 148
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Table 1: Reserves and Liquidity 2024/2025 2023/2024 2022/2023 General Fund Useable Reserves (exc. HRA) £137.128m £120.467m £164.080m Movement in Useable Reserves (exc. HRA) 16.661m (43.613m) £28.135m Useable Reserves / Net Revenue Stream 14.61% 14.13% 19.86% Level of Uncommitted General Fund Reserve £13.043m £13.043m £13.043m Level of Committed Reserves (exc. HRA) £124.085m £107.424m £151.037m Housing Revenue Account Reserve Useable Reserves £10.440m £13.221m £12.861m Movement in Useable Reserves (£2.781m) £0.360m (£3.380m) Useable Reserves / Net Revenue Stream 9.14% 12.52% 12.67% Liquidity Current Assets to Current Liabilities £129.484m/ £435.737m = 0.30 £119.471m/ £277.436m = 0.43 £225.337m/ £242.674m = 0.93 9. Table 1 shows the movement in the Total Useable Reserves of the Council (exc. HRA) as well as the HRA Reserve. The level of committed reserves for the General Fund and the HRA have both decreased across years. At the end of 2024/2025, the General Fund decrease reflects the use of reserves for Budget Strategies mainly relating to those Generated by the Loans Fund Review and the implementation of Service Concessions. 10. As a proportion of the Net Revenue Stream, General Fund Reserves at the end of 2024/2025 have decreased since 2022/2023 (albeit slightly higher than 2023/2024). While the Council’s Net Revenue Stream (Council Tax and Government Grant) has increased, there has been a reduction in useable reserves reflecting the use of reserves for Budget Strategies. This is similar for the HRA Reserve as a proportion of its Net Revenue Stream. 11. In terms of the Council’s liquidity position, the ideal position is that current assets exceed current liabilities. However, this is not the case. In 2024/2025, the ratio has dipped from 2023/2024 due to an increase in short-term borrowing (as opposed to long term borrowing) while interest rates remain high. In reality, this indicator reflects the Council’s position at a point in time, and there are no concerns regarding the Council’s liquidity position. 12. Debt and Investment: The Council’s Balance Sheet provides information on Debt (borrowing) and Investment levels. It shows whether the Council’s liabilities are short or long term. 13. The Council already prepares a suite of ratios to meet the obligations of the Prudential Framework. The ratios that relate to Debt and Investment are provided in Table 2. Table 2: Debt and Investment 2024/2025 2023/2024 2022/2023 Borrowing 1,030.762 1,034.532 1,036.302 PPP Liability 323.255 172.036 179.134 Gross Debt 1,354.017 1,206.568 1,215.436 General Fund 1,268.007 1,102.027 1,089.036 HRA 323.678 307.217 292.706 Total Capital Financing Requirement 1,591.685 1,409.244 1,381.742 149
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2024/2025 2023/2024 2022/2023 Under / (Over) Borrowed 237.668 202.676 166.306 Investments 23.582 13.475 160.770 General Fund Financing Costs 45.164 31.249 36.921 Net Revenue Stream 938.760 852.568 826.366 Financing Charges to Net Revenue Stream 4.81% 3.67% 4.47% HRA Financing Costs 10.662 8.155 14.192 Net Revenue Stream 114.273 105.649 101.531 Financing Charges to Net Revenue Stream 9.33% 7.72% 13.98% 14. Table 2 shows that the Council’s Gross Debt has increased since last year reflecting anticipated debt repayment profiles. The Capital Financing Requirement (the level of debt that we need to finance our assets) has increased over the 3 years and this is because our in-year borrowing has been higher than the level of debt repayments made. 15. Comparing the Gross Debt to the Capital Financing Requirement gives a position of under or over borrowing. The Council has under-borrowed. This is a favourable position and is because we did not need to borrow as much as predicted due to the level of cash reserves held. In terms of investments (deposits) – there was an increase in 2024/2025, and this reflects the higher level of cash balances available. 16. Finally, the ratio of debt costs to net financing stream for the General Fund and the HRA are sitting at c5% and c9% respectively. This is an increase on the previous year and generally reflects the increase in debt payments offset by the increase in revenue income. 17. An important point to note is that the borrowing undertaken by the Council is planned and the repayments on these debts are considered affordable as part of our Revenue Budget planning. 18. Exposure to Risk: A review of Revenue expenditure and income over time ensures that we know the areas that we need to focus our attention on to ensure we can pre-empt any potential financial pressures. A review of the exposure to risk looks at: significant income areas, and top expenditure commitments. 19. Significant Income Areas: Looking at the Council’s Budget, there are a number of significant high value Income areas outwith the Government Grant / NNDR Income budgets. These are noted in Table 3 as appropriate, giving context on each. Table 3: Significant Income Areas 2024/2025 2023/2024 2022/2023 Council Tax Income 161.060 159.053 148.958 Council Tax Income as a % of Net Revenue Stream 17.16% 18.70% 18.03% Parking Income 2.234 2.031 1.867 School Meals Income 3.585 3.213 2.763 Bereavement Income 2.908 2.979 2.658 Planning and Building Standards Income 3.289 2.885 3.362 150
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Early Years Fee Income 2.387 1.990 1.591 Licensing and Registration Income 1.676 1.503 1.793 20. Table 3 shows that as a percentage of the Council’s Total Budget, the level of Council Tax Income has decreased into 2024/2025. This mainly reflects the Council Tax freeze in 2024/2025 while the overall Budget has gone up. In financial terms, the level of Council Tax income received in 2024/2025 is actually £2 million higher than the previous year – a positive position reflecting increased property numbers. 21. The table also shows some significant income budgets and the pattern over recent years. Some of these areas (School Meals, Parking, Licensing and Registration) were significantly affected by the pandemic and have struggled to return to pre-pandemic levels (before 2020/2021). They will continue to be monitored to identify whether the pressure reduces. 22. Top Expenditure Commitments: Similarly, there are a number of significant Council budget areas that can be highlighted for a trend analysis, on the basis that they are demand lead, high value budgets and are, therefore, a risk area for the Council. These are noted in Table 4 which notes the actual spend and the variance across years to show the pressure in those areas. Top expenditure commitment areas feature as part of the Council’s considerations when looking at future budget strategies. Table 4: Top Expenditure Commitments 2024/2025 2023/2024 2022/2023 Adult and Older People Social Care - delegated to the IJB (after commitments) 181.334 (0.010 under) 182.657 (breakeven) 165.334 (breakeven) Children and Family Services 50.031 (0.813 over) 47.160 (0.468 over) 43.749 (1.295 over) Waste Services - Facilities, Streets, Waste and Grounds 80.963 (0.176 under) 82.954 (0.097 under) 75.349 (0.370 over) * All figures are after approved Transfers to Reserves 23. Table 4 shows that the spend on these areas is increasing over time. For Children and Families and also for Adults and Older People (albeit the services are delegated to the Integration Joint Board (IJB)), the Services continue to manage budget pressures through Budget Planning. In the same way as the Council, the IJB identify Budget Gaps, and solutions as part of their medium-term financial planning process. For Children and Families, a detailed Budget recovery Plan is reported on regularly to Social Work Resources Committee. The cost of the Waste Service (as part of the Facilities, Streets, Waste and Grounds) continues to experience high demand and income pressures (school meals for example). These Services will continue to be monitored. 24. Local Government Benchmark Framework: From 2019/2020 onwards, the Local Government Benchmarking Framework introduced new ratios to assess sustainability. The 2023/2024 data is shown in Table 5 (2024/2025 information is not yet available). Table 5: Sustainability – Local Government Benchmark Framework Council Scotland What proportion of my income does the Council hold in reserves? 19.6% 23.9% What proportion of my Council's revenue is not committed to a 1.4% 2.3% 151
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specific theme/project? How much of my Council's income is used to service debt? 3.7% 5.8% How much of my Council's housing income is used to service debt? 7.7% 20.0% What proportion of my Council's budgeted spend is spent in practice? 100% 99.6% 25. Table 5 shows that the Council’s results alongside the national position. It is noted that a direct comparison cannot be drawn due to the nuances of individual councils and their own financial plans. However, reviewing the trend in the Council’s position over time will give context. The data over years since 2013/2014 are included in the Improvement Service website. 26. The financial resilience framework and the Local Government Benchmarks detailed above can be used as a basis for assessing the financial resilience of the Council. The aim of the first indicator is to show how much money the Council holds in reserves. At the end of 2024/2025 the Council was lower than the Scottish average. While the significance of the level of reserves held is acknowledged, it must also be acknowledged that most of these reserves are committed. 27. In terms of the uncommitted revenue monies, that refers to the unearmarked general fund and while it is lower than the Scottish average, at a level of £13.043 million, this is deemed appropriate but is kept under review. 28. The third indicator (and the fourth relation to the HRA) refers to the level of loan charges compared to the overall budget. Again, the General Fund loan charges are lower than the Scottish average, and similarly for the HRA. The relevance of this indicator is to consider affordability. The Council and the HRA have planned for the debt, ensuring repayments are sustainable. 29. Finally, the last indicator looks at the year-end position and as the Council had a breakeven position after approved transfers to reserves (the full budget is spent or committed in year) this is a positive outturn. 30. As with any set of indicators, there is not necessarily a right or a wrong answer. It is more important that they are used to provide financial context, and it may be that the trend in these figures over a number of years is more of an indicator for action as on an annual basis only, an issue might not be visible or may be overlooked. 152
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 30 September 2025 Report by: Executive Director (Finance and Corporate Resources) Subject: Audit Scotland – Local Government Budgets 2025/2026 1. Purpose of Report 1.1. The purpose of the report is to:- provide the Risk and Audit Scrutiny Committee with a summary of the information contained within the Audit Scotland Local Government Budgets Briefing 2025/2026, published in May 2025 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- (1) that the key messages and data from the Audit Scotland Local Government Budgets 2025/2026 briefing (detailed in sections 4 and 5) be noted; and (2) that the commentary on the Council’s position, as included in the Audit Scotland report (section 6), be noted. 3. Background 3.1. In May 2025, Audit Scotland published the Local Government Budgets 2025/2026 on behalf of the Accounts Commission. 3.2. The introduction and key messages from the report are outlined in section 4 of this report, with section 5 looking at funding, budgets and communities. Section 6 notes commentary on the Council’s data included in the Audit Scotland report. 4. Introduction and key messages 4.1. Audit Scotland has prepared this budget briefing on behalf of the Accounts Commission to summarise key issues arising from analysis of the 2025/2026 budgets recently agreed by Scotland’s 32 councils. 4.2. This briefing brings together data from all 32 councils to provide an indicative national picture of budgets set for 2025/2026. It considers how Scottish councils are addressing the challenges faced in achieving a balanced budget and long-term financial sustainability. It also considers how councils have consulted with communities on their budget priorities, including the measures agreed to achieve financial savings. 4.3. The wide range of approaches councils take to budget-setting, the level of information, and the way that it is publicly reported, make it challenging to report a definitive national position. Some of the variation between councils is likely due to differing budgeting approaches. 7 153
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4.4. The report is part of a series of overview outputs produced for the Accounts Commission. These reports provide an independent overview of the financial and operational performance of Scotland’s local government sector. In the next 12 months, Audit Scotland intends to publish a spotlight report, highlighting overall and specific service performance, and then the annual financial bulletin which assesses the financial performance and position of Scotland’s councils in the most recently audited financial year. 4.5. A number of key messages are presented by Audit Scotland in their report in relation to the 2025/2026 Local Government Budgets:- Scottish Government funding to local government in 2025/2026 is increasing by 6 per cent in real terms, to £15.2 billion. However, local government continues to face recurring pressures in excess of funding uplifts, such as inflation, annual pay deals and growing demand for services, and most of the increase will be used to deliver previously agreed national commitments. Alongside this, councils are facing additional costs related to the increase in employers’ National Insurance contribution rates, and investing in new buildings and assets is increasingly expensive. at a time of constrained public finances and growing demand, not all cost increases can be met from central government funding, and councils need to take local action to achieve budget balance over the short and medium term. At the time of setting their budgets, councils identified a difference of £647 million between anticipated expenditure and the funding and income they receive (the ‘budget gap’). Councils are required to set balanced budgets and have agreed on a range of actions to achieve this and close this gap. This includes all councils raising council tax rates by between 6% and 15.6%, identifying savings, drawing on reserves and increasing or introducing charges for accessing some services. councils continue to make savings across a broad range of services to address financial challenges and have been successful in identifying recurring measures that will help to address underlying pressures. Despite this, councils are still forecasting that more will need to be done in future years to achieve financial sustainability, given their projected increases in both costs and level of service demand. councils’ budget-setting processes vary, partly reflecting differences in organisational structures and local priorities, and this makes it difficult to compare information across Scotland. There remains an underlying issue with the transparency of how budget information is being presented. most councils engaged communities in some way to make decisions on their budgets for 2025/2026, but there were variations in the depth and level of this engagement. By improving the accessibility and transparency of how they are reporting budget information, councils can better inform and include their local communities in making the choices required to address ongoing financial challenges. 5. Funding, budgets and communities 5.1. Scottish Government funding to councils Initial funding to councils is higher than last year, with revenue and capital funding both increasing in real terms, but additional costs and inflationary pressures will remain challenging to manage. 154
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Scottish Government core funding to local government is increasing in 2025/2026 the Scottish Government will provide £15.2 billion to local government in 2025/2026. The level of funding allocated to local government is expected to change throughout the year as additional funding is made available to councils. For example, the 2024/2025 local government budget increased in real terms to £14.7 billion by the spring Budget revision. It is, therefore, likely that the 2025/2026 local government budget will change. All councils are receiving an annual increase in their initial revenue funding allocations the Scottish Government allocated £14.4 billion of revenue funding to local government in 2025/2026, an annual real terms increase of £789 million (6%). This settlement differs from the figures presented in the draft Scottish Budget published in full in December, due to changes made to the budget prior to receiving parliamentary approval. the increase in total revenue funding to councils is driven by an 8% annual real terms increase in the General Revenue Grant (GRG) to £11 billion. GRG has increased due to additional funding, but also because the Scottish Government moved previously ring-fenced funding into the general grant. Similarly, some elements of funding that were previously transferred from other portfolios during the year have now been included within initial allocations. in 2025/2026, the increase in GRG includes baselining of funding for non-teaching staff pay awards and teacher pension contribution increases, as well as the following:- £125 million of Living Wage funding £43 million of 2024 pay awards to teachers £10 million free personal and nursing care funding. The 2025/2026 finance settlement also outlines an additional £152 million of revenue funding, including £144 million of additional funding to partly compensate for the increase in employer’s National Insurance contributions. Prior to this funding being confirmed, Convention of Scottish Local Authorities (COSLA) estimated that councils would need to identify £240 million to meet additional costs related to directly employed council staff. Capital funding is increasing for 2025/2026, but it is still lower than in 2023/2024 the Scottish Government is allocating £779.7 million of capital funding to local government (a 16 per cent increase compared to last year). This includes £12.4 million of funding to Strathclyde Partnership for Transport and £89.5 million of undistributed funding in 2025/2026. The final settlement slightly differs from the figures presented in the draft Scottish Budget, due primarily to around £60 million of Specific Capital Grant moving into the General Capital Grant. 5.2. Council budgets Councils continue to identify savings, use reserves and review how they deliver services to manage financial pressures. 155
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Councils’ combined revenue budgets for 2025/2026 have increased from 2024/25 in 2025/2026, councils reported a combined revenue budget of around £18 billion, increasing from £16.7 billion in 2024/2025 (around 7%). Councils have again reported budget gaps in 2025/2026. At the time of setting their 2025/2026 budgets, councils identified a combined revenue budget gap of around £647 million. This represents a budget gap in the range of 3.4 per cent of councils’ total combined revenue budgets for 2025/2026. Compared to 2024/2025, the total budget gap identified by councils has increased by £52 million. Councils are continuing to forecast budget gaps over the short term councils are anticipating that funding pressures will continue, citing several key assumptions that inform budgets in the medium term. Where the information was available:- most councils report the pressures around annual pay settlements, with many expecting 3% increases to 2027/2028. This, alongside higher employers’ National Insurance contributions, increases overall workforce costs a majority of councils also reference general inflationary pressures, including increasing costs of goods and services, making councils’ operations more expensive several councils are also projecting flat cash funding settlements from the Scottish Government potential annual increases to council tax rates, with a lack of consistency on the projected expected increase from individual councils. based on 31 councils, the total projected revenue budget gap for 2026/2027 is £528 million. The projected revenue gap for 2027/2028 is £496 million, across these 31 councils. While elements of these projections are either expected to be addressed or lessen in impact, councils are currently anticipating a cumulative revenue budget gap of £997 million over the next 2 years. Financial pressures in 2025/2026 include increased costs related to National Insurance(NI) contributions all councils report facing increased costs from the changes in NI contributions for employers and in response to this, the Scottish Government announced £144 million in additional funding. COSLA, however, estimated the additional cost could be up to £370 million: £240 million for directly employed staff and £130 million for indirectly employed staff (£85 million for staff working in Adult Social Care commissioned services, and up to £46 million for staff across other commissioned services and ALEOs). returns submitted by councils showed additional costs of around £235 million within approved 2025/2026 budgets, as councils mainly adjusted budgets to recognise costs associated with direct employees. Councils, however, continue to benefit from reduced pension costs councils’ financial plans and budgets for 2025/2026 incorporated the reduction in pension contributions, allowing the reduced costs against 2023/2024 rates to be redirected to other areas. 156
