Annual Audit Plan - Argyll and Bute Integration Joint Board - Year Ending 31 March 2026
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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Annual Audit Plan Argyll and Bute Integration Joint Board – Year ending 31 March 2026 June 2026
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Annual Audit Plan Letter Members of the Audit and Risk Committee Argyll and Bute Integration Joint Board Kilmory Lochgilphead PA31 8RT 5th June 2026 Forvis Mazars The Corner, Bank Chambers 26 Mosley Street Newcastle upon Tyne NE1 1DF Dear Audit and Risk Committee Members, Annual Audit Plan – Year ending 31 March 2026 I am pleased to present our Annual Audit Plan for Argyll and Bute Integration Joint Board (the IJB) for the year ending 31 March 2026. This document will be presented at the Audit and Risk Committee meeting on 16 June 2026. If you would like to discuss any matters in more detail, please contact me on 0191 383 6339. This report provides an overview of the planned scope and timing of our audit, including the significant and enhanced audit risks we have identified. In addition, as it is a fundamental requirement that we are, and are seen to be, independent of the IJB, this report also summarises our considerations and conclusions on our independence. Two-way communication with you is key to a successful audit and is important in: • Reaching a mutual understanding of the scope of our audit and our respective responsibilities, • Sharing information to assist each of us with fulfilling our respective responsibilities, • Providing you with constructive observations arising during our audit, and Forvis Mazars LLP – 26 Mosley Street, Newcastle upon Tyne, NE1 1DF - Tel: +44 (0)191 383 6300 – www.forvismazars.com/uk Forvis Mazars LLP is the UK firm of Forvis Mazars Global, a leading global professional services network. Forvis Mazars LLP is a limited liability partnership registered in England and Wales with registered number OC308299 and with its registered office at 30 Old Bailey, London, EC4M 7AU. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001139861. VAT number: GB 839 8356 73
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Annual Audit Plan Letter (continued) Annual Audit Plan – Year ending 31 March 2026 (continued) • Ensuring that we gain an understanding of your attitude and views in respect of the risks facing the IJB which may affect our audit, including the likelihood of those risks materialising and how they are monitored and managed. This report, which we have prepared following our initial planning discussions with management, facilitates a discussion with you on our audit approach. We welcome any questions, concerns, or input you may have on our approach. Providing a high-quality service is extremely important to us and we strive to provide technical excellence with the highest level of service quality, together with continuous improvement to exceed your expectations. During the meeting, we would be grateful for your views/ knowledge on the following specific matters: • Whether you have identified any other risks (business, laws & regulation, fraud, going concern, etc.) that may result in material misstatements in the financial statements. • If there are any matters that you consider warrant particular attention during our audit and/ or any areas where you would like additional procedures to be undertaken. This report has been prepared in accordance with the responsibilities set out within the Audit Scotland’s Code of Audit Practice (“the Code”) and for the sole benefit of the Audit and Risk Committee. Except where required by law or regulation, it should not be used, quoted or made available to any other parties without our prior written consent. Yours faithfully, Mark Outterside Forvis Mazars LLP Forvis Mazars LLP – 26 Mosley Street, Newcastle upon Tyne, NE1 1DF - Tel: +44 (0)191 383 6300 – www.forvismazars.com/uk Forvis Mazars LLP is the UK firm of Forvis Mazars Global, a leading global professional services network. Forvis Mazars LLP is a limited liability partnership registered in England and Wales with registered number OC308299 and with its registered office at 30 Old Bailey, London, EC4M 7AU. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001139861. VAT number: GB 839 8356 73
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4 Contents 01 Engagement and responsibilities summary 02 Your audit engagement team 03 Audit scope, approach and timeline 04 Materiality and misstatements 05 Significant risks and other key judgement areas 06 Wider scope and Best Value 07 Audit fees and other services 08 Confirmation of our independence Appendix A – Key communication points Appendix B - Current year updates, forthcoming accounting and other issues This document is to be regarded as confidential to Argyll and Bute Integration Joint Board. It has been prepared for the sole use of the Audit and Risk Committee as the appropriate sub- committee charged with governance. No responsibility is accepted to any other person in respect of the whole or part of its contents. Our written consent must first be obtained before this document, or any part of it, is disclosed to a third party.
