Audit and Risk Committee Annual Report 2025-26
Argyll and Bute Council · 16 June 2026
Back to Argyll and Bute HSCP Audit and Risk Committee — 16 June 2026 and its agenda
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1 Audit & Risk Committee Date of Meeting: 16 June 2026 Title of Report: Audit & Risk Committee Annual Report 2025-26 Presented by: Councillor Kieron Green, Chair - Audit & Risk Committee The Audit & Risk Committee is asked to: • Approve the Annual Report prior to submission to the IJB 1. EXECUTIVE SUMMARY 1.1 1.2 1.3 In compliance with the principles of good governance, an Annual Report is prepared by the Audit & Risk Committee for submission to the Integration Joint Board. The purpose is to provide the IJB with assurance the Audit and Risk Committee has evaluated its activity and performance. It also provides a further opportunity for the Committee to raise any matters of concern to the Board. The Committee has met on 4 occasions with all minutes submitted to the Integration Joint Board and published within those papers. The Committee has been supported throughout the year by the Council’s Committee services team. This report provides a summary of the work of the Committee, its auditors and an evaluation by the Chair. Overall, the Committee performed well in its oversight of audit and risk and is therefore pleased to be able to provide assurance to the IJB that it has operated effectively. The financial sustainability of the IJB and the sector has been of significant concern throughout the year, as reflected in the Strategic Risk Register. The Committee has expressed some concern regarding an increase in the number of internal audit recommendations outstanding. Management have been requested to prioritise addressing these in 2026/27. 2. RECOMMENDATION 2.1 The Audit and Risk Committee are recommended to: • Review and approve the Committee Annual Report. 3. DETAIL OF REPORT 3.1 The report provides the following:
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2 3.2 3.2.1 • Summary of the Committee Meetings • Membership and Remit • Evaluation by Chair This report is supported by the annual reports prepared by the Internal and External Auditors. Audit & Risk Committee Meetings This section summarises the items of business considered at each meeting, all were held electronically. The IJB is provided with the minutes as a matter of course, this provides members with the opportunity to raise issues or question the Chair in respect of the work of the Committee. Meeting 1 – 20 June 2025 • The internal auditor provided an update report. Specific audit reports were considered in respect of External Care Placements and Payroll Arrangements relating to the Care at Home service. The latter report was an additional piece of work commissioned by the HSCP following payroll errors identified in one location. The report provided assurance that appropriate systems and processes were in place and operating effectively but did make recommendations aimed at improving efficiency and reducing the potential for human error. The 2024/25 annual internal audit report was approved at the February 2025 meeting. • The un-audited accounts for 2024/25 were approved, noting concern that the IJB was reporting a significant overspend on adult social care services. The outturn position in the accounts was discussed alongside the management accounts which provided a more detailed analysis of the overspending and reasons for it. • The annual external audit plan and timetable were approved for the audit of the 2024/25 accounts, presented by Forvis Mazars. • The Strategic Risk Register was reviewed. • The Annual Report of the committee for 2024/25 was considered and approved prior to its submission to the IJB. Additionally the Committee Self-Assessment process was considered but due to the small number of responses received it was agreed that the exercise had not provided representative sample of the views of members. • An interim report on progress on updating the policy review planner was presented, it was noted that good progress had been made but that planner was not yet complete. • The Audit Scotland Report on IJB finances as at the end of the 2023/24 financial year was considered in some detail as this provided a helpful national context in respect of the challenges facing the sector. • Audit Scotland reports relating to the topics listed below were also discussed: -Governance in the NHS -Local Government budgets 2025/26 -Best Value – Argyll & Bute Council
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3 3.2.2 3.2.3 3.2.4 Meeting 2 – 23 September 2025 • A verbal update on progress with the audit was provided by the external auditor and the draft assurance letters from the committee to the auditor were considered and approved. • The Internal Audit update report was considered alongside reports on Governance Arrangements and Partnership Working. • Audit Scotland reports were also included on the agenda, these related to: -Delivering for the future – responding to the workforce challenge -Quality of Public Audit in Scotland -The 2023/24 Audit of Glasgow City Council The latter report highlighted governance deficiencies relating to severance arrangements for senior staff to ensure that lessons from this were highlighted. Meeting 3 – 16 December 2025 • The audited accounts for 2024/25 were considered and approved alongside the external audit report which provided an unqualified audit opinion and good assurance on accounting and financial reporting arrangements within the HSCP. • The internal auditor presented a report on Workforce Planning which made a number of recommendations for improvement. • The new incident response framework was considered and adopted, along with the plan