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reduced pension contribution rates should only be seen as a temporary source of funding by the Council, with rates increasing in 2026/2027. The level of reductions range from 13 per cent (for 2 years) to one per cent. Councils who reported a 13 per cent reduction in contribution rates are the 12 members of Strathclyde Pension Fund. Contribution rates will rise from 6.5 per cent in 2025/2026 to 17.5 per cent in 2026/2027. Councils continue to make savings across a broad range of services to address financial challenges all councils provided information on the service areas where they are planning financial savings in 2025/2026. Councils are planning to deliver around £210 million of approved savings in 2025/2026. Most of these saving measures are recurring, with only £12.2 million of non-recurring savings planned. across all councils, most savings are planned within corporate services, followed by children’s services. Councils plan to achieve £68 million of savings within corporate services and £58 million of savings in children’s services. Actions to tackle climate have the lowest level of saving measures planned, with £0.4 million of savings planned in 2025/2026. All councils chose to increase council tax rates significantly in 2025/2026 councils had full flexibility over council Tax decisions in 2025/2026. All councils increased their council tax levels, ranging from a 6% increase in South Lanarkshire Council to a 15.6 per cent rise in Falkirk Council. In total, councils expect to receive £284.3 million from the increase to council tax in 2025/2026. £275 million will be used to bridge the funding gap and the remaining is additional income. Councils continue to raise income by charging for certain local services 24 councils provided information on their 2024/2025 income from fees and charges. Those councils generated £966 million from fees and charges in 2024/2025, representing around 5% of their 2025/2026 revenue budgets. Fourteen councils received more income from fees and charges in 2024/2025 compared to initial projections. In total, councils anticipate receiving £1.1 billion from fees and charges in 2025/2026. This represents around 6% of the combined 2025/2026 approved revenue budgets for councils. Councils are also continuing to use reserves to balance their budgets at the end of 2024/2025, 25 councils are estimating that they will be holding £1.8 billion in their General Fund, a usable reserve, with £1.3 billion of this committed. An estimated £0.14 billion has been identified by councils as formal contingency funding, with a further £0.4 billion of uncommitted reserves also available for that purpose if required. Combined, this represents a potential contingency of 2.9 per cent of net revenue expenditure. Councils approved the use of £0.19 billion of reserves in 2025/2026 during budget-setting as a means of balancing budgets. Borrowing continues to be the primary funding source for capital projects the total capital budget for all councils in 2025/2026 is £4.74 billion. This is an increase from £4.23 billion in 2024/2025 across Scotland; however, eleven councils are reducing their capital budgets. Borrowing is the main source for funding capital projects, and councils are intending to borrow £3.13 billion in 2025/2026, an increase from 2024/2025 (£2.67 billion). 157
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Councils are increasing the amount they intend to spend on building and maintaining social housing 26 councils own and maintain council housing, and all these councils provided information on how much of their capital budget is allocated to their Housing Revenue Account (HRA). Councils are committing a combined £1.5 billion from their capital budgets to the HRA in 2025/2026, an increase of £186 million from the previous year. All councils are planning expenditure on new builds in 2025/2026:- councils expect to spend £656 million from the HRA on new builds in 2025/2026, an increase of £81 million from 2024/2025. This represents the largest area of expenditure within the HRA. refurbishment costs are the second largest area of expenditure within the HRA, increasing by £142 million from 2024/25 to 2025/2026. Councils expect to spend £521 million on refurbishing housing stock in 2025/2026 compared to £379 million in 2024/2025. 16 councils are planning programmes of maintenance work in 2025/2026. They are expecting to utilise £289 million of funding for maintenance, an increase of £78 million from 2024/2025. Social care revenue budgets make up a high proportion of total revenue budgets for 2025/2026 of the £18 billion revenue budget in 2025/2026, councils reported £4 billion related specifically to social care services. This equates to almost 23 per cent of councils’ total revenue budget. Across councils, the social care budget ranges between 18 and 30 per cent of councils’ total revenue budget for 2025/2026. 5.3. Consulting with communities As councils continue to make difficult decisions, it is more important than ever that they involve communities in the decisions that impact their local services. Most councils carried out an assessment to understand the impact budget decisions will have on different groups 31 councils completed an Equality Impact Assessment (EIA) as part of their 2025/2026 budget process. Most councils consulted with residents on their 2025/2026 budgets 30 councils provided evidence of how they engaged with residents, while identifying saving measures and wider proposals within their 2025/2026 budgets. However, the approaches taken varied. The Accounts Commission’s forthcoming work will assess how key council services are performing for the next report in this series, the Accounts Commission will publish a service spotlight. This new report, due to be published in October 2025, will provide an overview of council performance as set out by the Local Government Benchmarking Framework (LGBF) and other key metrics. For 2025, the spotlight will have a particular focus on culture and leisure services that councils provide. 6. South Lanarkshire Council – Budgets 2025/2026 6.1. The Audit Scotland report contains a number of tables that set out information for all councils; however, there are 5 tables of data which show the performance of individual councils. Commentary on South Lanarkshire Council’s position in each of these tables is provided below. 158
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6.2. Scottish councils’ budget gaps for 2025/2026 ranged between £4.4 million and £70 million. The Council’s Budget Gap was £5.3 million, being 2nd lowest. City of Edinburgh was the highest with just over £70 million, and Eilean Siar was the lowest with £4.4 million. There are differences in the way councils’ approach and present their budget and identify budget gaps. This means that direct comparison should be taken with caution. An example noted in previous years is Glasgow City, who are a significant outlier due to their approach. 6.3. In terms of the budget gaps for 2025/2026 as a percentage of total revenue budget, the Council is 0.5%, with other councils ranging from around just under 2% to just under 7%. The Council has the lowest budget gap as a percentage of revenue budget. Shetland and Orkney are excluded from this dataset as they are outliers due to their planned use of (large) reserves to their balance budgets (20% and 18% respectively). 6.4. The Council’s projected budget gaps to 2027/2028 shows the Council’s Budget Gap for 2026/2027 at £11.7 million and 2027/2028 at £13.8 million. At that point, the cumulative Budget Gap to 2027/2028 was projected at £25.5 million with the cumulative gap being 3% of the 2025/2026 net revenue budget. The cumulative gap for other councils as percentage of their 2025/2026 net revenue budget ranges from 1% (Fife and Moray) to 51% (Shetland). As noted above, there are differences in the way councils’ approach and present their budget and identify budget gaps. This means that direct comparison should be taken with caution. 6.5. All councils increased their council tax in 2025/2026 with increases ranging in 2025/2026 from 6% to 15.6%. The South Lanarkshire Council had the lowest increase (6%), and Falkirk had the highest increase (15%). 6.6. The Selected 2025/2026 budget information shows the Council’s 2025/2026 revenue budget (£1,019 million), budget gap (£5.3 million), approved savings (£4.7 million) and other bridging to close budget gap (£0.5 million). South Lanarkshire Council set a balanced budget for 2025/2026 on 26 February 2025. The budget was balanced using a combination of savings and earmarked reserves, in line with the Budget Strategy, as well as a 6% increase in Council Tax levels into 2025/2026 – the lowest increase in Scotland. 6.7. In terms of Consulting with Communities, the Council undertook a comprehensive budget and savings consultation process with communities and partner organisations. The feedback was provided to Elected Members to facilitate informed decision- making. Integrated Impact Assessments on the Budget and Savings were made available to Elected Members. These were published and included the feedback from the consultation process. 7. Employee Implications 7.1. None. 159
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8. Financial Implications 8.1. The Audit Scotland Report raises a number of financial areas for consideration by councils; however, there are no direct financial implications as a result of the content of this report. 9. Climate Change, Sustainability and Environmental Implications 9.1. There are no implications for climate change, sustainability, or the environment in terms of the information contained in this report. 10. Other Implications 10.1. None. 11. Integrated Impact Assessment and Consultation Requirements 11.1. This report does not introduce a new policy, function or strategy or recommend a change to an existing policy, function, or strategy and, therefore, no impact assessment is required. 11.2. There is also no requirement to undertake any consultation in terms of the information contained in the report. Jackie Taylor Executive Director (Finance and Corporate Resources) 7 August 2025 Link(s) to Council Values/Priorities/Outcomes Accountable, Effective, Efficient and Transparent Previous References None List of Background Papers Local government budgets 2025/2026 Audit Scotland, May 2025 Contact for Further Information If you would like to inspect the background papers or want further information, please contact: Jackie Taylor, Executive Director of Finance and Corporate Resources Ext: 5637 (Tel: 01698 455637) E-mail: jackie.taylor@southlanarkshire.gov.uk 160
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 30 September 2025 Report by: Executive Director (Finance and Corporate Resources) Subject: Fraud Statistics Annual Report 2024/2025 1. Purpose of Report 1.1. The purpose of the report is to:- provide a summary of the fraud statistics and workload for the year to 31 March 2025 and a comparison to the same period in 2024 provide an update around other anti-fraud activity provide a comparison of current fraud arrangements to best practice 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- (1) that the contents of this report be noted. 3. Background 3.1. Collating and reporting fraud statistics and setting targets for improvement are considered best practice by the Chartered Institute of Public Finance and Accountancy and the Association of Local Authority Risk Managers. 3.2. This report provides information on the overall fraud workload in 2024/2025 together with a summary of the number, types and outcomes of fraud investigations within South Lanarkshire Council (SLC) for the year and a comparison to the statistics for the same period in 2024. 3.3. Although the responsibility for housing benefit fraud investigations has transferred to the Department for Work and Pensions (DWP) Fraud and Error Service (FES), SLC retains responsibility for the recovery of fraud overpayments from its own Housing Benefit claimants. Housing Benefit fraud data will therefore continue to be included within the fraud statistics reported, once information has been provided by FES. Numbers are now reducing for new benefit overpayments as most claimants are now in receipt of Universal Credit. 3.4. Benefits and Revenue continue to deliver an annual programme of rolling reviews on Housing Benefit claimants based on risk-profiling to establish the most likely areas of benefit fraud or overpayment. Information is also obtained from Her Majesty’s Revenue and Customs (HMRC) through the Verification of Earnings and Pensions arrangement, from Department for Work and Pensions (DWP) through the Housing Benefit Matching Service and from data gathered through the National Fraud Initiative. Where fraud is suspected, the case will be passed to FES for investigation and, if proven, returned to SLC to pursue recovery. Irrespective of whether a fraud is proven or not, the Council takes steps to recover any overpayment. 8 161
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3.5 The collection and reporting of fraud statistics assists in the management of fraud by identifying patterns and areas of high risk where preventative controls should be concentrated. However, in order to do this effectively, fraud statistics must be complete. Internal Audit will continue to highlight areas where practice could be improved to ensure that all instances of potential and actual fraud are reported to Internal Audit. 4. 2024/2025 Fraud Statistics, Workload and Outcomes Fraud Statistics 4.1. All concerns reported to Internal Audit are risk assessed with high risk areas investigated by Internal Audit, medium risks investigated by Resources and low risks registered for monitoring of trends. Internal Audit may also undertake joint investigations with Resources and the Fact-Finding team within Personnel Services depending on the nature of the fraud and the operational knowledge required. 4.2. Areas within the Council that have an inherently higher risk of fraud are considered for inclusion in the annual Audit Plan. There were no new trends or patterns identified in 2024/2025. Appendix 1 sets out a summary of the overall fraud workload across the year. 4.3. An analysis of the fraud caseload1 for the year to 31 March 2025, and the comparative period in 2024 is detailed in Table 1. Cases reported in the year were lower reflecting the transition from Housing Benefit to Universal Credit. Fraud referrals in this area are now mostly in relation to Council Tax Reduction. Status Year to 31/03/2025 Year to 31/03/2024 Nos. £000 Nos. £000 Cases open as of 1 April 171 44 136 70 Concerns reported during the financial year 30 9 101 32 SLC caseload for the year 201 53 237 102 Cases closed in period (see Table 2) (177)2 (48) (66) (58) Work in progress at 31 March 24 5 171 44 Table 1 4.4. In addition to those cases summarised above, a further 18 SLC investigations are being progressed by the DWP with a potential cumulative housing benefit overpayment/fraud value of £7k. On conclusion of investigations, SLC will seek repayment in line with standard recovery procedures. 4.5. An analysis of closed cases in the year is detailed in Table 2:- Source of fraud Year to 31/03/2025 Year to 31/03/2024 Nos. £000 Nos. £000 Founded allegation (see Table 3) 14 11 19 56 Insufficient information 1 0 28 2 Unfounded allegations 44 37 19 0 1 It includes all frauds reported to Internal Audit, benefit frauds during this period passed to the DWP for investigation and insurance losses resulting from a failure in internal controls or which have been investigated by Internal Audit. 2 Cases where there is no housing benefit in the referral to DWP have been removed to reflect that these will be treated as DWP fraud and any identified fraud or overpayment will impact benefits paid by DWP, such as universal credit, rather than housing benefit administered by the Council. 162
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No Housing Benefit in claim 118 0 0 0 Total 177 48 66 58 Table 2 4.6. An analysis of the founded allegations is detailed in Table 3:- Source of fraud Year to 31/03/2025 Year to 31/03/2024 Nos. £000 Nos. £000 External 13 8 18 56 Internal 0 0 1 0 Benefits 1 3 0 0 Total 14 11 19 56 Table 3 Wider Fraud Workload 4.7. Time spent on investigative work was broadly in line with the planned split of days available across the year (127 days against a planned 100 days). Six separate, investigative assignments were completed in the year, including financial frauds, grants and complaints about a process. The majority, on investigation, found substance to concerns or allegations and appropriate actions were agreed to address the issue and amend processes going forward. The nature of these concerns was wide-ranging, and each of these was investigated in line with established fraud procedures and reflecting the Council’s zero-tolerance approach to fraud. 4.8. External auditors are required to report significant fraud or suspected fraud to Audit Scotland, where they were caused or facilitated by weaknesses in public bodies’ internal controls. Frauds and irregularities are considered significant where the value of the loss is over £5,000 or where it is of significance owing to the nature of the activity. 4.9. Audit Scotland routinely reports these significant frauds within technical bulletins, which also includes details around improvements to controls to prevent similar frauds occurring. Bulletins are reviewed and cases shared with relevant Services to assess whether controls require amendment. 4.10. Three of the 4 cases reported related to payroll fraud, and the fourth, the most significant, was in relation to a Council Tax fraud at Aberdeen City Council, which was the subject of a separate report by the Accounts Commission. Given the significance of the fraud, a series of actions was circulated to Local Authorities for review and implementation. Although controls within South Lanarkshire Council were considered to be robust, further monitoring arrangements have now been put in place with Internal Audit facilitating a data analytical review of payments ahead of processing. 4.11. Internal Audit has also monitored fraud alerts through internal and external sources and disseminated information as appropriate. In 2024/2025 these have continued to relate to adhoc issues and have been shared with Council Resources as appropriate. 4.12. Outcomes from audit work completed in the year was reported in the 2024/2025 Internal Audit Annual Assurance Report or has been captured in the report on the 2022 National Fraud Initiative (NFI) exercise. 163
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5. National Fraud Initiative 5.1. Internal Audit coordinates the delivery of the NFI exercise3 within the Council, liaising with Resources responsible for investigating matches relevant to them. 65 days were included in the 2024/2025 Audit Plan to undertake this task. A total of 28,090 matches were received for the 2022 exercise, which concluded on 31 March 2024. This resulted in 317 recoverable fraud and errors being detected from matches received and an (actual) amount to be recovered of £107,116. 5.2. Preparation for the 2024 exercise began with the data extract and uploads being completed at the end of September 2024. Matches started being released to the Council at the end of 2024 / early 2025, and, as at April 2025, 32,675 matches have been received. Target matches have been determined, and work has started within Resources to investigate. This is anticipated to conclude early 2026 to meet the final reporting deadline of 31 Match 2026 that has been set by the Cabinet Office. Progress will be monitored and reported by Internal Audit, and assistance provided where required, throughout 2025/2026. 6. Three Lines of Defence – Fraud Risk Analysis 6.1 Resource Fraud Risk Registers have again been reviewed and updated to categorise controls that mitigate fraud risks using the Institute of Internal Auditors ‘three lines of defence’ methodology. This framework recognises that different parts and levels of the organisation play complementary roles in risk management. Controls that form the first line of defence sit at a Service level with the second line of defence being those that ‘oversee’ (senior management teams, Committees etc). The final level is that of independent assurance provided by internal and external audit or external inspectors. Good risk management will evidence controls across all ‘lines’. Going forward, the review of these registers will align to the timetable of that of the Council’s top risks. 7. Comparison of Fraud Risk Arrangements to Best Practice 7.1. Periodic self-assessment exercises are undertaken to compare existing fraud management arrangements to best practice to ensure that these are robust and that the risk of fraud is being mitigated where possible. Appendix 2 provides the self- assessment exercise undertaken in 2024/2025 with highlighted areas where action is ongoing. 7.2. Although fraud control measures are embedded within processes, investigative work undertaken by Internal Audit has identified that levels of fraud awareness could be improved so that all employees are mindful of fraud risks, how these are managed and controlled and how concerns should be reported. A whistle-blowing process is included within the Counter Fraud, Bribery and Corruption Policy but, was identified, on review, as not being formally re-publicised on a regular basis. To address this gap, and to promote fraud awareness, a formal fraud awareness programme has been developed for 2025/2026. 7.3 Services work with the Security Coordinator or with Internal Audit to review and address gaps in controls identified during the investigation of cases. Where appropriate, improvement plans are agreed with the relevant Heads of Service and the actions followed up by Internal Audit to ensure implementation. Outcomes for concluded investigations are reported to this Committee as part of Internal Audit’s annual assurance report. 3 Undertaken every 2 years 164
