Item 12 Appendix 2 - External Audit Enquiries – 2024-2025 Accounts
West Dunbartonshire Council · 10 December 2025
Back to Audit Committee — 10 December 2025 and its agenda
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Appendix 2 International Standard for Auditing 240 - The auditor’s responsibility to consider fraud in an audit of financial statements 1) How do the Trustee’s, in their role as those charged with governance, exercise oversight of management's processes in relation to: undertaking an assessment of the risk that the financial statements may be materially misstated due to fraud or error (including the nature, extent and frequency of these assessments); identifying and responding to risks of fraud in the organisation, including any specific risks of fraud which management have identified or that have been brought to its attention, or classes of transactions, account balances, or disclosure for which a risk of fraud is likely to exist; communicating to employees of views on business practice and ethical behaviour (for example by updating, communicating and monitoring against the organisation’s code of conduct); and communicating to those charged with governance the processes for identifying and responding to fraud or error? Response The Annual Governance Statement within West Dunbartonshire Council’s (WDC) annual financial statements contains a review of the adequacy and effectiveness of the governance framework including the system of internal control. These systems are periodically reviewed and tested by internal audit, and our external auditors. Consequently although the material misstatement cannot be ruled out, its likelihood is low. All financial transactions relating to the delivery of the Trusts are hosted within the WDC ledger, therefore the Trusts rely on the processes and controls implemented by WDC including approval and authorisation processes, defined limits for all authorised signatories and adherence to WDC Financial Regulations. The financial statements reflect the transactions which have been processed by the WDC financial system. The Trust’s financial statements are prepared by experienced and professionally qualified accountants who are regulated by the standards of their respective institutes. The WDC Chief Internal Auditor provides regular reports to the Audit Committee which include information on control issues identified within the partner organisations and any potential impact on the Trusts. If the Trustees became aware of any fraud or suspected fraud then appropriate reporting processes would be followed e.g. the Chief officer - resources would be notified in conjunction with reporting to Internal Audit, Fraud Liaison Officer or Legal teams for cases involving suspected data breaches. Through the Code of Conduct for Staff, all WDC employed staff are obliged to comply with the partner’s Corporate Governance documentation, which includes the responsibilities of managers and other staff arising from the Financial Regulations, SFIs and Fraud Policies – all available on WDC websites and intranet 2) How does the Trust oversee management processes to identify and respond to the risk of fraud and possible breaches of internal control? Is the Trust aware of any breaches of internal control during 2024/25? Please provide details. Response It is the responsibility of management to develop and maintain sound systems of risk management, governance and internal control. This includes the requirement to identify and respond to any identified breaches of internal control. However it is noted that internal control systems, no matter how well designed and
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Appendix 2 operated, are affected by inherent limitations. These include the possibility of poor judgement in decision making; human error; control processes being deliberately circumvented by employees and others; management overriding controls and unforeseeable circumstances. In terms of oversight, the Council’s Internal Audit function plays a key role in this regard. Internal Audit work is not a substitute for management’s responsibilities for the design and operation of these systems, and is not responsible for identifying all significant control failures. Where deemed necessary the Audit Committee will ask that a relevant officer of the Trust is present at Audit Committee meetings to respond to questions on a report being presented. 3) Has the Trust knowledge of any actual, suspected or alleged fraud during the period 1 April 2024 – 31 March 2025? Where appropriate please provide details. Response There have been no suspected/alleged instances of fraud during 2024/25. 4) Has the Trust any suspicion that fraud may be occurring within the organisation? Please provide details. Has the Trust identified any specific fraud risks within the organisation? Please provide details. Does the Trust have any concerns that there are areas within the organisation that are at risk of fraud? Please provide details. Are there particular locations within the organisation where fraud is more likely to occur? Please provide details. Response As with any large and complex organisation there are a range of fraud risks and emphasis on reducing fraud risk is continuous. The results of the NFI, internal audit work and reported fraud show some low value frauds. Management and the Audit Committee is kept up to date with fraud risks through updates on counter fraud arrangements, Internal Audit and other ad hoc reports. Fraud risks are acknowledged in key areas. Members and officers are aware of these and the risks are managed through established risk management processes. 5) Is the Trust satisfied that internal controls, including segregation of duties, exist and work effectively? Please provide details. If not, where are the risk areas? What other controls are in place to help prevent, deter or detect fraud? Response Key controls such as the segregation of duties, management review and supervision and authorisation and approval are evident in each of WDC’s core systems. It is acknowledged that maintaining an effective control environment is challenging in a time of reducing resources and a changing operating environment. For this reason, internal audit will have a continued role in supporting the Council in ensuring that an adequate but appropriate control environment is in place. In overall terms, Internal Audit have concluded that reasonable assurance can be provided on the Trust’s system of internal control for 2024/25. 6) Is the Trust satisfied that staff are encouraged to report their concerns about fraud, and the types of concerns they are expected to report? Please provide details. Response The Council promotes a zero tolerance toward fraud and promotes a culture that enables individuals to identify potential fraud and empowers them to report their concerns in a safe
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Appendix 2 and secure manner to the appropriate people at the right time. The means by which employees can report fraud are publicised on the Council’s intranet. Fraud issues are widely communicated both internally and externally to provides a deterrent to fraudsters by highlighting the Council’s commitment to identify fraud and take proactive action to pursue fraudsters. 7) From a fraud and corruption perspective, what are considered by the Trust to be high risk posts within the organisation? Please provide details. How are the risks relating to these posts identified, assessed and managed? Response Fraud and corruption, and associated risks, come in many forms and, consequently, it is not easy to specifically identify specific posts where there are greater risks than others. However there is a general recognition that there is an inherent risk of fraud within an organisation like a Council and partner organisations the risk of fraud is managed through existing controls and procedures which are in place across the organisation. The Trust takes assurance from the work of internal audit, the established fraud policies in place and ongoing embedding of a culture of fraud awareness through a programme of anti-fraud training and the work of the Council’s fraud team. This helps ensure that issues identified as a result of Internal Audit work or fraud investigations, result in recommendations to management to address gaps in control to ensure that risks are properly mitigated to acceptable levels. 8) Is the Trust aware of any related party relationships or transactions that could give rise to instances of fraud? Please provide details. How are the risks associated with fraud related to such relationships and transactions mitigated? Response We are not aware of any related party relationships or transactions that could give rise to instances of fraud. Disclosure of significant related party relationships is required for both members and officers in positions of influence.
