Public reports pack
Argyll and Bute Council · 12 June 2025
Back to Audit and Scrutiny Committee — 12 June 2025 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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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 5 June 2025 NOTICE OF MEETING A meeting of the AUDIT AND SCRUTINY COMMITTEE will be held BY MICROSOFT TEAMS on THURSDAY, 12 JUNE 2025 at 10:30 AM, which you are requested to attend. Douglas Hendry Executive Director BUSINESS 1. APOLOGIES FOR ABSENCE 2. DECLARATIONS OF INTEREST 3. MINUTES (Pages 3 - 8) Minutes of the Audit and Scrutiny Committee as held on 13 March 2025 AUDIT ITEMS 4. ANNUAL AUDIT PLAN FOR YEAR ENDING 31 MARCH 2025 (Pages 9 - 66) Report by Forvis Mazars 5. INTERNAL AUDIT AND COUNTER FRAUD SUMMARY OF ACTIVITIES (Pages 67 - 76) Report by Chief Internal Auditor 6. INTERNAL AND EXTERNAL AUDIT REPORT FOLLOW UP REPORT 2024-2025 (Pages 77 - 88) Report by Chief Internal Auditor 7. INTERNAL AUDIT REPORTS TO AUDIT AND SCRUTINY COMMITTEE 2025-26 (Pages 89 - 94) Report by Chief Internal Auditor (a) Short Term Lets (Pages 95 - 108) (b) Asbestos Management (Pages 109 - 126) (c) Bridges Asset Management Plan (Pages 127 - 142) Public Document Pack
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(d) Trading Standards (Pages 143 - 154) (e) External Placements (Pages 155 - 170) (f) IFRS 16 - Leasing (Pages 171 - 182) (g) Disclosure Checks - Live Argyll (Pages 183 - 196) 8. INTERNAL AUDIT ANNUAL REPORT 2024-2025 (Pages 197 - 220) Report by Chief Internal Auditor SCRUTINY ITEMS 9. SCRUTINY REPORT ON THE MONITORING AND MANAGING OF COMPLAINTS (Pages 221 - 240) Report by Chief Internal Auditor 10. VERBAL UPDATE BY CHAIR OF SCRUTINY PANEL 11. LOCAL GOVERNMENT IN SCOTLAND - FINANCIAL BULLETIN 2023-24 (Pages 241 - 286) Report by Section 95 Officer 12. TREASURY MANAGEMENT ANNUAL REPORT 2024-25 Report by Section 95 Officer (TO FOLLOW) 13. LOCAL GOVERNMENT BENCHMARKING FRAMEWORK (LGBF): 2023/24 (Pages 287 - 296) Report by Executive Director with responsibility for Customer Support Services 14. STATEMENT OF GOVERNANCE AND INTERNAL CONTROL (Pages 297 - 316) Report by Executive Director with responsibility for Legal and Regulatory Support REPORT FOR NOTING 15. DRAFT AUDIT AND SCRUTINY COMMITTEE WORKPLAN (Pages 317 - 320) 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: Shona Barton, Governance Manager Tel: 01436 657605
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MINUTES of MEETING of AUDIT AND SCRUTINY COMMITTEE held BY MICROSOFT TEAMS on THURSDAY, 13 MARCH 2025 Present: Janice Wason Hall (Chair) Councillor Graham Hardie Councillor Fiona Howard Councillor Reeni Kennedy- Boyle Councillor Gary Mulvaney 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 Mark Outterside, Forvis Mazars The Chair asked the Committee to agreed that Item 7 (Audit Progress Report) of the Agenda be taken after Item 3 (Minutes) to enable Mr Outterside from Forvis Mazars to attend another meeting. The Chair also took the opportunity to congratulate Mhairi Weldon from the Internal Audit Team who has recently passed her final examination and qualified as a Chartered Member of the Institute of Internal Audit. Mhairi has been supported on the journey by Paul and his team and this is an excellent example of the Council’s “Growing our Own” approach which encourages staff to achieve their full potential. 1. APOLOGIES FOR ABSENCE Apologies for absence was intimated on behalf of Councillor Daniel Hampsey. 2. DECLARATIONS OF INTEREST There were no declarations of interest intimated. 3. MINUTES The Minute of the previous meeting, held on 17 December 2024, were approved as a correct record. 4. AUDIT PROGRESS REPORT The Committee gave consideration to a report and a verbal update on the progress and the current position of ongoing works in relation to the completion and delivery of the Annual Audit for 2024-25. Decision The Audit and Scrutiny Committee noted the contents of the report and the verbal update provided. (Reference: Report by Forvis Mazars dated 13 March 2025, submitted) Page 3 Agenda Item 3
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Councillor Fiona Howard joined the meeting during consideration of the following item of business. 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 2024/25 against the following areas:- Audits Completed • Oban Airport • Data Security & Information Security Audits in Planning/in Progress • Short-Term Lets • Bridges Asset Management Plan and Inspection Regime – In draft • Asbestos Management – In draft • External Placements • Trading Standards • Leasing – Estates • Stores • Disclosure Checks - protecting vulnerable groups The report also provided information on the work carried out on the 2024/25 Audit Plan and by the Counter Fraud Team (CFT). Decision The Audit and Scrutiny Committee reviewed and endorsed the Summary of Activities report. (Reference: Report by Chief Internal Auditor, dated 13 March 2025, submitted) 6. INTERNAL AND EXTERNAL AUDIT REPORT FOLLOW UP 2024-25 Consideration was given to a report which provided an update on all open actions as at 31 December 2024. 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 13 March 2025, submitted) 7. INTERNAL AUDIT REPORTS TO AUDIT AND SCRUTINY COMMITTEE 2024/2025 Consideration was given to a report containing the action plans in relation to the following two audits:- Oban Airport Data and Information Security – Data Platform Decision Page 4
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The Audit and Scrutiny Committee reviewed and endorsed the summary report and detail within each individual report. (Reference: Report by Chief Internal Auditor dated 13 March 2025, submitted) 8. VERBAL UPDATE BY CHAIR OF SCRUTINY PANEL The Chair provided information on the work of the Panel and noted that the final meeting will be held on 28 March 2025. She advised that the Panel had been chaired by Martin Caldwell and she was involved in a shadowing capacity. It was noted the scrutiny report on the monitoring and managing of complaints will be submitted to the June Audit and Scrutiny Committee for consideration. 9. SCRUTINY FRAMEWORK AND MANUAL ANNUAL REVIEW The Committee gave consideration to a report which highlighted the conclusion of the annual review to determine whether any changes are required to the Council’s Scrutiny Framework and Manual. Decision The Audit and Scrutiny Committee noted the outcome of the annual review of the Scrutiny Framework and Manual. (Reference: Report by the Chief Internal Auditor dated 13 March 2025, submitted) 10. SCRUTINY - IDENTIFICATION OF A TOPIC 2025-2026 The Committee gave consideration to a report which provided an update on the recent engagement on potential scrutiny options in order to identify a topic to take forward in the context of the Scrutiny Manual and Framework as part of the Committee’s scrutiny role for 2025-26. Decision The Audit and Scrutiny Committee:- 1. agreed that the topic for 2025-26 will be a review of the Council’s readiness and preparation for compliance with the ‘Biodegradable Municipal Waste Landfill Ban’ both based on the responses provided to the Chief Internal Auditor as part of the recent communications with the Committee and the Committee’s previous wish to maintain overview of progress in this area and, in accordance with the agreed process of assessment which is detailed in the Scrutiny Framework and Manual. 2. agreed to form a Scrutiny Panel that would take forward the review and that the review would be scheduled to commence in the final quarter of 2025-2026; and 3. appointed Janice Wason Hall as the Panel Chair and Councillors Reeni Kennedy- Boyle and Gary Mulvaney as the two further Members. (Reference: Report by Chief Internal Auditor dated 13 March 2025, submitted) Page 5
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11. TREASURY MANAGEMENT UPDATE QUARTER ENDED 31 DECEMBER 2024 The Committee gave consideration to a report which provided an update on the Council’s treasury management activity during the quarter 1 October to 31 December 2024 and the overall position as at 31 December 2024. The report covered information on Economic background; Interest rate forecasts; Borrowing; Investments and Compliance with treasury and prudential limits. Decision The Audit and Scrutiny Committee noted the contents of the report and the treasury activity during the period 1 October to 31 December 2024. (Reference: Report by Section 95 Officer dated 17 January 2025, submitted) 12. TREASURY MANAGEMENT STRATEGY AND ANNUAL INVESTMENT STRATEGY Consideration was given to a report which outlined the proposed Treasury Management Strategy Statement and Annual Investment Strategy and set out the policy for the repayment of loans fund advances for 2025-26. Decision The Audit and Scrutiny Committee:- 1. noted that the report had been considered by the Policy and Resources Committee on 20 February 2025 and approved by full Council on 27 February 2025. Any recommendations arising from further scrutiny by the Audit and Scrutiny Committee will require to be presented to Council at the earliest opportunity; and 2. endorsed the Treasury Management Strategy and Annual Investment Strategy for 2025-26, and the Prudential and Treasury Indicators for 2025.26 to 2027-28. (Reference: Report by Section 95 Officer dated 13 February 2025, submitted) 13. 2024/2025 UNAUDITED ANNUAL ACCOUNTS PREPARATIONS Consideration was given to a report which outlined the plans in place for financial year end 31 March 2025 and the preparation of the Council’s Unaudited Accounts for 2024-25. Decision The Audit and Scrutiny Committee noted that plans are in place to prepare the Council’s Annual Accounts for the year ending 31 March 2025, consistent with the proper accounting practice and by the statutory deadline of 30 June 2025. (Reference: Report by Section 95 Officer, dated 19 February 2025, submitted) 14. INTERNAL AUDIT STRATEGY 2025-28 AND AUDIT PLAN 2025-26 The Committee gave consideration to a report which introduced the new Internal Audit Strategy covering 2025-28 and the Internal Audit Plan 2025-26. Page 6
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Decision The Audit and Scrutiny Committee:- 1. Approved the Internal Audit Strategy 2025-28, as attached at Appendix 1 to the report; and 2. Approved the Internal Audit Plan 2025-26, as attached at Appendix 2 to the report. (Reference: Report by Chief Internal Auditor, dated 13 March 2025, submitted) 15. INTERNAL AUDIT CHARTER AND INTERNAL AUDIT MANUAL Consideration was given to a report which outlined the proposed changes to the Internal Audit Charter and Internal Audit Manual. Decision The Audit and Scrutiny Committee:- 1. Approved the amended Internal Audit Charter, as attached at Appendix 1 to the report; and 2. Approved the amended Internal Audit Manual, as attached at Appendix 2 to the report. (Reference: Report by Chief Internal Auditor, dated 13 March 2025, submitted) 16. INTERNAL AUDIT - GLOBAL INTERNAL AUDIT STANDARDS AND APPLICATION NOTE FOR UK PUBLIC SECTOR The Committee considered a report which provided an update arising from the introduction of the new Global Internal Audit Standards (GIAS) and the supplementary Application Note. Decision The Audit and Scrutiny Committee:- 1. noted the requirements of the new GIAS Standards as outlined in para 3.3 of the report and also those contained within the Application Note which require the Council’s Internal Audit section to comply with effect from the 1 April 2025; 2. noted the gaps outlined in paragraph 3.5 which require to be addressed in order to comply and agree the action plan to address these requirements of the Standards; and 3. noted the additional duties expected of the Audit and Scrutiny Committee in their roles as ‘those charged with governance duties’. (Reference: Report by Chief Internal Auditor dated 13 March 2025, submitted) 17. RIPSA ANNUAL REPORT Having noted the legal requirements placed on the Council in relation to covert surveillance, the Committee gave consideration to a report which advised that between 1 Page 7
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January and 31 December 2024, the Council undertook no covert surveillance operations and that training for Roads and Infrastructure and Regulatory Services was undertaken in February and March 2024. Decision The Audit and Scrutiny Committee considered and noted the terms of the report. (Reference: Report by Executive Director with responsibility for Legal and Regulatory Support dated 17 February 2025, submitted) 18. 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 13 March 2025, submitted) Page 8
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Annual Audit Plan Argyll and Bute Council – Year ending 31 March 2025 Page 9 Agenda Item 4
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Annual Audit Plan Letter Audit and Scrutiny Committee Argyll and Bute Council Lochgilphead Argyll PA31 8RT 19th May 2025 Forvis Mazars The Corner, Bank Chambers 26 Mosley Street Newcastle upon Tyne NE1 1DF Dear Audit and Scrutiny Committee members, Annual Audit Plan – Year ending 31 March 2025 We are pleased to present our Annual Audit Plan for Argyll and Bute Council for the year ending 31 March 2025. This report summarises our audit approach, including the significant audit risks and areas of key judgement we have identified, and provides details of our audit team. In addition, as it is a fundamental requirement that an auditor is, and is seen to be, independent of an audited entity, the section of the report titled ‘Confirmation of our independence’ summarises our considerations and conclusions on our independence as auditors. Two-way communication with you is key to a successful audit and is important in: • Reaching a mutual understanding of the scope of the audit and our respective responsibilities; • Sharing information to assist each of us to fulfil our respective responsibilities; • Providing you with constructive observations arising during the audit process; and • Ensuring that we, as external auditors, gain an understanding of your attitude and views in respect of the internal and external operational, financial, compliance, and other risks facing Argyll and Bute Council which may affect the audit, including the likelihood of those risks materialising and how they are monitored and managed. With that in mind, this report, which has been prepared following our initial planning discussions with management, facilitates a discussion with you on our audit approach. We welcome any questions, concerns, or input you may have on our approach or role as auditor. www.forvismazars.com/uk Forvis Mazars LLP – The Corner, Bank Chambers, 26 Mosley Street, Newcastle upon Tyne, NE1 1DF – Tel: 0191 383 6339 – www.forvismazars.com/uk Forvis Mazars LLP is the UK firm of Forvis Mazars Global, a leading global professional services network. Forvis Mazars LLP is a limited liability partnership registered in England and Wales with registered number OC308299 and with its registered office at 30 Old Bailey, London, EC4M 7AU. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001139861. VAT number: GB 839 8356 73 Page 10
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Annual Audit Plan Letter Annual Audit Plan – Year ending 31 March 2025 (continued) This report also contains appendices that outline our key communications with you during the audit, and forthcoming accounting issues and other issues that may be of interest to you. Providing a high-quality service is extremely important to us and we strive to provide technical excellence with the highest level of service quality, together with continuous improvement to exceed your expectations. If you have any concerns or comments about this report or our audit approach, please contact me. This report has been prepared in accordance with the responsibilities set out within the Audit Scotland’s Code of Audit Practice (“the Code”) and for the sole benefit of the Audit and Scrutiny Committee. Except where required by law or regulation, it should not be used, quoted or made available to any other parties without our prior written consent. Yours faithfully, Mark Outterside (Director) Forvis Mazars Forvis Mazars LLP – The Corner, Bank Chambers, 26 Mosley Street, Newcastle upon Tyne, NE1 1DF – Tel: 0191 383 6339 – www.forvismazars.com/uk Forvis Mazars LLP is the UK firm of Forvis Mazars Global, a leading global professional services network. Forvis Mazars LLP is a limited liability partnership registered in England and Wales with registered number OC308299 and with its registered office at 30 Old Bailey, London, EC4M 7AU. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001139861. VAT number: GB 839 8356 73 Page 11
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4 Contents 01 Engagement and responsibilities summary 02 Your audit engagement team 03 Audit scope, approach and timeline 04 Materiality and misstatements 05 Significant risks and other key judgement areas 06 Wider scope and Best Value 07 Audit fees and other services 08 Confirmation of our independence Appendix A – Key communication points Appendix B - Current year updates, forthcoming accounting and other issues This document is to be regarded as confidential to Argyll and Bute Council. It has been prepared for the sole use of the Audit and Scrutiny Committee as the appropriate sub-committee charged with governance. No responsibility is accepted to any other person in respect of the whole or part of its contents. Our written consent must first be obtained before this document, or any part of it, is disclosed to a third party. Page 12
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01Engagement and responsibilities summary Page 13
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6 Engagement and responsibilities summary We are appointed to perform the external audit of Argyll and Bute Council for the year to 31 March 2025. The scope of our engagement is set out in the Code of Audit Practice, issued by the Auditor General and the Accounts Commission available from the Audit Scotland website: Code of audit practice | Audit Scotland (audit-scotland.gov.uk). Our responsibilities are principally derived from the Local Government (Scotland) Act 1973 (the 1973 Act) and the Code of Audit Practice, as outlined below and overleaf. Audit opinion We are responsible for forming and expressing an opinion on whether the financial statements are prepared, in all material respects, in accordance with applicable law and UK adopted International Accounting Standards as interpreted and adopted by the Code of Practice on Local Authority Accounting in the United Kingdom 2024/25. Our audit does not relieve management or Audit and Scrutiny Committee, as Those Charged With Governance, of their responsibilities. The Section 95 Officer is responsible for the assessment of the Council’s ability to continue as a going concern. As auditors, we are required to obtain sufficient, appropriate audit evidence regarding, and conclude on: a) whether a material uncertainty related to going concern exists, and b) the appropriateness of the Section 95 Officer’s use of the going concern basis of accounting in the preparation of the financial statements. Fraud The responsibility for safeguarding assets and for the prevention and detection of fraud, error, and non-compliance with law or regulations rests with both those charged with governance, and management. This includes establishing and maintaining internal controls over asset protection, compliance with relevant laws and regulations, and the reliability of financial reporting. As part of our audit procedures in relation to fraud, we are required to inquire of those charged with governance, including key management and internal audit on their knowledge of instances of fraud, and their views on the risks of fraud and on internal controls that mitigate those risks. In accordance with International Standards on Auditing (UK), we plan and perform our audit to obtain reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether due to fraud or error. However, our audit should not be relied upon to identify all such misstatements. Page 14
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7 Engagement and responsibilities summary (continued) Internal control Management is responsible for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. We are responsible for obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Council’s internal control. Wider reporting We report to the National Audit Office on the consistency of the Council’s financial statements with its Whole of Government Accounts (WGA) submission. The level of auditor assurance required depends on monetary thresholds set by HM Treasury. Wider scope and Best Value We are also responsible for reviewing and reporting on the wider scope arrangements that the Council has in place and its arrangements to secure Best Value. We discuss our approach to wider scope and Best Value work further in the ‘Wider scope and Best Value’ section of this report. Page 15
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02Your audit engagement team Page 16
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Your audit team 9 Mark Outterside Engagement Leader mark.outterside@mazars.co.uk 07824 086 593 We will consider utilising internal experts/specialists on this engagement in the following areas: 1. The valuation of property, plant and equipment 2. The migration of payroll data to a new system Engagement Manager peter.hawkins@mazars.co.uk 07580 854 210 Peter Hawkins Aaron Rowell Engagement Team Leader aaron.rowell@mazars.co.uk 07816 209 250 Page 17
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03Audit scope, approach, and timeline Page 18
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11 Audit scope, approach, and timeline Risk-based approach Professional scepticism Understand the Council, its business, and the environment in which it operates (including IT environment) Plan our audit, including determining materiality and identifying significant components Perform our risk assessment to identify risks of material misstatement, including significant risks Respond to our identified risks by designing appropriate and sufficient audit procedures Perform planned procedures and evaluate findings and, where necessary, review the appropriateness and sufficiency of the scope of our audit Form our audit conclusion based on our audit findings Page 19
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Audit scope, approach, and timeline (continued) Audit scope Our audit approach is designed to provide an audit that complies with all professional requirements. Our audit of the financial statements will be conducted in accordance with International Standards on Auditing (UK), relevant ethical and professional standards, our own audit methodology, and in accordance with the terms of our engagement. Our work is focused on those aspects of your business which we consider to have a higher risk of material misstatement, such as those impacted by management judgement and estimation, application of new accounting standards, changes of accounting policy, changes to operations, or areas found to contain material errors in the past. Audit approach Our audit approach is risk-based, and the nature, extent, and timing of our audit procedures are primarily driven by the areas of the financial statements we consider to be more susceptible to material misstatement. Following our risk assessment where we assess the inherent risk factors (subjectivity, complexity, uncertainty, change and susceptibility to misstatement due to management bias or fraud) to aid in our risk assessment, we develop our audit strategy and design audit procedures to respond to the risks we have identified. If we conclude that appropriately designed controls are in place, we may plan to test and rely on those controls. If we decide controls are not appropriately designed, or we decide that it would be more efficient to do so, we may take a wholly substantive approach to our audit testing where, in our professional judgement, substantive procedures alone will provide sufficient appropriate audit evidence. Substantive procedures are audit procedures designed to detect material misstatements at the assertion level and comprise tests of detail (of classes of transaction, account balances, and disclosures), and substantive analytical procedures. Irrespective of our assessed risks of material misstatement, which takes account of our evaluation of the operating effectiveness of controls, we are required to design and perform substantive procedures for each material class of transaction, account balance, and disclosure. Our audit has been planned and will be performed to provide reasonable assurance that the financial statements are free from material misstatement and give a true and fair view. The concept of materiality and how we define a misstatement is explained in the ‘Materiality and misstatements’ section of this report. The diagram on the next page outlines the procedures we perform at the different stages of our audit. We have also provided, later in this report, a table setting out the procedures we perform for the significant financial statement areas. 12 Page 20
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Audit scope, approach, and timeline 13 Planning and risk assessment March to April 2025 • Planning our visit and developing our understanding of the entity • Documenting systems and control and performing walkthroughs • Risk identification and assessment • Considering proposed accounting policies and accounting treatments • Developing our audit strategy and planning the audit work to be performed • Agreeing timetable and deadlines • Preliminary analytical review • Determination of materiality Interim May 2025 • Documenting systems and controls • Performing walkthroughs • IT general controls testing • Reassessment of our audit strategy (and revising if necessary) • Early substantive testing of transactions Fieldwork July to September 2025 • Executing our strategy, starting with significant risks and other higher-risk areas • Use of data analytics • Receiving and reviewing the draft financial statements Completion October 2025 • Final review of financial statements, and disclosure checklist • Final director review • Agreeing the content of the letter of representation • Preparing our auditor’s report • Reporting to the Audit and Scrutiny committee • Subsequent events procedures • Signing our auditor’s report Page 21
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Audit scope, approach, and timeline (continued) Key developments The below key developments have taken place in the year. We have set out below how we will approach these areas during our audit. 14 Implementation of new payroll /HR system In August 2024, a new payroll/HR system was implemented (iTrent). The Council previously used ResourceLink. The change in system directly impacts our audit due to increased risk around migration of data, as staff costs are a significant balance within the accounts. We plan to test staff costs at enhanced risk (per the following page). We will engage an internal IT specialist to assess the migration process, and the design and implementation of iTrent. First year application of IFRS 16 The 2024/25 code introduced the mandatory application of IFRS 16 – Leases. It is expected that IFRS 16 will have a material impact on the accounts in 2024/25, as the Council will be required to recognise most of their operational leases on the balance sheet. IFRS 16 will also impact the three Public Private Partnership arrangements that the Council has. We plan to test leases/Public Private Partnership arrangements at enhanced risk (as set out on page 29 of this report). Page 22
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15 Audit scope, approach, and timeline (continued) Audit approach for significant financial statement areas Our audit approach on significant financial statement areas is set out below. Financial statement area Significant risk Key judgement area or enhanced risk Testing of controls Substantive procedures Comments Valuation of land and buildings Yes Yes No Yes See ‘Section 05 – Significant risks and other key judgement areas’ for further detail. Valuation of net defined pension liability/asset Yes Yes No No See ‘Section 05 – Significant risks and other key judgement areas’ for further detail. Accounting for leases under IFRS 16 No Yes No No See ‘Section 05 – Significant risks and other key judgement areas’ for further detail. Accounting for Public Private Partnerships under IFRS 16 No Yes No Yes See ‘Section 05 – Significant risks and other key judgement areas’ for further detail. Accounting for staff costs under a new payroll/HR system (iTrent) No Yes No No See ‘Section 05 – Significant risks and other key judgement areas’ for further detail. Page 23
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16 Audit scope, approach, and timeline (continued) Group audit approach The preliminary scope of our group audit is based on our analysis of the risks we have identified at group level. When scoping our audit, we have considered quantitative criteria (the contribution of each of the group’s consolidated components to the group financial statements); qualitative criteria (the risks of material misstatement of the group financial statements that consolidated components may present individually at component level); and we have assessed the risk of material misstatement across the group’s consolidated components in aggregate. The nature and extent of audit work we plan to perform on the consolidated components is set out below. Component name Identifier % Group Expenditure Location Auditor Scope Argyll and Bute Council Parent – local authority 98.05% Kilmory, Lochgilphead, Argyll, PA31 8RT Forvis Mazars Full Argyll and Bute Integration Joint Board Joint venture between the Council and NHS Highland with responsibility for health and social care functions. 0.00% Campbeltown, PA28 6LE Forvis Mazars Specific Dunbartonshire and Argyll and Bute Valuation Joint Board Joint Board responsible for the maintenance of the electoral, council tax and non-domestic rates registers for Argyll and Bute, West Dunbartonshire and East Dunbartonshire Councils. 0.28% Kilbrannan House, Bolgam St, Campbeltown, PA28 6JY Forvis Mazars N/A Live Argyll 100% owned subsidiary of the Council, which provides a wide range of services within the area including libraries, leisure facilities, halls, sports development and community centres. 1.67% Campbeltown Aqualibrium. Kinloch Road, Campbeltown, Argyll, PA28 6EG Forvis Mazars Specific Common Good accounts The Council administers the Common Good Accounts for several former Burghs. 0.00% Kilmory, Lochgilphead, Argyll, PA31 8RT Forvis Mazars N/A Page 24
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17 Audit scope, approach, and timeline (continued) Follow up on deficiencies in internal control Set out below are the significant deficiencies in internal control that we identified during our prior period audit. We request that you and management provide an update on the action taken to address these deficiencies. • We noted that there is scope for the Council to improve their property, plant and equipment valuation reconciliations, as there were instances where we struggled to agree details to underlying records. We recommended that management prepare and maintain a reconciliation of the results of any revaluation exercises conducted with the fixed asset register/general ledger and maintain summaries that agree back to supporting records (such as maps or architects’ plans). • During our testing of property, plant and equipment valuations, we noted the asset records and floor areas held on the Concerto system were inconsistent with area inputs used in the valuer calculations. We recommended management ensure there are clear controls and processes in place to ensure that information on Concerto is kept accurate and up to date. • The Council administers numerous bank accounts, several of which were dormant during the period. It was not clear whether these accounts are actively monitored. We recommended that a review of open bank accounts should be carried out periodically to identify dormant accounts. Any accounts which are no longer required should be closed. • Related Parties testing identified one officer who was disclosed in the Senior Councillor Remuneration note in the accounts, but not on the Council’s website. We recommended that management perform a regular exercise to ensure there is consistency between the two. • During our testing of debtors, when considering the application of the Code/IFRS 9 Financial Instruments, we noted the Council had not done a detailed assessment of the expected credit loss for 2023/24. We recommended that the Council ensure they perform an expected credit loss calculation which includes sufficient detail. Page 25
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18 Audit scope, approach, and timeline (continued) Audit of trusts registered as Scottish charities The Charities Accounts (Scotland) Regulations 2006 outline the accounting and auditing requirements for charitable bodies. The 2006 Regulations require charities to prepare annual accounts and an auditor to prepare a report to the charity trustees where any legislation requires an audit. The Local Government (Scotland) Act 1973 specifies the audit requirements for any trust fund where some or all members of a Council are the sole trustees. Therefore, a full and separate audit and independent auditor’s report is required for each registered charity where members of the Council are sole trustees. Members of the Council are the sole trustees for 7 trusts registered as Scottish charities, with total assets of circa £800,000. The preparation and audit of financial statements of registered charities is regulated by the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006. We have not identified any significant risks, other than the risk of management override of controls which we have also identified as a risk for the Council’s annual accounts, for the financial statements of the Council’s charitable trusts. Please see page 22 for disclosure of our planning materiality level. Page 26
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04Materiality and misstatements Page 27
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Materiality and misstatements 20 Definitions Materiality is an expression of the relative significance or importance of a particular matter in the context of the financial statements as a whole. Misstatements in the financial statements are considered to be material if they could, individually or in aggregate, reasonably be expected to influence the economic decisions of users based on the financial statements. Materiality We determine materiality for the financial statements as a whole (overall materiality) using a benchmark that, in our professional judgement, is most appropriate to the entity. We also determine an amount less than materiality (performance materiality), which is applied when we carry out our audit procedures and is designed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Further, we set a threshold above which all misstatements we identify during our audit (adjusted and unadjusted) will be reported to the Audit and Scrutiny Committee. Judgements on materiality are made in light of surrounding circumstances and are affected by the size and nature of a misstatement, or a combination of both. Judgements about materiality are based on a consideration of the common financial information needs of users as a group and not on specific individual users. An assessment of what is material is a matter of professional judgement and is affected by our perception of the financial information needs of the users of the financial statements. In making our assessment we assume that users: • Have a reasonable knowledge of business, economic activities, and accounts; • Have a willingness to study the information in the financial statements with reasonable diligence; • Understand that financial statements are prepared, presented, and audited to levels of materiality; • Recognise the uncertainties inherent in the measurement of amounts based on the use of estimates, judgement, and consideration of future events; and • Will make reasonable economic decisions based on the information in the financial statements. We consider overall materiality and performance materiality while planning and performing our audit based on quantitative and qualitative factors. When planning our audit, we make judgements about the size of misstatements we consider to be material. This provides a basis for our risk assessment procedures, including identifying and assessing the risks of material misstatement, and determining the nature, timing and extent of our responses to those risks. The overall materiality and performance materiality that we determine does not necessarily mean that uncorrected misstatements that are below materiality, individually or in aggregate, will be considered immaterial. We revise materiality as our audit progresses should we become aware of information that would have caused us to determine a different amount had we been aware of that information at the planning stage. Page 28
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Materiality and misstatements (continued) 21 Materiality (continued) For the consolidated and single-entity Council financial statements, we consider that gross revenue expenditure at surplus/deficit level is the key focus of users of the financial statements. We have therefore determined our initial materiality levels using this as the benchmark. We expect to set a materiality of 2% of gross revenue expenditure at surplus/deficit level for the consolidated financial statements, and a materiality of 2% of gross revenue at surplus/deficit level for the single-entity. As set out in the tables alongside, based on currently available information (being the prior period signed financial statements), we anticipate overall group materiality for the year ended 31 March 2025 to be in the region of £9.810m (£9.810m in the prior year), and performance materiality to be in the region of £7.358m (£6.867m in the prior year). For the single-entity, we anticipate overall materiality for the year ended 31 March 2025 to be in the region of £9.697m (£9.697m in the prior year), and performance materiality to be in the region of £7.273m (£6.788m in the prior year). As set out in the tables overleaf, for the Argyll and Bute Charitable Trusts, we anticipate overall materiality for the year ended 31 March 2025 to be in the region of £16,318 (£16,318 in the prior year), and performance materiality to be in the region of £9,791 (£9,791 in the prior year). We have selected gross revenue expenditure at surplus/deficit on provision of services level as the benchmark for our materiality calculation. This is because the users of the financial statements primarily focus on expenditure in the year and the implications of this on the funding position of the authority. We will continue to monitor materiality throughout our audit to ensure it is set at an appropriate level. Group financial statements blank 2024/25 £’000s 2023/24 £’000s Overall materiality £9,810 £9,810 Performance materiality £7,358 £6,867 Clearly trivial £294 £294 Specific materiality: Remuneration Report £1 for senior councillors and senior employees’ remuneration and pensions benefits. 1 banding for Employees’ remuneration. 1 banding for exit packages. Council’s single-entity financial statements blank 2024/25 £’000s 2023/24 £’000s Overall materiality £9,697 £9,697 Performance materiality £7,273 £6,788 Clearly trivial £291 £291 Specific materiality: Remuneration Report £1 for senior councillors and senior employees’ remuneration and pensions benefits 1 banding for Employees’ remuneration. 1 banding for exit packages. Page 29
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Materiality and misstatements (continued) 22 Materiality (continued) Argyll and Bute Charitable Trust blank 2024/25 (TBC) £ 2023/24 £ Overall materiality £16,318 £16,318 Performance materiality £9,791 £9,791 Clearly trivial £490 £490 Page 30
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Materiality and misstatements (continued) Misstatements We will accumulate misstatements identified during our audit that are above our determined clearly trivial threshold. We have set a clearly trivial threshold for individual misstatements we identify (a reporting threshold) for reporting to the Audit and Scrutiny Committee and management that is consistent with a threshold where misstatements below that amount would not need to be accumulated because we expect that the accumulation of such amounts would not have a material effect on the financial statements. Based on our preliminary assessment of overall materiality, our proposed clearly trivial threshold is £294k for the Group and £291k for the Council, based on 3% of overall materiality. If you have any queries about this, please raise these with Mark Outterside. Each misstatement above the reporting threshold that we identify will be classified as: • Adjusted: Those misstatements that we identify and are corrected by management. • Unadjusted: Those misstatements that we identify that are not corrected by management. We will report all misstatements above the reporting threshold to management and request that they are corrected. If they are not corrected, we will report each misstatement to the Audit and Scrutiny Committee as unadjusted misstatements and, if they remain uncorrected, we will communicate the effect that they may have individually, or in aggregate, on the financial statements and on our audit opinion. Misstatements also cover qualitative misstatements and include quantitative and qualitative misstatements and omissions relating to the notes of the financial statements. Reporting In summary, we will categorise and report misstatements above the reporting threshold to the Audit and Scrutiny Committee as follows: • Adjusted misstatements; • Unadjusted misstatements; and • Disclosure misstatements (adjusted and unadjusted). Page 31
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05Significant risks and other key judgement areas Page 32
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Significant risks and other key judgement areas Definitions Following the risk assessment approach set out in the ‘Audit scope, approach, and timeline’ section, we have identified the risks of material misstatement in the financial statements. These risks are categorised as significant, enhanced, or standard. The definitions of these risk ratings are set out below. 25 Risk Level Definition Significant A risk that is assessed as being at or close to the upper end of the spectrum of inherent risk, based on a combination of the likelihood of a misstatement occurring and the magnitude of any potential misstatement. A fraud risk is always assessed as a significant risk (as required by auditing standards), including management override of controls and revenue recognition. Enhanced An area with an elevated risk of material misstatement at the assertion level, other than a significant risk, based on factors/ information inherent to that area. Enhanced risks require additional consideration but do not rise to the level of a significant risk. These include but are not limited to: • Key areas of management judgement and estimation uncertainty, including accounting estimates related to material classes of transaction, account balances, and disclosures but which are not considered to give rise to a significant risk of material misstatement; and • Risks relating to other assertions and arising from significant events or transactions that occurred during the period. Standard A risk related to assertions over classes of transaction, account balances, and disclosures that are relatively routine, non-complex, tend to be subject to systematic processing, and require little or no management judgement/ estimation. Although it is considered that there is a risk of material misstatement, there are no elevated or special factors related to the nature of the financial statement area, the likely magnitude of potential misstatements, or the likelihood of a risk occurring. Page 33
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Significant risks and other key judgement areas (continued) 26 Audit risks and planned responses In this section, we have set out the risks that we deem to be significant and enhanced, and our planned response. An audit is a dynamic process, and should we change our view of risk and/ or our approach to address those risks during our audit, we will report this to the Audit and Scrutiny Committee. Significant risks Blank Risk name Fraud Error Judgement Risk description Planned response 1 Management override of controls Yes No Yes Management at various levels within an organisation are in a unique position to perpetrate fraud because of their ability to manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively. Due to the unpredictable way in which such override could occur there is a risk of material misstatement due to fraud on all audits. You should assess this risk as part of your oversight of the financial reporting process. We plan to address the management override of controls risk through performing audit work over accounting estimates, journal entries and significant transactions outside the normal course of business or otherwise unusual. We will address the risk through performing audit procedures covering a range of areas including (but not limited to): • accounting estimates included in the financial statements for evidence of management bias; • any significant transactions outside the normal course of business; and • journals and other adjustments recorded in the general ledger in preparing the financial statements. Page 34
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Significant risks and other key judgement areas (continued) 27 Significant risks (continued) Blank Risk name Fraud Error Judgement Risk description Planned response 2 Valuation of the net defined benefit (liability)/surplus No Yes Yes As at 31 March 2024, the net defined benefit liability was £19.6m. The pension asset was nil. This is due to the application of the asset ceiling applied in accordance with IAS 19. The valuation of the Council’s net liabilities/assets includes use of discount rates, inflation rates, mortality rates etc., all of which should reflect the profile of the Council’s employees and other appropriate data. Due to the high degree of estimation uncertainty associated with the valuations, we have determined there is a significant risk in this area. We will address this risk by reviewing the controls that the Council has in place over the information sent to the Scheme Actuary by the fund administrators (Strathclyde Pension Fund). We will: • challenge the reasonableness of the Actuary’s assumptions that underpin the relevant entries made in the financial statements; • critically assess the competency, objectivity and independence of the Actuary; • liaise with the auditors of the Pension Fund to gain assurance that the overall IAS19 procedures and controls in place at the Pension Fund are operating effectively; • compare assumptions to expected ranges; and • agree data in the Actuary’s valuation report for accounting purposes to the relevant accounting entries and disclosures in the Council’s financial statements. Page 35