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8. Serious and Organised Crime Group 8.1 The multi-agency Lanarkshire Serious and Organised Crime (SOC) group has recently agreed a new SOC Delivery Plan, which was launched at an awareness event for partners on 1 May 2025. The Delivery Plan highlights key issues and outcomes across the associated SOC themes of Divert, Deter, Detect and Disrupt. The Delivery Plan launch was supported by the Scottish Government, and its implementation will be reviewed by the multi-agency Lanarkshire SOC Group on a six-monthly basis. 8.2. Governance arrangements are currently being agreed between partners and further high-level updates will be included within six-monthly fraud reports. 9. Employee Implications 9.1. SLC has a zero tolerance approach to fraud. Manager and employee roles and responsibilities are set out in SLC’s Counter Fraud, Bribery and Corruption Policy. 10. Financial Implications 10.1. The investigation of fraud, participation in the National Fraud Initiative (NFI) exercise and the collection and reporting of fraud statistics is carried out within existing resources. 11. Other Implications 11.1. Fraud risk is recognised as one of the top risks facing SLC. This risk is significant as it can adversely affect the delivery of Council objectives and erode valuable resources. It is therefore important that the risk of fraud is soundly managed. 11.2. The new Failure to Prevent Fraud offence in the UK, introduced by the Economic Crime and Corporate Transparency Act 2023, makes large organizations criminally liable for failing to prevent fraud committed by an "associated person", for example by an employee, agent or subsidiary if the fraud benefits the organisation. The offence came into effect on 1 September 2025 and further updates around actions to address any gaps in current practice will be provided to this Committee in December 2025 within the 2025/2026 Six Monthly Fraud report. 11.3. There are no sustainability issues in terms of the information contained in this report. 12 Integrated Impact Assessment and Consultation Requirements 12.1. There is no requirement to undertake an integrated impact assessment. 12.2. Consultation was not necessary for this report. Jackie Taylor Executive Director (Finance and Corporate Resources) 28 August 2025 Link(s) to Council Values/Priorities/Outcomes Accountable, effective, efficient and transparent Previous References Risk Audit Scrutiny Committee - 24 September 2024 (Fraud Statistics Annual Report 2023/2024) 165
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Risk Audit Scrutiny Committee - 24 September 2024 (National Fraud Initiative Exercise Report 2022) Risk Audit Scrutiny Committee -18 February 2025 (Fraud Statistics Six Monthly Update 2024/2025) List of Background Papers None Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Yvonne Douglas, Audit and Compliance Manager Ext: 2618 (Tel: 01698 452618) E-mail: yvonne.douglas@southlanarkshire.gov.uk 166
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APPENDIX 1 Summary of Enquiries received in relation to Suspected Fraud 2024/2025 Category Number Comments Whistleblowing 9 All 9 enquiries related to a suspected fraud and were investigated in line with protocols. Missing Equipment 16 Log maintained by Internal Audit. Assignment in progress to review controls. Resource Fraud and Conduct 13 9 from the 13 enquiries led to further investigation and were allocated audit job numbers and added to the audit plan. The other 4 required no further investigation. Other Local Authorities 4 Related to fraud within other Local Authorities and were investigated by Services. Scottish Local Authority Investigator’s Group (SLAIG) 4 Enquiries via SLAIG from other Local Authorities. National Anti-Fraud Network (NAFN) Alerts 32 Internal Audit regularly receive fraud alerts from NAFN which are disseminated to Services for information and action. Since October 2024, formal feedback is now requested given the frequency of recurring issues. Services are required to check for relevance, to implement any recommended actions and to provide feedback. Other External Bodies 2 1 notification related to a cyber-attack which was passed to IT. The other related to a SLC supplier and an email address being compromised. Action was taken to mitigate the risk. Police Scotland 1 System check. TOTAL ENQUIRIES 81 167
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APPENDIX 2 Preventing Fraud – Self Assessment Checklist “Managing Fraud Risk in a Changing Environment – A Good Practice Guide” Consider each statement and determine whether it should be assessed as: Red: The area needs significant strengthening and improvement to reduce fraud risk. Amber: The area needs some strengthening and improvement to reduce fraud risk. Green: The area is strong, and fraud risk has been reduced to an acceptable level R A G Organisational Culture SLC Approach ✓ Our organisation has a zero-tolerance approach to fraud and corruption that is communicated to all staff in a policy. All staff are aware of their role in relation to fraud prevention. SLC has a zero tolerance to fraud, bribery and corruption. A counter fraud bribery and corruption policy are in place which clearly states expected employee roles and behaviour. ✓ There is clear commitment from senior management and the Board that fraud will not be tolerated. Clear commitment from senior management and Members to a zero-tolerance approach. ✓ We have communicated our zero tolerance of fraud to all staff, contractors and other third parties with whom we do business. They know what to do if they become aware of possible fraud. The Council’s Counter Fraud, Bribery and Corruption Policy is available to all employees. Fraud awareness programme has been developed for 2025/2026. ✓ A designated senior manager has responsibility for counter fraud work, sufficient resources for this work and direct access to the Audit Committee. The Audit and Compliance Manager has responsibility for counter fraud work and has direct access to the Risk and Audit Scrutiny Committee. ✓ There is a code of conduct which sets out clearly for employees’ which behaviour is acceptable or unacceptable. All staff are required to sign up to this annually. The code highlights that unethical behaviour will lead to disciplinary proceedings. A Code of Conduct is in place for all employees. The Code outlines what is acceptable. Employees do not sign up to the Code annually, however, they will be reminded on an annual basis of the need to declare “Conflicts of Interest”. Any employee who does not comply with the Code will be taken through a disciplinary process. ✓ There are arrangements in place for reporting and addressing conflicts of interest, including a register of interests. Staff are made aware of the need to declare potential conflicts of interest. The Council has a Conflict of Interest Policy. Annual reminder of Conflict of Interest policy has been developed. Our organisation maintains a register of gifts and hospitality. Staff are aware of the need to register any gifts and hospitality Register maintained and guidance included within Conflict of Interest policy. 168
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✓ received. ✓ All staff attend regular fraud and ethics awareness training. The effectiveness of the training is confirmed through testing. New staff receive fraud and ethics awareness training at induction. Developed as part of the fraud awareness programme which commenced in June 2025 and then throughout 2025/2026. ✓ Our organisation undertakes pre-employment screening by risk assessing posts and undertaking checks to minimise the risk of employing dishonest and unethical staff. SLC undertakes the relevant and necessary screening checks. ✓ Leavers and retirees are subject to an exit interview which is designed to identify any vulnerability to fraud. The Audit Committee is notified of any relevant concerns. All employees who leave or retire should complete an exit interview as part of the leaving process. Outcomes reported to the Finance and Corporate Resources Committee. ✓ Our organisation has a counter fraud strategy in place, which applies to all aspects of the business, is communicated across the organisation and is overseen by those charged with governance. Yes, SLC has a counter fraud strategy in place which is for council wide practice. Fraud Risk Assessment ✓ Our organisation considers fraud risk as part of the overall risk management process. Yes, fraud risk is co-ordinated by Internal Audit on behalf of the Council. Fraud risks are incorporated into processes, procedures and controls. ✓ Our organisation has carried out a rigorous fraud risk assessment in the last 2 years (more recently if a new or merged organisation). Fraud risk registers are in place for all Resources of the Council along with Council-wide risks and controls. Each register must be reviewed by the Resource and updated annually (at a minimum) for any new emerging fraud risks or controls implemented. ✓ Our assessment of fraud risk is based on known fraud risks, benchmarking with similar organisations and internal brainstorming with frontline staff. Based on known fraud risks and known emerging risks. Council- wide review process involves a bench-marking exercise. ✓ Our fraud risk assessment has been reviewed and agreed by the Audit Committee and/ or Board. Risk Management Strategy is presented to the Risk and Audit Scrutiny Committee. ✓ Counter fraud staff and/or internal audit have a role in fraud- proofing new policies, strategies and initiatives across our organisation to minimise fraud risks. As part of a rolling programme of testing. ✓ Our fraud risk assessment is reviewed at regular intervals, and particularly when our organisation changes, to ensure that any new fraud risks are identified and addressed. Annual exercise. Audit Committee ✓ Our Audit Committee takes a proactive role with respect to fraud prevention. Receive six monthly and annual fraud statistic reports along with reports on the National Fraud Initiative Exercise. Output from 169
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investigations reported within routine activity reports and annual reports. ✓ Our Audit Committee is totally independent of management and includes members with financial expertise. Risk and Audit Scrutiny Committee operate as an independent scrutiny committee. Members receive periodic training to assist in this role. ✓ Our Audit Committee meets at least quarterly and devotes sufficient time to providing assurance on our counter fraud strategy Audit Committee meets quarterly and devotes sufficient time to consider anti-fraud arrangements. Internal Control Environment ✓ Our internal controls have been designed to address identified fraud risks and help prevent fraud occurring. The controls are proportionate to the identified fraud risks. Yes, controls address fraud risks. Controls are designed to be proportionate to assessed fraud risk. ✓ Our internal control environment includes a range of complementary controls (directive, preventive, detective and corrective). Yes, evidenced within Fraud Risk Registers. ✓ All staff, contractors and other stakeholders are made aware that there are controls in place to prevent and detect fraud, as a deterrent. Anti-fraud clauses within contracts. ✓ Our fraud risk controls have been reviewed by internal audit and the Audit Committee. Yes, Internal Audit review fraud risk registers, which contain the fraud risk controls for each Resource, to ensure they are relevant. ✓ Internal Audit has a direct role in reviewing any new or amended policies and programmes to ensure that fraud risk is minimised at the outset. As part of a rolling programme of testing. ✓ Internal Audit tests controls to mitigate fraud risks as part of its annual programme of work. Yes, all audit work is tested against fraud risks. Data Mining and Data Matching ✓ We regularly use data analysis to detect potentially fraudulent activity Yes, Internal Audit uses data analysis on a regular basis to detect fraud and have devised programmes to enable Resources to monitor fraud. ✓ Our IT and information systems include controls (such as reconciliations, physical counts and analyses) designed to detect potentially fraudulent activity Yes, regular reviews are carried out and exceptions reports are built into systems to enable monitoring. ✓ Our data analysis controls include review of journal entries, unusual transactions and period-end transactions, where fraud may be concealed by management override. Processes in place and audited by External Audit as part of the financial year-end audit. We share data and participate in data matching exercises (e.g. Yes, SLC takes part every 2 years in the NFI exercise. 170
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✓ the National Fraud Initiative) to help in the prevention and detection of fraud. ✓ We act promptly on any issues of concern identified through data mining and data matching. Yes, any concerns are investigated immediately. Whistleblowing Arrangements ✓ Our organisation has an internal whistleblowing policy and procedures in place which are known to all staff. Staff are regularly reminded of the policy and procedures. Yes, SLC has a Whistleblowing policy which can be accessed both internally and externally for members of the public. Included within the fraud awareness programme which commenced in June 2025 and then throughout 2025/2026. ✓ Our whistleblowing arrangements are endorsed by senior management and the Board and include an assurance that all concerns raised will be welcomed and treated seriously. Yes, SLC’s Whistleblowing policy has been approved by senior management and by Committee. The policy states that all whistleblowing communications will be investigated. ✓ The policy and procedures make clear how, and with whom, staff should raise concerns about possible fraud. A range of internal and external reporting options is given. Yes, clearly stated in policy. ✓ The policy and procedures make clear how we will handle any concerns raised. Yes, states the process. ✓ Our whistleblowing policy provides reassurance that employees will not be victimised or suffer detriment for raising concerns. We monitor to ensure this commitment is borne out in practice. Whistle-blowing policy commits to protection of anonymity. ✓ Our whistleblowing policy provides assurance about confidentiality. Confidentiality is respected as far as possible in practice. Yes, all whistleblowing communications are treated confidentially. ✓ Our whistleblowing policy allows for anonymous disclosures, which will be treated seriously, but points out the disadvantages of anonymous disclosures. Yes, the policy states that a communication can be anonymous. ✓ There is a clear process by which contractors, third parties and members of the public can raise concerns about possible fraud in our organisation, for example a fraud hotline. Details are easily accessible on our website. SLC has a generic fraud email address which can be accessed by members of the public as well as employees. Suspected fraud can also be reported via the customer relationship management system (CRM) or by telephone. ✓ We review our whistleblowing arrangements periodically to ensure their continued effectiveness. We seek views from employees as to their level of trust and confidence in the arrangements. We review the policy periodically. Feedback will be sought as part of the fraud awareness programme which commenced in June 2025 and then throughout 2025/2026. ✓ We maintain confidential case files on all concerns raised and analyse the caseload for indications of systemic control weaknesses. All whistleblowing concerns sent to IA are confidentially retained. 171
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✓ We report on whistleblowing caseload to the Audit Committee. Included within fraud statistic reports and routine activity reports to the Risk and Audit Scrutiny Committee. Fraud Response Plan ✓ Our organisation has a comprehensive fraud response plan in place. The plan is approved by the Audit Committee and Board. The fraud response process is incorporated into the Counter Fraud, Bribery and Corruption Strategy which has been approved by the Risk and Audit Scrutiny Committee. ✓ The fraud response plan makes clear that all allegations of fraud will be investigated and appropriate action taken. Yes, all allegations of fraud are taken seriously and investigated. Action will be taken where fraud is identified. ✓ All allegations of fraud, including anonymous allegations, are assessed in line with the fraud response plan. Yes, all allegations will be investigated in line with the response plan. Fraud Investigations ✓ The fraud response plan clearly documents the procedures for fraud investigations. Wording in the Counter Fraud, Bribery and Corruption Strategy will be reviewed at next revision to ensure this is clear. ✓ All fraud investigations are carried out in accordance with the fraud response plan. All completed within established protocols and procedures. ✓ There are arrangements in place for securing fraud investigation expertise from outside the organisation, if required. Not routinely required but would be secured if expertise required. Sanctions and Redress ✓ In responding to proven fraud, we consider the full range of possible sanctions – disciplinary, regulatory, civil and criminal. Where appropriate we consider parallel sanctions. Independent decision by Personnel Services. Decision to report to the Police determined following established protocol. ✓ The fraud response plan makes clear that we will seek to recover any losses incurred due to fraud. The Council policy is to seek any losses incurred due to fraud. Fraud Reporting and Case Review ✓ All frauds are brought to the attention of the Board and Audit Committee. All are reported within activity, fraud and annual assurance reports. ✓ We review and strengthen systems and controls in light of proven frauds. Yes, additional controls will be implemented where relevant following the identification of a fraud. ✓ We report annually to the Board and Audit Committee on fraud caseload. Yes, a report is provided to the senior management and the Risk and Audit Scrutiny Committee on a six-monthly basis. ✓ We report all frauds to external third parties as required. Reported to Police as required. ✓ We publicise proven frauds, and action taken in response to the frauds, both internally and externally as appropriate, as a deterrent. Addressed by the fraud awareness programme. 172
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 30 September 2025 Report by: Executive Director (Finance and Corporate Resources) Subject: Year End Insured Claims Report – 2024/2025 1. Purpose of Report 1.1. The purpose of the report is to:- [purpose} highlight trends on an annual basis, for insurance claims against the Council [1purpose] 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- [recs] (1) that the Insured Claims Report for year ended 31 March 2025 be noted. [1recs] 3. Background 3.1. The Council has in place insurance policies for employers’ liability, public liability, motor, property and other miscellaneous risks. 3.2. The combined liability policy covers both public liability (PL) and employer’s liability (EL) claims. The PL section of the policy provides indemnity for the Council’s legal liability to pay claims for death, injury and disease to third parties, as well as third party property damage, where the Council is found to be responsible for such losses. The EL section of the policy covers employee injury, disease, and death, where the Council is deemed to be negligent. The self-insured excess for this policy is £0.500 million. 3.3. Motor insurance provides comprehensive cover for all Council vehicles and injuries resulting from motor incidents. The self-insured excess for this policy is £0.150 million. 3.4. The property insurance policy covers damage/loss to Council buildings and assets. The self-insured excess for this policy is £0.500 million for all claims other than for storm and flood where a £1.000 million excess applies. 4. Five Year Overview 4.1. Claims which fall under the main policies are handled by the Council’s Risk Management section and external claims handlers, Gallagher Bassett for employer’s liability and public liability claims, and the Davies Group for motor claims. The number and cost of these claims form the basis of this report and includes comparisons with previous years. 4.2. Claims will continue to be intimated beyond the financial year end, with numbers increasing by approximately 10 per cent due to those incidents that have taken place, but claims have not yet been reported to the Council. 4.3. Up to date annual comparisons for the last five years are included at Appendix 1. The comparison shows that claim numbers have fluctuated over the period, with the 9 173
