Audit and Scrutiny Committee Annual Report 2024/25
Argyll and Bute Council · 26 November 2025
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 26 NOVEMBER 2025 AUDIT AND SCRUTINY COMMITTEE ANNUAL REPORT 2024/25 1. SUMMARY 1.1 The purpose of this report is to provide the Chair of the Audit and Scrutiny Committee’s (the Committee) annual overview of the Committee’s activity during the financial year 2024/25 and a summary of key developments since the commencement of 2025/26. It sets out how the Committee has fulfilled its remit and provides assurances to the Council. 2. RECOMMENDATIONS 2.1 Review and endorse the Chair’s Annual Report. 3. DETAILS 3.1 It is important that the Committee fully complies with best practice guidance on Audit Committees to ensure it can demonstrate its effectiveness as a scrutiny body as a foundation for sound corporate governance for the Council. The Chartered Institute of Public Finance and Accountancy (CIPFA) issued an updated guidance note Audit Committees Practical Guidance for Local Authorities and Police 2022 Edition which incorporates CIPFA’s Position Statement: Audit Committees in Local Authorities and Police. This sets out CIPFA’s view of the role and functions of an Audit Committee. The CIPFA Audit Committees Guidance includes the production of an annual report on the performance of the Audit Committee against its remit for submission to the Council. 4. CONCLUSION 4.1 The Audit and Scrutiny Committee Annual Report 2024/25, which is appended to this report as Appendix 1, provides assurance to full Council over the activity of the Committee. 5. IMPLICATIONS 5.1 Policy: None 5.2 Financial: None 5.3 Legal: None 5.4 HR: None 5.5 Customer Service: None 5.6 Risk: None 5.7 Climate Change: None
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5.8 Fairer Scotland Duty: None 5.9 Equalities – protected characteristics: None 5.10 Consumer Duty: None 5.11 Island Communities: None 5.12 Children’s Rights and Wellbeing None For further information please contact Internal Audit (01546 604108) Paul Macaskill Chief Internal Auditor 26 November 2025 Appendices: 1. Audit and Scrutiny Committee Chair Annual Report 2024/25
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Introduction by the Chair of Audit and Scrutiny Committee This report provides an overview of the Audit and Scrutiny Committee’s (the Committee) activity during the financial year 2024/25 and a summary of key developments since the commencement of 2025/26. In 2024/25 the Committee met quarterly on a hybrid approach with the following as appointed members: Janice Wason-Hall (Chair) Daniel Hampsey Reeni Kennedy-Boyle Graham Hardie Andrew Vennard Gary Mulvaney (Vice Chair) Fiona Howard Committee meetings were also attended by appropriate representatives of the Council including the Chief Internal Auditor (CIA) and our appointed External Auditors, Forvis Mazars. Other Council Officers attend as and when appropriate including the Chief Executive and the Head of Customer Support Services who attends regularly to advise the Committee on issues relating to performance management. There has been progressive improvement in the service received from Forvis Mazars after what had been a concerning start, due to recruiting difficulties which had caused delays in the External Audit of our accounts and trust funds. However, since regular meetings and updates between Finance staff and lead staff within Forvis Mazars have occurred, this has resulted in an improvement in timelines for planned audit work and we hope that such progress continues in the delivery of the Council’s audit. It is normal for accounts to be signed off and submitted to the Accounts Commission by our appointed external Auditors by 30 September each year, it is important that such improvements focus on the restoration of this deadline going forward. Whilst the Committee has had changes since the inception of the Council in 2022, as a result of both Council Leadership but also the retirement of the previous Committee Chair; the Committee continues to operate effectively and efficiently in the discharge of its responsibilities and offers appropriate overview and scrutiny. All members have been trained in their specific role on the Committee and experienced support also provided for those Members sitting on Scrutiny Panels set up to review specific areas of the Council’s work. The Council’s Internal Audit section is subject to an independent External Quality Assurance Assessment which is mandatory under the Public Sector Internal Audit standards (PSIAS) every five years. I was pleased to note that the service was deemed compliant in all 14 areas of assessment. This assessment is augmented with annual reviews which are reported to the Committee, and I am again reassured that full compliance has been maintained in 2024/25. It is important that the service provided by Internal Audit maintains the highest standards which helps the Committee in receiving high quality reports for its assurance purposes. Furthermore, this supports the wider governance operating within the Council. I continued to work closely with the CIA and have built up a good and productive relationship which is augmented with regular scheduled meetings. There are a number of important developments which intend to have positive outcomes for Argyll and Bute, the largest of which was the funding announcement relating to the