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Significant risks and other key judgement areas (continued) 28 Significant risks (continued) Blank Risk name Fraud Error Judgement Risk description Planned response 3 Valuation of property, plant and equipment No Yes Yes The Council held land and buildings (including council dwellings) with a net book value of £457 million at 31 March 2024. The Council has adopted a rolling revaluation model which sees other land and buildings revalued over a five-year cycle. This may result in individual assets not being revalued for up to 5 years. This creates a risk that the carrying value of those assets that have been revalued in year is materially different from the year end fair value. Valuations are based on specialist and management assumptions and changes in these can result in material changes to valuations. Due to the high degree of estimation uncertainty associated with valuations, we have determined there is a significant risk in this area. We will address this risk through: • assessing the scope and terms of engagement with the in-house Valuer; • assessing the competence, skills and objectivity of the in-house Valuer; • assessing how management use the in-house Valuer’s report to value land and buildings included in the financial statements; • testing the accuracy of the data used in valuations; • challenging the Council and in-house Valuer’s assumptions and judgements applied in the valuations; • reviewing the valuation methodology used, including the appropriateness of the valuation basis; • considering the reasonableness of the valuation by comparing the valuation output with market intelligence; • testing a sample of revaluations in the year, by agreeing the revaluations recorded in the Annual Accounts to the in-house valuer’s reports. As part of this testing, we will check whether the movements have been accounted for in accordance with the Code; • challenging management’s assessment for those assets not subject to valuation in the year; • for those valued on Existing Use Value on a market comparable basis, we will check market movements to assess the materiality of potential movement for 2024/25; and • for those valued on a Depreciated Replacement Cost basis, which would be impacted by changes in build costs during the year, we will test management’s analysis of changes in the Build Costs Information Service (BCIS) index and assess any decisions management make this regard. We will engage the Forvis Mazars Real Estate Valuation Team to assist us with the above. Page 36
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Significant risks and other key judgement areas (continued) 29 Other key areas of management judgement and enhanced risks Blank Risk name Fraud Error Judgement Risk description Planned response 1 Lease liabilities including PPP (Public Private Partnership) contracts No Yes Yes Enhanced risk due to the implementation of a new accounting standard in 2024/25 (IFRS 16 Leases). The Council has the following PPP contracts: • Waste Management Public Private Partnership; • Schools Non-Profit Distributing Organisation (NPDO) Public Private Partnership; and • Schools Hub Design, Build, Finance and Maintain Contract (DBFM) Public Private Partnership. PPP liabilities as at 31 March 2024 totalled £122.38m. IFRS 16 changes the definition of a lease compared to IAS 17 and IFRIC 4. The Council will apply this definition to new leases only and will grandfather its assessments made under the old standards of whether existing contracts contain a lease. The new standard also applies to the Council’s PPP arrangements from 1 April 2024. The Council has previously made disclosures in its financial statements; however, this is a complex area, hence we have assessed it as an enhanced risk. We will: • critically review the accuracy and completeness of the Council’s assessment and review the changes to the PPP models; • review the accounting treatment; • ensure the required disclosures have been made; and • seek other evidence as appropriate. Page 37
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Significant risks and other key judgement areas (continued) 30 Other key areas of management judgement and enhanced risks Blank Risk name Fraud Error Judgement Risk description Planned response 2 Accuracy and completeness of staff costs following change in payroll/HR system No Yes No The Council have changed their payroll/HR system in-year (during August 2024), from ResourceLink to iTrent. There is a risk relating to data migration, as this involves a significant amount of payroll/HR data being migrated from one system to another, which increases risks in relation to accuracy and completeness of this data. We will: • review the Council’s arrangements for ensuring the iTrent system is accurate and complete; • review import/export files to ensure that these reconcile and are accurately recorded in the financial statements; • increase our sample size of staff costs by testing at enhanced risk; and • consider using an internal Forvis Mazars IT expert/specialist to assist with our work. Page 38
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Significant risks and other key judgement areas (continued) 31 Other considerations In consideration of ISA (UK) 260 Communication with Those Charged with Governance, we would like to seek the Audit and Scrutiny Committee‘s views/ knowledge of the following matters: • Did you identify any other risks (business, laws & regulation, fraud, going concern etc.) that may result in material misstatements? • Are you aware of any significant communications between the Council and regulators? • Are there any matters that you consider warrant particular attention during the course of our audit, and any areas where you would like additional procedures to be undertaken? Significant difficulties encountered during the course of audit In accordance with ISA (UK) 260 Communication with Those Charged with Governance, we are required to communicate certain matters to you which include, but are not limited to, significant difficulties, if any, that are encountered during our audit. Such difficulties may include matters such as: • Significant delays in management providing information that we require to perform our audit. • An unnecessarily brief time within which to complete our audit. • Extensive and unexpected effort to obtain sufficient appropriate audit evidence. • Unavailability of expected information. • Restrictions imposed on us by management. • Unwillingness by management to make or extend their assessment of an entity’s ability to continue as a going concern when requested. We will highlight to you on a timely basis should we encounter any such difficulties (if our audit process is unduly impeded, this could require us to issue a modified auditor’s report). Internal audit function Based on our assessment of the extent to which the internal audit function’s organisational status and relevant policies and procedures support the objectivity of the internal auditors, the level of competence of the internal audit function, and whether the internal audit function applies a systematic and disciplined approach, including quality control, we do not expect to use the work of the internal audit function for the purpose of our audit. Nonetheless, we will obtain a copy of the reports issued by internal audit relating to the financial period under audit to determine whether any findings will have an impact on our risk assessment and planned audit procedures. Page 39
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06Wider scope and Best Value Page 40
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Wider scope and Best Value 33 The framework for wider scope work The Code of Audit Practice sets out the four areas that frame the wider scope of public sector audit. We are required to form a view on the adequacy of the Council’s arrangements in four areas: 1. Financial management 2. Financial sustainability 3. Vision, leadership, and governance 4. Use of resources to improve outcomes Financial management Financial management means having sound budgetary processes. Audited bodies require the ability to understand the financial environment and whether internal controls are operating effectively. Auditors consider whether the body has effective arrangements to secure sound financial management. Vision, leadership and governance Audited bodies must have a clear vision and strategy and set priorities for improvement within this vision and strategy. They work together with partners and communities to improve outcomes and foster a culture of innovation. Auditors consider the clarity of plans to implement the vision, strategy and priorities adopted by the leaders of the audited body. They also consider the effectiveness of governance arrangements for delivery. Financial sustainability Financial sustainability means being able to meet the needs of the present without compromising the ability of future generations to meet their own needs. Auditors consider the extent to which audited bodies have shown regard to financial sustainability. They look ahead to the medium term (two to five years) and longer term (over five years) to consider whether the body is planning effectively so that it can continue to deliver services. Use of resources to improve outcomes Audited bodies need to make best use of their resources to meet stated outcomes and improvement objectives, through effective planning and working with strategic partners and communities. Auditors consider the clarity of the arrangements in place to ensure that resources are deployed to improve strategic outcomes, meet the needs of service users taking account of equalities, and deliver continuous improvements in priority services. Page 41
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Wider scope and Best Value (continued) 34 Our approach Our planned audit work against the four wider scope areas is risk based and proportionate. We need to gather sufficient evidence to support our commentary on the Council’s arrangements and to identify and report on any significant weaknesses. We will carry out more detailed work where we identify significant risks. Where significant weaknesses are identified we will report these to the Council and make recommendations for improvement. In addition to local risks, we consider challenges that are affecting the public sector generally. Best Value Under the Code of Audit Practice, the audit of Best Value in councils is fully integrated within our annual audit work. We are required to consider the seven Best Value themes which are: 1. Vision and leadership 2. Governance and accountability 3. Effective use of resources 4. Partnerships and collaborative working 5. Working with communities 6. Sustainability 7. Fairness and equality We are required to consider the Council’s arrangements in respect of the seven Best Value themes, to identify any significant risks. Best Value at the Council will be assessed over the period of the audit appointment. Where we identify risks or improvement areas we will plan appropriate coverage over the period of the audit appointment on a risk basis. We will also follow up previously reported Best Value findings to assess the pace and depth of improvement. This work will be integrated into our audit approach, including our work on the wider scope areas. We will also conduct thematic reviews as directed by the Accounts Commission. In 2024/25 this will be on transformation. We will prepare a separate management report to document the findings of this work. At least once every five years, the Controller of Audit will report to the Accounts Commission on the Council’s performance in meeting its Best Value duties. The Council was included in the second year of the programme in 2023/24. Page 42
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35 Wider scope and Best Value (continued) Wider scope risks The Code of Audit Practice requires us to consider the significant audit risks in areas defined in the Code as the wider scope audit. Although we have not fully completed our planning and risk assessment work, the table below outlines the wider scope audit risks that we have identified to date. We will report any further identified risks to the Audit and Scrutiny Committee on completion of our planning and risk identification work. Blank Risk Description Financial management Financial sustainability Vision, leadership and governance Use of resources to improve outcomes Planned procedures 1 Financial Sustainability Before implementing measures to balance the budget, the 2025/26 budget gap stood at £10.938 million. The budget also highlights a gap of £9.528m in 2026/27 rising to a cumulative budget gap of £29.537m by the end of 2029/30 based upon a ‘mid-range’ scenario. The Council’s ‘worst case’ scenario highlights a potential £55.999m cumulative budget gap by the end of 2029/30. This represents a risk in relation to financial sustainability, impacting on the future provision of services in the Council’s area. No Yes No No As part of our audit, we will review: • the Council’s medium to long term financial strategy; • financial position and track record in delivering planned recurrent and non-recurrent savings in 2024/25; • financial performance in 2025/26 and updates to its financial planning during the year, including the implications for general reserves balances; • regular reporting to Members on financial performance, savings plans and financial risks; and • progress in developing plans to address future years budget gaps. Page 43
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36 Wider scope and Best Value (continued) Wider scope risks (continued) Blank Risk Description Financial management Financial sustainability Vision, leadership and governance Use of resources to improve outcomes Planned procedures 2 Corporate Plan The Council's Strategic Plan 2023/2027, also known as the Corporate Plan, outlines the vision and key commitments for the Council. During the previous year's audit, we noted that the Strategic Plan and other key policy documents were being revised due to a change in administration, with an updated Strategy and other key policy documents scheduled for publication in March 2025. We therefore consider there to be a risk that these strategic documents may be inconsistent with other related policy documents, potentially impacting the clarity of the Council's vision and implementation of the administration’s policies. No No Yes No As part of our audit, we will consider: • the Council's progress in implementing its revised Corporate Plan and other key policy documents; • consider how the revised Corporate Plan maintains clarity of vision, and how changes are communicated to ensure effective implementation; and • how the Council ensures alignment between the Corporate Plan, other key policy documents, and key Council strategies (e.g., medium-term financial plan and corporate savings plan). Page 44
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37 Wider scope and Best Value (continued) Best Value risks The Code of Audit Practice requires us to consider the significant audit risks in areas defined in the Code as the Best Value audit. Although we have not fully completed our planning and risk assessment work, the table below outlines the best value audit risks that we have identified to date. We will report any further identified risks to the Audit and Scrutiny Committee on completion of our planning and risk identification work. Blank Risk Description Reporting Criteria Planned procedures 1 Performance management In connection with the risk identified on page 36 of this report, we recommend that the Council ensure the revised Corporate Plan includes Key Performance Indicators (KPIs). These KPIs will help assess Council performance, addressing the risk that performance may not be effectively monitored. Effectiveness of performance reporting We plan to: • Understand how KPIs and performance metrics align with the Corporate Plan. • Review and assess the appropriateness of KPIs and other performance metrics. • Understand the Council’s performance monitoring arrangements and how KPIs are utilised to improve performance and deliver the Corporate Plan. Page 45
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38 Wider scope and Best Value (continued) Best Value risks . Blank Risk Description Reporting Criteria Planned procedures 2 Corporate Improvement Plans In 2023/24, we reported that the Council's Corporate Improvement Plan (CIP) concluded in 2022, and the Council intended to publish an updated CIP in 2024/25. Consequently, we identified a risk that the Council might not track progress in achieving its Connect for Success objectives. We therefore recommended that the Council updated its CIP to ensure alignment with other key strategies and plans, including its workforce plan. Effectiveness of performance reporting We plan to: • Review the updated Corporate Improvement Plan (CIP) and understand how it aligns with other key strategic issues/plans. • Understand the Council’s arrangements to monitor and deliver the CIP. Page 46
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39 Wider scope and Best Value (continued) Best Value risks Blank Risk Description Reporting Criteria Planned procedures 3 Workforce Strategy In 2023/24, we reported that the Council had implemented a new people strategy and strategic workforce plan, extending to 2028. In connection with the Wider Scope risk highlighted on page 36 of this report, we identified a risk that the Council's strategic workforce plans may not be aligned with the updated Corporate Plan and other key strategies, including the MTFP. There is a risk that workforce planning does not align with other strategic plans, including the MTFP. Thematic Review We plan to: • Review the Council’s strategic workforce plan to understand its alignment with other strategic documents (e.g., MTFP, Corporate Plan, etc.). • Consider the key assumptions used in developing the workforce plan and evaluate the Council’s arrangements for monitoring and updating the plan to ensure it remains current. • Update our understanding of how updates to the workforce strategy inform budget reporting and the MTFP. Page 47
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40 Wider scope and Best Value (continued) Best Value risks Blank Risk Description Reporting Criteria Planned procedures 4 Agency staff costs In 2023/24, we reported that workforce trends outlined in the Strategic Workforce Planning Priorities indicated that temporary and casual staff increased to approximately 16% of the workforce. We therefore highlighted a risk that high turnover of staff and reliance on agency recruitment may result in increased costs and diminished service quality. Thematic Review We plan to: • Update our understanding of the Council’s arrangements for monitoring and reporting the impact of high turnover and the use of agency staff on both financial and non-financial performance. • Update our understanding of the strategies and plans the Council has implemented to mitigate the risks associated with current turnover levels and the use of agency staff for critical services. Page 48
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07Audit fees and other services Page 49
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Audit fees and other services 42 Our fees for the audit of the Council’s financial statements for the year ended 31 March 2025 are outlined below. At this stage of the audit, we are not planning any divergence from the expected fees set by Audit Scotland, which is available on the Audit Scotland website: Audit Scotland expected fees for 2024/25 audits. Area of work 2024-25 Proposed Fee 2023-24 Actual Fee Auditor remuneration £262,260 £251,690 Pooled costs £6,590 £9,170 Contribution to PABV costs £60,940 £63,850 Sectoral cap adjustment £1,010 -£110 Total fees £330,800 £324,600 Fees for work as the Charitable Trust’s appointed auditor We propose setting a fee for the audit of the Charitable Trusts of £9,750 (2023/24 fee was £9,000). We have not provided any non-audit services to the Charitable Trusts in 2024/25. Services provided to other entities within the Council's group In addition to auditing the Council’s Charitable Trusts, we are providing audit services to the following entities in the Council’s group: • Argyll and Bute Integration Joint Board (total fee of £34,000) • Dunbartonshire and Argyll & Bute Valuation Joint Board (total fee of £9,500) • Live Argyll (fee TBC for 2024/25) Page 50
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08Confirmation of our independence Page 51
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Confirmation of our independence 44 Requirements We comply with the International Code of Ethics for Professional Accountants, including International Independence Standards issued by the International Ethics Standards Board for Accountants together with the ethical requirements that are relevant to our audit of the financial statements in the UK reflected in the ICAEW Code of Ethics and the FRC Revised Ethical Standard. Compliance We are not aware of any relationship between Forvis Mazars and Argyll and Bute Council that, in our professional judgement, may reasonably be thought to impair our independence. We are independent of Argyll and Bute Council and have fulfilled our independence and ethical responsibilities in accordance with the requirements applicable to our audit. Non-audit and Audit fees We have set out a summary of the non-audit services provided by Forvis Mazars (with related fees) to Argyll and Bute Council in section 7, together with our audit fees and independence assessment. We are committed to independence and confirm that we comply with the FRC’s Revised Ethical Standard. In addition, we have set out in this section any matters or relationships we believe may have a bearing on our independence or the objectivity of our audit team. Based on the information provided by you and our own internal procedures to safeguard our independence as auditors, we confirm that in our professional judgement there are no relationships between us and any of our related or subsidiary entities, and you and your related entities, that create any unacceptable threats to our independence within the regulatory or professional requirements governing us as your auditors. We have policies and procedures in place that are designed to ensure that we carry out our work with integrity, objectivity, and independence. These policies include: • All partners and staff are required to complete an annual independence declaration. • All new partners and staff are required to complete an independence confirmation and complete annual ethical training. • Rotation policies covering audit engagement partners and other key members of the audit team. • Use by managers and partners of our client and engagement acceptance system, which requires all non-audit services to be approved in advance by the audit engagement partner. We confirm, as at the date of this report, that the engagement team and others in the firm as appropriate, Forvis Mazars LLP are independent and comply with relevant ethical requirements. However, if at any time you have concerns or questions about our integrity, objectivity or independence, please discuss these with me in the first instance. Page 52
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Confirmation of our independence Prior to the provision of any non-audit services, Mark Outterside will undertake appropriate procedures to consider and fully assess the impact that providing the service may have on our independence as auditor. Principal threats to our independence and the associated safeguards we have identified and/ or put in place are set out in Framework Agreement issued by Audit Scotland available from the Audit Scotland website: Audit Scotland Framework Agreement (audit-scotland.gov.uk). Any emerging independence threats and associated identified safeguards will be communicated in our Annual Audit Report. Any emerging independence threats and associated safeguards we identify or put in place will be communicated to you in our Annual Audit Report. 45 Page 53
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Appendices A: Key communication points B: Current year updates, forthcoming accounting and other issues Page 54
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Appendix A: Key communication points We value communication with you, as a two-way feedback process is at the heart of our client service commitment. ISA (UK) 260 Communication with Those Charged with Governance and ISA (UK) 265 Communicating Deficiencies In Internal Control To Those Charged With Governance And Management specifically require us to communicate a number of points with you. Relevant points that need to be communicated with you at each stage of the audit are outlined below. Form, timing and content of our communications We will present the following reports: ▪ Our Annual Audit Plan; ▪ Our Annual Audit Report; ▪ Our independent auditor’s report; and ▪ Our thematic report. These documents will be discussed with management prior to being presented to yourselves and their comments will be incorporated as appropriate. Key communication points at the planning stage as included in this Annual Audit Plan Our responsibilities in relation to the audit of the financial statements; • The planned scope and timing of the audit; • Significant audit risks and areas of management judgement; • Our commitment to independence; • Responsibilities for preventing and detecting errors; • Materiality and misstatements; and • Fees for audit and other services. Key communication points at the completion stage to be included in our Annual Audit Report ▪ Significant deficiencies in internal control; ▪ Significant findings from the audit; ▪ Significant matters discussed with management; ▪ Significant difficulties, if any, encountered during the audit; ▪ Qualitative aspects of the entity’s accounting practices, including accounting policies, accounting estimates and financial statement disclosures; ▪ Our conclusions on the significant audit risks and areas of management judgement; ▪ Summary of misstatements; ▪ Management representation letter; ▪ Our proposed draft audit report; and ▪ Independence. 47 Page 55
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Appendix A: Key communication points ISA (UK) 260 Communication with Those Charged with Governance, ISA (UK) 265 Communicating Deficiencies In Internal Control To Those Charged With Governance And Management and other ISAs (UK) specifically require us to communicate the following: Required communication Where addressed Our responsibilities in relation to the financial statement audit and those of management and Those Charged with Governance. Annual Audit Plan The planned scope and timing of the audit including any limitations, specifically including with respect to significant risks. Annual Audit Plan With respect to misstatements: • Uncorrected misstatements and their effect on our audit opinion; • The effect of uncorrected misstatements related to prior periods; • A request that any uncorrected misstatement is corrected; and • In writing, corrected misstatements that are significant. Annual Audit Report With respect to fraud communications: • Inquiries of the Audit and Scrutiny Committee to determine whether you have knowledge of any actual, suspected, or alleged fraud affecting the entity; • Any fraud that we have identified or information we have obtained that indicates that fraud may exist; and • A discussion of any other matters related to fraud. Annual Audit Report and discussion at the Audit and Scrutiny Committee Audit planning and clearance meetings Where relevant, any issues identified with respect to authority to obtain external confirmations or inability to obtain relevant and reliable audit evidence from other procedures. Annual Audit Report 48 Page 56
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Appendix A: Key communication points (continued) Required communication Where addressed Significant matters arising during the audit in connection with the entity’s related parties including, when applicable: • Non-disclosure by management; • Inappropriate authorisation and approval of transactions; • Disagreement over disclosures; • Non-compliance with laws and regulations; and • Difficulty in identifying the party that ultimately controls the entity. Annual Audit Report Significant findings from the audit including: • Our view about the significant qualitative aspects of accounting practices including accounting policies, accounting estimates and financial statement disclosures; • Significant difficulties, if any, encountered during the audit; • Significant matters, if any, arising from the audit that were discussed with management or were the subject of correspondence with management; • Written representations that we are seeking; • Expected modifications to the audit report; and • Other matters, if any, significant to the oversight of the financial reporting process or otherwise identified in the course of the audit that we believe will be relevant to the Council or the Audit and Scrutiny Committee in the context of fulfilling their responsibilities. Annual Audit Report Significant deficiencies in internal controls identified during the audit. Annual Audit Report 49 Page 57
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Appendix A: Key communication points (continued) here Required communication Where addressed Audit findings regarding non-compliance with laws and regulations where the non-compliance is material and believed to be intentional (subject to compliance with legislation on tipping off)} and inquiry of the Audit and Scrutiny Committee into possible instances of non-compliance with laws and regulations that may have a material effect on the financial statements that the Audit and Scrutiny Committee may be aware of. Annual Audit Report and the Audit and Scrutiny Committee meetings With respect to going concern, events or conditions identified that may cast significant doubt on the entity’s ability to continue as a going concern, including: • Whether the events or conditions constitute a material uncertainty; • Whether the use of the going concern assumption is appropriate in the preparation and presentation of the financial statements; and • The adequacy of related disclosures in the financial statements. Annual Audit Report Communication regarding our system of quality management, compliant with ISQM (UK) 1, developed to support the consistent performance of quality audit engagements. To address the requirements of ISQM (UK) 1, our firm’s System of Quality Management team completes, as part of an ongoing and iterative process, a number of key steps to assess and conclude on our firm’s System of Quality Management: • Ensure there is an appropriate assignment of responsibilities under ISQM (UK) 1 and across Leadership • Establish and review quality objectives each year, ensuring ISQM (UK) 1 objectives align with the firm's strategies and priorities • Identify, review, and update quality risks each quarter, taking into consideration the number of input sources (such as FRC / ICAEW review findings, internal monitoring findings, findings from our firm’s root cause analysis and remediation functions, etc.) • Identify, design, and implement responses as part of the process to strengthen our firm's internal control environment and overall quality • Evaluate responses and remediate control gaps or deficiencies We perform an evaluation of our system of quality management on an annual basis. Our first evaluation was performed as of 31 August 2023. Details of that assessment and our conclusion are set out in our 2022/2023 Transparency Report, which is available on our website here. The details of our evaluation of our system of quality management as of 31 August 2024, and our conclusion, will be available in our 2023/24 Transparency Report, which will be available on our website by 31 December 2024. Annual Audit Plan 50 Page 58
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Appendix A: Key communication points (continued) Required communication Where addressed An overview of the work to be performed at the components of the group and the nature of our involvement in the work to be performed by component auditors. Annual Audit Plan and Annual Audit Report Instances where our review of the work of the component auditor gave rise to a concern about the quality of the component auditor’s work, and how we addressed that concern. Annual Audit Report Any limitations on the scope of the group audit, for example, significant matters related to restrictions on access to people or information. Annual Audit Plan and Annual Audit Report, as necessary Fraud or suspected fraud involving group management, component management, employees who have significant roles in the group’s system of internal control or others when the fraud resulted in a material misstatement of the group financial statements. Annual Audit Report and discussion at the Audit and Scrutiny Committee meetings, audit planning meetings, and audit clearance meetings 51 Page 59
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52 Appendix B: Current year updates, forthcoming accounting & other issues Applicable for IFRS Reporters Current and forthcoming accounting issues New standards and amendments Effective for accounting periods beginning on or after 1 January 2023 IFRS 17 Insurance Contracts (issued May 2017) and Amendments to IFRS 17 Insurance Contracts (Issued June 2020) • IFRS 17 Insurance Contracts (IFRS 17) is a new standard that will replace IFRS 4 Insurance Contracts (IFRS 4). The standard sets out the principles for the recognition, measurement, presentation and disclosure about insurance contracts issued, and reinsurance contracts held, by entities. The amendments, issued subsequently in June 2020, do not change the fundamental principles of IFRS 17 and are aimed at helping companies implement the standard and make it easier for them to explain their financial performance. The EU has endorsed the adoption of IFRS 17, although with some changes to the version issued by the IASB. In May 2022, the UK Endorsement Board (UKEB) adopted the standard and the associated amendments. Amendments to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 (Issued December 2021) • The amendments address potential mismatches between the measurement of financial assets and insurance liabilities in the comparative period because of different transitional requirements in IFRS 9 Financial Instruments (IFRS 9) and IFRS 17. The amendments introduce a classification overlay under which a financial asset is permitted to be presented in the comparative period as if the classification and measurement requirements of IFRS 9 had been applied to that financial asset in the comparative period. The classification overlay can be applied on an instrument-by-instrument basis. The amendments have been UK-adopted and endorsed by the EU. Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements: Disclosure of Accounting Policies (Issued February 2021) • The amendments set out notable new requirements for accounting policy disclosures that change the requirements for entities to disclose material accounting policy information, rather than significant accounting policies, and not to disclose immaterial accounting policy information, explaining that accounting policy information taken in isolation is unlikely to be material, but it is when the information is considered together with other information in the financial statements that may make it material. Earlier application is permitted. The amendments have been UK-adopted and endorsed by the EU. Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (Issued February 2021) • The amendment introduces a new definition for accounting estimates and clarifies how entities should distinguish changes in accounting policies from changes in accounting estimates. The distinction is important because changes in accounting estimates are applied prospectively only to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events. Earlier application is permitted. The amendments have been UK-adopted and endorsed by the EU. Page 60
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53 Appendix B: Current year updates, forthcoming accounting & other issues (continued) Applicable for IFRS Reporters Current and forthcoming accounting issues (continued) New standards and amendments (continued) Effective for accounting periods beginning on or after 1 January 2023 IFRS 18 Presentation and Disclosure in Financial Statements (Issued April 2024) • IFRS 18 Presentation and Disclosure in Financial Statements (IFRS 18) is a new standard that replaces IAS 1 Presentation of Financial Statements. The new standard aims to increase the comparability, transparency and usefulness of information about companies’ financial performance. It introduces three key new requirements focusing on the presentation of information in the statement of profit or loss and enhancing certain guidance on disclosures within the financial statements. Page 61
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54 Appendix B: Current year updates, forthcoming accounting & other issues (continued) International Auditing Standard UK 600 Revised - Special considerations - Audits of group financial statements (Including the work of component auditors) ISA UK 600 deals with the special considerations that apply to audits of group financial statements, including those circumstances when component auditors are involved. The auditing standard has been revised. The revised standard is effective for audits of group financial statements for periods beginning on or after 15 December 2023. The revisions made to ISA (UK) 600 impact how we perform audits of group financial statements, and how we communicate our audit strategy and audit findings arising from audits of group financial statements, going forward. This page sets out the key changes made to ISA (UK) 600 and how Forvis Mazars will apply the requirements of the revised standard in practice. Key changes The previous ISA (UK) 600 included prescriptive requirements in respect of the audit procedures required over ‘significant components’ of a group, i.e., a ‘full scope’ audit of a significant component’s financial information relevant to the group financial statements was required. Forvis Mazars defined a ‘significant component’ as one that contributed to the group financial statements more than 15% of the materiality benchmark selected to determine group materiality, e.g., if we had determined materiality using a profit before tax benchmark, any component that contributed more than 15% of the group’s reported profit before tax would be classified as a significant component and a ‘full scope’ audit would be performed over that component’s financial information. ISA (UK) 600 Revised eliminates the 'significant component' concept, opting instead for consideration of risks of material misstatement at the assertion level of the group financial statements that are associated with components. This results in a group audit that is better focused on the risks of material misstatement of the group financial statements and affords greater flexibility in how we classify components and how we may design the nature and extent of audit procedures to be performed over a component’s financial information, i.e., we can determine the nature and extent of the audit procedures to be performed over a component’s financial information based on the specific risks relevant to the group financial statements. ISA (UK) 600 also, however, removed the option to limit the procedures performed over a ‘non-significant’ component’s financial information to desktop analytical procedures. We are now required to perform substantive audit procedures (or a combination of substantive audit procedures and tests of controls) over the group financial statements, including the financial information relating to components in the group, until the residual, untested balances, classes of transaction and disclosures in the group financial statements are below our group materiality. This is to ensure that aggregation risk (the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole) is addressed appropriately. In combination, these changes may result in a change to the nature and extent of the audit procedures we perform over the financial information of components on a group audit compared to previous years and may result in components that were not previously in scope of our group audit being brought into scope going forward to ensure that we address aggregation risk appropriately. Page 62
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55 Appendix B: Current year updates, forthcoming accounting & other issues (continued) International Auditing Standard UK 600 Revised - Special considerations - Audits of group financial statements (including the work of component auditors) Key changes (continued) To ensure consistency of approach, Forvis Mazars will apply the definitions set out below when performing audits of group financial statements going forward: Key component Material component Non-material component Any component: i.Which is greater or equal to 15% of the benchmark chosen for calculating group materiality (key by size); or ii.Where the specific nature or circumstance of its financial information make it likely to include significant risks of misstatement of the group financial statements (key by risk). Any component, other than a key component, that contributes to one or more group financial statement areas an amount that is above group financial statement materiality. A component, that is not a key component or a material component, that is scoped into a group audit to reduce the risk of material misstatement of the group financial statements to an acceptably low level (based on size or risk) in situations when, after assessing which components are key components and material components, the aggregate amount of a financial statement area related to un-scoped components is still above group financial statement materiality. Page 63
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56 Appendix B: Current year updates, forthcoming accounting & other issues (continued) International Auditing Standard UK 600 Revised - Special considerations - Audits of group financial statements (including the work of component auditors) Key changes (continued) Definition of ‘component’ - The definition of ‘component’ has been revised to “an entity, business unit, function or business activity, or some combination thereof, determined by the group auditor for the purposes of planning and performing audit procedures in a group audit”. This provides clarity on how components may be identified in a group audit and may result in a change to how we identify components on a group audit compared to previous years. For example, we may group separate legal entities (e.g., subsidiaries) in a group based on common characteristics (such as common management, common information systems, and common geographical locations) and treat those components as a single component, when appropriate to do so. Common controls - The definition of ‘group-wide’ controls has been removed and we are instead required to consider ‘common controls’, being controls that operate in a common manner for multiple entities or business units. This may assist us in grouping separate legal entities, business units, functions, or business activities in a group into a single component for the purposes of a group audit; or it may result in us grouping specific account balances or classes of transaction recorded by individual legal entities, business units, functions, or business activities into a single population for the purposes of our audit procedures. For audits where we are adopting a controls-based audit strategy, this may result in efficiencies, as we can rely on a single control for the purposes of the audits of more than one component where that control is common to those components. Definition of ‘engagement team’ - The definition of ‘engagement team’ has been revised to include component auditors. While this change may seem inconsequential, it forms part of the overall changes intended by ISA (UK) 600 Revised to enhance two-way communication between the group auditor and component auditors during a group audit. This will result in enhanced direction and supervision of component auditors by the group auditor during a group audit. Calculation of component materiality - The requirement to set overall materiality for a component has been removed. We are now only required to determine component performance materiality. Other changes - ISA (UK) 600 Revised includes new and revised requirements and application material that better aligns the standard with recently revised standards such as ISQM (UK) 1, ISA (UK) 220, and ISA (UK) 315. The new and revised requirements also strengthen our responsibilities related to professional scepticism, planning and performing a group audit, two-way communications between the group auditor and component auditors, and audit documentation. These changes are to encourage proactive management of quality at the group engagement level and the component level; reinforce the need for robust communication and interactions during a group audit; and foster an appropriately independent and challenging sceptical mindset. Scope of audit work to be performed over a component’s financial information - Forvis Mazars will, going forward, determine the scope of work to be performed over a component’s financial information on a group audit using the definitions set out below: Full scope Specific scope Group Engagement Team Instructed Procedures Designing and performing audit procedures on the entire financial information of a component. Designing and performing audit procedures on one or more specified account balances, classes of transaction, and/ or disclosures of a component. Performing specified audit procedures, as designed and instructed by the group engagement team. Page 64
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Contact Forvis Mazars www.auditregister.org.uk Forvis Mazars LLP is the UK firm of Forvis Mazars Global, a leading global professional services network. Forvis Mazars LLP is a limited liability partnership registered in England and Wales with registered number OC308299 and with its registered office at 30 Old Bailey, London, EC4M 7AU. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001139861. VAT number: GB 839 8356 73 © Forvis Mazars 2024. All rights reserved. Contact information Mark Outterside Director – Public Sector Audit Tel: 07824 086 593 mark.outterside@mazars.co.uk Page 65
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ARGYLL AND BUTE COUNCIL AUDIT & SCRUTINY COMMITTEE FINANCIAL SERVICES 12 JUNE 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. • 2024/25 Individual Audits undertaken: Seven audits have been completed during the period, one has been assessed as providing high assurance, three substantial assurance and three reasonable assurance. There is one report concerning LiveArgyll issued since the last Committee. (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 through 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 no new issues which we have identified this quarter. • Performance indicators: Current status is green / on track. Page 67 Agenda Item 5
