Agenda Document Pack - Risk and Audit Scrutiny Committee - 26/05/2026
South Lanarkshire Council · 26 May 2026
Back to Risk and Audit Scrutiny Committee — 26 May 2026 and its agenda
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Council Offices, Almada Street Hamilton, ML3 0AA Monday, 18 May 2026 Dear Councillor Risk and Audit Scrutiny Committee The Members listed below are requested to attend a meeting of the Committee to be held as follows:- Date: Tuesday, 26 May 2026 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 10 March 2026 submitted for approval as a correct record. (Copy attached) 3 - 12 Item(s) for Noting 3 Internal Audit Activity Report Report dated 27 April 2026 by the Internal Audit Manager. (Copy attached) 13 - 32 4 Accounts Commission – Code of Audit Practice Consultation Report dated 1 May 2026 by the Executive Director (Finance and Corporate Resources). (Copy attached) 33 - 40 5 Audit Scotland – Annual Assurance and Risks Report 2024/2025 Report dated 27 April 2026 by the Executive Director (Finance and Corporate Resources). (Copy attached) 41 - 52 6 Financial Resources Scrutiny Forum Activity Report dated 20 April 2026 by the Executive Director (Finance and Corporate Resources). (Copy attached) 53 - 56 7 Forward Programme for Future Meetings Report dated 30 April 2026 by the Executive Director (Finance and Corporate Resources). (Copy attached) 57 - 60 Urgent Business 8 Urgent Business Any other items of business which the Chair decides are urgent. Clerk Name: Ishara Opatha Clerk Telephone: 07385370069 Clerk Email: ishara.opatha@southlanarkshire.gov.uk 2
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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 10 March 2026 Chair: Councillor Elaine McDougall Councillors Present: Councillor Colin Dewar, Councillor Mary Donnelly (Depute), Councillor Ross Gowland, Councillor Celine Handibode, Councillor Susan Kerr, Councillor Richard Lockhart, Councillor Julia Marrs (substitute for Councillor Alistair Fulton) Councillors' Apologies: Councillor Mathew Buchanan, Councillor Alistair Fulton Councillor Also Present: Councillor Joe Fagan (for item 3) Attending: Chief Executive’s Service P Manning, Chief Executive (for item 3) Community and Enterprise Resources M Wilkie, Performance and Policy Development Manager Finance and Corporate Resources J Taylor, Executive Director; Y Douglas, Internal Audit Manager; 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 J Boyd and A Barclay, 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 9 December 2025 were submitted for approval as a correct record. The Committee decided: that the minutes be approved as a correct record. 2 3
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3 Good Governance Update and Significant Governance Areas Quarter 2 Progress Report A report dated 2 March 2026 by the Executive Director (Finance and Corporate Resources) was submitted providing an update on the Council’s annual governance arrangements. Each year, the Council undertook a comprehensive review of the governance arrangements required to support its financial and operational controls. The annual review of governance arrangements informed the Governance Statement, which was included within the Council’s Annual Accounts. As part of this annual review, the Council’s Local Code of Corporate Governance was reviewed, updated and republished. Compliance with the Code was also reviewed on an annual basis and Appendix 1 to the report provided details of the Council’s compliance with the Code. Details of the amendments made to the Code, following the review, were provided and the revised Code was attached as Appendix 2 to the report. Progress on the significant governance areas, as highlighted within the Annual Governance Statement 2024/2025, was detailed in Appendix 3 to the report. The Head of Administration and Legal Services responded to a member’s questions in relation to:- significant governance issues that the Committee should be aware of whether the actions identified in 2024/2025 would be completed by 31 March 2026 The Committee decided: (1) that the findings from the annual compliance check against the Local Code of Corporate Governance be noted; (2) that the updated Local Code of Corporate Governance, as detailed in Appendix 2 to the report, be approved; and (3) that progress against the significant governance areas identified within the Annual Governance Statement 2024/2025, as detailed in Appendix 3 to the report, be noted. [Reference: Minutes of 18 February 2025 (Paragraph 3)] 4 Internal Audit Plan 2026/2027 A report dated 13 February 2026 by the Executive Director (Finance and Corporate Resources) was submitted setting out the requirements and responsibilities of the Global Internal Audit Standards (GIAS) relative to the Internal Audit Plan 2026/2027 and seeking:- approval of the revised Internal Audit Mandate and Charter endorsement of the Audit Strategy approval of the proposed Internal Audit Plan for 2026/2027 Internal Audit formed part of the Council’s wider governance framework. Output from the function was the delivery of a planned programme of internal audit assignments. Each assignment was formally reported to the Committee and an audit conclusion was expressed, which was based on the level of assurance that testing had provided. 4
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The definitions of the various levels of assurance that were expressed within an audit report were provided in Appendix 1 to the report. Those assurances informed an overall assessment of the adequacy and effectiveness of the Council’s framework of governance, risk management and control arrangements that were reported to the Committee and captured in the Council's Governance Statement, which formed part of the Annual Accounts. From 1 April 2025, the internal audit function had operated in compliance with the requirements of the GIAS. The Standards had been issued by the Internal Audit Standards Board and endorsed by the Chartered Institute of Internal Auditors. The GIAS set out a role for those ‘charged with governance’ within an organisation and within the Council, this was the Risk and Audit Scrutiny Committee. The requirements of the Standards were set out in paragraphs 4.2 to 4.8 of the report and a copy of the proposed Internal Audit Mandate and Charter was attached as Appendix 2 to the report. A further element of the overall work plan that the Standards referenced was the Audit Strategy. The Audit Strategy, which underpinned the 2026/2027 Internal Audit Plan, was set out in Appendix 3 to the report. The broad aims of the Strategy were set out in paragraph 5.1 of the report. Capacity in 2026/2027 had been adjusted to remove the time to deliver audit plans for the function’s external clients, as detailed in paragraph 6.1 of the report. The process had determined that 1,258 days were available to deliver the Council’s Audit Plan for 2026/2027. Further details on the planning themes and content of the plan were provided in paragraphs 6.2 to 6.8 of the report. The draft Internal Audit Plan 2026/2027 was attached at appendices 4 and 5 to the report. The Internal Audit Manager responded to members’ questions on various aspects of the report and undertook to:- keep the Internal Audit Plan 2026/2027 under review throughout the year, providing updates to the Committee if any adjustments or revisions were required provide regular update reports, including performance indicators which measured progress of audit assignments The Committee decided: (1) that the requirements and responsibilities of the Global Internal Audit Standards (GIAS) relative to the 2026/2027 Internal Audit Plan be noted; (2) that the revised Internal Audit Mandate and Charter be approved; (3) that the Audit Strategy be endorsed; and (4) that the proposed Internal Audit Plan for 2026/2027, attached at appendices 4 and 5 to the report, be approved. [Reference: Minutes of 18 February 2025 (Paragraph 4)] 5
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5 Internal Audit Activity Report A report dated 13 February 2026 by the Executive Director (Finance and Corporate Resources) was submitted:- providing an update on work completed by Internal Audit during the period 15 November 2025 to 13 February 2026 seeking approval to make an amendment to the Internal Audit Plan 2025/2026 The Committee had approved the Internal Audit Plan 2025/2026 in February 2025. Information was provided on the work undertaken since the last progress report, which was considered by the Committee on 9 December 2025. The report highlighted that, as at 13 February 2026, 100% of the 2025/2026 Audit Plan was in progress and 67% of assignments had reached the draft report stage. 99% of the Audit Plan was projected to be at the draft report stage by April 2026 and 22 out of 24 performance indicators were meeting targets. This represented good progress with the overall delivery of the Plan. There were no significant concerns regarding the overall deliverability of the Plan ahead of presenting an annual report to the Committee in June 2026. There remained a continued risk of unforeseen service demands and, potentially wider, a less significant risk in relation to team upskilling requirements, particularly in the development of digital skills. Those risks were mitigated by the inclusion of contingency time within the Plan, a focus on coaching and training, and by setting realistic expectations around the wider use of data analytics in audit work. Any risk of substantial amendments to the Plan, arising from changes in Council priorities or risks, had been controlled through regular re-assessment of capacity and ongoing review of the Audit Plan, with incremental updates reported to the Committee as required. Performance indicators for the period to 31 January 2026 were detailed in Appendix 1 to the report, alongside targets and an overall assessment as to whether those would be met by 31 March 2026. All indicators had been included for completeness, but some would not be reported until the end of the financial year. There was currently one indicator assessed as red and one at amber. A list of those, together with corrective actions, was detailed in the table at paragraph 3.8 of the report. A summary of the audit output from assignments completed between 15 November 2025 and 13 February 2026 was detailed in Appendix 2 to the report. Sixteen assignments from the 2025/2026 Plan had been completed during the period, as detailed in the table at paragraph 4.2 of the report. In line with Global Internal Audit Standards’ (GIAS) requirements, the Audit Plan had been reviewed in February 2026 to ensure it remained risk-based and aligned with organisational objectives. The review had identified one assignment for deferral. The reasons for deferral, and the proposed course of action, were detailed in the table at paragraph 4.5 of the report. Details were also provided on:- Audit Plan recommendations, as detailed in section 5 of the report emerging risks and issues, as detailed in section 6 of the report a compliance and standards update, as detailed in section 7 of the report. This included information on a Quality Assurance and Improvement Programme (QAIP), which was a mandatory framework used to evaluate and ensure that an Internal Audit function conformed to GIAS. governance and committee engagement, as detailed in section 8 of the report 6
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The Internal Audit Manager responded to members’ questions on various aspects of the report and undertook to include the QAIP checklist as an appendix to the Internal Audit Annual Assurance Report 2025/2026, which would be presented to the Committee in June 2026. The Committee decided: (1) that progress with the delivery of the 2025/2026 Internal Audit Plan be noted; (2) that performance in the period to 31 January 2026, as detailed in Appendix 1 to the report, be noted; (3) that output from internal audit assignments completed in the period 15 November 2025 to 13 February 2026, as detailed in Appendix 2 to the report, be noted; and (4) that the proposed amendments to the Internal Audit Plan 2025/2026, as detailed in paragraph 4.5 of the report, be approved. [Reference: Minutes of 18 February 2025 (Paragraph 7) and 9 December 2025 (Paragraph 3)] 6a South Lanarkshire Council Annual Audit Plan 2025/2026 The Committee considered the South Lanarkshire Council Annual Audit Plan for 2025/2026 submitted by Audit Scotland, the Council’s External Auditor. The Plan set out the audit work necessary to allow Audit Scotland to provide an independent auditor’s report and meet the wider scope requirements of public sector audit, which included assessing arrangements for:- financial management financial sustainability vision, leadership and governance use of resources to improve outcomes Based on the risk assessment process, significant risks of material misstatement to the financial statements had been identified and those were summarised in Exhibit 2 of the report. A risk around financial sustainability had been identified in the wider scope areas and this was detailed in Exhibit 4 of the report. The Plan was structured around the following areas:- annual accounts wider scope and best value reporting arrangements, timetable and audit fee other matters Details were given on key aspects of those areas. As part of the annual work on Best Value, thematic reviews were conducted as directed by the Accounts Commission. In 2025/2026, the subject of the thematic review was asset management and involved considering how the Council was managing its assets to ensure high- quality services, whilst responding to the challenges around financial sustainability and climate change. At least once over the 5-year appointment, the Controller of Audit would report to the Accounts Commission on the Council’s performance in meeting its Best Value duties. The fourth year of the programme would run from October 2026 to August 2027. The Council was included in the fourth year of that programme, with a planned reporting date of December 2026. 7
