Agenda reports pack
Argyll and Bute Council · 4 September 2025
Back to Audit and Scrutiny Committee — 4 September 2025 and its agenda
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Argyll and Bute Council Comhairle Earra-Ghàidheal Agus Bhòid Customer Services Executive Director: Douglas Hendry Kilmory, Lochgilphead, PA31 8RT Tel: 01546 605522 DX 599700 LOCHGILPHEAD 28 August 2025 NOTICE OF MEETING A meeting of the AUDIT AND SCRUTINY COMMITTEE will be held ON A HYBRID BASIS IN THE COUNCIL CHAMBERS, KILMORY, LOCHGILPHEAD AND BY MICROSOFT TEAMS on THURSDAY, 4 SEPTEMBER 2025 at 2:00 PM, which you are requested to attend. Douglas Hendry Executive Director BUSINESS 1. APOLOGIES 2. DECLARATIONS OF INTEREST 3. MINUTE OF PREVIOUS MEETING OF THE AUDIT AND SCRUTINY COMMITTEE, HELD ON 12 JUNE 2025 (Pages 3 - 8) AUDIT ITEMS 4. INTERNAL AUDIT AND COUNTER FRAUD SUMMARY OF ACTIVITIES (Pages 9 - 18) Report by Chief Internal Auditor 5. INTERNAL AND EXTERNAL AUDIT REPORT FOLLOW UP 2025-26 (Pages 19 - 32) Report by Chief Internal Auditor 6. INTERNAL AUDIT REPORTS TO AUDIT AND SCRUTINY COMMITTEE 2025/2026 (Pages 33 - 58) Report by Chief Internal Auditor • Education Maintenance Allowance • Music Services 7. EXTERNAL AUDIT PROGRESS REPORT Verbal Update by Forvis Mazars SCRUTINY ITEMS Public Document Pack
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8. INTERNAL AUDIT - ANNUAL SELF-ASSESSMENT (Pages 59 - 62) Report by Chief Internal Auditor 9. CORPORATE COMPLAINTS HANDLING - ANNUAL REPORT 2024/25 (Pages 63 - 102) Report by Executive Director with responsibility for Legal and Regulatory Support 10. INFORMATION REQUESTS - ANNUAL REPORT 2024/25 (Pages 103 - 108) Report by Executive Director with responsibility for Legal and Regulatory Support 11. AUDIT AND SCRUTINY COMMITTEE ANNUAL REPORT 2024/25 (Pages 109 - 118) Report by Chair 12. STRATEGIC RISK ASSURANCE MAPPING (Pages 119 - 136) Report by Chief Internal Auditor 13. STRATEGIC RISK REGISTER (Pages 137 - 144) Report by Chief Executive 14. TREASURY MANAGEMENT UPDATE - QUARTER ENDED 30 JUNE 2025 (Pages 145 - 162) Report by Interim Head of Financial Services REPORT FOR NOTING 15. WORKPLAN (Pages 163 - 164) For noting and updating Audit and Scrutiny Committee Janice Wason Hall (Chair) Councillor Daniel Hampsey Councillor Graham Hardie Councillor Fiona Howard Councillor Reeni Kennedy-Boyle Councillor Gary Mulvaney (Vice-Chair) Councillor Andrew Vennard Contact: Lynsey Innis, Committee and Democratic Services Officer Tel: 01546 604338
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MINUTES of MEETING of AUDIT AND SCRUTINY COMMITTEE held BY MICROSOFT TEAMS on THURSDAY, 12 JUNE 2025 Present: Janice Wason Hall (Chair) Councillor Daniel Hampsey Councillor Graham Hardie Councillor Fiona Howard Councillor Reeni Kennedy-Boyle Councillor Andrew Vennard Attending: Paul MacAskill, Chief Internal Auditor Carolyn Earl, Interim Head of Financial Services Shona Barton, Governance Manager Mhairi Weldon, Senior Audit Assistant Jane Fowler, Head of Customer and Support Services Iain Jackson, Governance Risk and Safety Manager Mark Outterside, Director, Forvis Mazars Peter Hawkins, Manager, Forvis Mazars James Gow, Head of Finance and Transformation, HSCP Martin Caldwell, Chair of Complaints Scrutiny Panel 1. APOLOGIES FOR ABSENCE Apologies for absence were intimated on behalf of Councillor Gary Mulvaney. 2. DECLARATIONS OF INTEREST Janice Wason Hall, Chair of the Audit and Scrutiny Committee declared a financial interest in relation to item 7(a) (Internal Audit Report – Short - Term Lets) due to her being a Short Term Let business owner. She advised that she would leave the meeting and take no part in the consideration of this item. 3. MINUTES The Minute of the previous meeting, held on 13 March 2025, were approved as a correct record. 4. ANNUAL AUDIT PLAN FOR YEAR ENDING 31 MARCH 2025 The Committee gave consideration to a report which presented the Audit Strategy Memorandum for Argyll and Bute Council for the year ending 31 March 2025. The report provided a summary of the audit approach taken by external auditors, Forvis Mazars LLP and highlighted significant audit risks and areas of key judgements. Decision The Audit and Scrutiny Committee considered and noted the contents of the report. (Reference: Report by Mazars LLP dated June 2025, submitted) 5. INTERNAL AUDIT AND COUNTER FRAUD SUMMARY OF ACTIVITIES The Committee gave consideration to a report providing a summary of Internal Audit activity and progress during quarter four of 2024 against the following areas:- Page 3 Agenda Item 3
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Audits in Planning/in Progress • 2024/25 Audit Plan progress • 2024/25 Individual Audits undertaken • 2025/26 Audit Plan progress • Scrutiny • Counter Fraud • Continuous Monitoring Programme Testing • Performance Indicators Decision The Audit and Scrutiny Committee reviewed and endorsed the Summary of Activities report. (Reference: Report by Chief Internal Auditor, dated 12 June 2025, submitted) 6. INTERNAL AND EXTERNAL AUDIT REPORT FOLLOW UP REPORT 2024- 2025 Consideration was given to a report which provided an update on all open actions as at 31 March 2025. The report included information on actions where the agreed implementation date had been rescheduled. Decision The Audit and Scrutiny Committee endorsed the contents of the report. (Reference: Report by Chief Internal Auditor dated 12 June 2025, submitted) Janice Wason Hall, having declared an interest in the Short-Term Lets report in the following item of business, left the meeting and took no part in the consideration of that report. The Committee agreed unanimously that Councillor Reeni Kennedy-Boyle take the position of Chair for the consideration of the Short-Term Lets report only. On conclusion of the Short-Term Let report Janice Wason Hall returned to the meeting and took the Chair. 7. INTERNAL AUDIT REPORTS TO AUDIT AND SCRUTINY COMMITTEE 2025-26 Consideration was given to a report containing the action plans in relation to the following seven audits:- Short-Term Lets Asbestos Management Bridges Asset Management Trading Standards External Placements IFRS 16 – Leasing Disclosure Checks – PVG – LiveArgyll Page 4
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Decision The Audit and Scrutiny Committee reviewed and endorsed the summary report and detail within each individual report. (Reference: Report by Chief Internal Auditor dated 12 June 2025, submitted) 8. INTERNAL AUDIT ANNUAL REPORT 2024-2025 The Committee gave consideration to a report which outlined the work undertaken by Internal Audit in respect of the Annual Audit Plan 2024/25 and advised of the contents of the Chief Internal Auditor’s (CIA) independent annual opinion on the effectiveness of the Council’s risk management, internal control and governance processes. The Chair, on behalf of the Committee, took the opportunity to recognise the volume of work undertaken by the Internal Audit team and thanked them for their continued hard work and support. Decision The Audit and Scrutiny Committee endorsed the content of the report and the associated annual opinion of the Chief Internal Auditor. (Reference: Report by Chief Internal Auditor, dated 12 June 2025, submitted) 9. SCRUTINY REPORT ON THE MONITORING AND MANAGING OF COMPLAINTS The Committee gave consideration to a report which advised that the complaints scrutiny review had been carried out as per the 2024/25 scrutiny plan agreed by Committee in March 2024. The complaints process was chosen for inclusion in the scrutiny priorities for 2024/25 due to the importance of having a complaints process which met expected best practice. The Chair on behalf of the Committee thanked Martin Caldwell for all his hard work and involvement with the Audit and Scrutiny Committee over the years. Decision The Audit and Scrutiny Committee agreed:- 1. the Draft Complaints Scrutiny Report; and 2. to refer the report to the Council’s Executive Leadership Team to take forward the recommendations in the report. (Reference: Report by Chief Internal Auditor, dated 12 June 2025, submitted) The Chair announced, and the Committee agreed, to adjourn the meeting for a 10 minute comfort break and re-convened at 12.30pm with all Members present with the exception of Councillor Daniel Hampsey. Page 5
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10. VERBAL UPDATE BY CHAIR OF SCRUTINY PANEL The Chair advised that the new Panel had been established and the current review will be commenced shortly. A more detailed update will be provided at the next meeting of the Committee. 11. LOCAL GOVERNMENT IN SCOTLAND - FINANCIAL BULLETIN 2023-24 Consideration was given to a report which highlighted the key messages and recommendations contained within the Accounts Commission report. Information on Argyll and Bute Council’s position in respect of key facts and analysis across Scotland, and an assessment of the authority’s current position in respect of compliance with the report’s recommendations was also provided. Decision The Audit and Scrutiny Committee noted the contents of the report. (Reference: Report by Section 95 Officer dated 11 March 2025, submitted) 12. TREASURY MANAGEMENT ANNUAL REPORT 2024-25 Consideration was given to a report which advised that Local Government (Scotland) Act 2003, and supporting regulations, requires local authorities to have regard to the CIPFA Code of Practice on Treasury Management (revised 2021) and that the code requires full Council to receive an annual Treasury Management Strategy Statement, including the Annual Investment Strategy for the year ahead. Decision The Audit and Scrutiny Committee:- 1. Considered the Treasury Management Annual Report 2024/25 and noted the technical breach to the bank deposit limit outlined at paragraph 5.2.5 of the submitted report. 2. noted a required amendment to the actual Capital Financing Requirement (CFR), given within the report at paragraph 5.3.15, in respect of the actual 2024/25 Service Concession Annual Gain. This increases both the actual CFR movement during the year and the balance as at 31 March 2025 by £5m. The revised CFR as at 31 March 2025 is noted as £349m; and 3. was content to note the detail and to refer the report, which will be updated on this basis, to Council for noting. (Reference: Report by Section 95 Officer dated 4 June 2025, submitted) 13. LOCAL GOVERNMENT BENCHMARKING FRAMEWORK (LGBF): 2023/24 Consideration was given to a report which provided a high level summary of Argyll and Bute Council’s performance as reported in the Local Government Benchmarking Framework (LGBF) data. Decision Page 6
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The Audit and Scrutiny Committee considered the contents of the report and noted the trend of net improvement across the Council’s functions. (Reference: Report by Executive Director with responsibility for Customer Support Services, dated 16 May 2025, submitted) 14. STATEMENT OF GOVERNANCE AND INTERNAL CONTROL Consideration was given to a report which advised that the statement of governance and internal control for 2023/24 had been reviewed and updated which allowed the Council to include a statement of governance and internal control in the Annual Accounts for 2024/25. Decision The Audit and Scrutiny Committee:- 1. Noted the updates in the Action Plan for 2024/25. 2. Considered and approved the content of the areas for further development for 2025/26; and 3. Considered and approved the draft statement of governance and internal control for 2024/25. (Reference: Report by Section 95 Officer and Executive Director with responsibility for Legal and Regulatory Support dated June 2025, submitted) 15. DRAFT AUDIT AND SCRUTINY COMMITTEE WORKPLAN In order to facilitate forward planning of reports to the Audit and Scrutiny Committee, Members considered the outline Audit and Scrutiny workplan. Decision The Audit and Scrutiny Committee agreed to note the outline workplan. (Reference: Audit and Scrutiny Workplan, dated 12 June 2025, submitted) Page 7
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ARGYLL AND BUTE COUNCIL AUDIT & SCRUTINY COMMITTEE FINANCIAL SERVICES 04 SEPTEMBER 2025 INTERNAL AUDIT AND COUNTER FRAUD SUMMARY OF ACTIVITIES 1. SUMMARY 1.1 The objective of the report is to provide the Audit and Scrutiny Committee (the Committee) with a summary of Internal Audit activity and progress during quarter one of 2025/26. 1.2 Core activities together with a progress update statement are shown below: • 2024/25 Audit Plan progress: The plan is complete and all items reported to the Committee. • 2025/26 Individual Audits undertaken: Two audits have been completed during the period, one has been assessed as providing high assurance and one substantial assurance. In addition, two pieces of audit verification work were undertaken relating to the SPT claim and Local Government Benchmarking Framework (LGBF). (Where HSCP and LiveArgyll Audits are included, these are provided for information only). • 2025/26 Audit Plan progress: The plan is currently on track. In the event that this position was to change, we will flag it to the Committee as part of the quarterly updates. • Scrutiny: Planned work for 2025/26 has been agreed by the Committee along with those who will serve on the Panel, and work on this will commence later in the calendar year. • Counter Fraud: The Counter Fraud Team (CFT) is continuing to rebill council tax accounts and recovery of funds is underway. All other aspects and referrals are being considered, investigated and evaluated and the Counter Fraud Team remain vigilant to protect our public purse. The established CFT team member is on secondment to Housing for career and personal development for a two year period. The CFT have obtained a member of staff, again on secondment for the same time period who has recently completed the CIPFA Fraud Specialist Course. The team lead is currently progressing toward the completion of year 3 of a Master in Accountancy course. • Continuous Monitoring Programme Testing: A number of auditable units are subject to continuous testing. There have been two new issues which we have identified this quarter. • Performance indicators: Current status is green / on track. Page 9 Agenda Item 4
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2. RECOMMENDATIONS 2.1 To review and endorse the Summary of Activities report. 3. DETAIL 3.1 Two audits have been completed since the previous Committee in June 2025. Audits Completed • Education Maintenance Allowance (EMA) • Music Services Verification Audit Work Completed • SPT Annual Claim – See section 3.6 for further details • Local Government Benchmarking Framework – See section 3.7 for further details Audits in Planning / in Progress reported to a future meeting of the Committee. • Self-Directed Support (Draft Report – awaiting management response) • Payroll – iTrent • ICT Disaster Recovery • School Residential Trips • Capital Programme – Management and Monitoring • Building Cleaning • Oban Airport • HSCP Audits 3.2 In addition to those already in progress, indicative audits planned for Q3 2025/26 are: • Street Lighting • Performance Management Arrangements and Reporting 2025/26 Audit Plan 3.3 Work is ongoing and is currently on track at this point in time. Scrutiny 3.4 It was agreed by the Committee that the chosen subject area for the 2025/26 scrutiny review would be on the Council’s preparedness for the Bio-Municipal Waste (BMW) Landfill Ban. A background and scoping document will be prepared and issued to the Panel members for agreement in due course. We anticipate that this will commence towards the end of the calendar year. Page 10
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Counter Fraud 3.5 The CFT is progressing well with both team members fully CIPFA accredited fraud investigators. The current investigator has taken on a 2 year secondment to empty homes for further skills development and this is due to come to an end in September 2025 with discussions ongoing regarding transitional arrangements. The backfill of the investigator post was again on a secondment basis which is also coming to an end. The seconded member of staff has completed and passed the CIPFA Fraud Specialist course. Efforts are underway to maintain service delivery for the terminations of both secondments. Routine work continues and is progressing to track the full income due and to be recovered as part of this ongoing work. Based on the amount of additional billing, even accounting for a degree of non-recovery, the indications are that the team are anticipating exceeding their annual target. In addition, the team 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. Visits continue to play a vital role in the CFTs proactive and reactive work. Recent visits have taken place in Islay, Dunoon, Tarbet and surrounding villages. Investigations and visits will take place in the outer islands toward the autumn. Both officers continue to be proactive and make visits when information is received via the online portal and other islands will soon be visited. The CFT continue to link in with Internal Audit and Debt Recovery, and where necessary to assist, trace persons and open communication to long term debts for recovery. Several cases have resulted in large scale rebilling. Second homes and Non-Domestic Rates are playing larger roles in the CFT’s investigations with several claims already adjusted. These will remain proactive areas. The CFT now have an established referral system in place from council tax teams and have already liaised with this team going forward into 2025 for the review of the second and holiday home tax changes. The aim is to assist with the single person discount review within 2025. The CFT continue to work closely with the empty homes team to support each other in our remits. Work and communication between each department is key in identifying and finding appropriate solutions to enable empty homes to return to residency or open market. The NFI exercise continues to be a routine work area for the CFT. The 2024/2025 exercise has extra data to be uploaded this September and work on this element will commence when this has been matched and released. The initial part of the matching exercise is coming to a close. Any remedial or conclusive work will be completed when and where appropriate. The system is reviewed periodically for any updates Since the inception of the CFT a total of £1,514,262 has been rebilled and £950,168 has been recovered. A recovery percentage of 62% has been achieved Page 11
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at the last review of the figures. Recent large rebilling has been passed to other agencies, and this takes time to process and progress payment plans. Additional Updates from Quarter Two 3.6 The Strathclyde Concessionary Travel Scheme (SCTS) is founded on the provision of the Transport Act 1985, which allows authorities to make concessionary travel schemes in certain circumstances. The SCTS is administered by Strathclyde Partnership for Transport (SPT) on behalf of the SCTS Joint Committee consisting of 12 local authorities to issue travel cards which entitles the holder to discounted travel by reason of age or disability, and provide reimbursement of fare reductions on rail, subway and ferry services. Argyll and Bute Council operates two ferry routes that qualify for concessionary fares within the SCTS. Internal Audit are required to provide a certificate of accuracy on an annual basis to confirm that the details pertaining to the number of concessionary passengers carried and the equivalent standard fares are consistent with the quarterly claims for reimbursement of the difference between the concessionary fare charged and the standard fare. The data and supporting information for quarter 4 2024/25 claim was provided to Internal Audit for review and found to provide an accurate representation of the number of passengers and value of fares charged, and the reimbursement value was found to have been calculated in accordance with the SCTS requirements. The certificate of accuracy was therefore issued on 11 June 2025. 3.7 A sample of data in respect of the Statutory Performance Indicators (SPI’s) that are required to be returned by councils as part of the Local Government Benchmarking Framework (LGBF) must be reviewed by Internal Audit for submission to the Improvement Service by 31 August each year. Internal audit carry out this work in collaboration with colleagues in performance management. Internal Audit was provided with data from which to select indicators for review on 25 June and as large variances were reported in ‘Other Local Government Employees – Sickness Absence – including Covid, ‘Sport and Leisure Management’, and ‘Museum Services’ these indicators were selected for review. ‘Teachers – Sickness Absence – including Covid’ was also reviewed alongside Teachers data due to large numbers involved. ‘Council Tax Collection’ was selected as this has risen in both the past two years and ‘Council Tax Income’, as this has slightly dipped this year and both indicators use similar data sources. Some minor errors were identified in the Sport and Leisure Management, and Museum Services, these were immaterial and did not require to be amended prior to submission to the Improvement Service. The supporting data were found to contain a known issue and an incorrect calculation. The relevant officers are progressing with plans to ensure this is not repeated in future. Therefore, Internal Audit are offering a substantial level of assurance for all 6 of the indicators reviewed. 3.8 The Council has entered a ten-year programme to deliver the Rural Growth Deal (RGD) for Argyll and Bute. The Council, as the accountable body for this programme is required to allocate and account for distribution of the funding to partners, third parties and other bodies in accordance with the approved governance arrangements. The Council’s Chief Internal Auditor has been appointed to coordinate audit activity throughout the programme, this will include liaison with partner auditors to obtain annual confirmation of regular and planned reviews of grant funded activities and a specific review of RGD within the Council’s Annual Audit Plan at least every two years. Discussions regarding the audit input required have taken place and the first review will be included within Page 12
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the 2025/26 Internal Audit Plan. We will closely monitor the additional work associated with this appointment going forward and determine whether additional resources may be required. 3.9 Our work as the contracted Internal Auditors for the HSCP has been progressing well and priority has been given in this area due to the availability of staff, work has completed for 2024/25 and commenced for 2025/26. We will continue to monitor and report progress to the HSCP’s Audit and Risk Committee in relation to the implementation of recommendations made in previous reports. 3.10 Internal Audit staff continue to increase their skills and ultimately aim to complete appropriate professional qualifications at the end of their training programmes. Internal Audit have two staff members who are undertaking formal professional training; training is at differing stages but is progressing as expected at this time. The aim is to develop and retain professional staff on the completion of the qualifications and increase resilience within the service. Continuous Monitoring 3.11 Our continuous monitoring programme is generally focused on transactional type activity. Standard audit tests are applied which are relevant to each auditable unit. Control design tests look at whether the controls in place adequately address the potential risk event. There has been two new findings within the quarter that require to be reported. Table 2: Continuous Monitoring Findings Auditable Area Areas Tested Issues Identified Management comment / action Budgeting Engagement logs for cost centres Engagement records not maintained Staff will ensure that an appropriate record is maintained going forward. This is a minor issue but will be rectified. Payroll Overtime High levels of overtime Management have advised that an error had been made in the overtime payment and details have now been passed to Payroll who will make arrangements to recover the overpayment element in full. 3.12 A follow up process is in place whereby management are advised of continuous monitoring findings and, where appropriate, requested to take remedial action. There are currently no outstanding follow-up points arising from previous testing. Due to the volume of continuous monitoring tests carried out the decision was made to report by exception only. National Reports 3.13 A follow up process for national reports is in place whereby management are advised of national reports published and asked to confirm what, if any, action is Page 13
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planned as a result of the report. Table 2 details the national reports issued during quarter four of 2024/25 due to be reported in quarter one of 2025/26. Table 3: National Reports National Report Issued To Detail Management response/ Action taken Sustainable Transport: Reducing car use Executive Director Kirsty Flanagan A lack of leadership has meant the Scottish Government has made minimal progress towards its challenging climate change goal of reducing car use. All councils in Scotland have seen an increase in car kilometres driven. The Council works closely with Hi Trans and a new Regional Transport Strategy has been approved that promotes the use of public transport and active travel. The council is about to consult on a new active travel strategy to inform how new active travel routes will be delivered in future years. At the moment the majority of funding to deliver active travel improvements comes through competitive bids and we have been successful in relation to projects in Kintyre, Roseneath and Islay. Further bids have been made. The council has also approved a further consultation on transport issues that will inform a new local transport strategy. The issue of reducing car usage will be examined through this however given we are a predominately rural authority with limited public transport options reducing car usage will be a challenging task going forward. National Fraud Initiative (NFI) 3.14 NFI data matching involves comparing computer records held by one body against other computer records held by the same or another body to identify potentially fraudulent claims and payments to be identified. Note though that the inclusion of personal data within a data matching exercise does not mean that any specific individual is under suspicion. Where a match is found it indicates that there may be an inconsistency which requires further investigation. No assumption can be made as to whether there is fraud, error or other explanation until an investigation is carried out. A reminder process is in place to ensure that matches are reviewed on a timely basis. 3.15 The previous NFI exercise has been completed and results are being compiled by Audit Scotland. Any follow up matches will be addressed if necessary. This exercise was conducted throughout the year by officers and matches checked and closed accordingly. NFI provided additional data releases over the course of the exercise and matches are addressed when these become available. Page 14
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Existing users have been reviewed and new users added where requested, all users have been and will continue to be informed that matches are available for review and progress will be monitored monthly by the Counter Fraud team and reported quarterly to the Audit and Scrutiny Committee. New HMRC data has been uploaded and released back to us, and teams have been contacted to start matching this data. 3.16 The new NFI exercise for 2024/25 has commenced with the data uploads so far submitted to the Cabinet office for review and therefore data matching when released. The new NFI matches will appear in the table below as and when they have been released and checked. Table 4: National Fraud Initiative Progress at 03/08/2025 Operational Area Total Matches Recommended/Very High / High/ Medium Risk Matches Matches Complete * WIP Match Description CT to Elect Register 2422 0 2422 0 CT records to Electoral Register/ other data sets to ensure discount awarded to only those living alone aged over 18, taking into account disregarded occupants. (CT to other Datasets will not be progressed further due to poor quality data) CT rising 18s 85 0 3 0 CT to HMRC Household Composition 1106 0 0 0 Housing Benefits 13 9 9 0 HB records to records in other authorities / other datasets including student loans, payroll and pensions to identify undeclared income and capital. Payroll 300 107 51 0 Payroll records to other datasets including other payrolls and pensions to ensure employee is not receiving additional income. Blue Badges 200 200 183 0 Blue badge records to DWP data to identify deceased claimant with valid badge. Housing Waiting list 262 259 199 0 Housing waiting list records to other organisations HBCTR and tenant data to identify undisclosed changes in circs or false info. Council Tax Reduction 638 174 87 2 CTR records with records in other authorities / other datasets including; student loans, payroll and pensions to identify undeclared income and capital Creditors 2340 0 1126 0 Analyses Creditors data to identify possible duplicate vendors and payments, VAT errors or fraud and Page 15
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multiple vendors sharing a bank account. Procurement 67 0 14 0 Payroll records to Companies House and creditors’ data to identify employees who appear to have a personal interest in a company that the authority has traded with. Business Rates 154 0 154 0 Business rates records within and between authorities to identify those fraudulently claiming small business bonus scheme and grants * Work in Progress Overall Summary of Matches Matches Complete Work In Progress Cleared Frauds Errors Total Value £ Recovering Recovering Value £ 4248 2 4173 0 75 58,756 0 0 Internal Audit Development 3.17 The table below details progress against the action points in our Internal Audit development plan. Table 5: Internal Audit Development Key Actions: updated 31/3/25. Area For Improvement Agreed Action Progress Update Timescale Review Continuous Monitoring Programme The Continuous Monitoring Programme will be reviewed to assess value of existing tests carried out and establish where these can be enhanced with greater use of data analytics . In progress December 2025 3.18 Internal Audit scorecard data provided below are aligned to those for internal audit in the Financial Services service plan. All indicators are shown as currently being on track. Page 16
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Table 6: Internal Audit Team Scorecard Internal Audit Team Scorecard 2025– 26 – FQ1 25/26 (as at June 2025) BO115 We Are Efficient and Cost Effective Internal Audit Level of Satisfaction Actual 100% G Target 80% Review of Strategic Risk register Status Complete G Target Complete Percentage of audit plan completed Status 100% G Target 80% Percentage of audit recommendations accepted by management Actual 100% G Target 100% 4 CONCLUSION 4.1 The 2025/26 audit plan is progressing as anticipated at this stage in the year, together with the Counter Fraud Team continuing with visits and pro-active work throughout Argyll and Bute. 5 IMPLICATIONS 5.1 Policy – Internal Audit continues to adopt a risk based approach to activity 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 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 4 September 2025 Page 17
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 4 September 2025 INTERNAL AND EXTERNAL AUDIT REPORT FOLLOW UP 2025-26 1.0 INTRODUCTION 1.1 Internal and external audit reports include an action plan with a management response establishing the agreed action, timescale and responsible officer. Internal Audit record these in a database and, on a quarterly basis, follow them up to ensure they are being progressed. 1.2 This report updates the committee on all open actions as at 30 June 2025 including information on actions where the agreed implementation date has been rescheduled. 2.0 RECOMMENDATIONS 2.1 To endorse the contents of the report. 3.0 DETAIL 3.1 The two tables below provide a numerical summary of open audit actions with a split between actions due by and due after 30 June 2025. 3.2 Appendix 1 provides further detail on actions that have been delayed and rescheduled or superseded. Page 19 Agenda Item 5