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2. RECOMMENDATIONS 2.1 To review and endorse the Summary of Activities report. 3. DETAIL 3.1 Seven audits have been completed since the previous Committee in March 2025. In addition, visits were undertaken to Coulcil depots in Lochgilphead, Helensburgh, Dunoon and Rothesay which are detailed in section 5 of the report, together with our work undertaken for the HSCP. Audits Completed • Short Term Lets • Bridges Asset Management Plan • Asbestos Management • External Placements • Trading Standards • Leasing - IFRS16 • Disclosure Checks - Protecting Vulnerable Groups (PVG) Audits in Planning / in Progress reported to a future meeting of the Committee. • LGBF • SPT Annual Claim • Education Maintenance Allowance • Payroll – iTrent 3.2 In addition to those already in progress, indicative audits planned for Q2 2025/26 are: • School Residential Trips • Music Service • Reporting Concerns at Work – Whistleblowing Policy • HSCP - Audits 2025/26 Audit Plan 3.3 Work is ongoing and is currently on track at this point in time. Page 68
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Scrutiny 3.4 It was agreed by the Committee that the chosen subject area for the 2024/25 scrutiny review would be on the Council’s complaints process. This review has now concluded and is reported as a separate agenda item at this committee. 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 report is submitted to this Committee outlining the suggested approach and appointment of the Panel to undertake this work. A background and scoping document will be prepared and issued to the Panel members for agreement in due course. 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. The investigator post was filled again on a secondment basis. The new member of staff has completed and passed the CIPFA Fraud Specialist course. Both team members will revert to substantive post circa September 2025. Continued routine work is still progressing to track the full income recovered from the team’s work, however, based on the amount of additional billing, even accounting for a degree of non-recovery, the indications are that the team are still exceeding their 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, Rothesay, Helensburgh, and Luss, the review for Oban has been completed with both non-domestic rates and Council tax being reviewed and rebilled. Both officers continue to be proactive and make visits when information is recieved via the online portal and outher 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 Page 69
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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 commenced with matches already being progressed, with additional matches having recently been released. Review and matches are completed periodically. Since the inception of the CFT a total of £1,411,068 has been rebilled and £924,810 has been recovered. A recovery percentage of 65% has been achieved at the last review of the figures. Due to other commitments the rebilling has yet to be checked and updated. Additional Updates from Quarter Four 3.6 A series of visits to Council depots and HSCP Integrated Equipment Stores was undertaken to verify quantities and values of stock items submitted for year-end accounting purposes. Stock items were found to be stored safely and securely with robust systems an processes in place to provide accurate counts and reasonable measurements, and whilst small differences were identified, the overall value was found to be immaterial. 3.7 We have been working closely with the Council’s HR and Payroll Teams to obtain a suite of reports from the new system to inform our Continuous Monitoring Programme. These reports had not been provided since this system was implemented in August 2024 due to development issues, however, a significant amount of work has taken place by the development team and reports have now been delivered. Work has commenced to progress testing with the information provided for the period August 2024 – March 2025, thereafter regular monthly and quarterly reporting in addition to self-service functionality has been arranged for future testing requirements. 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 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. Page 70
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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 have been no new findings within the quarter that require to be reported. Table 2: Continuous Monitoring Findings Auditable Area Areas Tested Issues Identified Management comment / action No issues identified. 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 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 Local government in Scotland: Financial Bulletin 2023/24 Executive Director Kirsty Flanagan Scotland’s councils continue to face severe financial pressures. The need to consult with communities, clearly communicate the impact on local services, whilst working together to shape and deliver The Interim Head of Financial Services presented a report to the Executive Leadership Team on 11 March and is included as a separate agenda item at this committee. Page 71
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urgently needed transformation , is more important than ever. A review of Housing Benefit overpayments 2018/19 to 2021/22 Executive Director Kirsty Flanagan Audit Scotland’s Housing Benefit overpayment study. The Council’s performance in Housing Benefit overpayment recovery is very strong, consistently exceeding the national average. The only action required is to review and update the existing management checking protocol. This will ensure it remains fit for purpose, aligns with the responsibilities of the newly formed Revenues and Benefits Business Support Team, and that all management checks are up-to-date, targeted, and proportionate to the current caseload and operational challenges. Additional Support for Learning Executive Director Douglas Hendry The Scottish Government and Councils must fundamentally rethink how they plan, fund and staff additional support for learning as part of core school education in Scotland. Following consideration of the report and in terms of the recommendations, if the Scottish Government determines these are being taken forward, they will take the lead on these matters at a national level and we will engage with them as appropriate. Integration Joint Boards Finance bulletin 2023/24 Chief Officer HSCP Community health and social care finances are increasingly precarious. Integration Joint Boards must urgently work with their partners in the NHS and Councils to reform how they deliver services to achieve financial sustainability. A summary of this report was included in the HSCP Finance & Policy Committee agenda on 19 May and will be considered at the Audit and Risk Committee on June 20. The HSCP is in the process of seeking approval for its financial recovery plan and is developing savings proposals to address the issues raised by Audit Scotland in respect of financial sustainability in the Health and Social Care Sector. Page 72
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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. 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 18/05/2025 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 0 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 10 3 Payroll records to other datasets including other payrolls and pensions to ensure employee is not receiving additional income. Page 73
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Blue Badges 200 200 149 0 Blue badge records to DWP data to identify deceased claimant with valid badge. Housing Waiting list 262 262 159 2 Housing waiting list records to other organisations HBCTR and tenant data to identify undisclosed changes in circs or false info. Council Tax Reduction 245 174 46 1 CTR records with records in other authorities / other datasets including; student loans, payroll and pensions to identify undeclared income and capital Creditors 2340 0 573 1 Analyses Creditors data to identify possible duplicate vendors and payments, VAT errors or fraud and 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 0 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 £ 3382 7 3312 0 70 54,786 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 September 2025 Page 74
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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. Table 6: Internal Audit Team Scorecard Internal Audit Team Scorecard 2024– 25 – FQ4 24/25 (as at March 2025) BO115 We Are Efficient and Cost Effective Internal Audit Level of Satisfaction Actual 97% G Target 80% Review of Strategic Risk register Status On Track G Target On Track 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 2024/25 plan is complete and 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: 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 12 June 2025 Page 75
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 12 June 2025 INTERNAL AND EXTERNAL AUDIT REPORT FOLLOW UP 2024-25 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 monthly basis, follow them up to ensure they are being progressed. 1.2 This report updates the committee on all open actions as at 31 March 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 31 March 2025. 3.2 Appendix 1 provides further detail on actions that have been delayed and rescheduled. Page 77 Agenda Item 6
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Table 1 - Actions Due by 31 March 2025 SMT/Service Complete Delayed/ Rescheduled Total Internal Audit DH – Education Performance & Improvement 0 1 1 DH – Legal & Regulatory Support 1 1 2 KF – Customer Support Services 1 0 1 KF – Development & Economic Growth 0 1 1 KF – Roads & Infrastructure Services 5 4 9 KF – Financial Services 7 1 8 H&SCP (IJB) – Strategic Planning & Performance 0 6 6 H&SCP (IJB) – Adult Services (Older Adults & Community Hospitals 1 1 2 H&SCP (SW) – Adult Services (Mental Health Learning Disability, Addictions & Lifelong Conditions) 0 5 5 LiveArgyll 1 0 1 External Audit Nil TOTAL 16 20 36 Table 2 - Actions due after 31 March 2025 SMT/Service Complete On Course Total Internal Audit DH – Commercial Services 0 1 1 DH – Education Performance & Improvement 0 3 3 KF – Customer Support Services 1 0 1 KF – Development & Economic Growth 0 3 3 KF – Roads & Infrastructure Services 0 10 10 KF – Financial Services 0 7 7 H&SCP (IJB) – Adult Services (Older Adults & Community Hospitals 0 1 1 H&SCP (IJB) – Strategic Planning & Performance 0 2 2 H&SCP (SW) – Adult Services (Older Adults & Community Hospitals) 0 1 1 H&SCP (SW) – Children and Families and Criminal Justice 0 2 2 H&SCP (SW) – Finance/Transformation 0 2 2 H&SCP (SW) – Strategic Planning & Performance 0 2 2 External Audit Nil TOTAL 1 34 35 Page 78
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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: none 5.10 Consumer Duty: none 5.11 Island Communities: none 5.12 Children’s Rights and Wellbeing: none Paul MacAskill Chief Internal Auditor 12 June 2025 For further information contact: Paul MacAskill, 01546 604108 Paul.macaskill@argyll-bute.gov.uk APPENDICES Appendix 1 – Action Plan Points Delayed and Rescheduled. Page 79
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Appendix 1 - Action Plan Points Delayed & Rescheduled Actions Plan Points due by 31st March 2025 Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer Medium COMMERCIAL SERVICES EDUCATION PERFORMANCE & IMPROVEMENT SCHOOL FUNDS & MANAGEMENT OF FUNDS 2. Communicating amendments and updates Feedback from schools found that some clerical staff and some committee members are unaware of EMC 1.10 and therefore are unaware of the standard processes and templates. Future updates and amendments to EMC 1.10 should be communicated to all staff in schools. Following update of Management Circular information will be cascaded to HTs and clericals. Will be put on HT agenda for discussion. 31/03/2025 30 Apr 2025 Delayed due to work priorities and school holidays. Delayed and Rescheduled School Services Support Manager Low LEGAL & REGULATORY SERVICES 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 Jun 2025 Report still to be considered by DMT & ELT. Subject to approval, report will be published by end of April. Delayed and Rescheduled Compliance & Regulatory Officer Medium DEVELOPMENT & ECONOMIC GROWTH PLANNING 1. Staff Training Planning do not currently have in place a training schedule for 2023/24 for planning officers. 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 Jun 2025 Work has progressed on delivery of urgent training, most recently with delivery of training on Ancient Woodlands in February 2025 however a longer term plan which identifies resources and a programme for delivery is still Process and Productivity Improvement Officer Page 80
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Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer being worked upon. Delayed and Rescheduled Medium FINANCIAL SERVICES Non Domestic Rates (NDR) 1. Entitlement to SBBS Relief During the testing process of records it was found that there was very little in the way of supporting documentation to substantiate claims for reliefs, in particular for SBBS relief. There are no further checks undertaken to ensure that where relief is applied that the business is still trading and entitled to this relief. SBBS is reviewed a minimum of every two years by the NDR team. Over and above that review the team will produce an annual schedule to check and verify that the properties in receipt of SBBS are still in active use. Some of this review will be desk based however a list of higher risk properties will be split by area and issued to Council Officers operating in that area for inspection and manual verification. Any other reliefs that are deemed higher risk can be added to the inspection/verification list. The first schedule will be drafted by 31 March 2025 for the 2025/2026 year. 31/03/2025 30 Jun 2025 List provided to potentially complete this action are problem cases that have been identified and not whether properties are in use. Delay due to breakdown in communication with NDR team. Delayed and Rescheduled Revenues and Benefits Manager 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 31/03/2025 30 Jun 2025 Initial implementation of this is in place. Monthly email being automatically sent to Infrastructure Design from WDM with log of Late Inspections. Work required to rectify a number of errors generated. Expected to be developed to suitable stages by 30/06/2025. Delayed and Rescheduled Infrastructure Design Manager Page 81
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Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer management team. This will enable the Infrastructure Design Team to highlight risks, articulate mitigations and to seek support where required to implement these. VFM ROADS & INFRASTRUCTURE SERVICES External Hire 4. Evaluating whether long term hires should be leased or purchased outright There is currently no mechanism that triggers an exercise where “finance” considers whether cheaper long term finance options are available such as an operating lease or for the Council to purchase an item outright Roads and infrastructure services are currently under a review of all services and the recommendation will be assessed as part of the review. 31/03/2024 31/12/2024 31/03/2025 31 Dec 2025 This work will be part of a wider review in terms of a Fleet Strategy and will be completed by the end of the calendar year. Delayed and Rescheduled Principal Accountant, Roads and Infrastructure Services Low ROADS & INFRASTRUCTURE SERVICES PIERS & HARBOURS 7. Income Gaps We reviewed the fees and charges agreed by the Council and compared these to fees and charges applied in other piers and harbour throughout Scotland, including Clydeport. It was found that there were potential gaps. Complete a review of potential new charges for Harbour Board approval in Fees and charges report. 30/11/2024 28/02/2025 31/12/2025 This will be considered as part of the budget process for 2026. Delayed and Rescheduled Marine Operations Manager VFM ROADS & INFRASTRUCTURE SERVICES Pupil & Public Transport 5. Cost and demand pressure Requests for home to school transport for ASN placements are a direct driver for costs within School Cost pressures relating to the provision of ASN pupil transport will be discussed during budget holder engagement meetings and handled in accordance with corporate budget processes. 31/03/2025 30 Sep 2025 This action remains open until Executive Directors agree the outcome of funds. Delayed and Rescheduled Fleet, Waste and Transport Manager Page 82
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Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer Transport team, however these budgets sit within different Services, namely Education and Roads and Infrastructure, so have different reporting structures. Any additional cost pressures, relating to the provision of ASN pupil transport, due to increased demand should be escalated in accordance with corporate budgeting processes, by the budget holder. Medium STRATEGIC PLANNING AND PERFORMANCE H&SCP - Joint Strategic Planning 1. Alignment of JSP to Workforce Plan In order to support the delivery of the JSP it is important that a corresponding workforce plan is in place that is aligned with priorities and objectives of the JSP and that it supports the attraction, recruitment, development and retention of the workforce required to deliver the JSP. A review of the workforce plan noted that there was no evidence of a direct alignment between the current workforce planning document and the priorities and objectives set forth in the Joint Strategic Plan. HSCP will look to develop the next workforce plan to ensure direct alignment with the priorities and objectives outlined in the Joint Strategic Plan (JSP) for 2022-2025. 31/03/2025 31 Dec 2025 Council workforce plan is due in May, NHS workforce plan is due in July. The Joint Strategic Plan will be presented in draft to the IJB in September 2025 then shared for consultation with communities. The Strategic workforce oversight group is developing an annual work-plan with partner reps to ensure that all aspects of workforce planning are looked at collectively for action and monitored. Workforce is a strategic risk and this is reflected in draft priorities (as yet to go through the governance). Delayed and Rescheduled Head of Strategic Planning, Performance and Technology Medium STRATEGIC PLANNING AND PERFORMANCE HSCP CULTURE 1. Surveys Recent surveys undertaken by each organisation do not focus specifically on the HSCP in terms of HR leads within ABC and NHSH to review survey landscape and explore joint survey option over and above existing employer only surveys. To report to SLT and JPF. 31/03/2025 30 Sep 2025 The ‘imatter’ survey will run mid-May for all HSCP staff and we will await the outcomes of this survey and then determine what areas need to be considered therefore no additional survey will be Depute Director of People, NHS Highland Page 83
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Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer culture (how are the services working together, communicating with each other, sharing information), instead focusing on staff experiences in each organisation. undertaken. Delayed and Rescheduled Medium STRATEGIC PLANNING AND PERFORMANCE HSCP CULTURE 2. Work Plan The work plan outlines priorities, outcomes, responsible person and timeframes. However, these are not specific, targeted or in some instances easily measurable with target dates for completion marked as ‘ongoing’. Refresh and review of the remit and purpose of the Culture Group. The work plan will be included as part of the review to focus on meaningful action and timescales. 31/03/2025 30 Sep 2025 The decision has been made to cease the Culture Group and to incorporate into the Joint Partnership Forum but not in a same way as it was before. The agreed action doesn’t change and supporting documentation will be required to complete this action. The Culture Group will require to be embedded into the new group. Delayed and Rescheduled Depute Director of People, NHS Highland Medium STRATEGIC PLANNING AND PERFORMANCE HSCP CULTURE 3. Monitoring Progress There does not seem to be progress notes assigned to the work plan therefore difficult to assess, without reading every meeting note what progress has made. In addition as noted above a number of targets dates are simply noted as ‘ongoing’. Refresh and review of the remit and purpose of the Culture Group to include timescales and progress reporting as appropriate. 31/03/2025 30 Sep 2025 The decision has been made to cease the Culture Group and to incorporate into the Joint Partnership Forum but not in a same way as it was before. The agreed action doesn’t change and supporting documentation will be required to complete this action. The Culture Group will require to be embedded into the new group. Delayed and Rescheduled Depute Director of People, NHS Highland Medium STRATEGIC PLANNING AND PERFORMANCE HSCP CULTURE Chief Officer to communicate commencement of surveys to all staff via CO comms. 31/03/2025 30 Sep 2025 The ‘imatter’ survey will run mid- May for all HSCP staff and we will await the outcomes of this survey and then determine Chief Officer Page 84
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Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer 4. Survey Participation The results of surveys have demonstrated engagement and participation by HSCP staff could be improved. what areas need to be considered therefore no additional survey will be undertaken. Delayed and Rescheduled Medium STRATEGIC PLANNING AND PERFORMANCE HSCP CULTURE 5. Culture and Wellbeing Group Whilst the Culture Group is open to all staff across the HSCP, there is a greater proportion of representation of NHS staff. As per refresh and review of Culture Group, review membership as a result of revised remit and purpose. 31/03/2025 30 Sep 2025 The decision has been made to cease the Culture Group and to incorporate into the Joint Partnership Forum but not in a same way as it was before. The agreed action doesn’t change and supporting documentation will be required to complete this action. The Culture Group will require to be embedded into the new group. Delayed and Rescheduled Depute Director of People, NHS Highland High ADULT SERVICES (MENTAL HEALTH LEARNING DISABILITY, ADDICTIONS & LIFELONG CONDITIONS/CSWO) CLIENT FUNDS 6. Unaccounted Funds Detail Restricted Detail Restricted 30/06/2023 31/08/2023 31/12/2023 31/03/2024 30/09/2024 31/03/2025 30 Jun 2025 Detail Restricted Delayed and Rescheduled SW Admin Manager Medium ADULT SERVICES (MENTAL HEALTH LEARNING DISABILITY, ADDICTIONS & LIFELONG CONDITIONS/CSWO) CLIENT FUNDS PROGRESS REVIEW Detail Restricted 30/09/2024 31/03/2025 30 Jun 2025 Detail Restricted Delayed and Rescheduled SW Admin Manager Page 85
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Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer 1. Procedures Detail Restricted 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 Jun 2025 Detail Restricted Delayed and Rescheduled SW Admin Manager Medium ADULT SERVICES (MENTAL HEALTH LEARNING DISABILITY, ADDICTIONS & LIFELONG CONDITIONS/CSWO) CLIENT FUNDS PROGRESS REVIEW 3. Implementation of new working practices Detail Restricted Detail Restricted 31/08/2024 31/12/2024 31/03/2025 30 Jun 2025 Detail Restricted Delayed and Rescheduled SW Admin Manager Medium ADULT SERVICES (MENTAL HEALTH LEARNING DISABILITY, ADDICTIONS & LIFELONG CONDITIONS/CSWO) Learning & Physical Disability Care Packages 3. Case Notes Case notes are maintained on Eclipse, the replacement client database for Carefirst. It was noted that case notes were not always maintained and up to date. · Record keeping session(s) to be delivered by professional lead · Senior Managers to implement case note audit within their respective services – this should be linked to individual practitioner supervision 30/06/2024 31/12/2024 31/03/2025 30 Sep 2025 Examples will be provided throughout the next few months. Delayed and Rescheduled Senior Managers (Adult Services) Page 86
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Service, Report, Plan no. & Finding Agreed Action Dates Management Comment Responsible Officer Low ADULT SERVICES (OLDER ADULTS & COMMUNITY HOSPITALS) Scottish Social Services Council (SSSC) Registration 3. Service-user information Finding; Service- users and their family, friends and non-Council carers are advised that violence, threats or abuse towards them from Council employees will not be tolerated, however, only one handbook provided advised visitors on expected conduct regarding violence, threats or abuse towards employees. There was no documentation containing information regarding conduct of service users towards employees. Recommendation; Service-user documentation should be revised to advise that instanced of violence, threats or abuse directed towards employees is not acceptable. Review all social work and social care service user documentation in adult services. 31/08/2024 31/12/2024 28/02/2025 30 Sep 2025 All the managers have ensured this information is displayed and available within the care home information/introduction paperwork. The whole documentation review is more complex and still a work in progress. Delayed and Rescheduled Senior Manager - Resources/Professional Lead - Social Work Action Plan Points due after 31st March 2025 Nil Page 87
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 12 JUNE 2025 INTERNAL AUDIT REPORTS TO AUDIT AND SCRUTINY COMMITTEE 2025/2026 1. EXECUTIVE SUMMARY 1.1 There are seven 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 Short-Term Lets Substantial 1 1 0 0 Asbestos Management Reasonable 0 5 4 0 Bridges Asset Management Reasonable 1 1 2 0 Trading Standards High 0 0 0 0 External Placements Reasonable 0 7 0 0 IFRS 16 - Leasing Substantial 0 0 1 0 Disclosure Checks – PVG – LiveArgyll Substantial 0 1 1 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: Short Term Lets: 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. Policies and procedures have been put in place in respect of the Short Term Lets scheme, a total of 9 policies were made available for review. Whilst the policies and procedures in place are comprehensive, there are some elements Page 89 Agenda Item 7
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of the policies that require to be completed in parts. Other developments, including within the Oracle system have still to be progressed. Processes and controls in place are robust and ensure that applications are processed in accordance with procedures. Applications are processed through an online ‘bespoke’ oracle based database system (developed by Argyll & Bute Council IT service), completed by the applicant. Notes for Licencing Assistants are in place which provide guidance on what to look for when carrying out first checks in order to validate an application. Licences are not issued until all relevant supporting evidence has been submitted, any objections to the applications (if applicable) have been considered, relevant consultations have been undertaken and payment of licence fee has been received. Applications can take some time to process, however, this is not due to inefficiencies in processing, rather due to the applicant not providing all the information or supporting evidence at that time of the application. Oracle could be updated to include compulsory fields to ensure that applications cannot be submitted until all relevant supporting documentation has been attached resulting in efficiencies in processing applications. Fees and charges have been agreed and set by the Council prior to the commencement of the Short Term Lets, these charges will apply for the initial three year phase of the licence. Comprehensive details of the charges applied for Short Term Lets are available on the Council website. Asbestos Management: this audit provided a reasonable level of assurance. This means that 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. The Council has the Asbestos Management Plan (the 2013 Plan) in place to manage its duty relating to the risks associated with asbestos-containing materials (ACMs) across Council establishments. This should be updated to ensure it reflects the current Council structure and revised working practices. HSE guidance requires that individual buildings plans should be monitored and reviewed every 12 months or sooner if necessary. Of the 188 required premises, 186 have had a re- inspection within the last 12 months. The Council has procedures and guidance in place to follow if ACMs are disturbed, these are detailed in the plan and published in the Facility Responsible Person section on the Hub. The Health and Safety Team and Property Services identified gaps in awareness amongst staff and potential to consolidate the information available. A pilot scheme providing training to site responsible persons, within Education Services, has been developed and carried out by Health and Safety staff. This has proven successful and is planned to be rolled out across all Council Services. There is no clear mention of the retention period for the various documents relating to the management of asbestos. A review of the processes and training materials associated with the management of asbestos, is currently underway, once completed the 2013 Plan will be updated. Bridges Asset Management: this audit provided a reasonable level of assurance. This means that 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. The Infrastructure Design team lacks a documented procedure to ensure compliance with the relevant national Codes of Practice relying instead on national Codes of Practice and Standards and the WebSMS system. The infrastructure team should develop its own documented procedure for bridge inspections to ensure Page 90
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and document the process for compliance with the Well-managed Highway Infrastructure Code of Practice and DMRB CS 450. A review of inspection reports from the WebSMS system confirmed that inspections are comprehensive and adhere to the 'Well-managed Highway Infrastructure' Code of Practice and DMRB CS 450 standards. A structured performance reporting framework should be established to distribute reports to key stakeholders, and include performance updates to Departmental Management Team (DMT) meetings. Formal records should be maintained for all training completed by Bridge Inspectors, including certification courses and in-house training on the WebSMS asset management system, to enhance accountability and ensure compliance with training requirements. The infrastructure team should establish an audit trail within the WebSMS system to document late inspections, including reasons for delays, actions taken, and stakeholder communication, to enhance transparency and accountability. Trading Standards: 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 Council’s Constitution, Scheme of Authorisations and Delegations allows for the nomination and authorisation of officers to carry out the duties pertaining to the enforcement of the various public protection legislation, which includes consumer protection, fair trading and trading standards. Staff are issued with warrant cards to act in accordance with, and to enforce, certain legislation based on the professional qualifications they hold. The Trading Standards team follow guidance and protocols relating to testing and enforcement of age restrictions on tobacco and vapes (NVP), issued by the Scottish Government and the Society of Chief Officers of Trading Standards in Scotland (SCOTSS). The Council has a duty to prepare and carry out an annual programme of enforcement. The annual Trading Standards Service Plan details the tasks and actions team will take to meet the required standards and priorities for that year. Observation of Test Purchase visits confirm that staff follow the guidance issued by the Scottish Government and SCOTSS. Performance is reported internally to Legal and Regulatory Support - Governance, Risk and Safety Managers meeting, Department Team Meetings (DMT) and Senior Management Team (SMT) meetings and externally to SCOTSS. The Trading Standards team exceeded the statutory performance for advice visits and test purchase visits in the financial year 2024/25. Two breaches were identified in relation to the sale of tobacco products to someone under the age of 18. Fixed Penalty notices were issued and promptly paid. External Placements: this audit provided a reasonable level of assurance. This means that 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. An Option Appraisal Meeting Practice Guidance Document (the Document) dated 2021, is in place which outlines the agreed approach between Argyll and Bute Education services and HSCP children’s services when considering possible care options for any Looked after and accommodated young person. The option appraisal process clearly seeks to consider all options open to meet the needs of the young person and where a child requires care, and where there are no kinship options, the options appraisal process aims to match the child to the most appropriate available care option. Roles and responsibilities are detailed in the Page 91
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document, however, it has not been updated to reflect the role of the Care Assessment Reviewing Officers (CARO) in the process. The processes for consideration being given to an external placement are robust with a Multi- agency Options Appraisal Panel being convened. In addition, significant scrutiny and oversight is also given to external placements. Care plans are kept up to date and amended following any interventions or reviews. Care providers do not routinely provide regular updates to Social Work or Education on progress being made or whether outcomes are being achieved. The lack of regular updates makes it challenging to monitor and adapt care plans where goals and interventions are not meeting the needs of the young person. It was unclear whether there were robust procedures and monitoring in place for young people leaving care with many returning to their previous locations. Like other authorities, the Council has very little control over the cost of external placements, with providers setting the cost against a background of competing demands from authorities throughout Scotland. The cost of individual care packages is significant and can cost up to £10k per week, the demand is projected to rise in line with the profile of the last few years. In many cases there are no internal resources available to meet the needs of the young person, leaving the only option open to the Authority to place externally. It is difficult to assess whether the Council is receiving value for money for each individual placement, particularly if outcomes are not achieved or the placement does not result in a positive destination, however, it is recognised that against this backdrop, young people are provided with a safe environment. The increasing demands within the Council is resulting in significant budget overspends. IFRS 16 - Leasing: 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. Procedures and systems have been put in place to ensure compliance with IFRS 16. Initial work began in 2020 to start the process of collating information of leases within the Council. In June 2023 the Council’s consultant agency commenced preparation of a Decisions and Policies draft paper and also an Action List to assist with meeting our obligations under IFRS 16. In February 2024 a new Accounting Policies document was finalised, this, applying to lease arrangements where Argyll and Bute Council is the lessee. In addition, in April 2024, the Finance Manager prepared an ‘Implementation of IFRS 16 Accounting for Leases’ document, clearly outlining the requirements of IFRS 16 and what should be included. A significant amount of work has been undertaken from the end of 2024, accelerating at the beginning of 2025 to ensure that the Council has captured all lease agreements which fall within the scope of IFRS 16 and the Code to provide assurance that everything is accounted for in the Council’s Financial Statements for the year end March 2025. Communication processes were put in place, commencing in 2020 and continuing throughout the period to 2025 to ensure all lease information was gathered from Departments, and all third-tier managers contacted in February 2025. In addition, meetings were held throughout 2025 with key officers, contacts and in particular procurement and estates. Training commenced in 2020 with several sessions being delivered by external providers and attended by, predominantly, the Senior Business Support Officer. These early training events focussing mainly on introducing and understanding IFRS 16. In 2021 an IFRS 16 Forum Webinar was attended with further training and workshops delivered in 2023 and attended by delegates for various services within the Council. Further training was provided throughout 2024 and 2025. Page 92
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Disclosure Checks - LiveArgyll: 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. LiveArgyll operates using the Council’s overarching policies, processes and guidance in respect of recruitment and PVG requirements with some additional information to facilitate local application. These documents are available to all relevant employees, however, one document contained minor historic errors and another lacked version control. Regulated roles requiring PVG membership are clearly communicated at recruitment and adequate information and guidance is provided to applicants via the “MyJobScotland” portal. Management are also advised of the requirement to obtain specific forms of identification from applicants to enable the PVG membership application to proceed, however, we were unable to fully verify supporting documentation for two employees. As a result of updated legislation, membership is now required for additional roles and an exercise is in progress and on track to meet compliance, additionally, from April 2026, membership will be limited to 5 years and renewal required to continue in the specific roles. PVG membership of employees and volunteers is recorded using robust systems and contains adequate information to identify those approaching expiry and initiate a renewal process where required. Safeguarding training has been provided and appropriate officers have been designated with responsibility to progress any matters arising via the Council’s formal disciplinary process. Independent organisations using LiveArgyll facilities are responsible for managing their own PVG requirements, however, those indicating failure to comply will be refused use of the facility. 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: none 5.10 Consumer Duty: none 5.11 Island Communities: none 5.12 Children’s Rights and Wellbeing: none Paul Macaskill Chief Internal Auditor 12 June 2025 Page 93
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For further information contact: Paul Macaskill, Chief Internal Auditor Tel: 01546 604108 Email: paul.macaskill@argyll-bute.gov.uk APPENDICES 1. Short-term Lets 2. Asbestos Management 3. Bridges Asset Management 4. Trading Standards 5. External Placements 6. IFRS 16 – Leasing 7. Disclosure Checks – PVG – LiveArgyll Page 94
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Argyll and Bute Council Internal Audit Report MARCH 2025 FINAL High Medium Low VFM Number of Findings 1 1 0 0 Short Term Lets Audit Opinion: Substantial Page 95 Agenda Item 7a
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2 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 2025 Contents 1. Executive Summary ........................................................................................................................ 3 Introduction ............................................................................................................................................ 3 Background ............................................................................................................................................. 3 Scope ....................................................................................................................................................... 4 Key Dates ................................................................................................................................................ 4 Risks ........................................................................................................................................................ 5 Audit Opinion ......................................................................................................................................... 5 Recommendations ................................................................................................................................. 5 2. Objectives and Summary Assessment ........................................................................................... 5 3. Detailed Findings ............................................................................................................................ 7 Appendix 1 – Action Plan ..................................................................................................................... 11 Appendix 2 – Audit Opinion ................................................................................................................. 13 Contact Details Internal Auditor: Moira Weatherstone Telephone: 01546 604146 e-mail: moira.weatherstone@argyll-bute.gov.uk www.argyll-bute.gov.uk Page 96
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3 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 2025 1. Executive Summary Introduction 1. As part of the 2024/25 internal audit plan, approved by the Audit & Scrutiny Committee in March 2024, we have undertaken an audit of Argyll and Bute Council’s (the Council) system of internal control and governance in relation to Short Term Lets. 2. The audit was conducted in accordance with the Public Sector Internal Audit Standards (PSIAS) 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 4. The Scottish Government introduced legislation which required local authorities to establish a licensing scheme for short-term lets by 1 October 2022. The Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022, was brought in to ensure short term lets are safe, to address issues faced by neighbours, and to help local authorities understand what is happening in their area. The legislation aims to balance economic and tourism benefits with the needs and concerns of local communities. 5. The short-term licensing scheme covers a wide variety of residential and commercial accommodation in Scotland and includes: B&B and guest houses; Cabins; Chalets; Lighthouses; Lodges and castles 6. A short-term letting licence is a mandatory licence for short-term lets across Scotland. All short- term let accommodation in Scotland requires a licence (unless it falls under of the excluded types of accommodation). From the 1st of October 2023 you must have a licence before you offer short-term lets, this includes the requirement to have a licence prior to taking bookings. Existing hosts (operating before 1 October 2022) can continue operating until their application is determined, however new hosts require to be licenced before they can commence letting. 7. The Council have received a significant number of short-term let applications and this is posing significant challenges in assessing and determining them. As of December 2024, the total number of short-term letting application received by the Council was 3377. Page 97
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4 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 2025 8. Councils have up to 12 months to process applications from existing hosts if applied for before 1 October 2023 and for new hosts have up to 9 months to process the application. 9. Operating without a short-term licence is a criminal offence attracting a penalty fine of £2,500. On conviction, Courts can impose a ban from applying for a licence for a year. Resulting in hosts being unable to continue to offer lets during this period. 10. In order to ensure the safety of the accommodation short-term let accommodation must meet certain conditions to get a licence. This includes the following examples: Energy Performance Certificate, fire safely, gas supply electrical installation condition report, portable appliance testing report, building and public liability insurance. The Scottish Government have set mandatory conditions which must be attached to all licences and Local Councils have the ability to apply additional conditions. These must be specified within the Councils Short-term Let Policy and be listed on their website. 11. There is an application fee covering the cost of the Council’s administration of the scheme. Councils were required to develop their own licensing schemes, having regard to legislation and Scottish Government guidance to local authorities. The scheme required Councils to develop digital and on-line systems to receive applications and set their own schedule of fees and charges to cover the costs of delivering the licensing scheme on a self-financing basis. The licence lasts for up to three years and it was determined if the Council generated a surplus during the first period then the fee would be reduced next time and if the Council had under estimated the fee it would be increased. Scope 12. The scope of the audit was to review and assess the processes and controls in place for short term lets and determine whether these support the efficiency and effectiveness of the service as outlined in the Terms of Reference agreed with the Head of Development & Economic Growth on 18 December 2024. Key Dates 13. 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 18/12/2024 Fieldwork Commencement 19/12/2024 Draft Report issued 24/02/2025 Management Comments received 11/03/2025 Final Report issued 14/03/2025 Audit and Scrutiny Committee 12/06/2025 Page 98
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5 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 2025 Risks 14. The risks considered throughout the audit were: SRR01: Population, External Infrastructure and Economic Decline Audit Risk 1: Failure to have policies and procedures in place for the management of short term lets Audit Risk 2: failure to process short term let application in a timely manner Audit Risk 3: failure to collect income from short term lets in a timely manner Audit Opinion 15. 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. 16. Our overall audit 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 17. We have highlighted one high priority recommendation and one medium priority recommendation where we believe there is scope to strengthen the control and governance environment. These are summarised below: Remaining policies and procedures should be completed and circulated to staff and any remaining identified actions regarding developments within the Oracle system concluded as a priority; Oracle should be updated to include compulsory fields to ensure that applications cannot be submitted until all relevant supporting documentation has been attached by the applicant 18. 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 19. 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 Policies which meet the legislative requirements have been put in place Audit Risk 1 Substantial Policies and procedures have been put in place in respect of the Short Term Lets scheme. A total of 9 policies were made available for review. Whilst the Page 99