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The Audit Director, Audit Scotland responded to a question from the Chair in relation to the audit team for 2025/2026. The Committee decided: that the report be noted. 6b South Lanarkshire Council Charitable Trusts’ Annual Audit Plan 2025/2026 The Committee considered the South Lanarkshire Council Charitable Trusts’ Annual Audit Plan for 2025/2026 submitted by Audit Scotland, the Council’s External Auditor. The purpose of the Annual Audit Plan was to provide an overview of the planned scope and timing of the 2025/2026 audit of South Lanarkshire Council Charitable Trusts’ annual accounts. The audit was performed in accordance with the Code of Audit Practice, including supplementary guidance, International Standards on Auditing (UK), and other legislation. The Plan was structured around the following areas:- annual accounts wider scope and best value reporting arrangements, timetable and audit fee other matters Details were given on key aspects of those areas. The audit of the annual accounts was driven by materiality and the risks of material misstatement in the financial statements, with greater attention given to the significant risks of material misstatement. There were no significant risks identified in the wider scope areas or Best Value from the risk assessment process. The Committee decided: that the report be noted. 7 Public Audit in Scotland - Interim Evaluation A report dated 13 February 2026 was submitted by the Executive Director (Finance and Corporate Resources) on Audit Scotland’s ‘Public Audit in Scotland’ interim evaluation report, which had been published in December 2025. ‘Public Audit in Scotland 2023 to 2028’ was published in 2023 as a shared statement of purpose between the Auditor General for Scotland, the Accounts Commission and Audit Scotland. It articulated both a vision and a mission and intended outcomes for public audit services in the years through to 2028. 2025/2026 marked the halfway point of Public Audit in Scotland’s 5-year lifespan and a mid-term evaluation, published in December 2025, looked at progress in achieving the intended outcomes and in delivering the declared mission and vision. The review also considered how well performance had been recorded and monitored and identified areas where further improvement could be made. The interim evaluation set out recommendations for Audit Scotland to enhance both its audit work and its evaluation approach. A brief overview of both the findings and recommendations was provided in paragraphs 4.2 to 4.5 of the report. 8
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The interim evaluation report stated that, in conclusion, there had been good progress against the shared outcomes for public audit, as fully detailed in paragraph 5.1 of the report. Reflecting the commitment to continuous improvement, the Audit Scotland report articulated the key messages and recommendations as a series of next steps within the following wider development areas:- embedding outcomes in planning improving feedback updating the audit model enhancing evaluation A final evaluation of progress would be conducted and reported in 2027. The key messages from that report would be reported to the Committee once published. Officers responded to members’ questions on various aspects of the report. The Committee decided: that the key messages and recommendations set out in the Audit Scotland publication, Public Audit in Scotland, be noted. 8 Audit Scotland – Financial Bulletin 2024/2025 A report dated 19 February 2026 by the Executive Director (Finance and Corporate Resources) was submitted providing a summary of the:- information contained within the Audit Scotland Financial Bulletin 2024/2025, published in January 2026 information contained within The Scottish Budget 2026/2027: Supplement to the Financial Bulletin 2024/2025, published in February 2026 checklist for Elected Members: Supplement to the Financial Bulletin 2024/2025, published in January 2026 The report had been divided into 2 parts:- council funding and financial performance financial position and outlook The key messages from each of those parts were detailed in sections 4 and 5 of the report. An assessment of the position in South Lanarkshire Council was provided in section 6 of the report. The key points of the Scottish Budget 2026/2027 and the checklist for elected members were provided in sections 7 and 8 of the report. The Committee decided: (1) that the key messages and recommendations contained in the Audit Scotland report entitled 'Financial Bulletin 2024/2025', as detailed in sections 4 and 5 of the report, be noted; (2) that the commentary on the Council’s position, as included in the Audit Scotland report and detailed in section 6 of the report, be noted; (3) that the key points from The Scottish Budget 2026/2027: Supplement to the Financial Bulletin 2024/2025, as detailed in section 7 of the report, be noted; and 9
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(4) that the Checklist for Elected Members, as detailed in section 8 and Appendix 1 of the report, be noted. [Reference: Minutes of 6 May 2025 (Paragraph 4)] 9 Accounts Commission Report - Spotlight on Culture and Leisure Services A report dated 2 February 2026 by the Executive Director (Community and Enterprise Resources) was submitted on the Accounts Commission report ‘Spotlight on Culture and Leisure Services’. In October 2025, the Accounts Commission published a report on local government performance in relation to the provision of culture and leisure services. That report formed part of a series of outputs produced by the Accounts Commission, which, taken together, provided an independent overview of the local government sector. It followed its annual briefing on local government budgets, which looked at the decisions councils took when setting annual budgets. The ‘Spotlight on Culture and Leisure Services’ report, attached as an appendix to the Executive Director’s report, focused on how councils were delivering culture and leisure services, including the use of culture and leisure trusts. Performance in this service area over time was also considered. Section 5 of the report provided details on the Council’s and South Lanarkshire Leisure and Culture’s (SLLC) assessment of how the current delivery of culture and leisure services in South Lanarkshire aligned with the Accounts Commission expectations. The financial position was detailed in section 6 of the report. The key message within the Audit Commission report was that, despite councils spending more on delivering services, spending on culture and leisure services across Scotland had reduced by 3% in real terms between 2018/2019 and 2023/2024. The financial position for SLLC and the Council was detailed in paragraphs 6.2 to 6.4 of the report. The Performance and Planning Development Manager, Community and Enterprise Resources, responded to a question from the Chair in relation to public consultations and Equality Impact Assessments. The Committee decided: that the Accounts Commission report, Spotlight on Culture and Leisure Services, as detailed in Appendix 1 to the Executive Director’s report, and the key messages and expectations therein, be noted. [Reference: Minutes of the Executive Committee of 25 June 2025 (Paragraph 14)] 10 Forward Programme for Future Meetings A report dated 18 February 2026 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 26 January 2027. As part of future arrangements, members were invited to suggest topics for inclusion in the Committee’s forward programme. 10
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The Committee decided: that the outline forward programme for the meetings of the Risk and Audit Scrutiny Committee to 26 January 2027 be noted. [Reference: Minutes of 9 December 2025 (Paragraph 7)] 11 Urgent Business There were no items of urgent business. 11
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 26 May 2026 Report by: Internal Audit Manager Subject: Internal Audit Activity Report 1. Purpose of Report 1.1. The purpose of the report is to:- update the Committee on the progress, performance and output from the Internal Audit service in the period 14 February to 24 April 2026 provide a summary of activity to assess compliance with the Global Internal Audit Standards (GIAS) at 31 March 2026 present the Scottish Local Authority Chief Internal Auditor’s Group report for 2025 present a proposed training approach to support the member’s scrutiny activity 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 output from internal audit assignments completed in the period 14 February to 24 April 2026, as summarised at Appendix 1 to the report, be noted; (3) that the content of the Scottish Local Authority Chief Internal Auditor’s Group report for 2025 be noted; and (4) that the proposed training approach to support member’s scrutiny activity be noted. 3. Audit Plan: Progress and Performance Audit Plan: Progress 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 the Plan can be found here. A summary of the progress at 24 April 2026 with the delivery of this Plan is as follows:- 100% of 2025/2026 Internal Audit Plan has been progressed 98%1 of the Audit Plan is at draft report stage at 24 April 2026 3.2. All assignments within the 2025/2026 Internal Audit Plan are nearing conclusion at 24 April 2026 with 98% of audit assignments to, at least, draft report stage. The one remaining assignment not at draft report stage will be carried forward into 2026/2027 to be completed in this year. 1 Target of 100% by May 2026 reported to RASC in December 2025. Forecasted final position of 99% of the Audit Plan to draft report stage by April 2026 reported to RASC in March 2026. 3 13
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3.3. The Committee is asked to note progress with delivering the approved Plan in the reporting period and that overall progress in the year to 31 March 2026 is sufficient to support the audit opinion expressed within the Annual Assurance Report that will be presented to RASC in June 2026. Audit Plan: Performance 3.4. Performance for the year to 31 March 2026 will be reported to the RASC within the 2025/2026 Annual Assurance Report in June 2026. This will allow the RASC to satisfy themselves that the internal audit service delivered to South Lanarkshire Council (SLC) in 2025/2026 has met the mandate granted by the Committee in February 2025 in respect of the authority, role and responsibility under which Internal Audit has operated. 3.5. It is anticipated that Internal Audit will report positively on performance against the full suite of indicators for the year ended 31 March 2026 aligning to the positive position that has been reported throughout the year to the RASC. 4. Audit Plan: Output and Key Findings 4.1. The last progress report to RASC was in March 2026. This reported on work completed in the period 15 November 2025 to 13 February 2026. This report covers all work completed in the period 14 February to 24 April 2026. A summary of the audit plan output for this period is set out below:- 6 assignments have concluded in the period 3 relate to assignments that have been delivered across 2025/2026 4.2. All assignments from 1 April 2025 have been conducted in conformance with the GIAS. The scope of the assignments completed in the period from 14 February to 24 April 2026 (excluding the one assignment where it was approved by RASC in March 2026 that work be deferred) is as follows:- Audit Assignment Scope of Assignment UK Procurement Act Compliance Provide assurance around compliance with the UK Procurement Act 2023. Advice and Guidance Provide advice and guidance to Council Resources throughout 2025/2026. 2026/2027 Internal Audit Plan Develop and present a draft Internal Audit Plan for 2026/2027 in compliance with GIAS. Global Internal Audit Standards Fully implement the new GIAS across all aspects of the internal audit service. Develop an audit strategy and an assurance mapping framework (including tracking of output from external inspectors and delivery of improvement actions). Committee reporting Prepare reports to present to Senior Management and RASC throughout 2025/2026. 4.3. A summary of the audit output for each of these assignments is detailed in Appendix 1. 4.4. In addition to completing work across these audit areas, audit work for external clients has been progressed in the period. 94% of the External Client’s 2025/2026 Internal Audit Plans are now at, at least, draft report stage. Arrangements are in place to conclude External Client Internal Audit Plans and to report to their respective Boards and Audit Committees through the first two quarters of 2026/2027. 14