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highest number of claims being intimated in 2023/2024 (886). The average number of claims intimated each year is 840, therefore with 846 claims intimated for 2024/2025, last year’s claim numbers are around the average figure. It should be noted that 2020/2021 experienced an unusually low number of claims, due to reduced operations at the start of the pandemic, which affects the 5-year average figure. 4.4. Claims costs have also fluctuated over the last five years. On average, over that period, the self-insured cost of claims per annum is £2.882 million, with 2024/2025 costs notably above average at £4.137 million. It should be noted however that last year’s figures are higher due to a single significant storm event (Storm Eowyn). Inflation, increased costs of materials, car parts and repair charges has impacted on claim values also. 4.5. In addition, to allow comparison of the position as at the year-end for the last two years, Appendix Two compares the claim numbers and costs for incidents reported in 2023/2024 as at 31 March 2024 against incidents reported in 2024/2025, as at 31 March 2025. In effect, this compares the equivalent position and removes the impact of late claims notification for both years. 5. Total losses reported as at 31 March each year – 2023/2024 v 2024/2025 5.1. Based on the comparisons in Appendix 2, the overall number of claims for all classes received to date for incidents occurring during 2024/2025 is 846. This is a reduction of 40 claims (4.5 per cent) on the numbers reported last year for 2023/2024. 5.2. The total self-insured estimated cost of claims for 2024/2025 is £4.137m. At the same time last year estimated claims costs for 2023/2024 was £3.548m. This is an increase of £0.589m (16.6 per cent), which is a result of the estimated cost of property and motor claims increasing, with the position being offset slightly by reduced estimated costs for liability claims. Aside from the fluctuations across the different classes of cover, the main reasons for the increase in costs last year is due to Storm Eowyn occurring at the start of the year. 5.3. Based upon Appendix 2, sections 6 to 8 detail some of the key findings from the analysis of 2024/2025 claims. 6. Combined liability claims 6.1. The combined liability policy covers for both public liability (PL) and employer’s liability (EL) claims. The PL section of the policy provides indemnity for the Council’s legal liability to pay claims for death, injury and disease to third parties, as well as third party property damage, where the Council is found to be responsible for such losses. The EL section of the policy covers employee injury, disease, and death, where the Council is deemed to be negligent. The following sections detail the current position for 2024/2025 and make comparisons against the position reported for 2023/2024 as at 31 March 2024. 6.2. 415 liability claims have been received for 2024/2025, with an estimated value of £1.308 million. 6.3. The number of claims received for 2023/2024 was 415 and the estimated settlement value of these claims was £1.361 million. The 2024/2025 number of claims received is the same as that for 2023/2024, however there has been a 3.85 per cent decrease in claims costs. 174
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6.4. A further breakdown of public liability claims numbers and costs specifically for Roads and for other services within Community and Enterprise Resources is contained within Appendix 3. 7. Motor claims 7.1. The Council’s motor insurance policy provides comprehensive cover for all Council vehicles and injuries resulting from motor incidents. The following sections detail the current position for 2024/2025 and makes comparisons against the position reported for 2023/2024 as at 31 March 2024. 7.2. 370 motor claims have been received for 2024/2025, with an estimated value of £0.880 million. 7.3. At the same time last year, 394 motor claims had been received for incidents during 2023/2024, with an estimated settlement value of £0.697 million. This equates a 6 per cent reduction in claim numbers and a 26 per cent increase in costs. 7.4. The rising cost of vehicle parts and repairs is impacting upon the cost of claims and delays obtaining car parts is leading to an increase in third party hire charges. 7.5. “At fault” incidents continue to be monitored. Table 1 compares the number and cost of “at fault” incidents for the last 5 years. Table 1 – Comparison of “at fault” incidents Number of vehicles on fleet Number of incidents Cost of incidents Number of Accidents per vehicle Average cost per incident 2020/2021 1,808 127 £328,250 1:14 £2,585 2021/2022 1,834 189 £432,672 1:10 £2,289 2022/2023 1,700 200 £471,263 1:12 £2,356 2023/2024 1,676 183 £315,447 1:11 £1,724 2024/2025 1,643 189 £527,662 1:12 £2,792 7.6. The number of “at fault” incidents, per vehicle has improved sightly from last year. With one “at fault” incident per every 12 vehicles for 2024/2025, this is in line with the average for the four previous years. 7.7. Reports on motor insurance claims are provided to Resources on a quarterly basis, with Resources being prompted to implement support and actions to mitigate against future losses. This includes completion of challenging driver behaviour training, assessments and targeted support that can be offered by our driving instructors/assessors, as well as fact finding investigations where appropriate. 8. Property claims 8.1. The property insurance policy covers damage/loss to Council buildings and assets. This section of the report details the current claim position for 2024/2025 and makes comparisons against the status reported for 2023/2024 as at 31 March 2024. 8.2. 61 property insurance claims have been received for 2024/2025, with an estimated self-insured value of £1.950 million. 8.3. The overall number of claims intimated for 2024/2025 has decreased by 16 from the previous year, which equates to a 21 per cent reduction. The value of estimated claims intimated during 2024/2025 at £1.950m is an increase of £0.459 million from 2023/2024, a 31 per cent increase. 175
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8.4. The reason for the increase is due to Storm Eowyn that resulted in damage to Council properties, mainly housing stock, and an increased number of fires within the housing stock. 8.5. Significant weather related events have resulted in large claims over each of three winters. It is expected that this trend will continue and that we should, as a minimum account for estimated self-insured costs in the region of £1 million each year. Insurance premiums have also increased significantly as a result of these claims and insurers weather modelling. 8.6. The main cause of property claims during 2024/2025 continues to be fires. The number of house fires resulting in insurance claims has increased by four, from 27 incidents in 2023/2024 to 31 in 2024/2025. Costs over this period have increased by £0.237m, from £0.507m in 2023/2024 to £0.744m in 2024/2025. The main causes of fires within Council housing are wilful fire raising, cooking and cigarettes/smoking materials. The council continues to raise awareness of fire risks and preventative measures in conjunction with the Scottish Fire and Rescue Service. 9. Insurance hotspots/Lessons Learned 9.1. Following a health and safety training review by Gallagher Bassett last year an action plan was prepared to help mitigate against accidents and claims. 9.2. 81.8 per cent of actions with a target date of up to 31 March 2025, have been completed. 9.3. Table 2 below shows the overall status for all actions due as at 31 March 2025. Table 2 – Completion of GB H&S Review actions Action status Number of actions Percentage of actions On hold 0 0% Complete 9 81.8% On target 0 0% Slippage 2 18.2% Total 11 100.0% 9.4. Slippage has occurred in actions relating to manual handling training and health surveillance. Progress towards completion has been made in both actions, and it is anticipated that these actions will be finalised by 31 December 2025. 9.5. The actions noted above as being “slippage” have been carried forward. These actions, along with those with target dates during 2025/2026 will be progressed accordingly. 9.6. An analysis of all claims has been undertaken by the Council’s Risk Management team. This highlights the main cause of claims and areas of concern within each Resource, which includes house fires for Housing and Technical Resources, increasing number of motor incidents within Social Work Resources, injuries to teaching staff in Education Resources, and damage caused by falling trees and branches during inclement weather is an emerging claim trend in Community and Enterprise Resources. This analysis has now been shared with Resources and feedback requested on controls that are currently in place and further planned actions to mitigate against the hotspot areas identified. 176
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9.7. An update on risk mitigations will be provided to committee in due course. 10. Employee Implications 10.1. Time and effort will continue to be required by Resource personnel to deal with the significant number of claims intimated. Resource Personnel will also require to dedicate time to implementation of initiatives to mitigate insurance hotspots. 11. Financial Implications 11.1. Claims received to date, for incidents which occurred during 2024/2025 have an estimated self-insured cost of £4.137 million. It is reasonable to expect this value to increase due to incidents that have taken place, but claims have not yet been received. 11.2. During 2024/2025, a total of £4.195 million was paid out by the Council on all claims, irrespective of their incident date. For claims which occurred between 1 April 2024 and 31 March 2025, £0.466 million was paid out by the Council. These costs include claims payments and other associated costs. 11.3. The total cost of loss for 2024/2025 was £6.947 million. This covers self-insured claims costs, (£4.137 million) insurance premiums (£2.810 million), and other costs for contracted insurance services. For 2023/2024 the total cost of loss was £5.853 million (£3.361 million for claims and £2.492 million for premiums). 11.4. The balance in the insurance fund will require to be closely monitored to ensure adequate funds are available to meet known liabilities. 12. Climate Change, Sustainability and Environmental Implications 12.1. There are no implications for climate change, sustainability or the environment in terms of the information contained in this report. 13. Other Implications 13.1. The cost of insurance claims and premiums is linked to the Council top risk on budget gaps/pressures. 13.2. Over the last 5 years, the Council’s claims handlers have repudiated a total of 1,538 public liability claims, which reduces the potential level of claim settlements. This equates to a repudiation rate of 66 per cent. 13.3. Failure to adequately manage insurance hotspots is likely to lead to increased claims numbers, self-insurance costs and insurance premiums. This risk is mitigated through the insurance hotspots review and associated action plans and other risk management initiatives implemented by Resources. 13.4. There are no implications for sustainability in terms of the information contained in this report. 14. Integrated Impact Assessment and Consultation Requirements 14.1. There is no requirement to carry out an impact assessment in terms of the proposals contained within this report. 14.2. Copies of this report will be passed to the Resource Risk Representatives. 177
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Jackie Taylor Executive Director (Finance and Corporate Resources) 5 September 2025 Link(s) to Council Values/Priorities/Outcomes Accountable, Effective, Efficient and Transparent Previous References Risk and Audit Scrutiny Committee – 2023/2024 Year End Insured Risks – 24 September 2024 List of Background Papers Insured Claims Annual Report for year ended 31 March 2025 Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Craig Fergusson, Head of Finance (Transactions) Ext: 4951 (Tel: 01698 454951) E-mail: craig.fergusson@southlanarkshire.gov.uk 178
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Appendix 1 Full year claims numbers and values by Resource as at 31 March 2025. All claim types Number of claims 2020/21 2021/22 2022/23 2023/24 2024/25 Community and Enterprise 522 517 537 642 478 Education 22 39 28 41 17 Finance and Corporate 1 0 2 6 2 Housing and Technical 262 306 319 254 245 Social Work 84 103 107 120 104 Total 891 965 993 1,063 846 Reported at individual year end 768 822 879 886 Cost of claims 2020/21 2021/22 2022/23 2023/24 2024/25 Community and Enterprise £758,450 £1,041,232 £749,519 £1,048,617 £1,447,836 Education £372,667 £336,632 £210,522 £300,535 £70,980 Finance and Corporate £0 £0 £15,000 £109,702 £30,000 Housing and Technical £635,397 £820,899 £1,454,329 £2,122,557 £2,406,922 Social Work £548,789 £309,008 £299,848 £311,229 £181,503 Total £2,315,304 £2,507,770 £2,729,218 £3,892,639 £4,137,241 Reported at individual year end £2,009,739 £2,241,620 £2,474,988 £3,548,238 Combined Liability Number of claims 2020/21 2021/22 2022/23 2023/24 2024/25 Community and Enterprise 310 281 335 410 285 Education 11 35 18 21 10 Finance and Corporate 1 0 2 5 2 Housing and Technical 167 177 184 123 113 Social Work 11 9 9 32 5 Total 500 502 548 591 415 Cost of claims 2020/21 2021/22 2022/23 2023/24 2024/25 Community and Enterprise £298,270 £387,676 £391,317 £587,687 £848,757 Education £357,691 £334,984 £204,085 £221,282 £60,740 Finance and Corporate £0 £0 £15,000 £109,702 £30,000 Housing and Technical £359,368 £383,021 £437,373 £444,514 £335,466 Social Work £493,093 £236,628 £206,360 £163,298 £32,810 Total £1,508,422 £1,342,309 £1,254,135 £1,526,483 £1,307,773 Motor Number of claims 2020/21 2021/22 2022/23 2023/24 2024/25 Community and Enterprise 189 213 187 211 180 Education 1 2 7 10 4 Finance and Corporate 0 0 0 1 0 Housing and Technical 56 94 114 94 94 Social Work 63 84 91 79 92 Total 309 393 399 395 370 Cost of claims 2020/21 2021/22 2022/23 2023/24 2024/25 Community and Enterprise £434,102 £453,421 £345,489 £441,177 £468,057 Education £1,163 £1,297 £5,283 £5,533 £3,765 Finance and Corporate £0 £0 £0 £0 £0 Housing and Technical £90,064 £174,809 £231,375 £244,763 £259,737 Social Work £55,152 £65,552 £92,912 £147,470 £148,393 Total £580,481 £695,079 £675,060 £838,943 £879,951 179
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Property Number of claims 2020/21 2021/22 2022/23 2023/24 2024/25 Community and Enterprise 23 23 15 21 13 Education 10 2 3 10 3 Finance and Corporate 0 0 0 0 0 Housing and Technical 39 35 21 37 38 Social Work 10 10 7 9 7 Total 82 70 46 77 61 Cost of claims 2020/21 2021/22 2022/23 2023/24 2024/25 Community and Enterprise £26,078 £200,135 £12,714 £19,754 £131,022 Education £13,812 £350 £1,153 £73,720 £6,475 Finance and Corporate £0 £0 £0 £0 £0 Housing and Technical £185,966 £263,069 £785,581 £1,433,280 £1,811,719 Social Work £544 £6,828 £576 £461 £300 Total £226,400 £470,382 £800,025 £1,527,215 £1,949,517 180
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Appendix 2 Comparison of claims costs and numbers for claims occurring during the last 2 years as at their respective year ends All claim types Number of claims 2023/24 as at 31 March 2024 2024/25 as at 31 March 2025 Difference Difference Percentage Community and Enterprise 541 478 -63 -11.65% Education 35 17 -18 -51.43% Finance and Corporate 2 2 0 0.00% Housing and Technical 205 245 40 19.51% Social Work 103 104 1 0.97% Total 886 846 -40 -4.51% Cost of claims 2023/24 as at 31 March 2024 2024/25 as at 31 March 2025 Difference Difference Percentage Community and Enterprise £1,283,276 £1,447,836 £164,560 12.82% Education £202,275 £70,980 -£131,295 -64.90% Finance and Corporate £16,500 £30,000 £13,500 0.00% Housing and Technical £1,851,783 £2,406,922 £555,139 29.98% Social Work £194,404 £181,503 -£12,901 -6.64% Total £3,548,238 £4,137,241 £589,003 16.60% Combined liability Number of claims 2023/24 as at 31 March 2024 2024/25 as at 31 March 2025 Difference Difference Percentage Community and Enterprise 309 285 -24 -7.77% Education 15 10 -5 -33.33% Finance and Corporate 1 2 1 100.00% Housing and Technical 75 113 38 50.67% Social Work 15 5 -10 -66.67% Total 415 415 0 0.00% Cost of claims 2023/24 as at 31 March 2024 2024/25 as at 31 March 2025 Difference Difference Percentage Community and Enterprise £818,300 £848,757 £30,457 3.72% Education £98,354 £60,740 -£37,114 -37.74% Finance and Corporate £16,500 £30,000 £13,500 81.82% Housing and Technical £344,890 £335,466 -£9,424 -2.73% Social Work £82,620 £32,810 -£49,809 -60.29% Total £1,360,664 £1,307,773 -£52,390 -3.85% Motor Number of claims 2023/24 as at 31 March 2024 2024/25 as at 31 March 2025 Difference Difference Percentage Community and Enterprise 211 180 -31 -14.69% Education 10 4 -6 -60.00% Finance and Corporate 1 0 -1 0.00% Housing and Technical 93 94 1 1.08% Social Work 79 92 13 16.46% Total 394 370 -24 -6.09% 181
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Cost of claims 2023/24 as at 31 March 2024 2024/25 as at 31 March 2025 Difference Difference Percentage Community and Enterprise £421,169 £468,057 £46,888 11.13% Education £6,926 £3,765 -£3,162 -45.65% Finance and Corporate £0 £0 £0 0.00% Housing and Technical £157,583 £259,737 £102,153 64.83% Social Work £110,935 £148,393 £37,458 33.77% Total £696,614 £879,951 £183,337 26.32% Property Number of claims 2023/24 as at 31 March 2024 2024/25 as at 31 March 2025 Difference Difference Percentage Community and Enterprise 21 13 -8 -38.10% Education 10 3 -7 -70.00% Finance and Corporate 0 0 0 0.00% Housing and Technical 37 38 1 2.70% Social Work 9 7 -2 -22.22% Total 77 61 -16 -20.78% Cost of claims 2023/24 as at 31 March 2024 2024/25 as at 31 March 2025 Difference Difference Percentage Community and Enterprise £43,807 £131,022 £87,215 199.09% Education £96,995 £6,475 -£90,520 -1397.99% Finance and Corporate £0 £0 £0 0.00% Housing and Technical £1,349,310 £1,811,719 £462,409 34.27% Social Work £850 £300 -£550 -64.71% Total £1,490,962 £1,949,517 £458,555 30.76% 182
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Appendix Three Public Liability – Community and Enterprise Resources Roads and other claims as at 31 March 2025 Number of claims 20/21 21/22 22/23 23/24 24/25 Total Roads claims - injury 71 58 48 50 43 270 Community and Enterprise Resources other - injury 8 8 10 12 5 43 Roads claims – property damage 179 161 225 242 178 985 Community and Enterprise Resources other – property damage 40 48 41 45 46 220 Total 298 275 324 349 272 1,518 Cost of claims 20/21 21/22 22/23 23/24 24/25 Total Roads claims - injury £156,244 £233,702 £167,819 £150,796 £458,051 £1,166,612 Community and Enterprise Resources other - injury £15,759 £875 £81,722 £37,610 £70,050 £206,016 Roads claims – property damage £47,303 £33,576 £17,115 £44,769 £55,879 £198,641 Community and Enterprise Resources other – property damage £7,167 £5,682 £18,607 £30,951 £43,252 £105,658 Total £226,473 £273,834 £285,263 £264,126 £627,232 £1,676,927 *Note number and cost of these public liability claims are also contained in Appendix 1. 183
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 30 September 2025 Report by: Executive Director (Finance and Corporate Resources) Subject: Year-End Risk Management Report - 2024/2025 and Review of Council's Top Risks - 2025/2026 1. Purpose of Report 1.1. The purpose of the report is to:- SAD provide the Risk and Audit Scrutiny Committee (RASC) with an update on progress with risk management activity undertaken during 2024/2025 provide an update on the Council’s top risk register following the review and consultation process 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- [recs] (1) that Resource compliance with the requirements of the Risk Management Strategy be noted; (2) that the progress being made in delivering actions to mitigate top Council risks be noted; and (3) that the updated Council top risks detailed in Appendix 2 be noted. 3. Background 3.1. Annual reviews of the Council’s top risks are undertaken, with the findings of the last review reported to the RASC on 24 September 2024. This year’s full review commenced in April 2025. The consultation involved views being sought from Heads of Service, Elected Members and Trade Unions on new areas of risk. 3.2. The results of the work undertaken were considered and used to inform proposals for a refined set of top risks. The feedback was used to review risk descriptions, as required. 3.3. The content of this report provides the Committee with the outcome of the review of these risks. 3.4. The Council’s updated Risk Management Strategy, which was presented to RASC on 24 September 2024, was rolled out via a Management Bulletin with an effective date of 1 April 2025. 4. Resource compliance with the Risk Management Strategy 4.1. Risk Sponsors are required on an annual basis to assess Resource compliance with the Risk Management Strategy and provide supporting evidence. The information for 2024/2025 is summarised in the end-of-year compliance statement, which is attached as Appendix 1. 10 185
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4.2. Appendix 1 shows that Resources continue to demonstrate full compliance with the Strategy, having scored 45 out of 45. 4.3. It is important that the current level of compliance is maintained to demonstrate effective risk management, which contributes to robust service planning and improved decision-making. 5. Progress made in delivering actions to control the Council’s top risks 5.1. As at 31 March 2025, the percentage of actions completed on the 2024/2025 risk control plan was 73.4% against an overall target of 90%. 5.2. Table 1 below shows the overall status as at 31 March 2025 for all actions relating to the Council’s top risk register. Table 1 – Completion of top risk control actions Action status Number of actions Percentage of actions On hold 2 13.3% Complete 11 73.4% On target 0 0.0% Slippage 2 13.3% Total 15 100.0% 5.3. The actions that are on hold or where slippage has occurred relate to Community Planning and IT forecasting. These actions have been carried forward to next year’s risk control plan. 5.4. Actions carried forward along with those identified during this year’s review have been included within the 2025/2026 top risk control plan. 6. Results of the review of the Council’s top risks 6.1. To assist the review process, the following broad criteria were recommended as a guide to concluding what constitutes a top risk:- it threatens the delivery of corporate objectives it impacts other services or partnerships there are financial impacts, or impacts on other key priority strategies there are impacts of a social or demographic context 6.2. Risks from last year’s review were mostly deemed to be still valid. The main changes and developments with the top risks are summarised below:- Risks Removed “The Council is materially affected by the implications arising from the National Care Service (NCS) Bill” On 23 January, the Government published amendments which delete the entirety of Part 1 of the National Care Service (Scotland) Bill. This means that all the structural reforms in the original NCS bill (and the government’s proposed draft Stage 2 amendments) have been dropped. This is therefore no longer considered a Council Top risk. 186