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6 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 2025 and communicated to all relevant parties policies and procedures in place are comprehensive, there are some elements of the policies that require to be completed in parts. This includes policies and procedures in respect of Enforcement and Renewals which still require to be brought together and circulated to staff. Other developments, including within the Oracle system have still to be progressed. At present this is not affecting the efficiencies of progressing applications. All procedures, standard templates, policy documents and legislation are stored within a shared drive which all staff team members have access to. In addition, there is an induction process in place for Licensing Assistants, which is covered within the first week or two of commencing their job roles. 2 Processes and controls have been put in place for assessing and registering short term lets, including review processes Audit Risk 1 Audit Risk 2 Substantial Processes have been put in place for registering short term lets. Processes and controls in place are robust and ensure that applications are processed in accordance with procedures. Applications are processed through an online ‘bespoke’ oracle based database system (developed by Argyll & Bute Council IT service), completed by the applicant. Applications for Short Term Lets are generally submitted online via the Council website page or alternatively a paper application can be submitted. Applications are allocated to a Licencing Assistant who retains responsibility for the processing of that individual application. Notes provide guidance on what to look for when carrying out first checks in order that the Licencing Assistant can validate an application. Licences are not issued until all relevant supporting evidence has been submitted, any objections to the applications (if applicable) have been considered, relevant consultations have been undertaken and payment of licence fee has been received. Prior to issuing a licence a further check of the application is made by the Licencing Team Leader. Page 100
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7 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 2025 3 Applications for short term lets are processed in a timely manner and within legislative requirements SRR01 Substantial Applications can take some time to process, however, this is not due to inefficiencies in processing, rather due to the applicant not providing all the information or supporting evidence at that time of the application. 4 Controls have been put in place for the collection of fees and charges Audit Risk 3 High Fees and charges have been agreed and set by the Council prior to the commencement of the Short Term Lets, these charges will apply for the initial three year phase of the licence. Comprehensive details of the charges applied for Short Term Lets are available on the Council website. Fees and charges were set in accordance with legislative requirements to cover the expenses incurred in administering the scheme. A comprehensive review is currently underway with the support of Financial Services to assess whether the current fees and charges have been sufficient to cover the expenses for processing and issuing Short Term Let licences. 20. Further details of our conclusions against each control objective can be found in Section 3 of this report. 3. Detailed Findings Policies which meet the legislative requirements have been put in place and communicated to all relevant parties 21. The Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022 introduces a licensing regime for the short-term let of residential accommodation. This provides a definition of short-term let and short-term let licence. In addition it also outlines the mandatory licence conditions, which includes details of certificates to be supplied to the authority during the application process. We were provided with copies of the relevant legislation. 22. Policies and procedures have been put in place in respect of short term lets. A total of 9 policies were made available for review. including: Validating Applications (Annex A – Validation Checklist and Annex B – Validation Notes) Consultees Objections / Hearings Issuing a Licence Notification of Changes & Alterations & Variation Requests Temporary Licences Provisional Licences (New Builds) Page 101
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8 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 2025 Transfer of Licence Enquiries & Complaints Enforcement Renewals 23. Whilst policies and procedures in place are comprehensive, there are some elements of the policies that require to be completed in parts. This includes policies and procedures in respect of Enforcement and Renewals which still require to be brought together and circulated to staff. Other developments, including within the Oracle system have still to be progressed. These have been identified and are noted for progression, including: develop a template licence revocation letter, with this status being added to oracle and develop a way of tracking these; develop a template for provisional licence, including cover letter; include a new Licence type - “Transfer Licence” and new application status entitled “transferred”. Action Plan 1 24. All procedures, standard templates, policy documents and legislation are stored within a shared drive which all staff team members have access to. In addition, there is an induction process in place for Licensing Assistants, which is covered within the first week or two of commencing their job roles. New team members are initially allocated a ‘buddy/mentor’ for training purposes. 25. The general public have been made aware of the introduction of the Short Term Let legislation with details of the Short Term Lets legislation available on the Council’s website. The website also provides links to obtain further information about the legislation and read the Scottish Government guidance for hosts and operators. It also provides a link to Visit Scotland where further information can be found. It is also noted that the Council have proactively engaged with the Association of Scottish Self Caterers (ASSC) to discuss the scheme and receive feedback from the sector. Were appropriate, this has led to changes in the Councils Policy or representations to the Scottish Government 26. Applications for a Short Term Let are generally submitted online via the Council website page Short term lets licence (argyll-bute.gov.uk) or alternatively a paper application can be submitted. The website provides information on how to apply for a licence and details of the various pieces of evidence that must be submitted with the licence application. Applicants are strongly advised that before beginning the application process they refer to the pre-application checklist or the Scottish Government's checklist to ensure you have gathered the appropriate information, ensuring the application can be processed in a timely manner. Supporting evidence can be uploaded as part of the online application process or emailed separately. 27. The Council website also provides a public register of short term lets available within Argyll & Bute Council area. Processes and controls have been put in place for assessing and registering short term lets, including review processes Page 102
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9 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 2025 28. Processes have been put in place for registering short term lets. Applications are processed through an online ‘bespoke’ oracle based database system (developed by Argyll & Bute Council IT service) which is completed by the applicant. Applications for a Short Term Let are generally submitted online via the Council website page or alternatively a paper application can be submitted. Applications submitted online receive an automatic response from the system to acknowledge receipt of their application, this also includes their unique reference number. 29. Applications are allocated to a Licencing Assistant who retains responsibility for the processing of that individual application. Notes provide guidance on what to look for when carrying out first checks in order that the Licencing Assistant can validate an application. Licences are not issues until all relevant supporting evidence has been submitted, any objections to the applications (if applicable) have been considered, relevant consultations have been undertaken and payment of licence fee has been received. Prior to issuing a licence a further check of the application is made by the Licencing Team Leader. 30. The Civic Government (Scotland) Act 1982, Schedule 1 as modified by The Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022 specifies Chief Constable and Scottish Fire and Rescue Service as mandatory consultees. In addition the following are consulted: Argyll & Bute Council Planning Department Argyll & Bute Council Building Standards Service Argyll & Bute Council Environmental Health Service Loch Lomond & the Trossachs Parks Authority (where the property is within the National Park) Additional consultation may take place with the Private Water Supply Team and the Health and Safety Lead Officer, Environmental Health. 31. Processes and controls in place are robust and ensure that applications are processed in accordance with procedures. We selected a random sample of processed applications for testing and with one application reviewed every stage of the application process, including reviewing all the supporting evidence and consultations. We found the applications to be complete with all documentation to support the application attached. Applications for short term lets are processed in a timely manner and within legislative requirements 32. Applications can take some time to process, however, this is not due to inefficiencies in processing, rather due to the applicant not providing all the information or supporting evidence at that time of the application. 33. A number of documents of supporting evidence must be submitted with the licence application prior to 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. There can be, at times, a lot of communication and emails back and forward to the Page 103
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10 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 2025 applicant requesting information and documentation to support their application. This can be very time consuming for staff, in addition to the need to keep track of follow-up. Action Plan 2 34. Applications received in paper form, require a Licencing Assistant to manual processes the application through the Oracle based online system for the applicant. This ensures that all applications, received in the various formats are all recorded on Oracle. Applications received by post will take longer to process. 35. Councils have up to 12 months to process applications from existing hosts if applied for before 1 October 2023 and for new hosts have up to 9 months to process the application. In addition, existing hosts can continue to take bookings and offer lets, whilst new hosts cannot take bookings or receive guests until you have obtained a licence. As a result of this, in order to support new hosts, these applications have been prioritised for processing. Controls have been put in place for the collection of fees and charges 36. The legislation allows for licencing fees to be charged: “licensing authority may, subject to sub- paragraphs (2) and (3), charge such reasonable fees as they may determine in respect of—“ However, in doing so the legislations states: “In determining the amount of the different fees under sub-paragraph (1), the licensing authority— must seek to ensure that the total amount of fees receivable by the authority is sufficient to meet the expenses of the authority in exercising their functions under Parts I and II of this Act and this schedule, they also may determine different fees for different purposes”. Therefore fees are set to offset the expenses incurred by the authority. 37. Fees and charges have been agreed and set by the Council prior to the commencement of the Short Term Lets, these charges will apply for the initial three year phase of the licence. Comprehensive details of the charges applied for Short Term Lets are available on the Council website. 38. A comprehensive review is currently underway with the support of Financial Services to assess whether the current fees and charges have been sufficient to cover the expenses for processing and issuing Short Term Let licences. This will assist to inform the Council on whether the fees and charges, when reviewed in 2026 should be reduced or increased when the renewal process begins. Page 104
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Appendix 1 – Action Plan No Finding Risk Agreed Action Responsibility / Due Date High 1 Procedures Whilst policies and procedures that are in place are comprehensive, there are some elements of the policies which require to be completed in parts. This includes policies/procedures around Enforcement and Renewals that still require to be brought together and circulated. Other developments are noted for progression on Oracle. Inconsistencies in practice and inefficiencies in processing 1. Develop a Short-term Let Enforcement policy 2. Develop procedures for the renewal of Short-term let Licences 3. Secure changes to the Oracle STL system, including a searchable public register, a template licence revocation letter, with this status being added to oracle and tracking these 4. Develop a template for provisional licence, including cover letter 5. Include a new Licence type - “Transfer Licence” and new application status entitled “transferred”. Officer title : Building Standards Manager Date: 30 September 2025 Medium 2 Oracle – Compulsory Fields A number of documents of supporting evidence must be submitted with the licence application prior to 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. Inefficiencies in processing leading to delays in issuing licences 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 Officer title: Building Standards Manager Date: 1 May 2025 Page 105
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12 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 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 106
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13 Argyll and Bute Council – Internal Audit Report – Short Term Lets, March 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 107
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Argyll and Bute Council Internal Audit Report April 2025 Final High Medium Low VFM Number of Findings 0 5 4 0 Asbestos Management Audit Opinion: Reasonable Page 109 Agenda Item 7b
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2 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 Contents 1. Executive Summary ........................................................................................................................ 3 Introduction ............................................................................................................................................ 3 Background ............................................................................................................................................. 3 Scope ....................................................................................................................................................... 4 Key Dates ................................................................................................................................................ 4 Risks ........................................................................................................................................................ 4 Audit Opinion ......................................................................................................................................... 4 Recommendations ................................................................................................................................. 4 2. Objectives and Summary Assessment ........................................................................................... 5 3. Detailed Findings ............................................................................................................................ 7 Appendix 1 – Action Plan ..................................................................................................................... 12 Appendix 2 – Audit Opinion ................................................................................................................. 17 Contact Details Internal Auditor: Annemarie McLean Telephone: 01700 501354 e-mail: annemarie.mclean@argyll-bute.gov.uk www.argyll-bute.gov.uk Page 110
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3 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 1. Executive Summary Introduction 1. As part of the 2024/25 internal audit plan, approved by the Audit & Scrutiny Committee in March 2024, we have undertaken an audit of Argyll and Bute Council’s (the Council) system of internal control and governance in relation to Asbestos Management. 2. The audit was conducted in accordance with the Public Sector Internal Audit Standards (PSIAS) 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 4. Although asbestos is a hazardous material, it can only pose a risk to health if the asbestos fibres become airborne and then inhaled. Asbestos Containing Materials (ACMs) only release fibres into the air when they are disturbed. If ACMs are not disturbed airborne fibres will not be released and therefore, they will not pose a risk to health. 5. The Control of Asbestos Regulations (CAR) 2012 requires employers to prevent the exposure of their employees to asbestos, or where this is not practicable, to reduce the exposure to the lowest possible level. Specifically, the broad legal duties are to: • take reasonable steps to find materials likely to contain asbestos; • presume materials contain asbestos, unless there is strong evidence to determine they do not; • assess the risk of the likelihood of anyone being exposed to asbestos from these materials; • make a written record of the location and the condition of the ACMs and presumed ACMs and keep it up to date; • repair or remove any material that contains or is presumed to contain asbestos, if necessary, because of the likelihood of disturbance, and its location or condition; • prepare a plan to manage that risk and put it into effect to ensure that: o information on the location and condition of ACMs is given to people who may disturb them during work activities; o any material known or presumed to contain asbestos is kept in a good state of repair; • monitor the condition of ACMs and presumed ACMs; and • review and monitor the action plan and the arrangements made to put it in place. 6. The management of asbestos in premises is also covered under Health and Safety legislation, including: Page 111
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4 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 • The Management of Health and Safety at Work Regulations 1999, which requires an assessment of the risks to employees and users of premises be undertaken and appropriate arrangements made for protecting those people’s health and safety; and • The Workplace (Health, Safety and Welfare) Regulations 1992 which includes duties to maintain workplace buildings/premises to protect occupants and workers. Scope 7. The scope of the audit was to review and assess the arrangements for the management of asbestos across Council establishments, as outlined in the Terms of Reference agreed with the Head of Commercial Services on 23 October 2024. Key Dates 8. 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 23 October 2024 Fieldwork Commencement 23 October 2024 Draft Report issued 04 February 2025 Management Comments received 01 April 2025 Final Report issued 02 April 2025 Audit and Scrutiny Committee 12 June 2025 Risks 9. The risks considered throughout the audit were: • Audit Risk 1: Failure to comply with the Control of Asbestos and Health and Safety at Work, Regulations. 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 audit opinion for this audit is that we can take a reasonable level of assurance. This means that 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. Recommendations 12. We have highlighted five medium priority recommendations and four low priority recommendations where we believe there is scope to strengthen the control and governance environment. These are summarised below: Page 112
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5 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 • The Council’s Asbestos Management Plan (the 2013 Plan) should be updated to ensure it reflects the current Council structure and revised working practices. • HSE guidance requires that individual buildings plans should be monitored and reviewed every 12 months or sooner if necessary. The 2013 Plan and all associated documents and checklists should be reviewed to ensure they reflect this requirement. • Gaps in staff training and awareness were identified. A pilot scheme providing training to staff in Education Dept, proved successful. This should be rolled out to all Council Services. • When reviewing and updating the 2013 Plan and associated documents/ checklists, the storage and retention period of the document should be clearly stated. • The 2013 Plan and associated procedures, materials and information, should be updated to clarify the role and responsibilities at individual site/premises level and should include the requirement for a Deputy to be appointed to ensure cover for absence. • Property Services must be advised of any changes to staff, nominated by Heads of Services, to be the Site Premises Manager/ Site Responsible Persons for each site/ establishment. • Mandatory LEON training for Facility Responsible Persons should be extended to include the Site Premises Manager/ Site Responsible Persons and their nominated Deputies. This should be completed annually. • The Duties of the Facilities Responsible Person document should be updated to include their responsibilities in relation to the management of asbestos. There may be benefit to producing a checklist of facility related checks for sites/premises to collate these in one place. 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. Exhibit 1 – Summary Assessment of Control Objectives Control Objective Link to Risk Assessment Summary Conclusion 1 The Council has a plan/policy in place to manage its duty relating to the risks associated with asbestos- containing materials (ACMs) across Council establishments. Audit risk 1 Reasonable • The Council has the Asbestos Management Plan (the 2013 Plan) in place to manage its duty relating to the risks associated with asbestos-containing materials (ACMs) across Council establishments. This should be updated to ensure it reflects the current Council structure and revised working practices. • HSE guidance requires that individual buildings plans should be monitored and reviewed every 12 months or sooner if necessary. Page 113
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6 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 • 186 of the 188 premises required, have had a re-inspection within the last 12 months. • The Council has procedures and guidance in place to follow if ACMs are disturbed, these are detailed in the plan and published in the Facility Responsible Person section on the Hub. • The Health and Safety Team and Property Services identified gaps in awareness amongst staff and potential to consolidate the information available. Testing confirmed this. • A pilot scheme providing training to site responsible persons, within Education Services, has been developed and carried out by Health and Safety staff. This has proven successful and is planned to will be rolled out across all Council Services. • There is no clear mention of the retention period for the various documents relating to the management of asbestos. • A review of the processes and training materials associated with the management of asbestos, is currently underway, once completed the 2013 Plan will be updated. 2 Council staff are aware of their responsibilities in relation to monitoring buildings and reporting issues that may relate to asbestos- containing materials (ACMs). Audit risk 1 Reasonable • The Facility Responsible Person (FRP) takes responsibility for overseeing facility safety and facility related activities. • The Site Responsible Person (SRP) co- ordinates arrangements between Property Services and other Services occupying the premises. The SRP role and its responsibilities should be detailed in the 2013 Plan and referred to in the wider information and materials. • Key contact details for staff nominated by Services as SRP are not up to date. • Mandatory LEON training for Facility Responsible Persons, does not reference the SRP role nor their deputies and there is currently no mandatory training for these staff. • The Duties of the Facilities Responsible Person document should be updated to include their responsibilities in relation to management of asbestos. There may be benefit to producing a checklist of facility related checks for sites/premises to collate these in one place. Page 114
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7 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 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 a plan/policy in place to manage its duty relating to the risks associated with asbestos-containing materials (ACMs) across Council establishments. 16. The Council has the Asbestos Management Plan (the 2013 Plan) in place to manage its duty relating to the risks associated with asbestos-containing materials (ACMs) across Council establishments. It applies to all parts of the Council’s estate constructed prior to 2000, when the use of asbestos in construction was considered to be officially banned. 17. The 2013 Plan, and the management system it contains, is designed to provide the basis for implementing the key legislative elements, some examples include: • to provide and maintain an Asbestos Register for each site where asbestos may be present and an Onsite Control of Asbestos Logbook; • to develop, implement and review an effective management strategy so that appropriate measures, such as sealing, labelling, inspection or removal of ACMs are undertaken to prevent exposure to the hazards associated with asbestos; • to promote awareness of the Asbestos Management Plan and the hazards of asbestos, through training and induction of staff and those working on behalf of the Council. 18. Property Services is responsible for maintenance of the building fabric and building services. In relation to the management of asbestos within Council premises, Property Services arrange for the compilation, consultation, implementation and monitoring of specific management arrangements for Asbestos Containing Materials (ACMs) or suspected ACMs. 19. The Health and Safety Team offer advice and support on all matters relating to health, safety and welfare. The relevant asbestos policies and procedures are contained within the Health and Safety Team site on the Council’s Intranet, the Hub. 20. The 2013 Plan is the over-arching guide for all Council staff and while it is comprehensive and takes cognisance of the legislation it has not been updated since its approval in May 2013 as there has, we are advised, been no significant changes in legislation or working practices. 21. A review of the processes, procedures and training relating to managing asbestos is currently being undertaken by staff from Property Services and the Health and Safety Team, once complete the 2013 Plan will be updated to reflect the revised working practices. 22. In line with statutory requirements, the Council has defined the organisational structure and management responsibilities for the Control of Asbestos. The 2013 Plan contains a flow chart depicting the organisation structure and the roles/ titles of those persons appointed to key roles of Dutyholder, Responsible Person, and Competent Persons. Alongside this structure the Health and Safety Team are involved in providing advice, specifically in terms of the legal requirements, at all stages of the management process. 23. The Dutyholder has overall responsibility for ensuring that the Control of Asbestos is adequately managed to mitigate the risks identified, they can delegate tasks to the Deputy Dutyholder and Page 115
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8 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 can nominate others to do tasks. The Responsible Person, nominated by individual Services, implements the Control of Asbestos Management Plan with assistance from the designated Competent Persons. Competent Persons, ensure local control of the Risk Assessment Process at a site or multi-site level. Site Responsible Persons are the employees appointed by Services to be the person responsible for individual Council establishments. 24. Appendix One – Register of Role holders details the Organisational Structure Key Personnel. This includes the names and contact details of individuals and deputies that have been appointed to the main roles, Dutyholder, Deputies, Responsible Persons and Competent Person, and while some of the names remain the same, this list has does not reflect the current Council structure. Action Plan 1 25. The management of asbestos in non-domestic premises requires the Council, as Dutyholder, to have as a minimum a Management Survey to have been undertaken for its premises. The purpose of the survey is to gather the base information required for an asbestos register and plan to be prepared, a suitable risk assessment to be carried out and a written plan to manage the risks is required to be produced. 26. The Management Surveys for each premises will identify whether the establishment is affected by the Control of Asbestos Regulations by: • Checking for, identifying and assessing the condition of Asbestos Containing Materials; • Assessing the risk; • Providing a Control of Asbestos Risk Assessment indicating the relevant information and recommendations necessary to manage the risk and to minimise the risk of ACMs being disturbed. 27. Property Services maintain the Asbestos Site History spreadsheet which is a central register of establishments/premises where the initial Management Survey has identified as containing or suspected to have Asbestos Containing Materials (ACMs). The register includes details of: • the site name: • management survey date; • re-inspection by a competent person date; • date next re-inspection due; and • whether the sites have an asbestos register and asbestos location plan. 28. Property Services issue the Onsite Control of Asbestos Logbook folder to each of the establishments, this is onsite information specific to that facility. It includes the most up to date asbestos management survey, a location plan showing where ACMs are present, a register of where there is ACM present and re-inspection register. For completeness, if applicable, copies of any Refurbishment/Demolition surveys that have been undertaken in the facility. There is a visitor’s sign in sheet for most facilities and a contractors sign in/register for all sites. If something changes in the building, the Property Asbestos Officer will arrange for the register to be updated to reflect this. 29. The review of the 2013 Plan includes the re-alignment of scheduled re-inspections by Property Services to match the geographic areas covered by staff and the review of the Health and Safety risk assessments for each site. Given the size and geography of the Council area this is a resource Page 116
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9 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 intensive exercise, in terms of both staff time and travel related costs. Where possible staff plan the site visits to coincide with other inspections. 30. The HSE duty to manage asbestos in buildings guidance states that, as part of the Control of Asbestos Regulations, buildings plans should be monitored and reviewed every 12 months or sooner if necessary. There is limited mention of this requirement within the 2013 Plan and the associated documents. These should be reviewed to ensure that they refer to this requirement and that they specify staff roles and responsibility for completion of reviews, monitoring of the ACMs and where applicable carrying out risk assessments. Action Plan 2 31. A review of the Asbestos Site History spreadsheet confirms that of the 188 Council premises that have been identified as containing, or are suspected to have ACMs, 186 have been re-inspected within the past 12 months. 32. The Council has procedures and guidance in place to follow if ACMs are disturbed. The 2013 Plan provides details of the internal requirements for each of the duties within the roles and responsibilities section. It also sets out Emergency Procedures which are predominately targeted where works are being carried, so aimed at external contractors. The information is published in the Facility Responsible Persons section of the Health and Safety site on the Hub. 33. The Health and Safety Team and Property Services identified that there were gaps in awareness amongst staff and potential to consolidate the information available. They decided to update the Onsite Control of Asbestos logbook by collating the relevant information and guidance into one place rather than have it spread between the 2013 Plan, the site plans/logbooks and the Hub. 34. The Health and Safety Team have produced a Site Asbestos Management Plan (Site AMP), based on the Council’s overarching 2013 Plan and developed new awareness training materials for Site Responsible Person (SRP). This includes showing how to complete the Site AMP and highlights what their responsibilities are. This has been piloted within Education services with awareness training sessions delivered to Head Teachers, as the SRP. 35. Testing, as noted in paragraph 45 below confirms the awareness and training gap and highlights the success of the pilot scheme. Following completion of the pilot, staff within Health and Safety and Property Services are reviewing and updating the documentation, processes and procedures, to ensure that they reflect the revised working practices. The awareness training is planned to will be rolled out by the Health and Safety Team to other Services after the review. Records of this training should be maintained. Action Plan 3 36. There is no clear mention of the retention period for the various documents relating to the management of asbestos. When reviewing and updating the 2013 Plan and associated documents/ checklists and training materials, the storage and retention of the document should be clearly stated. Action Plan 4 37. As noted in paragraph 21 above, the 2013 Plan will be updated once the working practices and training is fully revised. For completeness, any linked documents referred to or based upon the Page 117
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10 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 2013 Plan, including the Education Management Circular 1.31, should be listed to ensure that they are updated/ reviewed any time the Plan is revised and vice versa. Council staff are aware of their responsibilities in relation to monitoring buildings and reporting issues that may relate to asbestos-containing materials (ACMs). 38. The Facility Responsible Person (FRP) is the Head of Service, they have responsibility for overseeing facility safety and facility related activities (other than maintaining building fabric and building services which remain the responsibility of Property Services). Heads of Service nominate a member of staff as the Site/Premises Manager for each establishment and notify Property Services who record the appointment on the Council’s Property Management System, Concerto, which contains the central register. 39. The SRP co-ordinates arrangements between Property Services and other Services occupying the premises and performs specific facility related tasks, including monitoring buildings and reporting issues that may relate to disturbances of areas identified as having asbestos containing materials (ACMs). Some documents in the Health and Safety Intranet site refer to Site Premises Manager. To avoid confusion there should be consistent use of one title. 40. The 2013 Plan currently refers to Site Manager or Head Teacher rather than the current title of Site Responsible Person. While there is no requirement for the 2013 Plan to include titles of the individual SRP, this is an important role. The 2013 Plan and associated procedures, materials and information and the Education Management Circular 1.31, should be updated to clarify the role and responsibilities of the SRP and include the requirement for a Deputy to be appointed to ensure cover for any absences. Action Plan 5 and 6 41. Services should advise Property Services of any changes of staff nominated as SRP but in practice this does not happen consistently meaning that these records are not up to date. Property Services have in the past issued emails to Heads of Services asking for staffing updates, but due to a lack of response this practice was stopped. Consideration should be given to whether this could be reinstated and where there is no response if this should be escalated to DMT/SMT. Action Plan 7 42. Mandatory training for staff nominated by Services as FRP, is available on the LEON system, which also records and monitors completion. This does not reference the SRP role and there is currently no mandatory training for staff appointed to this role. Mandatory training should be extended to include SRPs and their nominated Deputies to ensure that there is cover for absence. Action Plan 8 43. To establish the extent to which Council staff are aware of their responsibilities in relation to monitoring buildings and reporting issues that may relate to ACMs, a survey was issued to 34 sites/ establishments. These were selected on a risk basis so included schools, Homes For the Elderly, Customer Service Points, Social Work premises and Roads Depots. In total, we received 26 completed surveys, the results are set out in the table below. Page 118
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11 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 Survey Questions and Results y n % Yes Q1 Is there an asbestos management plan the building? 20 6 77% Q2 If yes, is it prominently displayed 19 7 73% Q3 Have you received training in relation to your duties? specifically, your duties relating the monitoring and reporting of Asbestos Containing Materials (ACM) 12 14 46% Q4 Have you completed the Facility Responsible Person LEON training? 12 14 46% Q5 Do you carry out undertake regular inspections of the establishment/ building, (this includes checking the whether the location of ACM has been disturbed)? 13 13 50% Q6 Do you know where to find information and who to contact if you have queries relating to: • Management of Asbestos 19 7 73% Q6a • Health and Safety of users of that Council establishment 21 5 81% Q6b • the location of ACMs 18 7 69% Q6c • where to find information and who to contact if you have queries 17 9 65% Q6d • what to do/how to report if the ACMs may be disturbed? 18 8 69% Q7 Have you ever reported a potential disturbance to the area containing the ACMs? 0 26 0% 44. The responses from schools were positive with all 12 confirming they have received training and only one school unaware that Property Services have to be notified of potential asbestos related issues, in addition to contacting Health and Safety Team. This highlights the success and impact of the recent pilot scheme. As noted in paragraph 33 above, the awareness training is planned to be rolled out to other Services, after the plan and linked materials have been updated. 45. The survey responses highlight the gap in awareness of staff responsibilities and training already identified by Property Services and Health and Safety Teams as 46% of staff have not received training - neither awareness training nor the LEON module. In particular five of the six Council Depots contacted have not received training and were unaware of the asbestos management plan for the site, staff highlighted a lack of handover in relation to SRP duties, when changes of staff occurred. 46. Currently the Duties of the FRP document makes no mention of their responsibilities relating to the management of asbestos. This should be updated to include the need to appoint an SRP and Deputy for each site/premises and where appropriate, a visual check for disturbances to locations identified as containing or suspected to contain ACMs. 47. Half of the staff surveyed carry out regular inspections. In addition to clarifying the role and responsibilities of the SRP, there would be benefit to producing a checklist of facility related checks for sites/premises to collate these in one place e.g. fire alarm testing, legionella testing, visual check of ACMs, including the frequency that these are required. Action Plan 9 Page 119
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Appendix 1 – Action Plan No Finding Risk Agreed Action Responsibility / Due Date Medium 1 Asbestos Management Plan (the 2013 Plan) The 2013 Plan, states that it will be reviewed annually, but it has not been updated since approval in May 2013. Appendix 1, includes the Register of Role holders which details the Organisation Structure Key Personnel, however, this does not reflect the current Council Structure. At the time of the audit, the 2013 Plan was under review. This should be updated to ensure it reflects the current Council structure and revised working practices. Consideration should be given as to what is an appropriate period of review for this document. Failure to comply with the Control of Asbestos at Work, and, Health and Safety at Work, Regulations. Property Services and Health and Safety Team are reviewing the 2013 Plan. It will be renamed as the Management Standard for the Control of Asbestos and will be updated to refer to the job titles of key personnel. Heads of Service will need to make necessary commitment to any changes. Property Services will monitor this every 12 months. Property Maintenance Manager Governance, Risk and Safety Manager 1st April 2026 Medium 2 Managing Asbestos in Buildings The HSE duty to manage asbestos in buildings guidance states that buildings plans should be monitored and reviewed every 12 months or sooner if necessary. The 2013 Plan, Onsite Control of Asbestos Logbooks and Individual Site AMPs, and all associated documents and checklists should be reviewed to ensure that they refer to the above requirement and specify staff roles and responsibility for completion of reviews and monitoring of the ACMs, including risk assessments. Failure to comply with the Control of Asbestos at Work, and, Health and Safety at Work, Regulations. Property Services and Health and Safety Team will include this requirement and make any necessary amendments, while they are reviewing the 2013 Plan, the individual Site Asbestos Management Plans and associated/ linked documents. The updated documents will be provided to audit to evidence completion Property Maintenance Manager Governance, Risk and Safety Manager 1st April 2026 Low 3 Training and awareness raising Gaps in asbestos awareness amongst staff were identified. Testing confirmed this. A pilot scheme providing training to Site Responsible Persons, within Education Services, has been developed and carried out by Health and Safety staff. This has proven successful and is planned to be rolled out across all Council Services. Records of this training should be maintained. Failure to comply with the Control of Asbestos at Work, and, Health and Safety at Work, Regulations. The Pilot with Education dept is now complete. Health and Safety Link Officers will liaise with other Services to develop the asbestos system across council for monitoring buildings and reporting issues. Governance, Risk and Safety Manager 1st April 2026 Page 120
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13 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 No Finding Risk Agreed Action Responsibility / Due Date Medium 4 Document Retention There is no clear mention of the retention period for the various documents relating to the management of asbestos. When reviewing and updating the 2013 Plan and associated documents/ checklists etc., the storage and retention period should be clearly stated. For completeness, any linked documents referred to, based upon the revised 2013 plan, should be listed to ensure that they are updated/ reviewed any time the plan is revised and vice versa. Failure to comply with the Control of Asbestos at Work, and, Health and Safety at Work, Regulations. Property Services and Health and Safety Team when reviewing the 2013 Plan (and updating to the Management Standard for the Control of Asbestos) and associated documents, will develop a list of linked documents and specify a storage & the retention period for these. Property Maintenance Manager Governance, Risk and Safety Manager 1st April 2026 Medium 5 Roles and Responsibilities There is inconsistent use of the title, role and responsibilities when referring to the member of staff, nominated as the individual Site Responsible Person. Different titles include Site Manager, Head Teacher, Site Premises Manager or Site Responsible Person (SRP). To avoid confusion there should be consistent use of one title. The 2013 plan and associated procedures, materials and information, should be updated to clarify the role and responsibilities of the SRP and include the requirement for a Deputy to be appointed to ensure cover for absence. Council staff may be unaware of their responsibilities in relation to monitoring buildings and reporting issues that may relate to asbestos containing materials (ACMs). Property Services and Health and Safety Team are reviewing the Plan (and updating to the Management Standard for the Control of Asbestos) currently to update and include a consistency in role titles across the various documents. Property Maintenance Manager Governance, Risk and Safety Manager 1st April 2026 Medium 6 Education Management Circular 1.31 This document will need reviewed to ensure it reflects: The HSE guidance that buildings plans should be monitored and reviewed every 12 months or sooner if necessary. Any revision to titles, roles and responsibilities of the member of staff, nominated as the individual Site Responsible Person Retention period for the various documents relating to the management of asbestos. Council staff may be unaware of their responsibilities in relation to monitoring buildings and reporting issues that may relate to asbestos- containing materials (ACMs). School Services Support Manager will update the EMC 1.31 and will liaise with Property Services and Health and Safety Team, who are reviewing the Plan (and updating to the Management Standard for the Control of Asbestos) currently to update and include a consistency in role titles across the various documents. School Services Support Manager Governance, Risk and Safety Manager 1st April 2026 Page 121