for staff training to support its operation in practice. • A range of Audit Scotland reports highlighting a number of strategic risks were presented to the committee. These included reports prepared under section 22 pf the Public Finance and Accountability act relating to 2 NHS Boards and their financial sustainability. Others included: -NHS in Scotland 2025 -NHS Highland External Audit Report -Adult Disability Payments -Financial Sustainability and Taxes -Cyber Attack – Comhairle nan Eilean Siar Collectively these reports continue to raise concern in respect of financial and service sustainability risks in the short and longer term. Meeting 4 – 17 February 2026 • The internal audit update was discussed in some detail. Concern was expressed regarding the number of outstanding audit recommendations, particularly as some had been delayed and re- scheduled more than once. Management agreed that this would be given increased priority and more care would be given to ensuring that target completion dates were realistic. • The Internal Audit plan for 2026/27 was also approved. • A report on progress with the implementation of the internal audit
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4 recommendations relating to the culture audit was considered. This highlighted that a different approach was being taken in respect of some of these with the revised approach endorsed by the committee. Assurance was provided that the Joint Partnership Forum were supportive of the revised approach. • The Strategic Risk Register was reviewed for the second time in the year and the Committee requested that the partnership working risk be kept under review due to the issues with the Glasgow SLA and broader financial context facing the HSCP. The approach to Risk Appetite was also considered and it was agreed that greater participation in the review process would be helpful prior to making any changes. The Global Risk report published by the World Economic Forum was also provided to ensure that issues highlighted in this document were appropriately reflected in the Strategic Risk Register where relevant. • The Audit Scotland Reports considered at this meeting were: -Local Government in Scotland – Finance Bulletin -Delayed Discharges -Community health and Social Care Performance The final report provided a link to national performance management data regarding the performance of IJBs enabling stakeholders to compare performance relative to the rest of the sector. 3.3 Committee Self-Evaluation and Improvement 3.3.1 3.4 3.4.1 3.4.2 3.5 3.5.1 The outstanding improvement actions have been completed and therefore there is nothing new to report in respect of the self-evaluation process. Committee Membership and Remit Membership consists of six IJB members, the Committee Chair may not be either the Chair or the Vice-Chair of the IJB. Not all places have been filled with 4 members appointed. In addition there are 4 required attendees – the Chief Officer, Chief Financial Officer, External Auditor and the Internal Auditor. Other officers attend as required. Councillor Kieron Green has acted as Chair throughout the year. The remit was revised in January 2021 and again in January 2023 by the IJB, the Committee has ensured that its work is consistent with its remit and this enables the Committee to provide assurance to the IJB that it has fulfilled its role effectively throughout 2025/26. Evaluation by the Chair The committee met regularly throughout the year and has continued to operate effectively. It has contributed to ensuring that the management of risk and assurance has continued on behalf of the IJB. It has had appropriate access to HSCP management and the auditors. Committee members meet in private with the auditors once per year.
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5 3.5.2 3.5.3 3.5.4 3.5.5 The work of the Committee evidences the IJB’s commitment to transparency, accountability and effective scrutiny of management. The committee has comprehensively fulfilled its remit in terms of consideration of internal and external audit reports, national performance reports and review of the annual accounts and the internal control environment. Financial performance for the year ended 31 March 2025 was noted with some concern due to the scale of the adult social care overspending, although funded from resources held by the HSCP. The unplanned use of reserves not sustainable and action is required to avoid this situation recurring. It is acknowledged that the financial challenges facing the IJB and the sector more widely are severe and the outlook is deteriorating. Concerns about financial sustainability remain a very high grade strategic risk. The Committee was pleased with the level of assurance provided by the External Auditor that accounting and reporting arrangements within the finance teams are robust and appropriate. Internal Audit One of the main responsibilities of the Committee is to ensure that the internal audit programme is appropriate and delivered effectively. It is critical that agreed management actions made in response to audit recommendations are implemented. The Committee receives an update report from the Internal Auditor at each meeting. The table below provides a summary in respect of the audit work undertaken during the year: Report Name No. of recommendations No. implemented No. Outstanding Governance Arrangements Opinion - High 2 (2 Low Grade) 0 2 Partnership Working Opinion – High 3 (3 Low Grade) 0 3 Workforce Planning Opinion - Reasonable 7 (7 Medium Grade) 4 3 Payroll – Care at home Opinion - Reasonable 2 (1 Medium, 1 low grade) 2 0 Care Assessment & Resources Allocation – reported June 26 Opinion - Limited 3 (3 High Grade) 0 3 Total 17 6 11 However there are also a number of recommendations made in prior years that have not yet been implemented to the satisfaction of the auditor. These will continue to be discussed at each meeting and the reasons for delay considered carefully. During 2025/26 there were 11 recommendations fully implemented, 10 were outstanding but reported as being on course to be complete by the agreed date and a further 7 were outstanding and delayed, some of these have been rescheduled more than once. Therefore there were a total of 17