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“The Council inherits commercially unviable shopping centres due to the financial failure of existing owner/management companies, resulting in significant financial and operational liabilities transferring to the Council.” This risk has been removed following the recent sale of the Regent Shopping Centre in Hamilton and agreement to demolish Centre West in East Kilbride. There are no other shopping centres where ownership may transfer back to the Council due to Council ownership of land. Risks Consolidated Table 2 details risks that have been consolidated this year, given that they are closely related. The new risk wording is intended to cover all types of civil emergencies rather than a specific pandemic/endemic event. Table 2 – Consolidated Risks 2024 Risks 2025 Risk Failure to fulfil emergency response commitments befitting the Council’s status as a Category One (emergency) responder The Council does not have the appropriate emergency/business continuity plans, contingency arrangements, or partnerships in place to respond to/or recover from a pandemic/endemic event The Council does not have the appropriate resilience measures, emergency or business continuity plans in place to respond efficiently as a Category 1 Responder to a civil emergency. Changes to Residual Risk Scores Table 3 provides a summary of changes to risk scores Table 3 – Amendments to Risk Scores Risk Residual Risk Score 2024 Residual Risk Score 2025 Change in residual score Reason/comments The Council fails to comply with or meet the expected standards of scrutiny and deliver the improvement actions identified by regulatory bodies 20 16 As a result of the Council receiving positive inspection reports the residual risk score has been reduced 187
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Risk Residual Risk Score 2024 Residual Risk Score 2025 Change in residual score Reason/comments Due to the fragility and lack of capacity of the third and private sector market, providers are potentially unable to sustain their business models, which could result in a deterioration of their service standards and/or provider failure. This could result in the Council seeking alternative service provision in a reduced marketplace to allow us to meet the demand for services 12 16 The increase in risk score reflects areas of uncertainty such as changes to employer NI contributions which will affect all sectors. Changes for International Workers in Care - In May 2025, the UK Government announced plans to end overseas recruitment for social care workers. Barriers related to the recruitment and employment of skilled care workers will put additional pressure on the delivery of care services in Scotland Information governance not subject to adequate control 12 16 Information governance has been added as a new area in the annual governance statement for 2024/2025 due to an awareness of the impact of security information incidents. The perception of this risk is increased with the introduction of new IT systems planned for 2025/2026. Inability to ensure public protection and safety 16 12 The overall risk score has reduced given that the Council is compliant with legislation and 188
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Risk Residual Risk Score 2024 Residual Risk Score 2025 Change in residual score Reason/comments has sound governance processes in place. Following the move from analogue to digital telephone networks, there has been periods of disruption experienced with the community alarm system. There are well established business continuity plans in place to mitigate against such risks, with a focus on communication with service users and next of kin. The provision of Council services is disrupted because of industrial action 16 12 The residual risk has been reduced due to the recent agreement of a 2- year pay deal for staff members, with the exception to teaching staff. Inability to maintain infrastructure, assets and properties in a well-maintained condition and difficulties achieving the objectives of asset and property reviews 9 12 The increase in risk score reflects an ageing property asset portfolio against limited funding available to maintain. The Council does not fully deliver the strategic outcomes required of the Integration Joint Board (IJB) as outlined in their 20 9 The risk score has reduced given that sound arrangements are in place for the IJB to offer direction to South 189
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Risk Residual Risk Score 2024 Residual Risk Score 2025 Change in residual score Reason/comments Strategic Commissioning Plan Lanarkshire Council and/or NHS Lanarkshire in the delivery of the new plan for 2025 to 2028. The reduction also reflects robust governance arrangements in place in each organisation which mitigate against unfavourable outcomes. The Council fails to comply with its statutory duties by not conducting sufficiently robust impact assessments where the same are required, including in respect of budget/service redesign proposals, leading to potential legal and financial challenges, which could result in failure to deliver those proposals 16 9 The residual score has decreased as a result of the new integrated impact assessment process now being in place, with training undertaken across relevant staff groups. Changes to Risk Wordings Some key risk wordings have been updated to reflect the current status of risks and/or to provide more straightforward and understandable risk descriptions. Amendments of note are summarised below:- “Housing Emergency” has been added to the risk description “inability of the Council to effectively provide accommodation and support to households who are homeless and people who arrive in South Lanarkshire as part of refugee resettlement and the asylum seeker dispersal programmes (including those for unaccompanied children)”. This is to make the risk description more specific. the risk wording for the adverse weather risk has been expanded to “Inability of the Council to manage the impacts that increasing frequency and intensity of adverse weather events such as floods, storms, cold and freezing conditions and extreme heat, water shortages and wildfires has on Council services, budgets 190
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and our communities,” this amendment is to recognise the effects that the risk has on the Council and our local communities. “Inability to maintain infrastructure, assets and properties in a well-maintained condition that will avoid unplanned closure, due to budget constraints and difficulties achieving the objectives of asset and property reviews” has been refined to “Inability to maintain infrastructure, assets and properties in a well- maintained condition and difficulties achieving the objectives of asset and property reviews” 6.3. As part of the review of the Risk Management Strategy, risk categories were realigned, and some scores have been revised. This has resulted in the following previously high categorised risks now being categorised as medium level risks, and no longer feature as part of the Council’s top risks:- the Council does not fully deliver the strategic outcomes required of the IJB as outlined in their Strategic Commissioning Plan implications of the Scottish Fire and Rescue Service Unwanted Fire Alarm Signals Policy within the Council's non-domestic estate the Council fails to comply with its statutory duties by not conducting sufficiently robust impact assessments where the same are required, including in respect of budget/service redesign proposals, leading to potential legal and financial challenges, which could result in failure to deliver those proposals IT development, functionality and implementation of new systems does not support service delivery to secure efficiencies inability of the Council to deliver the objectives of the Community Wealth Building Strategy inability of the Council to deliver the outcomes of the Economic Strategy failure to ensure the health, safety and well-being of employees and the protection of service users and members of the public in the delivery of Council services inability of the Council to achieve the outcomes of the Community Plan 2022- 2032 inability of the Council to achieve the outcomes of the Council Plan 6.4. The Council’s top risk register is monitored on an ongoing basis, ensuring that risks are adequately managed. Updates are reported annually to this Committee. Risk scores and rankings may be amended if new information comes to light that allows the position to be reassessed. 6.5. Risks scored 20 to 25 are considered to be very high risks and risks scored 10 to 16 are considered to be high risks. The top risks identified for the Council, that is those that are residually scored as being very high and high, are attached at Appendix 2. 7. Benchmarking 7.1. An Informal benchmarking exercise has been undertaken to review risks faced by a sample of other Scottish local authorities. This review established that the current South Lanarkshire Council top risk register is in the main reflective of the risks faced by these other authorities. 8. Horizon Scanning 8.1. Through wider analysis and discussion with the Council’s Risk Sponsors Group, areas that could pose potential threats and risks or are emerging issues and opportunities that could affect the Council were identified. Areas identified are listed below. 191
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Transformational Change The Council has embarked upon a transformational change programme which includes a series of cross-cutting reviews, with a view to transforming services and meeting savings targets over the next 3 years. The level of change will require the Council to take on new levels of risk in managing and delivering service change. Progress with the transformational reviews is being monitored, and as part of review the top risks for 2026/2027, updates will be sought to assess progress and consider the need for a standalone risk. The Terrorism (Protection of Premises) Act The Act, more commonly known as Martyn’s Law, received Royal Assent on 3 April 2025. The Security Industry Authority (SIA) has been named as the national regulator, and it estimates that establishing the new regulatory capability will take at least 24 months during which time they will work with the Home Office to engage and inform stakeholders as preparation work progresses. The Act will require certain public premises and events to be prepared to keep people safe in the event of an attack. Premises within scope of the legislation will include locations used for entertainment and leisure, retail, food and drink, museums and galleries, sports grounds (with controlled entry), the public areas of buildings, visitor attractions and temporary event spaces where entry to a defined space is ticketed (with or without a fee), as well as places of worship, health, and education settings. Existing Council-wide activities related to health and safety, risk management, property maintenance, resilience and security generally all contribute to creating safe environments for our staff, service users, visitors, and pupils. Martyn’s Law will add a new reference point for these activities. The Resilience Adviser, on behalf of the Executive Director Housing and Technical Resources, will convene a working group comprising representation from Risk Management, Personnel, Licensing, Property Services, Facilities, Health and Safety, Education, South Lanarkshire Leisure and Culture (SLLC) , the Health and Social Care Partnership (HSCP) and Police Counter Terrorism Liaison Officers to:- raise awareness of Martyn’s Law within this group. identify premises anticipated to fall within the respective tiers. identify key issues and make recommendations on changes to policy and/or procedure for managing the implementation of Martyn’s Law and ongoing compliance. The Care Reform (Scotland) Bill The Care Reform (Scotland) Bill was passed on 10 June 2025 and will introduce changes to social care procurement and a new right to breaks for unpaid carers. The legal right to breaks for unpaid carers means that Councils will have a duty to decide whether a carer is able to take sufficient breaks from their caring role. If 192
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they are not, then the local authority will provide support to enable this, such as providing funding for short respite breaks. This policy, given Scotland has around 700,000 unpaid carers, will cost between £196 million and £315 million by 2035/2036, according to the Bill's financial memorandum. Scotland’s Census 2022 estimated that there are 42,375 carers in South Lanarkshire, equating to approximately 13% of its population. This is likely to have significant financial implications for the Council. A watching brief will be maintained, as “sufficient” has not yet been defined. Scotland Excel Supply Chain Intelligence Report The Scotland Excel Supply Chain Intelligence 2025 report highlights a significant number of national and global issues that present supply chain challenges. The main areas covered in the 2025 Intelligence Report are:- the economic outlook inflation and price fluctuations interest rates global market security international trade tariffs US-UK Economic Prosperity Deal the labour market national Insurance Contributions changes for international workers in care policy and funding local government funding landscape proposed policy and legislation changes (Housing, Social Care) environmental change Avian bird flu climate change adaptation technological Change artificial intelligence in supply chains This report has been circulated throughout the Council, and Resources are being encouraged to prepare and, where possible, put plans in place to react to the challenges that arise. 8.2. These areas will continue to be monitored to ensure that the Council is adequately prepared to respond where required. 9. Three lines model 9.1. The ‘three lines’ model was developed by the Institute of Internal Auditors. When using this model, risk controls are categorised under three lines of defence. This aims to provide assurance around the adequacy of control measures that are in place to mitigate strategic risks, identify control descriptions that need amendment to clearly link these to the mitigation of the risk and to highlight any residual gaps in controls that require to be addressed. 193
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9.2. Internal Audit work on the three lines model for the top risks has been concluded. Resources have been provided with individual analysis and guidance to support them in developing further controls to close any gaps identified from the three lines approach for the Council top risks that they lead on. Work is now ongoing to review and refine risk controls. This is scheduled to be completed by 31 March 2026. 10. Scope and appetite for risk 10.1. The Council aims to be risk embracing, that is it will accept a tolerable level of risk in seeking service efficiencies and in agreeing control measures. 10.2. The level of risk facing the Council is measured both before (inherent risk) and after (residual risk) consideration of controls. The Council should never carry a very high residual risk exposure as this would indicate instability, but a low residual risk exposure should also be avoided as this indicates lack of innovation. 10.3. The Council’s universal risk tolerance levels were updated as part of the review of the risk management strategy last year, with the ideal risk profile now defined as:- no more than 20% of risks at a very high level no more than 25% of risks at a high level around 40 to 50% of risks at a medium level no more than 25% of risks at a low level 10.4. Table 4 below shows the top risks heat map, i.e. it details the total number of risks for each individual risk score. Table 5 below notes the overall risk profile for the top risks. Table 4 – Top risks heat map Likelihood 5 Almost certain 4 4 Likely 3 4 1 3 Possible 6 4 2 Unlikely 3 1 Rare 1 Negligible 2 Minor 3 Moderate 4 Major 5 Catastrophic Impact Table 5 – Top risks risk profile Risk category Risk rating Number of risks Percentage of risks 1 Very high 5 20% 2 High 11 44% 3 Medium 9 36% 4 Low 0 0% 25 100% 194
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10.5. The main changes to the risk profile, as a result of the realignment of risk categories, and changes to risk scores noted in Section 6.2, are:- number of very high risks has reduced from 12 to 5 number of high risks has reduced from 16 to 11 9 risks are now recorded as being medium-level risks 10.6. Whilst the profile noted in Table 5 remains out with the ideal universal risk exposure defined by the Risk Management Strategy, there has been a reduction in the number of very high and high risks, and as such, it is now closer to the ideal risk exposure level. This is in part due to the revision to risk bandings and tolerance levels within the strategy. 10.7. Whilst this profile is not unusual in the current climate, where possible, further mitigation is encouraged. These are the highest-level risks currently being faced by the Council. 11. Employee Implications 11.1. There are no direct employee implications relative to this report. There are proposed risks which are classified under the heading of employee. Where this is the case, the appropriate controls and actions have been included in the risk control cards and progress will be monitored. 12. Financial Implications 12.1. There are no direct financial implications associated with the Council’s top risks. There are a number of proposed risks which are classified under the heading of financial. Where this is the case, the appropriate controls and actions have been included in the risk control cards, and progress will be monitored. 13. Climate Change, Sustainability and Environmental Implications 13.1. There are no direct implications associated with the Council’s top risks. 13.2. A specific risk has been included within the Council’s top risk to cover climate change and environmental implications. The risk is titled ‘Inability to take the necessary action due to funding constraints, to combat climate change, and work toward achieving net zero carbon emissions by 2045, thereby contributing to negative and irreversible environmental, social and economic impacts on the Council and its residents.’ Control measures that currently mitigate against this risk have been identified, with a number of additional actions recorded to further strengthen these controls. 13.3. There are a number of further risks within the Council’s top risk register which are categorised under the risk classification ‘Environmental’ and/or are linked to the Connect Outcome ‘Communities and Environment’. Appropriate controls and actions have been identified within the individual risk control cards, and progress will be monitored. 14. Other Implications 14.1. Failure to demonstrate that risk is actively considered and managed can not only lead to avoidable financial loss but could also adversely affect the delivery of services and could affect the Council’s reputation. The work carried out to identify and review the Council’s top risks and to determine the risks, controls and actions necessary enables the Council to manage the impact. 195
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15. Integrated Impact Assessment and Consultation Requirements 15.1. This report does not introduce a new policy, function or strategy or recommend a fundamental change to an existing policy, function or strategy and, therefore, no impact assessment is required. 15.2. Consultation has taken place with Heads of Service, Risk Lead Officers, Elected Members, Trade Unions and Resource Risk Sponsors. Jackie Taylor Executive Director (Finance and Corporate Resources) 5 September 2025 Link(s) to Council Values/Priorities/Outcomes Accountable, effective, efficient and transparent Previous References Risk and Audit Scrutiny Committee – 24 September 2024 (Review of Council’s Top Risks/Year-End Risk Management Report 2023/2024) List of Background Papers Top Risk Control Cards Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Craig Fergusson, Head of Finance (Transactions) Ext: 4951 (Tel: 01698 454951) E-mail: craig.fergusson@southlanarkshire.gov.uk 196
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Appendix 1 – 2024/2025 Compliance with risk management strategic requirements Key Score 3= Up to date and in line with requirement Score 2= Work in progress Score 1= Needs addressed Requirement from Risk Management Strategy Community and Enterprise Resources Education Resources Finance and Corporate Resources Housing and Technical Resources Social W ork Resources Risk registers are updated on an annual basis, in line with the Council’s Risk Management Strategy 3 3 3 3 3 Where appropriate, Council top risks are adequately reflected in the Resource risk register 3 3 3 3 3 Delivery of Resource risk control actions and control actions for top risks lead by the Resource are progressed. 3 3 3 3 3 The risk register and risk control plan are approved annually by the Resource Management Team 3 3 3 3 3 The risk register is presented for noting; and assurance of delivery of actions is given to the Resource Committee on an annual basis. 3 3 3 3 3 Information held on Figtree reflects the latest Resource Risk Register and Risk Control Plan 3 3 3 3 3 The Council’s agreed risk profile and risk tolerance level is adopted. 3 3 3 3 3 Risk evaluations are undertaken prior to the commencement of major projects, partnerships and organisational changes 3 3 3 3 3 Formal risk sharing agreements for major partnerships and contracts are in place 3 3 3 3 3 Major decisions are transparent and clearly show the following key elements: • Full cost over life of proposal; • Funding source; • Savings or efficiencies; • Other benefits; • Associated risks and how they will be managed. 3 3 3 3 3 197