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14 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 No Finding Risk Agreed Action Responsibility / Due Date Low 7 Site Responsible Person Records Services should advise Property Services of any changes of staff nominated as SRP but in practice this does not happen consistently meaning that these records are not up to date. Property Services have in the past issued emails to Heads of Services asking for staffing updates, but due to a lack of response this practice was stopped. Consideration should be given to whether this could be reinstated and where there is no response if this should be escalated to DMT/SMT. Council staff may be unaware of their responsibilities in relation to monitoring buildings and reporting issues that may relate to asbestos- containing materials (ACMs). Property Services will issue emails to Heads of Services asking for staffing updates then enter details into Concerto Commercial Services Admin Officer 30th September 25 Low 8 Mandatory Training Mandatory training for Facility Responsible Persons (HoS), is available on the LEON system, which also records and monitors completion. This does not reference the Site and Premises Manager/ Site Responsible Person role and there is currently no mandatory training for staff appointed to this role. Mandatory training should also extend to these roles and their nominated Deputies to ensure that there is cover for absence. Consideration should be given to this being an annual requirement. Council staff may be unaware of their responsibilities in relation to monitoring buildings and reporting issues that may relate to asbestos- containing materials (ACMs). Mandatory Training will be developed and available on LEON for all appropriate personnel. Deputies will be included Governance, Risk and Safety Manager 30th September 25 Low 9 Duties of the Facility Responsible Person Currently the Duties of the FRP document makes no mention of their responsibilities relating to the management of asbestos. This should be updated to include, the need to appoint an SRP and Deputy for each site/premises and where appropriate, a visual check for disturbances to locations identified as containing or suspected to contain ACMs. There may be benefit to producing a checklist of facility related checks for sites/premises to collate these in one place e.g. fire alarm testing, legionella testing, visual check of ACMs, including the frequency that these are required. Council staff may be unaware of their responsibilities in relation to monitoring buildings and reporting issues that may relate to asbestos- containing materials (ACMs). Property Services and Health and Safety Team are currently reviewing the Plan (and updating to the Management Standard for the Control of Asbestos) to update and include roles and responsibilities for key personnel. Health and Safety Link Officers will liaise with other Services to develop the asbestos system across council for monitoring buildings and reporting issues. Property Maintenance Manager Governance, Risk and Safety Manager 1st April 2026 Page 122
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15 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 No Finding Risk Agreed Action Responsibility / Due Date There are various site checklists on the hub, these will be reviewed to include Asbestos. 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: Page 123
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16 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 2025 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 124
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17 Argyll and Bute Council – Internal Audit Report – Asbestos Management, April 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 125
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Argyll and Bute Council Internal Audit Report March 2025 Final High Medium Low VFM Number of Findings 1 1 2 0 Bridge Asset Management Plan Audit Opinion: Reasonable Page 127 Agenda Item 7c
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2 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 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 ............................................................................................................................ 7 Appendix 1 – Action Plan ..................................................................................................................... 11 Appendix 2 – Audit Opinion ................................................................................................................. 15 Contact Details Internal Auditor: David Sullivan Telephone: 01546 604125 e-mail: david.sullivan@argyll-bute.gov.uk www.argyll-bute.gov.uk Page 128
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3 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 1. Executive Summary Introduction 1. As part of the 2024/25 internal audit plan, approved by the Audit & Scrutiny Committee in March 2024, we have undertaken an audit of Argyll and Bute Council’s (the Council / ABC) system of internal control and governance in relation to Bridge Asset Management Plan. 2. The audit was conducted in accordance with the Public Sector Internal Audit Standards (PSIAS) 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 4. The Infrastructure Design team is responsible for the oversight of 903 bridges within Argyll and Bute Council. The Infrastructure Design team’s approach is to follow the 'Well-managed Highway Infrastructure' Code of Practice and the Standards for Highways/Design Manual for Roads and Bridges (DMRB) CS 450 - Inspection of Highway Structures. 5. These national Codes of Practice and Standards categorise bridge inspections into three types: General Inspections, Principal Inspections, and Special Inspections and set out the frequency of inspections that should be undertaken. General Inspections should be conducted every 24 months, encompassing visual assessments from ground level without additional access equipment. Principal Inspections are more comprehensive, requiring close examinations within touching distance of all accessible parts of a structure, and are recommended every 72 months. Special Inspections are performed as needed to address specific concerns raised by various stakeholders. 6. The Infrastructure Design team recently transitioned the structures' asset management system to the cloud-based WebSMS platform by WDM, replacing the previous server-based version of the WDM system maintained by Argyll and Bute Council. This system migration aimed to enhance the accessibility of bridge inventory data. Inventory validation is being integrated into WebSMS through tablet input by Bridge Inspectors or manually via desktop entries. Additionally, ad-hoc validation is performed by Bridge Inspectors and Engineers as required. 7. This audit will aim to provide an analysis of the data integrity within the WebSMS system and evaluate the effectiveness and compliance of the cyclic bridge inspection process with the national Code of Practice and Standards. Page 129
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4 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 Scope 8. The scope of the audit was to review the data held in the bridges asset management system together with a review of the cyclic bridge inspection process as outlined in the Terms of Reference agreed with the Head of Roads and Infrastructure Services on July 24th 2024. 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 24th July 2024 Fieldwork Commencement 24th July 2024 Draft Report issued (Information required for the review was delayed) 25th November 2024 Management Comments received 17th March 2025 Final Report issued 19th March 2025 Audit and Scrutiny Committee 12th June 2025 Risks 10. The risks considered throughout the audit were: SRR02: Infrastructure and Asset Base does not meet future requirements Audit Risk 1: There are no procedures in place for Bridge inspections Audit Risk 2: Information within the Bridge Asset Management system is not complete and accurate Audit Risk 3: Bridge Inspections are carried out as per agreed policies Audit Risk 4: Reputational damage to the Council Audit Risk 5: There are no procedures in place for mitigating the risk of late inspections Audit Risk 6: Monitoring and reporting of inspections is not in place 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 2 to this report. 12. Our overall audit opinion for this audit is that we can take a Reasonable level of assurance. This means that 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. Page 130
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5 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 Recommendations 13. We have highlighted one high priority recommendation, one medium priority recommendation and two low priority recommendations where we believe there is scope to strengthen the control and governance environment. These are summarised below: The Council should ensure a structured performance reporting framework is established to distribute reports to key stakeholders, include performance updates to Departmental Management Team (DMT) meetings, The Council should develop its own documented procedure for bridge inspections to ensure and document the process for compliance with the Well-managed Highway Infrastructure Code of Practice and DMRB CS 450, to enhance clarity, accountability, and adaptability while aligning inspection activities with external standards and the Council’s specific operational requirements. The Council should ensure formal records are maintained for all training completed by Bridge Inspectors, including certification courses and in-house training on the WebSMS asset management system, to enhance accountability and ensure compliance with training requirements. The Council should establish an audit trail within the WebSMS system to document late inspections, including reasons for delays, actions taken, and stakeholder communication, to enhance transparency and accountability. 14. 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 15. 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 CO1 There are Procedures in place for Managing Bridge Inventory Data which are Documented and communicated to appropriate personnel Audit Risk 1 Reasonable The Infrastructure Design team oversees 903 bridges, operating within a legislative and procedural framework that includes the Roads (Scotland) Act 1984 and the DMRB standards. The Infrastructure Design team lacks a documented procedure to ensure compliance with the relevant national Codes of Practice relying instead on national Codes of Practice and Standards categorise and the WebSMS system. This reliance could result in reduced adaptability to local conditions, potential accountability gaps, and inconsistent processes. Additionally, while inspectors are trained, there is no formal record to Page 131
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6 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 verify this, highlighting the need for documented procedures and training records to enhance accountability and transparency. CO2 All bridge inspection are carried out in accordance with General, Principal, and Special Inspections per the recommended frequencies and standards as outlined in the 'Well-managed Highway Infrastructure' Code of Practice and the DMRB CS 450. Audit Risk 2 Audit Risk 3 Audit Risk 4 Substantial A review of inspection reports from the WebSMS system confirmed that inspections are comprehensive and adhere to the 'Well-managed Highway Infrastructure' Code of Practice and DMRB CS 450 standards. The reports include calculated Condition Indicators & Scores, inspection of each bridge element, estimated costs of repairs and summary of work required. CO3 There are procedures in place for identifying and mitigating risks associated with late inspections, particularly for high- priority structures. Audit Risk 5 Reasonable The audit found gaps in WebSMS for managing late bridge inspections, as the system lacks a formal reporting mechanism to document delays, actions taken, and risk mitigation. Currently, inspectors manage this manually, though plans for an automated email report are underway. While risks for high- priority structure delays are addressed as needed, no formal procedures or records exist within WebSMS for these mitigation strategies or resource reallocation. CO4 There are regular performance reports generated and reviewed by relevant stakeholders and reports include key performance indicators in relation to inspection schedules and late inspections Audit Risk 6 Limited The audit identified gaps in performance reporting, including the absence of a structured framework to distribute reports to key stakeholders on a regular basis. Additionally, performance reports are not routinely included in Departmental Management Team (DMT) meetings or other forums, limiting opportunities for enhanced monitoring, accountability, and informed decision-making. Furthermore, there are no specific regular reports addressing late bridge inspections, nor are there formal action plans or follow-up measures to ensure compliance with inspection schedules. Page 132
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7 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 16. Further details of our conclusions against each control objective can be found in Section 3 of this report. 3. Detailed Findings There are Procedures in place for Managing Bridge Inventory Data which are Documented and communicated to appropriate personnel. 17. The cyclic bridge inspection process, recorded within WebSMS, follows established standards including the 'Well-managed Highway Infrastructure' Code of Practice and the Standards for Highways/Design Manual for Roads and Bridges (DMRB) CS 450 - Inspection of Highway Structures. The Infrastructure Design team is responsible for the oversight of 903 bridges within Argyll and Bute Council. Management within Infrastructure Design follow a framework of legislative, procedural, and operational documents to ensure effective and compliant management of highway structures. This includes the Roads (Scotland) Act 1984, adherence to the Code of Practice: Well-Managed Highway Infrastructure, and implementation of design standards as outlined in the DMRB - Highway Structures and Bridges Series. Furthermore, the team operates in alignment with the Council's strategic objectives as detailed in the Roads Asset Management Plan (RAMP) - June 2017, providing a structured approach to maintaining and managing bridge infrastructure. 18. The audit found that the Council does not have its own documented service procedure for ensuring that bridge inspections are conducted in line with the national codes of practice. Instead, the Management complies with 'Well-managed Highway Infrastructure' Code of Practice and the Standards for Highways/Design Manual for Roads and Bridges (DMRB) CS 450 - Inspection of Highway Structures and records asset management information within WDM WebSMS. The sole reliance on national Codes of Practice and Standards and the WebSMS (WDM) system without agreed internal procedures tailored to the Councils operational requirements may result in Reduced adaptability to address specific local requirements or unique structural conditions Potential gaps in accountability and clarity for staff responsible for inspections Inconsistent application of inspection processes, especially when relying solely on system outputs Vulnerability to interruption in service of the WebSMS (WDM) system including: failures by the provider, cyber-attack or other long duration ICT outage requiring reversion to “manual / paper based” approaches to bridge inspection and associated data collection. The Council should consider developing its own documented service procedure for bridge inspections setting out how compliance with the national codes of practice will be achieved in the context of Argyll and Bute Council. This would enhance clarity, accountability, and adaptability, ensuring that all inspection activities align with both external standards and the Council’s specific operational requirements. Action Plan 2 Page 133
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8 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 19. Council officers advised that Bridge Inspectors have completed comprehensive training under the Bridge Inspector Certification Scheme, ensuring they are qualified to conduct inspections in line with established standards. Inspectors follow the Inspection Manual for Highway Structures, Volumes 1 and 2, which guides inspection procedures. Additionally, training on the WDM WebSMS asset management system is provided internally by the Infrastructure Design team, as the system was developed specifically to meet the team's unique operational needs. This in- house, tailored training equips inspectors with the necessary skills to effectively manage bridge inventory data in the WebSMS system. While the client has indicated that Bridge Inspectors have completed relevant certification courses and received in-house training on using the WebSMS asset management system, there is no formal record of training maintained on file. Action Plan 3 20. Special Inspections are recorded within the WebSMS system, the current limitation is the inability to export these reports. The client was already aware of this issue and had instructed WDM to enhance the system's functionality to allow for exporting Special Inspection data in future for full Inspection History reports. This enhancement will facilitate more efficient audits and improve accessibility to inspection data. All bridge inspection are carried out in accordance with General, Principal, and Special Inspections per the recommended frequencies and standards as outlined in the 'Well-managed Highway Infrastructure' Code of Practice and the DMRB CS 450. 21. A sample of inspection reports from the WebSMS system were viewed via a desktop exercise. The review found inspections were comprehensive and aligned with 'Well-managed Highway Infrastructure' Code of Practice and the DMRB CS 450 standards. Checked carried out detailed within Inspections reports include: Calculated Structural Condition Indicators and Condition indicator scores indicating the average and critical condition of each bridge, Inspection of each bridge element including deck, sub structure, safety elements, and all other structural elements of each bridge, Estimated costs of repairs for each inspected bridge element which requires work, Work required section indicating where structures require works, including immediate attention (High Priority) where applicable. 22. The audit found that 38 bridges have inspections late by 26 months or more. While the report provided details on the late status, it did not specify the risk category of these bridges. This lack of information limits the Council’s ability to prioritise and address inspections based on the potential risk level associated with each structure. 23. The audit found that inspection resources for bridge inspections, particularly for high-priority or urgent matters, are allocated on an ad hoc basis, according to immediate needs. Consideration should be given to establishing a more structured approach for allocating inspection resources, particularly for high-priority or urgent inspections, to ensure that critical inspections are consistently prioritised and adequately resourced. Page 134
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9 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 24. Concerns raised by the public are addressed through the same process as those initiated by Inspectors' recommendations following General Inspections. While Special Inspections are primarily triggered by Inspectors' observations, any inspections prompted by public concerns are handled consistently within the established inspection framework. There are procedures in place for identifying and mitigating risks associated with late inspections, particularly for high-priority structures. 25. The Code of Practice states that there should be a formal and traceable documentation process in place to manage and report on late inspections. This ensures accountability and continuous monitoring of inspection schedules and compliance with the 'Well-managed Highway Infrastructure' Code of Practice and the DMRB CS 450 standards. 26. The audit found that there is currently no audit trail within the WebSMS system (WDM) to document late inspections, including reasons for delays, actions taken, and stakeholder communication. Instead, this process is managed manually by inspectors outside of the system. Council officers noted that steps are underway to develop an automated report from WDM to capture and record this information formally via email. Establishing an integrated, automated audit trail within WebSMS would enhance transparency, accountability, and ease of access to records related to late inspections, providing a more robust system for tracking and managing inspection compliance. Action plan 4 27. The audit found that while council officers confirmed that risks associated with late inspections of high-priority structures are addressed as they arise, there is no formalised documentation of specific risk mitigation plans within the WebSMS system. To strengthen oversight, it is recommended that a formal process for documenting these risk mitigation strategies within the WebSMS system be implemented, ensuring consistent and transparent management of inspection delays. 28. The audit found that resources are reallocated as needed in response to inspection delays, including prioritisation for high-priority structures. This flexible approach helps to mitigate risks associated with inspection delays and ensures that high-priority structures receive attention promptly. However, formalising this process with documented procedures could enhance consistency and transparency in resource reallocation, providing clearer guidance for staff and further supporting effective risk management. There are regular performance reports generated and reviewed by relevant stakeholders and reports include key performance indicators in relation to inspection schedules and late inspections. 29. The Council's Annual Report highlights key data on the condition of bridge stock and associated challenges. The Bridge Stock Condition is now evaluated using a weighted average per span, with recent cyclic assessments showing a decline in condition over time. In the most recent cycle (2022-24), the Average Bridge Stock Condition was reported as 87.86 (out of 100), and the Critical Element Stock Condition as 79.08 (out of 100), both showing a significant drop compared to earlier cycles, such as 2016-18 when these figures were 89.46 and 82.40, respectively. A Page 135
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10 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 backlog of maintenance works currently amounts to £32.4 million, exacerbating the declining condition trend. Additionally, the report identifies specific weak bridges within the Council's network, which are subject to weight restrictions ranging from 3 tonnes to 18 tonnes. Examples include Laggan Old Bridge (10T, Islay), Glendaruel Bridge (3T, Cowal), and Kilbride Bridge (10T, Cowal). In the near term it is unlikely that significant increases in capital budget allocation will enable a meaningful programme of works to address this backlog maintenance liability. These findings underscore the need for prioritised maintenance to address the growing infrastructure deficit and ensure public safety and functionality while recognising that difficult decision may be required that prioritizes the limited available resources to maximise the preservation of transport network functionality on the more highly used / critical road routes. 30. The audit found that no key performance indicators (KPIs) are currently established for the bridge inspection process, resulting in an absence of KPI-based performance reporting. Introducing relevant KPIs and incorporating them into regular performance reporting would enhance transparency, facilitate better decision-making, and support the timely identification and resolution of potential issues in bridge inspections. Action plan 1 31. The audit found that no performance reports are currently generated within the WebSMS system for distribution to relevant stakeholders. Without a structured reporting process, key stakeholders lack critical information needed to monitor inspection performance and allocate resources effectively. It is recommended that the Council establish a clear reporting framework to ensure that key stakeholders receive regular performance updates, enhancing oversight and accountability in bridge management. Action Plan 1 32. The audit determined that performance reports are not forwarded to Departmental Management Team (DMT) meetings or other relevant forums. Establishing regular performance reporting and including these in DMT meetings would strengthen monitoring practices, foster accountability, and enable timely decision-making regarding the bridge inspection management. Action plan 1 33. The audit revealed that no regular performance reports generated specifically for late bridge inspections, and consequently, no formal action plans or follow-up measures are developed to address these delays. Implementing a structured reporting process focused on late inspections, along with associated action plans to resolve identified issues, would improve oversight and help ensure that inspection schedules are adhered to, thereby enhancing the safety and reliability of the bridge infrastructure. Action Plan 1 34. Regular team meetings are held to discuss bridge inspection matters, ensuring ongoing oversight and coordination. A review of the meeting minutes confirmed that these discussions address key issues related to inspection schedules, prioritisation of high-risk structures, and any arising concerns regarding bridge maintenance and safety. Page 136
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Appendix 1 – Action Plan No Finding Risk Agreed Action Responsibility / Due Date High 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. The absence of regular performance reporting also restricts visibility for relevant stakeholders, which may lead to delays in addressing late inspections and hinder proactive maintenance planning. 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 HoS will provide a by exception report to the Infrastructure Design Manager 30th June 2025 Page 137
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12 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 No Finding Risk Agreed Action Responsibility / Due Date 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 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. Medium 2 Procedures The Council should consider developing its own documented procedure for bridge inspections which sets out how the Council will achieve and ensure compliance with Well-managed Highway Infrastructure Code of Practice and DMRB CS 450. This would enhance clarity, accountability, and adaptability, ensuring that all inspection activities align with both external standards and the Council’s specific operational requirements. Reliance on national Codes of Practice and Standards without internalised procedures may reduce adaptability to local requirements, create gaps in accountability, and result in inconsistent application of inspection processes. A service manual will be developed setting out how the Council implements and assures compliance with Well-managed Highway Infrastructure Code of Practice and DMRB CS 450. This will not seek to replace the national Code of Practice but rather to articulate how the Council ensures compliance with it. Infrastructure Design Manager 30th September 2025 Low 3 Training While the client has indicated that Bridge Inspectors have completed relevant certification courses and received in- house training on using the WebSMS asset management system, there is no formal record of training maintained on file. The absence of documented training records creates a gap in verifying staff competency, which could lead to potential compliance issues and hinder accountability. Records shall be stored on Infrastructure Design network drive until instructed otherwise. Infrastructure Design Manager 31st March 2025 Page 138
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13 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 2025 No Finding Risk Agreed Action Responsibility / Due Date Low 4 Audit Trail Re late Inspections The audit found that there is currently no audit trail within the WebSMS system (WDM) to document late inspections, including reasons for delays, actions taken, and stakeholder communication. Without an integrated, automated audit trail, there is limited transparency and accountability in tracking late inspections. 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. Infrastructure Design Manager 31st March 2025 Page 139
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14 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 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 140
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15 Argyll and Bute Council – Internal Audit Report – Bridge Asset Management, March 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 141
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Argyll and Bute Council Internal Audit Report May 2025 FINAL High Medium Low VFM Number of Findings 0 0 0 0 Trading Standards Audit Opinion: High Page 143 Agenda Item 7d
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2 Argyll and Bute Council – Internal Audit Report – Trading Standards, May 2025 Contents 1. Executive Summary ........................................................................................................................ 3 Introduction ............................................................................................................................................ 3 Background ............................................................................................................................................. 3 Scope ....................................................................................................................................................... 4 Key Dates ................................................................................................................................................ 4 Risks ........................................................................................................................................................ 4 Audit Opinion ......................................................................................................................................... 4 2. Objectives and Summary Assessment ........................................................................................... 5 3. Detailed Findings ............................................................................................................................ 6 Appendix 2 – Audit Opinion ................................................................................................................. 11 Contact Details Internal Auditor: Annemarie McLean Telephone: 01700 501354 e-mail: Annemarie.mclean@argyll-bute.gov.co.uk www.argyll-bute.gov.uk Page 144
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3 Argyll and Bute Council – Internal Audit Report – Trading Standards, May 2025 1. Executive Summary Introduction 1. As part of the 2024/25 internal audit plan, approved by the Audit & Scrutiny Committee in March 2024, we have undertaken an audit of Argyll and Bute Council’s (the Council) system of internal control and governance in relation to Trading Standards. 2. The audit was conducted in accordance with the Public Sector Internal Audit Standards (PSIAS) 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 4. The Tobacco and Primary Medical Services (Scotland) Act 2010 contains measures aimed specifically at reducing the attractiveness and availability of tobacco to persons under 18. The Act: • bans the sale of tobacco from vending machines; • introduces a tobacco sales registration scheme, which will be free for retailers to join; • makes it an offence for under 18s to attempt to purchase tobacco; • makes it an offence for adults to buy tobacco on behalf of under 18s (known as proxy purchase); • gives trading standards officers powers to issue fixed penalty notices, and ; • gives courts the power to ban retailers from selling tobacco where they have repeatedly broken the law. 5. Since the 1 April 2011, local authorities have had a statutory duty to enforce the tobacco-related provisions of the 2010 Act and related regulations. They have also had a statutory duty to carry out an annual programme of enforcement in their area. 6. From the 1 April 2017, The Health (Tobacco, Nicotine etc and Care) (Scotland) Act 2016 amended the 2010 Act, requiring that tobacco products be extended to include NVPs, commonly known as ‘vapes’. This includes: • making it an offence to sell NVPs to under 18s, • making it an offence to buy for under 18s (‘proxy purchase’), • creating a national register of NVP retailers, • introducing banning orders for NVP retailers who flout the law, and • creating a fixed penalty enforcement regime for offences. 7. At the same time, additional requirements were brought in for both tobacco and NVPs, namely: • a requirement to have an ‘age verification policy’ (AVP), and Page 145
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4 Argyll and Bute Council – Internal Audit Report – Trading Standards, May 2025 • a requirement for under 18s to have authorisation from a responsible person to sell these products. 8. Trading Standards Officers work in partnership with the Scottish Government to monitor and support sellers, who need to comply with regulations associated with the retail sale of both tobacco and vaping products. Officers work with young (under-18) people locally and in tightly controlled test purchase situations to check that sellers are abiding by the law by asking for proof of age where appropriate and refusing to sell to children. Those found to be selling to under-18s can be issued with fixed penalty notices or even be banned from selling these products. 9. Enforcement is critical to ensuring that tobacco and vaping products are sold legally. All retailers have a responsibility to ensure that they are complying with the law. Scope 10. The scope of the audit was to review and assess the duties relating to age restrictions on tobacco and vapes (NVP), together with how such restrictions are monitored and enforced by the Council as outlined in the Terms of Reference agreed with the Head of Legal and Regulatory Services. Key Dates 11. 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 20 March 2025 Fieldwork Commencement 20 March 2025 Draft Report issued 14 April 2025 Management Comments received 17 April 2025 Final Report issued 02 May 2025 Audit and Scrutiny Committee 12 June 2025 Risks 12. The risks considered throughout the audit were: • Audit Risk 1 - Failure to comply with tobacco related Legislation Audit Opinion 13. 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. 14. 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 Page 146
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5 Argyll and Bute Council – Internal Audit Report – Trading Standards, May 2025 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. 2. Objectives and Summary Assessment 15. 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 processes and procedures in place to ensure compliance with its duties relating to age restrictions on tobacco and vapes (NVP) Audit Risk 1 High • The Council’s Constitution, Scheme of Authorisations and Delegations allows for the nomination and authorisation of officers to carry put the duties pertaining to the enforcement of the various public protection legislation, which includes consumer protection, fair trading and trading standards. • Staff are issued with warrant cards to act in accordance with, and to enforce, certain legislation based on the professional qualifications they hold. • The Trading Standards team follow guidance and protocols relating to testing and enforcement of age restrictions on tobacco and vapes (NVP), issued by the Scottish Government and the Society of Chief Officers of Trading Standards in Scotland (SCOTSS). 2 The Councils monitors adherence to age related restrictions on tobacco and vapes (NVP) and enforces compliance when breaches are identified. Audit Risk 1 High • The Council has a duty to prepare and carry out an annual programme of enforcement. • The annual Trading Standards Service Plan details the tasks and actions team will take to meet the required standards and priorities for that year. • Observation of Test Purchase visits confirm that staff follow the guidance issued by the Scottish Government and SCOTSS. • Performance is reported internally to Legal and Regulatory Support - Governance, Risk and Safety Managers meeting, Department Team Meetings (DMT) and Senior Page 147
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6 Argyll and Bute Council – Internal Audit Report – Trading Standards, May 2025 Management Team (SMT) meetings and externally to SCOTSS. • The Trading Standards team exceeded the statutory performance for advice visits and test purchase visits in the financial year 2024/25. • Two breaches were identified in relation to the sale of tobacco products to someone under the age of 18. Fixed Penalty notices were issued and promptly paid. 16. Further details of our conclusions against each control objective can be found in Section 3 of this report. 3. Detailed Findings The Council has processes and procedures in place to ensure compliance with its duties relating to age restrictions on tobacco and vapes (NVP) 17. The Council’s Constitution Part C- Scheme of Authorisation and Delegations allows for the nomination/authorisation of officers to carry out the duties pertaining to the enforcement of the various public protection legislation, which includes consumer protection, fair trading and trading standards. 18. Staff within the Trading Standards are authorised to act in accordance with, and to enforce, over 200 pieces of current legislation on behalf of Argyll and Bute Council. Authorisation for warrant cards to enforce certain elements of legislation, e.g. Weights and Measures, Animal Health and Welfare, and Under Age sales (UAS), is dependent upon the professional qualifications held by staff. 19. Professional training teaches staff to interpret legislation and this judgement/professional knowledge is what is used by staff when carrying out their role. Individual officers maintain records of their own Continuing Professional Development (CPD), this is used by Chartered Trading Standards Professionals to maintain their chartered status and ensures they enhance the knowledge, skills, and competencies for their roles throughout their careers. 20. The Council’s Trading Standards team follow guidance and protocols relating to testing and enforcement of age restrictions on tobacco and vapes (NVP), issued by the Scottish Government and the Society of Chief Officers of Trading Standards in Scotland (SCOTSS). Given the volume and breadth of legislation covered by the Trading Standards and Money Advice team, we are advised that it is not practicable to develop separate Council procedure notes for each of these pieces of legislation. 21. The key documents are: • The Scottish Governments’: Tobacco and Nicotine Vapour Product Sales Guidance for Local Authorities – Enforcement Guidance & Protocols document (the Enforcement Guidance); Page 148
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7 Argyll and Bute Council – Internal Audit Report – Trading Standards, May 2025 • SCOTTS: Guidance for Local authorities on Test Purchasing Age Restricted Products (Testing Guidance); 22. SCOTSS works with a wide range of government, regulatory, consumer, business, and third sector organisations, mixing operational and technical expertise with policy work, in order to ensure the effectiveness of consumer protection services in Scotland and provide a source of knowledge and support for trading standards staff. 23. SCOTSS also maintains the Approved Trader database which is an online portal to all of Scotland's trading standards functions who run assured trader schemes. 24. The Enforcement Guidance document was developed by the Scottish Government in consultation with key stakeholders, including SCOTSS, to help local authorities and individual officers carry out enforcement of the Tobacco and NVP related provisions of the 2010 Act including the changes brought in by the 2016 Act, and ensure the legislation is implemented effectively, fairly and consistently across Scotland. 25. Information relating to age restrictions on tobacco and vapes (NVP) is published on the Trading Standards Sale of age restricted goods, of the Council’s website, it is up to date and easily available to the public. 26. The web page provides information and links to quick guides for business, regarding the sale, supply or offer to supply, tobacco products and nicotine vapour products, (NPV’s). It clearly states the age restrictions applicable (minimum age of 18) and that traders should always ask young people to produce proof of their age prior to selling, as “Challenge 25” is a legal requirement in Scotland. 27. Within the scope of this review, the key tasks relate to the provision of advice, responding to complaints, test purchase (TP) visits and enforcing compliance with relevant legislation. There are currently two staff who can be the Lead Officer when carrying out the test purchases. Staff within the wider team have been involved in test purchases and are aware of the roles and requirements of each staff member involved, but are currently not authorised to be the Lead Officer. 28. Discussions with the Trading Standards & Advice Services Manager confirm that within the confines of the resources available, there is an ongoing plan, utilising ‘grow our own’ where skills and training are developed for current staff in order to try and support business continuity in the future. There are currently two Trading Standards Officers, one Regulatory Servicers Officer, a Trainee Trading Standards Officer, and the Enforcement Officer post is in the process of being filled. Both the Trainee Trading Standards Officer and the Enforcement Officer are/will be undertaking professional training at differing levels. 29. Currently there is not an excessive over reliance on one member of staff, however, operations and business continuity, would be restricted due to authorisation levels linked to professional qualifications held by staff. Page 149
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8 Argyll and Bute Council – Internal Audit Report – Trading Standards, May 2025 The Councils monitors adherence to age related restrictions on tobacco and vapes (NVP) and enforces compliance when breaches are identified. 30. Local Authorities have a statutory duty to enforce the provisions within the 2010 Act and related regulations and are required to prepare and carry out an annual programme of enforcement in their area, as part of the Enhanced Tobacco Sales Enforcement Programme (ETSEP) and the Enhanced Nicotine Vapour Product Sales enforcement programme (ENSEP). To enable this programme, the Scottish Government provide funding which is embedded within the Local Authorities annual budget allocation. 31. The Trading Standards team have arrangements in place to monitor adherence to age related restrictions on tobacco and vapes (NVP), including how to enforce breaches. 32. The annual Trading Standards Service Plan, is based on the resources available and details the tasks and actions team will take to meet the required standards and priorities for that year. Performance is recorded and monitored using a spreadsheet which has a breakdown of the actions of required to complete each task. 33. There are 2 specific tasks for the annual enforcement plan for age related restrictions on tobacco and vapes (NVP) and enforcement of breaches. • TP 5 – Tobacco and Related Products (TARP) Programme of test purchased and advice visits. • TP 19 - Consider Civil Enterprise Act Action (Fair Trading) or Tobacco Banning Orders (TARP). 34. The statutory targets are percentages so vary from year and are based upon the number of registered retailers/supplier within the Council area, as detailed in the Scottish Tobacco Retailers Register. 35. The Enforcement Guidance states that all test purchasing operations: • should be carried out in accordance with the SCOTSS document ‘Guidance for Local authorities on Test Purchasing Age Restricted Products’ ; and • may lead to formal action being taken against the staff member and the owner of the business, for non-compliance with the Age Verification/Challenge 25 Guidance. 36. Observations of the Testing of premises by the Auditor, confirm that: • Staff follow the guidelines/best practice issued by the Scottish Government and SCOTTS; • There are pre Test Purchase risk assessments and discussions; • Staff involved in the operation were all aware of and familiar with the requirements of the legislation and guidance. • There are established processes for the collection and storage of documentation, information and evidence relating to age restrictions on tobacco and vapes (NVP) and Under Age Sales (UAS). • No breaches were identified during any of the observed visits. 37. When breaches occur Fixed Penalty Notices (FPN) must be issued to the person committing the offence within 7 days. Details on how to pay these are provided on the back of the notice. When Page 150
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9 Argyll and Bute Council – Internal Audit Report – Trading Standards, May 2025 a FPN is issued, Trading Standards staff notify the cash receipting team who monitor the income and advise when payment is received. 38. During Test Purchase visits, not attended by internal audit, two breaches were identified in relation to the sale of tobacco products to someone under the age of 18. Fixed Penalty notices were issued and promptly paid. 39. Performance towards meeting the statutory targets is reported: • Internally – monthly and quarterly, at the Legal and Regulatory Support - Governance, Risk and Safety Managers meeting and to Departmental Management Team; • Internally quarterly to Senior Management Team (SMT); • Externally, quarterly returns to SCOTSS who record performance for the Scottish Government. 40. Single Use Vapes (SUV) are due to be banned in 2025/26. In preparation for this, to support and educate retailers and suppliers, the decision was taken to focus resources towards this, increasing the number of both advice visits and vapes (NVP) Test Purchases. 41. This has been a success and in the financial year 2024/25 the Trading Standards team exceeded the statutory performance for advice visits and test purchase visits and achieved the undernoted results: Vape (NVP) Tobacco Retailers given advice 236% 108% Retailers test purchase visits 110% 114% Under Age Sales (UAS) breaches 0 2 Fixed Penalty Notices Issued 0 2 Fixed Penalty Notices Paid 0 2 Page 151