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Rural growth Deal. This includes a funding package of £70M over a 10-year period aimed at creating opportunities for people living in Argyll and Bute and attract future investment by increasing productivity, growing the working age population, addressing key infrastructure and skills gaps. The Council’s Internal Audit service will be the lead auditor for this programme of planned work and this will feature as a key area of review in their Audit Plan covering the same period. In looking forward to 2025/26 and beyond, significant pressures continue as a result of financial settlements, this has been particularly compounded as a result of inflationary pressures, the risk of unfunded or partly funded pay settlements, and the lack of opportunities to focus funding received to areas where resources may be best used due to ring fencing of specific allocated resources which continues to present a complex backdrop within local government. These pressures are likely to remain and will continue to add an element of uncertainty in relation to the overall financial picture affecting the Council. The Council continues to undertake appropriate medium to long term financial planning using a scenario modelling approach which helps to provide Members with a thorough overview of the implications of funding and cost pressures, along with associated risks. I am however satisfied that the Council continues to embrace these challenges in a strategic, capable, and productive manner. Janice Wason Hall – Chairperson 1. Audit and Scrutiny Committee’s Effectiveness and Impact 1.1 The Committee’s role is to ensure that the Council’s internal control framework and governance arrangements are operating effectively. In order to fulfil this role, a range of reports are provided to the Committee during the year. I am satisfied that the frequency, content and detail of reports provided to the Committee allow myself and fellow members to adequately fulfil this role. 1.2 In March 2024 Internal Audit presented their Annual Audit Plan setting out their approach to the 2024/25 audit of the Council and in June 2024 Forvis Mazars outlined their planned approach to their work reflecting their statutory duties and risk-based approach. The respective audit plan and approach were considered by the Committee and accepted. 1.3 During 2024/25 the CIA has continued to develop our approach to audit and scrutiny. Particular developments which have furthered the effectiveness of both Internal Audit and the Committee are: • The continued and successful work of the Counter Fraud Team. • The approach to Scrutiny continues to develop and work to complete the ‘Complaints’ review in 2024/25 was concluded. • The CIA engaged with Members of the Committee as part of the planning process for the 2024/25 audit plan. • An external assessment has been undertaken during 2022/23 in terms of compliance with the Public Sector Internal Audit Standards (PSIAS) after a portfolio of evidence has been prepared and submitted. This independent assessment identified that the Internal Audit service was in full compliance with all 14 areas of criteria. This was supplemented by the annual self- review in 2024/25 which confirmed that standards have been maintained to these levels. • A gap analysis for the implications of the new Global Internal Audit
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Standards (GIAS) and an action plan to address any gaps was undertaken and agreed by the Committee and will be monitored until implemented. 2. Assurances Internal Audit Assurance 2.1 Internal Audit is a key source of assurance for both Members and management on the effectiveness of the control environment. The Committee has a responsibility for ensuring that Internal Audit is effective in the provision of this assurance. I am content that the minor amendments made to the 2024/25 audit plan as a result of a variety of reasons from recent work having been done internally, postponement to another financial year and a national review to be undertaken in the specific area. Work within the Council will be further risk assessed and considered as part of the future audit planning process. I am content with the assurance provided by the CIA that sufficient work has been undertaken to allow him to provide an opinion on the Council’s systems of governance and internal control. Throughout the year, in my opinion, clear assurance judgements are provided, underpinned by an appropriate evidence base and, where appropriate, include sound management advice and guidance. 2.2 The Committee has received regular reports and information from the CIA including: • risk based internal audit annual plan • regular progress reports • annual report, in line with PSIAS, which provided the CIA’s independent annual opinion on the effectiveness of the Council’s risk management, internal control and governance processes. 2.3 Exhibit 1 shows an analysis of assurance opinions provided by internal audit in the three-year period 2022/23 – 2024/25. There have been minor fluctuations year to year, the important trend identified is the low number in audits issued that have been providing limited assurance. In addition, there have been largely consistent trends in the number of audits classified as providing a substantial and high levels of assurance in 2024/25. There was one classified as being limited. For these, and all other audit reports, management have accepted 100% of audit recommendations and action plans have been agreed. A robust follow-up system is in place with progress presented to the SMT on a quarterly basis and to the Committee as a standard agenda item. Exhibit 1 – Audit Assurances (2022/23-2024/25)
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2.4 The Committee has a clear role in relation to oversight of the Internal Audit function; specifically in relation to overseeing its independence, objectivity, performance and professionalism. I am pleased to advise, as Chair of the Committee, that I am satisfied that internal audit is effective and activity is undertaken in accordance with relevant standards. External Audit Assurance 2.5 External Audit is an essential part of the process of accountability and assurance for public funds, providing an independent opinion on the financial statements, and reviewing aspects of governance and financial management. Working closely with Internal Audit, the external audit programme ensures that statutory responsibilities are delivered, without the duplication of audit work. The Council’s appointed external auditors are Mazars. 2.6 The council’s audited annual accounts for the year ending 31 March 2024 were endorsed by the Audit and Scrutiny Committee and referred to Council for approval in December 2024. An ‘unqualified’ opinion has been provided by the external auditors, Mazars in this respect. Consequently, this provides a basis of assurance which the Committee can take as part of its duty as those charged with governance. The regulatory environment requires the authority to delegate responsibility for the monitoring and scrutiny of treasury management activities, strategy and policies to a specific named body. For this authority, the appropriate delegation body is the Audit and Scrutiny Committee. Treasury management training was delivered to members of the committee during October 2024, to support its scrutiny role. This scrutiny responsibility was discharged in respect of the 2024-25 Treasury Management Mid-year Review Report in December 2024, a 2024-25 Treasury Management Update as at 31 December 2024 in March 2025 and the 2025- 26 Treasury Management Strategy and Annual Investment Strategy, also in March 2025. 2.7 The Council was last subject to a Best Value review reported in April 2025, however, the period of this report will focus up to 31 March 2025 and relates to the Best Value Review of 2019/20 which highlighted that good progress