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Appendix 2 9) Is the Trust aware of any entries made in the accounting records of the organisation that it believes or suspects are false or intentionally misleading? Please provide details. Are there particular balances where fraud is more likely to occur? Please provide details. Is the Trust aware of any assets, liabilities or transactions that it believes were improperly included or omitted from the accounts of the organisation? Please provide details. Could a false accounting entry escape detection? If so, how? Are there any external fraud risk factors which are high risk of fraud? Please provide details. Response We are not aware of any accounting entries which are suspected to be false or intentionally misleading. Should management become aware of any suspect accounting entries, these would be subject to immediate investigation through Internal Audit. We are not aware of any assets, liabilities or transactions that have been improperly included or omitted from the Trust’s accounts. Should any issues arise it is expected that these would be identified through review and approvals processes. Current and emerging risks are identified from a number of sources including the National Anti-Fraud Network (NAFN) and other law enforcement agencies. These are disseminated to relevant teams to raise awareness. 10) Is the Trust aware of any organisational, or management pressure to meet financial or operating targets? Please provide details. Is the Trust aware of any inappropriate organisational or management pressure being applied, or incentives offered, to you or colleagues to meet financial or operating targets? Please provide details. Response The Trustees are not aware of any inappropriate organisational or management pressure to meet financial or operating targets and there is no evidence of any incentive ever being offered to do so. International Standard for Auditing 250 – Consideration of laws and regulations in an audit of financial statements 11) How does the Trust gain assurance that all relevant laws and regulations have been complied with. For example: Is the Trust aware of the process management has in place for identifying and responding to changes in laws and regulations? Please provide details. What arrangements are in place for the Trust to oversee this process? Is the Trust aware of the arrangements management have in place, for communicating with employees, non-executive directors, partners and stakeholders regarding the relevant laws and regulations that need to be followed? Please provide details. Does the Trust have knowledge of actual or suspected instances where appropriate laws and regulations have not been complied with, and if so is it aware of what actions management is taking to address it? Please provide details. Response WDC is subject to a range of legal and regulatory frameworks. The Council has a Local Code of Good Governance and has appointed a Monitoring Officer (Chief Officer Regulatory and Regeneration) to ensure that the Council acts lawfully. All Trustee reports are subject to legal review and comment to ensure key issues are identified. The Council’s Chief Officer Regulatory and Regeneration is a member of the Senior Management Team and is sighted on any new strategic projects or initiatives with the
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Appendix 2 Council’s Legal Services having specialist officers who provide legal advice and support to particular service areas. As required, training is provided to officers on particular legal issues, some of it being mandatory, for example around data protection and equalities. Accepting that there will be minor operational instances of non-compliance, we are not aware of any instances of significant non-compliance during the financial year. This is supported by the annual review of the Local Code of Good Governance. International Standard for Auditing 501 – Specific consideration of the potential for, and actual, litigation and claims affecting the financial statements 12) Is the Trust aware of any actual or potential litigation or claims that would affect the financial statements? Please provide details. Response Given the size and the nature of the transactions of the Trust there are no known litigations or claims that would affect the financial statements. International Standard for Auditing 570 – Consideration of the going concern assumption in an audit of financial statements 13) How has the Trust assessed and satisfied itself that it is appropriate to adopt the going concern basis in preparing the financial statements? Response No issues in relation to going concern were highlighted to the Trustees. 14) Has the Trust identified any events or conditions since the assessment was undertaken which may cast significant doubt on the organisation’s ability to continue as a going concern? Please provide details. Response The Trustees are not aware of any events or concerns since the assessment was undertaken that would cast doubt on the Trusts ability to continue as a going concern.