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4.5. GIAS requires re-consideration of the Audit Plan as the year progresses to ensure that it continues to be risk-based and aligns to the organisation’s objectives. This review, has been undertaken periodically throughout the year and, where required, proposed amendments to the Audit Plan presented to the RASC for approval. 4.6. Members are asked to note the scope and output from assignments completed in the period. 5. Audit Plan: Recommendations 5.1. Across all the assignments concluded in the period, Council Resources have demonstrated a good level of engagement. 5.2. Where audits identify areas for improvement, these actions are logged together with a ‘responsible owner’ and a due date. Verbal updates are obtained when the action falls due. This is classed as informal follow up and performance data included within routine indicators reported to RASC. Separately, actions are formally followed up to confirm that there is evidence of action being taken. The findings from these reviews are also reported to RASC throughout the year. 5.3. Eighty internal audit actions fell due in the year to 31 March 2026. More than 90% of these actions have been advised as implemented on time, exceeding the target set of 80%. Work to follow up these actions has now concluded and will be reported within the 2025/2026 Annual Assurance report to this Committee in June 2026. 6. Emerging Risks and Issues 6.1. The Council’s top risks were reviewed and reported to RASC in September 2025. These revised risks have been mapped to the 2025/2026 Internal Audit Plan that has now been delivered. Three from 5 of the top risks (categorised as very high) were within the scope of planned assignments in 2025/2026. A further 4 from 11 of the top risks (categorised as high) and four from 9 of the top risks (categorised as medium) were within the scope of planned assignments in 2025/2026. 6.2. New and emerging risks have developed as the year progresses as well as a change in priorities. Periodic re-assessments of the Plan have been undertaken to ensure that it has remained risk-based, aligned to the Council’s objectives and that sufficient resources were available to respond. Any proposed amendments to the Plan have been presented to RASC for approval during 2025/2026. 6.3. Other risks around unforeseen service demands and, a wider, though less significant, risk around responding timeously to team up-skilling requirements, particularly around the development of digital skills have also been managed across the year. These risks have been mitigated by the use 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. 7. Compliance and Standards Update 7.1. A report that set out the requirements and responsibilities of the new GIAS, which were effective from 1 April 2025, was presented to this Committee on 18 February 2025. A copy of the 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 role of audit committees is set out in some detail in Domain Three 15
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“Governance of the Internal Audit function”. The RASC demonstrates support for the Service by engaging constructively with Internal Audit’s findings, conclusions and advice. 7.3. The Code of Practice for the Governance of Internal Audit in UK Local Government assists with the interpretation of the new GIAS. Specifically, in relation to these activity updates, the Committee should be satisfied that the content is such to allow them to effectively scrutinise and challenge. 7.4. A Quality Assurance and Improvement Program (QAIP) is a mandatory framework used to evaluate and ensure that an internal audit function conforms to GIAS. An interim assessment was presented to this Committee in December 2025 confirming that the 2 main gaps in compliance with GIAS had now been addressed by reporting a revised and extended suite of performance indicators together with the development and presentation of a detailed Audit Strategy. 7.5. The 2025/2026 Internal Audit Annual Assurance Report, that will be presented to this Committee in June 2026, will confirm that a QAIP is in place and operating, summarise the level of compliance and detail any remaining areas where further improvement could be sought. 7.6. To meet the requirement of GIAS for internal audit activity to be externally reviewed once in each 5-year period (known as an External Quality Assessment), the Chief Internal Auditors Group within Scotland intend to continue an arrangement whereby reviews are undertaken by Local Authorities on a reciprocal, no-fee basis. The latest iteration of the 5-year External Quality Assessment programme was published in April 2026. Argyll and Bute Council have been allocated to review SLC with an indicative date for reporting of the External Quality Assessment findings of 2028/2029. 7.7. Members are asked to note the update on compliance with GIAS. 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 that allows for unrestricted access. 8.2. Members of the RASC met privately with the Internal Audit Manager, as required by GIAS, in December 2025. This provided an opportunity to offer 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. Plans to further support Members are set in Section 10 below with a continuation of one-to-one or group support, as required, to allow Members to ensure appropriate scrutiny can be undertaken by them in their role. 9. Chief Internal Auditors Group 9.1. Throughout the year, the internal audit function in SLC has continued to form part of the Chief Internal Auditor’s Group in Scotland. The Group convened meetings during 2025/2026 that has allowed the sharing of best practice and provided opportunities to attend presentations on topical issues. 9.2. A copy of the 2025 annual report is attached at Appendix 2, setting out the Group’s activities during the year, and Members are asked to note the content. 16
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10 Members Training 10.1. The public sector accounting body, Chartered Institute of Public Finance and Accountancy (CIPFA), recognises that Audit Committee effectiveness depends on members having and maintaining the right knowledge and skills. To achieve this objective, it is noted that training should be mandatory, ongoing and proportionate to the organisation’s size, complexity and risk profile. 10.2. Suggested best practice requires a structured induction programme for both new Members and those new to an audit committee role. SLC has in place a structured induction programme for all Councillors, which is supplemented with specific training for members of RASC. 10.3. The objective of this training is to ensure that members of RASC understand the purpose and remit of the audit committee, the difference between scrutiny and assurance and how internal audit, external audit, risk management and governance interact. 10.4. These principles are embedded in CIPFA’s Position Statement: Audit Committees in Local Authorities and Police (2022). Using this guidance, a checklist has been prepared that will be shared with members to allow them to self-assess their current role as a member of the Council’s audit committee and, based on responses, will inform a wider training programme to support scrutiny activity within SLC. 10.5. Training will cover governance (the roles and responsibilities of the RASC and the annual governance statement process); Internal and External Audit functions and the requirements of GIAS; risk management arrangements and financial reporting. 10.6. Specifically, in relation to GIAS, this will include a clear understanding of members’ roles in approving the Internal Audit Charter and Mandate, and oversight of Internal Audit’s strategy, resourcing and QAIP and the private meeting between the Chief Audit Executive (the Council’s Internal Audit Manager) and the audit committee. 10.7. Dependent on feedback from the self-assessment exercise, it is suggested that training and support could take the form of a handbook, short ‘bite-sized’ briefings and periodic refresher and update sessions. 10.8. As part of wider support, a library of relevant resources will be created and maintained. 10.9. The intention is to ensure that members receive the appropriate training linked to their assessed needs and that this training supports effective challenge and oversight. 10.10. Members are asked to note this approach and that this will be developed further in 2026/2027. 11 Employee Implications 11.1. There have been no changes to the team in the period to 24 April 2026 and there are no vacancies within the Service. Training arrangements includes regular team briefs, internal training sessions, attendance at professional body conferences and external seminars and briefings. Further online resources were secured to support team training throughout 2025/2026. 17
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12. Financial Implications 12.1. The Internal Audit plan for the year aligns to the budget that has been set, and sufficient resources were in place to deliver the approved programme of audit assignments in 2025/2026. 13. Climate Change, Sustainability and Environmental Implications 13.1. There are no implications for climate change, sustainability or the environment in terms of the information contained in this report. 14. Other Implications 14.1. There are no implications for sustainability in terms of the information contained in this report. 15. Integrated Impact Assessment and Consultation Requirements 15.1. 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 integrated impact assessment or consultation is required. 15.2. .Heads of Service are consulted on each and every audit assignment. Yvonne Douglas Internal Audit Manager 27 April 2026 Link(s) to Council Values/Priorities/Outcomes Accountable, effective, efficient and transparent Previous References Risk and Scrutiny Committee - 10 March 2026 (Internal Audit Activity Report) Risk and Scrutiny Committee - 30 January 2025 (2025/2026 Internal Audit Plan) Risk and Scrutiny Committee –18 February 2025 (Global Internal Audit Standards) Risk and Scrutiny Committee – 25 June 2025 (Internal Audit Annual Assurance Report 2024/2025) List of Background Papers Figtree extracts of Action Plans 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 18
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14 February to 24 April 2026 Appendix 1 Number Assignment name Draft Issue Final Issue Audit Conclusion I250121 UK Procurement Act Compliance 31/03/2026 31/03/2026 Legal Services are advising on guidance under Scottish Procurement Policy Note (SPPN) 5 with the Procurement Network already briefed on SPPN 5. No contracts have been awarded to date under the new arrangements, and no new frameworks have been awarded since the effective date of February 2026. To comply with the new Act, SLC will make any necessary amendments to the sourcing strategy and procurement process based on guidance received from Legal Services. I720104 Advice and Guidance 31/03/2026 31/03/2026 Provision of advice and guidance throughout 2025/2026. I810049 2026/2027 Internal Audit Plan 26/02/2026 10/03/2026 Developed a draft Internal Audit for 2026/2027. Approved by RASC 10.3.26. I810050 Global Internal Audit Standards 31/03/2026 31/03/2026 Progress with compliance reported throughout 2025/2026. A summary assessment of progress in implementing the new Standards was reported to RASC 9 December 2025 and a fuller update will be provide within the Annual Assurance Report. I823048 Committee reporting 31/03/2026 31/03/2026 Preparation and presentation of Committee reports throughout 2025/2026. 19
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Appendix 2 ANNUAL REPORT FROM THE CHAIR – 2025 “WORKING TOGETHER TO SUPPORT THE KEY ROLE OF INTERNAL AUDIT” 1. INTRODUCTION 1.1 Membership of the CIPFA Scottish Local Authorities Chief Internal Auditors’ Group (SLACIAG) is open to the chief internal auditor from each Scottish local authority and the Strathclyde Partnership for Transport (SPT). SLACIAG is a Special Interest Group of CIPFA in Scotland, with operational arrangements, vision, and objectives set out in a formal Constitution. 1.2 SLACIAG’s Vision is to be the voice of internal audit across Scottish local authorities and a driving force for best practice in respect of local authority and public transport bodies internal audit, governance, and operations. 1.3 In support of that Vision, SLACIAG has the following objectives: • Secure a quality and responsive service for members of the group. • Develop the influence of the group with key decision makers and institutions in Scotland, as the key representative body for internal audit in local government with a particular emphasis on governance, risk, control and assurance matters. • Strengthen links and build long term relationships across the internal audit community within the public service. • Provide an effective group for the discussion of issues of common concern, sharing of good practice and commissioner of work to develop advanced practice. • Consider the development and training needs of our people as a collective to ensure that the best available products are procured at the best price. • Uphold the group’s key values, including: respect; openness and honesty; adding value; professional team working; sharing best practice; integrity; continuous improvement. 1.4 The purpose of this annual report to key stakeholders is to provide an update on SLACIAG’s activities and achievements over the course of 2025 and to recognise actions required to achieve its Vision. 1.5 SLACIAG has two long-established sub-groups whose activity is reflected in this report: • the Computer Audit Sub-Group (CASG); and • the Scottish Local Authorities Investigators’ Group (SLAIG). 20
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1.6 Further sub-groups were established by SLACIAG in 2023 to lead on development actions arising from the SLACIAG Conference held in June 2023 within specific themes, including risk, data analytics, resourcing, and sustainability/climate change. Their activity in 2025 is also referenced in this report. 21