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Table 1 – Actions due by 30 June 2025 SMT/Service Complete Delayed/ Rescheduled Total Internal Audit DH – Education Performance & Improvement 0 2 2 DH – Legal & Regulatory Support 0 1 1 KF – Development & Economic Growth 0 3 3 KF – Roads & Infrastructure Services 0 10 10 KF – Financial Services 2 0 2 H&SCP (SW) – Adult Services (Mental Health Learning Disability, Addictions & Lifelong Conditions) 3 1 4 H&SCP (SW) – Children and Families and Criminal Justice 2 0 2 LiveArgyll 1 0 1 External Audit Nil TOTAL 8 17 25 Table 2 – Actions due after 30 June 2025 SMT/Service Complete Superseded On Course Total Internal Audit DH – Commercial Services 0 0 2 2 DH – Education Performance & Improvement 0 0 5 5 DH – Legal & Regulatory Support 0 0 7 7 KF – Development & Economic Growth 0 0 1 1 KF – Roads & Infrastructure Services 1 0 3 4 KF – Financial Services 1 1 1 3 H&SCP (IJB) – Adult Services (Older Adults & Community Hospitals 0 0 1 1 H&SCP (IJB) – Strategic Planning & Performance 0 0 8 8 H&SCP (SW) – Adult Services (Mental Health Learning Disability, Addictions & Lifelong Conditions) 0 0 1 1 H&SCP (SW) – Adult Services (Older Adults & Community Hospitals 1 0 1 2 H&SCP (SW) – Children and Families and Criminal Justice 1 0 7 8 H&SCP (SW) – Finance/Transformation 0 0 3 3 H&SCP (SW) – Strategic Planning & Performance 0 0 2 2 LiveArgyll 0 0 1 1 External Audit Nil TOTAL 4 1 43 48 Page 20
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4.0 CONCLUSION 4.1 Satisfactory progress continues to be made implementing audit actions. 5.0 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 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 Paul MacAskill Chief Internal Auditor 4 September 2025 For further information contact: Paul MacAskill, 01546 604108 Paul.macaskill@argyll-bute.gov.uk APPENDICES Appendix 1 – Action Plan Points Delayed & Rescheduled or superseded Page 21
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Appendix 1 - Action Plan Points - Delayed and Rescheduled or Superseded Action Plan Points due by 30th June 2025 Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer Medium EDUCATION PERFORMANCE & IMPROVEMENT SCHOOL FUNDS & MANAGEMENT OF FUNDS 4. Practical Training With the exception of the LEON module, no formal training programme or support is in place for those involved in the management and administration of school funds. This is in part reflected in the inconsistent practices across schools visited. Practical training should be developed and provided for head teachers, committee members and clerical staff involved in the management and administration of school funds. Training on school fund procedures will be carried out. Who will carry out the training will be clarified as part of the management circular review. 30/06/2025 31 Dec 2025 The training will be developed over the summer for implementation with the new School Fund Committees from August. Delayed and Rescheduled School Services Support Manager High EDUCATION PERFORMANCE & IMPROVEMENT SCHOOL FUNDS & MANAGEMENT OF FUNDS 5. Grants The Circular states that schools must ensure that the Education Authority has knowledge of any grant application for monies made to third parties that involve the school fund. There is no established process for this. · The Circular should be updated to state that AFAs must be consulted prior to grant applications being submitted to ensure that the applicant is the correct beneficiary and that income and expenditure is accurately recorded. Circular will be updated to reflect an instruction that AFAs must be consulted prior to grant applications being submitted. A central grant register for grants over £1,500, covering all schools, will be created and maintained. Any grants over £1,500 will have to be reported to Finance and this will be reflected in the updated circular. 30/04/2025 31 Dec 2025 Whilst a template is in place for a grant register, not all grants are captured at this stage. Work is ongoing to ensure all grants are registered centrally. Delayed and Rescheduled School Services Support Manager Page 22
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Medium DEVELOPMENT & ECONOMIC GROWTH PLANNING 1. Staff Training Once the incorporation of the IDOX project is completed a training schedule will be introduced covering both the new system and other relevant areas such as the National planning for framework 4. 31/03/2024 31/12/2024 31/03/2025 30/06/2025 30 Sep 2025 Planning staff have access to a range of training opportunities throughout the year. We are operating a flexible and dynamic range of training options which can be accessed Process and Productivity Improvement Officer Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer · A central grant register for grants over £1,500, covering all schools, should be created and maintained. Low LEGAL & REGULATORY SUPPORT Freedom of Information 3. Publication Scheme The Council’s Publication scheme not updated since May 2021, and the Council’s website was updated in 2023. A review of the Council’s Publication scheme should be undertaken, including checking that any links to information are still working. Review and Update Publication Scheme, publish on Website and provide link to Audit. 31/03/2025 30/06/2025 30 Sep 2025 Report still to be considered by ELT. Subject to approval, an anticipated report will be published by end of July. Delayed and Rescheduled Compliance & Regulatory Officer Low DEVELOPMENT & ECONOMIC GROWTH Private Sector Housing Grants & Adaptions 3. Procedure Notes and Shared Documents While the vast majority of requirements are included there would be benefit to updating these to reflect current working practices, which have evolved due to hybrid working arrangements and the digitalisation of records. Consideration should be given to creating a checklist to ensure consistent application of processes. Procedures and documents will be reviewed and updated. Checklists to be drawn up and introduced when updating the procedures. 31/12/2022 30/06/2023 31/03/2024 30/09/2024 30/12/2024 30/06/2025 31 Oct 2025 Following approval of the Revised Scheme of Assistance, the documents and procedures currently in the process of being updated. This is happening slowly due to staff sickness. Delayed and Rescheduled Team Lead - Housing Operations Page 23
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Planning do not currently have in place a training schedule for 2023/24 for planning officers. by staff, as and when is best suited to their individual learning needs, the needs of the department, and individual specific training needs that arise as a requirement of new work items. Annual training events are held that all planners are requested to attend. For example, an internal Planning conference was held focussing on a number of topics such as Biodiversity, the role of GIS in Planning, Strategic Development Frameworks, and investment in the national grid and its impacts on Argyll and Bute. Staff can attend external conferences if they wish to do so such as the HPs’ conference held in Kilmarnock this year. We are also working with several key stakeholders such as HES to develop training modules for Planning staff and we are looking at how we can work with the University of the West of Scotland to enable staff to access degree level Planning courses. In addition, staff can access a range of digital course specialising in Planning topics and there is also a range of internal courses available on back-office systems, corporate priorities, and other topics such as cyber security and the use of AI and digital tools such as Page 24
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copilot etc. Creating a training schedule is further complicated by a lack of available external courses however when staff do attend these they are also asked to cascade learning to other colleagues through notes taken. Lastly the council is also undertaking a transformational process and planners attend an increasing number of workshops and seminars that often involve a place-based approach working with other council services and external partners. This approach is likely to increase in the future. Delayed and Rescheduled Medium DEVELOPMENT & ECONOMIC GROWTH SHORT TERM LETS 2. Oracle – Compulsory Fields A number of documents of supporting evidence must be submitted with the licence application prior to the issuing of the licence. Oracle currently has a number of compulsory fields which require to be completed, this does not include the uploading of evidence. Applications can be submitted without all the supporting evidence attached resulting in time-consuming delays contacting the applicants. 1. Upgrade to be applied to Oracle system to ensure that applications made without all the necessary certification and documentation, cannot be submitted through the on-line system. 2. A similar approach will be applied to paper-based applications 01/05/2025 30 Aug 2025 1. IT system changes ongoing. Revised application forms/processes for both New Applications and Renewals is currently in the testing stage. 2. The paper form cannot be developed until the layout of the electronic one is finalised as they must be the same. Currently we have contacted all applicants who are due for renewal advising of the situation and further contact will be made once the forms are agreed. Delayed and Rescheduled Regulatory Services and Building Standards Manager Page 25
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High ROADS & INFRASTRUCTURE SERVICES BRIDGE ASSET MANAGEMENT PLAN 1. Performance Reporting There are no regular performance reporting on the following: · Structured reporting framework to distribute performance reports to key stakeholders on a regular basis. · Performance reporting into Departmental Management Team (DMT) meetings and other relevant forums to improve monitoring, accountability, and decision-making. · Specific regular performance reports for late bridge inspections, accompanied by formal action plans and follow-up measures to address delays and ensure compliance with inspection schedules. A report setting out key performance information in relation to the annual programme of bridge inspections will be produced for review by the RIS senior management team on a quarterly basis. The report will be received by the RIS senior management team by the end of the month following quarter end at the latest. The first of these reports will be produced for review during the month of April 2025 for Q4 of 2024. A Quarterly Report on appropriate KPIs will be generated by WDM and can be aligned around ABC Reporting timescales. Currently a QR is being implemented to report on every bridge’s most recent inspection. The Quarterly Report will be accompanied by the most recent Late Inspections report. The overall suite of performance measures used by RIS is currently under review. Until such time as this review work is completed and a refreshed approach to service performance reporting is implemented the Head of Service will provide a by exception report to the Departmental Management Team on a quarterly basis setting out key metrics and risks associated with the annual bridge inspection programme. This reporting will commence for the Q4 period of 2024 and will follow 30/06/2025 30 Sep 2025 Bridge Inspection status report defined, and report can be submitted in draft form for comments from Management / Executive. Final report to be put in place and reporting channel confirmed. Delayed and Rescheduled Infrastructure Design Manager Page 26
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reporting into the RIS senior management team and will therefore take place as early as possible in the month 2 months after quarter end i.e. commencing in June 2025. Low ROADS & INFRASTRUCTURE SERVICES BRIDGE ASSET MANAGEMENT PLAN 4. Audit Trail re Late Inspections The audit found that there is currently no audit trail within the WebSMS sysytem (WDM) to document late inspections, including reasons for delay, actions taken and stakeholder communication. Late Inspections are currently being recorded manually via a report infrastructure. Design can export on WDM as to which reasons are added by the Infrastructure Design team. An automatic report is currently being built within WDM that will send a late inspections report. Late inspections and actions needed to ensure they are undertaken will form part of the quarterly reporting to RIS senior management team. This will enable the Infrastructure Design Team to highlight risks, articulate mitigations and to seek support where required to implement these. 31/03/2025 30 Sep 2025 Previously identified errors have been rectified, and implementation of Late Inspections functionality has now been further developed. Backlog of information held externally from WDM system now able to be recorded. Currently underway. Actions requested from auditable to be fulfilled at this stage, despite ongoing refinement of WDM and data entry. Full implementation on track for September 2025. Delayed and Rescheduled Infrastructure Design Manager Low ROADS & INFRASTRUCTURE SERVICES Burial Records 6. Historical Register Information Finding; The Burial and Cremation (Scotland) Act 2016 (The Act) requires information to be retained electronically although this is not currently in force it will be at a future date. The BACAS system has been partially updated with historical information recorded in burial The service will source temporary assistance to update records during Summer 2024. 30/06/2024 31/12/2024 30/06/2025 30 Sep 2025 Still looking to recruit however resource has been identified within the teams to get this project underway with an attempt to recruit and backfill the administrative roles. Delayed and Rescheduled Operations Manager, Roads and Infrastructure Services Page 27
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registers, it has not been possible to update with all information due to the volume of work involved. Recommendation; Source temporary additional resource to update historical burial records on BACAS. Low ROADS & INFRASTRUCTURE SERVICES PIERS & HARBOURS 2. CalMac Charges Calmac, the main ferry operator uses the Council’s Piers and Harbours on a daily basis, with administratively intensive process in place for charging. Have an agreement (financial) in place by the end of the year. 31/12/2023 31/03/2024 30/06/2024 30/11/2024 30/06/2025 31 Dec 2025 Being progressed with senior management within CalMac. High level options appraisal to be carried out investigating payment mechanisms that can be incorporated into the new Harbour Access Agreement (HAA) The draft Harbour Access Agreement will be ready for review by legal representatives by December 2025 Delayed and Rescheduled Marine Operations Manager High ROADS & INFRASTRUCTURE SERVICES PIERS & HARBOURS 3. SLAs A number of companies, including large fish farming businesses, make use of our facilities on a regular basis, however, there are no SLAs in place. We were advised that work is currently being undertaken to put Harbour Access Agreements in place. Any agreement must be supported by both parties and Argyll & Bute Council legal department. May tie in with No 2 above. Provide a report to Head of Service and Director with options. 1. Identify potential partners 2. Negotiation period 3. Legal support in drafting agreement 31/12/2023 31/03/2024 30/06/2024 30/11/2024 30/06/2025 31 Dec 2025 Work is ongoing to identify bridging partners First batch of agreements is being developed on a priority basis in terms of value and risk, and will be ready by end of December 2025 Delayed and Rescheduled Marine Operations Manager Low ROADS & INFRASTRUCTURE SERVICES PIERS & HARBOURS Actionable evidence and enforcement will continue to be an issue where there are no Argyll & Bute Council personnel on site. 31/12/2023 31/03/2024 30/06/2024 App being developed by supplier to allow Harbour Masters to monitor and enforce at priority sites via CCTV. Report Marine Operations Manager Page 28
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4. Remote Piers and Harbours Harbourmasters based at the main piers and harbours are able to record the use of the facilities where they are predominantly based, however, a number of piers, slipways and harbours are in remote locations and are difficult to manage in terms of use. In addition, there are no robust procedures in place to identify commercial tour vessels using our facilities potentially resulting in a loss of income for the Council. Investigate issues and possible solutions with Harbour Masters and provide options for consideration in report to DMT. 30/09/2024 30/11/2024 30/06/2025 31 Dec 2025 will be ready for DMT in December Delayed and Rescheduled Low ROADS & INFRASTRUCTURE SERVICES PIERS & HARBOURS 5. Fishing Fleet Fees and charges for the fishing fleet within the Council area are managed by the fishing fleet whereby they advise us of the value of their landings once the catch has been sold. There is no back up information provided to substantiate the value, and it is generally paid through cash receipting or by cheque. Investigate issues and possible solutions with Harbour Masters and provide options for consideration in report to DMT. 31/12/2023 31/03/2024 30/06/2024 30/09/2024 30/11/2024 30/06/2025 31 Dec 2025 Work is ongoing to develop solution for verification of value of catches and electronic payment of fees. Report will be ready for DMT in December Delayed and Rescheduled Marine Operations Manager Low ROADS & INFRASTRUCTURE SERVICES PIERS & HARBOURS 6. Management of Debt The outstanding debt owed to the Council at the end of June in respect of Piers and Harbours amounted to £143k. There are a number of long-term outstanding debts, and it was noted that in some instances there is continued use of our facilities by vessels who have outstanding debts dating back to 2019. Investigate with legal department recovery or write-off options. Provide a report to Head of Service and Director with options. 31/12/2023 31/03/2024 30/06/2024 30/09/2024 30/11/2024 30/06/2025 31 Dec 2025 Debt reviewed by Marine Operations Management team and Finance on a regular basis and pursued where possible. Aged debt and ability to pursue has been identified. Where necessary, write off to be identified by Marine Operations Manager and processed in terms of the Corporate Debt Recovery Policy 2024 Marine Operations Manager Page 29
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Report will be ready for DMT in December Delayed and Rescheduled Low ROADS & INFRASTRUCTURE SERVICES PIERS & HARBOURS 8. Published Pier and Harbour Dues and Fees Harbour fees and dues are published on the Council website on an annual basis following being agreed and set at the Council’s budget setting meeting, however, these are not in a format that can be easily downloaded. Produce a ‘Schedule of Harbour Charges’ for Harbour Board approval. 30/11/2024 30/06/2025 31 Dec 2025 Work is ongoing to develop schedule that is clear and easily understood. Draft for approval will be complete by end of December 2025 and ready for approval for first Harbour Board of 2026 Delayed and Rescheduled Marine Operations Manager High ROADS & INFRASTRUCTURE SERVICES WARDEN SERVICES 3. Second Bin Service Verification Wardens are expected to verify the veracity of applications from customers for a second domestic bin service. This requires the warden to confirm that information provided by the customer is accurate and meets the defined criteria. The information provided to substantiate an application can be very personal and sometimes of a sensitive medical nature. Wardens have been asked to provide this service but have received no formal training in how to ensure a customer’s dignity is maintained or to ensure they are aware of the requirements of General Data Protection Regulation (GDPR) in relation to personal data Review the process for; Review the second bins that are in place and the process for rationalising. This review to also give consideration to composition and identify opportunity to increase recycling and reduce general waste. 31/03 2022 30/09 2022 31/12/2022 31/03/2023 30/09/2023 31/12/2023 31/03/2024 31/03/2025 30/09/2025 30/06/2025 31 Mar 2026 The second bin review will be part of an overall waste delivery project including wider aspects of the service such as assisted pullouts, service delivery on private roads and commercial refuse. Project plan currently being agreed and will be communicated to the RIS review board. Timescales for the project and implementation plan will require to be agreed. This is part of a bigger review on commercial waste contracts and self-catering establishments. Delayed and Rescheduled Operations Manager, Roads & Infrastructure Services Page 30
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for this specific process. Due to the sensitivity of this process, and the potential risks associated with data protection it is recommended that the current verification process is reconsidered to determine if it is appropriate to maintain it in its current form. If it is decided, it should be retained then there should be engagement with the Council’s Governance and Risk Manager to ensure it is being carried out in full compliance with GDPR. Medium ADULT SERVICES (MENTAL HEALTH LEARNING DISABILITY, ADDICTIONS & LIFELONG CONDITIONS/CSWO) CLIENT FUNDS PROGRESS REVIEW 2. Meeting service users financial needs Detail Restricted. Detail Restricted. 30/12/2024 31/03/2025 30/06/2025 30 Sep 2025 Detail restricted. Delayed and Rescheduled SW Admin Manager Action Plan Points due after 30th June 2025 Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer Medium FINANCIAL SERVICES CAPITAL MONITORING 1. Capital Programme Planning & Management Guide The Council’s Capital Guide has not been revised since 2018 and requires a review to ensure it reflects current working practices and provides appropriate support to officers involved in the capital monitoring process. The Council is Capital Planning and Management Guide to be updated once the Capital Strategy has been approved to ensure the two are aligned and provide clarity. 31/03/2022 30/09/2022 31/12/2022 31/03/2023 30/09/2023 31/12/2023 31/03/2024 31/03/2025 30/09/2025 This action has been superseded by a wider ‘Review of Capital Arrangements’ approved by members, as part of the 2025/26 budget process. The review requires to be progressed by ELT during 2025/26. A discussion paper was considered by ELT in May, with next steps agreed and a further report to be brought back to ELT in September. Head of Commercial Services/Finance Manager Page 31
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Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer currently developing a new Capital Strategy which is to be presented to the Policy and Resources Committee in August 2021 and we recognise that a review of the Guide should be conducted after the Strategy has been finalised to ensure the two documents complement each other and. The Guide could also benefit from being linked to, or referencing, other relevant Council processes, in particular the Project Management section on the Hub. Superseded Page 32
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 4 SEPTEMBER 2025 INTERNAL AUDIT REPORTS TO AUDIT AND SCRUTINY COMMITTEE 2025/2026 1. EXECUTIVE SUMMARY 1.1 There are two audits being reported to the Audit and Scrutiny Committee. 1.2 The table below provides a summary of the conclusions for the audits performed. The full reports are included as appendices to this report. Audit Name Level of Assurance High Actions Medium Actions Low Actions VFM Actions Education Maintenance Allowance Substantial 0 2 0 0 Music Service High 0 0 0 0 1.3 Internal Audit provides a level of assurance upon completion of audit work. A definition for each assurance level is documented in each audit report. 2. RECOMMENDATIONS 2.1 Audit and Scrutiny Committee to review and endorse this summary report and the detail within each individual report. 3. DETAIL 3.1 A high level summary of each completed audit report is noted below: Education Maintenance Allowance: this audit provided a substantial level of assurance. This means that internal control, governance and the management of risk is sound. However, there are minor areas of weakness which put some system objectives at risk and specific elements of residual risk that are slightly above an acceptable level and need to be addressed within a reasonable timescale. Appropriate arrangements are in place to process applications, payments and submit accurate monthly claims and year-end schedules. Awards of EMA payments were made appropriately following submission of the required documentation in support of their formal application, however, inaccuracies in maintaining attendance records resulted in 2 errors, one payment was made and one withheld incorrectly. All payments and costs incurred were aligned with details held on the Council’s general ledger and correctly reflected in the total value requested for reimbursement from Scottish Government in accordance with the terms and conditions of the offer of grant. Page 33 Agenda Item 6
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Music Services: this audit provided a high level of assurance. This means that internal control, governance and the management of risk are at a high standard. Only marginal elements of residual risk have been identified with these either being accepted or dealt with. A sound system of control designed to achieve the system objectives is in place and being applied consistently. The Instrumental Music Service in Argyll and Bute: Employee Induction / IMS Operational Guidance is the overarching, document for the delivery of music services in schools and includes details of standard forms to be used. The Procedural Timeline supports the Operational Guidance document by providing details of keys tasks, activities and the due by dates, throughout the academic year. These documents and standard forms are available to all music instructors on the google drive. There are plans in place to provide equitable access to music services and piping tuition across all Council areas, these are reviewed and adjusted annually. Instructor capacity and rurality can create gaps in provision which are closely monitored by the Education Officer, who plans and priorities Youth Music Initiative projects to cover these gaps, rotating the areas/ schools and age groups, to provide as equitable provision as possible. Music services across the Council areas receive funding from the Scottish Government, the Youth Music Initiative funding via Creative Scotland and a donation from The Argyllshire Gathering Trust (AGT). Checks of financial records, publicity and copies of the required reports have been reviewed and confirm that all funding requirements are being met and reported upon. 4. CONCLUSION 4.1 Management has accepted each of the reports submitted and have agreed responses and timescales in the respective action plans. 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 – The implementation of recommendations contained in audit reports may help mitigate the risk to the Council 5.7 Climate Change – None 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 Paul Macaskill Chief Internal Auditor 4 September 2025 For further information contact: Paul Macaskill, Chief Internal Auditor Tel: 01546 604108 Email: paul.macaskill@argyll-bute.gov.uk Page 34
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APPENDICES 1. Education Maintenance Allowance 2. Music Service Page 35
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Argyll and Bute Council Internal Audit Report July 2025 FINAL High Medium Low VFM Number of Findings 0 2 0 0 Education Maintenance Allowance-Verification Audit Audit Opinion: Substantial Page 37
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2 Argyll and Bute Council – Internal Audit Report – EMA Verification audit, July 2025 Contents 1. Executive Summary ........................................................................................................................ 3 Introduction ............................................................................................................................................ 3 Background ............................................................................................................................................. 3 Scope ....................................................................................................................................................... 4 Risks ........................................................................................................................................................ 4 Audit Opinion ......................................................................................................................................... 4 2. Objectives and Summary Assessment ........................................................................................... 4 3. Detailed Findings ............................................................................................................................ 5 Appendix 1 – Audit Opinion ................................................................................................................... 9 Contact Details Internal Auditor: Mhairi Weldon Telephone: 01546 604294 e-mail: Mhairi.weldon@argyll-bute.gov.uk www.argyll-bute.gov.uk Page 38
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3 Argyll and Bute Council – Internal Audit Report – EMA Verification audit, July 2025 1. Executive Summary Introduction 1. As part of the 2025/26 internal audit plan, approved by the Audit & Scrutiny Committee in March 2025, we have undertaken an audit of Argyll and Bute Council’s (the Council) system of internal control and governance in relation to Education maintenance Allowance (EMA) Verification. 2. The audit was conducted in accordance with the Global Internal Audit Standards (GIAS) with our conclusions based on discussions with council officers and the information available at the time the fieldwork was performed. The findings outlined in this report are only those which have come to our attention during the course of our normal audit work and are not necessarily all the issues which may exist. It is the responsibility of management to determine the extent of the internal control system appropriate to the Council. 3. The contents of this report have been agreed with the appropriate council officers to confirm factual accuracy and appreciation is due for the cooperation and assistance received from all officers over the course of the audit. Background 4. Regulation 3 of the Education Maintenance Allowances (Scotland) Regulations 2007 (“the 2007 Regulations”) allows the Scottish Ministers to pay an education maintenance allowance (EMA) to provide support for eligible 16 to 19 year olds who are engaged in full-time education in school; undertaking a course of non-advanced education at home which has been approved by the education authority; or undertaking a course of non-advanced education elsewhere under the supervision of the education authority (including Learning Agreements/Action Plans). The 2007 Regulations form the basis of the EMA programme which aims to increase participation and retention in post-compulsory education, thus increasing skills and life chances for this group. EMA payments are made by the Council to eligible young people in school and other types of learning within the local authority area in accordance with the 2007 Regulations, and the EMA (Scotland) Guidance and Processes, provided that a young person is eligible for EMA, that a young person qualifies based on the EMA eligibility criteria and a signed learning agreement is in place. 5. The EMA programme offers means-tested financial support of £30 per week in arrears during term-time to eligible young people from low income households who are planning to continue in post-compulsory education. Eligibility for EMA payments depends on the young person's age, household income, residency, course validity and completion of a learning agreement detailing targets and attendance requirements. 6. The Scottish Government (SG) reimburses the Council for payments made to young people following submission of monthly grant claims and a year-end statement confirming the total of the monthly claims. A standard allowance for the costs of administering the programme as well as an additional £15 for each new application processed is also paid by the SG. 7. Audit Scotland published technical guidelines, TGN/EMA/21 in March 2021 and this was used to support auditors in the verification of EMA claims. Page 39