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Elected members are kept informed of risks by using the “Other Implications” section of the Committee report template. This section should include: • The risks involved with the report’s recommendations; • The potential positive and negative consequences; • How these risks are currently being managed (existing controls) or how they will be managed going forward (additional actions); • Link to risks on the Council’s top risk register. 3 3 3 3 3 Assurance is gained from contractors and sub-contractors, in line with procurement processes, of their adoption of recommended risk management practices, particularly that adequate insurance cover, safe health and safety practices, and equalities, sustainable development, business continuity and scrutiny procedures are in place. 3 3 3 3 3 Regular Resource Risk Management Group meetings (or alternative where risk management is a standing agenda item). 3 3 3 3 3 Liaison with Service Planners to ensure that risks associated with Council and Resource plans are identified and assessed; and that appropriate plans are put in place to manage these risks. 3 3 3 3 3 Management of insurance hotspots and required mitigating actions 3 3 3 3 3 Total 45 45 45 45 45 Percentage compliance 100% 100% 100% 100% 100% 198
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Appendix 2 - Council top risk register 2025/2026 Risk Category Key risk Inherent Risk Score Residual Risk Score Controls (Good, adequate, poor) 1 Very High (20-25) The Budget Gap that the Council faces across the medium term continues to be the biggest risk faced by the Council. The Budget Gap is the result of the cumulative real terms reductions in Government funding as well as the ongoing impact of increased demand, increased cost of services due to inflation, and increased staff costs resulting from pay awards. The potential of reduced fees/income being received by the Council would further add to budget pressures across Services 25 20 Adequate Housing Emergency - inability of the Council to effectively provide accommodation and support to households who are homeless and people who arrive in South Lanarkshire as part of refugee resettlement and the asylum seeker dispersal programmes (including those for unaccompanied children) 25 20 Good The Council’s operations are affected by fraud, theft, organised crime and cyber attacks 25 20 Adequate Inability to take the necessary action due to funding constraints, to combat climate change, and work toward achieving net zero carbon emissions by 2045, thereby contributing to negative and irreversible environmental, social and economic impacts on the Council and its residents 25 20 Good The Council, in conjunction with its partners, is unable to provide the required support to reduce the overall impact of the cost-of-living crisis on households in South Lanarkshire, resulting in increasing levels of poverty, debt, and poorer outcomes for people 25 20 Adequate 2 High (10-16) Due to the fragility and lack of capacity of the third and private sector market, providers are potentially unable to sustain their business models, which could result in a deterioration of their service standards and/or provider failure. This could result in the Council seeking alternative 25 16 Good 199
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Risk Category Key risk Inherent Risk Score Residual Risk Score Controls (Good, adequate, poor) service provision in a reduced marketplace to allow us to meet the demand for services. Information governance not subject to adequate control 20 16 Adequate The Council fails to comply with or meet the expected standards of scrutiny and deliver the improvement actions identified by regulatory bodies 25 16 Adequate Inability of the Council to manage the impacts that increasing frequency and intensity of adverse weather events such as floods, storms, cold and freezing conditions and extreme heat, water shortages and wildfires has on Council services, budgets and our communities 20 16 Good Inability to ensure public protection and safety 25 12 Good The Council does not have the appropriate resilience measures, emergency or business continuity plans in place to respond efficiently as a Category 1 Responder to a civil emergency 25 12 Adequate Procurement activity is affected by supply chain issues; a lack of resources; non-compliance or legal challenge 25 12 Good The provision of Council services is disrupted because of industrial action 20 12 Adequate Lack of capacity and skills to meet increased service demands 20 12 Good Inability to maintain infrastructure, assets and properties in a well-maintained condition and difficulties achieving the objectives of asset and property reviews 20 12 Good Historic childhood abuse 16 12 Good 200
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 30 September 2025 Report by: Executive Director (Finance and Corporate Resources) Subject: Annual Update on the Use of Surveillance Powers - The Regulation of Investigatory Powers (Scotland) Act 2000 (RIPSA) 1. Purpose of Report 1.1. The purpose of the report is to:- [purpose] provide the Committee with an updated version of the Council’s Regulation of Inventory Powers (Scotland) Act 2000 (RIPSA) Policy and provide an overview and update on the use of directed surveillance powers by the Council 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- [recs] (1) that the contents of this report be noted; (2) that the updated Council’s RIPSA Policy, being the Protocol for Direct Covert Surveillance and the Protocol for using Covert Human Intelligence Source, included in Appendix 1 and Appendix 2 to this report, be noted; and (3) that it be noted that the Council’s use of surveillance powers under RIPSA will be reported annually to the Committee going forward. [1recs 3. Background 3.1. The use of surveillance to provide information is a potentially valuable resource for the protection of the public and the maintenance of law and order. To ensure that local authorities and law enforcement agencies are able to discharge their responsibilities, use is made of unaided surveillance and surveillance devices. 3.2. Where this surveillance is covert, that is the subject of the surveillance is unaware that it is taking place, then it must be authorised in accordance with the relevant regulations to ensure that it is lawful. CCTV systems in the main, will not be subject to this procedure as they are “overt” forms of surveillance. However, where CCTV is used as part of a pre-planned operation of covert surveillance, then authorisation must be obtained. 3.3. The Regulation of Investigatory Powers (Scotland) Act 2000 (RIPSA) provides a legal framework for the use, deployment, duration and effectiveness of covert surveillance and the use of covert human intelligence sources. The Council must comply with RIPSA and adhere to the authorisation procedures specified in the Council’s RIPSA Policy and related procedures. The Investigatory Powers Commissioner's Office (IPCO) provides independent oversight of the use of the powers contained within RIPSA. This oversight includes inspections by IPCO inspectors on a regular basis, approximately every 3 years, with the Council’s next inspection expected in 2026. 11 201
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3.4. Under the Council’s authorisation procedures, applications for directed surveillance are authorised by a restricted number of Authorising Officers, being certain named senior officers as listed in Section 2.1 of the Protocol for Direct Covert Surveillance. A central register of authorisations is maintained by the Head of Administration and Legal Services, who also carries out a gate-keeping role in connection with draft applications. 3.5. The Council’s RIPSA Policy is contained in the Protocol for Direct Covert Surveillance and the Protocol for using Covert Human Intelligence Source, which must both be read in conjunction (respectively) with the Scottish Government Code of Practice on Covert surveillance and Property Interference and the Scottish Government Code of Practice on Covert Human Intelligence Sources. 4. Proposals Overview of RIPSA 4.1. The Council’s RIPSA Policy and its procedures applies where ‘Directed Surveillance’ is being planned or carried out. Directed Surveillance can only be conducted to achieve one of more of the permitted RIPSA purposes, namely (i) preventing or detecting crime or prevention of disorder, (ii) in the interests of public safety or (iii) protecting public health. Directed surveillance is covert and is undertaken for the purpose of a specific investigation to obtain private information. 4.2. All applications for authorisations or renewals of authorisations must be reviewed by one of the Council’s Authorising Officers, with an appropriate form having first been completed by a relevant Council officer. Authorisations should be made in writing but can be made verbally in cases of emergency. Authorising Officers must be satisfied that the authorisation is (i) necessary - where there is no reasonable and alternative way of achieving the objective, and (ii) proportionate - any use of the surveillance shall not be excessive i.e. it shall be in proportion to the significance of the matter being investigated. 4.3. Key points in relation to the Authorisation Process are outlined below:- Time Periods Written authorisations expire after 3 months in the case of directed surveillance. Oral applications expire after 72 hours. Review Authorisations, if granted for a period of longer than one month, must be reviewed every month. Renewals If at any time before an authorisation expires, the Authorising Officer considers it necessary for the authorisation to continue for the purpose for which it was given, authorisations can be renewed for a further period, three months in the case of directed surveillance and 12 months for use of a covert human intelligence source. Any renewal must take place before the authorisation expires, and the further period begins on the day on which the previous authorisation ceases to have effect. Cancellation 202
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The Authorising Officer must cancel an authorisation if satisfied that the directed surveillance no longer satisfies the criteria for authorisation, the use or conduct of the source no longer satisfies the criteria for authorisation or procedures for the management of the source are no longer in place. 4.4. It is important that elected members receive regular updates on the Council’s use of its surveillance powers, given their potentially intrusive nature. Such public reporting is also recommended by IPCO. In the last 5 years, that is from 2020/2021, the Council has made no use of RIPSA, for either covert directed surveillance or covert human intelligence sources. This reflects what is understood to be a general decline in the use of RIPSA by Scottish local authorities. 4.5. Going forward, in line with best practice and the expectations of IPCO, the Committee will receive an annual report on the use of RIPSA, even if there has been none. An updated version of the Policy will continue to assist with the Council’s compliance. 4.6. All operational procedures and forms have been made available to staff on the Intranet. Refresher training will be provided later in 2025 to Authorising Officers and relevant staff. Council’s RIPSA Policy 4.7. As noted above, the Council’s RIPSA Policy comprises a Protocol for Covert Directed Surveillance and a Protocol for Using Covert Human Intelligence Source. These were last reviewed in May 2023 and November 2016. 4.8. These have been the subject of a fresh review, and some minor updates have been made to reflect changes in Council structure and align the 2 Protocols, as attached in Appendix 1 and Appendix 2. Given the minor nature of the changes, these have been made by officers under delegated authority in terms of the Scheme of Delegation. 4.9. Going forward, these Protocols will be the subject of annual review, the outcome of which will be reported to the Committee, in line with the IPCO’s recommended practice. 5. Employee Implications 5.1. None. 6. Financial Implications 6.1. None. 7. Climate Change, Sustainability and Environmental Implications 7.1. There are no implications for climate change, sustainability or the environment in terms of the information contained in this report. 8. Other Implications 8.1 RIPSA provides a legal framework for authorising covert surveillance by public authorities and an independent inspection regime to monitor these activities within the United Kingdom. If RIPSA has been complied with, then any interference with an individual’s privacy will be in accordance with the law. Failure to act in accordance with RIPSA could result in a complaint being raised with the Investigatory Powers Tribunal. There are clear risks to the Council if unlawful surveillance were to be undertaken, and keeping the RIPSA Policy under regular review, with appropriate support and training to staff, will mitigate against this. 203
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9. Integrated Impact Assessment and Consultation Requirements 9.1. Given the minor changes being proposed to the RIPSA Policy, there is no requirement for an integrated impact assessment or formal consultation in terms of the information contained in this report. Jackie Taylor Executive Director (Finance and Corporate Resources) 6 August 2025 Link(s) to Council Values/Priorities/Outcomes Fair, open and sustainable Accountable, effective, efficient and transparent Previous References None List of Background Papers None Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Iain Strachan, Head of Administration and Legal Services Ext: 4658 (Tel: 01698 454658) E-mail: iain.strachan@southlanarkshire.gov.uk 204
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PROTOCOL FOR COVERT DIRECTED SURVEILLANCE This Protocol sets out the Council’s Protocols in relation to the use of covert directed surveillance. It is in 3 parts. Part 1 – The Protocol’s Purpose and Principles – deals with why a Protocol is required and what it requires of officers of the council. Part 2 – How to obtain an authorisation – details the actual Protocol and forms to be used by officers when obtaining, renewing and cancelling authorisations. Part 3 – How to make a complaint – details how a person may make a complaint either through the Council’s internal Protocol or externally through the Investigatory Powers Tribunal. 11 205
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Protocol for Covert Directed Surveillance
Part 1 – The protocol’s purpose and principles
1.1 Why do we have a Protocol?
The objective of this Protocol is to ensure that all covert directed surveillance by
Council employees or on behalf of the Council is carried out effectively, while
remaining in accordance with the law. It should be read in conjunction with the Scottish
Government Code of Practice on Covert Surveillance and Property Interference ('the
Code of Practice') and any subsequent Council policy on surveillance.
In some circumstances, it may be necessary for Council employees, in the course of
their duties, to make or ask others to make observations of a person or person(s) in a
covert manner, i.e. without that person's knowledge. By their nature, actions of this
sort are potentially intrusive (in the ordinary sense of the word) on some one’s privacy
and may give rise to legal challenge as a potential breach of Article 8 of the European
Convention on Human Rights and the Human Rights Act 1998 ('the right to respect for
private and family life').
The Regulation of Investigatory Powers (Scotland) Act (2000) [RIP(S)A] and the
Investigatory Powers Act 2016, together with relevant regulations, ('the Acts')
together provide a legal framework for authorising covert surveillance by public
authorities and an independent inspection regime to monitor these activities within the
United Kingdom. Relevant regulations include the Regulation of Investigatory Powers
(Prescription of Offices, etc and Specification of Public Authorities)(Scotland) Order
2010 and the Regulation of Investigatory Powers (Authorisation of Covert Human
Intelligence Sources) (Scotland) Order 2014.
This Protocol applies in all cases where directed covert surveillance is being planned
or carried out. Overt surveillance such as public CCTV cameras is not intended to be
covered by the legislation as it has little impact on someone’s private life.
Where the surveillance is being carried out by others separate from but on behalf of
the Council, the officer instructing the surveillance will be responsible for the seeking
of an authorisation from the Council and also for ensuring that so far as possible the
investigators comply with the authorisation.
1.2 What is “Directed Surveillance, including the use of Online Surveillance?”
Directed surveillance is defined in the Code of Practice as undertaken "for the
purposes of a specific investigation or operation" and "in such a manner as is likely to
result in the obtaining of private information about a person" (Scottish Government
Code of Practice, Paragraph 2.2).
Surveillance itself is not defined in detail in the Regulation of Investigatory Powers
Scotland Act (RIPSA), but it includes (so is not restricted to):-
the monitoring, observing or listening to people, their movements, their
conversations or their other activities or communications
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recording of anything monitored, observed or listened to in the course of surveillance; and surveillance by or with the assistance of any apparatus designed or adapted for use in surveillance So, surveillance does not need to involve the use of equipment; however, there should be a conscious decision to carry out the surveillance, and in which event, the principles described below should be followed. Online Surveillance - The use of the internet and social media sites may be required to gather information prior to and/or during an operation, which may amount to directed surveillance. Although it may be argued as to how anything made publicly available on the internet can be considered private, the view of the Investigatory Powers Commissioner’s Office (IPCO) is that the repeat viewing of individual “open source” sites for the purpose of intelligence gathering, and data collation should be given protection under RIPSA. In particular, this would include social media sites such as Facebook, Twitter/X and the like. Accordingly, whenever the Council intends to use the internet or social media sites as part of an investigation, the officer concerned must first consider whether the proposed activity is likely to interfere with a person’s Article 8 rights, including the effect of any collateral intrusion. Any activity likely to interfere with an individual’s Article 8 rights should only be used when necessary and proportionate to meet the objectives of a specific case. Where it is considered that private information is likely to be obtained, an authorisation (combined or separate) must be sought as set out elsewhere in this Protocol. Where an investigator may need to communicate covertly online, for example contacting individuals using social media websites, a Covert Human Intelligence Source (“CHIS”) authorisation should be considered (see separate Council Protocol in relation to the use of CHIS. 1.3 What are the Principles of Surveillance? In planning and carrying out covert surveillance, South Lanarkshire Council employees and investigators on behalf of the council must comply with the following principles. a) Lawful purposes - covert surveillance shall only be carried out where necessary to achieve one or more of the permitted purposes (as defined in the Acts), i.e. it must be: for the purpose of preventing or detecting crime or the prevention of disorder; in the interests of public safety; and for the purpose of protecting public health. Only if one or more of these purposes are met can there be any consideration of undertaking the surveillance. It must be stressed that employees carrying out surveillance shall not cause damage to any property or harass any person. b) Necessity – covert surveillance shall only be undertaken where it is necessary for one of the purposes mentioned in paragraph a) above. The conduct that it 207
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is aimed to prevent or detect must be identified and clearly described. It must also be explained why there is no reasonable and effective alternative way of achieving the desired objective(s). c) Effectiveness – planned covert surveillance shall be undertaken only by suitably trained or experienced employees, or under their direct supervision. d) Proportionality – An authorisation should demonstrate how an authorising officer has reached the conclusion that the activity is proportionate to what it seeks to achieve including an explanation of the reasons why the method, tactic or technique proposed is not disproportionate. An authorisation should make it clear that the following elements of proportionality have been fully considered:- balancing the size and scope of the operation against the gravity and extent of the perceived mischief; explaining how and why the methods to be adopted will cause the least possible intrusion on the target and others; that the activity is an appropriate use of the legislation and the only reasonable way, having considered all others, of obtaining the necessary result; and providing evidence of other methods considered and why they were not implemented. e) Intrusive surveillance – no activity shall be undertaken that comes within the definition of 'intrusive surveillance', i.e. if it involves surveillance of anything taking place on residential premises, either permanent or temporarily used as such – but not common areas such as closes, or in a private vehicle, whether from within or outside. f) Collateral intrusion – reasonable steps shall be taken to minimise the acquisition of personal information of others who are not directly involved in the investigation or operation being carried out. An excessive amount of collateral intrusion could mean that the surveillance is not proportionate. g) Authorisation – all directed surveillance must be authorised in accordance with the Protocols described below. 1.4 What if the Surveillance is of, or could include, employees? RIPSA is only to be used by the Council for its “core” functions. Investigations into staff conduct are unlikely to fall within a core function and accordingly RIPSA should not be used to carry out surveillance on employees – Investigatory Powers Tribunal (C v The Police and Secretary of State for the Home Office IPT/03/32/H) 14 November 2006. However, the Council considers that employees as individuals should have the same protection as members of the public and any potential surveillance of employees should receive an equivalent scrutiny and protection to that provided under RIPSA. If surveillance of South Lanarkshire Council employees is being planned, the office intending this should only do so after consulting the Head of Personnel and the Head 208