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2. MANAGEMENT COMMITTEE 2.1 I, Chief Officer Audit & Risk, Scottish Borders Council, was appointed as Chair of SLACIAG at the AGM in March 2025, continuing as Chair following a 2-year term during 2022-2023 to facilitate succession planning within the Management Committee. I previously served as Chair of SLACIAG during 2014-2015. In accordance with SLACIAG’s Constitution, my term of office will expire after serving 2 years at the SLACIAG AGM in March 2026. The Chair of SLACIAG joins the meetings of the CIPFA Scotland Branch Executive Committee, as SLACIAG is a special interest group of CIPFA in Scotland. 2.2 Internal Audit Manager, South Lanarkshire Council, was re-elected as Treasurer of SLACIAG at the AGM March 2025 having initially been appointed to the role in June 2020. Treasurer provided regular updates on the financial position of SLACIAG to enable the Management Committee to plan activity. 2.3 The appointments to the SLACIAG Management Committee were approved at the AGM March 2025. New members were welcomed to the Management Committee, including each sub-group Lead to ensure all sub-groups were represented. The Chairs of both CASG and SLAIG participate in the Management Committee meetings to derive benefits from their sectoral expertise and to ensure synergy when forward planning the regular meetings. 2.4 There were some membership changes during 2025, as follows: SLACIAG MANAGEMENT COMMITTEE 2025 Chief Officer Audit & Risk Scottish Borders Council Chair SLACIAG Internal Audit Manager South Lanarkshire Council Treasurer SLACIAG Service Manager Audit and Risk Management Fife Council Member; Lead for EQA and Risk Sub-Groups Audit & Risk Manager (stood down June 2025 secondment) East Dunbartonshire Council Member Service Manager Internal Audit East Lothian Council Member; Lead for Sustainability/ Climate Change Sub-Group Head of Audit (stood down June 2025 due to new job role) Glasgow City and Shetland Islands Councils Member; Lead for Data Analytics Sub-Group Audit Service Manager Stirling Council Member; EQA Moderation Panel Chief Internal Auditor Aberdeenshire and Aberdeen City Councils Member Chief Internal Auditor City of Edinburgh Council Member; Lead for Resourcing Sub-Group 22
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Senior Manager (Audit, Fraud, Safety, Risk and Insurance) North Ayrshire Council Chair CASG Corporate Fraud Team Leader East Dunbartonshire Council Chair SLAIG 2.5 There were Management Committee virtual meetings held in March, July and August 2025. The purpose of these meetings was to forward plan the SLACIAG Conference and SLACIAG and Sub-Group meetings, considering topics, setting dates and arranging speakers. 2.6 The Management Committee also oversees the External Quality Assessment (EQA) process, which is a peer review process established by SLACIAG to enable external validation of compliance with the Global Internal Audit Standards in the UK Public Sector (GIAS). The Management Committee monitors progress with completion against a recommended programme of reviews each year to ensure that all participating organisations comply with the requirement to undertake an EQA once every 5 years. 3. SCOTTISH LOCAL AUTHORITIES’ CHIEF INTERNAL AUDITORS GROUP (SLACIAG) SLACIAG Conference 2025 a) The biennial SLACIAG Conference was held on Thursday 5 and Friday 6 June 2025 at Edinburgh Napier University (ENU) Craiglockhart Campus, an incredible learning campus with superb location and facilities, hosted by the Chair of SLACIAG. The event was attended each day by 95+ delegates from nearly all Scottish Councils’ internal audit, risk management and counter fraud functions to invest in their learning and development. b) The Keynote speaker was the Director of Finance and Procurement at City of Edinburgh Council (CEC) outlining the Important Role of Internal Audit in Challenging times ‘Navigating a New Era’. They shared their perspectives on the rapid changes and challenges in the local government sector and the profession of Internal Audit, setting out the opportunity to evolve and respond to these challenges using the new global internal audit standards to continue to add value through its vital role in councils across the country (not only in terms of providing assurance, but through insight and advice on a whole range of areas of work), and reflected on the road map of the future including the new skills requirements for audit and other assurance functions in a more digitised environment. This keynote speech acted as a catalyst for the workshop connections and collaborations over the two days. c) Furthermore, guest speakers were welcomed to cover key areas over the two days, including: o Chief Internal Auditor, City of Edinburgh Council: Coordination and Resilience - Assurance Mapping o Insurance Manager, City of Edinburgh Council: Areas of emerging risk – Insurance Lead Officer perspective 23
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o Head of Technical Content and Research, Chartered Institute of Internal Auditors: Topical Requirements in new Global Internal Audit Standards in the UK public sector: Cyber security (approved; implementation February 2026); Third Party Supply Chain (being finalised; implementation 12 months from approval); and Organisational Behaviour (out for consultation) o SLACIAG Resourcing Sub-Group: Coaching and Mentoring Awareness Session - Overview of the proposed approach o Head of IT, Fife Council: Generative Artificial Intelligence (AI) – threat or opportunity for audit and fraud professionals in public sector, governance of AI o Account Manager and Senior AI Solution Engineer, Microsoft: Generative AI – the art of the possible o Chief Officer (People Resources), North Lanarkshire Council: Building a Sustainable Scottish Local Government Workforce for the Future – national developments in 2025 o Director CIFAS: Failure to Prevent Fraud: New legislation and Fraud Risk assessments & Fraud Prevention Strategies d) There were excellent networking opportunities for all delegates, significant sharing of knowledge and practice during the workshop sessions, and lots of suggestions for improvement actions in keeping with the conference title ‘Connections Collaborations Catalysts’. This will help all delegates to collectively improve, challenge and strengthen the approaches and practices within their respective organisations in Scottish local government. 24
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SLACIAG Meetings 2025 3.1 The Treasurer produced the 2024 annual accounts, which were considered in draft by the Group at the AGM in March 2025. Thanks to those at South Ayrshire Council for completing the independent audit of the 2024 Accounts. Thanks to SLACIAG Treasurer for her professionalism in fulfilling the Treasurer role and providing regular updates during 2025 on the financial position of SLACIAG which is important to ensure the Group remains financially sustainable. 3.2 There were three SLACIAG virtual meetings in 2025 with topics/speakers set out in the table below in addition to core business. The network continues to be strongly supported by members with a focus on significant and current issues. Date Topics / Speakers 21 March 2025 AGM • SLACIAG Annual Report 2024 (Chair) • SLACIAG Annual Accounts 2024 (Treasurer) • SLACIAG Subscriptions Accounts Commission report IJB Finances • The IJB CIAs from NHS boards were invited to the virtual meeting to discuss common issues raised within the Accounts Commission report (published 6 March 2025) Integration Joint Boards Financial Bulletin 2023/24 with key message “Reform urgently needed to tackle precarious health and social care finances”. Updates from Sub-Groups • External Quality Assessment (EQA), Data Analytics, Resourcing, Sustainability/Climate Change, Risk 25
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Date Topics / Speakers 5 September 2025 CIIA Internal Auditing Competency Framework • Head of Technical Content and Research, Chartered Institute of Internal Auditors (CIIA), provided an overview of the Internal Auditing Competency Framework (published July 2025) using CIIA Global website. The overview covered: Competency in the Global Internal Audit Standards (Domains II, III, IV, V); Components of the Competency Framework; Using the Competency Framework. SLACIAG Mentoring approach • Chief Internal Auditor (Resourcing Sub-Group Lead and CAE City of Edinburgh Council) presented an overview of Mentoring, the recent work of the sub-group, the next steps in setting up the Mentoring approach for SLACIAG members (CAEs and their teams) and evaluating it in 2026. External Quality Assessment (EQA) • Service Manager Audit and Risk Management (EQA Sub-Group Lead and CAE Fife Council) provided an update on External Quality Assessment (EQA), completing the EQA2 programme and the March 2026 target date for the EQA Sub-Group to update the guidance and templates for the SLACIAG EQA3 process to meet the requirements of the Global Internal Audit Standards in the UK Public Sector (GIAS). 26
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Date Topics / Speakers 5 December 2025 Risk Assurance Module • Risk Manager, Renfrewshire Council, presented an overview of the ‘Business As Usual Risk Assurance Module’ which they developed, and how this is used to obtain the annual assurances from Services to assist in formulating the Annual Governance Statement. Strategic Risk Analysis in Scottish Councils • Risk Sub-Group presented an analysis of corporate risks on Scottish Councils’ risk registers highlighting the themes of significant current risks as well as emerging risks. Risk focus to inform CAE horizon scanning for the development of Internal Audit Strategies and Plans 2026/27 for Scottish Councils. Strategic Audit Review • Director of Audit Services, Audit Scotland, provided an outline of the strategic audit review process, timescales and any opportunity for SLACIAG, Councils and/or CAE engagement. Accounts Commission S102 Report - Comhairle nan Eilean Siar Cyber-attack • Chief Internal Auditor, CAE City of Edinburgh Council, chaired a discussion on the learnings from the cyber-attack affecting operations and services at Westerns Isles Council, and used this to consider the GIA Topical Requirement on Cyber Security to assess risks and controls in Councils. External Quality Assessment (EQA) 3.3 The EQA Sub-Group members set out below have been active in 2025 to oversee the completion of the EQA2 schedule and to plan the EQA3 schedule. The schedule of EQA3 peer reviews (involves 29 Councils with 21 CAEs due to shared services arrangements) was approved. Appointment to the vacancy on the Moderation Panel will be considered at March 2026 AGM. EQA Sub-Group Moderation Panel Service Manager Audit and Risk Management Fife Council Chief Internal Auditor Argyll & Bute Council Chief Internal Auditor Orkney Islands Council Audit Service Manager Stirling Council Chief Internal Auditor South Ayrshire Council vacancy 3.4 Responsibility is on the reviewee Council CAE to meet EQA requirements and to keep their Audit Committee informed of any delays in meeting the 5-year timeframe. Access to the SLACIAG peer EQA process through SLACIAG membership provides a potential financial saving benefit with costs to have a similar exercise completed by an external supplier or body likely to be more than £5,000. Sub-Groups 27
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3.5 At each of the quarterly SLACIAG meetings during 2025 updates were received from the Sub-Groups in accordance with their respective terms of reference to derive significant benefits from them. The Data Analytics Sub-Group has fulfilled its purpose and was stood down in June 2025. SLACIAG Knowledge Hub and Teams Channel 3.6 All Agendas, Minutes, and Presentations of SLACIAG meetings, Conference, EQA Framework Guidance, and other relevant documents are uploaded to the SLACIAG Knowledge Hub to enable access by all members in a secure way. New Members have been registered on the SLACIAG Knowledge Hub, including new starts from within audit teams of Councils, thus enabling greater participation. A new SLACIAG MS Teams channel hosted by Aberdeenshire Council has been created and used during 2025 to enable discussion content and document sharing, though there is scope for greater participation. 4. COMPUTER AUDIT SUB-GROUP 4.1 The main aim of the Computer Audit Sub-Group (CASG), which is a permanent sub- group of SLACIAG, is to provide a forum to share and discuss computer audit practices and developments. This includes raising awareness of new standards, updates to legislation, new and current topics of interest, and computer audit developments, resources, and techniques. 4.2 The role and outputs of CASG have been expanded during 2025 to cover IT/Cyber Security, Artificial Intelligence (AI), Data Analytics and Digital Transformation, in addition to core Computer Audit work to ensure the sustainability of the sub-group. 4.3 The Computer Audit Sub-Group (CASG) met two times in 2025, all meetings were virtual to ensure participation in the group remains good, with topics/speakers as follows: Date Topics / Speakers 09 April 2025 Cyber Security Maturity Assessments Frameworks • Head of Public Sector Cyber Resilience, National Cyber Resilience Unit, Scottish Government, was welcomed to deliver a presentation to the group, which was followed up by Questions and Discussions on how this could be used to comply with the GIAS Cyber Security Topical requirement which is mandatory by February 2026. SEEMiS Audit Report Presentation • Internal Auditor, Midlothian Council, highlighted key findings to the group from each of the control objectives from the audit report, and outlined the data analytics work which was undertaken to identify system users who were still on the system but were leavers. 05 November 2025 Cyber Assurance and Data Analytics Internal Auditor, Strathclyde Partnership for Transport (SPT), delivered a presentation followed by group discussion, covering the following key elements: • Begin the audit with an overview of cybersecurity standards. 28