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4 Argyll and Bute Council – Internal Audit Report – EMA Verification audit, July 2025 Scope 8. The scope of the audit was to assess that the Council is fully compliant with requirements as set out in the Offer of Grant for EMA 2024/25. Risks 9. The risks considered throughout the audit were: • Audit Risk 1 – The Council fails to comply with the provisions set out in the Offer of grant for EMA 2024-25 Audit Opinion 10. We provide an overall audit opinion for all the audits we conduct. This is based on our judgement on the level of assurance which we can take over the established internal controls, governance and management of risk as evidenced by our audit work. Full details of the five possible categories of audit opinion is provided in Appendix 2 to this report. 11. Our overall opinion for this audit is that we can take a substantial level of assurance. This means that, Internal control, governance and the management of risk is sound. However, there are minor areas of weakness which put some system objectives at risk and specific elements of residual risk that are slightly above an acceptable level and need to be addressed within a reasonable timescale. Recommendations 12. We have highlighted two medium priority recommendations where we believe there is scope to strengthen the control and governance environment. These are summarised below: • Schools should ensure that EMA recipient’s attendance records are accurately maintained to provide a clear indication of when EMA payments are due. • School teaching staff authorising EMA payments should be reminded of the attendance criteria young people are required to meet to qualify for these payments. 13. Full details of the audit findings, recommendations and management responses can be found in Section 3 of this report and in the action plan at Appendix 1. 2. Objectives and Summary Assessment 14. Exhibit 1 sets out the control objectives identified during the planning phase of the audit and our assessment against each objective. Control Objective Link to Risk Assessment Summary Conclusion 1 The year-end statement has been completed in accordance with guidance. Audit Risk 1 High Appropriate arrangements are in place to process applications and payments and prepare and submit accurate monthly claims and year-end schedules. All payments and costs were confirmed on the Council’s general ledger and verified on the claims submitted. Page 40
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5 Argyll and Bute Council – Internal Audit Report – EMA Verification audit, July 2025 Control Objective Link to Risk Assessment Summary Conclusion 2 Young people have been correctly assessed for eligibility. Audit Risk 1 Substantial A detailed review of a sample of 10 young people confirmed that EMA was appropriately awarded following submission of the required evidence in support of their applications, however, attendance records were not always accurate. One payment for £30 was found to have been incorrectly authorised and one payment incorrectly withheld. 3 Administration costs have been appropriately applied. Audit Risk 1 High The additional top-up administration cost has been applied to the monthly claims and correctly reflected in the year-end claim. 4 Completion procedures have been appropriately followed. Audit Risk 1 High The claim forms submitted accurately reflected payments made and costs incurred in accordance with the terms and conditions of the Offer of Grant. Claims and supporting evidence were reviewed and confirmed to be correct. 15. Further details of our conclusions against each control objective can be found in Section 3 of this report. 3. Detailed Findings The year-end statement has been completed in accordance with guidance. 16. The Councils arrangements for the completion of the year end statement are adequate. All relevant parts of the year end statement have been completed and signed by the Council’s Executive Director/Section 95 Officer including schedules 4 to 6 as required in the Offer of Grant for EMA 2024-25 letter. 17. The entries on the year-end statement were reviewed and found to be consistent with the total of the monthly claims submitted and also with entries lodged on the Council’s general ledger. Young people have been correctly assessed for eligibility 18. A total of 177 young people were awarded EMA payments in 2024-25, from these, a random sample of 10 was chosen for detailed review of supporting documentation to confirm they met the eligibility criteria as set out below: • Proof of age to confirm young person is between 16 and 19 years of age • Household income below £24,421 (one child) or £26,884 (more than one child) • UK citizen or qualifying non-national who are resident in Argyll and Bute area • Course(s) being undertaken is/are valid and require attendance of at least 21 hours per week • An agreement has been completed detailing learning goals and level of attendance required • Attendance records confirming eligibility for each weekly payment made • Back-payments were made in accordance with grant requirements Page 41
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6 Argyll and Bute Council – Internal Audit Report – EMA Verification audit, July 2025 19. Documentation provided in support of applications made confirmed that all young people within the sample selected for review were appropriately assessed as eligible for EMA payments. 20. EMA payments were routinely awarded or disallowed in accordance with attendance records, however, a few anomalies were identified during the course of the audit. Requests for additional information revealed that attendance had been incorrectly recorded in some instances where recipients had been marked as absent but later found to be in attendance in other areas of the school premises e.g. study rooms or other classrooms and records were not updated accordingly. One payment for £30 was found to have been incorrectly authorised and one payment incorrectly withheld. Action Plan 1 & 2 Administration costs have been appropriately applied 21. The Council is in receipt of a flat rate of £25k for administering the EMA programme, in addition to this, an administration cost of £15 per new applicant in receipt of at least one payment of EMA is available to claim. The administration cost was correctly applied to monthly claims, a total of £2,700 was recovered from the SG in respect of this element and was found to be consistent with the documented requirements. Completion procedures have been appropriately followed 22. Testing carried out confirmed that, with the exception of the 2 errors noted at paragraph 20 above, payments were made in accordance with the grant terms and conditions. As the value of errors found totalled £0, there is no requirement to revise the grant claims submitted. Page 42
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Appendix 1 – Action Plan No Finding Risk Agreed Action Responsibility / Due Date Medium 1 Attendance Records Finding: The audit identified that EMA payments did not correspond with the recipient’s attendance records in some instances due to updates not being recorded. Recommendation: Schools should ensure that EMA recipient’s attendance records are accurately maintained to provide clear evidence of EMA payment entitlement. Attendance records do not accurately support EMA payment entitlement. Updated guidance will be issued to schools at the start of the new session to ask schools to ensure that recipients attendance records are accurately maintained. School Services Support Manager December 2025 Medium 2 EMA Payment Entitlement Finding: One payment for £30 was found to have been incorrectly authorised and one payment incorrectly withheld. Recommendation: School staff authorising EMA payments should be reminded of the attendance criteria young people are required to meet to qualify for these payments. Failure to comply with EMA grant terms and conditions. Incorrect payments may result in additional work to rectify. Updated guidance will be issued to schools at the start of the new session clarifying the attendance criteria for young people qualifying for EMA payments. School Services Support Manager December 2025 Page 43
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8 Argyll and Bute Council – Internal Audit Report – EMA Verification audit, July 2025 In order to assist management in using our reports a system of grading audit findings has been adopted to allow the significance of findings to be ascertained. The definitions of each classification are as follows: Grading Definition High A major observation on high level controls and other important internal controls or a significant matter relating to the critical success of the objectives of the system. The weakness may therefore give rise to loss or error. Medium Observations on less significant internal controls and/or improvements to the efficiency and effectiveness of controls which will assist in meeting the objectives of the system. The weakness is not necessarily substantial however the risk of error would be significantly reduced if corrective action was taken. Low Minor recommendations to improve the efficiency and effectiveness of controls or an isolated issue subsequently corrected. The weakness does not appear to significantly affect the ability of the system to meet its objectives. VFM An observation which does not highlight an issue relating to internal controls but represents a possible opportunity for the council to achieve better value for money (VFM). Page 44
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9 Argyll and Bute Council – Internal Audit Report – EMA Verification audit, July 2025 Appendix 2 – Audit Opinion Level of Assurance Definition High Internal control, governance and the management of risk are at a high standard. Only marginal elements of residual risk have been identified with these either being accepted or dealt with. A sound system of control designed to achieve the system objectives is in place and being applied consistently. Substantial Internal control, governance and the management of risk is sound. However, there are minor areas of weakness which put some system objectives at risk and specific elements of residual risk that are slightly above an acceptable level and need to be addressed within a reasonable timescale. Reasonable Internal control, governance and the management of risk are broadly reliable. However, whilst not displaying a general trend, there are areas of concern which have been identified where elements of residual risk or weakness may put some of the system objectives at risk. Limited Internal control, governance and the management of risk are displaying a general trend of unacceptable residual risk above an acceptable level and placing system objectives are at risk. Weakness must be addressed with a reasonable timescale with management allocating appropriate resources to the issues raised. No Assurance Internal control, governance and the management of risk is poor. Significant residual risk and/or significant non-compliance with basic controls exists leaving the system open to error, loss or abuse. Residual risk must be addressed immediately with management allocating appropriate resources to the issues. Page 45
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Classification: OFFICIAL Argyll and Bute Council Internal Audit Report August 2025/6 FINAL High Medium Low VFM Number of Findings 0 0 0 0 Music Services Audit Opinion: High Page 47
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2 Argyll and Bute Council – Internal Audit Report – Music Services, August 2025 Classification: OFFICIAL Contents 1. Executive Summary ........................................................................................................................ 3 Introduction ............................................................................................................................................ 3 Background ............................................................................................................................................. 3 Scope ....................................................................................................................................................... 4 Key Dates ................................................................................................................................................ 4 Risks ........................................................................................................................................................ 4 Audit Opinion ......................................................................................................................................... 4 Recommendations ................................................................................................................................. 5 2. Objectives and Summary Assessment ........................................................................................... 5 3. Detailed Findings ............................................................................................................................ 6 Appendix 1 – Audit Opinion ................................................................................................................. 11 Contact Details Internal Auditor: Annemarie McLean Telephone: 01700 501354 e-mail: annemarie.mclean@argyll-bute.gov.uk www.argyll-bute.gov.uk Page 48
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3 Argyll and Bute Council – Internal Audit Report – Music Services, August 2025 Classification: OFFICIAL 1. Executive Summary Introduction 1. As part of the 2025/26 internal audit plan, approved by the Audit & Scrutiny Committee in March 2025, we have undertaken an audit of Argyll and Bute Council’s (the Council) system of internal control and governance in relation to Music Services. 2. The audit was conducted in accordance with the Global Internal Audit Standards (GIAS) with our conclusions based on discussions with council officers and the information available at the time the fieldwork was performed. The findings outlined in this report are only those which have come to our attention during the course of our normal audit work and are not necessarily all the issues which may exist. Appendix 1 to this report includes agreed actions to strengthen internal control however it is the responsibility of management to determine the extent of the internal control system appropriate to the Council. 3. The contents of this report have been agreed with the appropriate council officers to confirm factual accuracy, and appreciation is due for the cooperation and assistance received from all officers over the course of the audit. Background 1. Through music, Curriculum for Excellence recognises the value of singing and learning to play an instrument, providing children and young people with opportunities to be creative and imaginative, to experience inspiration and enjoyment, and to develop skills for learning, life and work. 2. There are many wider benefits of music education and musical experiences. These include promoting healthy lives and cognitive benefits such as increasing attainment, improving levels of literacy and numeracy and the emotional, social and physical wellbeing of our young people. 3. Instrumental Music Instructors develop the vocal and instrumental skills of children and young people, encouraging them to have a lifelong appreciation of music and its place in contributing effectively to Scotland’s culture. Music services also support bands, orchestras, choirs, and other extracurricular musical activities within schools. 4. In Scotland, instrumental music tuition in schools is a core part of the curriculum, with the Scottish Government committed to providing free tuition for all pupils. Local authorities manage the delivery of these services, including providing instruments and lessons, often with support from the Youth Music Initiative (YMI). 5. Creative Scotland administers the Youth Music Initiative (YMI) – a music education programme, funded by the Scottish Government, which aims to create access to high quality music making opportunities for young people and support the development of the youth music sector. 6. The Argyllshire Gathering Trust, via the Argyll and Bute Schools Piping Tuition Scheme (the Scheme), is the primary sponsor of Schools Piping Tuition in Argyll and Bute in collaboration with the Council and the Scottish Government. The provides funding to the Council to support the teaching of the bagpipes in Argyll primary schools. Page 49
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4 Argyll and Bute Council – Internal Audit Report – Music Services, August 2025 Classification: OFFICIAL 7. The Scheme, in recent academic years, has supported piping tuition to the value of £50,000 in primary and secondary schools in Oban, Mid Argyll, Islay, Mull, Kintyre, Cowal, Helensburgh and Lower Argyll. Tuition is currently provided by 6 tutors, including two world class Argyll pipers. Scope 8. The scope of the audit was to assess the arrangements for the efficient delivery of music services and that funding requirements have been met in relation to this provision, as outlined in the Terms of Reference agreed with the Head of Education, Performance and Improvement on 03 July 2025. Key Dates 9. The Terms of Reference provided provisional timescales for the review to take place, the actual dates are noted below. Exhibit 1 – Key Dates Stage Actual Date Terms of Reference agreed 03 July 2025 Fieldwork Commencement 04 July 2025 Draft Report issued 01 August 2025 Management Comments received 20 August 2025 Final Report issued 20 August 2025 Audit and Scrutiny Committee 04 September 2025 Risks 10. The risks considered throughout the audit were: • Audit Risk 1: Lack of standard policies and procedures may lead to inefficient and unequitable music service delivery. • Audit Risk 2: Inability to demonstrate that requirements of funding have been met may impact future ability to secure funding. Audit Opinion 11. We provide an overall audit opinion for all the audits we conduct. This is based on our judgement on the level of assurance which we can take over the established internal controls, governance and management of risk as evidenced by our audit work. Full details of the five possible categories of audit opinion is provided in Appendix 1 to this report. 12. Our overall audit opinion for this audit is that we can take a high level of assurance. This means that internal control, governance and the management of risk are at a high standard. Only marginal elements of residual risk have been identified with these either being accepted or dealt with. A sound system of control designed to achieve the system objectives is in place and being applied consistently. Page 50
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5 Argyll and Bute Council – Internal Audit Report – Music Services, August 2025 Classification: OFFICIAL Recommendations 13. There are no recommendations. 2. Objectives and Summary Assessment 14. Exhibit 1 sets out the control objectives identified during the planning phase of the audit and our assessment against each objective. Exhibit 1 – Summary Assessment of Control Objectives Control Objective Link to Risk Assessment Summary Conclusion 1 The Council has common policies/procedures for the delivery of music services in schools. Audit Risk 1 High • The Instrumental Music Service in Argyll and Bute: Employee Induction / IMS Operational Guidance is the overarching, document for the delivery of music services in schools and includes details of standard forms to be used. • The Procedural Timeline supports the Operational Guidance document by providing details of keys tasks, activities and the due by dates, throughout the academic year. • These documents and standard forms are available to all music instructors on the google drive. 2 There is equitable provision/ access to music services across all Council areas. Audit Risk 1 High • There are plans in place to provide equitable access to music services and piping tuition across all Council areas, these are reviewed and adjusted annually. • Instructor capacity and rurality can create gaps in provision which are closely monitored by the Education Officer, who plans and priorities Youth Music Initiative projects to cover these gaps, rotating the areas/ schools and age groups, to provide as equitable provision as possible. 3 Funding requirements are met and reported upon. Audit Risk 2 High • Music services across the Council areas receive funding from the Scottish Government, the Youth Music Initiative funding via Creative Scotland and a donation from The Argyllshire Gathering Trust (AGT). • Checks of financial records, publicity and copies of the Page 51
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6 Argyll and Bute Council – Internal Audit Report – Music Services, August 2025 Classification: OFFICIAL required reports have been reviewed and confirm that all funding requirements are being met and reported upon. 15. Further details of our conclusions against each control objective can be found in Section 3 of this report. 3. Detailed Findings The Council has common policies/procedures for the delivery of music services in schools. 16. Within the Council, the Instrumental Music Service (IMS) in Argyll and Bute: Employee Induction / IMS Operational Guidance (Operational Guidance document) is the overarching document for the delivery of music services in schools and takes cognisance of national guidance from the Scottish Government, Education Scotland and the Scottish Qualifications Authority. 17. The Operational Guidance document was created in consultation with Instrumental Music Instructors (IMIs), by reviewing and collating previous guidance and procedure notes and provides clear guidance for all instructors, both new and experienced, and includes details of: • General employment terms and conditions including, working hours, pupil contact, activities and mandatory training etc. • Scottish Education and SQA exams. • Reporting to parents and carers, The Argyllshire Gathering Trust and quality assurance procedures • Links to key documents, standard forms and templates to be used. 18. To aid staff planning, the Procedural Timeline is emailed to all instructors at the start of each academic year. This supports the Operational Guidance document by providing details of keys tasks, activities and the due by dates, throughout the academic year, and contact details for support and submission. 19. Provision of instruments to pupils is monitored via loan agreements but due to the abolition of tuition fees the term is open ended, with instruments to be returned when pupils no longer engage with music services. Instructors keep a record of instruments issued and there is a standing task on the Procedural Timeline for Instructors at the beginning of each academic session and thereafter at the end of each term, to request new/replacement instruments. 20. The Operational Guidance document, Procedural Timeline and standard forms, are stored on the IMS google drive, which is accessible to all instructors. These documents will be reviewed annually in May at the team instructor meetings. Staff engagement with shaping and reviewing the Operational Guidance aids collective ownership and ensures it will reflect current working practices and that staff are kept informed of any changes. 21. At a national level, the draft “How Good is Our Instrumental Music Service” document is being developed as a self-evaluation tool, incorporating peer observations, to support self- development for IMIs. This has been discussed at IMI team meetings and there are plans to trial this in the next academic session 2025/26. Page 52
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7 Argyll and Bute Council – Internal Audit Report – Music Services, August 2025 Classification: OFFICIAL There is equitable provision/ access to music services across all Council areas. 22. There are plans in place to provide equitable access to music services and piping tuition across both primary and secondary schools in all Council areas, these are reviewed and adjusted annually. The Education Officer (EO) – Curriculum (2-18) with Gaelic, Music and Culture, maintains a list of the IMS distribution across all Council areas. This details the instructors in each area, the hours they are contracted for, the schools’ they cover and the classification of the instruments that they teach e.g. brass or strings etc. 23. Like many Council services, provision and planning of music services is constrained by instructor availability in the locality and their capacity to cover the geographical areas, while maximising the time spent in the school’s providing instruction to pupils. Most instructors have a set secondary school location and travel within those clusters. This can create gaps, which are closely monitored by the EO who plans and prioritises Youth Music Initiative projects to cover these gaps, rotating the areas/ schools and age groups, to provide as equitable provision as possible. 24. As the provision of music services is part of the curriculum for excellence monitoring and reporting takes a variety of forms, for example, IMIs are required to monitor and record: • Pupil attendance. • Pupil progress and reporting to parents. • Class registers. • Instrumental Music Services IMS survey data (which feeds into the national statistics) • 12 Hours data required by Creative Scotland • Piping reports provided to Argyllshire Gathering Trust as a condition of their donation. Funding requirements are met and reported upon. 25. Music services across the Council areas receive funding from the Scottish Government, the Youth Music Initiative funding via Creative Scotland and a donation from The Argyllshire Gathering Trust (AGT) via the Argyll and Bute Schools Piping Tuition Scheme. Checks of financial records, publicity and copies of the required reports have been reviewed and confirm that All funding requirements are being met and reported upon. 26. Financial monitoring follows the standard Council budget monitoring and year end processes for Education budgets and funds. There is no requirement to record spend per Council area, so this is not currently monitored, but could be readily ascertained as most costs are related to staffing, in addition to travel, and the costs of instruments/education equipment. 27. The Council are required by the Scottish Government to contribute to National Statistics and report on costs including total spend for the academic session and any cost implications for pupils. Using the IMS Survey template completed by instructors, data on Instrument Music Services is collated and submitted to the Improvement Service who collate this and publish the National IMS Survey results. The aim of the survey is to highlight the current state of instrumental music services (IMS) in Scotland and to identify and share best practice. Page 53
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8 Argyll and Bute Council – Internal Audit Report – Music Services, August 2025 Classification: OFFICIAL 28. The completion of the IMS survey is a key task detailed in the Procedural Timeline document. A copy of the “Results from the IMS Survey 2024” was provided and confirms the Council’s submission, and compliance with reporting requirements. 29. Creative Scotland administers the Scottish Government’s Youth Music Initiative (YMI SG) programme. The purpose of the YMI fund is to meet the Scottish Government commitment that: “every school pupil in Scotland should be offered a year of free music tuition by the time they leave primary school”, this is referred to as the 12 hours project and includes young people with additional support needs, disabilities and those in non-mainstream settings. 30. Local authorities apply to the YMI Formula funds providing details of the planned programme of activities / projects, and the costs associated with these, that they aim deliver within the School Based Music Making strand. Criteria for funding is set out in the YMI Formula Guidance for that year, and all applications must state how the programme will deliver and track the 12 hours project to meet the YMI SG commitment. 31. Successful applications are issued with an Award of Funding from the Youth Music Initiative Programme – Formula Funding letter by Creative Scotland. This sets out the conditions of funding and the funding instalments. In addition to the YMI SG commitment 12 hours project, other key conditions include: • Maintenance of financial records for the projects. • The use of set logos/wording in all publicity. • The submission of an end of project evaluation report, including a final report and evidence to support delivery of the agreed activities and projects. 32. Creative Scotland does not stipulate when the 12 Hours project should be delivered. Music Services, through discussion with the IMS team, agreed that the 12 hours project would support the recruitment phase at the start of each year. This provides pupils with free specialist tuition and examples of the types of instruments that are available and gives them the opportunity to gain the enthusiasm to commit to practicing. 33. YMI instructors and the schools in receipt of each project are asked to complete evaluations. IMS instructors delivering 12 Hours projects submit pupil data and a brief evaluation. This is collated by the EO who produces the End of Project evaluation which is submitted to Creative Scotland and used to inform the following years’ application. 34. Music services have a specific cost centre for YMI funding and financial records are retained as per Council Standing Orders. The end of project evaluation for 2023-24 has been provided along with copies of the 2024-25 application form, planned budget and award of funding letter. The fact that Creative Scotland have approved the 2024-25 application demonstrates that they are satisfied that the Council continues to meet their funding requirements. Page 54
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9 Argyll and Bute Council – Internal Audit Report – Music Services, August 2025 Classification: OFFICIAL 35. The annual donation from the Argyllshire Gathering Trust (AGT) to support the Argyll and Bute Schools Piping Tuition Scheme, is a long-standing arrangement. In return for the annual donation, the AGT requires: • Monies are spent on subsidising piping and chanter instruction. • Posters are displayed and flyers distributed in relevant schools i.e. those with piping instructors, to publicise their support. • Reports detailing the number of pupils, the type of instruction (pipes/chanter), details of involvement with pipe bands and those showing exceptional promise. 36. The Operational Guidance document provides instructors with guidance on the requirements of AGT. An examination of Music Services budgets confirms that the full donation from the Argyllshire Gathering Trust (AGT) is spent on subsidising piping and chanter instruction. Examples of submitted reports, flyers and adverts were provided and these meet AGT’s requirements. Page 55
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Classification: OFFICIAL In order to assist management in using our reports a system of grading audit findings has been adopted to allow the significance of findings to be ascertained. The definitions of each classification are as follows: Grading Definition High A major observation on high level controls and other important internal controls or a significant matter relating to the critical success of the objectives of the system. The weakness may therefore give rise to loss or error. Medium Observations on less significant internal controls and/or improvements to the efficiency and effectiveness of controls which will assist in meeting the objectives of the system. The weakness is not necessarily substantial however the risk of error would be significantly reduced if corrective action was taken. Low Minor recommendations to improve the efficiency and effectiveness of controls or an isolated issue subsequently corrected. The weakness does not appear to significantly affect the ability of the system to meet its objectives. VFM An observation which does not highlight an issue relating to internal controls but represents a possible opportunity for the council to achieve better value for money (VFM). Page 56