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6 3.5.6 3.5.7 3.5.8 3.5.9 recommendations outstanding at the year end. Whilst some good progress has been made, the committee has requested that audit actions are given greater priority as this provides important assurance in respect of the internal control environment. The overall conclusion of the Internal Auditor is to provide a reasonable level of assurance on the adequacy of internal controls and governance arrangements. The Internal Audit Annual Report provides more detail on the basis for this conclusion, which is the same as the prior year. External Audit The External Auditor’s report was positive and the auditor issued an un- qualified audit opinion in respect of the accounts for 2024/25. The report indicates that the auditors are content with financial accounting and reporting and concludes that leadership, governance and arrangements for securing value for money were likewise appropriate. They noted that were no adjusted or unadjusted misstatements in the accounts and confirmed that the working papers provided to support the accounts were of a good standard. The auditor did reiterate their recommendation in respect of medium term planning and the financial sustainability challenge currently faced by the HSCP and other public bodies. The work of External Audit provides the Committee and IJB with an important source of independent assurance on financial reporting and governance and leadership. Progress has been made in respect of the Committee improvement agenda set out through the self-evaluation process, however low participation in the self-evaluation process in 2025/26 requires to be improved upon next year. There is also a requirement to fill the vacant member roles and ensure that members have access to the training and development they require to fulfil their roles effectively. I am pleased to commend the work of the Committee to the IJB and provide assurance, that in my opinion, the Committee has operated effectively throughout the year and has discharged its responsibilities with diligence. This opinion is formed on the basis of the totality of evidence considered by the Committee throughout the year. I would also like to acknowledge the role committee members, committee services, officers and auditors have played in facilitating the work of the Committee. 4. RELEVANT DATA AND INDICATORS 4.1 Minutes of Audit & Risk Committee meetings, formal audit reports and committee papers. 5. CONTRIBUTION TO STRATEGIC PRIORITIES 5.1 This document contributes to good governance of the Integration Joint Board and provides assurance to the IJB that the Audit & Risk Committee is operating effectively and in a manner that is consistent with its terms of reference.
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7 6. GOVERNANCE IMPLICATIONS 6.1 Financial Impact – The Committee has considered a number of reports relating to the financial sustainability challenges faced by the HSCP and the public sector more widely. The Committee continued to ensure it was informed of the wider context within which the HSCP is operating whilst acknowledging concern in respect of the overspend in 2024/25 (noting that this appears to have been addressed in the 2025/26 year). 6.2 Staff Governance – The Committee continues to scrutinise progress on workforce planning and associated risk. 6.3 Clinical and Care Governance – none. 7. 7.1 8. PROFESSIONAL ADVISORY Consideration should be given to this report. EQUALITY AND DIVERSITY IMPLICATIONS 8.1 9. 9.1 None directly from this report. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE No issues arising directly from this report. 10. RISK ASSESSMENT 10.1 The Committee has commented on a number of occasions on key financial sustainability, service and workforce planning risks for the IJB. It has also reviewed and scrutinised the Strategic Risk Register. 11. PUBLIC AND USER INVOLVEMENT AND ENGAGEMENT 11.1 The report draws from findings of internal audit and external audit reports. There has been no direct public or service user involvement in respect of the work of the Committee during the year. Meetings will be held in public from 2026/27 onwards, this will further improve accountability and transparency. 12. CONCLUSIONS 12.1 The Audit & Risk Committee is asked to approve its annual report prior to its submission to the IJB. The report concludes that the Audit & Risk Committee has performed its role effectively throughout 2025/26. The Committee has operated in line with its terms of reference and has received independent assurance from Internal and External Auditors. It has scrutinised, in detail, the reports presented and has continued to seek to contribute to the development of the governance, assurance and risk frameworks.
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8 13. DIRECTIONS Directions required to Council, NHS Board or both. Directions to: tick No Directions required √ Argyll & Bute Council NHS Highland Health Board Argyll & Bute Council and NHS Highland Health Board 14. PREVIOUS REVIEW OF THE REPORT Meeting Title of report Date Output (if relevant) N/A REPORT AUTHOR AND CONTACT Councillor Kieron Green, Chair of Audit & Risk Committee: kieron.green@argyll- bute.gov.uk