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01Engagement and responsibilities summary
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6 Engagement and responsibilities summary We are appointed to perform the external audit of the IJB for the year to 31 March 2026. The scope of our engagement is set out in the Code of Audit Practice, issued by the Auditor General and the Accounts Commission available from the Audit Scotland website: Code of audit practice | Audit Scotland (audit-scotland.gov.uk). Our responsibilities are principally derived from the Local Government (Scotland) Act 1973 (the 1973 Act) and the Code of Audit Practice, as outlined below and overleaf. Audit opinion We are responsible for forming and expressing an opinion on whether the financial statements are prepared, in all material respects, in accordance with applicable law and UK adopted international accounting standards as interpreted and adopted by the Code of Practice on Local Authority Accounting in the United Kingdom 2025/26. Our audit does not relieve management or the Audit and Risk Committee, as Those Charged with Governance, of their responsibilities. The Chief Finance Officer is responsible for the assessment of the IJB’s ability to continue as a going concern. As auditors, we are required to obtain sufficient, appropriate audit evidence regarding, and conclude on: a) whether a material uncertainty related to going concern exists, and b) the appropriateness of the Chief Finance Officer’s use of the going concern basis of accounting in the preparation of the financial statements. Fraud The responsibility for safeguarding assets and for the prevention and detection of fraud, error, and non-compliance with law or regulations rests with both you and management. This includes establishing and maintaining internal controls over asset protection, compliance with relevant laws and regulations, and the reliability of financial reporting. As part of our audit procedures in relation to fraud, we are required to inquire of those charged with governance, including key management personnel and internal audit, on their knowledge of instances of fraud, and their views on the risks of fraud and on internal controls that mitigate those risks. In accordance with International Standards on Auditing (UK), we plan and perform our audit to obtain reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether due to fraud or error. However, our audit should not be relied upon to identify all such misstatements.
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7 Engagement and responsibilities summary (continued) Internal control Management is responsible for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. We are responsible for obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the IJB’s internal control. Wider reporting We are required to provide assurance on the Whole of Government Accounts (WGA) returns prepared by the IJB. The level of auditor assurance required depends on monetary thresholds set by HM Treasury. Wider scope and Best Value We are also responsible for reviewing and reporting on the wider scope arrangements that the IJB has in place and its arrangements to secure Best Value. We discuss our approach to wider scope and Best Value work further in the ‘Wider scope and Best Value’ section of this report.
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02Your audit engagement team
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Your audit team 9 Mark Outterside Engagement Leader mark.outterside@mazars.co.uk 07824 086 593 Peter Hawkins Engagement Manager peter.hawkins@mazars.co.uk 07580 854 210 Aaron Rowell Engagement Team Leader aaron.rowell@mazars.co.uk 07816 209 250
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03Audit scope, approach, and timeline
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Audit scope, approach, and timeline Audit scope Our audit approach is designed to provide an audit that complies with all professional requirements. Our audit of the financial statements will be conducted in accordance with International Standards on Auditing (UK), relevant ethical and professional standards, our own audit methodology, and in accordance with the terms of our engagement. Our work is focused on those aspects of your business which we consider to have a higher risk of material misstatement, such as those impacted by management judgement and estimation, application of new accounting standards, changes of accounting policy, changes to operations, or areas found to contain material errors in the past. Audit approach Our audit approach is risk-based, and the nature, extent, and timing of our audit procedures are primarily driven by the areas of the financial statements we consider to be more susceptible to material misstatement. Following our risk assessment where we assess the inherent risk factors (subjectivity, complexity, uncertainty, change and susceptibility to misstatement due to management bias or fraud) to aid in our risk assessment, we develop our audit strategy and design audit procedures to respond to the risks we have identified. If we conclude that appropriately designed controls are in place, we may plan to test and rely on those controls. If we decide controls are not appropriately designed, or we decide that it would be more efficient to do so, we may take a wholly substantive approach to our audit testing where, in our professional judgement, substantive procedures alone will provide sufficient appropriate audit evidence. Substantive procedures are audit procedures designed to detect material misstatements at the assertion level and comprise tests of detail (of classes of transaction, account balances, and disclosures), and substantive analytical procedures. Irrespective of our assessed risks of material misstatement, which takes account of our evaluation of the operating effectiveness of controls, we are required to design and perform substantive procedures for each material class of transaction, account balance, and disclosure. Our audit has been planned and will be performed to provide reasonable assurance that the financial statements are free from material misstatement and give a true and fair view. The concept of materiality and how we define a misstatement is explained in the ‘Materiality and misstatements’ section of this report. Where appropriate our Annual Audit Plan reflects discussions with the Local Area Network. The diagram on the next page outlines the procedures we perform at the different stages of our audit. We have also provided, later in this report, a table setting out the procedures we perform for the significant financial statement areas. 11