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was made by the Council since the previous inspection in 2015, specifically the significantly improved relationships amongst elected members and between members and officers and the Council’s sound approach to financial planning. All of these points and actions have now been addressed and a final report was prepared and presented to the Audit and Scrutiny Committee in March 2023. This should provide further assurance that these key issues have been addressed by the Council. Regular updates on Performance are presented to the Committee, including progress on the Performance Excellence Project and updates on the Council’s performance in the LGBF. The Annual Business Plan records progress against Corporate Outcome Indicators and new Council Priorities, agreed in September 2024 are being used to develop and new Corporate Plan and Corporate Outcome measures. The Council also reported on thematic work on Digital Exclusion in 2024 and carried out a self-assessment on Workforce Innovation as part of national Audit Scotland Best Value work. Further development in performance and reporting has been introduced and a seminar for the Committee has been arranged in order that the latest position has been conveyed to the Committee which has oversight. 3. Risk Management 3.1 The CIA performs an annual strategic risk register assurance mapping exercise which enables the Committee to assess the levels of assurance it can take over the activity undertaken by the Council to manage its strategic risks. This is complemented by the Chief Executive presenting the Strategic Risk Register to the Committee on an annual basis to allow the Committee to further scrutinise the approaches being taken to manage risk. 3.2 In 2023/24 a review of Risk Management was undertaken and this provided an audit opinion that a high level of assurance can be taken. This is the highest level of audit opinion and should further provide additional assurance on the Risk Management arrangements within the Council. 4. Independence 4.1 To assist in preserving the Committee’s independence, measures are in place including: • the appointment of an independent chair • observation of the Internal Audit Charter which specifies the independence of the CIA and the wider audit team • the non-political approach of the committee • the active involvement of the external auditors • clear terms of reference aligned to CIPFA’s Role of the Audit Committee Guidance 5. Scrutiny 5.1 During 2024/25 the Committee undertook work on completing the ‘Complaints’ scrutiny review as part of our scrutiny plan. This report was presented to the Audit and Scrutiny Committee in June 2025. These and previous reports were well received by the Committee and widened the understanding of the complexities and challenges faced by both staff and the community in specific
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areas and where these reports will help allow continuous improvement as a Council. 5.2 The benefits of scrutiny are twofold; helping to understand, what can often be multifaceted and procedurally complex issues due to legislation but also to help consider ways to improve and develop to make any processes more understandable and/or streamlined where that is at all possible. 5.3 Scrutiny work will continue in 2025/26; it is anticipated that work will focus on the Councils arrangements for the implementation of the Biodegradable Municipal Waste Landfill Ban. This review will commence in late autumn of 2025, allowing operational resources to be balanced in the service area with the planned scrutiny work. 6. Counter Fraud Team (CFT) 6.1 The Council has an effective CFT having been made permanent after a trial period with both officers having completed the CIPFA (Chartered Institute of Public Finance and Accountancy) Accredited Counter Fraud Specialist Course meaning they are fully accredited counter fraud investigators. This further strengthens the Council’s commitment to protecting the public purse. 6.2 Since the inception of the CFT, regular reporting to the Audit and Scrutiny Committee takes place and latterly the CFT reported that proactive and targeted work in this area has resulted in a cumulated £1.48M being rebilled and that to date £928K has been recovered. The ongoing work of the CFT in both recovery but also in its deterrent effect sends a strong message that the Council will take all reasonable steps it can to identify error and fraud but also take appropriate action to recover monies that are due. Regular reports are presented to Committee each quarter in relation to the work of both Internal Audit and the Counter Fraud function. 6.3 Local visits throughout Argyll and Bute were undertaken in the year and this will form part of a rolling programme of visits going forward, focusing on maximising the income due to the Council. In addition, the CFT are raising awareness of the Council’s zero tolerance to fraud and this will help act as a deterrent to fraud being perpetrated in the first place. I expect further visits to be equally successful and so far in 2025/26 this has proved to be the case. It is pleasing to note that the ongoing work in relation to counter fraud clearly demonstrates the Council both in its commitment to recovering sums of revenue due through error or fraud but also in the wider context of good governance. 7. External Quality Assurance Assessment – Internal Audit 7.1 The mandatory Public Sector Internal Audit Standards (PSIAS), published in April 2013 and updated in March 2017, apply to all internal audit service providers in the UK public sector. To supplement the PSIAS, and provide specific guidance surrounding its application within a local government setting, the Chartered Institute of Public Finance and Accountancy (CIPFA) compiled a Local Government Application Note, (LGAN) which was updated in 2019. This requires all internal audit providers to have an independent external assessment of these standards in application within their service