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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 152
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11 Argyll and Bute Council – Internal Audit Report – Trading Standards, May 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 153
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Argyll and Bute Council Internal Audit Report May 2025 FINAL High Medium Low VFM Number of Findings 0 7 0 0 External Placements Audit Opinion: Reasonable Page 155 Agenda Item 7e
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2 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 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 ............................................................................................................................ 7 Appendix 1 – Action Plan ..................................................................................................................... 11 Appendix 2 – Audit Opinion ................................................................................................................. 15 Contact Details Internal Auditor: Moira Weatherstone Telephone: 01546 604146 e-mail: moira.weatherstone@argyll-bute.gov.uk www.argyll-bute.gov.uk Page 156
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3 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 1. Executive Summary Introduction 1. As part of the 2024/25 internal audit plan, approved by the Audit & Scrutiny Committee in March 2024, we have undertaken an audit of Argyll and Bute Council’s (the Council) system of internal control and governance in relation to External Placements. 2. The audit was conducted in accordance with the Public Sector Internal Audit Standards (PSIAS) 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 4. The Children (Scotland) Act 1995 is centred on the needs of children and their families and defines both parental responsibilities and rights in relation to children. Councils have a duty to provide social care for those who need it, whether they provide these services themselves, contract with the voluntary or private sector to provide them or give clients a budget to arrange their own care. This includes placements which are out with the authority area. 5. Argyll & Bute Council (the Council) Children & Families provide a range of services to protect and support vulnerable children to enable them to continue to live safely in their own communities and to meet the Council’s statutory responsibilities. The Council also provides, where appropriate, to meet the needs of the young person, out of authority placements in Scotland. Out of authority placements require effective planning, engagement, and information sharing with the services likely to be responsible for meeting the needs of children. 6. In 2023/24 the annual budget for external placement services was £2.961m, with Social Work providing £1,697m of this and Education providing £1.264m. The actual spend in 2023/24 amounted to £3.411m (Social Work £1.744m and Education £1.667m). The number of young people requiring an external placement has been increasing in recent years, the current number of external placements is 16. The increase in the number of placements and the increase in rates imposed by external providers (one provider increased rates by 19%) has resulted in budget overspends on an annual basis. 7. In addition, with demand for external placements increasing and a large number of authorities throughout the UK requiring placements, the availability to meet those demands is becoming challenging. Page 157
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4 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 Scope 8. The scope of the audit was to determine if clear measures and goals of external placements, including the actual interventions offered meets the expected long term outcomes and represents Best Value as outlined in the Terms of Reference agreed with the Head of Children & Families & Criminal Justice, in addition to Head of Education-Wellbeing, Inclusion and Achievement on the 10 February 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 10/02/2025 Fieldwork Commencement 24/02/2025 Draft Report issued 19/05/2025 Management Comments received 23/05/2025 Final Report issued 23/05/2025 Audit and Scrutiny Committee 12/06/2025 Risks 10. The risks considered throughout the audit were: • SRR07: 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 • Audit Risk 1: failure to have policies and procedures in place for external placements • Audit Risk 2: failure to have robust care plans with detailed outcomes in place for external placements • Audit Risk 3: Failure to review and monitor young people’s progress in external placements in terms of agreed outcomes • Audit Risk 4: Failure to set and monitor budgets to ensure value for money 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 2 to this report. 12. Our overall audit opinion for this audit is that we can take a reasonable level of assurance. This means that 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 Page 158
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5 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 identified where elements of residual risk or weakness may put some of the system objectives at risk. Recommendations 13. We have highlighted 7 medium priority recommendations where we believe there is scope to strengthen the control and governance environment. These are summarised below: • Procedures should be put in place that outline the various steps to be taken when placing young people in external placements, this should include details of the review processes • Consideration should be given to inviting education to participate in the weekly resource panel meetings and/or minutes shared • Consideration should be given to requesting regular reports from providers detailing achievements and progress towards outcomes • Visits to providers should resume • Procedures should be put in place for young people leaving care to ensure that they have a clear pathway towards a positive destination and destinations are being recorded • There is increased risks associated with the current model of care and increased demand on Social Work and Education budgets resulting in significant overspends. Budgets could be reviewed in conjunction to considering alternate models of care which could be delivered internally, where that is deemed appropriate • the costs of care and education must be fully transparent and broken down into each element with reports provided to both services for each individual package 14. 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 15. 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 Policies and procedures are in place for the assessment and care planning of young people SRR07 Audit Risk 1 Audit Risk 2 Reasonable An Option Appraisal Meeting Practice Guidance Document (the Document) dated 2021, was made available for review. This document outlines the agreed approach between Argyll and Bute Education services and HSCP children’s services when considering possible care options for any looked after and accommodated young person. Roles and responsibilities are detailed in the document, however this has not been updated to reflect the role of the Care Assessment Reviewing Officers (CARO) in the process. The Page 159
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6 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 document outlines who is authorised to approve admissions to care, including if this is an emergency placement. There was no process document which outlined, for practitioners, the various stages of the process from referral (or emergency placement) stage to the actual placement of the young person. Procedures are understood by those undertaking the tasks. 2 All young people in external placements have care plans in place with clear goals and intervention which meet the needs of the young person Audit Risk 2 Reasonable Care plans are kept up to date and amended following any interventions or reviews. In addition, as detailed above weekly internal reviews are undertaken looking at each placement. However, it is noted that Care Plans and case notes were not always updated timeously on Eclipse. Care providers do not routinely provide regular updates to Social Work or Education on progress being made or whether outcomes are being achieved. 3 Reviews are undertaken with progress to achieving goals discussed Audit Risk 3 Reasonable Formal case reviews are held within 72 hours of placement, 6 weeks and then 3 months. Visits to the providers were undertaken by the Virtual Head Teacher and the Residential and Aftercare Manager, this allowed more informal discussions to take place around whether outcomes were being achieved and discuss any amendments to the care plan in place. Due to staff changes these have not been taking place. 4 Long term outcomes are assessed and destinations recorded at the end of the external placement Audit Risk 3 Reasonable It was unclear whether there were robust procedures and monitoring in place for young people leaving care with many returning to their previous locations. This became more challenging when the young person left education, although it was noted that the Virtual Head Teacher ensured that all efforts were made to secure a positive destination for that young person. 5 Budgets are aligned to ensure costs reflect the cost of care and education elements of the Audit Risk 4 Reasonable Like other authorities, the Council has very little control over the cost of external placements, with providers setting the cost against a background of competing demands from Page 160
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7 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 placement, with value for money being monitored authorities throughout Scotland. In addition, the need for external placements is increasing each year. In many cases there are no internal resources available to meet the needs of the young person. Clear costings are given from the providers, they are available to see in advance of contacting them to discuss any prospective placement, and these are available through the Scotland Excel procurement service website. The breakdown of all cost of care and education placements is 38% education and 62% care with the placements agreed jointly by Heads of Service for both care and education. 16. Further details of our conclusions against each control objective can be found in Section 3 of this report. 3. Detailed Findings Policies and procedures are in place for the assessment and care planning of young people 17. An Option Appraisal Meeting Practice Guidance Document (the Document) dated 2021, was made available for review. This document outlines the agreed approach between Argyll and Bute Education services and HSCP children’s services when considering possible care options for any Looked after and accommodated young person. 18. Roles and responsibilities are detailed in the document, however, it has not been updated to reflect the role of the Care Assessment Reviewing Officers (CARO) in the process. The document outlines who is authorised to approve admissions to care, including if this is an emergency placement, however, it does not outline the complete process or responsibilities in terms of identifying placement information, contracting, sharing information with providers and the review follow up processes. Action Plan 1 19. The option appraisal process clearly seeks to consider all options open to meet the needs of the young person and where a child requires care, and where there are no kinship options, the options appraisal process aims to match the child to the most appropriate available care option. It is stated that consideration should only be given to an external care option where other options have been exhausted. At this point, the Senior Manger Children’s Resources may request an external care screening panel and authorise initial approaches to potential providers where urgent. 20. The processes for consideration being given to an external placement are robust with a Multi- agency Options Appraisal Panel being convened. The options appraisal meeting will consider all provider’s proposals to meet the child’s needs, along with; cost, previous experience of the Page 161
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8 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 provider and any registration or inspection issues, to identify a recommended preferred option. The panel has 2 purposes: • To consider whether an options appraisal of external care providers should be undertaken • To approve a preferred external option – where required 21. Significant scrutiny and oversight is also given to external placements. A Joint Resource Group (JRG) Terms of Reference was provided. The JRG is the interagency management group with operational responsibility for promoting and overseeing effective joint working between Education, Health and Social Work, and for ensuring the effective prioritisation and deployment of interagency resources in respect of individual children, in line with the principles and values of GIRFEC (Getting it Right for Every Child) and best value. The remit of the JRG group includes: • Consideration of requests for funding of complex interagency packages of support, including Social Work packages over £30,000 • Consideration of requests for external placements including residential school and day education placements and CAMHS tier 4 commissioned services • Monitor the progress of care planning for high profile cases including children at risk, secure placements and children in the community • Consider any issues of concern around meeting the needs of looked after and accommodated children as identified by the CAROs • Monitor receptions into care, transfers and discharges • Consider variations in contracts in respect of children in external placements 22. Weekly Children’s Resource Panel meetings are chaired by the Senior Manager for Resources and are attended by the Senior Managers for Resources and Justice and the two operational Service Managers. This is an internal meeting where each external placement is reviewed, in addition to discussion on any potential placements coming forward. Minutes of this meeting are recorded, however are not shared with education. The details of individual children’s plans are shared with education at review meetings, however, we understand that such meetings may not always be taking place within expected timescales or are being postponed. Action Plan 2 All young people in external placements have care plans in place with clear goals and intervention which meet the needs of the young person 23. Care plans are kept up to date and amended following any interventions or reviews. In addition, as detailed above, weekly internal reviews are undertaken looking at each placement. It is noted that Care Plans and case notes were not always updated timeously on Eclipse, however, regular supervision by the Line Manager ensured that case records were discussed and where necessary highlighted if care plans are not updated. 24. Care providers do not routinely provide regular updates to Social Work or Education on progress being made or whether outcomes are being achieved. The lack of regular updates makes it challenging to monitor and adapt care plans where goals and interventions are not meeting the needs of the young person. Action Plan 3 Page 162
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9 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 Reviews are undertaken with progress to achieving goals discussed 25. Formal case reviews should be held within 72 hours of placement, after 6 weeks and also after 3 months. Visits to the providers were previously undertaken by the Virtual Head Teacher and the Residential and Aftercare Manager, this allowed more informal discussions to take place around whether outcomes were being achieved and discuss any amendments to the care plan in place. Due to staff changes these have not been taking place. Action Plan 4 Long term outcomes are assessed and destinations recorded at the end of the external placement 26. It was unclear whether there were robust procedures and monitoring in place for young people leaving care with many returning to their previous locations. This became more challenging when the young person left education, although it was noted that the Virtual Head Teacher ensured that all efforts were made to secure a positive destination for that young person. Action Point 5 Budgets are aligned to ensure costs reflect the cost of care and education elements of the placement, with value for money being monitored 27. Like other authorities, the Council has very little control over the cost of external placements, with providers setting the cost against a background of competing demands from authorities throughout Scotland. In addition, the need for external placements is increasing each year. In many cases there are no internal resources available to meet the needs of the young person, leaving the only option open to the Authority to place externally. The increasing demands within the Council is resulting in significant budget overspends, the demand for such services are projected to increase in the coming years. Action Point 6 28. Clear costings are given from the providers, they are available to see in advance of making contact to discuss any prospective placement, and these are available through the Scotland Excel procurement service website. The breakdown of all care and education placements is 38% education and 62% care with the placements agreed jointly by Heads of Service for both Care and Education. In addition to the breakdown of Care and Education, providers detail their costing for any specialist resources that may be necessary to meet the individual needs of the young person. It is unclear whether education are provided with a copy of the costs of the provision of the education in order that they can review best value for the service provided. Action Point 7 29. The costings for the placements are reviewed in line with the Individual Placement Agreement (IPA) contracts that are generated through Scotland Excel, contained within these contracts are the parameters of any increments planned for coming years. Working alongside Financial Services, Social Work are alert to any deviation from agreed costs signed for with IPA and no additional funds will ever be released unless an updated and jointly signed IPA is in place. Both Page 163
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10 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 Care and Education Financial Services work jointly to ensure that invoices are accurate and reflect only what has been confirmed within the IPA. 30. The cost of individual care packages is significant and can cost up to £10k per week, the demand is projected to rise in line with the profile of the last few years. It is difficult to assess whether the Council is receiving value for money for each individual placement, particularly if outcomes are not achieved or the placement does not result in a positive destination, however, it is recognised that against this backdrop, young people are provided with a safe environment. Without alternate internal solutions regarding the mode of care, the Council will require to continue placing young people externally. Greater monitoring of outcomes, achievements and destinations, including regular reporting on progress from providers will ensure that value for money in each placement is achieved. Page 164
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Appendix 1 – Action Plan No Finding Risk Agreed Action Responsibility / Due Date Medium 1 Options Appraisal Meeting Practice Guidance The Options Appraisal Meeting Practice Guidance document does not outline the complete process or responsibilities in terms of identifying placement information, contracting, sharing information with providers and the review follow up processes. Inconsistencies in practice and a lack of shared understanding of processes A simplified pathway schematic will be drawn. Head of Children Families and Justice 31 March 2026 Medium 2 Sharing of Information Children’s Resource Panel meetings take place weekly. This is an internal meeting where each external placement is reviewed, in addition to discussing any potential placements coming forward. Minutes of this meeting are recorded, however, are not shared with Education. Important updates regarding education may not be shared A member of the senior education team will attend the weekly meeting, where possible. Minutes of meetings will be shared with Education Service- directly to Principal Educational Psychologist, Ed Mgr Inclusion and ASN and Virtual Headteacher. Head of Children Families and Justice/Head of Education-Wellbeing, Inclusion and Achievement 31 March 2026 Medium 3 Reports from providers The lack of regular updates from providers makes it challenging to monitor and adapt care plans where goals and interventions are not meeting the needs of the young person. Failure to achieve early interventions and adapt Care Plans to meet the changing needs of young people Termly updates from providers will be requested and shared with Social Work and Education staff as appropriate, and discussed at relevant multi-agency review meetings. Head of Children Families and Justice/Head of Education-Wellbeing, Inclusion and Achievement 31 March 2026 Medium 4 Provider Monitoring Visits Visits to the providers were previously undertaken by the Virtual Head Teacher and the Residential and Aftercare Manager, this allowed more informal discussions to take place around whether outcomes were being achieved and discuss any amendments to the care plan in place. Due to staff changes these have not been taking place. Lack of monitoring of care providers Virtual Headteacher will work with relevant staff in SW C&F team to undertake a programme of visits to all care settings over the course of a rolling 12 month period. These will be of a commissioning nature rather than care planning and feedback shared via the placement review process. Head of Education- Wellbeing, Inclusion and Achievement/Head of Children Families and Justice 31 March 2026 Page 165
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12 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 No Finding Risk Agreed Action Responsibility / Due Date Medium 5 Destinations It was unclear whether there were robust procedures and monitoring in place for young people leaving care with many returning to their previous locations and no clear pathway for the future. No positive destination for young person leaving care There requires to be a fundamental review of the models of care within A&B encompassing the use of external placements. The child’s journey within placement and discharge planning requires as much focus as admission. Head of Children Families and Justice 31 March 2026 Medium 6 Model of Care and Costs The increasing demands within the Council is resulting in significant budget overspends and the demand for services is projected to increase in the coming years. In many cases there are no internal resources available to meet the needs of the young person, resulting in the only option being looking for external placements. Budgets not aligned to demand increasing risks of budget overspends Continue to explore options to develop internal resources for the education and care of Argyll and Bute’s children within its existing asset base- specifically in line with Education’s work on the development of Secondary Wellbeing Hubs and the development of the work of Children’s Houses. As in finding 5 there is a need for a fundamental review of the models of care. Head of Children Families and Justice/Head of Education-Wellbeing, Inclusion and Achievement 31 March 2026 Medium 7 Sharing of Costs It is clear that need is currently outstripping the budget available to accommodate this cohort of children. The breakdown of all care and education placements is 38% education and 62% care with the placements agreed jointly by Heads of Service for both care and education. It is unclear if a detailed breakdown of cost in regards the care and education service of each placement is provided. The value of what is provided by external placements is not clear. This is particularly the case where costs move beyond the baseline and extra is provided. If the current numbers of young people in external Providers are expected to provide a more detailed breakdown of costs, particularly extra costs to inform consideration and decision making at service level. There will need to be a focus on data trends. Head of Children Families and Justice/Head of Education-Wellbeing, Inclusion and Achievement 31 March 2026 Page 166
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13 Argyll and Bute Council – Internal Audit Report – External Placements, May 2025 No Finding Risk Agreed Action Responsibility / Due Date placements is in fact a longer term trend the current budget will result in an inherent deficit Page 167
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14 Argyll and Bute Council – Internal Audit Report – External Placements, May 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 168
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15 Argyll and Bute Council – Internal Audit Report – External Placements, May 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 169
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Argyll and Bute Council Internal Audit Report May 2025 FINAL High Medium Low VFM Number of Findings 0 0 1 0 Preparedness for IFRS16 Audit Opinion: Substantial Page 171 Agenda Item 7f
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2 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 2025 Contents 1. Executive Summary ........................................................................................................................ 3 Introduction ............................................................................................................................................ 3 Background ............................................................................................................................................. 3 Scope ....................................................................................................................................................... 4 Key Dates ................................................................................................................................................ 4 Risks ........................................................................................................................................................ 4 Audit Opinion ......................................................................................................................................... 4 Recommendations ................................................................................................................................. 4 2. Objectives and Summary Assessment ........................................................................................... 5 3. Detailed Findings ............................................................................................................................ 7 Appendix 1 – Action Plan ..................................................................................................................... 10 Appendix 2 – Audit Opinion ................................................................................................................. 12 Contact Details Internal Auditor: Moira Weatherstone Telephone: 01546 604146 e-mail: moira.weatherstone@argyll-bute.gov.uk www.argyll-bute.gov.uk Page 172
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3 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 2025 1. Executive Summary Introduction 1. As part of the 2024/25 internal audit plan, approved by the Audit & Scrutiny Committee in March 2024, we have undertaken an audit of Argyll and Bute Council’s (the Council) system of internal control and governance in relation to Preparedness for IFRS16. 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 4. Leasing is an important method of financing the acquisition of assets for many organisations, this can include assets as diverse as buildings, vehicles, machinery, and computers. In a lease the lessor owns the asset and leases it to the user, the lessee. This is an agreement which is legally binding and generally non-cancellable without early termination penalties. 5. Leases can be classified into finance leases and operating leases. A finance lease usually involves repayment to the lessor by a lessee of the full cost of the asset together with a return on the finance provided by the lessor. The lessee enjoys substantially all the risks and rewards of ownership of an asset. An operating lease is an agreement whereby the lessor retains the risks and rewards of ownership and normally assumes responsibility for repairs, maintenance and insurance. The lessee pays a rental for the hire of an asset for a period of time which is normally substantially less than its useful economic life. 6. Under IFRS 16 (International Financial Reporting Standard) a lease is defined as a ‘contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration’. IFRS 16 defines a lease term as the non-cancellable period for which the lessee has the right to use an underlying asset, meeting the definition of capital expenditure. 7. The introduction of IFRS 16 requires all leases or lease type arrangements, including ‘embedded leases’ to be recognised on the balance sheet through a ‘right to use’ asset, meeting the requirements of capital expenditure and together with the associated lease liability and impacts to income and expenditure. Local Authorities are required to implement IFRS 16 from 1st April 2024, first reporting in the financial accounts for the year ended March 2025. Page 173
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4 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 2025 Scope 8. The scope of the audit was to review and assess the arrangements for the compliance with IFRS16 as outlined in the Terms of Reference agreed with the Interim Head of Financial Services on 13 March 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 13 March 2025 Fieldwork Commencement 14 March 2025 Draft Report issued 8 May 2025 Management Comments received 8 May 2025 Final Report issued 14 May 2025 Audit and Scrutiny Committee 12 June 2025 Risks 10. The risks considered throughout the audit were: Audit Risk 1 - failure to have procedures in place to ensure compliance with IFRS 16 Audit risk 2 - Failure to account for all leases to be included within the scope of IFRS 16 Audit Risk 3 - failure to implement the requirements of IFRS 16 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 2 to this report. 12. Our overall audit 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 13. We have highlighted one low priority recommendations where we believe there is scope to strengthen the control and governance environment. These are summarised below: Robust procedures should be established and circulated to departments to ensure the lease database is maintained and kept up to date Page 174
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5 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 2025 14. 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 15. 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 Procedures and systems have been put in place to ensure compliance with IFRS 16 Audit Risk 1 Substantial Procedures and systems have been put in place to ensure compliance with IFRS 16. Initial work began in 2020 to start the process of collating information of leases within the Council. In June 2023 the Council’s consultant agency commenced preparation of a Decisions and Policies draft paper and also an Action List to assist with meeting our obligations under IFRS 16. In February 2024 a new Accounting Policies document was finalised, this, applying to lease arrangements where Argyll and Bute Council is the lessee. In addition, in April 2024, the Finance Manager prepared an ‘Implementation of IFRS 16 Accounting for Leases’ document, clearly outlining the requirements of IFRS 16 are and what should be included. It also outlined what needs to be done to meet our obligations under IFRS 16. Although it was not clear whether the ‘Implementation of IFRS 16 Accounting for Leases’ document had been widely circulated it formed part of the preparation for the relevant Finance team. A significant amount of work has been undertaken from the end of 2024, accelerating at the beginning of 2025 to ensure that we the Council has captured all lease agreements which fall within the scope of IFRS 16 and the Code to provide assurance that everything is accounted for in the Councils Financial Statements or the year end March 2025. 2 Communication processes have been put in place Audit Risk 2 Substantial Systems and processes within the Council over the years have resulted in leases being arranged by departments, Page 175
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6 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 2025 between the services and Financial Services to ensure all leases within the scope of IFRS 16 have been accounted for historical leases renewed and/or carried forward, this has led to there being no single complete register for leases throughout the Council. This has resulted in the requirement to gather and collate a significant amount of information, setting up processes to record the information gathered and the necessity to analyse information gathered to assess whether leases fall within the scope of IFRS 16. Extensive communication and engagement with Financial Service and the Departments has been ongoing, with meetings undertaken. Communication process were put in place, commencing in 2020 and continuing throughout the period to 2025 in order to ensure all lease information was gathered from Departments, all third tier managers being contacted in February 2025. In addition meetings were held throughout 2025 with key officers, contacts and in particular procurement and estates. 3 Training has been provided to relevant staff members or specialist services procured in order to ensure compliance with IFRS 16, with systems and processes updated accordingly Audit Risk 3 Substantial Training has been provided to relevant staff members to ensure there is a clear understanding of IFS 16 and our obligations on how to account for lease agreements. Training has been delivered by external providers and has been provided internally to key staff. Training commenced in 2020 with several sessions being delivered by external providers and attended by, predominantly, the Senior Business Support Officer. These early training events focussing mainly on introducing and understanding IFRS 16. In 2021 an IFRS 16 Forum Webinar was attended with further training and workshops being delivered in 2023 and attended by delegates for various department within the Council. Further training was provided throughout 2024 and 2025. 16. Further details of our conclusions against each control objective can be found in Section 3 of this report. Page 176
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7 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 2025 3. Detailed Findings Procedures and systems have been put in place to ensure compliance with IFRS 16 17. All local authorities require to account for leases in accordance with IFRS 16 Leases rom 1 April 2024, first reporting in the financial statements for the year ended 31 March 2025. This, with the exception where adaptations to fit the public sector have been made in the Code of Practice on Local Authority Accounting in the United Kingdom (the “Code”). 18. Systems and processes within the Council over the years have allowed lease agreements to be arranged by departments, historical leases renewed and/or carried forward. This has resulted in there being no single complete register or central overview of leases held throughout the Council. In order to comply with IFRS 16 Finance Staff have undertaken a significant amount of work gathering and setting up a processes to record lease information, in addition to analysing information gathered to assess whether leases fall within the scope of IFRS 16. 19. Policies, processes and systems have been implemented and the Council is on track to fulfil their obligations to comply with IFRS 16 for the financial year end 2025, with extensive work being undertaken to gather, collate, analyse and record lease information. 20. Work on the implementation of IFRS 16 began in 2020, with an initial email being sent from the Senior Business Support Officer, to key staff, requesting the identification of all items currently rented or leased by the Council. An attached spreadsheet, based on a spreadsheet provided by the Council’s leasing advisors, showed the information required to be kept for each item rented or leased by the Council. Following the initial email being circulated in 2020, a lease template was sent out at every subsequent year end. 21. June 2023 the Council’s consultant agency commenced preparation of a Decisions and Policies draft paper and also an Action List to assist with meeting our obligations under IFRS 16. 22. In November 2023, an email was sent to all Finance contacts, Principal Accountants, administration Finance contacts (schools AFAs), finance departmental contacts and procurement, highlighting that the deadline was fast approaching to have a new database up and running to comply with IFRS 16. It outlined that the Senior Accounting assistant had been tasked with gathering as much information and copies of all hired, rental and leased agreements for the whole of the Council whether these agreements were under or over 12 months, that this information was required to enable finance to start populating the new database which was to come in to effect from 1 April 2024. It also highlighted that it was extremely important to have accurate and up to date information and the importance of finance being kept informed going forward of any changes to leases, hires, and contracts. A lease template was attached for completion. 23. In February 2024 a new Accounting Policies document was finalised, this, applying to lease arrangements where Argyll and Bute Council is the lessee. In addition, in April 2024, the Finance Manager prepared an ‘Implementation of IFRS 16 Accounting for Leases’ document, clearly outlining the requirements of IFRS 16 are and what should be included. It also outlined what needed to be done to meet our obligations under IFRS 16. Although it was not clear whether the Page 177
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8 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 2025 ‘Implementation of IFRS 16 Accounting for Leases’ document had been widely circulated it formed part of the preparation for the relevant Finance team. 24. Due to a combination of circumstances and staff changes little progress was made during 2024 until mid-February 2025 when the Executive Director and Section 95 Officer circulated an email to all third tier managers and above explaining IFRS 16, how it affects the services, what’s changing, describing what a lease is, outlining who will decide whether arrangements contain a lease, key dates and what is being asked of the services. The email also stressed that the requirement to notify financial services of any future lease agreements, any changes to existing lease arrangements was ongoing and provided a link to a corporate email address set up for the specific purpose. Importantly a deadline of 25 February 2025 was set for the gathering of information. 25. The Council has entered into a contract to use cloud software, LS2, as its lease register. The LS2 database will store all information required to meet the accounting and disclosure requirements of IFRS 16 on an ongoing basis. The LS2 database was recommended as a solution for the management of leases. By the end of the financial year the Council had obtained, from departments, an extensive list of contract arrangements that may indicate a lease for a Right of Use an asset as defined by IFRS 16 and adapted by the Code. As information was received, Financial Services assessed the information and applied the requirements of the Code to determine if the arrangement was within the scope of IFRS 16 and, if so, whether any exemptions or practical expedients could be applied. In addition, by the end of the financial year 2024-2025, Financial Services had substantially completed the list ready for forwarding to the lease register provider, the initial upload of data being carried out by the provider. The provider has confirmed they are operating on around 2-week turnaround which the Council deems to be satisfactory in terms of not hindering the production of the annual financial statements. 26. Continuing to meet the requirements of IFRS 16 will rely on good communication with departments and a clear understanding of the processes involved for updating Financial Services with new lease arrangements or changes to existing lease arrangements. In addition, a large part of the future recording and maintenance of the data base will be important to ensure continued compliance with IFRS 16. The Council’s Financial Services department will operate the database post-transition/implementation phase, adding and amending lease data. In addition to lease information that is provided to the team as new leases are entered into or contract variations occur, information will be sought from other Council departments to confirm that no changes have occurred other than those notified to Financial Services. Action Plan 1 Communication processes have been put in place between the services and Financial Services to ensure all leases within the scope of IFRS 16 have been accounted for 27. The success of gathering information relied on robust communication across the Council in particular with finance staff, procurement staff, budget holders, the HSCP, LiveArgyll and departments. Regular communication and support has been provided by our Treasury advisors. 28. Communication process were put in place, commencing in 2020 and continuing throughout the period to 2025 in order to ensure all lease information was gathered from Departments, all third tier managers being contacted in February 2025. In addition meetings were held throughout 2025 with key officers, contacts and in particular procurement and estates. Page 178
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9 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 2025 29. Budget holders were contacted and provided with guidance on IFRS 16 in relation to leases and the importance of providing information to Financial Services. In addition, DMT’s (Department Management Teams) were presented with information on what is required in terms of IFRS. Training has been provided to relevant staff members or specialist services procured in order to ensure compliance with IFRS 16, with systems and processes updated accordingly 30. Training has been provided to relevant staff members to ensure there is a clear understanding of IFS 16 and our obligations on how to account for lease agreements. Training has been delivered by external providers and has been provided internally to key staff. 31. Training commenced in 2020 with several sessions being delivered by external providers and attended by, predominantly, the Senior Business Support Officer. These early training events focussing mainly on introducing and understanding IFRS 16. In 2021 an IFRS 16 Forum Webinar was attended with further training and workshops being delivered in 2023 and attended by delegates for various department within the Council. 32. During 2024 and 2025 a number of training courses were delivered by our leasing advisors, attended by a number of finance staff. A further technical workshop was delivered by CIPFA in 2025 which was attended by the Finance Manager. Page 179
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Appendix 1 – Action Plan No Finding Risk Agreed Action Responsibility / Due Date Low 4 Database Maintenance Continuing to meet the requirements of IFRS 16 will rely on good communication with departments and a clear understanding of the processes involved for updating Financial Services with new lease arrangements or changes to existing lease arrangements. Failure to maintain robust lease arrangement records Policy document and training will be developed to provide a framework for ongoing compliance with IFRS 16 Leases, and will be reviewed and updated as appropriate. Year-end processes will be developed to provide additional checks and Heads of Service will be provided with a current list of leases for their sign off. Finance Manager 31 December 2025 31 May 2026 Page 180
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11 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 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 181
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12 Argyll and Bute Council – Internal Audit Report – Preparedness for IFRS16, May 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 182
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LiveArgyll Internal Audit Report May 2025 FINAL High Medium Low VFM Number of Findings 0 1 1 0 Disclosure Checks – Protecting Vulnerable Groups Audit Opinion: Substantial Page 183 Agenda Item 7g
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2 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 2025 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 – Action Plan ..................................................................................................................... 11 Appendix 2 – Audit Opinion ................................................................................................................. 13 Contact Details Internal Auditor: Mhairi Weldon Telephone: 01546 604294 e-mail: Mhairi.weldon@argyll-bute.gov.uk www.argyll-bute.gov.uk Page 184