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Audit scope, approach, and timeline (continued) 12 Planning and risk assessment May to June 2026 • Planning our visit and developing our understanding of the entity • Documenting systems and controls and performing walkthroughs • Risk identification and assessment • Considering proposed accounting policies and accounting treatments • Developing our audit strategy and planning the audit work to be performed • Agreeing timetable and deadlines • Preliminary analytical review • Determination of materiality • Undertake planning work for our wider scope and best value responsibilities Planning and risk assessment (continued) May to June 2026 • Collate evidence to support our wider scope and best value work, including obtaining key documents and confirming our understanding of arrangements in place, including consideration of whether a significant risk exists Fieldwork July to August 2026 • Executing our strategy, starting with significant risks and other higher-risk areas • Receiving and reviewing the draft financial statements • Form a view on the adequacy of the IJB’s arrangements across the four wider scope areas and in relation to securing best value Communication Ongoing • Communicating progress and any issues arising • Clearance meeting(s) Completion September/October 2026 • Final review of financial statements, and disclosure checklist • Final partner review • Agreeing the content of the letter of representation • Preparing our auditor’s report • Reporting to the Audit and Risk Committee including wider scope/best value reporting • Subsequent events procedures • Signing our auditor’s report
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13 Audit scope, approach, and timeline (continued) Audit approach for significant financial statement areas Our audit approach on significant financial statement areas is set out below. Financial statement area Significant risk Key judgement area or enhanced risk Testing of controls Substantive procedures Gross Expenditure No No No Yes Gross Income No No No Yes Taxation and Non-Specific Grant Income No No No Yes Short Term Debtors No No No Yes
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14 Audit scope, approach, and timeline (continued) Follow up on significant deficiencies in internal control Set out below are the significant deficiencies in internal control that we identified during our prior period audit. We request that you and management provide an update on the action taken to address these deficiencies. • As part of the 23/24 external audit, we noted that the IJB depends on financial data from its partner organisations – NHS Highland, and Argyll and Bute Council. We noted that the IJB lacked documented controls to verify the accuracy and completeness of this data, and some working papers supporting the financial statement figures were insufficiently detailed. We recommended that the IJB establish data quality and internal controls to guarantee the accuracy and completeness of financial data received from the NHS and Council, and that the IJB ensure figures included in the financial statements are supported by detailed working papers and evidence, ready in time for the audit. From our 24/25 external audit, we observed improvements in the IJB’s arrangements and acknowledged the complexity arising from obtaining information from both partner organisations. We will continue to monitor this as part of the audit in 25/26 and discuss any potential improvements to processes with management.
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05Materiality and misstatements
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Materiality and misstatements 16 Definitions Materiality is an expression of the relative significance or importance of a particular matter in the context of the financial statements as a whole. Misstatements in the financial statements are considered to be material if they could, individually or in aggregate, reasonably be expected to influence the economic decisions of users based on the financial statements. Materiality We determine materiality for the financial statements as a whole (overall materiality) using a benchmark that, in our professional judgement, is most appropriate to entity. We also determine an amount less than materiality (performance materiality), which is applied when we carry out our audit procedures and is designed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Further, we set a threshold above which all misstatements we identify during our audit (adjusted and unadjusted) will be reported to Audit and Risk Committee. Judgements on materiality are made in light of surrounding circumstances and are affected by the size and nature of a misstatement, or a combination of both. Judgements about materiality are based on a consideration of the common financial information needs of users as a group and not on specific individual users. An assessment of what is material is a matter of professional judgement and is affected by our perception of the financial information needs of the users of the financial statements. In making our assessment we assume that users: • Have a reasonable knowledge of business, economic activities, and accounts; • Have a willingness to study the information in the financial statements with reasonable diligence; • Understand that financial statements are prepared, presented, and audited to levels of materiality; • Recognise the uncertainties inherent in the measurement of amounts based on the use of estimates, judgement, and consideration of future events; and • Will make reasonable economic decisions based on the information in the financial statements. We consider overall materiality and performance materiality while planning and performing our audit based on quantitative and qualitative factors. When planning our audit, we make judgements about the size of misstatements we consider to be material. This provides a basis for our risk assessment procedures, including identifying and assessing the risks of material misstatement, and determining the nature, timing and extent of our responses to those risks. The overall materiality and performance materiality that we determine does not necessarily mean that uncorrected misstatements that are below materiality, individually or in aggregate, will be considered immaterial. We revise materiality as our audit progresses should we become aware of information that would have caused us to determine a different amount had we been aware of that information at the planning stage.