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• Consider IIA guidance on cybersecurity, including topical issues and budget constraints. If complying with the Scottish Government framework then most likely you are complying with the IIA topical requirements. • Ensure policies and procedures are communicated to the right stakeholders and roles and responsibilities are clearly defined. • Check industrial control measures to safeguard assets and data flows across infrastructure components and preventing unauthorized access. • Undertake a self-assessment to identity gaps and control failures Group discussion on use of AI across the Councils and to discuss about the recent AI training from Fife Council and Microsoft Group acknowledged that Council teams are all are different levels whilst the development of AI products is fast paced. Some Council teams are using free version whilst others have licenced version of CoPilot. There’s an opportunity to learn from other Councils as AI Policies are developed. 4.4 The Agendas, Minutes, and Presentations for CASG meetings 2025, where available, are uploaded to the SLACIAG Knowledge Hub (CASG sub-folder) to enable access by all members in a secure way. 5. SCOTTISH LOCAL AUTHORITY INVESTIGATORS GROUP (SLAIG) 5.1 The main aim of the Scottish Local Authority Investigators Group (SLAIG), which is a permanent sub-group of SLACIAG, is to provide a forum to share and discuss counter fraud practices and developments. This includes raising awareness of updates to legislation, new and current topics of interest, and developments in counter fraud activities. 5.2 The Scottish Local Authority Investigators Group (SLAIG) met four times in 2025, all meetings were virtual, with topics/speakers as follows in addition to core business: Date Topics / Speakers 12 March 2025 Polygamous Working Presentation on case at Stirling Council. Sharing of red flags identified during the investigation and of steps required to ensure similar cases are suitable for criminal proceedings. • Stirling Council 12 June 2025 NHS Bribery Presentation on a recent case involving employees of NHS and of directors of a company who had been awarded a contract by NHS. Details provided of investigation methods deployed and red flags identified by the investigation. • NHS Scotland NFI Data Matching exercise Update on the current position and sharing of good practice for the sifting and investigation of 29
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Date Topics / Speakers matches. • Audit Scotland 25 September 2025 Proposed Fraud Landscape Report and Fraud Apprenticeship Scheme Input from Scottish Government providing an overview of a proposed Fraud Landscape Report and of a proposed Fraud Apprenticeship Scheme in partnership with Skills Scotland. • Scottish Government 10 December 2025 Tenancy Fraud detection tool Presentation on a tool developed by Lintels which searches online booking platforms. • Lintels NFI Data Matching exercise Presentation on current position of the NFI data matching exercise, deadline for completion of exercise for inclusion in next report, tips on investigation of creditors matches and of forthcoming pilot with Airbnb. • Audit Scotland 5.3 One specific task assigned to SLAIG was the Benchmarking on fraud activity and resources to align with the vison and objectives of SLACIAG and SLAIG’s Terms of Reference. The proposal was agreed in March 2025 that all local authorities will participate in a benchmarking exercise which is ongoing. The core content of the exercise will include resources, training, and outcomes. 5.4 All Agendas, Minutes, and Presentations of SLAIG meetings, and other relevant documents are uploaded to the SLAIG Knowledge Hub to enable access by all members in a secure way. Articles and discussion forums are shared to provide fraud risk insights relevant to the local government sector. 30
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6. CONCLUSION 6.1 Notwithstanding the challenges that continue to affect our organisations, SLACIAG and its Sub-Groups have had another successful year, as evidenced by the number of delegates investing in their learning and development through their engagement during the 2-day in-person Conference in June 2025 and through participation in our virtual meetings, the range of topics discussed and the outputs created. This provides significant benefits to our members and their teams. 6.2 During the year Chief Audit Executives (CAE) considered significant matters facing our organisations such as Financial Sustainability Risks and Cyber Security Risks, shared approaches being taken to implement the new Global Internal Audit Standards, assessed their impact on the provision of assurance and advisory services, discussed key issues facing our assurance functions, including resourcing, workforce planning, skills and knowledge mix, and shared approaches being taken to address these, and focussed on specialist themes including data analytics, counter fraud and crime, climate change and sustainability. 6.3 In line with their remits the CASG and SLAIG Sub-Groups focussed on matters that are affecting our organisations and our functions/individuals. The Sub-Groups are excelling in their exploration of specific matters to the benefit of the wider Group and its members. I give thanks to those who volunteer their time to achieve this. 6.4 I would like to thank the Management Committee and the Leads of our Sub-Groups for their work in organising meetings and responding to the challenges that have arisen. I would also like to thank our speakers for giving up their time to join us at our virtual meetings during 2025 and assist us in enhancing our effectiveness as providers of assurance and compliance services. 6.5 My thanks are also extended to our members for their support, as evidenced by engaging in the 2-day in-person Conference in June 2025 and participating in our virtual meetings during 2025, but also by the generous advice and assistance provided in relation to the myriad of audit, risk and governance questions which have arisen within our membership during the year. SLACIAG relies on the dedicated and hard-working public sector professionals within its membership, recognising the time and effort of those members who volunteer their time to plan and deliver these events. We look forward to the learning and development opportunities in 2026 to support us in fulfilling the roles and responsibilities of CAE and Internal Audit functions, and the wider functions covered in some organisations. 6.6 CAEs are asked to distribute the SLACIAG Annual Report 2025 to key stakeholders within their organisations, in particular the Audit Committee or equivalent, to highlight the value of this forum. Chief Officer Audit & Risk, Scottish Borders Council Chair of SLACIAG 10 March 2026 31
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 26 May 2026 Report by: Executive Director (Finance and Corporate Resources) Subject: Accounts Commission – Code of Audit Practice Consultation 1. Purpose of Report 1.1. The purpose of the report is to:- provide a summary of South Lanarkshire Council’s response to the Accounts Commission consultation on the new Code of Audit Practice (effective from 2027/2028) 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation:- (1) that the response, submitted by South Lanarkshire Council in March 2026, be noted. 3. Background 3.1. Audit Scotland, on behalf of the Auditor General and the Accounts Commission, intimated, in February 2026, that they were opening a consultation on the revised Code of Audit Practice (the Code) that governs all appointed auditors, performance auditors and Best Value auditors in Scotland. The Code is reviewed every five years to ensure it remains fit for purpose and is aligned to legislation, contemporary audit expectations, and the changing public service landscape. Stakeholder feedback had indicated that the current (2021) Code was broadly effective but required important refinements in areas such as proportionality, Best Value, assurance standards, and clarification of core concepts. 3.2. Responses to the Consultation were invited by 27 March 2026 and South Lanarkshire Council submitted a response by the due date. 4. Consultation Exercise 4.1. The Code, first issued in 2021, sets out the framework for strong and effective public audit to support accountability and provide independent assurance that public money is spent and reported properly. It applies to all audit work undertaken by appointed auditors and by performance auditors. This includes the audit of the annual accounts, which has a wider scope than the private sector, performance auditing and the auditing of Best Value arrangements. The Code reflects the legal requirements for audit, as well as the professional standards with which auditors must comply and sets out the arrangements which promote auditor independence and monitor audit quality. 4 33
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4.2. The Auditor General and Commission, supported by Audit Scotland, review the Code at least every five years to ensure it remains fit for purpose in a dynamic and constantly changing environment and a consultation was launched in February 2026, inviting comments on a new Code for the 5-year period from 2027/2028 to 2031/2032. 4.3. A key element of the Code review was to gather views and insights from external stakeholders to ensure it reflected the issues stakeholders perceive to be the most relevant to public audit over that 5-year period. 4.4. The consultation exercise took the form of a series of questions with an opportunity for respondents to share any other comments that the Auditor General or Accounts Commission should take into account in finalising their new Code. 4.5. Following this formal consultation stage, a final version of the Code will be published to replace the current version. This revised Code will apply to 2027/2028 audits onwards. 5. South Lanarkshire Council: Response to Consultation 5.1. A summary of the responses to the consultation, submitted by South Lanarkshire Council, are set out in Appendix 1. 6. Employee Implications 6.1. There are no direct employee implications for South Lanarkshire Council. Finance Services and wider Council Services will continue to engage with Audit Scotland in their role as the Council’s External Auditors and respond, as required, to requests for stakeholder feedback. 7. Financial Implications 7.1. None. 8. Climate Change, Sustainability and Environmental Implications There are no climate change, sustainability, or Environmental implications in terms of the information contained within this report. 9. Other Implications 9.1. There are no implications for sustainability in terms of the information contained in this report. 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. Responses to the consultation exercise were gathered through an internal consultation process. Jackie Taylor Executive Director (Finance and Corporate Resources) 1 May 2026 34
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Link(s) to Council Values/Priorities/Outcomes Accountable, effective, efficient and transparent Previous References None List of Background Papers Consultation on Code of Audit Practice 2026 | Audit Scotland 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 35
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Appendix 1 No. Question SLC Response Rationale 1 Do you agree with the proposed general principles for public audit? If not, what alternative do you suggest? Agree The addition of public accountability, professional scepticism, proportionality, data-driven auditing, and appropriate skill requirements reflects the reality of modern public service delivery. Explicitly stating these principles is helpful and will improve consistency across audits. 2 Do you agree that the standard on review engagements (ISRE 2400) is an appropriate standard for auditing smaller bodies? Agree ISRE 2400 provides a more proportionate and cost-effective framework for small entities while still delivering meaningful assurance. This addresses long-standing concerns about the burden of full ISA audits on small organisations. 3 Do you agree that limited assurance is proportionate for auditing the accounts of smaller bodies? Agree Limited assurance is an appropriate level for smaller bodies where risks are inherently lower, and the costs of full assurance outweigh the benefits. 4 Do you agree with the proposed features of the review of the audited accounts for smaller bodies? Agree Focusing on income/expenditure completeness, bank controls, and key compliance areas reflects where smaller-body risks typically lie. The framework should remain flexible enough to accommodate exceptional circumstances. 5 Do you agree that smaller bodies should be defined for the purposes of auditing the accounts primarily using an expenditure- based threshold set by the Auditor General and the Accounts Commission? If you agree, do you have any views on the appropriateness of setting the expenditure threshold at £6.5 million? If you do not agree, what alternative for Agree A clear quantitative threshold is simple, transparent, and avoids subjective judgements. The proposed £6.5m threshold appears reasonable and aligns with practice in other UK jurisdictions. Discretion to require a full ISA audit where necessary is essential and should be retained. 36