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11 Argyll and Bute Council – Internal Audit Report – Music Services, August 2025 Classification: OFFICIAL Appendix 1 – Audit Opinion Level of Assurance Definition High Internal control, governance and the management of risk are at a high standard. Only marginal elements of residual risk have been identified with these either being accepted or dealt with. A sound system of control designed to achieve the system objectives is in place and being applied consistently. Substantial Internal control, governance and the management of risk is sound. However, there are minor areas of weakness which put some system objectives at risk and specific elements of residual risk that are slightly above an acceptable level and need to be addressed within a reasonable timescale. Reasonable Internal control, governance and the management of risk are broadly reliable. However, whilst not displaying a general trend, there are areas of concern which have been identified where elements of residual risk or weakness may put some of the system objectives at risk. Limited Internal control, governance and the management of risk are displaying a general trend of unacceptable residual risk above an acceptable level and placing system objectives are at risk. Weakness must be addressed with a reasonable timescale with management allocating appropriate resources to the issues raised. No Assurance Internal control, governance and the management of risk is poor. Significant residual risk and/or significant non-compliance with basic controls exists leaving the system open to error, loss or abuse. Residual risk must be addressed immediately with management allocating appropriate resources to the issues. Page 57
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Classification: OFFICIAL ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 4 SEPTEMBER 2025 INTERNAL AUDIT - ANNUAL SELF-ASSESSMENT 1. EXECUTIVE SUMMARY 1.1 This paper informs the Audit and Scrutiny Committee (the Committee) of the findings from the recent internal self-assessment of the Council’s Internal Audit service performed by a member of the Internal Audit team. 2. RECOMMENDATIONS 2.1 Members are requested to review and endorse the findings of the assessment including the identified areas for improvement, where applicable. 3. DETAIL 3.1 The Public Sector Internal Audit Standards (PSIAS) require the Council’s Chief Internal Auditor (CIA) to develop a Quality Assurance and Improvement Programme (QAIP). The purpose of the QAIP is to enable the evaluation of internal audit’s conformance to the PSIAS. The QAIP must include annual internal self-assessments with a five yearly external assessment, carried out by an independent assessor. 3.2 The Council’s last external independent assessment was reported to the Committee in March 2023 and concluded that internal audit demonstrated full compliance with PSIAS in all 14 areas of criteria, along with identified good practice. It also highlighted two minor areas for potential improvement which now have been fully implemented. A further internal self-assessment has been undertaken and again confirms compliance with all criteria. 3.3 The 2025 self-assessment exercise has been completed and the table below summarises the assessment of the service against each of the fourteen PSIAS assessment areas. PSIAS Assessment Area Assessment 1 Mission of internal audit Fully Conforms 2 Definition of internal auditing Fully Conforms 3 Code of ethics Fully Conforms 4 Purpose, authority and responsibility Fully Conforms 5 Independence and objectivity Fully Conforms 6 Proficiency and due professional care Fully Conforms 7 Quality assurance and improvement programme Fully Conforms 8 Managing the internal audit activity Fully Conforms 9 Nature of work Fully Conforms 10 Engagement planning Fully Conforms 11 Performing the engagement Fully Conforms 12 Communicating results Fully Conforms 13 Monitoring progress Fully Conforms 14 Communicating the acceptance of risks Fully Conforms Page 59 Agenda Item 8
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Classification: OFFICIAL 3.4 The self-assessment identified a number of areas of good practice and no further areas for improvement – these are summarised in the table below. Good Practice Comprehensive Internal Audit Charter which is subject to annual review and approval Robust procedures for ensuring independence and objectivity CIA has regular engagement with senior management Experienced and qualified team focused on continuous improvement Robust and structured audit planning Clear link between identified risks and audit work Strong audit engagement review and supervision Full and transparent audit reporting to Senior Management and Committee Comprehensive follow up process Regular progress reporting to Committee Annual assurance mapping Very positive feedback from services on audit approach and outputs Area for Improvement No actions outstanding. 4. CONCLUSION 4.1 The Internal Audit service has been self-assessed as fully conforming with PSIAS in all of the 14 assessment areas. This assessment is consistent with the opinions raised in the independent External Quality Assurance Assessment (EQA) reported to the Audit and Scrutiny committee in March 2023. 4.2 Overall, the CIA is of the view that this is a positive self-assessment which reflects well on the team and their ongoing commitment to improvement. This process is one element of assessing and determining compliance with best practice and mandatory requirements outlined by the relevant regulatory bodies. There will always be opportunity for improvement and development within the service and this will be reflected upon on a regular basis to improve the service we provide to the Council. 4.3 The Internal Audit service will continue to monitor compliance on an annual basis and also as part of the five yearly external quality assessment programme and will be subject to a comprehensive review undertaken by another local authority Chief Internal Auditor which is next scheduled for 2027/28 and will follow the new Global Internal Audit Standards. (GIAS) 5. IMPLICATIONS 5.1 Policy – Internal Audit continues to adopt a risk-based approach to activity 5.2 Financial –None 5.3 Legal –None 5.4 5.5 HR – None Customer Service - None 5.6 Risk – None 5.7 Climate Change – None 5.8 Fairer Scotland Duty – None Page 60
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Classification: OFFICIAL 5.9 5.10 5.11 Equalities – protected characteristics – None Consumer Duty – None Island Communities - None 5.12 Children’s Rights and Wellbeing – None Paul Macaskill, Chief Internal Auditor 4 September 2025 For further information contact: Paul Macaskill, Chief Internal Auditor (01546 604108) Page 61
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Classification: OFFICIAL ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE Legal and Regulatory Support 4 September 2025 Corporate Complaints Handling – Annual Report 2024/25 1.0 INTRODUCTION The report provides information on how the Council has dealt with complaints during the period between 1 April 2024 and 31 March 2025, and performed against the statutory indicators which have been agreed between the Scottish Public Services Ombudsman (SPSO) and the Local Authorities Complaint Handlers Network. 2.0 RECOMMENDATIONS 2.1. It is recommended that the Committee consider and note the content of this report. 3.0 DETAIL 3.1. All Council services follow the SPSO’s model Complaint Handling Procedure (CHP). A requirement of this model procedure is that the Council report to the SPSO on a standard set of statutory performance indicators and prepare an annual report for consideration by Members. The report attached at appendix 1 has been prepared in order to satisfy this requirement. 3.2. The scope of this report includes complaints received in relation to Live Argyll, and also includes complaints which relate to the Social Work service within Argyll and Bute HSCP. 3.3. The SPSO introduced a new model complaints handling procedure from 01 April 2021, which all local authorities were required to adopt. This updated procedure incorporates complaints in relation to the Social Work service, which were previously reported separately, and also introduced a new complaint outcome where officers can conclude a complaint as “resolved”. 3.4. A more detailed breakdown of performance by Service is attached at Appendix 2. Details around the common themes of complaints, service areas and further analysis of the root causes of complaints are provided within Appendix 3 to this report. This additional information is provided following a previous request from the Audit and Scrutiny committee. 3.5. The corporate complaints procedure is administered centrally by the Compliance and Regulatory team within Legal and Regulatory Support, and quarterly performance reports are provided to departmental management. Performance reports are published on the Council’s website: Complaints | Argyll and Bute Page 63 Agenda Item 9
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Classification: OFFICIAL Council (argyll-bute.gov.uk) although some reports have not been uploaded this year due to the website upgrade. 3.6. The Compliance and Regulatory team produce monthly performance update reports, which are circulated to all Heads of Service and Directors, to draw attention to any areas where complaints performance may be falling. This includes detailed information, including the ward area and reasons for late response. 4.0 CONCLUSION 4.1. The Council has dealt with complaints it has received in accordance with the requirements of the complaints handling procedure and has complied with the obligation to prepare an annual report. Once it has been presented to the Audit and Scrutiny Committee, the annual report will be published on the Council’s website. 5.0 IMPLICATIONS 5.1 Policy None 5.2 Financial None 5.3 Legal Statutory requirement to prepare report 5.4 5.5 HR Customer Service None Responses to the satisfaction questionnaire tend to reflect comments based on the outcome of the complaint as opposed to the complaint’s procedure. 5.6 5.7 5.8 5.9 Risk Climate Change Fairer Scotland Duty Equalities – protected characteristics None None None None 5.10 5.11 Consumer Duty Island Communities None None 5.12 Children’s Rights and Wellbeing The Complaints Handling Procedure incorporates a Child Friendly Complaints process Douglas Hendry Executive Director with responsibility for Legal and Regulatory Support Policy Lead - Councillor Mark Irvine 4 August 2025 For further information contact: Iain Jackson, Governance, Risk & Safety Manager, 01546 604188 APPENDICES Appendix 1 – Annual Complaints Report 2024-25 Page 64
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Classification: OFFICIAL Appendix 2 – Service Breakdown Appendix 3 – Themes of Complaints Page 65
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL ANNUAL COMPLAINTS ANNUAL COMPLAINTS PERFORMANCE REPORT 2024/25 Page 67
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL Contents Chief Executive’s Foreword ........................................................................................ 3 Introduction................................................................................................................. 4 Complaints Process ................................................................................................... 5 Indicator 1 – Complaints Received per 1,000 of Population ...................................... 6 Indicator 2 – Number of Complaints ........................................................................... 7 Indicator 3 – Complaint Outcomes Stage 1 ................................................................ 8 Indicator 3 – Complaint Outcomes Stage 2 ................................................................ 8 Indicator 3 – Complaint Outcomes Escalated Complaints ....................................... 10 Indicator 4 – Average Times .................................................................................... 11 Indicator 5 – Performance Against Timescales ........................................................ 13 Indicator 6 – Extensions to Timescales .................................................................... 15 Indicator 7 – Customer Satisfaction ......................................................................... 16 Indicator 8 – Learning from Complaints – Reporting ................................................ 17 Indicator 8 – Learning from Complaints – Improvements ......................................... 18 Complaints Investigated by the SPSO ..................................................................... 19 Complaint Themes ................................................................................................... 20 Positive Feedback .................................................................................................... 22 Contact Us ................................................................................................................ 24 Page 68
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Page 3 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL Chief Executive’s Foreword I am pleased to present Argyll and Bute Council’s Annual Complaints Report, which provides information about our performance in handling complaints from our customers between 1 April 2024 and 31 March 2025. In July 2024, we successfully implemented the Scottish Public Services Ombudsman’s Child Friendly Complaints Procedure following the United Nations Convention on the Rights of the Child (UNCRC) being incorporated into Scottish Law. Through this procedure, we can ensure that Children’s rights and needs are central to policy and decision making and ensure they are the primary decision makers on complaints (where they have the capacity to do so). Argyll and Bute Council is committed to providing high quality services for residents, businesses and visitors in our area and an important part of this commitment is to ensure we have effective processes in place to resolve matters when things go wrong. We strive to be thorough, transparent, objective and fair in our approach to complaints, and to make it as easy as possible for customers to access our complaints procedure through our website, by email, over the telephone or in person. I understand it can be disappointing and frustrating when your expectations’ are not met but we welcome and value complaints and feedback from our customers as it allows us to learn from the issues reported to us to improve the quality of the services we provide. Some examples of those improvements made are included within this report. It has been a challenging year and I thank all the staff in my organisation for doing what they do best and going the extra distance to provide the best possible services and support to the people of Argyll and Bute. Pippa Milne Chief Executive – Argyll and Bute Council Page 69
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL What is a complaint? A complaint is ‘an expression of dissatisfaction about the Council’s action or lack of action, or about the standard of service provided by or on behalf of the Council’. Introduction Argyll and Bute Council, along with all other Scottish Local Authorities, follow a model complaints handling procedure which is determined by the Scottish Public Sector Ombudsman (SPSO). This report presents how Argyll and Bute Council has performed against eight key performance indicators set by the SPSO that are used by all 32 local authorities, and provides some details about improvements to our services, along with some positive feedback from our customers. Complaints process Complaints can be either Stage 1, which are usually straightforward issues and must be dealt within 5 days or less, or Stage 2, which are usually about more complex or serious issues and can take up to 20 days for a response to be provided. If a customer is not happy with a Stage 2 response, they can refer their complaint on to the SPSO, who will look at the issues raised and can investigate the matter. Stage 1 Stage 2 SPSO In most cases, a complaint will be made because the customer considers that the Council has: • Done something wrong • Failed to live up to expectations • Treated someone badly or unfairly The process map on the following page outlines our process. Page 70
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Page 5 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL Complaints Process Page 71
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL INDICATOR 1 – COMPLAINTS RECEIVED PER 1,000 OF POPULATION This section details the total number of complaints handled by Argyll and Bute Council between 1 April 2024 and 31 March 2025. To allow a fair comparison to be made across all 32 Scottish councils, this indicator looks at the figure of “complaints per 1,000 of population”. This means there were 9.6 complaints per 1,000 population, or roughly 1 resident in 104 made a complaint about our services. A comparison of this indicator over the past 3 years is shown in the table below. Year No. of Complaints Complaints Per 1,000 Population 2024/25 830 9.6 2023/24 781 9.1 2022/23 686 8.0 In 2024/2025 Argyll and Bute received, processed and closed 830 complaints. The population of Argyll and Bute is estimated at around 86,220 Page 72
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Page 7 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL INDICATOR 2 – NUMBER OF COMPLAINTS This indicator provides information about the number of complaints received at Stages 1 and 2, and the escalated complaints (when a customer is not satisfied with a stage 1 response, and it goes on to be dealt with as stage 2). 566* complaints were closed at Stage 1 – 70% 184* complaints were closed at Stage 2 – 21% 80 complaints were closed after escalation – 9% *7 complaints were not closed at Stage 1 within 10 days and were escalated to Stage 2. *1 Complex Complaint at Stage 2 has not been closed at time of reporting due to an extension being applied. The graph below shows a comparison between the number of complaints received at each stage over the past 3 years. 566 185 79 544 163 74 467 138 81 0 100 200 300 400 500 600 Stage 1 Stage 2 Escalated No. of Complaints 2022/23 2023/24 2024/25 Page 73
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL Upheld 34% Partially Upheld 21% Not Upheld 39% Resolved 6% 2024/2025 Outcomes 192 148 131 115 130 101 218 197 172 34 57 49 2024/25 2023/24 2022/23 Stage 1 Outcomes - 3 Year Comparison Upheld Partially Upheld Not Upheld Resolved INDICATOR 3 – COMPLAINT OUTCOMES STAGE 1 With every complaint, we contact the customer and explain what the outcome of their complaint was — Upheld, Not Upheld or Partially Upheld — and provide details about how this decision was made. The charts below provide a comparison of the outcomes for this year, and over the past 3 years. The “resolved” outcome was introduced with the new complaints handling procedure in April 2021, and is used when positive action can be taken to resolve the issue for the customer. 192 complaints were Upheld at Stage 1 – 34% 115 complaints were Partially Upheld at Stage 1 – 21% 218 complaints were Not Upheld at Stage 1 – 39% 34 complaints were Resolved at Stage 1 – 6% Page 74
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Page 9 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL Upheld 18% Partially Upheld 30% Not Upheld 50% Resolved 2% 2024/2025 Outcomes 33 23 22 56 63 55 92 72 55 3 1 5 2024/25 2023/24 2022/23 Stage 2 Outcomes - 3 Year Comparison Upheld Partially Upheld Not Upheld Resolved INDICATOR 3 – COMPLAINT OUTCOMES STAGE 2 33 Complaints were Upheld at Stage 2 – 18% 56 Complaints were Partially Upheld at Stage 2 – 30% 92 Complaints were Not Upheld at Stage 2 – 50% 3 Complaints were Resolved at Stage 2 – 2% Page 75
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL Upheld 28% Partially Upheld 30% Not Upheld 41% Resolved 1% 2024/25 - Outcomes 22 22 2524 18 17 32 33 37 1 1 2 2024/25 2023/24 2022/23 Escalated Outcomes - 3 Year Comparison Upheld Partially Upheld Not Upheld Resolved INDICATOR 3 – COMPLAINT OUTCOMES ESCALATED COMPLAINTS When a customer is not happy with a Stage 1 response, it is dealt with as a Stage 2 complaint — these are known as “Escalated Complaints”. 22 complaints were Upheld after escalation - 28% 24 complaints were Partially Upheld after escalation – 30% 32 complaints were Not Upheld after escalation – 41% 1 complaint was Resolved after escalation – 1% Page 76
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Page 11 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL INDICATOR 4 – AVERAGE TIMES Stage 1 – We aim to respond to and close all Stage 1 complaints within 5 working days. In 2024/2025, we closed 559 complaints at Stage 1, with a total sum of 2,505 working days used to close them. Our average time to close a Stage 1 complaint was 4.5 working days. The figures for the last 3 years can be seen in the table below. Year No. of Complaints Closed Total Days Average Time (days) 2024/25 559 2505 4.5 2023/24 532 2337 4.4 2022/23 453 1,995 4.4 Stage 2 – We aim to respond to and close all Stage 2 complaints within 20 working days. In 2024/2025, we closed 184 complaints at Stage 2, with a total sum of 4,087 working days used to close them. Our average time to close a Stage 2 complaint was 22.2 working days. The figures for the last 3 years can be seen in the table below. Year No. of Complaints Closed Total Days Average Time (days) 2024/25 184 4,087 22.2 2023/24 159 3,587 22.6 2022/23 137 2367 17.3 Monthly performance reporting is provided to all Heads of Service, Directors and Complaints Officers to allow them to take action with their Services if required. Page 77
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL Indicator 4 – Average Times After Escalation – in 2024/2025, we closed 79 escalated complaints after Escalation, with a total sum of 1,607 working days. Our average time to close a complaint after Escalation was 20.3 working days. The last three year’s results can be seen below. Year No. of Complaints Closed Total Days Average Time (days) 2024/25 79 1,607 20.3 2023/24 74 1,643 22.2 2022/23 81 1671 20.6 Page 78
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Page 13 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL INDICATOR 5 – PERFORMANCE AGAINST TIMESCALES Stage 1 – We aim to respond to and close all Stage 1 complaints within 5 working days. In 2024/2025, we closed 559 complaints at Stage 1 with 465 of these within timescale, or 83%. 35 (6%) were closed after an extension was agreed with the customer. No. of Complaints Closed Within Timescale % No. with Extension % 2024/25 559 465 83% 35 6% 2023/24 532 442 83% 37 7% 2022/23 453 370 82% 23 5% Stage 2 – we aim to respond to and close all Stage 2 complaints within 20 working days. In 2024/2025, we closed 184 complaints at Stage 2, with 110 of these within timescale, or 60%. 38 (21%) were closed after an extension was agreed with the customer. No. of Complaints Closed Within Timescale % No. with Extension % 2024/25 184 110 60% 38 21% 2023/24 159 100 63% 38 24% 2022/23 137 65 47% 33 24% Complaints with extensions agreed do not count as within timescale, these are reported as late responses. Page 79
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL Indicator 5 – Performance Against Timescales After Escalation – in 2024/2025, we closed 79 complaints after Escalation, with 54 of these within timescale, or 68%. 12 (15%) were closed after an extension was agree with the customer. No. of Complaints Closed Within Timescale % No. with Extension % 2024/25 79 54 68% 12 15% 2023/24 74 44 59% 12 16% 2022/23 81 46 57% 23 28% Page 80
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Page 15 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL INDICATOR 6 – EXTENSIONS TO TIMESCALES Part of the complaints handling procedure includes the option to seek an extension to the usual 5 or 20 day timescale, which should be agreed with the customer. This indicator reports the number and percentage of complaints at each stage which were closed after an extension to the 5 or 20 day timeline was authorised. Stage 1 35 Extensions agreed 6% of total complaints Escalated complaints 12 extensions agreed 15% of total complaints Stage 2 38 extensions agreed 21% of total complaints Page 81
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL INDICATOR 7 – CUSTOMER SATISFACTION Our customers are automatically issued with a short complaints process satisfaction survey once their complaint has been closed. The survey asks for feedback about the complaints process, and gives an opportunity to send us suggestions for improvements. The survey results are reviewed by the Complaints Co-ordinators quarterly, and the feedback can be used to improve how we handle complaints. We received 91 responses to our survey during the year, which is just over 13% of all complaints received. A low response rate makes it difficult to get an accurate picture of how all of our customers feel about the complaints process. 75% of customers indicated that they found it easy to make a complaint 68% of customers indicated they were told if the response was going to take longer than the set timescales 77% of customers indicated that information about the complaints procedure was easily accessible. 64% of customers indicated that they were given the opportunity to fully explain their complaint. From our review of the feedback provided through the surveys, we recognise that customers are often frustrated when an ongoing issue is not resolved through the complaints process. Page 82
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Page 17 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL INDICATOR 8 – LEARNING FROM COMPLAINTS – REPORTING Who looks at our complaints figures and trends? Information about complaints figures and corrective action taken is reported regularly to senior managers and a quarterly report is submitted to the Strategic Management Team. This process ensures the appropriate level of scrutiny takes place. Quarterly performance against the performance indicators is reported to the Local Authority Complaints Handlers Network (LACHN). We are also required to report our complaints figures to the Scottish Public Service Ombudsman (SPSO) by publishing our annual report. How we report Complaints Performance and Trends to our Customers We publish the quarterly and annual reports on our website: Complaints | Argyll and Bute Council (argyll-bute.gov.uk) Page 83
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL INDICATOR 8 – LEARNING FROM COMPLAINTS – IMPROVEMENTS By dealing with complaints on a day-to-day basis, our Officers are able to make adjustments to processes when issues are raised. In general, no major policy or procedural changes were required in response to complaints, however, a number of minor changes or actions were taken in order to improve our services. Whilst these improvements may have been minor in the overall scale of activities within the Council, it is our hope that they have made significant changes to the quality of service received by our customers. Examples of some of these changes are shown below: Departmental Complaints Co-ordinators attend regular meetings where learning points from the SPSO are shared and discussed. The feedback and suggestions from customer satisfaction surveys are also reviewed, and any potential improvement ideas are investigated and taken forward where appropriate. Customer wanted to make a complaint about the lack of response received following an email being sent to a member of staff. Complaint Partially Upheld – Customer was advised that unfortunately the member of staff that had been emailed was unexpectedly absent from work. It was identified that a process was required to be implemented, whereby should a member of staff be absent unexpectedly, arrangements should be made by the manager with IT colleagues to ensure either an Out of office message with alternate contact details is placed on the account or the Manager is granted access to access the absent staff members mailbox. This will ensure that any correspondence can be redirected as appropriate. Customer complaint in relation to the use of acronyms in reports that were available for the public and the lack of glossary included. Complaint Fully Upheld – While it is common practise when writing reports that the relevant term is used in full when first referenced with the acronym defined before it is then used within the remainder of the report, it was acknowledged that this does not always happen. It was identified that there was no specific reference to the use of acronyms within report guidance. The guidance was updated and issued to Officers involved in report writing to ensure this does not reoccur. Customer wanted to make a complaint about being unable to report a Missed Bin on the website. Complaint Resolved – It was identified that the issue stemmed from the Home Telephone Number being a mandatory field within the Webform and the customer not having one. The Webform was updated to remove the requirement for this information and the customer was advised that this had been updated. This will ensure that no other customers are faced with the same problem. Page 84
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Page 19 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL COMPLAINTS INVESTIGATED BY THE SPSO When a customer is not satisfied with our final response to a complaint, they can take it to the Scottish Public Service Ombudsman (SPSO) and ask for the complaint to be investigated. The SPSO is the final arbiter for complaints about public services. Cases passed to SPSO during 2024/2025 27 cases were received by the SPSO in relation to Argyll and Bute Council in 2024/2025. The SPSO publishes reports about all the organisations it has involvement with. More information is available from Statistics 2024-25 | SPSO 8 – Advice (not progressed) - 1 was mature (complaint was out with the time period for raising the complaint), 5 were premature (complainant contacted the SPSO before progressing through full complaints process) and 4 were enquiries. 27 - resolved early (not investigated) — the SPSO asks the Council to provide information in connection with the complaint, from that the investigating officer decides whether the complaint should be pursued further. Some of the reasons provided for not proceeding to an investigation were “Good Complaint Handling” and “Insufficient benefit would be achieved”. 0 – Investigations by the SPSO, however, there was 1 investigation in which we received an outcome of Fully Upheld from a 2023/24 Complaint. Page 85
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL COMPLAINT THEMES We record information about what type of complaints we receive, and have a standard set of categories that complaints generally fall into. The chart below shows how the complaints received have been classified during 2024-25. *Note – the total here does not directly correspond with the total number of complaints, due to how escalated complaint categories are recorded 23 42 26 155 34 311 172 0 50 100 150 200 250 300 350 Damage/Injury Inadequate Information Late Delivery Non Delivery Policy Restriction Substandard Delivery Unacceptable Behaviour Number of Complaints Page 86
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Page 21 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL 64 55 50 45 41 39 37 35 32 30 24 21 18 14 14 14 12 12 12 12 9 9 9 9 9 8 8 8 7 7 6 6 5 5 5 0 10 20 30 40 50 60 70 Staff Issue - Conduct Domestic Refuse Collection Staff Issue - Communication Education - Other Social Work Decisions Missed Bin Education - Treatment of Child Parking Services Council Tax Other Planning Applications Council Service Error Council Decision Ground Maintenance Cemeteries Street Lighting Failure of Care Winter Maintenance Quality of Care Public Conveniences Pavements/Footpaths Recycling Public Transport Road Closure Staff Issue - Other Traffic Management Commercial Refuse Enforcement Council Payments Road Works Licensing Social Work Reports Play Parks School Transport Care Funding Piers & Harbours No. of Complaints We have also captured information about what we believe the main theme of each complaint to be. This information will be provided (along with other levels of analysis) to our Elected Members and Senior Management to allow them to take this into consideration when making policy and service decisions. The chart below shows the main issues we have received complaints about. It includes all complaints where we received 5 or more in connection with a particular issue. Page 87
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL POSITIVE FEEDBACK Service was fantastic all dealt with in one phone call. Were very professional. A lot of councils in the UK generally should take heed of the quality of service received today and a credit to the ladies, that's all I’ve got to say. Here is a short message to compliment the awesome professional conduct of the team - [1] was patient and understanding, took time to listen, [2] immediately understood the situation and grasped the bigger picture [3] was genuinely considerate and showed knowledge and expertise, [4] relieved my anxiety and stress. please commend team. The person I dealt with was very professional very kind and helped me very much with my Council Tax query today and I'm very grateful for the assistance and you're very lucky to have such nice people working for you. All the best for 2025 many thanks bye now. Fabulous. The lady I spoke to was extremely helpful which at this moment in time at the age we are it was very rewarding to get this help. We are in our eighties and I got the help I needed the girl was absolutely fantastic. Thank you Here is just a small extract of the positive feedback that we have received this year. It is important to recognise that excellent services are being delivered, often in very challenging circumstances. For all the years I have dealt with Local Authorities, I have never received such excellent customer service and felt compelled to send you an email. I contacted Building Control to resolve an outstanding issue with a house we were about to purchase. The positive attitude, engagement and problem solving were second to none in helping us resolve a complex building warrant issue. Please kindly pass on my recommendation and appreciation! We are delighted to be moving to such a "welcoming" local authority! Page 88