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Materiality and misstatements (continued) 17 Materiality (continued) We consider gross revenue expenditure at the surplus/deficit level to be the most relevant measure for users of the financial statements. As this reflects the overall financial performance of the IJB and its stewardship of resources, we have used this as the benchmark for setting our initial materiality levels. We expect to set a materiality threshold of 2% of gross revenue expenditure at surplus/deficit for the financial statements. As set out in the table, based on currently available information (being the prior period signed financial statements) we anticipate overall materiality for the year ended 31 March 2026 to be in the region of £8.056m (£7.610m in the prior year), and performance materiality to be in the region of £6.042m (£5.707m in the prior year). This represents 75% of headline materiality (75% in 2024/25). The choice of this percentage reflects our assessment that the IJB’s previous accounts have been of a good quality, with few errors, and no significant recurring errors/issues. We will continue to monitor materiality throughout our audit to ensure it is set at an appropriate level. IJB’s single-entity financial statements blank 2025/26 £’000s 2024/25 £’000s Overall materiality £8,056 £7,610 Performance materiality £6,042 £5,707 Clearly trivial £242 £228 Specific materiality: We assess the Remuneration Report as sensitive given users’ interest in this specific area. We are proposing to set materiality in this area at £1,000 within the Remuneration Report. £1 £1
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Materiality and misstatements (continued) Misstatements We will accumulate misstatements identified during our audit that are above our determined clearly trivial threshold. We have set a clearly trivial threshold for individual misstatements we identify (a reporting threshold) for reporting to the Audit and Risk Committee and management that is consistent with a threshold where misstatements below that amount would not need to be accumulated because we expect that the accumulation of such amounts would not have a material effect on the financial statements. Based on our preliminary assessment of overall materiality, our proposed clearly trivial threshold is £242k, based on 3% of overall materiality. If you have any queries about this, please raise these with Mark Outterside. Each misstatement above the reporting threshold that we identify will be classified as: • Adjusted: Those misstatements that we identify and are corrected by management. • Unadjusted: Those misstatements that we identify that are not corrected by management. We will report all misstatements above the reporting threshold to management and request that they are corrected. If they are not corrected, we will report each misstatement to the Audit and Risk Committee as unadjusted misstatements and, if they remain uncorrected, we will communicate the effect that they may have individually, or in aggregate, on our audit opinion. Misstatements also cover qualitative misstatements and include quantitative and omissions relating to the notes of the financial statements. Reporting In summary, we will categorise and report misstatements above the reporting threshold to the Audit and Risk Committee as follows: • Adjusted misstatements; • Unadjusted misstatements; and • Disclosure misstatements (adjusted and unadjusted).
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04Significant risks and other key judgement areas
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Significant risks and other key judgement areas Definitions Following the risk assessment approach set out in the ‘Audit scope, approach, and timeline’ section, we have identified the risks of material misstatement in the financial statements. These risks are categorised as significant, enhanced, or standard. The definitions of these risk ratings are set out below. 20 Risk Level Definition Significant A risk that is assessed as being at or close to the upper end of the spectrum of inherent risk, based on a combination of the likelihood of a misstatement occurring and the magnitude of any potential misstatement. A fraud risk is always assessed as a significant risk (as required by auditing standards), including management override of controls and revenue recognition. Enhanced An area with an elevated risk of material misstatement at the assertion level, other than a significant risk, based on factors/ information inherent to that area. Enhanced risks require additional consideration but do not rise to the level of a significant risk. These include but are not limited to: • Key areas of management judgement and estimation uncertainty, including accounting estimates related to material classes of transaction, account balances, and disclosures but which are not considered to give rise to a significant risk of material misstatement; and • Risks relating to other assertions and arising from significant events or transactions that occurred during the period. Standard A risk related to assertions over classes of transaction, account balances, and disclosures that are relatively routine, non-complex, tend to be subject to systematic processing, and require little or no management judgement/ estimation. Although it is considered that there is a risk of material misstatement, there are no elevated or special factors related to the nature of the financial statement area, the likely magnitude of potential misstatements, or the likelihood of a risk occurring.
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Significant risks and other key judgement areas (continued) 21 Audit risks and planned responses In this section, we have set out the risks that we deem to be significant and enhanced, and our planned response. An audit is a dynamic process, and should we change our view of risk and/ or our approach to address those risks during our audit, we will report this to the Audit and Risk Committee. Significant risks Blank Risk name Fraud Error Judgement Risk description Planned response 1 Management override of controls Yes No Yes Management at various levels within an organisation are in a unique position to perpetrate fraud because of their ability to manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. Due to the unpredictable way in which such override could occur there is a risk of material misstatement due to fraud on all audits. You should assess this risk as part of your oversight of the financial reporting process. In line with our methodology, we plan to address the management override of controls risk by performing audit work over: • Manual adjustments: testing the appropriateness of adjustments made in preparing the financial statements; • Significant transactions: considering and testing any significant transactions outside the normal course of business or otherwise unusual.
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Significant risks and other key judgement areas (continued) 22 Other considerations In consideration of ISA (UK) 260 Communication with Those Charged with Governance, we would like to seek the Audit and Risk Committee’s views/ knowledge of the following matters: • Did you identify any other risks (business, laws & regulation, fraud, going concern etc.) that may result in material misstatements? • Are you aware of any significant communications between the IJB and regulators? • Are there any matters that you consider warrant particular attention during the course of our audit, and any areas where you would like additional procedures to be undertaken?
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06Wider scope and Best Value
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Wider scope and Best Value 24 The framework for wider scope work The Code of Audit Practice sets out the four areas that frame the wider scope of public sector audit. We are required to form a view on the adequacy of the IJB’s arrangements in four areas: 1. Financial management 2. Financial sustainability 3. Vision, leadership, and governance 4. Use of resources to improve outcomes Financial management Financial management means having sound budgetary processes. Audited bodies require the ability to understand the financial environment and whether internal controls are operating effectively. Auditors consider whether the body has effective arrangements to secure sound financial management. Vision, leadership and governance Audited bodies must have a clear vision and strategy, and set priorities for improvement within this vision and strategy. They work together with partners and communities to improve outcomes and foster a culture of innovation. Auditors consider the clarity of plans to implement the vision, strategy and priorities adopted by the leaders of the audited body. They also consider the effectiveness of governance arrangements for delivery. Financial sustainability Financial sustainability means being able to meet the needs of the present without compromising the ability of future generations to meet their own needs. Auditors consider the extent to which audited bodies have shown regard to financial sustainability. They look ahead to the medium term (two to five years) and longer term (over five years) to consider whether the body is planning effectively so that it can continue to deliver services. Use of resources to improve outcomes Audited bodies need to make best use of their resources to meet stated outcomes and improvement objectives, through effective planning and working with strategic partners and communities. Auditors consider the clarity of the arrangements in place to ensure that resources are deployed to improve strategic outcomes, meet the needs of service users taking account of equalities, and deliver continuous improvements in priority services.