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defining smaller bodies do you suggest? 6 Do you agree that the assurance standard ISAE 3000 is the appropriate standard for the wider scope reporting areas specified in the Code? If you do not agree, what are your reasons for disagreement and what alternative do you suggest? Agree ISAE 3000 is more appropriate for reviewing systems, processes, governance, and sustainability arrangements than the ISAs, which focus on historical financial information. 7 Do you agree with the proposals for reporting conclusions on the four wider scope reporting areas and Best Value for smaller bodies? If you do not agree, what are your reasons for disagreement and what alternative do you suggest? Agree Providing: • reasonable assurance on financial sustainability, and • limited assurance on the other three areas represents a fair, proportionate balance. 8 Do you agree that the definition of smaller bodies should be consistent for all elements of the audit? If you do not agree, what alternative do you suggest? Agree One definition across the full audit model reduces complexity and confusion. 9 Do you agree that the wider scope areas should be discontinued for local government? Do you agree that auditors should focus on Best Value arrangements and report a conclusion on whether councils and IJBs comply with the statutory guidance on Best Value? If you do not agree, what alternative do you suggest? Agree The separation between Best Value and wider scope areas created unnecessary overlap. A single, coherent Best Value-based model is clearer and reflects statutory requirements. 37
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10 Do you agree that auditors should report discrete conclusions on the elements of Best Value arrangements related to financial sustainability and financial management? If you do not agree, what alternative do you suggest? Agree These are critical areas for public confidence, especially given ongoing budget pressures, so retaining explicit conclusions is helpful. 11 Do you agree that the assurance standard ISAE 3000 is appropriate for considering and concluding on Best Value arrangements? If you do not agree, what are your reasons for disagreement and what alternative do you suggest? Agree ISAE 3000 is well suited to evaluating arrangements and governance processes. 12 Do you agree that the proposals set out above should be adopted for local government bodies other than councils and IJBs? If you do not agree, what are your reasons for disagreement and what alternative do you suggest? Agree The proposals balance assurance with proportionality. Limited assurance for these bodies is appropriate given their scale and risk profile. 13 Do you agree that the Best Value annual thematic reviews should be carried out by a central Audit Scotland team and on a sample of councils each year? If you do not agree, what are your reasons for disagreement and what alternative do you suggest? Agree A centralised approach will: • improve consistency • bring in specialist performance-audit expertise • provide clearer national insights Sampling is sensible and will reduce unnecessary burden. 14 Do you agree that the proposed explanation in the Code appropriately articulates the relationship between going concern and Agree The proposed wording clarifies a common misunderstanding. Explicit guidance will help avoid misinterpretation by audited bodies and stakeholders. 38
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financial sustainability? If you do not agree, what alternative do you suggest? 15 Do you agree that the Code clearly sets out the appropriate responsibilities of auditors when reporting on financial sustainability? If you do not agree, what alternative do you suggest? Agree It is important that auditors assess arrangements but do not become involved in operational decision-making or financial planning. The Code strikes the right balance. 16 Do you agree with the proposed definition of the term significant? If you do not agree, what alternative do you suggest? Agree The definition is clear, usable, and aligned with materiality concepts while recognising the public-interest context. 17 Do you agree with the proposed inclusion of references to sharing good practice in the Code? If you do not agree, what alternative do you suggest? Agree Encouraging auditors to share good practice is welcome and supports improvement. It is also appropriate to stress that auditors must avoid influencing operational decisions. No. Question SLC Response 18 Do you have any other comments that the Auditor General or Accounts Commission should take into account in finalising their new Code? South Lanarkshire Council welcomes the proposed Code’s emphasis on proportionality, data driven audit techniques, and clarity of scope recognising that such developments suggest that continued investment in auditor capability, particularly in digital and data skills, will be essential for successful implementation. In a similarly positive manner, the proposed Code’s move towards a more 39
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streamlined model for local government, reflecting sector priorities and reduced duplication, is welcomed. It is well designed, improves clarity and efficiency and maintains robust public accountability at its core. This evolution rather than a more radical shift in approach, however, presents opportunities for further development. Essentially this is around a theme of added value in audit and how the scope and approach of such is demonstrably proportionate. A cognisance of other and wider forms of assurance would present opportunities to co-ordinate assurance activity in a way that utilises the broader governance and scrutiny frameworks within which local authorities already operate. In doing so, it would clearly demonstrate that audits add value and that their scope and approach are proportionate. In summary, South Lanarkshire Council welcome the proposed changes to the Code but see these as a catalyst for further change that continue to place public accountability to the fore but do so in a context that manages unnecessary burdens being placed on Local Authorities by making more effective use of the broader assurance frameworks that currently exist. 40
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 26 May 2026 Report by: Executive Director (Finance and Corporate Resources) Subject: Audit Scotland – Annual Assurance and Risks Report 2024/2025 1. Purpose of Report 1.1. The purpose of the report is to:- [purpose] provide a summary of the information contained within the Audit Scotland Annual Assurance and Risks Report 2024/2025, published in March 2026 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- (1) that the key messages and recommendations of the Audit Scotland Annual Assurance and Risks Report 2024/2025 (detailed in Sections 4 and 5), be noted; and (2) that the information on relevant recent publications (appendices 1 and 2), be noted. 3. Background 3.1. The Annual Assurance and Risks Report is an annual report by the Controller of Audit to the Accounts Commission, made public for the first time since 2021. It brings together a wealth of evidence from annual audit reporting. This report highlights recurring themes across 2024/2025 audits, helping support individual bodies and the wider sector plan and to deliver improvements. Alongside wider audit intelligence, it also helps inform the Accounts Commission’s selection of a Best Value theme for 2026/2027. 3.2. The report covers the following:- Part 1 provides an overview of audit delivery and highlights the key risks raised in the 2024/2025 annual audit reports for councils and Integration Joint Boards (IJBs). It pulls out key messages from financial audit work to support wider reflection and learning. A comprehensive analysis of the nature and impact of auditors’ recommendations will be available in the annual impact report, later in 2026 Part 2 sets out the processes in place to identify emerging risks and address these through timely and high-quality audit work 3.3. An Executive Summary is provided in Section 4. The key messages from each of the 2 parts are outlined in Sections 5 and 6. Comments in relation to the Council’s position on these, where appropriate, are included in italics alongside the Audit Scotland key messages. Not all points require a Council response. 5 41
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3.4. More information on relevant recent publications can be found in the appendices to the Annual Assurance and Risks Report and Appendix 1 and Appendix 2 of this report. 4. Executive Summary 4.1. The report provides a summary of the Audit Scotland – Annual Assurance and Risks Report 2024/2025, published in March 2026, which brings together key findings from local government and Integration Joint Board audits across Scotland. 4.2. It highlights improvements in audit timeliness and collaboration, the overall strength of council finance teams and financial management arrangements and confirms that councils’ annual accounts were generally delivered on time and of reasonable quality. 4.3. However, the report also identifies significant and ongoing sector wide risks, particularly in relation to financial sustainability, reliance on non-recurring savings and reserves, workforce restructuring, major system implementations, and assurance over third party and externally hosted systems. 4.4. It additionally outlines how Audit Scotland uses emerging risk intelligence, Best Value reporting and performance information to inform audit planning and oversight, providing assurance to the Accounts Commission on audit quality, delivery and the key challenges facing councils and the wider local government sector. 5. Part 1 – 2024/2025 Council and IJB Audits 5.1. A number of key messages are presented by Audit Scotland in their report in relation to 2024/2025 council and IJB audits. Collaboration improved audit timeliness, though some delays remain a. The Commission set a target completion date of 30 September 2025 for annual audit reports across the local government sector. Fifteen councils and 17 IJBs met this deadline (up from 10 councils and 14 IJBs in 2024), a further 5 councils and 7 IJBs did not meet this deadline, but reports were submitted by January 2026 in time for this report, while reports for 12 councils and 6 IJBs remained outstanding at the time of drafting. South Lanarkshire Council 2024/2025 Accounts were approved by the Risk and Audit Scrutiny Committee on 30 September 2025, in line with the target completion date. b. Under the Local Authority Accounts (Scotland) Regulations 2014, councils must publish a notice on their website by 17 June setting out their intention to display their unaudited accounts for public inspection and when and where they will be available. Twenty-eight councils met this deadline in 2025. South Lanarkshire Council published the required notice on the Council’s website by the required date of 17 June 2025. Finance teams have sufficient capacity and produce good unaudited accounts c. Overall, council finance teams are led by suitably qualified and experienced staff, with several auditors noting sufficient skills, capacity and capability within the core finance team and good support for the audit. 42
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South Lanarkshire Council’s Annual Audit Report 2024/2025 outlined that the auditors received good support during the course of the financial audit from the core finance team. d. Of 44 council and IJB audit reports, 42 noted unaudited accounts were received on time, although seven reported some missing information. Where commented on, account quality was generally reasonable and financial scrutiny arrangements were appropriate. South Lanarkshire Council’s Accounts for 2024/2025 were submitted to Audit in advance of the deadline of 30 June 2025. e. The majority of councils reviewed required material audit adjustments. These were for a variety of issues with the most common being the valuation of Property, Plant and Equipment. Auditors also reported adjustments relating to International Financial Reporting Standards. (IFRS) 16 and pensions treatment at multiple councils. The majority of IJBs did not require material audit adjustments. Audit adjustments were required to the Council’s financial statements to correct misstatements that were identified from the audit however these were not material. These related to adjustments required to the consolidated Group Accounts for 2024/2025. 5.2. The review of annual audit plans and annual audit reports identified a range of risks across councils, which are summarised below. As outlined above, audit delays for some councils mean that this report draws upon the findings from 29 annual audit plans and 20 annual audit reports (out of 32 councils in total). Financial sustainability a. All councils have medium‑term financial plans that forecast significant budget gaps, driven by inflation and service demand, with savings and use of reserves the main measures used to manage these pressures in 2024/2025. South Lanarkshire Council recognise the financial challenges facing the organisation. The Council continues to undertake scenario planning to identify Budget Gaps and has a programme of transformational reviews to support the medium and long-term financial plans. b. Auditors recognised significant recurring savings but raised concerns about reliance on one‑off measures, such as reserves and non‑recurring savings, and risks to the deliverability of future savings. Any use of Reserves or one-off solutions is on a planned basis, and is communicated to and approved by Members. Members are advised that the use of one-off solutions such as reserves is not sustainable. Financial management c. Almost all auditors found that councils have effective financial management arrangements, with established budget setting and monitoring and clear, regular reporting to elected members. Despite this, more than a third of councils overspent against their general fund revenue budget in 2024/2025. 43