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3 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 2025 1. Executive Summary Introduction 1. As part of the 2024/25 internal audit plan, approved by the Audit & Scrutiny Committee in March 2024, we have undertaken an audit of LiveArgyll’s system of internal control and governance in relation to Disclosure Checks – Protecting Vulnerable Groups (PVG). 2. The audit was conducted in accordance with the Public Sector Internal Audit Standards (PSIAS) with our conclusions based on discussions with LiveArgyll 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 LiveArgyll. 3. The contents of this report have been agreed with the appropriate LiveArgyll and Argyll and Bute Council (The 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. The PVG scheme is managed by Disclosure Scotland. It helps ensure people who are unsuitable to work with children and protected adults cannot undertake regulated roles with these vulnerable groups. 5. From 1 April 2025, it is a legal requirement for individuals to be a member of the PVG scheme when carrying out a regulated role with children, protected adults, or both. Organisations must ensure that individuals who are to carry out a regulated role (paid or voluntary) have PVG scheme membership from 1 April 2025 onwards. Failure to do so will be considered an offence. 6. It is also an offence for individuals to seek, agree to do or carry out a regulated role if they are barred from doing so or for organisations to offer a regulated role to someone who is barred from that specific type of regulated role. Penalties for these offences are up to five years imprisonment and/or a fine up to the statutory maximum. 7. Schedules 2 and 3 of the PVG Act 2007 provides listings of regulated roles in working with children and protected adults. The listings are comprehensive and roles that are relevant to services provided by LiveArgyll include: • Education and training – Teaching, instructing or delivering training • Leisure activities – Providing cultural, leisure, social or recreational activities • Sports activities – Coaching in relation to sports or physical activity 8. Any posts that fall within the scope of the PVG scheme requires the successful candidate to obtain membership of the scheme prior to any unconditional offer of appointment being made, additionally, any current employee changing to a regulated role must have the necessary membership in place. 9. The disclosure process includes a requirement for applicants to share a copy of their disclosure with the accredited body that countersigned the application from 1 April 2025, or to notify Disclosure Scotland that they will seek a review of the content of their disclosure result. Page 185
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4 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 2025 10. Organisations should notify Disclosure Scotland when a PVG scheme member stops doing regulated work with them to ensure compliance with data protection legislation. 11. The Council operates as the lead signatory on the overarching account with Disclosure Scotland, including PVG requirements for LiveArgyll employees and volunteers. All correspondence on behalf of LiveArgyll, therefore, takes place through the Council’s Human Resources (HR) and Education services. Scope 12. The scope of the audit was to assess the systems in place for the processing of staff and volunteer Disclosure Checks for those working and volunteering with vulnerable individuals. This review covered staff employed and volunteers engaged by LiveArgyll in such roles as outlined in the Terms of Reference agreed with the Chief Officer on 01 May 2025. Key Dates 13. 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 01 May 2025 Fieldwork Commencement 18 March 2025 Draft Report issued 16 May 2025 Management Comments received 29 May 2025 Final Report issued 29 May 2025 Audit and Scrutiny Committee 12 June 2025 Risks 14. The risks considered throughout the audit were: • LA RR People 3: Failure to ensure young people and vulnerable adults are safeguarded when engaging with LiveArgyll • Audit Risk 1: Failure to comply with requirements of the Protection of Vulnerable Groups (Scotland) Act 2007 Audit Opinion 15. 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 are provided in Appendix 2 to this report. 16. Our overall audit 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 Page 186
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5 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 2025 residual risk that are slightly above an acceptable level and need to be addressed within a reasonable timescale. Recommendations 17. We have highlighted one medium priority recommendations and one low priority recommendations where we believe there is scope to strengthen the control and governance environment. These are summarised below: • Management should be reminded of the importance of ensuring that all documentation in support of employee PVG applications is checked and passed to the Council’s HR team in its entirety for retention purpose. • Version control should be added to the managers guide to recruitment and the Safeguarding policy should have existing errors corrected during review to update for new PVG legislation requirements. 18. 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 19. Exhibit 1 sets out the control objectives identified during the planning phase of the audit and our assessment against each objective. Exhibit 2 – Summary Assessment of Control Objectives Control Objective Link to Risk Assessment Summary Conclusion 1 Policies, procedures and processes are in place to manage PVG requirements, are regularly reviewed and clearly guide management to identify regulated roles requiring PVG scheme membership All Risks Substantial LiveArgyll operates using the Council’s policies, processes and guidance in respect of recruitment and PVG requirements. These documents are available to all employees and are due to be updated to incorporate new legislation, however there is no version control on one document and some historic errors have not been corrected on another. Guidance is available and followed to identify roles requiring PVG membership and comprehensive information is provided to applicants during advertising and recruitment. 2 Job descriptions and volunteer roles clearly identify where PVG membership is required and mechanisms are in place to ensure membership is in place prior to All Risks Substantial Records of employee and volunteer applications and status are maintained. Regulated roles requiring PVG membership are clearly communicated at recruitment, and management are advised of relevant documentation required to support applications. PVG membership had been confirmed for all relevant employees and volunteers within the samples selected, however, Page 187
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6 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 2025 Control Objective Link to Risk Assessment Summary Conclusion commencing these roles all supporting documentation could not be located for 2 employees. 3 Arrangements are in place to follow-up on allegations made, updates provided by Disclosure Scotland and to renew membership after 5 years All Risks Substantial Safeguarding training is provided at induction and periodically thereafter with records maintained at each LiveArgyll facility. A Safeguarding Lead and Officers have been appointed and are appropriately positioned within LiveArgyll to progress any reported matters regarding safeguarding. A robust disciplinary process is in place to progress any safeguarding concerns arising. Plans for routine renewal of PVG membership will be considered once the current exercise to process new PVGs as a result of changed legislation is complete. 4 Arrangements are in place to confirm that partner organisations have valid PVG membership and training in place All Risks Substantial Independent organisations are responsible for ensuring their own compliance with PVG legislation. To use LiveArgyll facilities, these organisations are required to indicate compliance on their registration and booking information and are subject to periodic sample checking for ongoing compliance. Any organisation indicating non-compliance will be refused use of the facility. 20. Further details of our conclusions against each control objective can be found in Section 3 of this report. 3. Detailed Findings Policies, procedures and processes are in place to manage PVG requirements, are regularly reviewed and clearly guide management to identify regulated roles requiring PVG scheme membership 21. LiveArgyll has adopted the Council’s policies and processes in respect of recruitment and safeguarding with some adjustments made to accommodate local requirements. The Council’s suite of documentation is available via the HUB intranet site and MyCouncilWorks resource website and are accessible to management and employees with corporate email accounts. The LiveArgyll specific versions are available to relevant employees on a shared drive within the corporate server area. 22. Both the LiveArgyll specific Manager’s Guide to Recruitment and Safeguarding Policy are planned to be updated to incorporate new legislation. The Managers Guide is comprehensive, providing clear guidance on PVG requirements when recruiting, however, it has no version control applied to help ensure the most up-to-date guidance is being used. The Safeguarding Page 188
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7 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 2025 Policy, is also comprehensive, however, it contains historic errors regarding page numbering and an incorrect reference to a PVG policy. The errors had previously been identified by the Senior Business Support Officer and amendments requested but these have not yet been completed and made available to the relevant employees. Action Plan 2 23. The need for PVG membership is most commonly identified during recruitment or transfer to regulated roles. The overarching recruitment process adopted by the Council and LiveArgyll is embedded within the MyJobScotland recruitment portal used by local authorities and other public sector bodies in Scotland. Within this portal, the need for PVG membership is communicated to all applicants alongside the specific role requirements to help guide the applicant through the recruitment process and provide the relevant supporting documentation. Where PVG membership is a requirement of a specific role, all applicants are advised at interview stage that no formal offer of employment is made pending PVG clearance. 24. Roles requiring PVG membership are identified by management in consideration of duties to be performed and who the employee is likely to interact with, additionally, guidance provided within the Disclosure Scotland website and details stated within the Protection of Vulnerable Groups (Scotland) Act 2007 and Disclosure (Scotland) Act 2020 are referred to. All job descriptions are currently under review to ensure compliance with updated legislative requirements which extends the necessity for PVG membership to roles where it may not have previously been required, this includes both frontline employees and their respective managers throughout the LiveArgyll hierarchy. 25. The Council is the “umbrella” organisation for progressing PVG scheme memberships on behalf of LiveArgyll, and as such, it submits all applications to Disclosure Scotland via an online portal and receives outcomes that are passed onto LiveArgyll via confirmation email. 26. The Council’s new HR system contains a user defined field to identify whether a post requires the holder to be a member of the PVG scheme and the supporting documentation is retained on the associated document management system. 27. Volunteer information is not retained on the HR system, instead, a database is maintained by the Council’s Education team to monitor PVG status. Documentation required in support of PVG applications for volunteers is not retained once confirmation of membership is received so as to comply with data protection requirements. Job descriptions and volunteer roles clearly identify where PVG membership is required and mechanisms are in place to ensure membership is in place prior to commencing these roles 28. LiveArgyll maintain a register of PVG applications sent to the Council for processing dating from January 2023. A full list of current post holders requiring membership of the PVG scheme was requested from the Council’s HR team and this was used to select a sample for review to assess if PVGs were in place and that the application process was followed correctly. 29. Job adverts are not retained in the individual’s HR file, these are posted on the MyJobScotland recruitment portal and can be viewed while active and for a period when recruitment has completed. Adverts state that applicants should note that the post requires PVG membership in relation to the specific protected groups for which the role covers i.e. children or vulnerable adults. Page 189
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8 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 2025 30. Job descriptions do not routinely include details of whether the post is considered to be a regulated role or whether PVG membership is required, however, where the post does entail a regulated role, a separate information document is included within the portal advising this is the case and the additional information required to be provided to support the application process. 31. An additional pack of documents is provided to the recruiting manager to ensure all information required in support of a PVG application is gathered, verified and passed to their relevant colleagues for processing. 32. A sample of 15 LiveArgyll employees requiring PVG membership was selected for review to confirm that the appropriate supporting documentation had been provided to management for passing to HR to progress a PVG application. The appropriate documentation was located for all but 2 employees, one of whom was transferred from Education and one whose recruitment pre- dates information held on “Cryoserver” (email archive) for retrieval. We are advised that the appropriate documentation must have been provided to enable the application to progress, however, this could not be located at the time of the audit. Action Plan 1 33. Evidence of PVG membership was located for 13 of the 15 employees reviewed, one did not require a PVG and one was in progress due to updated legislation. 34. The same sample was reviewed to assess if the appointment commenced prior to confirmation of PVG membership and this was found to be satisfactory taking into account a brief supervised induction period, changes to roles and new legislation requirements. 35. A full list of current volunteers requiring membership of the PVG scheme was requested from the Council’s Education team and this was used to select a sample of 15 for review to assess if PVG memberships were in place and that the application process was followed correctly. 36. The LiveArgyll website provides a dedicated area for volunteering allowing interested parties to obtain information and apply for roles they are interested in, specific roles are not advertised as vacancies for filling. 37. A suite of documents was made available for review including a volunteer policy, agreement and forms for completion and were found to be comprehensive in providing the volunteer and management with relevant and useful information regarding PVG membership requirements. 38. As with employees, volunteers are required to provide 3 forms of ID to enable their PVG application to be processed. These documents along with the application form are passed to the Council’s Education team and deleted by both parties upon receipt of confirmation of PVG scheme membership so as to comply with data protection requirements. 39. Confirmation of PVG membership was provided for all 15 volunteers within the sample selected and whilst there is no evidence of volunteer start date, we are advised that roles do not commence prior to receipt of PVG confirmation in compliance with the Safeguarding Operating procedure. 40. The Council’s HR team routinely advise Disclosure Scotland when employees undertaking regulated roles leave the Council/LiveArgyll to remove the noted interest in the individual. The Council’s Education team also indicate that Disclosure Scotland are informed of leavers upon completion of their annual review of volunteers. Page 190
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9 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 2025 Arrangements are in place to follow-up on allegations made, updates provided by Disclosure Scotland and to renew membership after 5 years 41. The Safeguarding Policy states that induction and ongoing training is provided to employees, safeguarding training is also included within employee conversations and refresher training provided every 3 years. Each LiveArgyll facility retains its own training records and these were reviewed for 2 facilities where safeguarding training was evidenced as having been completed between January 2024 and March 2025. 42. The Safeguarding Policy is available within the staff rooms of each facility and includes the named Designated Safeguarding Lead (DSL) and Officers (DSO) who are appropriately positioned within the organisation to take action regarding any reported matters. 43. LiveArgyll follows the Council’s disciplinary process, this is a robust process guided by the Council’s HR team and Disclosure Scotland would be notified if there were any reportable findings. Similarly, should the Council/LiveArgyll be notified of any concerns directly from Disclosure Scotland, an investigation would take place in accordance with the Disciplinary process. Results of any investigation would be assessed on an individual basis to arrive at a decision with the employee/volunteer placed on suspension in the intervening period. To date, there has been no requirement to follow this process for either employees or volunteers. 44. From 1 April 2026, lifetime membership of the PVG scheme will end and be replaced by a time- limited membership requiring to be renewed every 5 years. The Council’s HR system is under development to generate alerts when PVG renewals are due and will liaise with LiveArgyll in respect of their employees. In addition to this planned functionality of the HR system, LiveArgyll currently maintains a spreadsheet containing date fields that will enable identification of employees who are due for PVG renewal. LiveArgyll has commenced an exercise to identify employees whose PVG membership requires to be renewed in advance of the 1 April 2026 implementation date and will be progressed upon completion of the current exercise to arrange PVG membership for employees whose roles newly require PVG membership as a result of the recent legislative changes. 45. Initial discussions have taken place within the Education team regarding renewal requirements of PVG membership for volunteers. The PVG records maintained within the database contain the relevant date fields required to identify volunteers approaching their renewal dates and management will be informed using the same communication links as the annual review of volunteers. Arrangements are in place to confirm that partner organisations have valid PVG membership and training in place 46. Independent organisations using LiveArgyll facilities may opt for accreditation to demonstrate their commitment to being safe, well organised, inclusive and making a difference to their local community. Accreditation must be renewed annually and is encouraged, it also provides the additional benefits of discounts, recognition and support from LiveArgyll. As part of the accreditation requirement, organisations must have PVG processes and safeguarding policies in place unless they provide assurance that no under 18s or vulnerable adults participate. 47. The facility booking form includes a section advising that it is the responsibility of the independent organisation to ensure compliance with the PVG Act where relevant and a link to Page 191
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10 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 2025 the national guidance is provided for further information. Any organisation indicating non- compliance will be refused use of the facility. 48. Independent organisations using LiveArgyll facilities are subject to a periodic sample check to ensure ongoing compliance with PVG requirements and other specific criteria. Page 192
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Appendix 1 – Action Plan No Finding Risk Agreed Action Responsibility / Due Date Medium 1 PVG application Supporting ID documentation Finding: The appropriate supporting documentation to progress a PVG application was located for all but 2 employees, one of whom was transferred from a long- term role in Education and one whose recruitment pre- dates information held on “Cryoserver” for retrieval. Recommendation: Whilst these are exceptional and historical issues, it would be prudent to remind management of the importance of ensuring that all supporting documentation is checked and provided to HR for retention in support of employee’s PVG applications. PVG may be processed based on provision of insufficient/incorrect documentation Communication to all managers reminding them of the importance of ensuring that all supporting documentation is sent to LiveArgyll HR to be checked and documented. Services and Support Manager 02 June 2025 Low 2 Policies, Procedures & Guidance Finding: The Manager’s Guide to Recruitment lacks version control to help users ensure they are using the most current and up-to-date version and the Safeguarding Policy requires amendment to correct/remove errors. Recommendation: When updating documentation to incorporate new legislation, Management should ensure that version control is applied and all errors corrected/removed. Managers and employees may refer to and follow expired or erroneous guidance Document control protocols in relation to legislative updates will be reviewed and the process updated where needed. Services and Support Manager 31 July 2025 Page 193
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12 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 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 194
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13 LiveArgyll – Internal Audit Report – Disclosure Checks - PVG, May 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 195
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 12 JUNE 2025 INTERNAL AUDIT – ANNUAL REPORT 2024/25 1.0 INTRODUCTION 1.1 The purpose of this report is to advise the Audit and Scrutiny Committee (the Committee) of the work undertaken by Internal Audit in respect of the Annual Audit Plan 2024/25 and advise the Committee 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. 1.2 The Public Sector Internal Audit Standards (PSIAS) became effective on 1st April 2013 and remained valid until 31 March 2025, required that: “The chief audit executive [ABC: Chief Internal Auditor] must deliver an annual internal audit opinion and report that can be used by the organisation to inform its governance statement. The annual internal audit opinion must conclude on the overall adequacy and effectiveness of the organisation’s framework of governance, risk management and control. The annual report must also include a statement on conformance with the Public Sector Internal Audit Standards and the results of the quality assurance and improvement programme.” 1.3 Attached as appendices to this report are: • Appendix 1 – Internal Audit Annual Report and Summary of the audits completed in 2024/25 • Appendix 2 – Internal Audit Opinion for 2024/25 2.0 RECOMMENDATIONS 2.1 The Audit and Scrutiny Committee endorses the content of this report and the associated annual opinion of the CIA. 3.0 DETAIL 3.1 Internal Audit is an independent and objective assurance function designed to add value and improve the Council's operations. It helps the Council accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the Council's risk management, internal control and governance processes. Page 197 Agenda Item 8
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3.2 Internal Audit's purpose, authority and responsibilities are set out in detail in the Internal Audit Charter, which was most recently approved by the Committee in March 2025. Internal Audit reports its outputs regularly throughout the year to the Committee. The Committee also approves Internal Audit’s annual plan and monitors the performance of the function. 3.3 The risk based audits contained within the 2024/25 Internal Audit Annual Plan are shown in the table included at Appendix 1 page 12. This shows the overall audit opinion for each audit and the number and significance of agreed actions. 3.4 Internal audit activity is planned to enable an independent annual opinion to be given by the CIA on the adequacy and effectiveness of internal controls within the authority, including the systems that achieve the corporate objectives of the Council and those that manage the material risks faced by the authority. It should be noted, however, that the presence of an effective internal audit function contributes toward, but is not a substitute for, effective control and it is primarily the responsibility of line management to establish internal controls so that the Council's activities are conducted in an efficient manner, to ensure that management policies and directives are adhered to and that assets and records are safeguarded. 3.5 Internal Audit operated during financial year 2024/25 and reported directly to Kirsty Flanagan as Section 95 Officer. I also have unrestricted access to those charged with governance, specifically: Elected Members; the Chief Executive; Executive Directors including the Executive Director who is the Council’s Monitoring Officer. In addition, Internal Audit staff have unrestricted access to all documents, systems and information necessary to reach an opinion or view on any matter under consideration. 3.6 Internal Audit activity during the year was undertaken in accordance with the revised Internal Audit Annual Plan. 3.7 There were no substantial changes made to the 2024/25 audit plan. Three reviews relating to ‘New Roads and Street Works Coordination’ ‘Eclipse post implementation’ and ‘Roads and Flood Prevention’ were cancelled due to a variety of reasons, respectively ranging from recent work having been undertaken internally, postponement to another financial year and a national review to be undertaken in the specific area. 3.8 I am pleased to report that, successful attempts have been made to address the vast majority of outstanding historical recommendations with close ongoing monitoring by Internal Audit and SMT. Council officers have continued to make progress in terms of implementing agreed audit recommendations, despite challenging and competing demands and finite resources. Furthermore, there are robust follow up procedures in place with reports taken to the SMT on a quarterly basis and reported as a Page 198
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standing item on the Committee’s agenda. 3.9 There is a formal requirement for me to prepare an annual opinion on the Council’s internal control system. The opinion is presented to members of the Committee and is intended to provide independent and objective assurance as to the adequacy and effectiveness of internal controls within the Council. 3.10 In addition to the work carried out by internal audit, my opinion is also informed by: • the work of External Audit • the work of other external inspection agencies who report on the Council’s work • statements of assurances provided by the Chief Executive, Executive Directors and Heads of Service providing their opinion on the effectiveness of control, governance and risk management within their areas of responsibility. 3.11 My evaluation of the control environment is informed by these sources and in bringing these together, consideration has been given to whether there is evidence that any key controls are absent, inadequate or ineffective and whether the existence of any weaknesses identified, taken independently or with other findings, significantly impairs the Council's overall systems of internal control. Wider issues relating to the Council's corporate governance and risk management arrangements have also been considered. 3.12 The nature of individual audit assignments is such that most Internal Audit reports identify some weaknesses or areas where scope for improvement exists. However, I am pleased to report that, generally across the Council, there continues to be a strong recognition amongst management of the importance of proportionate but effective internal controls. Senior management has also established an operating culture where good standards of governance are seen as a key requirement in the way in which the Council conducts its activities. 3.13 During work undertaken in 2024/25 there have been instances where the control environment was not strong enough or complied with sufficiently to prevent risks to the organisation. In these cases, Internal Audit has made recommendations to further improve the systems of control and compliance. Although sometimes significant to the control environment in place for the individual system or areas that have been audited, I do not consider these weaknesses material enough to have a significant impact on the overall opinion on the adequacy of the Council's control environment at the year end. 3.14 My formal annual Internal Audit opinion on the soundness of the Council's internal control systems is presented in my Internal Audit Annual Report in particular at Appendix 2. Overall, the results of the work of Internal Audit in 2024/25 taken with other information available Page 199
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to me did not lead me to conclude that the Council's overall systems of internal control were significantly or materially impaired. 3.15 It has been a particularly busy year for the internal audit team as they have supported the Chief Internal Auditor in the further development of our work practices including working closely with the counter fraud team, together with the preparation for the implementation of the new Global Internal audit Standards (GIAS). The team have worked hard to deliver the internal audit plan, I am pleased to report that one of our trainees has completed the Chartered Institute of Internal Audit qualification and has been placed into the vacant auditor post. Interim arrangements will continue until other staff members have qualified and training plans are sufficiently progressed, this will support staff in developing experience along with underpinning professional qualifications in order to improve resilience. It is my opinion that the profile of Internal Audit continues to improve within the Council as does the quality of the work it delivers and is evident in the feedback received from post-audit surveys indicating a satisfaction rate of 97%. 3.16 As required by the PSIAS a five-yearly external assessment took place in 2022-23 and the service was found to be fully compliant in all 14 areas of review. Two minor housekeeping issues were identified and these have now been fully implemented. All identified actions for improvement have been tracked through our quality assurance and improvement programme with updates reported to Committee as part of a standard agenda item. The next scheduled external independent assessment is in 2027. 3.17 On behalf of my team I would like to thank all Council staff who have assisted Internal Audit during the course of our work throughout 2024/25 and to thank senior management and elected Members for the consideration and due regard given to our work. It is important that good relationships exist in order to promote and improve controls within the Council and it is clear that such relationships are in place. 4.0 CONCLUSION 4.1 Subject to the matters listed in the Annual Governance Statement reasonable/satisfactory assurance can be taken that the systems of governance and internal control are operating effectively. Internal Audit continues to develop and improve as a service. Our Internal Audit Annual Report 2024/25 on page 10 provides a dashboard of our opinion in each area of Governance, Risk Management and Internal Control. 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 – The implementation of recommendations contained in audit reports may Page 200
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help mitigate the risk to the Council. 5.7 Climate Change: none 5.8 Fairer Scotland Duty: none 5.9 Equalities: none 5.10 Consumer Duty: none 5.11 Island Communities: none 5.12 Children’s Rights and Wellbeing: none Paul Macaskill Chief Internal Auditor 12 June 2025 For further information contact: Paul Macaskill, Chief Internal Auditor Tel: 01436 604108 Email: paul.macaskill@argyll-bute.gov.uk APPENDICES 1. Internal Audit Annual Report 2024/25, Counter Fraud update and summary of planned work in 2024/25 2. The Certificate of internal Audit Opinion 2024/25 Page 201
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ARGYLL AND BUTE COUNCIL COMHAIRLE EARRA-GHÀIDHEAL AGUS BHÒID INTERNAL AUDIT ANNUAL REPORT 2024-25 Page 203
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2 Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 Contents Introduction ..................................................................................................................................................................................................................................... 1 Basis of opinion ............................................................................................................................................................................................................................... 2 Analysis of the Internal Audit Coverage and Performance ........................................................................................................................................................... 4 Quality Assurance and Improvement Programme ........................................................................................................................................................................ 5 Confirmation of Independence ....................................................................................................................................................................................................... 8 Counter Fraud Services ................................................................................................................................................................................................................... 8 Opinion, Conclusions and Observations ....................................................................................................................................................................................... 10 Appendix 1 – Summary of Internal Audit Plan 2024/25 .............................................................................................................................................................. 13 Appendix 2 – Certificate of Internal Audit Opinion 2024/25 ....................................................................................................................................................... 14 Contact Details Chief Internal Auditor: Paul Macaskill Telephone: 01546 604108 e-mail: paul.macaskill@argyll-bute.co.uk www.argyll-bute.gov.uk Page 204
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 Introduction 1. This report aims to provide the Audit & Scrutiny Committee with an evaluation of elements of Argyll and Bute Council’s internal control, risk management and corporate governance systems based on our work during 2024/25 and to summarise the Internal Audit coverage in the year. 2. Corporate governance is the system by which local authorities direct and control their functions and relate to their communities. The three fundamental principles of corporate governance are openness, integrity and accountability. A sound system of internal control must be maintained to support Councils in operating effective corporate governance arrangements. 3. Good governance practice and internal control suggests that:- • Council Members should set appropriate policies on internal control and seek regular assurance that the system of internal control is functioning effectively; • management should implement the Council’s policies on internal control and design, implement and monitor suitable systems; • a well-established and effective Audit and Scrutiny function should be in place within the Council; • a local Code of Corporate Governance exists and is reviewed annually; and • Internal Audit should provide an independent assessment of the adequacy of the system of internal control. 4. In Argyll and Bute Council a system of good governance is in existence and this is supported by a variety of policies, codes and guidance to promote expected conduct of its business on a day to day basis. The national framework ‘Delivering Good Governance in Local government’ which was published by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE) in April 2016 aims to assist authorities in reviewing and assessing their own governance arrangements. The Council has a ‘Local Code of Corporate Governance’ in place and these arrangements are reviewed periodically and improvements required will be implemented, where necessary. 5. To support the governance statement the Council will need to carry out a review of the effectiveness of internal control, deriving evidence from a variety of sources including Internal Audit, senior managers within the authority with responsibility for developing and maintaining internal control and cognisance of external/internal audit recommendations along with recommendations of other regulatory bodies. 6. This report provides internal audit information in support of the assurance statements and covers the period from 1 April 2024 to 31 March 2025. The attached Appendix reports the Internal Audit activity against the operational audit plan Page 205
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 Basis of opinion 7. We are able to provide assurance on the adequacy of internal controls and governance arrangements within the Council arising only from the results of Internal Audit reviews we have completed during the period in accordance with the programme of Internal Audit work approved by the Audit and Scrutiny Committee. In this context, it is important to note that: (a) it is Management’s responsibility to maintain internal control and good governance arrangements on an ongoing basis; (b) the Internal Audit function forms part of the overall internal control and governance structure of the organisation; (c) while we have planned our work so that we have a reasonable expectation of detecting significant control and governance weakness, internal audit procedures alone do not prevent the possibility of poor judgement in decision making, human error, control processes being deliberately circumvented by employees and others, management overriding controls and the occurrence of unforeseeable circumstances; (d) a sound system of corporate governance and internal control provides reasonable but not absolute assurance that the Council will not be hindered in achieving its objectives or in the orderly and legitimate conduct of its business by circumstances which may reasonably be foreseen. However, a system of corporate governance and internal control cannot provide protection with certainty against any organisation failing to meet its objectives or all material errors, losses, fraud or breaches of laws or regulations; (e) it is the responsibility of Internal Audit to assess the adequacy of the internal control and governance processes as far as it is reasonably possible by reviewing arrangements put in place by management and to perform testing to confirm whether those controls were operating for the period under review; and (f) reasonable expectations of senior management, the Audit and Scrutiny Committee and other stakeholders have been taken into account in terms of our duty to report all matters which come to our attention for the period under review. 8. In our reports issued to date we have made recommendations, where appropriate, to improve internal controls and promote good governance. On the basis of our sample testing of key controls, we concluded that these controls were generally operating as expected during the period under review, with some exceptions that have been reported to management. Appropriate responses to the recommendations made in our reports have been obtained and, if actioned, should provide management with additional comfort that the system of control operates as intended. 9. Summaries of the issues arising in relation to each system or activity covered by the internal audit work in 2024/25 have been reported to management and the Audit and Scrutiny Committee throughout the year. We do not, therefore, propose to repeat the matters in this report. There have been no significant issues which have come to our attention that have not been reported to management. 10. The services provided to the Council in 2024/25 by Internal Audit and Counter Fraud Services are summarised below:- Page 206
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 Analysis of the Internal Audit Coverage and Performance 11. In respect of 2024/25 the Internal Audit days planned and delivered can be summarised as follows: 12. We have been able to achieve 100% of the agreed 2024/25 audit plan. In addition to the Council’s audit plan we have completed the agreed work for the Health and Social Care Partnership (HSCP) contract and also that for LiveArgyll. The work demands on the service continue to be high and this is expected to continue, therefore, our focus will remain on our high risk work and core continuous monitoring of our key financial systems. Notwithstanding, the service remains focused on providing a high quality service and output supporting the Council to achieve its desired goals and outcomes for the communities we serve. We have had sufficient resources provided to us in 2024/25 to fulfil the approved internal audit plan and our other commitments with the HSCP, LiveArgyll and agreed Scrutiny work. 13. We have worked with Council services and our appointed External Auditors, Forvis Mazars, to focus our work on those areas of the highest business risk to the Council and those on which External Audit may wish to place reliance. 14. At Appendix 1, we provide details of the internal audit work undertaken in 2024/25. 0 20 40 60 80 100 2022/23 2023/24 2024/25 Percentage of Internal Audit Plan Completed Page 208
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 15. In 2024/25, we issued 15 reports, which contained a variety of recommendations to improve the system of control, along with verification work in a further 3 areas. Follow up internal audit work has been and will continue to be undertaken to establish if the more significant recommendations made in those reports have been implemented as agreed. Three planned reviews were cancelled due 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, respectively, these areas will be considered as part of future risk assessed internal audit planning processes, these were noted as amendments to the audit plan. During the year we undertook quarterly ‘follow up’ arrangements to report progress made by management in relation to previously agreed recommendations. In addition, regular reporting of outstanding recommendations are considered by the Council’s Strategic Management Team (SMT) on a regular basis to monitor progress and where appropriate seek that managers resolve any outstanding matters where these have gone beyond agreed implementation dates; SMT are supportive in our work and this is helpful in our continued monitoring and progress assessments until such time as our recommendations are fully implemented. 16. We also submitted formal progress reports to the Audit & Scrutiny Committee throughout the course of the year. Quality Assurance and Improvement Programme 17. Internal Audit monitors its performance in a number of ways. This allows us the opportunity to gauge the effectiveness of our service and may inform future improvements. Principally, we monitor performance by the use of client questionnaires which are issued after each piece of work and allow client departments to feedback contributions we have made to improve control, address any areas of value for money and raise any concerns. We are pleased to report, from the questionnaires returned, that clients are generally very satisfied with our service. In addition, Internal Audit produce quarterly and annual reports to the Audit and Scrutiny Committee allowing our progress to be monitored. 18. CIPFA has issued a statement that sets out the role of the Head of Internal Audit in Local Government in 2019. The purpose of this statement is to outline the core activities and behaviours that belong to the role of Head of Internal Audit and how these should influence and champion good governance, risk management and internal control. The Council’s Internal Audit section conforms to the Statement. 19. CIPFA and the Chartered Institute of Internal Auditors (CIIA) have reviewed the guidance and made amendments in order to have a common set of standards across the whole public sector. These changes are primarily based on the International Professional Practices Framework (IPPF). The standards termed Public Sector Internal Audit Standards (PSIAS) became effective in April 2013 and amended in 2017. It should, however, be noted that a comprehensive review of the IPPF has been completed and a new set of standards called the ‘Global Internal Audit Standards’ (GIAS) have been implemented in April 2025 for local government. New and updated Standards reflecting these changes have been issued to public bodies and a gap analysis has been undertaken to identify changes that Internal Audit and the Committee may need to make to our documentation and processes in order to achieve full compliance. Page 209
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 20. A key requirement of the PSIAS is that Internal Audit sections are required to state whether or not they conform to these standards as part of their annual reporting. In addition, they should outline the results of the quality assurance and improvement programme together with progress against any improvements identified during this assessment. 21. In 2022/23 financial year, Internal Audit were subject to an external evaluation against the PSIAS, Local Government Application note and Quality Assurance Improvement Programme. It is a requirement of the new standards that all public sector Internal Audit sections will require to be independently assessed against these standards during a five year rolling period. The assessment found that in all 14 categories the Council’s Internal Audit section were fully compliant. This is the highest level of standard attainable in the assessment and a report outlining the findings was presented to the Council’s Audit and Scrutiny Committee in March 2023. Arrangements for the next review will be scheduled in for January 2028. The table below outlines each of the 14 categories of assessment and the level of compliance/conformance achieved. Assessment Area Level of Conformance External Independent EQA 2023 Level of Conformance Internal Self-Assessment 2025 Mission of Internal Audit and Core Principles Fully Conforms Fully Conforms Definition of Internal Auditing Fully Conforms Fully Conforms Code of Ethics Fully Conforms Fully Conforms Purpose, Authority and Responsibility Fully Conforms Fully Conforms Independence and Objectivity Fully Conforms Fully Conforms Proficiency and Due Professional Care Fully Conforms Fully Conforms Quality Assurance and Improvement Programme Fully Conforms Fully Conforms Managing the Internal Audit Activity Fully Conforms Fully Conforms Nature of Work Fully Conforms Fully Conforms Engagement Planning Fully Conforms Fully Conforms Performing the Engagement Fully Conforms Fully Conforms Page 210