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Wider scope and Best Value (continued) 25 Our approach Our planned audit work against the four wider scope areas is risk based and proportionate. We need to gather sufficient evidence to support our commentary on the IJB’s arrangements and to identify and report on any significant risks. We will carry out more detailed work where we identify significant risks. Where significant risks are identified we will report these to the IJB and make recommendations for improvement. In addition to local risks, we consider challenges that are affecting the public sector as a whole. Best Value Under the Code of Audit Practice, the audit of Best Value in councils is fully integrated within our annual audit work. We are required to consider the seven Best Value themes which are: 1. Vision and leadership 2. Governance and accountability 3. Effective use of resources 4. Partnerships and collaborative working 5. Working with communities 6. Sustainability 7. Fairness and equality We are required to consider the IJB’s arrangements in respect of the seven Best Value themes to identify any significant risks. Best Value at the IJB will be assessed over the period of the audit appointment. Where we identify risks or improvement areas we will plan appropriate coverage over the period of the audit appointment on a risk basis. We have not identified any significant risks planned for coverage in 2025/26.
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Wider scope and Best Value (continued) 26 Best Value continued We will also follow up previously reported Best Value findings to assess the pace and depth of improvement. This work will be integrated into our audit approach, including our work on the wider scope areas. We are required to undertake work on performance reporting each year. Specifically in respect of assessing the IJB’s effectiveness of performance reporting we will consider the following matters for compliance with the Direction from the Accounts Commission: • Using resources effectively; • Financial sustainability; and • timeliness. We will also conduct thematic reviews as directed by the Accounts Commission. In 2025/26 this will be on asset management. We will prepare a separate management report to document the findings of this work. At least once every five years, the Controller of Audit will report to the Accounts Commission on the IJB’s performance in meeting its Best Value duties. The IJB is not included in the second year of the programme which runs from October 2025 to August 2026.
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27 Wider scope and Best Value (continued) Wider scope risks The Code of Audit Practice requires us to consider the significant audit risks in areas defined in the Code as the wider scope audit. Although we have not fully completed our planning and risk assessment work, the table below outlines the wider scope audit risks that we have identified to date. We will report any further identified risks to the Audit and Risk Committee on completion of our planning and risk identification work. Blank Significant Risk Description Financial management Financial sustainability Vision, leadership and governance Use of resources to improve outcomes Planned procedures 1 Financial sustainability The IJB is facing a challenging economic outlook, with unfunded cost pressures and unfunded increases and demands. Public finances for IJBs remain under significant pressure, noting that the sector is not operating in a sustainable way going forward. The medium to long-term financial plan projects significant budget gaps in future years. No Yes No No As part of our audit, we will review: • the IJB’s medium to long term financial strategy; • financial position and track record in delivering planned recurrent and non-recurrent savings in 2025/26; • financial performance in 2026/27 and updates to its financial planning during the year; • regular reporting to Members on financial performance, savings plans and financial risks; • how the IJB works with stakeholders to manage its financial position; and • progress in developing plans to address future years budget gaps.
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28 Wider scope and Best Value (continued) Our work to follow-up on previous wider scope recommendations As part of our 2024/25 audit, we identified wider scope risks in the IJB’s arrangements. The table below sets out the risks identified, our previous recommendations and the work we intend to carry out as part of our 2025/26 audit. Previously identified significant risks in arrangements Relevant reporting criteria Our 2024/25 recommendations Planned procedures for 2025/26 Strategic Plan – Level 2 There is a risk that future strategic documents will be inconsistent with other related policy documents, adversely impacting the clarity of the IJBs vision and direction Vision, leadership and governance With the current strategic plan coming to an end in the coming year, we recommend that management and those charged with governance should ensure that a new plan is put in place, with any revisions made continuing the clarity of vision, and ensuring these changes are communicated effectively. We plan to: • review the updated strategic plan and understand how the IJB has aligned it to other strategic plans.
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29 Wider scope and Best Value (continued) Best Value risks The Code of Audit Practice requires us to consider the significant audit risks in areas defined in the Code as the Best Value audit. Although we have not fully completed our planning and risk assessment work, we have not identified any Best Value audit risks to date. If we identify any Best Value audit risks as our work progresses, we will report details of them to the Audit and Risk Committee on completion of our planning and risk identification work. Our work to follow-up on previous best value recommendations As part of our 2024/25 audit, we did not identify any Best Value risks in the IJB’s arrangements.