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The Council reported an underspend at the end of 2024/2025, and following a number of agreed transfers to reserves, the final reported position was break- even. d. Capital expenditure was an exception, with ongoing underspends linked to capacity and supply chain issues, which auditors will examine further through 2025/2026 Best Value thematic work on asset management. While the Council’s general services and housing capital programmes were underspent in 2024/2025, funding was carried forward into the new year to allow project completion. IFRS 16 implementation e. Overall, the conclusion from 2024/2025 audit work reported to date is that councils appropriately reflected the impact of the International Financial Reporting Standard 16: Leases (IFRS 16) in their final accounts. However, there was scope for a smoother implementation process given the years available for councils to prepare. South Lanarkshire Council has reflected all the required IFRS 16 disclosures within the 2024/2025 Accounts. f. Five councils had missing financial or disclosure information in draft accounts, often due to delays from external advisers, and while widespread errors were identified, these were corrected or not material to the accounts. Equal pay claims g. Equal pay claims continue to create some financial uncertainty, but no significant new settlements or cash impacts were reported in 2024/2025. Issues identified focused on appropriate accounting, disclosure, and ongoing monitoring. Contract management h. Auditors identified no significant contract management risks across most councils, with only isolated project‑specific issues, mainly linked to large capital projects, increased costs and the need to strengthen procurement governance. Elected member behaviour i. Auditors reported concerns about elected member behaviour at a small number of councils. Issues included a lack of cross-party collaboration, tensions with officers, and, on occasion, unprofessional behaviour. Elsewhere, auditors noted robust elected member scrutiny, constructive member-officer relationships, and the importance of collaborative decision-making. 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 will be undertaken with the results captured within an annual report. Workforce restructuring j. Some councils have reduced senior management and restructured services in response to financial pressures, including through voluntary severance and early 44
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retirement. Governance and oversight of restructuring and exit decisions remains critical to ensure required savings are delivered. k. Exit packages represent a significant cost for some councils. North Ayrshire and Dundee City Councils have used or plan to use voluntary severance and early retirement schemes in 2024/2025 and 2025/2026, generating recurring savings of £2.5 and £1.2 million respectively. The Accounts Commission 2025 – Scrutiny, Governance and Transparency of Decision Making of Exit Packages of Senior Officers was reported to this Committee on 9 December 2025. System updates l. Many councils are undergoing major system replacements or implementations in areas such as HR, payroll and finance, with a move to externally hosted or cloud- based systems. Auditors at Highland and South Lanarkshire Councils reported successful implementation of new systems with appropriate governance and assurance arrangements in place. The Council successfully implemented a new multi-function system at the start of 2024/2025, Oracle’s cloud-based Human Resources (HR) and Finance solution. Assurance over third-party systems m. Auditors identified IT assurance as a recurring risk, with reliance on externally hosted systems and limited third‑party assurance, leading to recommendations to review and strengthen current assurance arrangements. South Lanarkshire Council has in place a service auditor to provide a report against recognised standards and provide independent assurance that outsourced service providers are operating effective controls. 6. Part 2 – Assurance Arrangements 6.1. This section covers the arrangements in place to assure the Commission that the audit work undertaken on its behalf is informed by the emerging risks across the sector. It also sets out the arrangements for monitoring and reporting on audit delivery and quality. The code of audit practice includes significant wider-scope elements a. Public audit takes a broad view of how public money is managed, assessing financial management and sustainability, governance and leadership, and the use of resources to improve outcomes. In local government, it also evaluates arrangements for Best Value and community planning. b. Under the approach adopted for the current 5-year audit appointments, auditors integrate their assessment of these areas with the annual audit, taking a risk- based approach. Robust arrangements are in place to support audit delivery and quality c. Audit Scotland supports audit quality through annual guidance, audit quality reviews, and learning from review findings, with monitoring in place to ensure 45
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compliance with ethical and quality standards, delivery timescales, and stakeholder feedback. d. The annual report on the quality of public audit in Scotland is due to be published in June 2026 and will set out progress against the Audit Quality Indicators set within the Audit Quality Framework for the 2024/2025 audit year. e. Audit Scotland monitors audit delivery against agreed timetables and reports regularly to the Commission. In February 2026, a Response Framework was introduced, including an escalation process where audit delivery concerns arise, emphasising early intervention and a partnership approach to addressing delays. Assessing council performance through Statutory Performance Information (SPI) and the Local Government Benchmarking Framework (LGBF) f. As part of the annual audit, auditors assess councils’ performance management arrangements and compliance with the SPI Direction, with all available audit reports concluding that councils were compliant. g. A revised SPI Direction will apply from the financial year 2025/2026 onwards. This sets clear expectations that councils will use the LGBF to report performance against their priorities over time and to draw comparisons with similar councils. South Lanarkshire Council’s Annual Audit Report 2024/2025 noted that 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 work is informed by ongoing stakeholder engagement h. A six-monthly intelligence report to the Commission highlights issues raised in correspondence to Audit Scotland or reported by other public sector oversight bodies. Annual audit reporting informs the Commission of key council challenges i. Best Value reporting is fully integrated into annual audits, with auditors producing annual thematic Best Value reports for each council and reporting Best Value issues within audit reports. Sector‑wide findings are collated in a national report, while council‑specific issues are reported through Section 102 Best Value and audit reports where concerns are identified. j. This suite of work provides an ongoing assessment of individual councils’ achievement in embedding Best Value and continuous improvement, as well as a more detailed assessment of the risks being faced by councils, both individually and as a sector. South Lanarkshire Council’s Annual Audit Report 2024/2025 concluded that the Council’s arrangements and performance in meeting Best Value and community planning duties are effective and appropriate. Local government overview reporting highlights key areas of concern k. Local government overview reporting includes annual publications on councils’ financial performance and budgets at both national and local levels. In 2024/2025, 46
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this also included a performance spotlight on culture and leisure services, alongside a separate financial bulletin on the financial performance of IJBs. The Accounts Commission Report Spotlight on Culture and Leisure Services was reported to the Committee on 10 March 2026. l. Overview reporting is informed by input from an independent advisory panel and Accounts Commission members, providing expertise and challenge. Sector overview reports draw together findings from audits, Best Value work and wider engagement, enabling the Commission to understand council challenges and set expectations for the sector. 7. Employee Implications 7.1. None. 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) 27 April 2026 Link(s) to Council Values/Priorities/Outcomes Accountable, Effective, Efficient and Transparent Previous References None List of Background Papers Annual Assurance and Risks Report. Audit Scotland, March 2026. 47
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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 48
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Appendix 1 The Accounts Commission published the following local government sector overview reports during 2025/26: • Local government budgets 2025/26 (May 2025) – Councils continue to face financial pressures in excess of funding uplifts, despite making a broad range of recurring savings. The report highlighted the need for greater transparency and accessibility of budget information to facilitate community engagement in decisions to address financial challenges. • Local government performance: Spotlight on culture and leisure services (October 2025) – Funding for culture and leisure services fell by three per cent in real terms between 2018/19 and 2023/24, with an increasing reliance on charging service users. The report highlighted that, in order to support informed budgetary decisions, councils need to strengthen their understanding of how these services contribute to improved outcomes. • Local government in Scotland: Financial bulletin 2024/25 (January 2026) – The report warned that there are signs that councils will become financially unsustainable over the medium term if sustained and recurring cost pressures are not addressed. • Integration Joint Board Financial Bulletin 2024/25 (February 2026) – IJBs are facing increasing cost pressures and with total reserves now lower than the forecast budget gap, difficult decisions need to be made about how services are delivered, who is eligible for services, and where to reduce or discontinue services. The Accounts Commission published the following national performance audits in partnership with the Auditor General in 2025/26: • Flooding in communities: Moving towards flood resilience (August 2025) – While there are positive examples of public bodies and councils collaborating effectively to tackle flooding, gaps remain in leadership, data, resources, skills and capacity. Auditors highlighted the need for clarity over roles and responsibilities, timelines, and delivery and funding mechanisms, as well as the importance of having enough people with the right skills and experience to support councils to tackle flooding. • Improving care experience: Delivering The Promise (October 2025) – The Promise is a commitment to improve Scotland’s ‘care system’. Plans have been slow to come together after insufficient early delivery planning by the Scottish Government and COSLA. • Community health and social care: Performance 2025 (January 2026) – There is a lack of comprehensive and consistent national performance information about community health and social care demand, workload, quality of care and outcomes. This makes it difficult to fully assess performance and progress, but from the available data there is a long-term picture of declining performance and satisfaction. • Delayed discharges: A symptom of the challenges facing health and social care (January 2026) – Delayed discharges (when someone remains in hospital despite being medically ready to leave) are well above pre-pandemic levels. This is symptomatic of wider issues in health and social care. Better analysis and transparency are needed around the costs and impacts of this issue, and the outcomes of initiatives to address it. 49