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Page 23 Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL The young lady the employee of yours in the bin collections department was very caring, kind, respectful and gave me wonderful care and service she should be getting 11 out of 10 for customer care. Many thanks for all your help dear 11 out of 10 for customer care, wonderful. Thank you very much. The person I dealt with was very professional very kind and helped me very much with my Council Tax query today and I'm very grateful for the assistance and you're very lucky to have such nice people working for you. All the best for 2025 many thanks. Fabulous. Just a quick email to pass on our sincere gratitude with all your help these past few days. You have gone above and beyond and we can't thank you enough. A wee note of thanks for attending to all of the local government departments following the death of my wife. Your kind attention to this removed a great deal of stress from my shoulders at a time of loss. Thanks again. I spoke with the lady and she was really, really kind I get really worried when letters come in and I can't do things online I can't manage it and she explained everything very quietly and patiently and kindly so that's put my mind at ease and I'm very grateful to her so she's very good employee so thank you very much. The representative that I spoke with today was absolutely 100% helpful, professional, a really, really, nice person to deal with and I wouldn’t hesitate to call her back again if I had any queries as such a nice person. A credit to Argyll & Bute Council. Thank you. Page 89
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Bute • Helensburgh • Islay • Oban • Mull • Campbeltown • Iona • Dunoon • Tiree • Lochgilphead • Seil … Classification: OFFICIAL CONTACT US Thank you for looking at our annual complaints report for 2024-25. If you would like to know more about our complaints procedure, details can be found on our website: https://www.argyll-bute.gov.uk/my-council/complaints Or you can contact us using any of the methods below. Phone – 01546 605522 Text – 07860023933 Post – Argyll and Bute Council, Kilmory, Lochgilphead, Argyll, PA31 8RT Email - enquiries@argyll-bute.gov.uk Online - https://www.argyll-bute.gov.uk/my-council/how-contact-us Page 90
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Department Stage 1 complaints Responded to within timescale Upheld Partially upheld Not upheld Resolved Stage 2 complaints Responded to within timescale Upheld Partially upheld Not upheld Resolved Chief Executives Directorate 0 0 0 0 0 0 1 1 0 0 1 0 Community Development & Planning 0 0 0 0 0 0 0 0 0 0 0 0 Total 0 0 0 0 0 0 1 1 0 0 1 0 % within timescale - 100% Development & Infrastructure Directorate 0 0 0 0 0 0 0 0 0 0 0 0 Financial Services 56 54 15 5 34 2 8 8 1 1 6 0 Development & Economic Growth 50 32 15 8 21 6 22 14 4 2 16 0 Roads and Infrastructure 309 266 132 71 101 3 100 85 34 17 47 2 Customer Support 7 7 3 0 2 2 1 1 0 0 1 0 Total 422 359 165 84 158 13 131 108 39 20 70 2 % within timescale 85% 82% Customer Services Directorate 1 1 0 0 1 0 1 1 0 0 1 0 Legal & Regulatory 10 9 4 0 4 2 11 8 3 1 7 0 Commercial Services 8 7 0 3 5 0 12 11 0 0 12 0 Education 43 40 8 16 18 1 50 35 5 29 16 0 Total 62 57 12 19 28 3 74 55 8 30 36 0 % within timescale 92% 74% Health & Social Care Partnership Adult Care - Health & Community Care 29 17 8 6 8 5 20 6 2 9 8 0 Adult Care - Acute & Complex Care 10 5 1 0 6 2 7 3 0 2 3 2 Children and Families & Criminal Justice 38 23 3 5 17 11 31 14 6 19 6 0 Total 77 45 12 11 31 18 58 23 8 30 17 2 % within timescale 58% 40% Live Argyll Live Argyll 5 4 3 1 0 0 0 0 0 0 0 0 Total 5 4 3 1 0 0 0 0 0 0 0 0 % within timescale 80% - Overall totals 566 465 192 115 217 34 264 187 55 80 124 4 % within timescale 82% 71% Annual complaints figures 2024/25 Page 91
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Page 1 Annual Complaints Report 2024-25 Appendix 3 Annual Complaints Performance 2024-25 This report provides additional details to accompany the full annual complaints report for 2024-25, which is based on the 8 indicators set by the Scottish Public Service Ombudsman (SPSO). 1. All Complaints listed by theme Complaint theme Number Cost of Council Service 4 Civic Amenity 3 Street Sweeping 3 Benefits Other 3 Flooding 3 Projects, Renewables & Regeneration 3 Live Argyll - Other 2 Special Uplift 2 Council Property/Buildings 2 Respite 2 Litter 2 HR Policy/Process 2 Disabled Parking Bays 2 Payroll 2 Library Services 2 Noise Control 1 Dog Fouling 1 Public Health 1 Road Markings 1 Drainage 1 Leisure Services 1 Surfacing 1 Council Tax Portal 1 Benefit Payments 1 School Catering 1 Local Development Plan 1 Table 1 provides a full breakdown of complaints into relevant themes. From the data in the complaints system, we have assigned each case a theme, based on our understanding of the main issue raised in the complaint. Where complaints have been in connection with a number of issues, or could fall into various themes, we have assigned it the theme we believe to be the main issue. The larger themes are explored further within this report. Complaint theme Number Staff Issue - Conduct 64 Domestic Refuse Collection 55 Staff Issue - Communication 50 Education - Other 45 Social Work Decisions 41 Missed Bin 39 Education - Treatment of Child 37 Parking Services 35 Council Tax Other 32 Planning Applications 30 Council Service Error 24 Council Decision 21 Ground Maintenance 18 Cemeteries 14 Street Lighting 14 Failure of Care 14 Winter Maintenance 12 Quality of Care 12 Public Conveniences 12 Pavements/Footpaths 12 Recycling 9 Public Transport 9 Road Closure 9 Staff Issue - Other 9 Traffic Management 9 Commercial Refuse 8 Enforcement 8 Council Payments 8 Road Works 7 Licensing 7 Social Work Reports 6 Play Parks 6 School Transport 5 Care Funding 5 Piers & Harbours 5 Homelessness Service 4 Non Domestic Rates 4 Data Protection 4 Committee/Governance 4 Road Signage 4 Page 93
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Page 2 Annual Complaints Report 2024-25 Appendix 3 2. General breakdown by complaint category and department Details about some of the larger themes / areas of complaints are provided in this section. A more in depth breakdown within the main service areas is provided at section 4 below Table 1 – Categories of complaints by department Chief Executive’s Unit & Community Planning Education, Legal & Regulatory & Commercial Customer Support, Financial Services, Road & Infrastructure and Development & Economic Growth Health and Social Care Partnership Live Argyll Damage/Injury 2 21 Inadequate Information 7 26 8 1 Late Delivery 2 23 1 Non Delivery 6 140 7 2 Policy Restriction 6 25 3 Substandard Delivery 64 188 58 1 Unacceptable Behaviour 1 39 85 46 1 Grand Total 1 126 508 123 5 Table 2 – Number of complaints by area Details of complaint themes within ward areas are provided below. Area Count of Ward Area Bute and Cowal 155 Helensburgh and Lomond 285 Mid Argyll Kintyre and the Islands 148 Oban Lorn and the Isles 173 Area Not Identified 2 Grand Total 763 Page 94
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Page 3 Annual Complaints Report 2024-25 Appendix 3 Section 3 – Complaints themes by Area Table 3a Mid Argyll, Kintyre and Islands Theme Count of Ward Area Staff Issue - Conduct 25 Education - Other 15 Education - Treatment of Child 11 Planning Applications 9 Council Service Error 8 Social Work Decisions 7 Public Conveniences 6 Staff Issue - Communication 6 Council Tax Other 6 Winter Maintenance 5 Cemeteries 4 Failure of Care 3 Council Decision 3 Quality of Care 3 School Transport 3 Enforcement 3 Missed Bin 3 Road Works 2 Data Protection 2 Commercial Refuse 2 Parking Services 2 Public Transport 2 Flooding 1 Benefits Other 1 Non Domestic Rates 1 Piers & Harbours 1 Social Work Reports 1 Benefit Payments 1 Payroll 1 Drainage 1 School Catering 1 Public Health 1 Civic Amenity 1 Ground Maintenance 1 Litter 1 Licensing 1 Street Lighting 1 Recycling 1 Road Closure 1 Committee/Governance 1 Grand Total 148 Page 95
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Page 4 Annual Complaints Report 2024-25 Appendix 3 3b Oban, Lorn and the Isles Theme Count of Ward Area Social Work Decisions 12 Parking Services 12 Staff Issue - Communication 12 Council Decision 11 Staff Issue - Conduct 9 Council Tax Other 9 Domestic Refuse Collection 9 Education - Other 8 Missed Bin 8 Council Service Error 7 Planning Applications 6 Winter Maintenance 6 Failure of Care 6 Cemeteries 6 Staff Issue - Other 5 Ground Maintenance 4 Licensing 4 Piers & Harbours 4 Projects, Renewables & Regeneration 3 Public Transport 3 Quality of Care 3 Pavements/Footpaths 2 Education - Treatment of Child 2 Council Payments 2 Street Lighting 2 Commercial Refuse 2 School Transport 2 Care Funding 2 Pothole 1 Civic Amenity 1 Public Conveniences 1 Committee/Governance 1 Play Parks 1 Respite 1 Enforcement 1 Council Property/Buildings 1 Surfacing 1 Cost of Council Service 1 Special Uplift 1 Non Domestic Rates 1 Grand Total 173 Page 96
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Page 5 Annual Complaints Report 2024-25 Appendix 3 3c Bute and Cowal Theme Count of Ward Area Theme Count of Ward Area Staff Issue - Communication 15 Live Argyll - Other 1 Staff Issue - Conduct 12 Missed Bin 1 Social Work Decisions 11 Grand Total 155 Education - Treatment of Child 10 Council Tax Other 9 Traffic Management 9 Road Closure 8 Parking Services 7 Pavements/Footpaths 7 Domestic Refuse Collection 6 Education - Other 5 Quality of Care 5 Planning Applications 4 Ground Maintenance 4 Public Conveniences 3 Failure of Care 3 Public Transport 3 Council Decision 2 Social Work Reports 2 Library Services 2 Council Service Error 2 Cemeteries 2 Street Lighting 2 Street Sweeping 1 Road Markings 1 Data Protection 1 Disabled Parking Bays 1 Road Works 1 Enforcement 1 Care Funding 1 Dog Fouling 1 Licensing 1 Council Tax Portal 1 Road Signage 1 Play Parks 1 Council Payments 1 Pothole 1 Council Property/Buildings 1 HR Policy/Process 1 Staff Issue - Other 1 Leisure Services 1 Noise Control 1 Non Domestic Rates 1 Page 97
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Page 6 Annual Complaints Report 2024-25 Appendix 3 3d Helensburgh and Lomond Theme Count of Ward Area Payroll 1 Domestic Refuse Collection 40 Quality of Care 1 Missed Bin 27 Winter Maintenance 1 Staff Issue - Conduct 18 Local Development Plan 1 Education - Other 17 Special Uplift 1 Staff Issue - Communication 17 Respite 1 Education - Treatment of Child 14 HR Policy/Process 1 Parking Services 14 Disabled Parking Bays 1 Social Work Decisions 11 Litter 1 Planning Applications 11 Non Domestic Rates 1 Street Lighting 9 Public Transport 1 Ground Maintenance 9 Civic Amenity 1 Recycling 8 Live Argyll - Other 1 Council Tax Other 8 Grand Total 285 Council Service Error 7 Council Payments 4 Road Works 4 Homelessness Service 4 Commercial Refuse 4 Council Decision 4 Play Parks 4 Social Work Reports 3 Staff Issue - Other 3 Cost of Council Service 3 Pavements/Footpaths 3 Enforcement 3 Road Signage 3 Care Funding 2 Public Conveniences 2 Committee/Governance 2 Street Sweeping 2 Flooding 2 Cemeteries 2 Failure of Care 2 Pothole 2 Benefits Other 2 Data Protection 1 Licensing 1 Page 98
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Page 7 Annual Complaints Report 2024-25 Appendix 3 3e Top 10 complaint themes, broken down by ward area Theme Bute and Cowal Helensburgh and Lomond Mid Argyll Kintyre and the Islands Oban Lorn and the Isles Grand Total Staff Issue - Conduct 12 18 25 9 64 Domestic Refuse Collection 6 40 9 55 Staff Issue - Communication 15 17 6 12 50 Education - Other 5 17 15 8 45 Social Work Decisions 11 11 7 12 41 Missed Bin 1 27 3 8 39 Education - Treatment of Child 10 14 11 2 37 Parking Services 7 14 2 12 35 Council Tax Other 9 8 6 9 32 Planning Applications 4 11 9 6 30 Grand Total 80 177 84 87 428 Section 4 – Service breakdown by area and theme Table 4a – Chief Executives Unit Theme Bute and Cowal Helensburgh and Lomond Mid Argyll Kintyre and the Islands Oban Lorn and the Isles Grand Total Staff Issue - Other 1 1 Grand Total 0 0 0 1 1 Table 4b – Education, Legal and Regulatory Support, Commercial Services Theme Bute and Cowal Helensburgh and Lomond Mid Argyll Kintyre and the Islands Oban Lorn and the Isles Area Not Identified Grand Total Committee/Governance 2 1 1 4 Council Decision 2 1 1 9 1 14 Council Property/Buildings 1 1 2 Council Service Error 1 1 1 3 Data Protection 2 2 Education - Other 5 17 15 8 45 Education - Treatment of Child 10 14 11 2 37 Enforcement 1 1 Local Development Plan 1 1 Projects, Renewables & Regeneration 1 1 Quality of Care 1 1 School Catering 1 1 Staff Issue - Communication 2 3 5 Staff Issue - Conduct 4 2 1 1 8 Staff Issue - Other 1 1 Grand Total 26 38 33 28 1 126 Page 99
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Page 8 Annual Complaints Report 2024-25 Appendix 3 Table 4c – Customer & Support Services Theme Bute and Cowal Helensburgh and Lomond Mid Argyll Kintyre and the Islands Oban Lorn and the Isles Grand Total Council Decision 1 1 Council Service Error 1 1 Data Protection 1 1 HR Policy/Process 1 1 2 Missed Bin 1 1 Staff Issue - Communication 1 1 Grand Total 1 4 1 1 7 Table 4d – Financial Services Theme Bute and Cowal Helensburgh and Lomond Mid Argyll Kintyre and the Islands Oban Lorn and the Isles Area Not Identified Grand Total Benefit Payments 1 1 Benefits Other 2 1 3 Care Funding 1 1 Cost of Council Service 1 1 2 Council Decision 1 1 2 Council Payments 1 4 2 1 8 Council Tax Other 9 8 6 9 32 Council Tax Portal 1 1 Non Domestic Rates 1 1 1 1 4 Payroll 1 1 2 Staff Issue - Communication 1 1 Staff Issue - Conduct 1 1 Grand Total 13 20 10 14 1 58 Table 4e – Development and Economic Growth Row Labels Bute and Cowal Helensburgh and Lomond Mid Argyll Kintyre and the Islands Oban Lorn and the Isles Grand Total Cost of Council Service 1 1 Council Decision 1 1 Council Service Error 2 2 Drainage 1 1 Enforcement 1 3 1 1 6 Homelessness Service 3 3 Licensing 1 1 1 4 7 Planning Applications 4 11 9 6 30 Projects, Renewables & Regeneration 2 2 Public Health 1 1 Staff Issue - Communication 2 3 1 6 Staff Issue - Conduct 1 1 2 Staff Issue - Other 1 1 3 5 Grand Total 10 24 14 19 67 Page 100
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Page 9 Annual Complaints Report 2024-25 Appendix 3 Table 4f – Roads & Infrastructure Services Theme Bute and Cowal Helensburgh and Lomond Mid Argyll Kintyre and the Islands Oban Lorn and the Isles Grand Total Cemeteries 2 2 4 6 14 Civic Amenity 1 1 1 3 Commercial Refuse 4 2 2 8 Cost of Council Service 1 1 Council Decision 2 1 3 Council Service Error 1 5 6 3 15 Data Protection 1 1 Disabled Parking Bays 1 1 2 Dog Fouling 1 1 Domestic Refuse Collection 6 40 9 55 Enforcement 1 1 Flooding 2 1 3 Ground Maintenance 4 9 1 4 18 Litter 1 1 2 Missed Bin 1 27 3 7 38 Noise Control 1 1 Parking Services 7 14 2 12 35 Pavements/Footpaths 7 3 2 12 Piers & Harbours 1 4 5 Play Parks 1 4 1 6 Pothole 1 2 1 4 Public Conveniences 3 2 6 1 12 Public Transport 3 1 2 3 9 Recycling 8 1 9 Road Closure 8 1 9 Road Markings 1 1 Road Signage 1 3 4 Road Works 1 4 2 7 School Transport 3 2 5 Special Uplift 1 1 2 Staff Issue - Communication 5 7 3 5 20 Staff Issue - Conduct 2 12 13 2 29 Staff Issue - Other 2 2 Street Lighting 2 9 1 2 14 Street Sweeping 1 2 3 Surfacing 1 1 Traffic Management 9 9 Winter Maintenance 1 5 6 12 Grand Total 70 170 60 76 376 Page 101
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Page 10 Annual Complaints Report 2024-25 Appendix 3 Health and Social Care Partnership Table 5a – Area breakdown Service Bute and Cowal Helensburgh and Lomond Mid Argyll Kintyre and the Islands Oban Lorn and the Isles Grand Total Children and Families 21 20 12 6 59 Complex Care and Registered Services 3 2 2 9 16 Criminal Justice 1 2 1 4 Hospital and Community Services 6 4 16 18 44 Grand Total 31 28 30 34 123 Table 5b – Area & Theme breakdown Bute and Cowal Helensburgh and Lomond Mid Argyll Kintyre and the Islands Oban Lorn and the Isles Grand Total Children and Families 21 20 12 6 59 Care Funding 1 1 2 Failure of Care 3 1 2 1 7 Quality of Care 1 1 2 Respite 1 1 2 Social Work Decisions 7 8 5 3 23 Social Work Reports 2 2 4 Staff Issue - Communication 5 4 2 1 12 Staff Issue - Conduct 2 2 3 7 Complex Care and Registered Services 3 2 2 9 16 Care Funding 1 1 Council Service Error 1 1 Social Work Decisions 2 1 2 5 Staff Issue - Communication 1 1 2 4 Staff Issue - Conduct 1 1 3 5 Criminal Justice 1 2 1 4 Homelessness Service 1 1 Social Work Decisions 1 1 Social Work Reports 1 1 Staff Issue - Conduct 1 1 Health and Community Services 6 4 16 18 44 Care Funding 1 1 Council Service Error 2 2 Failure of Care 1 1 5 7 Quality of Care 3 3 3 9 Social Work Decisions 2 2 2 6 12 Social Work Reports 1 1 Staff Issue - Communication 1 1 Staff Issue - Conduct 1 7 3 11 Grand Total 31 28 30 34 123 Notes: The total number of complaints does not exactly relate to the total number of themes reported, as many of the complaints escalated from stage 1 to stage 2 represent 1 theme. Page 102
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE Legal and Regulatory Support 4 September 2025 Information Requests – Annual Report 2024/25 1.0 INTRODUCTION 1.1 This report is to update the Committee on the position regarding the recording, responding to, monitoring and reporting of requests for information under the Freedom of Information (Scotland) Act 2002 (FOISA) and the Environmental Information (Scotland) Regulations 2004 (EIR’s) for the period between 01 April 2024 and 31 March 2025. 2.0 RECOMMENDATIONS 2.1 It is recommended that the Committee consider and note the content of this report. 3.0 DETAIL 3.1 A total of 1,582 requests for information were received during the period - 1 April 2024 to 31 March 2025 which is an increase of 94 on the number received in 2023-24. Overall, 90% of requests received this year (1,423) were responded to within the statutory timescale of 20 working days and 159 requests were responded to after 20 working days. These totals include requests for information from the Health and Social Care Partnership (Social Work) and Live Argyll. 3.2 A breakdown by Department and detail around late responses is provided in Appendix 1. 3.3 There were 38 requests for review made during this period, which equates to less than 2% of the total number of requests. 26 were responded to within the 20 working day statutory timescale (68%), and the 12 issued late required more time to gather information and investigate complex issues. 3.4 The overall response rate within timescale has decreased slightly from 92% in 2023/24 to 90% in 2024/25. As the details provided in Appendix 1 show, many service areas achieved a high level of performance, between 95-100%. It is helpful to note that 45 responses were sent out on day 21 and 18 sent out on day 22, which if they had been issued on time would have brought the response rate up to 94%. The team will have an ongoing focus to try and assist services to avoid responses issued late by only a day or so. In addition, while L&RS are showing as 92%, the bulk of those late responses relate to requests that were Page 103 Agenda Item 10
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handled by L&RS but where the information requested related to other services and sometimes multiple services where there has been a delay in the provision of the information. More information in relation to these is included within the Late Responses within Appendix 1. 3.5 Three decisions have been received following investigations by Office of the Scottish Information Commissioner (OSIC) in 2024/25. 2 decisions were in agreement with the applicant, one of which found the Council had considered a request under FOI instead of EIR and the other found that Council had failed to carry out the appropriate searches. 1 decision was in agreement with the Council, where OSIC agreed that the Council had applied an exemption appropriately to withhold information. 3.6 The Compliance and Regulatory team continues to work with Departments to seek to improve response rates where required, and deliver training and provide guidance to allow officers to appropriately respond to information requests. 3.7 The Compliance and Regulatory team provide monthly updates to the Chief Executive, the Chief Officer, Directors, Heads of Service and the departmental FOI reps. Quarterly reports are provided to all DMTs. 4.0 CONCLUSION 4.1 Many Services maintained an excellent performance level throughout 2024/25, and the overall result of 90% of responses issued within timescale is very positive, given the pressures on some service areas where high numbers of information requests were received. 4.2 The Compliance and Regulatory team continues to work with Departments to seek to improve response rates where required, and deliver training and provide guidance to allow officers to appropriately respond to information requests. 5.0 IMPLICATIONS 5.1 Policy None 5.2 Financial None 5.3 Legal Possible breach of statutory requirement to respond to requests 5.4 5.5 HR Customer Service None The relatively low number of requests for review is indicative that we are responding appropriately to requests and customers are receiving the information they are looking for. 5.6 5.7 5.8 Risk Climate Change Fairer Scotland Duty None None None 5.9 5.10 Equalities - protected characteristics Consumer Duty None None Page 104
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5.11 Island Communities None 5.12 Children’s Rights and Wellbeing None Douglas Hendry Executive Director with responsibility for Legal and Regulatory Support 4 August 2025 Policy Lead – Councillor Mark Irvine For further information contact: Iain Jackson, Governance, Risk and Safety Manager - 01546 604188 APPENDICES Appendix 1 – Departmental/Service stats & Late Response Details Page 105
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Department / Service Total requests received Responded to in time Responded to late Running in time Running late Overall % 2023/24 2022/23 2021/22 Chief Executives CP&D 1 1 0 0 0 100% 0% 0% 100% Customer Services Education 179 166 13 0 0 93% 89% 99% 93% L&RS 450 413 37 0 0 92% 92% 97% 98% Commercial 57 57 0 0 0 100% 100% 100% 100% Development and Infrastructure Financial 93 92 1 0 0 99% 100% 99% 97% D&EG 303 273 30 0 0 90% 90% 83% 85% R&IS 250 219 31 0 0 88% 89% 89% 86% Customer 113 80 33 0 0 71% 95% 98% 97% Health and Social Care Partnership IJB 1 1 0 0 0 100% - - - Adult Care 67 64 3 0 0 96% 98% 97% 99% C&F / CJ 52 46 6 0 0 88% 96% 95% 98% Live Argyll Live Argyll 16 11 5 0 0 69% 92% 80% 100% Totals 1582 1423 159 0 0 90% 92% 94% 93% FOISA and EIR Requests Information Requests - Annual Figures - 1st April 2024 - 31st March 2025 Page 107
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Classification: OFFICIAL ARGYLL AND BUTE COUNCIL AUDIT & SCRUTINY COMMITTEE FINANCIAL SERVICES 4 SEPTEMBER 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. 2.2 Agree that the Chair presents the report to a future meeting of the Council at a date to be confirmed. 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 Page 109 Agenda Item 11
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Classification: OFFICIAL 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 4 September 2025 Appendices: 1. Audit and Scrutiny Committee Chair Annual Report 2024/25 Page 110
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3 Classification: OFFICIAL Appendix 1 - Audit and Scrutiny Committee Chair Annual Report 2024/25 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 Page 111
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4 Classification: OFFICIAL 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 Page 112
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5 Classification: OFFICIAL 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) Page 113
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6 Classification: OFFICIAL 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 was made by the Council since the previous inspection in 2015, specifically the significantly improved relationships amongst elected members and Page 114
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7 Classification: OFFICIAL 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 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 Page 115
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8 Classification: OFFICIAL 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 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. Page 116
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9 Classification: OFFICIAL 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 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 Page 117
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10 Classification: OFFICIAL 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. Page 118
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Classification: OFFICIAL ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 4 SEPTEMBER 2025 STRATEGIC RISK ASSURANCE MAPPING 1. EXECUTIVE SUMMARY 1.1 The purpose of this report is to set out Internal Audit's assessment of the sources of assurance for the Audit and Scrutiny Committee (the Committee) on the management of the Council's strategic risks. 1.2 Appendix 1 highlights the overall assessment against each of the strategic risks. It should be noted that the assessment is based on the level of assurance that the Committee can rely on. A 'red' assessment therefore highlights where there are gaps in evidence of active/targeted actions/activity rather than an assessment on the management of that risk. 2. RECOMMENDATIONS 2.1 To note and consider the risk assurance map at appendix 1. 3. DETAIL 3.1 Internal audit has a key role in relation to the Council’s governance to provide assurance over the effective management of risk. 3.2 The Chief Executive presents the Strategic Risk Register to the Committee on an annual basis which provides the Committee the opportunity to scrutinise the register and seek assurance from the Chief Executive that risks are being managed appropriately. 3.3 The CIA is of the view that the cumulative effect of these management arrangements both contribute to positive risk management reporting within Argyll and Bute Council but also maintaining an annual review in order to maintain appropriate overview and update of key emerging issues which will be reported to the Audit and Scrutiny Committee. 3.4 The Global Internal Audit Standards (GIAS) require that Internal Audit evaluate the effectiveness of the Council’s risk management process. However, it does not state this needs to be an annual exercise. Furthermore, it states that Internal Audit’s may gather the information to support an assessment of the effectiveness of risk management processes ‘during multiple engagements ‘and further states that ‘The results of these engagements, when viewed together, provide an understanding of the organisation’s risk management processes and their effectiveness. As such PSIAS does not require a full risk management audit on an annual basis. Furthermore, The CIPFA publication “Audit Committees: Practical Guidance for Local Authorities and Police” (2022 Edition)” requires the Audit Committee to have the option to consider risk management on a regular basis, regardless of who has operational responsibility for it. That option is always available. Page 119 Agenda Item 12
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Classification: OFFICIAL 3.5 Appendix 1 provides a summary of the Council’s strategic risk assurance map which is based on the ‘three lines model’ (formerly known as the ‘Three Lines of Defence’). 1. The first line is the ‘functions that own and manage risks’. It is the control environment established by day-to-day business operations and risk management processes. It is formed by managers and staff who are responsible for identifying and managing risk as part of their accountability for achieving objectives. This requires an understanding of the Council, its objectives, the environment in which it operates, and the risks it faces. It includes things such as: • identifying risks and improvement actions • implementing controls • reporting on progress 2. The second line is the ‘functions that oversee or who specialise in compliance or the management of risk’. This provides the policies, frameworks, tools, techniques and support to enable risk and compliance to be managed in the first line, conducts monitoring to judge how effectively they are doing it, and helps ensure consistency of definitions and measurement of risk. The Council’s various committees and Strategic Management Team are key functions in delivering this element. 3. The third line is the ‘functions that provide independent assurance’. This is provided by internal and external audit and any other scrutiny or regulatory body who offer independent challenge and provide an evaluation, through a risk-based approach, on the effectiveness of the Council’s governance, risk management, and internal control. Page 120
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Classification: OFFICIAL 3.6 The table below summarises the assessment against each Strategic Risk. Strategic Risk Risk Score (August 2025) Assurance Assessment 1. Population, external infrastructure and economic decline Red 16 Green 2. Condition and suitability of infrastructure and asset base Amber 12 Green 3. Financial sustainability Amber 12 Green 4. Governance & leadership Amber 8 Green 5. Engagement and understanding the needs of the community Amber 9 Green 6. Service delivery Amber 12 Green 7. Health & Social Care Partnership Amber 12 Green 8. Civil contingency and business continuity arrangement are not effective Green 6 Amber 9. Waste management Red 16 Amber 10. Service delivery – Cyber Security Red 15 Amber 11. Cost of living crisis Amber 12 Amber 12. Impact of climate change Amber 12 Green 13. Lack of housing availability Red 20 Amber 14. Compliance with ‘Prevent’ Amber 9 Amber 3.7 The assurance map has not identified an area where there may be a concerning mismatch between the level of risk identified and the assurance provided to Committee. 3.8 3.9 Waste Management has been subject to regular monitoring and update from the service to the Council’s Audit and Scrutiny Committee, additional funding is to be provided from the Scottish Government of £1.5M to support the compliance with the BMW landfill ban. In addition, regular reports are being submitted to and are being monitored by the relevant service Committee of the Council. The Audit and Scrutiny Committee have identified the progress and arrangements for the implementation of the BMW landfill ban as the subject area which will be reviewed in 2025/26 as part of their scrutiny work. This will provide the Committee with a comprehensive overview of the arrangements relating to BMW. In relation to ‘Service Delivery – Cyber Security’ work has been undertaken in this area as part of the 2022/23 plan which provided a substantial level of assurance. Going forward, a planned review will be undertaken as part of the 2025/26 Internal audit plan putting additional audit resources into this area of risk, specifically, ICT Disaster Recovery Arrangements. However, it is relevant to note that work undertaken in 2022/23, 2023/24 and 2024/25 identified no significant concerns in relation to Cyber Security, Cloud Computing, Data Security and information Security and IT Risk Register and Mitigation Processes. Whilst this is in part reassuring, there is always a heightened risk to public bodies in relation to this critical area of business activity, together with increasing evidence of sustained attempts on public bodies within Scotland and the wider UK. The Council declared a Housing Emergency due to the risks associated with the Council, partner agencies and communities being unable to attract and retain working age people due to lack of housing and pricing. A housing summit in collaboration with housing delivery partners was held in December Page 121