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07Audit fees and other services
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Audit fees and other services 31 Our fees (exclusive of VAT and disbursements) for the audit of the IJB’s financial statements for the year ended 31 March 2026, are outlined below. At this stage of the audit, we are not planning any divergence from the expected fees set by Audit Scotland, which is available on the Audit Scotland website: Audit Scotland expected fees for 2025/26 audits. Area of work 2025-26 Proposed Fee 2024-25 Actual Fee Auditor remuneration £38,290 £36,890 Pooled costs £1,320 £930 Contribution to PABV costs £7,130 £7,080 Sectoral cap adjustment (£11,260) (£10,900) Total fees £35,480 £34,000
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08Confirmation of our independence
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Confirmation of our independence 33 Requirements We comply with the International Code of Ethics for Professional Accountants, including International Independence Standards issued by the International Ethics Standards Board for Accountants together with the ethical requirements that are relevant to our audit of the financial statements in the UK reflected in the ICAEW Code of Ethics and the FRC Revised Ethical Standard. Compliance We are not aware of any relationship between Forvis Mazars and the IJB that, in our professional judgement, may reasonably be thought to impair our independence. We are independent of the IJB and have fulfilled our independence and ethical responsibilities in accordance with the requirements applicable to our audit. Non-audit and Audit fees We have set out a summary of the non-audit services provided by Forvis Mazars (with related fees) to the IJB, together with our audit fees and independence assessment. We are committed to independence and confirm that we comply with the FRC’s Revised Ethical Standard. In addition, we have set out in this section any matters or relationships we believe may have a bearing on our independence or the objectivity of our audit team. Based on the information provided by you and our own internal procedures to safeguard our independence as auditors, we confirm that in our professional judgement there are no relationships between us and any of our related or subsidiary entities, and you and your related entities, that create any unacceptable threats to our independence within the regulatory or professional requirements governing us as your auditors. We have policies and procedures in place that are designed to ensure that we carry out our work with integrity, objectivity, and independence. These policies include: • All partners and staff are required to complete an annual independence declaration. • All new partners and staff are required to complete an independence confirmation and complete annual ethical training. • Rotation policies covering audit engagement partners and other key members of the audit team. • Use by managers and partners of our client and engagement acceptance system, which requires all non-audit services to be approved in advance by the audit engagement partner. We confirm, as at the date of this report, that the engagement team and others in the firm as appropriate, Forvis Mazars LLP are independent and comply with relevant ethical requirements. However, if at any time you have concerns or questions about our integrity, objectivity or independence, please discuss these with me in the first instance.
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Confirmation of our independence Prior to the provision of any non-audit services, I will undertake appropriate procedures to consider and fully assess the impact that providing the service may have on our independence as auditor. Principal threats to our independence and the associated safeguards we have identified and/ or put in place are set out in Framework Agreement issued by Audit Scotland available from the Audit Scotland website: Audit Scotland Framework Agreement (audit-scotland.gov.uk). Any emerging independence threats and associated identified safeguards will be communicated in our Annual Audit Report. Any emerging independence threats and associated safeguards we identify or put in place will be communicated to you in our Annual Audit Report. 34
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Appendices A: Key communication points B: Current year updates, forthcoming accounting and other issues
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Appendix A: Key communication points We value communication with you, as a two-way feedback process is at the heart of our client service commitment. ISA (UK) 260 Communication with Those Charged with Governance and ISA (UK) 265 Communicating Deficiencies In Internal Control To Those Charged With Governance And Management specifically require us to communicate a number of points with you. Relevant points that need to be communicated with you at each stage of the audit are outlined below. Form, timing and content of our communications We will present the following reports: Our Annual Audit Plan in June 2026; Our Annual Audit Report in October 2026; Our independent auditor’s report in October 2026; and These documents will be discussed with management prior to being presented to yourselves and their comments will be incorporated as appropriate. Key communication points at the planning stage as included in this Annual Audit Plan Our responsibilities in relation to the audit of the financial statements; • The planned scope and timing of the audit; • Significant audit risks and areas of management judgement; • Our commitment to independence; • Responsibilities for preventing and detecting errors; • Materiality and misstatements; and • Fees for audit and other services. Key communication points at the completion stage to be included in our Annual Audit Report Significant deficiencies in internal control; Significant findings from the audit; Significant matters discussed with management; Significant difficulties, if any, encountered during the audit; Qualitative aspects of the entity’s accounting practices, including accounting policies, accounting estimates and financial statement disclosures; Our conclusions on the significant audit risks and areas of management judgement; Summary of misstatements; Management representation letter; Our proposed draft audit report; and Independence. 36