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of Administration and Legal Services, in addition to securing the required authorisations in terms of Council policy, including this protocol. Remember that information obtained on Council employees during an investigation of other people amounts to collateral intrusion and must be taken into account when considering an application for authorisation. Part 2: How to obtain an authorisation 2.1 Who can grant an Authorisation? RIPSA requires that officers, who have a high degree of responsibility within the council, may only grant authorisations. Regulations made under RIPSA refer to these officers as “authorising officers” and set minimum levels of responsibility of these officers. The levels laid down and their corresponding levels within the council are as follows Regulations Council Chief Executive (or Executive Director) In cases where confidential material may be disclosed (see later) all applicants for authorisation must go to the Chief Executive or in his absence, but only where it would be prejudicial to the investigation to wait until he/she becomes available, the Executive Director of the relevant Resource. Only the Chief Executive or, in his/her absence an Executive Director, may authorise the use of a Covert Human Intelligence Source. Assistant Head of Service It is the view of the Council that in terms of the Regulations a “Head of Service” is a level equivalent to an Executive Director of a Resource. Consequently an “Assistant Head of Service” is an officer a level of responsibility directly below that of an Executive Director (normally referred to within the Council as a Head of Service). Investigation Manager It is the view that, where possible within the structure of a Service, the appropriate level for an Investigation Manager is the officer whose level is directly above that of the line manager of the investigators carrying out the surveillance. This is not always possible in terms of the structure; in that case the immediate line manager may be the Investigation Manager. 209
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Unlike an Assistant Head of Service, who is an authorising officer by his or her position within the Council, Investigation Managers will be appointed by the Chief Executive, acting under powers given to him by the Council. A list of Investigations Managers is available on written request from the Head of Administration and Legal Services, Council Offices, Almada Street, Hamilton. The current Authorising Officers (as at the date of this Protocol are: All Resources – Paul Manning, Chief Executive Community and Enterprise Resources Fraser Carlin, Head of Planning and Regulatory Services Education Resources None Finance and Corporate Resources Jackie Taylor, Executive Director Iain Strachan, Head of Administration and Legal Services Housing and Technical Resources Sharon Egan, Head of Housing Services Social Work Resources None 2.2 What if an Authorisation is required urgently? On rare occasions, it will be necessary to apply for an authorisation as a matter of urgency. Urgency would normally arise where the time that would elapse before the Authorising Officer was available to grant the authorisation would be likely to endanger life or jeopardise the operation or investigation for which the authorisation was being given. Urgent cases do not arise when there has been a failure on the part of the officer seeking the authorisation. Whilst all applications should be made in writing, an application for an urgent authorisation may be made orally to the designated Investigations Manager or an Assistant Head of Service. Sometimes an authorising officer, who would normally deal with applications, will not be available. In those circumstances, a written (but not oral) application may be approved by another officer of a similar grade as the Investigations Manager or above. Applicants should apply within their own line management structure unless other arrangements have been laid down by the Council. 2.3 How About Confidential Information? Applications where a significant risk of acquiring confidential material has been identified shall always require the approval of the Chief Executive or in his/her absence, the Executive Director of the Resource of which the service forms part. However, this would only apply where it would prejudice the investigation not to wait until the Chief Executive becomes available. Confidential information is:- 210
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matters subject to legal privilege; confidential personal information such as information on mental health and other counselling if confidential or disclosure is prohibited by law; confidential journalistic material i.e. information received by journalists in confidence; communication between a minister of religion and an individual relating to the latter’s spiritual welfare; and between a Member of Parliament and a constituent relating to constituency matters Information obtained as part of the surveillance which discloses someone’s religious or other beliefs is not in itself confidential information. There should be an element of recognised confidentiality about the information i.e. information arising from religious counselling, such as confession etc. However, it might not always be clear whether the information which may be obtained falls within the definition of “Confidential Information”. In any case where there is a possibility that the information obtained may fall into this category, then the applicant officer must contact the Head of Legal & Administration Services in order that the position can be clarified. This must be done before the authorisation being sought. All investigations which have been identified as possibly disclosing confidential information must be specifically highlighted and all information obtained must be retained until the next inspection by IPCO and brought to the attention of IPCO or his/her inspector at that inspection, regardless of whether the investigation has been completed. 2.4 The role of the RIPSA Monitoring Officer All applications must be sent the council’s RIPSA Monitoring Officer in Legal Services before being passed to the Authorising Officer. The RIPSA Monitoring Officer has undergone training in relation to disclosure of communication and will check the application to ensure that there is sufficient information contained in it to enable the Authorising officer to make an informed decision. The RIPSA Monitoring Officer will not consider whether the application should be granted, that is the role of the Authorising Officer. However, if the RIPSA Monitoring Officer considers there to be insufficient information in the application it will be returned to the application with an explanation of why it has been rejected. Additionally, originals of the application form and any related papers will be retained by the RIPSA Monitoring Officer in a central register within Legal Services. The RIPSA Monitoring Officer is Margaret Mary Wilson, Legal Services Manager (Extn 4501). 2.5 What are the duties of an Authorising Officer? In considering an application for an authorisation, the Authorising Officer must ensure that the requirements of the law are met. Therefore, he/she must be satisfied that 211
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one of the purposes exists AND the surveillance is absolutely necessary AND the surveillance is proportionate. If the authorising officer is not satisfied that all of these conditions are met, then he/she is under a duty to refuse the application. Remember that on any challenge, it shall be the Authorising Officer who will need to justify the granting of the authorisation and not the applicant officer. 2.6 What about proportionality? Proportionality will be the most likely area for challenge. The Authorising Officer should not merely consider the investigation but its wider possible effects. So not only must he/she be satisfied that the need for the surveillance outweighs the individual’s expectation of privacy, but also should consider whether there is, for instance, any unnecessary or excessive collateral intrusion and the possibility of disclosure of confidential information. Please see paragraph 1.3. d for a fuller description of what are the requirements of proportionality. 2.7 How long do authorisations last? Urgent authorisations have been granted orally or granted by an officer other than the designated Investigations Manager or an Assistant Head of Service, unless renewed, will expire after 72 hours. Otherwise in terms of the legislation authorisations last for three months from the date of granting i.e. they expire at 23.59 hrs on the day preceding three months of the date of granting. This is the case even if a shorter period of surveillance is intended by the applicant – the expiry date of the authorisation will still be three months after granting. However, authorisations should be reviewed on at least a monthly basis by the Authorising Officer. 2.8 What happens at a Review? This review must take place monthly or sooner depending on the circumstances of the investigation. When the authorisation is first granted the Authorising Officer will state when the review is to take place. At each review the Authorising Officer shall complete a review form, confirming that the original criteria adopted for granting the authorisation still meet the approval tests. If surveillance has been carried out for a month and has proved unfruitful, then it is doubtful whether anything will be gained from the surveillance. Under those circumstances it may be disproportionate to continue the surveillance. Consequently, such authorisations must be cancelled by the Authorising Officer. 212
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The originals of any renewal or cancellation forms should be sent to the central register within Legal Services to be retained with the original application and authorisation. 2.9 Can authorisation be renewed? Prior to (but not after) expiry, officers can apply to have the authorisation renewed on the same terms as before. Once an authorisation has expired it cannot be renewed and a new application must be made. An Authorising Officer can only renew an authorisation if the renewal meets the same criteria as the original authorisation, i.e. if surveillance has become disproportionate the renewal must be refused. In urgent cases the authorisation can be renewed in a similar way for the granting of an urgent application, but the renewal will be subject to the same time restrictions. Urgency would normally arise where the time that would elapse before the authorising officer was available to grant the renewal would be likely to endanger life or jeopardise the operation or investigation for which the authorisation was being given. Urgent cases do not arise when there has been a failure on the part of the officer seeking the authorisation. 2.10 Who cancels an authorisation? If it becomes obvious that the surveillance has not been fruitful i.e. is disproportionate or has already met its purpose, then the authorisation must be cancelled by the Authorising Officer. However, if the original Authorising Officer is no longer available i.e. left the Council’s employment, the authorisation must be granted by his/ her replacement or a more senior officer. If the post of the Authorising Officer is not filled, then the authorisation must be cancelled by an officer of the same rank or above who has taken over the responsibilities of the original Authorising Officer. If, for some reason, that person is not available, then the authorisation may be cancelled by any officer of the Council who could have granted that level of authorisation. 2.11 What Documents are to be used? This Protocol uses the following documents: 1) Application for authority for Directed Surveillance This form should be completed by the applicant in all cases, including those covered by oral authorisation. It is effective from the time that approval is given and for a period of three months thereafter unless cancelled earlier. This form includes a record of an oral authorisation, which should be completed by the applicant. It should be used only in cases where the urgency of the situation makes the submission of a written application impractical. It should be countersigned by the original authorising officer on the same day if possible. 213
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2) Review of a Directed Surveillance Operation This must be used by authorising officers when undertaking a review of a current authorisation. 3) Renewal of the Directed Surveillance authority This should be completed by the applicant in all cases where surveillance is required beyond the previously authorised period (including previous renewals). 4) Cancellation of a Directed Surveillance Operation This should be completed by either the applicant or the authorising officer when the authorisation ceases to be either necessary or appropriate. 2.12 Do the documents have to be kept, and if so, how securely? Documents created under this Protocol are highly confidential and shall be treated as such. Services shall make proper arrangements for their copies of each document’s retention, security and destruction, in accordance with the requirements of the Data Protection Act 1998 and the relevant Code of Practice. Resources should maintain a register of current and past authorisations (including those which have been refused by an Authorising Officer). Applicant officers shall ensure that sufficient information is provided to keep this up to date. However, as mentioned, there is a Central Register for the whole of the Council which is kept by Legal Services, Finance and Corporate Resources. Original records of authorisation re-granting, renewing or cancelling authorisations, together with copies of the relevant forms and any supplementary documentation referred to by the authorising officer when making his/her decision, should be sent monthly to the Central Register. The date of any review of any authorisation should also be notified to the Register as part of that information. 2.13 What happens if no authorisation is obtained? Basically, the Council could be acting illegally as they could be infringing a person’s rights under the Human Rights Act 1998 and the European Convention on Human Rights. Practical consequences could be:- courts considering whether not obtaining the authorisation means that the evidence recovered can be used. This is the same for both criminal prosecutions and civil cases. It could mean that a prosecution could collapse or the Procurator Fiscal could refuse to take any action on the case. This could cause difficulties and embarrassment to the Council and personal embarrassment to the officer concerned. 214
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civil cases such as court actions against anti-social tenants could be equally compromised and result in the council being unable to meet its aspirations. however, there are other remedies available to aggrieved individuals. There is an independent scrutiny system, which could lead to the formal investigation of the Council and possible adverse reports being issued. also there could be a claim for damages against the Council for the breach of the individual’s human rights. It is in order to avoid these possible situations that the officers of the Council are expected to obtain authorisations for surveillance. 215
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Part 3 - What if a person wants to make a complaint? Anyone who is unhappy about the way the council has or is carrying out surveillance may make complaint through either internal or external procedures. The decision as to which procedure should be used lies with the individual concerned. 3.1 How to use the internal Procedure If the person wishes to complain using the Council’s internal procedures, then the complaint should be, in the first instance addressed to the Executive Director of the Resource carrying out or has carried out the surveillance. If this is unknown then the complaint should be made to the Council’s RIPSA Monitoring Officer (Finance and Corporate Resources). The complaint should be in writing and give details as to who is making the complaint. All Executive Directors may be contacted at the following address:- Council Offices Almada Street Hamilton ML3 OAA The Council will then investigate using officers who were not involved in the surveillance. Where possible the applicant will be advised of the outcome of the investigation, however this might not be possible i.e. where the Council is unable to do so without prejudicing their regulatory functions. 3.2 How to use external Procedure If a person wishes to complain directly to an independent body or has used the Council’s internal procedures and is still dissatisfied, then he/she may complain to the Investigatory Powers Tribunal. Complaints should be made in writing to; The Investigatory Powers Tribunal PO Box 33220 London SWIH 9ZQ. Notices and explanatory information on how to make a complaint, copies of this Protocol and any Council Policies, together with copies of the relevant forms, Code of Practice and the Regulation of Investigatory Powers (Scotland) Act 2000, must be made available to members of the public upon request. Head of Administration and Legal Services TBC 2025 If you need this information in another language or format, please contact us to discuss how we can best meet your needs. Phone 0303 123 1015 or email equalities@southlanarkshire.gov.uk 216
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C:\Program Files (x86)\neevia.com\docConverterPro\temp\NVDC\E85CD5C2-FF8C-4F98-A943-E180573C3521\ba3d5c73-d52c-41b0-813e- 4f07983dc5ad.doc PROTOCOL FOR USING COVERT HUMAN INTELLIGENCE SOURCE This Protocol sets out the Council’s Protocols in relation to the use of covert human intelligence sources. It is in 3 parts. Part 1 – The Protocol’s Purpose and Principles – deals with why a Protocol is required and what it requires of officers of the Council. Part 2 – How to obtain an authorisation – details the actual Protocol and forms to be used by officers when obtaining, renewing and cancelling authorisations. Part 3 – How to make a complaint – details how a person may make a complaint either through the Council’s internal Protocol or externally through the Investigatory Powers Tribunal. IF THE USE OF A CHIS IS BEING CONSIDERED IT IS ESSENTIAL THAT YOU CONSULT THE HEAD OF ADMINISTRATION & LEGAL SERVICES BEFORE PROCEEDING. 11 217
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SOUTH LANARKSHIRE COUNCIL
Protocol for Covert Human Intelligence Sources
PART 1 – PROTOCOL’S PURPOSE AND PRINCIPLES
1.1 Why Do We Have Protocol?
The objective of this Protocol is to ensure that any use of covert human intelligence
sources by Council employees or on behalf of the Council is carried out effectively,
while remaining in accordance with the law. It should be read in conjunction with the
Scottish Government’s Code of Practice on Covert Human Intelligence Sources ('the
Code of Practice') and any subsequent Council policy on this activity.
In some circumstances, it may be necessary for Council employees, in the course of
their duties, to “go under cover” (or in extreme cases use informers) in order to
obtain information on a person’s unlawful or inappropriate activities without that
person's knowledge. By their nature, actions of this sort are potentially intrusive (in
the ordinary sense of the word) on someone’s privacy and may give rise to legal
challenge as a potential breach of Article 8 of the European Convention on Human
Rights and the Human Rights Act 1998 ('the right to respect for private and family
life').
The Regulation of Investigatory Powers (Scotland) Act (2000) [RIP(S)A] and the
Investigatory Powers Act 2016, together with relevant regulations ('the Acts'),
provide a legal framework for authorising covert surveillance by public authorities
and an independent inspection regime to monitor these activities within the United
Kingdom. Relevant regulations include the Regulation of Investigatory Powers
(Prescription of Offices, etc and Specification of Public Authorities) (Scotland) Order
2010 and the Regulation of Investigatory Powers (Authorisation of Covert Human
Intelligence Sources) (Scotland) Order 2014.
This Protocol applies in all cases where the use of a covert human intelligence
source is being planned or carried out.
Where the surveillance is being carried out by others separate from but on behalf of
the Council, the officer instructing the surveillance will be responsible for the seeking
of an authorisation from the Council and also for ensuring that, so far as possible,
the investigators comply with the authorisation.
1.2 What is a Covert Human Intelligence Source, including use of the Internet?
A covert human intelligence source is defined as a person who establishes or
maintains a personal or other relationship with another person for the covert purpose
of facilitating anything that:-
covertly uses such a relationship to obtain information or to provide access to
any information to another person; or
covertly discloses information obtained by the use of such a relationship or as
a consequence of the existence of such a relationship.