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provision. New Global Standards came into effect on 1 April 2025, a gap analysis was undertaken to identify any necessary changes that may be required to be implemented, these were reported to the Committee in March 2025. 7.2 An independent report on the Council’s Internal Audit Service was prepared and presented to the Audit and Scrutiny Committee in March 2023. It is pleasing and reassuring to note that the assessor found that in all 14 areas of assessment the Council’s Internal Audit Service fully conforms to the standards. The assessor also identified that the team are highly qualified with a training plan in place to address any skills gaps and that they deliver a high- quality service for the Council which is evident by the questionnaires returned after the completion of each review. 7.3 This was the first time the Council’s Internal Audit Service obtained a fully conforms opinion in all 14 areas of assessment and the independent report demonstrates the importance of having a fully resourced and functioning service which provides assurance to senior management and to those charged with governance responsibilities, specifically, the Audit and Scrutiny Committee. This position should provide substantial assurance to the Council and Members of the Audit and Scrutiny Committee. Annual internal assessments will continue until the next scheduled external assessment in 2027/28. 8. Looking Forward 8.1 I have been in post as Chair for just over a year, I am impressed with the way in which the Committee operates in the discharge of its audit and scrutiny duties, whilst respectfully challenging where required but also with a mindset of support. This approach is key to maintaining collective engagement, improving controls and progressing the need for continuous improvement within the Council. I would also like to thank the Vice-Chair, Cllr Gary Mulvaney for his invaluable support and the experience he brings to the Committee given his extensive financial background, as do all members of the Committee in their respective personal and professional backgrounds. Looking ahead, it is important that we develop our skills and knowledge so we can add value and to that end an in-person meeting of the Committee was scheduled in September 2025 which included development sessions to aid that learning. These sessions focused on the new Global Internal Audit Standards, key major frauds that occurred in other local authorities and the learning that can be gleaned from what went wrong, along with an overview of the work from our Counter Fraud Team. 8.2 In 2025/26 and onwards the Committee will consider potential options/topics for scrutiny reviews and as a Committee we will continue to implement and further develop our scrutiny approach. 8.3 This focus on continuous improvement is equally applicable to the audit element of the Committee and we will continue to work with the CIA and, where appropriate, our appointed External Auditors Forvis Mazars, to identify opportunities to further develop the skillset and expertise of both the Committee and the internal audit department to facilitate effective challenge
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and scrutiny. 8.4 The Counter Fraud Team will continue to focus their resources on specific concerns across the local authority area seeking to recover monies owed and due to the Council in accordance with its policies. 8.5 The Council continue to provide the audit services to the HSCP and were awarded the contract for a period of three years commencing 1 April 2024. A formal service level agreement is in place to reflect the new contract. In 2024/25, a plan of audit coverage was agreed and presented to their Audit and Risk Committee. 8.6 The Internal Audit team are focused, professional and work continues to promote better resilience within the team through the opportunities of professional training schemes and other forms of staff development. This approach fits in well with the Council’s programme of ‘Growing our Own’ in order that the Council has skilled workforce for the future and these are retained locally where possible. 8.7 We will continue to provide updates on progress of the CFT and reports will be presented to the Committee as part of the quarterly and annual reporting of the Internal Audit service. 9. Conclusion 9.1 Based on the reports received and reviewed by the Committee, I am in agreement with the CIA’s annual audit report which confirms that reasonable assurance can be placed upon the adequacy and effectiveness of the Council’s internal control system in 2024/25. I am satisfied that active monitoring and follow up are in place in respect of agreed management actions. This follow up process is further enhanced by the continuous monitoring programme carried out by internal audit which provides ongoing assurance over the Council’s core transactional based systems. 9.2 The pressures on the Council continue both in the need to balance delivering the services required by our communities but also in the backdrop of challenging financial settlements, economic and socio-demographic changes which are likely to remain for the foreseeable future. The need for a continued strong, independent, resourced and resilient Internal Audit team has never been so important and will be critical going forward in helping the Council to meet these challenges and provide the assurances that are required by the Audit and Scrutiny Committee, senior management and the Council.