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Classification: OFFICIAL 3.10 2023 in order to forge commitments aimed at tackling housing shortage which maximise resources, pursue innovation, coordinate planning and target delivery. A Housing Strategy and Investment Plan is being funded and implemented, with a new housing delivery group established; Plans are underway to approach this complex and difficult issue at both a national and local level. The remaining areas where assurance has been assessed as “amber” either have audit reviews already undertaken, scheduled or as part of the ongoing audit planning process. All changes to the Strategic Risk Register from September 2025 will be assessed in the 2026 Assurance Mapping Exercise. 4. CONCLUSION 4.1 This exercise has again confirmed that for the majority of risks in the Council’s strategic risk register there are either sufficient assurances in place or internal audit have scheduled work to fill identified gaps. Nevertheless, it is important to outline that such mitigations and assurances do not alone guarantee that an adverse event or risk will not present itself or materialise. 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 – The assurance mapping exercise has provided a satisfactory level of assurance that the Council is managing and monitoring its strategic risks effectively. 5.7 Climate Change - None 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 Paul Macaskill Chief Internal Auditor 4 September 2025 For further information contact: Paul Macaskill, Chief Internal Auditor, 01436 604108 APPENDICES Appendix 1 – Strategic Risk Assurance Map Page 122
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APPENDIX 1: Strategic Risk Assurance Map N o Risk Risk Score First Line of Defence Second Line of Defence Third Line of Defence Assessment 1 Population, External Infrastructure and Economic Decline Failure to identify relevant factors contributing to the decline and failure to develop strategies and actions targeting these factors. Red 16 • Service planning linked to Corporate Outcomes and the A&B Outcome Improvement Plan (ABOIP) • Community and multi- agency links through Community Planning Partnership • Parliamentary forum • Argyll, Lomond and Islands Rural Regeneration Initiative • Argyll and the Isles Strategic Tourism Partnership • Promotion and marketing of Argyll & Bute (ABplace2B campaign) • Business Gateway Service focused on helping local businesses grow • Council Leader engaging with leaders of other west coast councils suffering population decline • Economic Strategy and Action Plan monitored by ED&I Committee • CPP report on the progress being made against the outcomes and vision of the ABOIP and issue annual reports. • Monitoring of CPP plan and performance at CPP Management Committee. • Area Community Action Plans progress reported to Community Planning Groups • ABOIP targets population and economic recovery • Performance reports considered by A&SC, strategic committees and area committees External Audit • Best Value Assurance Report (May 2020) highlights Council’s and CPP partners’ commitment to a shared vision and that they recognise the challenges including the declining and aging population Internal Audit • Planning (2023/24 – Substantial) • Community Education (2024/25 – High) • Short Term Lets (2024/25 – Substantial) • Oban Airport (2024/25 – High) Scrutiny • Economic Strategy (2019/20) Future • Delivery of the Rural Growth Deal • UK Shared Prosperity Funding Investment Plan is being actioned as per plan. • Multi-agency approach to refugee settlement underway linking with national processes and There is a range of assurance sources across the three lines. Page 123
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agendas. • The council will continue as a partner of the Highlands and Islands Regional Economic Partnership and lobby for Government investment to realise economic opportunity and address barriers to future sustainable growth. • Internal Audit Rural Growth Deal (2025/25) 2 Condition and suitability of Infrastructure & Asset Base Infrastructure and asset base does not meet current and future requirements and is not being used or managed efficiently and effectively. Amber 12 • R&A Control Hub and Joint Operations Team • Operational risks monitored quarterly • Strategic Asset Mgt Board • Corporate Asset Management Strategy and Corporate Asset Management Plan • Service Asset Management Plans • Community Empowerment and Community Asset transfer arrangements in place • Roads Asset Management Plan • One Council Property Approach • Routine inspections of roads infrastructure to deal with potential weak areas • Revised capital management • D&I performance reporting to ED&I Committee • Asset Mgt Plans reviewed annually by Council as part of the budget setting process • Status and Options reports to ED&I Committee Internal Audit • Community Empowerment Act (2018/19 – High) • Capital Monitoring (2020/21 – Substantial) • Management of Property Contracts (2020/21 – Reasonable) • Land & Asset Disposal (2021/22 – Substantial) • Internal Audit – Fixed Asset Register (2021/22 – Reasonable) • Piers and Harbours (2023/24 – Reasonable) • Leasing - Estates (2024/25 – Substantial) • Asbestos Management (2024/25 – Reasonable) • Bridges Asset Management Plan and Inspection Regime (2024/25 – Reasonable) Scrutiny • Roads Maintenance (2018/19) • Scrutiny – Community Asset There is a range of assurance sources across the three lines. Page 124
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procedures Future • Modern Workspace Programme to review and rationalise property portfolio for future needs of the Council. Changes on phased and town by town basis Transfers (2021/22) Future • Internal Audit - Roads Reconstruction Programme (2025/26) • Review of Capital Arrangements in 2025/25 • Delivery of the Capital Programme 20025/26 3 Financial Sustainability Insufficient resource to meet current and future service requirement. Budget not aligned / does not support business outcomes. Amber 12 • Budget preparation and monitoring • Medium term financial strategy with worst case, mid case and best case scenario planning • Treasury Mgt Policy • 5 year budget outlook updated quarterly • Financial Services Team aligned to service delivery • Regular engagement between budget holders and appointed finance contact • Reserve balances monitored throughout the year • Financial monitoring and financial risk monitoring to P&R/BCC Committee • Budget and budget working papers considered by full Council • Financial Strategy reported to P&R Committee • 5 year budget outlook to P&R Committee • Treasury Mgt Annual Report to P&R Committee and A&SC • Joint SMT/Policy Leads meetings include discussions around financial issues Internal Audit • Continuous Monitoring • Financial Planning (2018/19 - Substantial) • Capital Monitoring (2020/21 - Substantial) • Fixed Asset Register (2021/22 – Reasonable) • Management of Debt and Recovery (2022/23 – Reasonable) • Financial Ledger (2023/24- Substantial) • NDR (2024/25 - Substantial) External Audit • Assessment of financial management via annual audit • Best Value Report (April 2025) highlights the Council has effective financial planning arrangements in place but could take steps to enhance its strategic approach to considering a range of savings options to support difficult decisions. There is a range of assurance sources across the three lines. Page 125
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(New medium – longer terms budget approach 2025/26) • Assessment of budget monitoring arrangements Future • Internal Audit – Payroll (2025/26) • Rural Growth Deal (2025/26) • Consider the implications and opportunities from the Visitor Levy (Scotland) Bill which could generate additional income from 2026/27. 4 Governance and Leadership Governance and leadership arrangements are not conducive to effective working and lead to a lack of strategic direction. Amber 8 • Corporate Governance Improvement Plan • Ongoing member development • Mentoring and coaching for SMT • Leadership development programme • Chief Exec Bilaterals • A&B Manager’s Course • Established partnership governance • Effective internal audit function • Scrutiny function • Performance Improvement framework • Council constitution • Codes of conduct • Oversight provided by Audit & Scrutiny Committee • Decision making committees open to public • Constitution updated and approved annually by Council • IA reports and follow up to DMT and SMT • Annual assurance statements • Fortnightly DMTs – weekly ELT and monthly SMTs Internal Audit • Continuous Monitoring • Organisational Culture (2018/19) • Performance Mgt (2018/19 – High) • Member Support (2018/19 – Substantial) • Risk Mgt 2018/19 – Substantial) • Following The Public Pound (2019/20 – Reasonable) • Annual self-assessment of PSIAS – external peer review every 5 years • Formal Induction of new Audit and Scrutiny Committee Members 2022 • Risk Management (2023/24 – Substantial) There is a range of assurance sources across the three lines. Page 126
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for staff and members • Code of Corporate Governance and Annual Action Plan • Scrutiny framework and scrutiny plan • Risk management embedded • Policy lead meetings • Area Committee Business Days External Audit • Ongoing independent assurance reported in AAR • Best Value Report (March 2025) identified no significant concerns. Future • Scheduled reviews of Risk Management every two to three years. • Connect for Success priorities now form the basis of new corporate improvements and are being delivered. • New Corporate Improvement Plan. 5 Engagement and Understanding the needs of the Community The Council fails to understand service user needs and emerging demographic trends and does not align service delivery to meet these. Amber 9 • Annual budget consultation • Complaints process • Community Engagement Strategy • Customer Service Board • Various user feedback (i.e. Refugee Resettlement, commissioned services, community council surveys) • Parental engagement strategy • Outreach service • Democracy matters • Community Planning Partnership • Service Committees • Area Committees • DMT and SMT Internal Audit • Community Empowerment Act (2018/19 – High) • Complaints Handling (2021/22 – High) • Customer Service Centre (2022/23 – High) Other Agencies • Education Scotland and Care Inspectorate seek views of service users External Audit • Best Value Report (March 2025) identified that - As savings options become There is a range of assurance sources across the three lines. Page 127
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consultation • Development Mgt user forums more challenging to identify, engaging with communities is increasingly important. The council’s community engagement strategy should support this critical dialogue and needs to be embedded across the organisation. Scrutiny • Scrutiny – Community Asset Transfers (2021/22) • Scrutiny – Community Engagement (2022/23) • Scrutiny – Complaints (2024/25) Future • A working group was established to review our approach to Community Engagement; the Framework has now been developed and was approved by Policy and Resources Committee in December 2024. • Here to Hear You events - Programme of Here to Hear You community engagement events being undertaken by Leader and Chief Executive. (2025/26) 6 Service Delivery Insufficient resources to ensure effective service delivery Amber 12 • Performance Improvement Framework • Rolling out programme of service self- assessment • Service improvement • Performance reporting to A&SC, Service Committees and Area Committees • LGBF Review to A&SC, Service Internal Audit • Performance Mgt (2018/19 – High) • Complaints Handling (2021/22 – High) • IA annual plan is risk There is a range of assurance sources across the three lines. Page 128
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plans • Workforce planning • Complaints process • Use of LGBF • Strategic Plans with Success Measures aligned to Business Outcomes • Performance Improvement Officers Committees and Area Committees • Self-Assessments reported to SMT and A&SC based but also designed to provide annual coverage of all Heads of Service • Internal Audit review of Human Resources (2023/24 – Substantial) External Audit • Best Value Report (March 2025) highlights - The council must now ensure that its new corporate plan maintains a clarity of vision, that supporting strategies and policies are aligned to it, and that the plan is underpinned by more streamlined and focused performance reporting and key performance indicators to drive continuous improvement. Future • Internal Audit – Performance Management Arrangements and Reporting (2025/26) • Performance excellence project being reported regularly to Audit and Scrutiny Committee and SMT. 7 Health and Social Care Partnership Failure of the HSCP to deliver on its Strategic Priorities results in deteriorating health and wellbeing outcomes for the population and / or Amber 12 • Strategic Plan • Integration Scheme • IJB has elected member representation including Council Leader • Elected member representation on IJB Audit Committee (inc Vice Chair) • Council’s CIA regularly • Performance and financial monitoring and reporting in place and reported to IJB Board • HSCP Chief Officer sits on Council’s ELT • Financial Recovery Plan for Internal Audit • The IJB has their own IA function provided by the Council’s IA function (Contract started 1 April 2021 and renewed 2024) • Council’s IA function also provide assurance over social work services on an annual basis There is a range of assurance sources across the three lines. Page 129
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reduced access to appropriate health and social care services. This could also result in financial and reputational risk to the Council. attends IJB Audit & Risk Committee • Regular engagement between Council CFO and HSCP CFO 2025/26 in place • Development of options to deliver sustainability in future years is ongoing • Internal Audit - Charging for Non-Residential Services (2020/21 – Substantial) • Child Protective Services (2021/22 – Substantial) • Care Programme Approach (2021/22 – Limited) • Complaints handling (2021/22 – Limited) • Workforce Planning (2021/22 – Reasonable) • Client Funds (2022/23 – Limited) • Learning and physical Disabilities Care Packages (2023/24 – Substantial) • Client Funds (2023/24 – Reasonable) • SSSC Registration (2023/24 – Substantial) • External Placements (2024/25 – Reasonable) External Audit • IJB’s external auditors are Mazars. Future Internal Audits • Directed Self Support (2025/26) • Eclipse System Post Implementation (2025/26) 8 Civil Contingency & Business continuity arrangements are not effective. Green 6 • Critical activity recovery plans • Emergency planning test events • West of Scotland local • Emergency Mgt Support Team • EU tactical group progress reported to SMT Internal Audit • Business Continuity (2019/20 – Reasonable) • Disaster Recovery Moderate third line assurance at current time. A project has Page 130
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resilience partnership • Community resilience plans • EU withdrawal tactical group Planning (2020/21 – Limited) • Civil Contingencies (2021/22 – Substantial) Future • The new BCM system has been procured and configured and a pilot project to test the system and the process has been completed within 3 service areas, Procurement, Customer Engagement and Transformation Management and Residential (Care Home Services). Roll out is ongoing to other service areas which will result in business continuity plans being in place for each service. This is expected to be completed by 31 March 2026. commenced to implement business continuity processes, covering critical activities and testing of CARPS. This is an area that will merit a follow up audit in the medium term future. However assurance can be taken from the Council’s response to COVID which was fast paced and has proven to be effective. 9 Waste Management Waste disposal is impacted by a number of significant risks which are 1) the impact of the BMW Landfill Ban, 2) the end of the current waste PPP contract (September 2026), 3) a fast moving Scotland and UK Policy context. Red 16 • Council rolling out new waste strategy • Using education and publicity to increase recycling • Performance reporting to EDI Committee • Progress monitoring by DMT and SMT Internal Audit • Waste Mgt (2018/19 – Limited) Scrutiny • Waste Mgt Strategy (2020/21) - On 27 April 2021 the Head of Roads and Infrastructure Services provided a presentation to the A&SC regarding the Council’s Waste Strategy followed by a question and answer session. Following the presentation the A&SC members agreed they were assured that appropriate progress was being made in relation to Assurances over this risk are currently moderate due to the Council’s Waste Strategy being in its infancy and prior to the full implementation of the BMW landfill ban. However full implementation is not untill 2026. The A&SC determined they are content that progress is reported to the Page 131
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the Council’s waste strategy and that inclusion of a specific scrutiny topic focusing on the Strategy would not add value at this time. • A briefing note was requested by the A&SC in June 2022 relating to Waste Mgt and was presented by the HoS in September 2022. • A briefing and update report was presented to the A&SC in December 2023 by the HoS. Future • Confirmation received from the Scottish Government that £1.5m has been made available to support the compliance with the BMW Landfill Ban. • Contract management meetings are now taking place with the PPP provider chaired by the HoS. • Determining and mobilizing a plan for the closure and restoration of existing landfill sites (within the PPP contract) to ensure compliance with regulatory requirements prior to the implementation of the BMW landfill ban. Next stage in this is to gain understanding from SEPA of the timescales they will require for restoration of these sites. Scrutiny Review of BMW EDI Committee and that the A&SC will maintain a watching brief. Page 132
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arrangements scheduled for 2025/26. 10 Service Delivery - Cyber Security Unable to deliver services to customers because of failure of ICT systems following major cyber security breach Red 15 • ICT Security & compliance officer in post, producing weekly threat analysis. • Regular patching regimes in place • ICT Disaster recovery plans tested regularly • Critical activities have recovery plans developed (CARP’s) • Progress monitoring by DMT and SMT Internal Audit • Business Continuity (2019/20 – Reasonable) • Disaster Recovery Planning (2020/21 – Limited) • Internal Audit – Cyber Security (2022/23 – Substantial) • Cloud Based Services (2023/24 – Substantial) • Data Security and Information Security (2024/25 – Substantial) • IT Risk register and Mitigation Processes (2024/25 – Substantial) Other Agencies • PSN and Cyber Essentials accreditations for corporate network (doesn’t cover education network) Future • Internal Audit – ICT Disaster Recovery (2025/26) Moderate third line assurance at current time. A project has commenced to implement business continuity processes, covering critical activities and testing of CARPS This is an area that will merit a follow up audit in the medium term future. 11 Cost of Living Crisis The Council are unable to respond to the implications Amber 12 • Financial stability and support to HSCP. • Social Welfare and Poverty Funding assistance. • Focused support and multi-agency approach • Progress monitoring by DMT and SMT • WRWG report to SMT • SMT monitor of risk and consider high and medium Internal Audit • HB & CTR (2018/19 – Substantial) • Internal Audit - Scottish Welfare Fund (2020/21 – There is a range of assurance sources across the three lines of assurance in respect of welfare reform. Page 133
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arising from the 'Cost of Living' crisis Implementation of welfare reform is not managed well resulting in increased poverty and deprivation or short term crisis. where risk is highlighted. • Monitoring of trends in service use to highlight any significant change as a result of financial hardship • Targeted measures - for example to those receiving Council Tax reductions - via Gift Cards and Flexible Food and Fuel Fund. • Financial Inclusion and Advice Group established. • Joint working with DWP, CPP and other agencies. • Flexible Food Fund created. Supporting householders in our area with funds and advice to address food and fuel insecurities. • Child Poverty Planning Group set up and active. • Joint initiative with Argyll and Bute Citizens Advice Bureau (ABCAB), and Bute Advice Centre to proactively identify and support vulnerable individuals experiencing mental health challenges due to the Cost of Living Crisis. hardship cases • Anti-poverty strategy approved by Council • Child poverty action planning monitored by WRWG Substantial) • Internal Audit - Welfare Rights (2020/21 – Substantial) Other Agencies • Focused support and multi-agency approach where risk is highlighted Future Actions • Extend flexible food and fuel fund.. • Supporting the Poverty Alliance in their Tackling Rural Poverty project, observing its progress and considering outcomes as they emerge. • Preloved School Clothing Bank operating across Argyll and Bute. • Deliver Islands Cost Crisis funding from the Scottish Government in 2025/2026 supporting island based foodbanks and further targeted support to mitigate fuel poverty on our islands • Provide £5,000 of LACER funding to community food organisations across Argyll and Bute in 2025/2026 which was approved as part of the budget process However, Limited third tier assurance in respect of ‘Cost of Living Crisis but significant evidence of pro- active measures and support. However assurance can be taken from the Council’s response to COVID which was fast paced and has proven to be effective. Page 134
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12 Impact of Climate Change The Council or communities are overwhelmed by severe or more frequent flooding, landslides, rainfall, storms, sea level changes or hot weather events due to changes in global temperature caused by climate change. Amber 12 • Continued delivery of Council De- Carbonization Plan • Civil Contingencies Manager liaising/ collaborating with Regional Resilience Partnerships and other resilience partners in terms of storm event, hot weather events, cut off communities, landslides etc. • Development and delivery of an integrated approach to decarbonisation and adaptation of Argyll and Bute as a Region via Community Planning Partnership. • Roads & Amenity Services continue to develop asset management plan and address strategic risks in terms of rising sea levels, bridge repairs, critical infrastructure vulnerability. • Progress monitoring by DMT and SMT Internal Audit • Climate Change Act (2021/22 – High) • Internal Audit – Civil Contingencies (2021/22 – Substantial) Future Actions • Review of De-Carbonisation Plan. • Review scoring of business cases and pipeline of strategic projects with enhanced climate change considerations. There is a range of assurance sources across the three lines. 13 Lack of Housing Availability The Council, partner agencies and communities are unable to attract and retain working age people due to lack of housing and pricing Red 20 • The council has declared a Housing Emergency • Housing Strategy and Investment Plan funded and implemented/new housing delivery group established. • Islands Programme Award of Funding for infrastructure for worker accommodation on Mull - this is for • Progress monitoring by DMT and SMT Future • Housing summit and Action Plan being continually monitored/updated. • Local Housing Strategy updated and approved reflecting the Council's Housing Action Plan approved by Council in November 2024 and update presented to June EDI Committee. Limited third line assurance at current time However, pro- active work is with partner agencies is evident and review of the Housing Strategy undertaken. Page 135
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phase 1 site infrastructure to enable delivery of accommodation for workers and will meet clearly evidenced community need. • Deliver key worker housing pilots on Islay and Mull using RGD funding. Mull (Rockfield, Tobermory) ground works now completed utilising Island Infrastructure funding and Strategic Housing Fund. 14 Compliance with 'Prevent' Response to the Prevent duty is not properly embedded in the Council. Amber 9 • Council has nominated Prevent Spoc – Ch Exec has delegated authority to make arrangements to fulfil Council’s statutory duties on TACT • Prevent Multi Agency Partnership panel established and operating, and training provided. • External Training sessions from Police Scotland given to Education and Social Work • Participate in Prevent multi agency meetings to coordinate approach across public sector partners. • Progress monitoring by SMT and ELT Future • Complete development of training and awareness online module and continue to review and enhance training. • Develop situational risk assessment process with Home Office to address national and local risk and mitigations. • Review training of PMAP members and particular Chair and Vice Chair when these change from time to time. Limited third line assurance at current time However, comprehensive processes and approach in place and pro-active work with partner agencies are clear. Page 136
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Classification: OFFICIAL ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE CHIEF EXECUTIVE 4 SEPTEMBER 2025 STRATEGIC RISK REGISTER 1.0 INTRODUCTION 1.1 This report provides members with an update on the Council’s Strategic Risk Register (SRR). 2.0 RECOMMENDATIONS 2.1 It is recommended that the Audit and Scrutiny Committee endorse the updated SRR (Appendix 1). 3.0 DETAIL 3.1 The Council’s Constitution requires the Chief Executive to attend one meeting of the Audit and Scrutiny Committee per annum to report on how the Council is addressing its key strategic risks and other matters of interest. Paul Macaskill, Chief Internal Auditor (CIA) will present the update on behalf of the Chief Executive. 3.2 The new format of the SRR and the Operational Risks Registers (ORR) and the associated processes to monitor and update them were revised. These are subject to regular internal audit review which has confirmed compliance with these procedures. 3.3 The Council’s SRR continues to be updated by the SMT on a bi-annual basis on dates agreed with the CIA however it will also be updated if and when the Strategic Management Team (SMT) feel there is a specific requirement. 3.4 As required by the revised risk management manual, the SMT also review all risks in the ORRs which have been classified as ‘red’ by the Departmental Management Teams (DMT) to determine whether they should be escalated to the SRR. 3.5 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, alongside the annual Internal Audit plan including a three year cycle providing audit coverage across all the identified risks, provides assurance that the Council continues to proactively manage its risks. Page 137 Agenda Item 13
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Classification: OFFICIAL 3.6 Appendix 1 to this paper provides a copy of the current SRR and demonstrates how the Council are treating the identified risks in terms of the mitigations currently considered to be in place and the action being taken to further reduce the residual risk. 4.0 CONCLUSION 4.1 The SRR is subject to regular review by the SMT as are the red risks highlighted in ORRs by the DMTs. Risks are actively managed to reduce their impact upon the Council and the likelihood of them being realised. 5.0 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 IMPLICATIONS Policy – Internal Audit continues to adopt a risk based approach to activity Financial – None Legal – None HR – None Customer Service – None Risk – None Climate Change – None Fairer Scotland Duty – None Equalities - protected characteristics – None Consumer Duty – None Island Communities – None Children’s Rights and Wellbeing – None Pippa Milne Chief Executive 4 September 2025 For further information please contact: Paul Macaskill, Chief Internal Auditor (01546 604108) Appendices: 1. Strategic Risk Register Page 138
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Classification: OFFICIAL# NEXT REVIEW DATE February 2026 Imp Like Sc Imp Like Sc 1 Population, External Infrastructure and Economic Decline Failure to identify relevant factors contributing to the decline and failure to develop strategies and actions targeting these factors. Our Economy is diverse and thriving Population decline reduces available funding impacting on Councils capacity to deliver services. A circle of decline with reduced employment, lower earning and failing businesses and poor perception of the area. Combined population and economic decline may increase the need for and cost of services. Insufficient people of working age with appropriate skills and experience to fill vacancies across CPP. Residual impact of withdrawal from EU. A continued trend of underinvestment in critical economic infrastructure will make our area increasingly uncompetitive as a place to live, work and do business. This includes transport and infrastructure needs (physical and digital). Without tackling infrastructure (including roads, ports, ferries, grid, business space, utilities, housing etc.) investments across Argyll and Bute, there are significant barriers to growing the local economy, attracting people, external investment and individual entrepreneurship. 5 4 20 1. Local outcome improvement plan targets population, infrastructure and economic recovery. 2. Maximise external funding opportunities. 3. Refreshed Economic Strategy (2024-2034) approved at the March 2024 EDI Committee. 4. Rural Growth Deal reaching full deal status in March 2025. 5. UK Shared Prosperity Funding Investment Plan agreed covering 2022/23 to 2024/25. 6. Abplace2b/Promote and Market Argyll and Bute. 7. Taking a place based approach to regeneration including maximising social-eco benefits/community wellbeing via effective procurement strategy, development of the circular economy and partnership working across sectors. 8. Invest in Argyll and Bute website established. 4 4 16 Treat 1. Lobbying activity in pursuit of regional immigration policies and related strategies. 2. Rural Growth Deal Full Deal signed on 10th March 2025. Pavilion on site with final phases. 3. Refreshed Economic Strategy, 2024-2034 approved at the March 2024 EDI Committee and associated short-term Economic Strategy Action Plan, 2024-2027 (to be reviewed annually, 2025-2028 draft prepared) approved at the September 2024 EDI Committee. Delivery requires partnership working with organisations such as HIE. 4. Community Regeneration Partnership projects up to the value of £20m agreed in principle with UK Government for delivery in 2026/27. 5. UK Shared Prosperity Funding Investment Plan, 2022-2025 has been delivered and a revised one-year transition investment plan in place and being delivered for 2025/26. 6. Preparation of a pipeline of projects across Argyll and Bute in order to be able to react to any other bid funding as and when it is announced. 7. Multi-agency approach to refugee settlement underway linking with national processes and agendas. 8. The council will continue as a partner of the Highlands and Islands Regional Economic Partnership and lobby for Government investment to realise economic opportunity and address barriers to future sustainable growth. 9. Openreach are continuing to build their Full Fibre network across A&B through the SG R100 programme, they are also currently undertaking a scoping exercise for the UKG Project Gigabit. Current resource intensive procedures cannot continue as OR need to be allowed to build at pace over the next 5 years, ensuring A&B are not left behind. An initial meeting was undertaken with Openreach to discuss progress with a follow up meeting planned for October. 10. It has been identified that the mobile networks across A&B do not have adequate resilience built in, resulting in a catastrophic network failure. With the imminent transition to fully digital Jan 2027 it is imperative that action is taken to mitigate against prolonged destructive weather events ensuring essential communications remain active. Jul-25 Kirsty Flanagan 2 Condition and suitability of Infrastructure & Asset Base Infrastructure and asset base does not meet current and future requirements and is not being used or managed efficiently and effectively. Our Infrastructure supports sustainable growth Infrastructure and asset base does not support or is not aligned to business outcomes and does not aid effective service delivery. Infrastructure and asset base is allowed to deteriorate resulting in cost, lost opportunities and wasted resource. Reductions in asset maintenance capital budgets would be highly likely to trigger this consequence. 5 5 25 1. Capital Investment Board oversight of implementation of Capital Investment Strategy. 2. Robust capital planning and monitoring. 3. Asset management work plan. 4. Business case modelling including sustainability, development and strategic change. 5. Intelligence and best practice sharing via Heads of Property Group. 6. Community Empowerment and Community Asset Transfer – Arrangements in place to evaluate and determine requests. 7. Roads Asset Management Plan and Status and Options Report. 8. RIS Review Project Board. 9. One Council Property Approach. 10. Continuing with successful bids for external funding. 4 3 12 Treat 1. Review of capital arrangements undertaken during 2025/26. 2. 'Modern Workspace Programme' will review, engage and rationalise property portfolio for future needs of the Council. Changes will take place on phased and town by town basis. Programme will be running for 3 years - April 2025 3. Project Manager from PPMS appointed to take forward development and implementation of programme. Lochgilphead, Islay and Dunoon identified as priorities. Interim solution for Lochgilphead will be in place in Q4 FY23/24 to provide maintenance facility for larger vehicles). 4. Delivery of the Roads Capital Programme which was approved at Committee. Jul-25 Kirsty Flanagan and Douglas Hendry 3 Financial Sustainability Insufficient resource to meet current and future service requirement. Budget not aligned / does not support business outcomes. Enablers Unable to deliver Local outcome improvement plan. Reduction in performance. Reputational damage. 4 4 16 1. Longer term financial planning and financial strategy. 2. Income generation activity. 3. Robust budget preparation and budget monitoring protocols. 4. Maintaining adequate contingency with reserves. 5. Digital transformation. 6. Effective workforce planning model. 7. Financial Services resilience building project including knowledge sharing and development of guidance notes. 4 3 12 Treat 1. Rural Growth Deal Outline Business Cases and Final Business Cases being worked on. 2. Investment in professional training through Grow Our Own Activity continuing. 3. External reviews of major budget areas e.g. RIS, education. 4. Council to consider Visitor Levy consultation report at a Special Meeting in September 2025. 5. A new medium-longer term budget approach was agreed by Council on 26 June 2025 - the approach has 4 themes (1) Empowering Communities (2) Increasing Income (3) Right Sizing Council Asset Base and (4) Delivering Services Differently. Jul-25 Kirsty Flanagan STRATEGIC RISK REGISTER No Risk Corporate Outcome Consequences Gross Risk Current Mitigation Residual Risk Approach Key Actions and Deadlines Last Reviewed Risk Owner Page 139