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In terms of the Code of Practice, a relationship is used covertly if, and only if, it is conducted in a manner calculated to ensure that the person is unaware of its purpose. Consequently, it is not intended to cover situations where officers of the Council visit premises and make themselves known as officers of the Council and why they are there at the start of the contact with the individual concerned. Online Surveillance - The use of the internet and social media sites may be required to gather information prior to and/or during an operation, which may amount to directed surveillance. Although it may be argued as to how anything made publicly available on the internet can be considered private, the view of the Investigatory Powers Commissioner’s Office (IPCO) is that the repeat viewing of individual “open source” sites for the purpose of intelligence gathering, and data collation should be given protection under the Regulation of Investigatory Powers Scotland Act (RIPSA). In particular, this would include social media sites such as Facebook, Twitter/X and the like. Accordingly, whenever the Council intends to use the internet or social media sites as part of an investigation, the officer concerned must first consider whether the proposed activity is likely to interfere with a person’s Article 8 rights, including the effect of any collateral intrusion. Any activity likely to interfere with an individual’s Article 8 rights should only be used when necessary and proportionate to meet the objectives of a specific case. Where an investigator may need to communicate covertly online, particularly where he or she uses a false persona, for example, contacting individuals using social media websites, a Covert Human Intelligence Source (“CHIS”) authorisation may be required. 1.3 What is meant by a “relationship”? Similarly, there must be a “relationship” which is established or maintained as part of an investigation. What constitutes a relationship is not defined, but it is clear that it should be more than merely making contact with the person, i.e. test purchases. However, it is unclear as to what would constitute establishing a relationship and therefore, in cases of uncertainty, an authorisation should be obtained. The use of a source in terms of the Code of Practice is any action to induce, ask or assist a person to engage in the conduct of a source or obtain information by means of an action of the source. 1.4 What Are the Principles of Surveillance? In planning and using a covert human intelligence source, South Lanarkshire Council employees and investigators on behalf of the Council shall comply with the following principles. a) Lawful purposes - the use of a covert human intelligence source shall only be carried out where necessary to achieve one or more of the permitted purposes (as defined in the Acts), i.e. it must be:- for the purpose of preventing or detecting crime or the prevention of disorder in the interests of public safety 219
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for the purpose of protecting public health Only if one or more of these purposes are met can there be any consideration of undertaking the activity. b) Necessity – the use of a covert human intelligence source shall only be undertaken where it is necessary for one of the purposes mentioned in paragraph a) above. The conduct that it is aimed to prevent or detect must be identified and clearly described. It must also be explained why there is no reasonable and effective alternative way of achieving the desired objective(s). c) Effectiveness – planned use of a covert human intelligence source shall be undertaken only by suitably trained or experienced employees, or under their direct supervision. d) Management – there must be suitable management structures in place to manage the source and to prevent any harm coming to the source (see later) e) Proportionality – the use and extent of the use of a covert human intelligence source shall not be excessive, i.e. it shall be in proportion to the significance of the matter being investigated, including the possibility of significant collateral intrusion. An authorisation should demonstrate how an authorising officer has reached the conclusion that the activity is proportionate to what it seeks to achieve, including an explanation of the reasons why the method, tactic or technique proposed is not disproportionate. An authorisation should make it clear that the following elements of proportionality have been fully considered:- balancing the size and scope of the operation against the gravity and extent of the perceived mischief; explaining how and why the methods to be adopted will cause the least possible intrusion on the target and others; that the activity is an appropriate use of the legislation and the only reasonable way, having considered all others, of obtaining the necessary result; and providing evidence of other methods considered and why they were not implemented. f) Collateral intrusion – reasonable steps shall be taken to minimise the acquisition of personal information of others who are not directly involved in the investigation or operation being carried out. An excessive amount of collateral intrusion could mean that the use of the source is not proportionate. g) Authorisation – all uses of a covert human intelligence source must be authorised in accordance with the Protocols described below. 1.5 What if the Surveillance is of, or could include, employees? RIPSA is only to be used by the Council for its “core” functions. Investigations into staff conduct are unlikely to fall within a core function and accordingly RIPSA should not be used to carry out surveillance on employees – Investigatory Powers Tribunal (C v The Police and Secretary of State for the Home Office IPT/03/32/H) 14 220
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November 2006. However, the Council considers that employees as individuals should have the same protection as members of the public and any potential surveillance of employees should receive an equivalent scrutiny and protection to that provided under RIPSA. If surveillance of South Lanarkshire Council employees is being planned, the office intending this should only do so after consulting the Head of Personnel and the Head of Administration & Legal Services. Remember that information obtained on Council employees during an investigation of other people amounts to a collateral intrusion and must be taken into account when considering an application for authorisation, in addition to securing the required authorisations in terms of Council policy, including this protocol. 221
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PART 2 - HOW TO OBTAIN AN AUTHORISATION 2.1 The role of the RIPSA Monitoring Officer As at the date of this Protocol (TBC 2025), there have been no applications for the use of a covert human intelligence source by South Lanarkshire Council. If you are considering using such a source, it is essential that you first of all contact the Head of Administration & Legal Services for advice. After consulting with and obtaining the approval of the Head of Administration & Legal Services to the use in principle of a covert human intelligence source, any application must be sent to the Council’s RIPSA Monitoring Officer in Legal Services before being passed to the Authorising officer. The Monitoring Officers have undergone training in relation to disclosure of communication and will check the application for to ensure that there is sufficient information contained in it to enable the Authorising officer to make an informed decision. The Monitoring Officer will not consider whether the application should be granted; that is the role of the Authorising Officer. However, if the Monitoring Officers consider there to be insufficient information in the application, it will be returned to the applicant with an explanation of why it has been rejected. Additionally, originals of the application form and any related papers will be retained by the Monitoring Officers in a central register within Legal Services. The RIPSA Monitoring Officer is Margaret Mary Wilson, Legal Services Manager (Extn 4501). 2.2 Who can grant an Authorisation? RIPSA requires that officers, who have a high degree of responsibility within the Council, may only grant authorisations. Regulations and the Code of Practice made under RIPSA refer to these officers as “authorising officers” and set minimum levels of responsibility of these officers. The levels laid down and their corresponding levels within the Council are as follows Regulations Council Chief Executive (or Executive Director) It has been decided that only the Chief Executive or, in his/her absence, an Executive Director may authorise the use of a Covert Human Intelligence Source. 2.3 What if an Authorisation is required urgently? On rare occasions, it will be necessary to apply for an authorisation as a matter of urgency. Urgency would normally arise where the time that would elapse before the Authorising officer was available to grant the authorisation would be likely to endanger life or jeopardise the operation or investigation for which the authorisation was being given. Urgent cases do not arise when there has been a failure on the part of the officer seeking the authorisation. Whilst all applications should be made in writing, an application for an urgent authorisation may be made orally to the Chief Executive or, in his/her absence, an Executive Director. 222
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2.4 What about obtaining confidential information? Applications where a significant risk of acquiring confidential material has been identified shall always require the approval of the Chief Executive or, in his/her absence, the Executive Director of the Resource of which the service form’s part. However, an Executive Director can only consider applications which disclose confidential information if the Chief Executive is absent and it would prejudice the investigation to wait until the Chief Executive becomes available. Confidential information is:- matters subject to legal privilege confidential personal information, such as information on mental health and other counselling, if confidential or disclosure is prohibited by law confidential journalistic material, i.e. information received by journalists in confidence. communication between a minister of religion and an individual relating to the latter’s spiritual welfare; and between a Member of Parliament and a constituent relating to constituency matters. Information obtained as part of the surveillance which discloses someone’s religious or other beliefs is not in itself confidential information. There should be an element of recognised confidentiality about the information, i.e. information arising from religious counselling, such as confession, etc. However, it might not always be clear whether the information which may be obtained falls within the definition of “Confidential Information”. In any case where there is a possibility that the information obtained may fall into this category, then the applicant officer must contact the Head of Administration & Legal Services in order that the position can be clarified. This must be done prior to the authorisation being sought. All investigations which have been identified as possibly disclosing confidential information must be specifically highlighted and all information obtained retained until the next inspection by and brought to the attention of IPCO or his/her inspector at that inspection, regardless of whether the official investigation has been completed. 2.5 What are the duties of an Authorising Officer? On receiving an application for an authorisation, the Authorising officer must ensure that the requirements of the law are met. Therefore, he/she must be satisfied that one of the purposes exists the surveillance is absolutely necessary the surveillance is proportionate; and there are suitable management arrangements in place in relation to the source (see later). If the Authorising officer is not satisfied that all of these conditions are met, then he/she is under a duty to refuse the application. Remember that on any challenge, it 223
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shall be the Authorising officer who will need to justify the granting of the authorisation and not the applicant officer. 2.6 What about Proportionality? Proportionality will be the most likely area for challenge. The authorising officer should not merely consider the investigation but its wider possible effects. So not only must he/she be satisfied that the need for the use of the source outweighs the individual’s expectation of privacy, but also should consider whether there is, for instance, any unnecessary or excessive collateral intrusion, the possibility of disclosure of confidential information and any possible harm to the source. Please see paragraph 1.4.e for a fuller description of what are the requirements of proportionality. 2.7 Can Young People or Vulnerable individuals be used as Sources? Young people (people under the age of 18 years old) or vulnerable individuals can be used as Covert Human Intelligence Sources. However, this is strongly discouraged and should only occur where there is no alternative available adult source, and the seriousness of the investigation warrants the use of a young person or such a person. No person under the age of 16 years old is to be used in an investigation where the subject of surveillance is their parent or has parental responsibilities (as defined in the Children (Scotland) Act 1995) for the young person. 2.8 What management arrangements need to be put in place? There needs to be proper oversight and management of the source. Therefore, every source must have a designated handler and a designated controller. The Council should take into account of possible risks to the source and carry out a risk assessment, in case the source’s purpose should become known. Where the source is under 18 years of age, the risk assessment must also show:- the nature and magnitude of any risk of physical injury and/or psychological distress to the source have been identified and evaluated; the authorising officer has considered the risk assessment and is satisfied that any risks are justified and, if they are, that they have been explained to and understood by the source; and the authorising officer is aware whether the subject of the surveillance is a grandparent, parent, brother, sister, uncle or aunt (including by marriage), a formal guardian or a person who has assumed responsibility for the source’s welfare and, if it is, has given particular consideration to whether the authorisation is justified in light of that fact. Where the source is under 16 years of age, there must be an officer responsible for ensuring that there is an appropriate adult present at all meetings with the Council or any other investigating authority. An appropriate adult means:- 224
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the parent or formal guardian of the source any other person who has assumed responsibility for the welfare of the source; or if neither of the above persons is available, any responsible person who is neither a member of nor employed by the Council or any other authority taking part in the investigation. This requirement ceases when the source becomes 16 years old. Proper records must be kept in relation to the use of the source. Descriptions of the records which should be kept are detailed in RIPSA and in the Code of Practice. The records kept must contain particulars on the matters detailed in Appendix 1. 2.9 How long do authorisations last? Urgent authorisations, which have been granted orally unless renewed, will expire after 72 hours. Where the source is under 18 years old, the authorisation will last for 1 month from the date of granting. Otherwise, authorisations last for twelve months from the date of granting, i.e. they expire at 23.59 hrs on the day preceding twelve months from the date of granting in terms of the Act. However, all authorisations should be reviewed regularly by the authorising officer. 2.10 What happens at a Review? This review must take place monthly or sooner, depending on the circumstances of the investigation. When the authorisation is granted, at that time the authorising officer will state when the next review is to take place. At each review, the authorising officer shall complete a review form, confirming that the original criteria adopted for granting the authorisation still meet the approval tests. If surveillance has been carried out and has proved unfruitful, then it is doubtful whether anything will be gained from the further use of the source. Under those circumstances, it may be disproportionate to continue to use the source. Consequently, said authorisation must be cancelled by the authorising officer. 2.11 Can authorisations be renewed? Prior to (but not after) expiry, officers can apply to have the authorisation renewed on the same terms as before. An authorisation can only be renewed if the authorising officer has considered whether the source has been used during the period of authorisation, and how the source has been used and the information obtained. In addition, where the source is under the age of 18 years old, the authorising officer must obtain an updated risk assessment in order to be satisfied that risks are still justified. If he/she is not satisfied with these matters, then the authorisation should not be renewed. 225
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In very urgent cases, the authorisation can be renewed in a similar way for the granting of an urgent application. For the avoidance of doubt, urgency would normally arise where the time that would elapse before the authorising officer was available to grant the authorisation would be likely to endanger life or jeopardise the operation or investigation for which the authorisation was being given. Urgent cases do not arise when there has been a failure on the part of the officer seeking the authorisation. 2.12 Who cancels authorisations? If it becomes obvious that the use of the source has not been fruitful, i.e. is disproportionate or has already met its purpose, then the authorisation must be cancelled by the authorising officer. However, if the original authorising officer is no longer available, i.e., has left the Council’s employment, the authorisation must be granted by his/ her replacement or a more senior officer. If the post of the authorising officer is not filled, then the authorisation must be cancelled by an officer of the same rank or above who has taken over the responsibilities of the original authorising officer. If, for some reason, that person is not available, then the authorisation may be cancelled by any officer of the Council who could have granted that level of authorisation. 2.13 What Documents are to be used? This Protocol uses the following documents: I. The use of a covert human intelligence source - Written Authorisation This form should be completed by the applicant in all cases except those covered by oral authorisation (below). It is affective from the time that approval is given. This form includes a record of an oral authorisation, which should be completed by the applicant. It should be used only in cases where the urgency of the situation makes the submission of a written application impractical. It should be countersigned by the original authorising officer on the same day if possible. II. The use of a covert human intelligence source - Renewal of Authorisation This should be completed by the applicant in all cases where surveillance is required beyond the previously authorised period (including previous renewals). III. The use of a covert human intelligence source - Review This should be used by the authorising officer when reviewing an authorisation. IV. The use of a covert human intelligence source - Cancellation This should be completed by either the applicant or the authorising officer when the authorisation ceases to be either necessary or appropriate. Due to the level of scrutiny required for the Council to authorise a covert human intelligence source, these documents are not available on the intranet, unlike forms for directed covert surveillance. If any officer is considering the use of a covert 226
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human intelligence source, they should contact either of the RIPSA Monitoring Officers in the first instance - Margaret Mary Wilson, Legal Services Manager (Extn 4501). 2.14 Do the documents have to be kept, and if so, how securely? Documents created under this Protocol are highly confidential and shall be treated as such. Services shall make proper arrangements for their copies of the documents’ retention, security and destruction, in accordance with the requirements of the Data Protection Act 1998 and the relevant Code of Practice, including making available to IPCO. Resources should maintain a register of current and past authorisations (including those which have been refused by an authorising officer). Applicant officers shall ensure that sufficient information is provided to keep this up to date. All original applications and related papers will be kept in the central register for the whole of the Council, located within Legal Services, Finance & Corporate Resources. Records of authorisations re granting, renewing or cancelling authorisations, together with copies of the relevant forms and any supplementary documentation referred to by the authorising officer when making his/her decision, should be sent monthly to the Central Register. The date of any review of any authorisation should also be notified to the Register as part of that information. Records must be kept until the next inspection by IPCO to ensure that they are available for inspection. Material must not be destroyed without the consent of the authorising officer. The following information is required to be kept in the records relating to each source:- the identity of the source; the identity, where known, used by the source; any relevant investigating authority other than the authority maintaining the records; the means by which the source is referred to within each relevant investigating authority; any other significant information connected with the security and welfare of the source; any confirmation made by a person granting or renewing an authorisation for the conduct or use of a source that the information in paragraph (e) has been considered, and that any identified risks to the security and welfare of the source have, where appropriate, been properly explained to and understood by the source; the date when, and the circumstances in which, the source was recruited; the identities of the persons who, in relation to the source, are discharging or have discharged the functions mentioned in section 7(6) (a) to (c) of RIPSA or in any order made by the Scottish Ministers under section 7(2)(c); the periods during which those persons have discharged those responsibilities; the tasks given to the source and the demands made of him or her in relation to their activities as a source; 227
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all contacts or communications between the source and a person acting on behalf of any relevant investigating authority; the information obtained by each relevant investigating authority by the conduct or use of the source; and any dissemination by that authority of information obtained in that way; and in the case of a source who is not an undercover operative, every payment, benefit or reward and every offer of a payment, benefit or reward that is made or provided by or on behalf of any relevant investigating authority in respect of the source's activities for the benefit of that or any other relevant investigating authority. (The Regulation of Investigatory Powers (Source Records) (Scotland) Regulations 2002) 2.15 What happens if no authorisation is obtained? Basically, the Council could be acting illegally as they could be infringing a person’s rights under the Human Rights Act 1998 and the European Convention on Human Rights. Practical consequences could be:- courts will need to consider whether not obtaining the authorisation means that the evidence recovered can be used. This is the same for both criminal prosecutions and civil cases. It could mean that a prosecution could collapse, or the Procurator Fiscal could refuse to take any action on the case. This could cause difficulties and embarrassment to the Council and personal embarrassment to the officer concerned. civil cases, such as court actions against anti-social tenants, could be equally compromised and result in the Council being unable to meet its aspirations. However, there are other remedies available to aggrieved individuals. There is an independent scrutiny system, which could lead to the formal investigation of the Council and possible adverse reports being issued. Also, there could be a claim for damages against the Council for the breach of the individual’s human rights. It is in order to avoid these possible situations that the officers of the Council are expected to obtain authorisations for surveillance. 228
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PART 3 - WHAT IF A PERSON WANTS TO MAKE A COMPLAINT? Anyone who is unhappy about the way the Council has used or is using a covert human intelligence source may make a complaint through either internal or external procedures. The decision as to which procedure should be used lies with the individual concerned. 3.1 How to use the internal procedure If the person wishes to complain using the Council’s internal procedures, then the complaint should be, in the first instance, addressed to the Executive Director of the Resource who has used the source. If this is unknown, then the complaint should be made to the Council’s RIPSA Monitoring Officer (Finance & Corporate Resources). The complaint should be in writing and give details as to who is making the complaint. All Executive Directors may be contacted at the following address:- Council Offices Almada Street Hamilton ML3 OAA The Council will then investigate using officers who were not involved in the use of the source. Where possible, the applicant will be advised of the outcome of the investigation; however, this might not be possible, i.e. where the Council is unable to do so without prejudicing the safety of the source. 3.2 How to use the external procedure If a person wishes to complain directly to an independent body or has used the Council’s internal procedures and is still dissatisfied, then he/she may complain to the Investigatory Powers Tribunal. Complaints should be made in writing to:- The Investigatory Powers Tribunal PO Box 33220 London SWIH 9ZQ. Notices and explanatory information on how to make a complaint, copies of this Protocol and any Council Policies, together with copies of the relevant forms, Code of Practice and the Regulation of Investigatory Powers (Scotland) Act 2000 must be made available to members of the public upon request. Head of Administration & Legal Services TBC 2025 229
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If you need this information in another language or format, please contact us to discuss how we can best meet your needs. Phone 0303 123 1015 or email equalities@southlanarkshire.gov.uk 230
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 25 June 2025 Report by: Executive Director (Finance and Corporate Resources) Subject: Forward Programme for Future Meetings 1. Purpose of Report 1.1. The purpose of the report is to:- [purpose] advise members of the forward programme for the meetings of the Risk and Audit Scrutiny Committee to 29 September 2026 invite members to suggest topics for inclusion in the Committee’s forward programme [1purpose] 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- [recs] (1) that the report and the outline forward programme for the meetings of the Risk and Audit Scrutiny Committee to 29 September 2026, attached as an Appendix to the report, be noted. [1recs] 3. Background 3.1. As part of a range of improvement measures introduced as a result of Audit Scotland’s report on the Audit of Best Value and Community Planning (2009), an Action Plan was prepared. One of the actions was to include, as a standard agenda item, a list of items proposed for consideration at subsequent meetings of this Committee to provide an opportunity for members to inform future agendas. The outline forward programme to 29 September 2026 is attached, for members’ information, as an Appendix to the report. 4. Employee Implications 4.1. There are no employee implications. 5. Financial Implications 5.1. There are no financial implications. 6. Climate Change, Sustainability and Environmental Implications 6.1. There are no Climate Change, Sustainability or Environmental implications in terms of the information contained within this report. 7. Other Implications 7.1. There are no risk implications in terms of the information contained within this report. 12 231
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8. Integrated Impact Assessment and Consultation Requirements 8.1. The report does not introduce a new policy, function or strategy or recommend a change to an existing policy, function or strategy and, therefore, no impact assessment is required. 8.2. There was no requirement to undertake any consultation in terms of the information contained in this report. Jackie Taylor Executive Director (Finance and Corporate Resources) 20 August 2025 Link(s) to Council Values/Priorities/Outcomes Accountable, Effective, Efficient and Transparent Previous References Executive Committee 8 July 2009 List of Background Papers Audit Scotland Audit of Best Value and Community Planning Contact for Further Information If you would like to inspect the background papers or want further information, please contact:- Elizabeth-Anne McGonigle, Administration Adviser Tel: 0738 5403101 E-mail:- elizabeth-anne.mcgonigle@southlanarkshire.gov.uk 232
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APPENDIX – RASC OUTLINE FORWARD PROGRAMME Meeting Date Item Responsibility 9 December 2025 Internal Audit Activity Report Audit and Compliance Manager Audit Scotland Report: Local Government in Scotland Overview 2024 Head of Communications and Strategy Performance and Review Scrutiny Forum Annual Update Head of Communications and Strategy Good Governance Update Head of Administration and Legal Services 2025/2026 Six Monthly Fraud Report Audit and Compliance Manager Global Internal Audit Standards - Update Audit and Compliance Manager 10 March 2026 Internal Audit Activity Report Audit and Compliance Manager 2026/2027 Internal Audit Plan Audit and Compliance Manager Annual Audit Plan External Audit 26 May 2026 Internal Audit Activity Report Audit and Compliance Manager 2025 NFI Exercise Audit and Compliance Manager Audit Scotland – Financial Bulletin 2024/2025 Head of Finance (Strategy) Financial Resources Scrutiny Forum Activity Head of Finance (Strategy) 233
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Meeting Date Item Responsibility 23 June 2026 (Special) Internal Audit Assurance Report 2025/2026 Audit and Compliance Manager • Annual Governance Statement for 2025/2026 and Significant Governance Areas for Quarter 4 Progress Report Head of Administration and Legal Services Unaudited Annual Accounts 2025/2026 Head of Finance (Strategy) 25 August 2026 Internal Audit Activity Report Audit and Compliance Manager Year End Insured Risks Report 2025/2026 Head of Finance (Transactions) Year End Risk Management Report 2025/2026 and Review of Council’s Top Risks 2026/2027 Head of Finance (Transactions) Fraud Statistics Annual Report 2025/2026 Financial Resilience and Sustainability Report Audit and Compliance Manager Head of Finance (Strategy) 29 September 2026 (Special) External Auditor’s Annual Report to South Lanarkshire Council 2025/2026 External Audit Audited Annual Accounts 2025/2026 Head of Finance (Strategy) N.B:- Audit Scotland national studies and reviews will appear as a recurring item but the frequency and subject matter will vary according to their programme. 234