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Appendix 2 Plans are in place to ensure Section 102 Best Value reports for all 32 councils are presented to the Commission by the end of the current five-year audit appointment. The Controller of Audit has published the following such reports since February 2025: • Controller of Audit report: Fife Council (February 2025) – The report concludes that the council must set out how it will respond to worsening inequalities, significant in-year financial challenges (including a large IJB overspend), Housing Revenue Account pressures and its significant use of reserves. The Commission welcomed improved performance reporting, cross-party collaboration on difficult decisions, and the council’s innovative approach to workforce challenges. • Controller of Audit report: Argyll and Bute Council (April 2025) – The report recognised a long-standing culture of innovation as the council looks to close its budget gap. The council has delivered significant recurring savings, but the report emphasised that a more strategic approach to transformation is now required. • Controller of Audit report: The Highland Council (April 2025) – The Commission welcomed the progress made since the council’s last Best Value Assurance Report in 2020, commending the council’s culture of transformation. The Commission also noted that savings challenges and financial risks still lie ahead. • Controller of Audit report: Renfrewshire Council (June 2025) – The report recognised improvement following the recent Section 102 report on Dargavel school accommodation. The report details how past prudent financial management has helped smooth financial challenges and how the next phase of transformation will be critical in tackling the council’s growing budget gap. Additionally, the Commission welcomed the council’s commitment to leadership and creating a positive working culture across services. • Controller of Audit report: East Lothian Council (July 2025) – The report sets out that performance has been maintained or improved in many areas, despite an increase in demand and financial challenges. However, the Commission highlighted that the use of reserves to balance budgets is unsustainable. It emphasised the need for an increased focus on transformation and continuing to develop opportunities to collaborate and share services as being crucial to future service delivery. • Controller of Audit report: North Ayrshire Council (October 2025) – The report commended the council for working effectively with the other Ayrshire councils and local partners, exploring sharing services and doing things differently as it looks to tackle the significant financial challenges and future service pressures that lie ahead with sustainable solutions. • Controller of Audit report: North Lanarkshire Council (January 2026) – The report commended the council’s ambitious vision, place-based approach and strong partnership working, alongside its high-performing housing and homelessness services. It also highlighted declining satisfaction levels and a large budget gap, noting that while the council is well placed to respond through transformation and effective financial management, it must set out how services will be delivered in the longer term. The Controller of Audit also published the following reports under Section 102 over the last year based on the findings of 2023/24 annual audit work: 50
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• The 2023/24 audit of Glasgow City Council: Senior officer exit packages (September 2025) – Auditors found that the processes, decisions and actions around significant early retirement and redundancy payments for five senior officers fell short of the behaviour and standards expected of public servants. • Cyber-attack affecting operations and services: The 2023/24 audit of Comhairle nan Eilean Siar (November 2025) – The report highlighted that all Scottish councils must learn from the immediate and ongoing impacts of a significant cyber-attack on Comhairle nan Eilean Siar. 51
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 26 May 2026 Report by: Executive Director (Finance and Corporate Resources) Subject: Financial Resources Scrutiny Forum Activity 1. Purpose of Report 1.1. The purpose of the report is to:- provide a summary of reports considered by the Financial Resources Scrutiny Forum from May 2025 to April 2026, for information 2. Recommendation(s) 2.1. The Committee is asked to approve the following recommendation(s):- (1) that the summary of reports considered by the Financial Resources Scrutiny Forum for the period May 2025 to April 2026, as detailed in Appendix 1 of this report, be noted. 3. Background 3.1. In May 2017, the Council agreed details relating to the review of Member Scrutiny Forums. This included consideration of the Terms of Reference and Powers and Responsibilities for the Forums. In respect of the Financial Resources Scrutiny Forum, the focus can be summarised as:- scrutinise all of the Council’s revenue budgets review the financial and operational progress of the Council’s capital programmes review the financial and operational progress of the Council’s trading operations 3.2. This report will cover items submitted to the Financial Resources Scrutiny Forum since the last update to the Committee in May 2025. 4. Agenda Items 4.1. The table attached in Appendix 1 notes the reports submitted to the Financial Resources Scrutiny Forum during the period May 2025 to April 2026, under the main areas of responsibility. The meeting on 4 September 2025 was the first of the new financial year, 2025/2026 and also covered the closing position of the old year (2024/2025). 4.2. Further reports will be provided to this Committee on an annual basis, advising of the business presented to the Financial Resources Scrutiny Forum. 5. Employee Implications 5.1. There are no employee implications. 6 53
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6. Financial Implications 6.1. There are no financial implications. 7. Climate Change, Sustainability and Environmental Implications 7.1. There are no Climate Change, Sustainability or Environmental implications in terms of the information contained within this report. 8. Other Implications 8.1. The main risk associated with the Council’s Revenue Budget, as reported to the Financial Resources Scrutiny Forum, is that there is an overspend. The risk has been assessed as low given the detailed budget management applied across the Resources. The risk is managed through four weekly Budget Monitoring Meetings at which any variance is analysed. In addition, the probable outturn exercise ensures early warning for corrective action to be taken where appropriate. 8.2. The main risk associated with the Council’s Capital Programme, as reported to the Financial Resources Scrutiny Forum, is that there is an overspend. The risk has been assessed as low given the detailed project management plans prepared and monitored for each project. The risk of overspending is managed through four weekly Investment Management Meetings. 9. Integrated Impact Assessment and Consultation Requirements 9.1. 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. 9.2. 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) 20 April 2026 Link(s) to Council Values/Priorities/Outcomes Accountable, Effective, Efficient and Transparent Previous References Risk and Audit Scrutiny Committee, 6 May 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:- Lorraine O’Hagan, Head of Finance (Strategy) Ext: 5637 (Tel: 01698 455637) lorraine.o’hagan@southlanarkshire.gov.uk 54
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Reports Submitted to Financial Resources Scrutiny Forum Appendix 1 Date Revenue Monitoring Capital Monitoring 8 May 2025 Provide an update on the position as at 21 February 2025 (period 12) for the following: • Revenue Budget Monitoring 2024/2025 • Revenue Budget Monitoring 2024/2025 - Detailed Resource Analysis Provide an update on the position as at 21 February 2025 (period 12) for the following: • 2024/2025 General Fund Capital – Financial Information, Programme exceptions approved by Executive Committee and Physical Progress for Build, Non-Build and Roads Projects • 2024/2025 Housing Capital Programme – Financial Information and Physical Progress 4 September 2025 Provide an update on the position as at 31 March 2025 (period 14) for the following: • Revenue Budget Monitoring 2024/2025 • Revenue Budget Monitoring 2024/2025 - Detailed Resource Analysis Provide an update on the position as at 11 July 2025 (period 04) for the following: • 2025/2026 Financial Monitoring • 2025/2026 Detailed Resource Analysis for the General Services Budget and Housing Revenue Account Provide an update on the position as at 31 March 2025 (period 14) for the following: • 2024/2025 General Fund Capital – Financial Information, Programme exceptions approved by Executive Committee and Physical Progress for Build, Non-Build and Roads Projects • 2024/2025 Housing Capital Programme – Financial Information and Physical Progress Provide an update on the position as at 11 July 2025 (period 04) for the following: • 2025/2026 Housing Capital Programme - Financial Information and Physical Progress • 2025/2026 General Services Capital Programme - Financial Information, Programme exceptions approved by Executive Committee and Physical Progress for Build, Non-Build and Roads Projects 2 October 2025 Provide an update on the position as at 8 August 2025 (period 05) for the following: • 2025/2026 Financial Monitoring • 2025/2026 Detailed Resource Analysis for the General Services Budget and Housing Revenue Account Provide an update on the position as at 8 August 2025 (period 05) for the following: • 2025/2026 Housing Capital Programme - Financial Information and Physical Progress • 2025/2026 General Services Capital Programme - Financial Information, Programme exceptions approved by Executive Committee and Physical Progress for Build, Non-Build and Roads Projects 13 November 2025 Provide an update on the position as at 5 September 2025 (period 06) for the following: • 2025/2026 Financial Monitoring • 2025/2026 Detailed Resource Analysis for the General Services Budget and Housing Revenue Account Provide an update on the position as at 5 September 2025 (period 06) for the following: • 2025/2026 Housing Capital Programme - Financial Information and Physical Progress • 2025/2026 General Services Capital Programme - Financial Information, Programme exceptions approved by Executive Committee and Physical Progress for Build, Non-Build and Roads Projects 55
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Date Revenue Monitoring Capital Monitoring 11 December 2025 Provide an update on the position as at 3 October 2025 (period 07) for the following: • 2025/2026 Financial Monitoring • 2025/2026 Detailed Resource Analysis for the General Services Budget and Housing Revenue Account Provide an update on the position as at 4 October 2025 (period 07) for the following: • 2025/2026 Housing Capital Programme - Financial Information and Physical Progress • 2025/2026 General Services Capital Programme - Financial Information, Programme exceptions approved by Executive Committee and Physical Progress for Build, Non-Build and Roads Projects 12 February 2026 Provide an update on the position as at 29 December 2025 (period 10) for the following: • 2025/2026 Financial Monitoring • 2025/2026 Detailed Resource Analysis for the General Services Budget and Housing Revenue Account Provide an update on the position as at 29 December 2025 (period 10) for the following: • 2025/2026 Housing Capital Programme - Financial Information and Physical Progress • 2025/2026 General Services Capital Programme - Financial Information, Programme exceptions approved by Executive Committee and Physical Progress for Build, Non-Build and Roads Projects 12 March 2026 Provide an update on the position as at 23 January 2026 (period 11) for the following: • 2025/2026 Financial Monitoring • 2025/2026 Detailed Resource Analysis for the General Services Budget and Housing Revenue Account Provide an update on the position as at 23 January 2026 (period 11) for the following: • 2025/2026 Housing Capital Programme - Financial Information and Physical Progress • 2025/2026 General Services Capital Programme - Financial Information, Programme exceptions approved by Executive Committee and Physical Progress for Build, Non-Build and Roads Projects 30 April 2026 Provide an update on the position as at 20 February 2026 (period 12) for the following: • 2025/2026 Financial Monitoring • 2025/2026 Detailed Resource Analysis for the General Services Budget and Housing Revenue Account Provide an update on the position as at 20 February 2026 (period 12) for the following: • 2025/2026 Housing Capital Programme - Financial Information and Physical Progress • 2025/2026 General Services Capital Programme - Financial Information, Programme exceptions approved by Executive Committee and Physical Progress for Build, Non-Build and Roads Projects 56
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Report Agenda Item Report to: Risk and Audit Scrutiny Committee Date of Meeting: 26 May 2026 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 23 March 2027, and 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 23 March 2027, 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 23 March 2027 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. 7 57
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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) 30 April 2026 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:- Ishara Opatha, Administration Officer Tel: 07385370069 E-mail:- ishara.opatha@southlanarkshire.gov.uk 58
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APPENDIX – RASC OUTLINE FORWARD PROGRAMME Meeting Date Item Responsibility 23 June 2026 (Special) Internal Audit Assurance Report 2025/2026 Internal Audit 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 Internal Audit 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 Internal Audit Manager Head of Finance (Strategy) 2024 NFI Exercise Internal Audit Manager 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) 3 November 2026 Internal Audit Activity Report Internal Audit Manager Annual Update on the Use of Surveillance Powers - The Regulation of Investigatory Powers (Scotland) Act 2000 Head of Administration and Legal Services 2024 NFI Exercise (Audit Scotland) Internal Audit Manager 26 January 2027 Internal Audit Activity Report Internal Audit Manager 59
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Performance and Review Scrutiny Forum Annual Update Head of Communications and Strategy Good Governance Update Head of Administration and Legal Services 2026/2027 Six-Monthly Fraud Statistics Internal Audit Manager 23 March 2027 2027/2028 Internal Audit Plan Internal Audit Manager Internal Audit Activity Report Internal Audit Manager Annual Audit Plan External Audit 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. 60