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Classification: OFFICIAL# 4 Governance and Leadership Governance and leadership arrangements are not conducive to effective working and lead to a lack of strategic direction. All Corporate Outcomes Poor decision making, lack of strategic direction. Lack of operational direction. Confidence in, and reputation of, the Council harmed. Deterioration in performance. 4 4 16 1. New Council Administration in place with working majority. 2. Development sessions for new Administration to cover areas such as being effective leaders, strategic thinking and working with officers. 3. Working with Policy Leads to provide support and development opportunities. 4. Continued programme of Member Seminars. 5. Progressing with programme of Member Development including 1:1 conversations. 6. Revised Corporate Plan sets out objectives and priorities. 7. Performance Improvement Framework and Service Planning. 8. Leadership development programme. 9. Council constitution regularly reviewed and updated. 10. Established partnership governance arrangements. 11. Scrutiny arrangements in respect of Police, Fire and Health. 12. Governance arrangements for scrutiny established. 4 2 8 Treat 1. An updated BV Report was completed and published in April 2025. 2. New Corporate Improvement Plan agreed by Council June 2025 3. Connect for Success priorities. 4. Pilot self-assessments have been completed and proposals are being submitted to SMT in October 2025 for consideration regarding self assessment. 5. The Performance Excellence Project Phase 1 is complete and phase 2 is underway, and is trialling scorecards and developing the Performance and Improvement Framework. 6. Leadership Development Programme with the Chief Officers Group and new cultural statements have been developed for consultation with management teams. Jul-25 Pippa Milne 5 Engagement and Understanding the needs of the Community The Council fails to understand service user needs and emerging demographic trends and does not align service delivery to meet these. People live active, healthier and independent lives Enablers Prioritisation of services may not be aligned to community needs. Gaps between community needs and Council services. Ineffective partnership working. Services not configured to meet user/citizen requirements. 3 4 12 1. Community Planning partnership has agreed new Argyll and Bute Outcome Improvement Plan based on demographically representative consultation exercise and governance arrangements are currently being refreshed to ensure a focus on action with suitable representation from partner organisations and Area Community Planning Groups. 2. Community Engagement Strategy to be supported by clear framework and guidance as developed by the Community Engagement Group. 3. Customer Service Board. 4. Operation and development of panels and forums. Young people’s plan, citizens panel. 5. Budget Consultation . 6. Comprehensive Complaints Protocols. 7. Demographic and end user analysis. 3 3 9 Treat 1. A working group was established to review our approach to Community Engagement, the Framework has now been developed and was approved by Policy and Resources Committee in December 2024. A collaborative space for sharing engagement activity has been developed by the Communications Team and ICT in the form of an App. Learning content has been developed for the finalised framework and presented to a Members Seminar. The end of project report was presented to ELT in June 2025 along with recommendations for embedding as business as usual. A joint DMT on engagement and consultation will take place in August. 2. Approach to area plans currently being reviewed to reflect the priorities of the new administration. 3. Analysis of latest census data has been undertaken to inform future strategic activity. Analysis has been presented to SLF, COG, ELT/Policy Leads and to a Members Seminar. A new page has been set up on the Hub with links to a portal of all the analysed data on population. This will continue to be refined and developed. 4. Officers are actively involved in national data analytics work with the Improvement Service on Poverty in Remote, Rural and Island areas. This includes work with Loughborough University on updating HIE's historic report on island oncosts. 5. Here to Hear You events - Programme of Here to Hear You community engagement events being undertaken by Leader and Chief Executive. Jul-25 Pippa Milne 6 Service Delivery Insufficient resources to ensure effective service delivery. Enablers Services fail to achieve agreed performance levels and as a result are not contributing fully to Council objectives. Resources are poorly managed with result that agreed outcomes and objectives are not fully achieved. Unable to achieve continuous improvement and improve effectiveness and efficiency. 4 4 16 1. Performance Improvement Framework. 2. Service Improvement plans. 3. Argyll and Bute Manager programme. 4. Customer needs analysis Protocols. 5. Demographic and end user analysis. 6. Workforce Planning . 7. Internal and External Scrutiny Arrangements. 8. Complaints process. 4 3 12 Treat 1. Performance excellence project being reported regularly to Audit and Scrutiny Committee and SMT. Stage 1 completed in 2023/24 and on track for completion of next phase with corporate and operational scorecards. 2. Completion of external review of Roads and Infrastructure Services should generate future year savings. 3. A review of Education has commenced on a similar basis as the RIS review. 4. Customer Service Strategy Action Plan 80% complete and digital self service reached a new high of 77% of all interactions in 2024/25. Jul-25 Kirsty Flanagan and Douglas Hendry Page 140
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Classification: OFFICIAL# 7 Health and Social Care Partnership Failure of the HSCP to deliver on its Strategic Priorities results in deteriorating health and wellbeing outcomes for the population and / or reduced access to appropriate health and social care services. This could also result in financial and reputational risk to the Council. People live active, healthier and independent lives Partnership viewed as having failed or not achieved strategic objectives. Partnership Failure or weakness exposes Council to significant Financial liability. Confidence in, and reputation of, the Council harmed. Unclear repercussions of financial and staffing effects of the implementation of the National Care Service on the Council and HSCP. Residual Covid-19 implications for ongoing health and social care services. 5 4 20 1. HSCP integration scheme approved by Scottish government. 2. Strategic Plan in place. 3. Performance and Financial reporting arrangements in place. 4. Independent audit arrangements in place. 5. Integrated Joint board with elected member representation including Council Leader. 6. Chief Officer member of ABC Senior Management Team with co-location of officers. 7. Tripartite leadership agreement. 8. Monitoring and improvement of HSCP financial position. 9. Medium term Financial Plan in place. 10. Establishment of Strategic and Tactical Groups with links to HSCP, NHS and national/regional resilience groups. 4 3 12 Treat 1. Develop options to deliver sustainability of future years budgets (ongoing). 2. Develop a longer term Financial plan and implement the value for money strategy. 3. Assessment of the financial implications on the Council of services transferring to the NCS when plans are sufficiently developed to enable this. 4. Progression of Service Transformation work, Estates Strategy and long term strategic service development with Hub North. 5. Implementation of the workforce strategy. 6. Remobilisation of services post Covid and improved performance management and reporting processes. 7. Recovery plan for 25/26 reported to Council in June. Jul-25 Evan Beswick and Pippa Milne 8 Civil Contingency & Business continuity arrangements are not effective. People live in safer and stronger communities Ineffective management of major emergencies affecting Council services and communities in Argyll and Bute. Incident and recovery phase of an emergency lead to greater inconvenience and hardship and a longer timescale for return to normal. Council unable to effectively deliver its own services. 2 4 8 1. Emergency Planning Test events. 2. Critical Activity Recovery Plans. 3. Roll out of Community resilience partnership programme. 4. Peer review of major exercises undertaken to provide external validation of planning process. 5. West of Scotland local resilience partnership. 6. Cross sector expertise and partnership working. 7. Emergency Management Support Team (EMST) meetings. 8. Training. 2 3 6 Treat 1. The Council’s critical activity recovery plans (Carps) are reviewed annually. The project for the review of Business Continuity processes within the Council is underway and will include a review of the Council’s critical activities and the potential for a software solution which would automate processes and provide a more efficient an effective service and ensure greater resilience for the Council. When the project is completed in 23/24 it will include a programme of testing of the updated Carps. Date 31 March 2024. 2. Review of BC processes has resulted in introduction of new BCM system which will allow more automation and oversight of plans and review of critical activities with an enhanced ability to test these. The new system is expected to be procured by 31 March 2024. The new BCM system has been procured and configured and a pilot project to test the system and the process is underway with 3 service areas, Procurement, Customer Engagement and Transformation Management and Residential (Care Home Services). Once the outputs form the pilot have been reviewed and the system goes live, all services will be required to complete a Business Impact Analysis, which will inform the basis for having a business continuity plan in place. This is expected to be completed by 31 March 2025. Jul-25 Douglas Hendry Page 141
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Classification: OFFICIAL# 9 Waste Management Waste disposal is impacted by a number of significant risks which are 1) the impact of the BMW Ban, 2) the end of the current waste PPP contract (September 2026), 3) a fast moving Scotland and UK Policy context. Our Infrastructure supports sustainable growth Alternative delivery models to respond to the BMW Ban would be likely to be more expensive than the current one which would result in cost pressures having to be accommodated by other services and service provision reduced. Alternative delivery models to replace the current PPP contract along with commercial matters relating to contract handback may result in additional cost pressure to the Council. In addition service continuity is a risk due to the compressed timescale for service redesign and mobilisation. Short to medium term strategic planning is made more complex by changes in national policy context. 5 4 20 1. Helensburgh and Lomond waste solution available is in place via third party off-takers, higher rates have been accepted by the council and the contract is in place which is capable of extension. 2. Following rejection by the Scottish Government to the Council's request for a derogation of the BMW ban, the Scottish Government confirmed financial support of £1.5m to support the Council in the costs associated with BMW ban compliance in the Council's unique circumstances (PPP contract featuring landfill sites). 3. Development of an options appraisal to determine the preferred future delivery model for those services currently provided by the PPP contract has been completed which has concluded that in the timescale available to the Council the lowest risk option is to re- procure the required waste disposal and civic amenity site management services within the area currently provided through the PPP contract. 4. Procurement of the services required to replace the PPP contract has commenced within initial market testing complete and development of detailed service specification underway. Specialist external consultants have been commissioned to support this activity. 5. Procurement of energy from waste services for the final 8-months of the PPP contract has commenced (the PPP contract runs for 8 months after the bio-ban comes into force). 6. A number of historic contractual matters between the 4 4 16 Treat 1. Weekly contract management meetings are now taking place with the PPP provider chaired by the HoS. These meetings have resulted in agreement of terms in relation to the 2 significant historic contract matters (CLO and Indexation). These matters will be finalised via signing of agreements as soon as pricing in relation to the CLO disposal is confirmed by the PPP contractor - anticipated end July 2025. 2. Determining and mobilising a plan for the closure and restoration of existing landfill sites (within the PPP contract) to ensure compliance with regulatory requirements prior to the implementation of the BMW ban. Next stage in this is to gain understanding from SEPA of the timescales they will require for restoration of these sites. Meeting being arranged with SEPA in July 2025. Jul-25 Kirsty Flanagan 10 Service Delivery - Cyber Security Unable to deliver services to customers because of failure of ICT systems following major cyber security breach. Our Economy is diverse and thriving Threat of ransomware attacks. Data corruption of ICT system caused by malware and/or loss of confidential data. ICT Systems unavailable for considerable period whilst recovery from uncorrupted backups takes place. Meanwhile Services fail to achieve agreed performance levels and as a result are not contributing fully to Council objectives. Reputational damage to Council and potential financial losses (fines, loss of income). 5 4 20 1. ICT Security & compliance officer in post, producing weekly threat analyses, member of CiSP. 2. PSN and Cyber Essentials Plus accreditations for corporate network. 3. Regular patching regimes in place. 4. ICT Disaster recovery plans tested regularly. 5. All critical activities have recovery plans developed (CARP’s). 6. Mimecast monthly cyber security training videos for all staff. 7. Enforce password changes when found to be weak. 8. Technical cyber exercise completed and Business Continuity Planning exercise conducted with senior management and other staff. 9. Internal Audit on Cyber Security completed with the Audit Opinion as substantial. 5 3 15 Treat 1. Review will be ongoing on all contingency plans with updated knowledge from SEPA, Western Isles Council and UHI Cyber Attacks. 2. Continue to work with Scottish Government Cyber Resilience Team to test ICT response. 3. Continued close review of disaster recovery plan and associated tests, finalise and test incident response procedure, and review of mirroring between the 2 data centres (monthly at ITMT) and backup. 4. Now progressing requirements for ongoing security of Education Network. 5. Mimecast has now been made mandatory across the Council and DMTs/HoS are monitoring the uptake from staff. 6. Corporate website migrated to cloud based resilient platform managed by BIgBlueDoor. Jul-25 Kirsty Flanagan Page 142
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Classification: OFFICIAL# 11 Cost of Living Crisis The Council are unable to respond to the implications arising from the 'Cost of Living' crisis. Implementation of welfare reform is not managed well resulting in increased poverty and deprivation or short term crisis. Our Economy is diverse and thriving People live active, healthier and independent lives 1. Unable to meet demands for assistance stemming from financial hardship. 2. Increases on the demand for Council services such as homelessness. 3. Financial implications for the Council as revenue income could fall correlating to financial hardship - Financial Sustainability. 4. Implications for staff, particularly those working from home. 5. Adverse impact on workforce, communities with regards to economy and demographic statistics. 6. Financial Inclusion and Advice Group established. 7. Joint working with DWP, CPP and other agencies. 8. Child Poverty Planning Group set up and active. 9. Flexible Food Fund created. Supporting householders in our area with funds and advice to address food and fuel insecurities. 4 4 16 1. Financial stability and support to HSCP. 2. Social Welfare and Poverty Funding assistance. 3. Focused support and multi-agency approach where risk is highlighted. 4. Monitoring of trends in service use to highlight any significant change as a result of financial hardship. 5. Targeted measures - for example to those receiving Council Tax reductions - via Gift Cards and Flexible Food and Fuel Fund. 6. Financial Inclusion and Advice Group established. 7. Joint working with DWP, CPP and other agencies. 8. Flexible Food Fund created. Supporting householders in our area with funds and advice to address food and fuel insecurities. 9. Child Poverty Planning Group set up and active. 4 3 12 Treat 1. Review and monitor changes in demand for key services which correlate to personal effects arising from financial distress. 2. Seek external funding to sustain the Flexible Food and Fuel Fund beyond March 2026 as part of a new project to included the legacy actions from the School Clothing Bank project and other poverty mitigations including data riven intervention and closer collaborative council tax collection. 3. Provision of welfare rights advice services in GP Surgeries in MAKI area via funding from SG until March 2025. 4. Supporting the Poverty Alliance in their Tackling Rural Poverty project, observing its progress and considering outcomes as they emerge. 5. Joint initiative with Argyll and Bute Citizens Advice Bureau (ABCAB), and Bute Advice Centre to proactively identify and support vulnerable individuals experiencing mental health challenges due to the Cost of Living Crisis. Provide targeted assistance to enable these individuals to assess their financial circumstances and explore options for paying a sustainable and reasonable rate of Council Tax. Implement a temporary moratorium of up to 3 months on the standard Council Tax recovery timetable to mitigate the risk of exacerbating mental health crises, while ensuring ongoing engagement and tailored support plans for affected individuals. 6. Maximise use of pilot authority status in new data-sharing project with HMRC to enhance engagement, reduce arrears, and improve income recovery in respect of Council Tax. The strategy aims to encourage non-engaged debtors to claim entitlements, make affordable payments, and reduce overall indebtedness by considering write-offs for older debts tied to compliance with current-year obligations. The pilot will also focus on income maximisation for those entitled to support from benefits. 7. Deliver Islands Cost Crisis funding from the Scottish Government in 2025/2026 supporting island based foodbanks and further targeted support to mitigate fuel poverty on our islands. 8. Provide £5,000 of LACER funding to community food organisations across Argyll and Bute in 2025/2026 which was approved as part of the budget process. Jul-25 Pippa Milne and all ELT 12 Impact of Climate Change The Council or communities are overwhelmed by severe or more frequent flooding, landslides, rainfall, storms, sea level changes or hot weather events due to changes in global temperature caused by climate change. Our Infrastructure supports sustainable growth 1. Unable to meet national and Scottish Government guidance in terms of meeting Climate Change Obligations - various milestones. 2. Inability to deliver core services due to failures in critical infrastructure - ferrys, roads, bridges, landslides, fallen trees etc. 3. Human casualty, death and community resilience if cut off or directly impacted by severe storms, landslides, flash foods or failed infrastructure. 4. Disruption of flow of goods, services and supply chains. 5. Adverse impact on workforce, communities with regards to economy and population. 5 4 20 1. Continued delivery of Council De-Carbonisation Plan. 2. Civil Contingencies Manager liaising/ collaborating with Regional Resilience Partnerships and other resilience partners in terms of storm event, hot weather events, cut off communities, landslides etc. 3. Development and delivery of an integrated approach to decarbonisation and adaptation of Argyll and Bute as a Region via Community Planning Partnership. 4. Roads & Amenity Services continue to develop asset management plan and address strategic risks in terms of rising sea levels, bridge repairs, critical infrastructure vulnerability. 5. A review of all critical transport routes in light of October 2023 severe weather event to identify any additional mitigations needed to maintain resilient routes. 4 3 12 Treat 1. Review of De-Carbonisation Plan December 2024. 2. Consideration of all Council Papers with climate change as consideration / implications - ongoing. 3. Review scoring of business cases and pipeline of strategic projects with enhanced climate change considerations. Jul-25 Pippa Milne / Kirsty Flanagan / Douglas Hendry 13 Lack of Housing availability The Council, partner agencies and communities are unable to attract and retain working age people due to lack of housing and pricing. All Corporate Outcomes Direct impact on property prices with substantial increases in our area. Lack of private rentals. Inability to attract working age people to live and work in the area which therefore affects the demographics of the area. 5 4 20 1. Council has declared a Housing Emergency. 2. Housing Strategy and Investment Plan funded and implemented/new housing delivery group established. 3. Islands Programme Award of Funding for infrastructure for worker accommodation on Mull - this is for phase 1 site infrastructure to enable delivery of accommodation for workers and will meet clearly evidenced community need. 5 4 20 Treat 1. Continue to implement the Housing Emergency actions identified in the approved Action Plan. 2. Address key barriers to housing. 3. Consider radical delivery models. 4. Local Housing Strategy updated and approved reflecting the Council's Housing Action Plan approved by Council in November 2024. 5. Deliver key worker housing pilots on Islay and Mull using RGD funding. Mull (Rockfield, Tobermory) ground works now completed utilising Island Infrastructure funding and Strategic Housing Fund. 6. Local Housing Strategy annual update and Housing Emergency Plan update paper reported to Council in November 2024. Update presented to June EDI Committee. Jul-25 Pippa Milne / Kirsty Flanagan / Douglas Hendry Page 143
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Classification: OFFICIAL# 14 Compliance with 'Prevent' Response to the Prevent duty is not properly embedded in the Council. People live in safer and stronger communities Cases which have not been identified, referred and managed can lead to escalation of behaviour up to and including TACT (Terrorism Act) offences. • Failure of duty by Council could lead to political censure. • Negative publicity and perception that Council is failing in its duty to protect both individuals at risk and the wider population. • Exposure of failings at public enquiry or as a result of court proceedings could have wider consequences for the Council. 5 4 20 Council has nominated Prevent Spoc – Ch Exec has delegated authority to make arrangements to fulfil councils statutory duties on TACT. Prevent Multi Agency Partnership panel established and operating, and training provided. External Training sessions from Police Scotland given to Education and Social Work. Participate in Prevent multi agency meetings to coordinate approach across public sector partners 3 3 9 Treat Complete development of training and awareness online module and continue to review and enhance training; develop situational risk assessment process with Home Office to address national and local risk and mitigations; review training of PMAP members and particular Chair and Vice Chair when these change from time to time. Jul-25 Douglas Hendry Page 144
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 4 SEPTEMBER 2025 TREASURY MANAGEMENT UPDATE – QUARTER ENDED 30 JUNE 2025 1.0 EXECUTIVE SUMMARY 1.1 The Local Government in Scotland Act 2003 requires the council to have regard to the CIPFA Code of Practice on Treasury Management (revised 2021), ‘the Code’. The Code recommends that members be updated on treasury management activities at least quarterly. This report demonstrates best practice in accordance with the Code. 1.2 The report provides an update on the council’s treasury management activity during the quarter 1 April to 30 June 2025 and the overall position as at 30 June 2025. This covers information on: • Economic background • Interest rate forecasts • Borrowing • Investments • Compliance with Treasury and Prudential Limits 1.3 The report concludes that: • The approved Treasury Management Strategy and Annual Investment Strategy 2025-26 continues to be fit for purpose. All borrowing and investment activity during the quarter ended 30 June 2025 has been undertaken in accordance with the approved strategy, and the authority has operated within the approved treasury and prudential limits contained therein; and, • Short-term borrowing and investment activity has been undertaken to manage day to day cashflow requirements. In respect of long-term capital financing requirements, the authority continues to maintain an under-borrowed position. The significant level of internal reserve Page 145 Agenda Item 14
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balances has provided an opportunity to defer new external borrowing, whilst also minimising exposure to investment risk. However, new PWLB borrowing of £20m was undertaken during the quarter, to provide an element of certainty in respect of funding the underlying borrowing requirement. 1.4 The Audit and Scrutiny Committee is requested to note and consider the contents of the report and the treasury activity during the period 1 April to 30 June 2025. Page 146
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 4 SEPTEMBER 2025 TREASURY MANAGEMENT UPDATE – QUARTER ENDED 30 JUNE 2025 2.0 INTRODUCTION 2.1 The CIPFA (Chartered Institute of Public Finance and Accountancy) Code of Practice for Treasury Management 2021, ‘the Code’ recommends that members be updated on treasury management activities at least quarterly. This report demonstrates best practice in accordance with the Code. 2.2 The report provides an update on the council’s treasury management activity during the quarter 1 April to 30 June 2025 and the overall position as at 30 June 2025. This covers information on: • Economic background • Interest rate forecasts • Borrowing • Investments • Compliance with Treasury and Prudential Limits 3.0 RECOMMENDATIONS 3.1 The Audit and Scrutiny committee is requested to note and consider the contents of the report and the treasury activity during the period 1 April to 30 June 2025. 4.0 DETAIL 4.1 Economic Background 4.1.1 During the quarter, there was a slight contraction in GDP growth, a decrease in wage growth and an easing of CPI inflation to 3.5% in May. There has been an overall increase in gilt yields over the period, which underpin long-term borrowing rates. During May, Bank Rate was cut from 4.50% to 4.25%, held during June, with the Monetary Policy Committee taking the view that a ‘gradual and careful’ approach to rate cuts remains appropriate. A more detailed update Page 147
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on the economic position, provided by the council’s treasury advisors, is given within Appendix 1. 4.2 Interest Rate Forecasts 4.2.1 The latest forecast was provided on 10 February and has proved robust over the period since February, setting out a central view that short and long-dated interest rates will start to fall once it is evident that the Bank of England has been successful in squeezing excess inflation out of the economy, despite a backdrop of stubborn inflationary factors. Nonetheless, the longer dated part of the forecast also reflects the increased level of Government borrowing over the term of the current Parliament and the weakness in the public finances, with the Government struggling to deliver on the efficiencies detailed in the October Budget. Note: The PWLB rate forecasts are based on the Certainty Rate (the standard rate minus 20 bps) which has been accessible to most authorities since 1 November 2012. Rate forecasts for 3, 6, 12 month investments are averages - rates offered by individual banks may differ significantly from these averages, reflecting their different needs for borrowing short-term cash at any point in time. 4.2.2 A comparison of current updated forecasts to the forecast position on Bank Rate and PWLB interest rates, included within the Treasury Management Strategy and Annual Investment Strategy 2025-26, is outlined in the table below. Rate Forecast March 2026 March 2027 Previous Current Previous Current Short term borrowing: Bank Rate 3.75% 3.75% 3.50% 3.50% Long term PWLB borrowing: 5 Year 4.50% 4.60% 4.10% 4.30% 10 Year 4.70% 4.90% 4.30% 4.60% 25 Year 5.10% 5.40% 4.70% 5.00% 50 Year 4.90% 5.10% 4.50% 4.70% Page 148