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Appendix A: Key communication points ISA (UK) 260 Communication with Those Charged with Governance, ISA (UK) 265 Communicating Deficiencies In Internal Control To Those Charged With Governance And Management and other ISAs (UK) specifically require us to communicate the following: Required communication Where addressed Our responsibilities in relation to the financial statement audit and those of management and Those Charged with Governance. Annual Audit Plan The planned scope and timing of the audit including any limitations, specifically including with respect to significant risks. Annual Audit Plan With respect to misstatements: • Uncorrected misstatements and their effect on our audit opinion; • The effect of uncorrected misstatements related to prior periods; • A request that any uncorrected misstatement is corrected; and • In writing, corrected misstatements that are significant. Annual Audit Report With respect to fraud communications: • Inquiries with the Audit and Risk Committee to determine whether you have knowledge of any actual, suspected, or alleged fraud affecting the entity; • Any fraud that we have identified or information we have obtained that indicates that fraud may exist; and • A discussion of any other matters related to fraud. Annual Audit Report and discussion at the Audit and Risk Committee Audit planning and clearance meetings Where relevant, any issues identified with respect to authority to obtain external confirmations or inability to obtain relevant and reliable audit evidence from other procedures. Annual Audit Report 37
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Appendix A: Key communication points (continued) Required communication Where addressed Significant matters arising during the audit in connection with the entity’s related parties including, when applicable: • Non-disclosure by management; • Inappropriate authorisation and approval of transactions; • Disagreement over disclosures; • Non-compliance with laws and regulations; and • Difficulty in identifying the party that ultimately controls the entity. Annual Audit Report Significant findings from the audit including: • Our view about the significant qualitative aspects of accounting practices including accounting policies, accounting estimates and financial statement disclosures; • Significant difficulties, if any, encountered during the audit; • Significant matters, if any, arising from the audit that were discussed with management or were the subject of correspondence with management; • Written representations that we are seeking; • Expected modifications to the audit report; and • Other matters, if any, significant to the oversight of the financial reporting process or otherwise identified in the course of the audit that we believe will be relevant to the IJB or the Audit and Risk Committee in the context of fulfilling their responsibilities. Annual Audit Report Significant deficiencies in internal controls identified during the audit. Annual Audit Report 38
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Appendix A: Key communication points (continued) Required communication Where addressed Audit findings regarding non-compliance with laws and regulations where the non-compliance is material and believed to be intentional (subject to compliance with legislation on tipping off) and inquiry of the Audit and Risk Committee into possible instances of non-compliance with laws and regulations that may have a material effect on the financial statements that the Audit and Risk Committee may be aware of. Annual Audit Report and the Audit and Risk Committee meetings With respect to going concern, events or conditions identified that may cast significant doubt on the entity’s ability to continue as a going concern, including: • Whether the events or conditions constitute a material uncertainty; • Whether the use of the going concern assumption is appropriate in the preparation and presentation of the financial statements; and • The adequacy of related disclosures in the financial statements. Annual Audit Report Communication regarding our system of quality management, compliant with ISQM (UK) 1, developed to support the consistent performance of quality audit engagements. To address the requirements of ISQM (UK) 1, our firm’s system of quality management team completes, as part of an ongoing and iterative process, key steps to assess and conclude on our firm’s system of quality management, including: • Ensuring there is an appropriate assignment of responsibilities, • Establishing and reviewing quality objectives each year, ensuring our firm’s quality objectives align with our strategies and priorities, • Identifying, reviewing, and updating quality risks each quarter, taking into consideration multiple input sources (such as FRC/ ICAEW review findings, internal monitoring findings, findings from our firm’s root cause analysis and remediation functions, etc.), • Identifying, designing, and implementing responses to strengthen our firm's internal control environment and overall quality, and • Evaluating our quality responses and remediating control gaps or deficiencies. We perform an evaluation of our system of quality management on an annual basis. We publish the details of our annual evaluation, and our conclusion, in our Transparency Report, which can be accessed on our website at: https://www.forvismazars.com/uk/en/who-we- are/corporate-publications/transparency-reports. Annual Audit Plan 39
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Appendix A: Key communication points (continued) Required communication Where addressed We are required to communicate certain matters to you which include, but are not limited to, significant difficulties, if any, that are encountered during our audit. Such difficulties may include: • Significant delays in management providing information that we require to perform our audit. • An unnecessarily brief time within which to complete our audit. • Extensive and unexpected effort to obtain sufficient, appropriate audit evidence. • Unavailability of expected information. • Restrictions imposed on us by management. • Unwillingness by management to make or extend their assessment of the entity’s ability to continue as a going concern when requested. We will highlight to you on a timely basis should we encounter any such difficulties (if our audit process is unduly impeded, this could require us to issue a modified auditor’s report). Annual Audit Report and audit clearance meetings 40