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4.2.3 Long-term borrowing rates have not fallen as quickly as previously forecast and remain elevated, largely as a result of continuing inflationary concerns. The longer dated part of the forecast also reflects the increased level of Government borrowing over the term of the current Parliament. 4.3 Borrowing Borrowing Strategy 4.3.1 As set out within the approved strategy, the council is maintaining an under- borrowed position. This means that the capital borrowing need, (the Capital Financing Requirement), has not been fully funded with loan debt, as cash supporting the authority’s reserve balances and cash flow has been used as a temporary measure (internal borrowing). This strategy is prudent while medium and longer dated borrowing rates are expected to fall from their current levels. 4.3.2 Given interest rate forecasts, it was anticipated that any new long-term borrowing undertaken during the financial year would be taken on a relatively short-term basis, with current high long-term interest rates forecast to fall over future years. This is a prudent and cost-effective approach in the current economic climate but requires ongoing monitoring. The capital plan and our use of reserve balances continues to be kept under regular review, and as such, our borrowing strategy will also be regularly reviewed, to achieve optimum value and minimise risk exposure in the long term. However, at this stage, the council’s approved borrowing strategy for 2025-26 remains fit for purpose. Borrowing Activity 4.3.3 PWLB loan principal of £0.840m has been repaid during the quarter ended 30 June 2025. This repayment of principal relates to a 12.5-year PWLB loan (original principal £21m), which was taken on a fixed Equal Instalments of Principal (EIP) basis. All other PWLB loans will be repayable on maturity. 4.3.4 No Maturity PWLB loans have matured during the quarter. Similarly, no other debt repayments or rescheduling has been undertaken. 4.3.5 The authority has one outstanding market or LOBO loan for £5.255m, with an interest rate of 4.75%, maturing 2048, with call dates every 6 months. This loan was not recalled at the 22 June 2025 call date. There is potential for this loan to be recalled before the end of the financial year, at the next call date of 22 December 2025. 4.3.6 New PWLB long-term borrowing of £20m was undertaken during the quarter, to provide an element of certainty in respect of funding the underlying borrowing requirement for capital. With long-term borrowing rates relatively high but forecast to steadily fall over the next few years, new borrowing has been taken on a relatively short-term basis. The new loans taken out during the quarter were as follows: Lender Principal Type Interest Rate Maturity PWLB £20.000m Fixed 4.69% 07/04/2028 Page 149
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4.3.7 As at 30 June 2025, the council’s external loan debt totalled £148.913m, as summarised in the table below. Debt Amount £000 Annual Average Interest Rate Share of Total Debt Public Works Loans Board 143,357 4.49% 96.26% Market Loans (LOBO) 5,255 4.75% 3.53% Temporary Loans* 321 3.96% 0.21% Total Debt 148,913 4.44% 100.00% *Note: This represents short-term borrowing from various institutions 4.4 Investments Investment Strategy 4.4.1 In accordance with the CIPFA Treasury Management Code of Practice, the council’s approved Annual Investment Strategy sets out the council’s investment priorities as being: • Security of capital • Liquidity • Yield 4.4.2 The authority continues to aim to achieve the optimum return (yield) on its investments, commensurate with proper levels of security and liquidity and within the authority’s risk appetite. The risk appetite of the council is low, prioritising security and liquidity. In the current economic climate, it is considered appropriate to keep investments short-term to cover cash flow needs, but also to seek out value available in longer periods with high credit quality financial institutions, using the Link suggested creditworthiness approach, including a minimum sovereign credit rating and Credit Default Swap (CDS) overlay information. 4.4.3 As shown within the interest rate forecasts given at paragraph 4.2.1, investment rates were forecast to fall during the first quarter of 2025/26, which they did, and expectations are that gradual but continuing reductions will follow over the next two years. Creditworthiness 4.4.4 There have been few changes to credit ratings over the quarter under review. However, officers continue to closely monitor these to ensure that only appropriate counterparties are considered for investment purposes. Investment Counterparty Criteria 4.4.5 The current investment counterparty criteria selection, approved within the Strategy, continues to meet the requirements of the treasury management function. Investment Activity Page 150
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4.4.6 The council’s Section 95 Officer confirms that the principles of the investment strategy have been adhered to. During the quarter ended 30 June 2025, all investments have been made in line with the approved limits for specific investment instruments, and in accordance with the creditworthiness approach. 4.4.7 Details of the council’s investments held as at 30 June 2025, totalling £75.143m, are summarised in the table below. Counterparty Maturity Amount £000 Interest Rate Clydesdale Bank Instant Access 343 4.15% Fixed Deposits: ANZ Banking Group 10/07/2025 15,000 4.67% Al Rayan Bank 20/11/2025 5,000 4.40% Money Market Funds: Federated Call Account 12,500 4.31% Insight Liquidity Fund Call Account 10,800 4.31% LGIM Stirling Liquidity fund Call Account 14,800 4.33% Aviva Call Account 15,000 4.32% Royal London Sterling Liquidity Fund Call Account 1,700 4.29% Total 75,143 4.44% 4.4.8 The weighted average rate of return on the above is 4.440%, with an average investment duration of 11 days. This compares to an average benchmark SONIA overnight rate of 4.313% over the quarter, while Bank Rate was lowered during the period from 4.50% to 4.25% in May. 4.5 Compliance with Prudential and Treasury Limits 4.5.1 It is a statutory duty for the council to determine and keep under review the affordable capital expenditure limits. The revised Prudential and Treasury Indicators for 2025-26, as approved by full Council on 27 February 2025, are attached as Appendix 2. During the quarter ended 30 June 2025, the council has operated within the treasury and prudential indicators. The council’s Section 95 Officer confirms that no difficulties are envisaged for the current or future years in complying with these indicators. 5.0 CONCLUSION 5.1 The approved Treasury Management Strategy and Annual Investment Strategy 2025-26 continues to be fit for purpose. All borrowing and investment activity during the quarter ended 30 June 2025 has been undertaken in accordance with the approved strategy, and the authority has operated within the approved treasury and prudential limits contained therein. 5.2 Short-term borrowing and investment activity has been undertaken to manage day to day cashflow requirements. In respect of long-term capital financing Page 151
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requirements, the authority continues to maintain an under-borrowed position. The significant level of internal reserve balances has provided an opportunity to defer new external borrowing, whilst also minimising exposure to investment risk. However, new PWLB borrowing of £20m was undertaken during the quarter, to provide an element of certainty in respect of funding the underlying borrowing requirement. 6.0 IMPLICATIONS 6.1 Policy None 6.2 Financial Complies with Annual Treasury Strategy 6.3 Legal None 6.4 HR None 6.5 Customer Service None 6.6 Risk None 6.7 Climate Change None 6.8 Fairer Scotland Duty None 6.9 Equalities - protected characteristics None 6.10 Consumer Duty None 6.11 Island Communities None 6.12 Children’s Rights and Wellbeing None Kirsty Flanagan Section 95 Officer / Executive Director with responsibility for Development and Infrastructure Services Policy Lead Councillor Ross Moreland 8 August 2025 For further information contact: Carolyn Earl, Head of Financial Services carolyn.earl@argyll-bute.gov.uk APPENDICES Appendix 1 Economic Background Page 152
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Appendix 2 Interest Rate Forecast Appendix 3 Prudential Indicators Appendix 1 – Economics Update • The first quarter of 2025/26 (1st April to 30th June) saw: - A 0.3% m/m fall in real GDP in April – the first fall since October 2024 - The 3myy rate of average earnings growth excluding bonuses fall from 5.5% to 5.2% in May - Core CPI inflation ease from 3.8% in April to 3.5% in May as temporary Easter-related effects faded - The Bank of England cut interest rates from 4.50% to 4.25% in May, holding them steady in June - The 10-year gilt yield fluctuate between 4.4% and 4.8%, and end the quarter at 4.50% • The 0.3% m/m fall in real GDP in April was the first fall since October 2024 and the largest fall since October 2023. This is a significant shift from the 0.7% q/q rise in Q1 2025, probably as a result of the boosts from net exports and business investment unwinding. The decline in exports was mostly due to a reversal of US tariff front-running with export values to the US falling by 31% m/m after rising 34% in total in the five months to February. April’s GDP figures also showed manufacturing output falling by 0.9% m/m along with the domestic economy showing signs of weakness in April. Despite construction output growing by 0.9% m/m, services output declined by 0.4% m/m, reversing all of March’s 0.4% m/m rise. This weakness in services likely reflects higher labour costs from April’s rise in National Insurance Contributions for employers. May’s GDP may have fallen a bit further as the boosts in Q1 continued to unwind. Overall, GDP in Q2 is likely to have flatlined and the economy will probably be hindered by subdued overseas demand and domestic businesses cutting spending given a rise in costs due to April’s increase in taxes. The Bank of England expects growth in 2025 to be around 0.8%. • Despite the rise in the composite Purchasing Managers Index (PMI) from 50.3 in May to 50.7 in June, it is still below its level in March, prior to the rise in business taxes and Trump’s Liberation Day tariffs. This rise was driven by increases in both the services and manufacturing output balances. Although the services PMI rose from 50.9 to 51.3, that is consistent with non-retail services output growth slowing from 0.5% 3m/3m in April to 0.3% 3m/3m in June. • The sharp 2.7% m/m drop back in retail sales volumes in May adds to other evidence that the burst of economic growth in Q1 is over. The weakness was widespread with sales falling in all seven of the major categories. This decline was partly due to the unwinding of the previous boost from April’s unusually warm and dry weather along with inflationary pressures prompting consumers to cut back. The latter would be a more persistent drag on retail spending. Looking ahead, the rise in the GfK measure of consumer confidence from -20 in May to -18 in June is Page 153
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consistent with the annual rate of real retail sales growth accelerating from -1.3% in May to around +0.5%. • While the £17.7bn of public sector borrowing in May was higher than the Office of Budget responsibility (OBR) forecast of £17.1bn, borrowing was £2.9bn below the OBR’s forecast in the first two months of the 2025/26 fiscal year. The current budget deficit was £12.8bn in May, a touch below the OBR’s forecast of £13.0bn. Within that, government spending surprised to the downside. Central government expenditure was £0.5bn lower than the OBR’s forecast in May, leaving it £1.6bn lower in April and May combined. That has been largely driven by debt interest payments, which were £1.1bn below the OBR’s forecast in May. But if the rises in gilt yields since the Spring Statement in March are sustained, the OBR will revise up its forecast for debt interest payments in the years ahead. That of itself would knock £1.0bn off the Chancellor’s £9.9bn of headroom against her fiscal mandate and the subsequent Government U-turns on benefit and welfare spending and higher borrowing costs may mean to maintain her current £9.9bn buffer, Reeves has to raise upwards of £13bn later this year. And with the gilt market sensitive to significant increases in borrowing, all this means substantial tax rises are looking very likely. • The weakening in the jobs market is gathering pace. May’s 109,000 m/m fall in the PAYE measure of employment was the largest decline (barring the pandemic) since the data began and the seventh in as many months. The monthly change was revised lower in five of the previous seven months too, with April’s 33,000 fall revised down to a 55,000 drop. Overall, the payroll measure of employment has now fallen by 276,000 since the announcement of the rise in payroll taxes and the minimum wage in the October Budget. The job vacancies data also portrays a rapidly weakening labour market. The number of job vacancies is now falling a bit faster, dropping from 760,000 in the three months to April to 736,000 in May. Capital Economics’ seasonally adjusted measure of single-month vacancies declined sharply from 763,000 in April to 713,000 in May. • A looser labour market is driving softer wage pressures. The 3myy rate of average earnings growth excluding bonuses fell from 5.5% to 5.2% in May. The rate for the private sector slipped from 5.5% to 5.1%, putting it on track to undershoot the Bank of England’s Q2 forecast of 5.2%. And after rising in April as the 6.7% rise in the minimum wage took effect, the timelier PAYE median earnings measure fell back from 6.2% y/y in April to 5.8% in May. Softer wage growth is feeding through to lower services inflation, pointing to a slowdown from 4.7% in May to around 3.0% by the end of the year. • CPI inflation fell slightly from 3.5% in April to 3.4% in May – close to consensus. The sharp falls in services inflation from 5.4% to 4.7% and in core inflation from 3.8% to 3.5% confirmed that the previous month’s jumps partly reflected an Easter- related blip. Services inflation is expected to continue to fall as wage growth slows, supporting a view that CPI inflation will fall close to 2.0% by the start of 2027. An upside risk, however, in the near term is that higher oil/gas and food prices could trigger another bout of second-round effects on wages and inflation expectations, meaning CPI inflation stays above 3.0% for longer and causes the Bank to shift to an even slower rate cutting path. CPI is expected to peak at 3.8% in September. • The yield on the 10-year gilt moved sideways in the second quarter of 2025. After rising from 4.4% in early April to 4.8% in mid-April following wider global bond Page 154
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market volatility stemming from the “Liberation Day” tariff announcement, gilt yields eased back as trade tensions began to de-escalate. By the end of April, the 10- year gilt yield had returned to 4.4%. In May, concerns about stickier inflation and shifting expectations about the path for interest rates led to another rise, with the 10-year gilt yield fluctuating between 4.6% and 4.75% for most of May. Thereafter, as trade tensions continued to ease and markets increasingly began to price in looser monetary policy, the 10-year yield edged lower, and ended Q2 at 4.50%. We expect this trend to continue over the next year. However, it is more difficult to be confident that the longer part of the curve will also see falls in yields, although that is still our central case, as that part of the curve is increasingly held by transient investors, such as foreign investors and hedge funds. Pension funds and insurance companies have more appetite in the short to medium part of the curve nowadays. • The FTSE 100 fell sharply following the “Liberation Day” tariff announcement, dropping by more than 10% in the first week of April - from 8,634 on 1st April to 7,702 on 7th April. However, the de-escalation of the trade war coupled with strong corporate earnings led to a rapid rebound starting in late April. As a result, the FTSE 100 closed Q2 at 8,761, around 2% higher than its value at the end of Q1 and more than 7% above its level at the start of 2025. PWLB maturity Certainty Rates 1st April to 30th June 2025 Heading into the second quarter of 2025/26 markets seem to be comfortable with a central case of gradual monetary policy easing, leading to Bank Rate and gilt yields out to c10 years trending downwards. That part of the curve has broadly acted in line with our forecasts, unchanged since February. However, the Government’s difficulty in convincing the market that it can work within its self-imposed fiscal parameters has meant there has continued to be a somewhat fragile confidence in the medium to longer dated part of the curve. The worst of this sentiment was reflected on 21st May, but as recently as the first week of July has provided a reminder that markets will be quick to sell off if they feel there is anything to prejudice the Chancellor’s stated aim of not raising the headline tax rates nor boost borrowing to greater than has already been reported. The markets have also indicated that they would prefer Chancellor Reeves to stay in post even if the fiscal landscape has deteriorated since the Autumn. The Bank of England has remained cautious in stating that any Bank Rate cuts must be undertaken gradually, and the inflation outlook remains a little opaque with the CPI measure of inflation not expected to peak until September (possibly 3.8%) before falling back towards 2% by the start of 2027. Annual wage increases also remain at 5% y/y, even though the seasonally adjusted job vacancies number has fallen to 712k. Nonetheless, both the 5-year and, albeit to a lesser extent, 10- year PWLB Certainty Rates have trended lower through the quarter. Further out, however, rates have either finished close to their starting point for the quarter, if not a little higher. It remains problematic that historic buyers of longer- dated gilts – pension funds and insurance companies – have preferred the shorter- Page 155
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dated maturities of late, whilst there is anecdotal evidence that both foreign investors and hedge funds, who are not natural long-term holders of long-dated debt gilt issuance, as a rule, may be more active in this part of the market currently than has previously been the case. Their presence, arguably, adds even greater volatility to the equation. Consequently, pulling all these factors together, and it is clear that any signs of public finance weakness could put even greater upward pressure on medium and longer dated gilts and, therein, PWLB rates. Additionally, US Treasury yields have also remained elevated because markets are unclear as to the relative impact of President Trump’s tariffs, deportation and tax-cutting policies. Given the effect US markets have globally, this is another contributing factor to the stubbornness of medium to long-dated gilt yields to fall back. MPC meetings: 8th May & 19th June 2025 • There were two Monetary Policy Committee (MPC) meetings this quarter. In May, the Committee cut Bank Rate from 4.50% to 4.25%, while in June policy was left unchanged. In June’s vote, three MPC members (Dhingra, Ramsden and Taylor) voted for an immediate cut to 4.00%, citing loosening labour market conditions. The other six members were more cautious, as they highlighted the need to monitor for “signs of weak demand”, “supply- side constraints” and higher “inflation expectations”, mainly from food prices rising. By repeating the well-used phrase “gradual and careful”, the MPC continued to suggest that rates will be reduced further. 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% PWLB Rates 01.04.25 - 30.06.25 1 Year 5 Year 10 Year 25 Year 50 Year 50 year target % Page 156
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• At the start of June, amid escalating tensions between Israel and Iran, oil prices surged to over $75 per barrel. However, following a ceasefire agreement near the end of the month, oil prices eased back to levels prior to the conflict. Given the drop back in energy prices and the relatively muted reaction to fears of a ceasefire violation, along with a large drop in the services PMI output prices balance, our central view is that once inflation begins to trend downwards in the final months of 2025, Bank Rate reductions can begin again from November (pause in August as inflation remains close to its peak), falling to a low of 3.5% in May 2026. However, if the conflict in the Middle East were to result in higher energy prices and/or domestic inflationary pressures grow stronger, there is a risk the Bank of England may skip cutting rates further. Page 157
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Appendix 2 – Interest Rate Forecast The Council has appointed MUFG Corporate Markets as its treasury advisors and part of their service is to assist the Council to formulate a view on interest rates. The PWLB rate forecasts below are based on the Certainty Rate (the standard rate minus 20 bps) which has been accessible to most authorities since 1st November 2012. For Housing Revenue Account authorities, the lower Housing Revenue Account (HRA) PWLB rate has also been available since 15 June 2023 (standard rate minus 60 bps) but is available for HRA borrowing only. The latest forecast was provided on 10th February: • Money market yield forecasts are based on expected average earnings by local authorities for 3 to 12 months. • The MUFG Corporate Markets forecast for average earnings are averages i.e., rates offered by individual banks may differ significantly from these averages, reflecting their different needs for borrowing short-term cash at any one point in time. The forecast has proved robust over the period since February, setting out a central view that short and long-dated interest rates will start to fall once it is evident that the Bank of England has been successful in squeezing excess inflation out of the economy, despite a backdrop of stubborn inflationary factors. Nonetheless, the longer dated part of the forecast also reflects the increased level of Government borrowing over the term of the current Parliament and the weakness in the public finances, with the Government struggling to deliver on the efficiencies detailed in the 30th of October Budget. Moreover, there is still on-going debate as to when, and if, the Government’s policies will lead to a material uptick in growth given their reliance on the logistics of fast- tracking planning permissions, identifying sufficient skilled labour to undertake a resurgence in building, and an increase in the employee participation rate within the economy. Overall, our central view is that monetary policy is sufficiently tight at present to cater for some further moderate loosening, the extent of which, however, will continue to be data dependent. We forecast the next reduction in Bank Rate to be made in November and for a pattern to evolve whereby rate cuts are made quarterly and in keeping with the release of the Bank’s Quarterly Monetary Policy Reports (February, May, August and November). Any movement below a 4% Bank Rate will, nonetheless, be very much dependent on inflation data releases in the coming months. MUFG Corporate Markets Interest Rate View 10.02.25 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Sep-26 Dec-26 Mar-27 Jun-27 Sep-27 Dec-27 Mar-28 BANK RATE 4.50 4.25 4.25 4.00 3.75 3.75 3.75 3.50 3.50 3.50 3.50 3.50 3.50 3 month ave earnings 4.50 4.30 4.30 4.00 3.80 3.80 3.50 3.50 3.50 3.50 3.50 3.50 3.50 6 month ave earnings 4.40 4.20 4.20 3.90 3.70 3.70 3.50 3.50 3.50 3.50 3.50 3.50 3.50 12 month ave earnings 4.40 4.20 4.20 3.90 3.70 3.70 3.50 3.50 3.50 3.50 3.50 3.50 3.60 5 yr PWLB 5.00 4.90 4.80 4.70 4.60 4.50 4.40 4.40 4.30 4.20 4.20 4.10 4.00 10 yr PWLB 5.30 5.20 5.10 5.00 4.90 4.80 4.70 4.70 4.60 4.50 4.50 4.40 4.40 25 yr PWLB 5.80 5.70 5.60 5.50 5.40 5.30 5.20 5.10 5.00 5.00 4.90 4.90 4.80 50 yr PWLB 5.50 5.40 5.30 5.20 5.10 5.00 4.90 4.80 4.70 4.70 4.60 4.60 4.50 Page 158
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International factors could also impact the prospect for longer dated gilt yield falls. President Trump’s “big, beautiful bill” has successfully made its way through the House of Representatives in July and given that it will signal a continued large budget deficit position in the US finances, any uptick in Treasury yields will likely impact other developed economies markets too. There will also be a keen focus on whether US- driven tariff policies result in upward pressures on inflation. Page 159
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Appendix 3 2025-26 Prudential and Treasury Indicators as at Quarter 1 2025-26 Original Forecast Estimate As at Qtr 1 Prudential Indicators for prudence 1) Capital expenditure £m £m Gross capital expenditure 71 75 Less Financing (26) (26) Net financing need (in-year borrowing requirement) 45 49 2) Capital financing requirement (CFR) £m £m Total CFR at 1 April 360 354 Total CFR at 31 March 394 392 Movement in CFR 34 38 Represented by: Net in-year borrowing requirement (above) 45 49 Less: principal repayments and other financing movements (11) (11) Total 34 38 3) Authorised limits £m £m Authorised limit for borrowing 293 Within limit Authorised limit for long-term liabilities 101 Within limit Authorised limit for external debt 394 Within limit 4) Operational boundaries £m £m Operational boundary for borrowing 298 Within limit Operational boundary for long-term liabilities 104 Within limit Operational boundary for external debt 402 Within limit 5) Gross debt and the CFR £m £m Gross debt at 31 March 321 301 Total CFR at 31 March 394 392 Gross debt less the CFR at 31 March (73) (91) Prudential indicators for affordability % % 6) Ratio of financing costs to net revenue stream 4.9 No update Page 160
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Forecast As at Qtr 1 Treasury indicators – borrowing limits 7) Maturity structure of fixed rate borrowing Upper Lower Upper Lower Under 12 months 30% 0% Within limit 12 months and within 24 months 30% 0% Within limit 24 months and within 5 years 30% 0% Within limit 5 years and within 10 years 40% 0% Within limit 10 years and above 100% 0% Within Limit 8) Limits on fixed rate and variable rate borrowing Upper Lower Upper Lower Fixed rate 100% 0% Within limit Variable rate 60% 0% Within limit Treasury indicator - investment 9) Upper limit on principal sums invested for over 365 days £m £m Upper limit 20 Within limit Notes to Prudential and Treasury Indicators The authority’s capital expenditure plans are the key driver of treasury management activity. The output of the capital expenditure plans is reflected in the prudential indicators, which are designed to assist members’ overview and confirm capital expenditure plans. Prudential Indicators – Prudence Indicators 1-5 above cover the overall capital and control of borrowing prudential indicators. Affordability Prudential Indicators Within the overall framework, prudential indicators are required to assess the affordability of the capital investment plans. These provide an indication of the impact of the capital investment plans on the authority’s overall finances. Ratio of Financing Costs to Net Revenue Stream This indicator identifies the trend in the cost of capital (borrowing and other long term obligation costs), against the net revenue stream. The estimates of financing costs include current commitments and the proposals in the 2025-26 Budget Pack. Maturity Structure of Borrowing These gross limits are set to reduce the authority’s exposure to large, fixed rate sums falling due for refinancing, and are required for upper and lower limits. Page 161
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IFRS 16 Leases It was not possible to account for leases on an IFRS16 compliant basis within the pre- audit annual accounts for the year ending 31 March 2025. Changes will require to be made during the audit process, which are not yet quantifiable but will impact both the CFR and Debt positions. It is anticipated that Prudential and Treasury Indicators and Limits will be reviewed and updated, as may be required, as part of the Mid-year Review report. Page 162
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Audit & Scrutiny Committee Work Plan 2025 This is an outline plan to facilitate forward planning of reports to the Audit & Scrutiny Committee Report Lead Service Regularity 4 September 2025 – Hybrid Meeting Reports to Committee Services by 11 August 2025 Internal Audit and Counter Fraud Summary of Activities Chief Internal Auditor Quarterly Internal and External Audit Report Follow Up Chief Internal Auditor Quarterly Internal Audit Reports to Audit and Scrutiny Committee 2025/26 Chief Internal Auditor Quarterly External Audit Progress Report Forvis Mazars – Mark Outterside Quarterly 2025-26 Treasury Management Update as at 30 June 2025 Interim Head of Financial Services Annual PSIAS Self-Assessment Chief Internal Auditor Annual Corporate Complaints Annual Report 2024-25 Governance, Risk and Safety Manager Annual Freedom of Information Annual Report 2024-25 Governance, Risk and Safety Manager Annual Audit & Scrutiny Committee 2024/25 Annual Report Audit & Scrutiny Committee Chair Annual Strategic Risk Assurance Mapping Chief Internal Auditor Annual Strategic Risk Register Update Chief Executive Annual 16 December 2025 Reports to Committee Services by 21 November 2025 Internal Audit and Counter Fraud Summary of Activities Chief Internal Auditor Quarterly Internal and External Audit Report Follow Up Chief Internal Auditor Quarterly Internal Audit Reports to Audit and Scrutiny Committee 2025/26 Chief Internal Auditor Quarterly Verbal Update by Chair(s) of Scrutiny Panel Chair and Vice Chair of Audit & Scrutiny Committee Quarterly External Audit Progress Report Forvis Mazars – Mark Outterside Quarterly Performance Reporting Update (to include reference to LGBF) Chief Executive/Head of Customer Support Services/HR & OD Manager – Carolyn Cairns/Jennifer Coyle Annual Council Annual Report 2025/26 Head of Customer Support Services Annual Annual Auditors Report Forvis Mazars – Mark Outterside Annual Draft Thematic Review Forvis Mazars – Mark Outterside Annual 2024-25 Audited Annual Accounts Forvis Mazars – Mark Outterside/Section 95 Officer/Head of Financial Services Annual Treasury Management Strategy and Annual Investment Strategy – Mid-year Review Report 2025/26 Head of Financial Services Annual 12 March 2026 Reports to Committee Services by 16 February 2026 Page 163 Agenda Item 15
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Audit & Scrutiny Committee Work Plan 2025 Internal Audit and Counter Fraud Summary of Activities Chief Internal Auditor Quarterly Internal and External Audit Report Follow Up Chief Internal Auditor Quarterly Internal Audit Reports to Audit and Scrutiny Committee 2025/26 Chief Internal Auditor Quarterly Verbal Update by Chair(s) of Scrutiny Panel Chair and Vice Chair of Audit & Scrutiny Committee Quarterly External Audit Progress Report Forvis Mazars – Mark Outterside Quarterly RIPSA Annual Report Governance and Risk Manager Annual Internal Audit 2025/26 Plan and Internal Audit Strategy 2025-2028 Chief Internal Auditor Annual 2025/26 Unaudited Annual Accounts Preparation Plan and Timetable Head of Financial Services Annual 2025-26 Treasury Management Update as at 31 December 2025 Head of Financial Services Annual 2026-27 Treasury Management Strategy and Annual Investment Strategy Head of Financial Services Annual Internal Audit Charter and Internal Audit Manual Chief Internal Auditor Annual Scrutiny Manual and Framework Annual Review Chief Internal Auditor Annual 11 June 2026 Reports to Committee Services by 18 May 2026 Internal Audit and Counter Fraud Summary of Activities Chief Internal Auditor Quarterly Internal and External Audit Report Follow Up Chief Internal Auditor Quarterly Internal Audit Reports to Audit and Scrutiny Committee 2026/27 Chief Internal Auditor Quarterly Verbal Update by Chair(s) of Scrutiny Panel Chair and Vice Chair of Audit & Scrutiny Committee Quarterly External Audit Progress Report Forvis Mazars – Mark Outterside Quarterly Internal Audit 2025-26 Annual Report Chief Internal Auditor Annual Scrutiny report on the Monitoring and Managing of Complaints Chief Internal Auditor (Scrutiny Panel) from March A&SC Annual Annual Audit Plan for year ending 31 March 2026 Forvis Mazars – Mark Outterside Annual Local Government in Scotland – Financial Bulletin 2024/25 (Accounts Commission publication – timing will be subject to change, as this is dependent on publication date) Head of Financial Services Annual Local Government Benchmarking Framework Report Head of Customer Support Services/OD Project Manager (Chris Carr) Annual Unaudited Annual Accounts for year ending 31 March 2026 Head of Financial Services Annual Treasury Management Annual Report 2025/26 Head of Financial Services Annual Statement of Governance and Internal Control Governance, Risk and Safety Manager Annual Page 164