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41 Appendix B: Current year updates, forthcoming accounting & other issues HM Treasury changes to non-investment asset valuation Code of Practice on Local Authority Accounting in the United Kingdom 2025/26 (the “Code”) Following a thematic review of non-current asset valuations for financial reporting in the public sector, HMT has made a number of changes to its requirements for the valuation frequency, valuation methodology and classification of non-investment property assets. The changes are effective from 1 April 2025 as set out in the 2025-26 Code and include: • A change to the requirements regarding revaluation frequency. Rather than adhering to paragraph 34 of IAS 16 which requires an asset to be revalued whenever its carrying value differs materially from its fair value, entities will be required to revalue assets on a quinquennial basis, i.e. every five years, supplemented by annual indexation in the intervening years. This requirement can be adhered to either as part of a full revaluation or as part of a rolling programme. The Code requires bodies to use the best index available to them. Should management determine that there is no appropriate index to use, then the quinquennial valuation is supplemented by a valuation in the third year. • Revaluations carried out prior to 2025/26, in line with former requirements of the Code, remain valid throughout the transition period (being 1 April 2025 to the date the next revaluation is due for a given asset). During the transition period, the maximum period between revaluations must not exceed five years. • The requirement to consider indicators of impairment under IAS 36 remains, so management will still be required to undertake an annual assessment of whether there are indicators of impairment, and where these are present, it may be necessary to undertake valuations outside of the 5-yearly valuation programme. Whilst management will no longer need to consider annually whether it is necessary to revalue non-investment assets, they will need to be satisfied that they have appointed a suitably qualified valuer to undertake the valuation of assets whenever they fall due either as part of a full valuation or a rolling programme. If local indices are used, management will need to have sufficient evidence to demonstrate these indices are appropriate and relevant to the entity’s circumstances, and to provide this evidence to the auditor. Effective for accounting periods beginning on or after 1 January 2027 IFRS 18 Presentation and Disclosure in Financial Statements The standard was UK-adopted in December 2025, and the date of incorporation into the Code is not confirmed, though expected to be within the 2028/29 financial year. It is not yet confirmed what interpretations and adaptations HMT will determine are necessary for implementation in the public sector. We have provided an outline of the main changes arising from IFRS 18 as unadapted and without interpretation and will provide an update on the expected impact on the IJB as and when detail is available as to when and how the standard is incorporated into the Code. IFRS 18 Presentation and Disclosure in Financial Statements (IFRS 18) is a new standard that replaces IAS 1 Presentation of Financial Statements. The new standard aims to increase the comparability, transparency and usefulness of information about companies’ financial performance. It introduces three key new requirements focusing on the presentation of information in the statement of profit or loss and enhancing certain guidance on disclosures within the financial statements.
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42 Appendix B: Current year updates, forthcoming accounting & other issues Effective for accounting periods beginning on or after 1 January 2027 (continued) IFRS 18 Presentation and Disclosure in Financial Statements • New categories and subtotals for inclusion within the statement of profit or loss • Income and expenses are to be classified into three new defined categories: operating, investing and financing, in addition to the income taxes and discontinued operations categories. • All companies are to present new defined subtotals – operating profit and loss, and profit or loss before financing and income taxes. • New reporting requirements on Management Performance Measures (MPMs) • New requirements are introduced for management-defined performance measures (MPMs), which may also be called Alternative Performance Measures (APMs). These are described as subtotals of income and expenses that an entity: (a) uses in public communications outside financial statements; (b) uses to communicate to users of financial statements management’s view of an aspect of the financial performance; and (c) are not listed within IFRS 18 or specifically required to be presented or disclosed by another IFRS Accounting Standard. • All MPMs are required to be disclosed in a single note in the financial statements setting out: • an explanation of why the MPM is reported, and • a reconciliation to a directly comparable GAAP measure within IFRS 18 or another IFRS Accounting Standard. • Enhanced requirements for aggregation & disaggregating information • Enhanced requirements are set out for the aggregation and disaggregation of items based on similar and dissimilar characteristics. Items that have dissimilar characteristics must be disaggregated when the resulting information is material. Guidance is also included on how to describe items within the financial statements, requiring an entity to label items presented or disclosed as ‘other’ only if a more informative label cannot be found. • New guidance is provided on whether information should be reported in the primary financial statements or the notes. This includes guidance on presentation and disclosure of expenses classified in the operating category, alongside introducing more prescribed requirements for an entity that classifies expenses by function as well as the requirement to disclose expenses by nature in a single note for certain amounts - depreciation, amortisation, employee benefits, impairment and write-downs of inventories Many principles and requirements have been brought forward from IAS 1 to IFRS 18 such as frequency of reporting, comparative information, offsetting, capital disclosures and the requirements for the statement of financial position and for the statement of changes in equity.
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Contact Forvis Mazars Forvis Mazars LLP is the UK firm of Forvis Mazars Global, a leading global professional services network. Forvis Mazars LLP is a limited liability partnership registered in England and Wales with registered number OC308299 and with its registered office at 30 Old Bailey, London, EC4M 7AU. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001139861. VAT number: GB 839 8356 73 © Forvis Mazars 2026. All rights reserved. Mark Outterside Director mark.outterside@mazars.co.uk