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 Assessment Area Level of Conformance External Independent EQA 2023 Level of Conformance Internal Self-Assessment 2025 Communicating Results Fully Conforms Fully Conforms Monitoring Progress Fully Conforms Fully Conforms Communicating the Acceptance of Risks Fully Conforms Fully Conforms Assessment Gradings: Fully Conforms Generally Conforms Partially Conforms Does Not Conform 22. In terms of the findings of the EQA a number of areas of good practice were identified: • Full compliance with the PSIAS; • Qualified Internal Auditors with extensive local authority experience; • Internal Audit staff who are enthusiastic, experienced and focused on providing a good and professional service; • Well defined procedures which ensures that the service provided is robust, reliable and efficient in carrying out audit activity; and • The ability of External Audit to place reliance on the work of Internal Audit. The overall conclusion was that the Internal Audit Service Fully Conforms to the PSIAS. It was, however, noted that the two areas for improvement highlighted in the report are as follows: • The need to undertake an annual review of the declarations of interest – this has now been implemented. • Clearer referencing in the internal audit annual report to matters referenced in the Annual Governance Statement – this has now been implemented. As part of the annual process the Internal audit service undertakes a self-assessment against the PSIAS and this has concurred with the independent assessment which was reported to the Council’s Audit and Scrutiny Committee in March 2023. A full copy of the EQA report can be accessed using the link provided. Page 211
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 Confirmation of Independence 23. Internal audit activity is planned to enable an independent annual opinion to be given by the CIA on the adequacy and effectiveness of internal controls within the authority, including the systems that achieve the corporate objectives of the Council and those that manage the material risks faced by the authority. It should be noted, however, that the presence of an effective internal audit function contributes toward, but is not a substitute for, effective control and it is primarily the responsibility of line management to establish internal controls so that the Council's activities are conducted in an efficient manner, to ensure that management policies and directives are adhered to and that assets and records are safeguarded. 24. Internal Audit operates as part of the Directorate of Kirsty Flanagan and reports directly to the Council’s Section 95 Officer and the Head of Financial Services on an administrative basis only, however, has unrestricted access to those charged with governance, specifically: Elected Members; the Chief Executive; Executive Directors including the Executive Director who is also the Council’s Monitoring Officer. 25. Internal Audit operated without any restriction and had unfettered access to all staff and documents both electronic and paper to allow full and effective assessment of the work during 2024-25. We are therefore pleased to note that there are no matters which require to be drawn to the Audit and Scrutiny Committee’s attention or wider senior management contained within this report regarding the independence of the Internal Audit service during 2024- 25. Counter Fraud Services 26. The Counter Fraud Team (CFT) was established in September 2020 on a two year trial basis, during this period significant successes have been made in identifying monies due to the Council and issuing bills for the rightful charges. In September 2022, on conclusion of the trial period and having demonstrated a need for the service and its continued success, these arrangements were made permanent. The work of the CFT is wide in nature, covering complaints of theft, fraud, dishonesty and irregularity to reviewing and proactively working to maximising the Council’s revenue streams by reducing the amount of benefit fraud, not to mention educating and training staff on such issues. The Council also participates in the National Fraud Initiative (NFI) which uses data analysis and matching to highlight potential irregularities that are reported back to each participating authority to investigate. 27. The CFT consists of two full time staff who have formal qualifications in CIPFA Accredited Fraud investigators course. Indeed, both members of staff have significant public sector experience in dealing with such matters and this has contributed to a successful approach. 28. The table below summaries the total income recovered by the team to date. This has been broken down into reactive work through referrals, which can also be quantified in terms of numbers, and proactive work such as large scale council tax reviews. The total funds recovered by the Fraud Team are: Page 212
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 Reactive Work Total Rebilled Value Employee 2 0 Council Tax 33 74,090 Blue Badge 2 0 DWP 3 0 Grants 0 0 Other 7 0 Welfare Fund 0 0 Total 47 74,090 Proactive Work Total combined work rebilled 1,411,068 Total combined work recovery 924,810 29. These figures represent the rolling total since the inception of the team to date and so far 65.5% of the income due that has been rebilled has been paid to the Council. The rebilled accounts are routinely monitored and recovery is updated regularly. The recovery figure is still ongoing as large re-billings were made in 2024 and the beginning of 2025. These values take time to recover and are underway via debt recovery, payment plans and recovery agents. It is not within the CFT’s remit to pursue rebilling as that rests with the Debt Recovery teams. The CFT will liaise with Debt Recovery for long term debts, and work closely together to maximise the income for the Council. The CFT monitor recovery for its own records. The unquantifiable work carried out by the CFT also raises awareness of the potential for suspicious activity toward the Council and information is passed nationally to other local authorities and Police Scotland. 30. 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. 31. In addition to the above role the CFT undertake investigative work on complaints received regarding allegations against staff and where these require to be looked at in terms of fraud, theft or other irregularity then a full examination of the facts will follow and be reported. This work can be and often is time consuming and is fitted into the overall demands of the role. The nature of this work is sensitive and confidential and reporting is therefore restricted in terms of data protection and associated rights. Page 213
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 Opinion, Conclusions and Observations 32. We agreed a rolling programme of Internal Audit coverage based on an assessment of risk factors with Management and the Audit and Scrutiny Committee. This programme related to the level of available resources, focusing on higher risks and areas identified by management as requiring audit review within the Council. On the basis of the internal audit systems and work completed in respect of this year, we consider that the assessment of key systems are as noted below. A certificate of opinion is noted within Appendix 2 of this document reflecting our opinion. Governance Risk Management Internal Control Classification and Assessment Poor and Requiring Improvement – Does not meet any key areas of good practice or partially or fails to meet most key areas of good practice. Adequate and/or Improving - Attempting to meet or meets most key areas of good practice/ with effort being made to improve further. Reasonable/Satisfactory - Substantially meets all key areas of good practice. Page 214
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 33. We would, however, point out the following exceptions and/or observations: • Across Scotland’s public sector significant pressures continue as a result of financial settlements and this has been particularly compounded due to the impact of inflationary pressures and rising costs of fuel, gas and electricity, together with the risk of unfunded or partly funded pay settlements. These pressures are likely to remain going into 2025/26 financial year 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. • The Health and Social Care sector across Scotland is in a difficult position at present due to the financial challenges they are facing. Most HSCPs have significant forecast deficits and depleted reserves. Audit Scotland have repeatedly reported that the sector is not operating on a financially sustainable basis. The Integrated Joint Board approved the HSCP budget for 2025/26 at their meeting on 26 March 2025. Social Work had a balance of £0.500m of savings still to be identified and Health had a gap of £4.2m as the HSCP were not able to identify the required 3% in NHS savings. This is a notable risk for the HSCP, as this is likely to impact and require the use of non-recurring funding and general reserves to balance this overspend. The use of reserves to address this and future overspends increases the risk of exhausting the reserves and this may further create an ongoing risk to the HSCP in being able to mitigate any unplanned significant issues arising in the future. Furthermore, the need to implement, risk assess and monitor the financial savings recovery plan to address the gap requires to be a primary priority as this may increase the risk to parent bodies in terms of financial support being required in the event that such gaps remain and reserves are not sufficient to set a balanced budget and/or to sustain ongoing services. The Accounts Commission published a report in March 2025 concerning Integration Joint Board finances across Scotland called ‘Integration Joint Board finances continue to be precarious’. Whilst there are local challenges within Argyll and Bute area, these are consistent with the Scottish wide picture. • The Council introduced a new HR/Payroll System called i-Trent in September 2024, we understand that there have been a number of post implementation issues resulting in operational aspects of functionality requiring ‘work arounds’ having to be implemented pending remedial and permanent solutions. Additional resources have been made available in order to address these problems identified post implementation and where possible, deliver permanent solutions. As a result, there was a delay in the planned work relating to continuous monitoring of this system in 2024/25, we have recently been provided with a suite of reports covering this period and have commenced work in this area. However, arrangements for system access and reporting tools to access data have been provided to Internal Audit from April 2025 onwards. Whilst we have not undertaken formal work in this area in 2024/25, we will be undertaking a comprehensive audit of the new system as part of the 2025/26 audit plan. Page 215
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 • Due to a significant weather event, specifically, Storm Eowyn in January 2025, extensive damage was reported to have occurred at the Helensburgh Leisure Centre, which at present remains closed. The closure of this facility could have financial implications for LiveArgyll as the operators who, whilst a separate legal entity, have a direct link with the Council and this may increase the risk of the need of financial assistance in the short term until the facility is reinstated and operational. At this stage whilst notable, we do not anticipate this as a material risk to the Council. • During our planned work for 2024/25, we found no significant reporting issues that have not already been drawn to the Audit and Scrutiny Committee’s attention. • The Work of our CFT continues to be supportive and preventative in approach and where there is evidence of error, fraud or complaint which has a financial impact on the Council, every attempt will be made to actively recover monies due in order to maximise income and serve as a deterrent. • Our findings contained within this report should be considered in the preparation and reporting of the Council’s Annual Governance Statement which can be found on the Council’s web page. 34. Finally, we would also like to highlight our appreciation to the Council’s Audit & Scrutiny Committee for their strong support, together with the full co- operation of the Council’s Management Team and ongoing good working relationship with the appointed External Auditors, Forvis Mazars. Page 216
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13 Argyll and Bute Council – Internal Audit 2024/25 Annual Audit Plan Appendix 1 – Summary of Internal Audit Plan 2024/25 Appendix 1 - Summary of 2024/25 Internal Audit Plan No. of Recommendations Report Title Overall Opinion High Medium Low VFM Community Education High 0 0 1 0 School Funds and Management of Funds Reasonable 2 5 0 0 Trading Standards High 0 0 0 0 Leasing – Estates (IFRS 16) Substantial 0 0 1 0 Asbestos Management Reasonable 0 5 4 0 External Placements Reasonable 0 7 0 0 Bridges Asset Management Plan and Inspection Regime Reasonable 1 1 2 0 Oban Airport High 0 0 0 0 Short-Term Lets Substantial 1 1 0 0 Data Security & Information Security Substantial 0 1 0 0 IT Risk Register and Mitigation Processes High 0 0 2 0 NDR – Including Reliefs and Appeals Substantial 0 3 0 0 IR35 Off-Payroll Working and Compliance Limited 2 2 0 0 Disclosure Checks – Protecting Vulnerable Groups (PVG) Substantial 0 1 1 0 LGBF n/a 0 0 0 0 Stores & Stock Control n/a 0 0 0 0 EMA High 0 0 0 0 SPT Concessionary Fares n/a 0 0 0 0 Page 217
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 Appendix 2 – Certificate of Internal Audit Opinion 2024/25 To the Members of Argyll and Bute Council, the Chief Executive, other members of the Council’s Senior Management Team including the Section 95 Officer As the Chief Internal Auditor of Argyll and Bute Council (the Council), I am pleased to present my annual statement on the adequacy and effectiveness of the internal financial control system of the Group Accounts prepared by the Council for the year ended 31 March 2025. Respective responsibilities of management and internal auditors in relation to internal control It is the responsibility of the Council’s senior management to establish an appropriate and sound system of internal financial control and to monitor the continuing effectiveness of that system. It is the responsibility of the Chief Internal Auditor to provide an annual overall assessment of the robustness of the internal financial control system. The Council’s framework of governance, risk management and internal control The Council has a responsibility to ensure that its business is conducted in accordance with legislation and proper standards. The governance framework comprises the systems and processes, culture and values by which the Council is directed and controlled and how it accounts to communities. It enables the Council to monitor the achievement of its strategic priorities and to consider whether those objectives have led to the delivery of appropriate services and value for money. The main objectives of the Council’s internal control systems are to ensure: • adherence to management policies and directives in order to achieve the organisation’s objectives • economic, efficient, effective and safe use of resources and assets • the relevance, reliability and integrity of information, so ensuring as far as possible the completeness and accuracy of records • compliance with statutory requirements. The system of internal control is a significant element of the governance framework. Any system of control can only ever provide reasonable and not absolute assurance that control weaknesses or irregularities do not exist or that there is no risk of material errors, losses, fraud, or breaches of laws or regulations. Accordingly, the Council is continually seeking to improve the effectiveness of its systems of internal control in order to identify and prioritise the risks that would prevent the achievement of the Council’s strategic objectives. The work of internal audit Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. The Council’s Internal Audit Section operates in accordance with the Public Sector Internal Audit Standards (PSIAS) which have been agreed to be adopted from 1 April 2013 by the relevant public sector Internal Audit Standard setters. PSIAS applies the Institute of Internal Auditors International Standards to the UK Public Sector. Page 218
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 PSIAS requires that a Quality Assurance and Improvement Programme (QAIP) is developed in order to provide assurance that internal audit activity: • is conducted in accordance with an Internal Audit Charter • operates in an efficient and effective manner • is perceived to be adding value and improving operations. PSIAS also requires, as outlined in Standard 1300 “QAIP”, that: “External assessments must be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the organisation. External assessments can be in the form of a full external assessment or a self-assessment with independent external validation”. To meet this requirement, a reciprocal arrangement to complete a programme of inspections has been developed by the Scottish Local Authorities Chief Internal Auditors Group (SLACIAG). This process identified East Dunbartonshire Council as the body to undertake the independent review of the Council’s Internal Audit function’s level of compliance with PSIAS. This output of this review was presented to the Audit and Scrutiny Committee in March 2023. It concluded that the internal audit service demonstrates full compliance/conformance with PSIAS and identified many areas of strong practice including the internal audit team is highly qualified, delivers a high quality service, good engagement and clear reporting lines and clear evidence of supervision and audit follow up. Internal Audit undertakes an annual programme of work based on a risk assessment process which is revised on an ongoing basis to reflect evolving risks and changes within the Council. All Internal Audit reports identifying system weaknesses and / or non-compliance with expected controls are brought to the attention of management and the Audit and Scrutiny Committee together with appropriate recommendations and agreed action plans. It is management’s responsibility to ensure that proper consideration is given to Internal Audit reports and that appropriate action is taken on audit recommendations. The internal auditor is required to ensure that appropriate arrangements are made to determine whether action has been taken on internal audit recommendations or that management has understood and assumed the risk of not taking action. A programme of follow-up on assignment findings and recommendations provides assurance on the complete and timeous implementation of internal audit recommendations. Internal Audit staff regularly attended the following external user group meetings: • SLACIAG, the purpose of which is to develop and improve the practice of internal audit activity with Scottish local authorities. It achieves this by meeting to discuss issues of common concern, commissioning work to develop ideas, sharing good practice, working in partnership with other professional / governing bodies and promoting SLACIAG as the representative body for internal audit in local authorities. We have attended meetings of SLACIAG during 2024/25. • SLACIAG Computer Audit sub group: a member of the audit team attends this forum and contributes to outputs and communications that are regularly exchanged with the aim of ensuring that audit teams are better equipped to perform technical information systems audits. Page 219
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Argyll and Bute Council – Internal Audit Annual Audit Report 2024/25 • The CIA also meets the Chief Internal Auditors of West Dunbartonshire Council, East Dunbartonshire Council, West Lothian Council, Falkirk Council and Inverclyde Council on a quarterly basis to discuss developments and share knowledge. In-between these meetings we are in regular contact to share information which helps deliver audit plans more efficiently including consistent use of benchmarking indicators. • Chartered Institute of Internal Auditors Data Analytics, Local Authority and Heads of Internal Audit Virtual Forums: a member of the audit team attends forums on an ad-hoc basis where subject matter is deemed to be useful, e.g. continuous monitoring and cyber security Basis of Opinion My evaluation of the control environment is informed by a number of sources: • the audit work undertaken by Internal Audit during the year to 31 March 2025, including risk based audits, continuous monitoring and follow-up activity. • the assurance statements signed by the executive directors and heads of service on the operation of the internal financial controls for the services for which they were responsible during the year to 31 March 2025. • the assurance statement signed by the Chief Executive for the overall Council for the year ended 31 March 2025. • reports issued by the Council’s external auditors, Forvis Mazars, and other external review agencies. • my knowledge of the Council’s governance, risk management and performance monitoring arrangements. Limitation to Resources or Scope of Internal Audit Work I can report that Internal Audit operated throughout 2024/25 with no impairments or restrictions in scope or independence. There were sufficient resources available to deliver the amended programme of audit assignments contained within the 2024/25 Internal Audit Plan and no significant threats emerged to the independence of the internal audit activity such as inappropriate scope or resource limitations. Opinion It is my opinion, based on the above, that reasonable assurance can be placed upon the adequacy and effectiveness of the Council’s systems of governance, risk management and internal control in the year to 31 March 2025. Signature: Paul Macaskill FCPFA CMIIA Title: Chief Internal Auditor Date: 12 June 2025 Page 220
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 12 JUNE 2025 COMPLAINTS SCRUTINY REVIEW 1. SUMMARY 1.1 The complaints scrutiny review was carried out as per the 2024/25 scrutiny plan agreed by the Audit and Scrutiny Committee at their 14 March 2024 committee meeting. 1.2 The Consultations scrutiny panel comprised of Mr Martin Caldwell (Panel Chair), Mrs Janice Wasson-Hall (Chair) Councillor Mulvaney, Councillor Vennard and Councillor Howard with support provided by internal audit officers. 1.3 The complaints process was chosen for inclusion in our scrutiny priorities for 2024/25 due to the importance of having a complaints process which meets expected best practice and adopting identified improvement actions across the Council where applicable. 2. RECOMMENDATIONS 2.1 Committee to agree the Draft Complaints Scrutiny Report. 2.2 Committee to agree the most appropriate committee or other Council group for the Complaints Scrutiny Report to be presented to for consideration. 3. DETAIL 3.1 The agreed objectives of the scrutiny review were to: • Ensure the Complaints Handling Procedure contains clear guidance defining what can and cannot be considered as a complaint, it is well communicated and referenced within key council documentation: o In constitution, governance statement and Council policies o In guidance to Members, line managers and officers • Ensure the Council’s procedure is aligned with national guidance and best practice: o Scottish Public Services Ombudsman o Identified best practice within public service o Robust sources of evidence are used in arriving at complaints resolutions Page 221 Agenda Item 9
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• Ensure performance data is captured, reported and used to inform senior management of areas for improvement and share good practice o Surveys to gather information o Reports to senior management and committees o Submissions to appropriate partner organisation for monitoring and benchmarking o Information published on Council website • Assess methods of identifying and sharing improvement actions o Improving complaints handling process o Informing service performance improvements o Information sharing across Council Services • Development and final agreement of improvement actions 3.2 Throughout this review two panel meetings were held to gather evidence. • Panel one – Head of Legal and Regulatory Support, Governance, Risk and Safety Manager and Compliance and Regulatory Officer • Panel two – those attending panel one. 3.3 We would like to extend our appreciation for the cooperation and assistance received from all witnesses invited to provide evidence over the course of the review. 3.4 Based on the information obtained over the course of the review the panel has identified two findings specific to this review. These are detailed in the report attached as appendix 1. 3.5 The report has been discussed with the officers and panel members involved in the review to confirm accuracy and it is now for the Committee to decide whether to approve the report and, if so, to agree the most appropriate committee or other Council group for the Complaints Scrutiny Report to be presented to for consideration. 4. CONCLUSION 4.1 Committee is requested to agree the attached report and agree the most appropriate Committee or other Council group for the report to be presented to for consideration. 5. 5.1 5.2 5.3 5.4 5.5 5.6 5.7 IMPLICATIONS Policy: none Financial: none Legal: none HR: none Customer Service: none Risk: none Climate Change: none Page 222
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5.8 5.9 5.10 5.11 5.12 Fairer Scotland Duty: none Equalities: none Consumer Duty: none Island Communities: none Children’s Rights and Wellbeing: none Martin Caldwell Chair of the Complaints Scrutiny Panel 12 June 2025 For further information please contact: Paul Macaskill, Chief Internal Auditor Tel: 01546 604108 Email: paul.macaskill@argyll-bute.gov.uk Appendices: Appendix 1 – Draft Complaints Scrutiny Report Page 223
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Argyll and Bute Council Scrutiny Report March 2025 FINAL Complaints Process Page 225
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2 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 Contents 1. Executive Summary ........................................................................................................................ 3 2. Detail ............................................................................................................................................... 4 Introduction ............................................................................................................................................ 4 Objectives ............................................................................................................................................... 4 Background ............................................................................................................................................. 5 Scrutiny Initiation Briefings – 30 November 2022 ................................................................................ 7 Exhibit 1 – Scrutiny Meetings Attendees and Key Areas for Discussion ............................................. 8 3. Scrutiny Meetings ........................................................................................................................... 8 Scrutiny Panel Meeting – Council Officers – 02 & 24 February 2023 ................................................... 8 Exhibit 2 – Scrutiny Meetings – Council Officers - Key Messages ....................................................... 9 4. Overall Conclusion and Findings .................................................................................................. 12 Exhibit 3 – Findings ........................................................................................................................... 12 APPENDIX 1........................................................................................................................................... 14 Contact Details Chair: Martin Caldwell (Independent Chair of Audit and Scrutiny Committee) Chief Internal Auditor: Paul Macaskill (paul.macaskill@argyll-bute.gov.uk) www.argyll-bute.gov.uk Page 226
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3 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 1. Executive Summary 1. In January 2024, Elected Members requested that a scrutiny review of the Council’s Complaints Process take place as part of Argyll and Bute Council’s (the Council) 2024/25 scrutiny plan. The Audit and Scrutiny Committee (the Committee) agreed to progress with this review and work should commence to define the scope of the work to be carried out. 2. A briefing paper was prepared by the scrutiny officer and passed to the panel to provide background information. Discussion took place to establish the scope of the review which resulted in the following themes of enquiry: • The Council’s complaints process is aligned to the national guidance provided by the Scottish Public Services Ombudsman (SPSO). • Sufficient comprehensive guidance has been prepared and made available to assist officers conduct complaints investigations and provide adequate responses to the complainant within the stipulated timelines. • Suitable oversight is in place to ensure the complaints process is operating as intended. • Sufficient measures are in place to assess satisfaction with the complaints process separately from dissatisfaction with specific outcomes relating to the subject matter of the complaint to exclude undue/subjective negativity. • Improvements identified as a result of learning from complaints are shared equitably throughout the Council to avoid recurrence in other service areas. • Sufficient, comprehensive training and guidance is in place to assist Members and Officers decide when to progress communications as complaints, expressions of dissatisfaction or an enquiry. 3. Research took place to establish legislative requirements and examples of good practice to form a basis for assessing the Council’s complaints handling process. An extensive examination followed to measure compliance with the established assessment basis and identify any areas for improvement. The findings of this review formed the basis of discussions held with key officers involved, the full details of which are included in Exhibit 2. 4. The panel reviewed and discussed a large suite of documents obtained over the course of the review to reach its conclusions, these can be summarised as follows: • The Council’s Complaints Handling Procedure is based on the SPSO’s Model Complaints Handling Procedure. • The Complaints Handling Procedure is comprehensive and readily available to all Council employees, supplementary information and templates provide additional support. • Monthly, quarterly and annual reporting provides senior management with oversight of the complaints handling process. This information is made available to DMTs and separately to Heads of Service and service single points of contact for complaints, however, there is no evidence of this information being cascaded to operational levels to share learning and improvement actions. • Customer satisfaction is subjective and difficult to assess, satisfaction surveys may be biased and return rate is low. • Training and guidance materials help Members and officers understand what is and is not a complaint. Page 227
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4 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 The full conclusions reached are included in paragraph 33 with findings and recommendations outlined in exhibit 3. 2. Detail Introduction 5. As part of the Council’s 2024/25 scrutiny plan, approved by the Committee in March 2024, we have undertaken a scrutiny review of the Council’s complaints process. 6. Throughout this report references to ‘the panel’ refers to the former independent Chair of the Committee (to provide guidance to new panel members), the new independent Chair and three Committee Elected Members who conducted this review. They were: • Martin Caldwell (panel chair) • Janice Wasson-Hall (Chair) • Councillor Mulvaney • Councillor Vennard • Councillor Howard 7. The panel was supported by council officers who gave willingly of their time to help deliver the review. We would like to extend our appreciation for the co-operation and assistance received from all attendees invited to provide evidence over the course of the review. Scope 8. Consider whether the Complaints Handling Procedure provides sufficient clarity over service expectations, what does and does not constitute a complaint and whether services are learning lessons from complaints feedback to inform continuous improvement. As social Work Servies are the responsibility of the HSCP, the Panel should exclude this service area from considerations. Objectives 9. The agreed objectives of the scrutiny review were to: • Ensure the Complaints Handling Procedure contains clear guidance defining what can and cannot be considered as a complaint, it is well communicated and referenced within key council documentation: o In constitution, governance statement and Council policies o In guidance to Members, line managers and officers • Ensure the Council’s procedure is aligned with national guidance and best practice: o Scottish Public Services Ombudsman o Identified best practice within public service o Robust sources of evidence are used in arriving at complaints resolutions • Ensure performance data is captured, reported and used to inform senior management of areas for improvement and share good practice o Surveys to gather information o Reports to senior management and committees o Submissions to appropriate partner organisation for monitoring and benchmarking Page 228
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5 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 o Information published on Council website • Assess methods of identifying and sharing improvement actions o Improving complaints handling process o Informing service performance improvements o Information sharing across Council Services • Development and final agreement of improvement actions Background 10. Within the Council’s website and Complaints Handling Procedure, a complaint is defined as “the expression of dissatisfaction with an organisation’s procedures, charges, employees, agents or quality of service”, and “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”. 11. Complaints may relate to the following examples: • failure or refusal to provide a service • inadequate quality or standard of service, or an unreasonable delay in providing a service • dissatisfaction with one of our policies or its impact on the individual • failure to properly apply law, procedure or guidance when delivering services • failure to follow the appropriate administrative process • conduct, treatment by or attitude of a member of staff or contractor (except where there are arrangements in place for the contractor to handle the complaint themselves: see Complaints about contracted services); or • disagreement with a decision, (except where there is a statutory procedure for challenging that decision, or an established appeals process followed throughout the sector). 12. The above complaint definition is broad, but not every concern raised with the Council is a complaint. For example, a complaint is not: • a request for information or an explanation of policy or practice • a request under the Freedom of Information Act or Data Protection legislation. 13. There are also some matters we can’t deal with under the Complaints Procedure. These include: • A first time request for a service e.g. a request for a street-lighting repair • A request for compensation only • Where there is a statutory or other formal right of appeal e.g. decision on housing or council tax benefit or in regard to formal enforcement action • Insurance claims or potential claims concerning injury to people or damage to property, however if they are also complaining about the cause of the injury/damage this part should be dealt with as a complaint • Matters which are currently subject to court proceedings or have already been heard in court or at a tribunal • Complaints regarding the conduct of a Councillor • Disagreement with decisions or conditions that are based upon social work recommendations, but determined by a court or other statutory body, for example decisions made by a children's panel, parole board or mental health tribunal Page 229
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6 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 • A concern about a child or an adult’s safety • A complaint which has already been investigated and a final decision given. 14. The Council Constitution states that “Citizens have the right to complain to the Council under its complaints procedure about any service failure”. The Council is committed to providing high quality services for the people in Argyll and Bute, however, sometimes services may fail to fully meet their objectives, and when this happens, the Council needs to know so that weaknesses can be addressed and lessons are learned from the actions taken. 15. The Council has developed a formal complaints procedure to help those wishing to raise a complaint to do so either in person at any of the Council’s customer service points, or by telephone, in writing, by email or via the Council’s or Health and Social Care Partnership’s (HSCP) websites. 16. The Council has a dedicated area on its website providing information about complaints. This includes an explanation of what a complaint is, the Council’s aims and commitments regarding the complaints procedure, how to raise a complaint, what can and cannot be complained about, who can complain, how long a customer has to make a complaint, a link to what happens when complaints have been submitted and performance information. 17. The Complaints Handling Procedure operated by the Council and the HSCP is comprehensive and was developed by local government complaints handling experts working closely with the SPSO. The Model Complaints Handling Procedure (MCHP) was revised in 2019, combining both local authority and social work procedures into one containing core text applicable to all public services in Scotland with some additional text specific to local authorities and HSCPs handling social work complaints. 18. The procedure sets out what constitutes a complaint, the complaints handling process and what is expected from employees during the complaints process, it also provides some examples and guidance with regard to issues raised. 19. The Complaints procedure consists of two stages: • Stage one: Frontline Response • Stage two: Investigation 20. Complaints will be resolved wherever possible and this may happen at any point within the process. Action taken, if any, to resolve the complaint will be agreed between the complainant and the Council/HSCP. Where a complaint is resolved, it is not usually necessary to continue investigating, although it may be useful to do so e.g. to identify learning opportunities to prevent recurring complaints. All investigations will be undertaken by a senior officer independent of the service area under review and a clear record of how the complaint was resolved will be maintained, noting what action was agreed and the customer’s agreement to the final outcome. 21. The Council welcomes and indeed values complaints as the feedback received can be used to inform service improvements and ensure that customers are treated fairly. Where appropriate, action will be taken to improve services on the basis of complaints findings. The outcomes and actions taken are recorded for all complaints and this data is used to analyse trends and themes. Complaints data is used to analyse and improve services and learning is shared throughout the Council/HSCP as relevant. Page 230
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7 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 Scrutiny Preparatory Meeting – 02 October 2024 22. In October 2024 the Panel Chair and scrutiny officers met with key service officers to gather information and discuss possible focus areas for the review. 23. The attendees recognised the nature of this briefing and discussion noted the following : • The definition of a complaint is provided by the SPSO, however there may be benefit in further explaining “expectations” • We follow the SPSO Model Complaints Handling Process to progress complaints, it is not useful to step outside of this guidance • Complaints should focus on service provision and not overarching policy • The Member’s Portal is not a conduit for submitting a complaint, anything that looks like a complaint should be passed to relevant officers to progress through the appropriate channels if deemed appropriate • Members have been provided with induction training • It is important to understand the difference between a complaint and a disagreement • The complaints procedure includes issue of a survey upon completion • Survey return rate is low and more commonly returned by those who are unhappy with the outcome rather than the complaint process, this has an impact on the annual complaints report • Services use feedback inconsistently for learning and benchmarking purposes, there is no mechanism across the Council to share improvement actions e.g. to provide more timeous responses to complaints • Heads of Service are provided with monthly complaints reports and SMT quarterly, however, there is no evidence of this being cascaded to operational management to highlight need for improvement 24. The scrutiny officer thereafter prepared and circulated a “Background and Scoping Document” to the Panel which contained a great deal of information to help inform the review. As well as providing the scope (para 8), Objectives (para 9) and background information (paras 10-21 above) the document also contained a briefing paper providing a summary of the contents of the Council’s Complaints Handling Procedure and performance reporting mechanisms. 25. Attendees agreed that a panel meeting be held to consider the following: • SPSO Model Complaints Handling Guidance is communicated within Council guidance and training provided to Members and officers and helps provide a clear understanding of what can and cannot be considered a complaint • performance data is captured and shared with management to inform improvement actions and where relevant share information across the Council • benchmarking arrangements are in place to learn from other Councils 26. The panel agreed that they should meet with appropriate representatives of the groups set out in Exhibit 1. Page 231
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8 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 Exhibit 1 – Scrutiny Meetings Attendees and Key Areas for Discussion Group Key Areas for Discussion Council Officer(s) SPSO guidance is communicated within Council procedures and training to provide clear understanding of what is and what is not a complaint • In Complaints Handling Procedure • In Council website • In service information Performance data is captured, reported and shared sufficiently to inform improvement actions • Survey feedback • KPI reporting • Information sharing across services Benchmarking Arrangements • Local Authorities Complaints Handlers Network (LACHN) • How improvements are shared within other Councils • How improvements are shared between Councils 3. Scrutiny Meetings Scrutiny Panel Meeting – Council Officers – 29 November 2024 27. The Panel meeting consisted of Panel Chair, Chair of the Audit and Scrutiny Committee, Councillor Vennard, Councillor Howard, Head of Legal and Regulatory Support and the Compliance and Regulatory Officer. 28. The scrutiny officer undertook a review of the Council’s procedure document on complaints handling against the SPSO Model Complaints Handling Procedure to assess their alignment. This revealed that the Council’s guide is clearly based on this document with additional details advising of how the procedure should be applied locally within services. This is a lengthy document and a summary was provided for the convenience of the Panel. 29. Against this finding and building on the overall purpose of the review that had been agreed within the Background and Scoping document following the first meeting, the six themes identified in paragraph 2 were agreed by the panel as the final scope of the review. 30. Scrutiny officers thereafter reviewed the Council’s procedure against these themes and considered improvements. (See conclusions at Paragraph 33) 31. The panel focussed on how satisfaction with the complaints process is assessed, learning from complaints and what is and is not considered to be a complaint. 32. The panel met with Council Officers at a single panel meeting. The Exhibit 2 lists the themes in order and the key messages emerging from each theme representing the respective views of the panel and the Officers. Page 232
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9 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 Exhibit 2 – Scrutiny Meetings – Council Officers - Key Messages Theme Detail The Council’s complaints process is aligned to the national guidance provided by the Scottish Public Services Ombudsman (SPSO). The SPSO Model Complaints Handling Procedures has been adopted by the Council with some additional detail around how to apply the requirements at a local level. When we consider aspects of the complaints process, we will not be able to deviate away from what the SPSO expects of a local authority. The Complaints Handling Procedure is considered to be comprehensive and useful. The definition of a complaint used by the Council is derived from the SPSO. Sufficient comprehensive guidance has been prepared and made available to assist officers conduct complaints investigations and provide adequate responses to the complainant within the stipulated timelines. The Complaints Handling Procedure is available to all members of staff with a Council email address on the HUB intranet resource website. The complaints process is underpinned by best practice. The Council uses a suite of templates provided by the Compliance and Regulatory Team, including examples of what is and is not a complaint. Suitable oversight is in place to ensure the complaints process is operating as intended. Annual report is published and passed to the Audit and Scrutiny Committee. Heads of Service are passed monthly reports detailing how many complaints were received in the period, how many were dealt with within the required timeframe, how many were late, number of issues arising and any lessons learned. Each Service has a Complaints Representative (Rep) who coordinates the response to complaints within that Service. The Rep liaises with the Compliance and Regulatory Team for advice and assistance and attends regular meetings held by the team for all Reps to discuss matters related to performance, current issues and advice related to that. Strategic Leadership Team (SLT) are passed quarterly summaries of the above. The format of this report is undergoing development to provide an easier to understand graphic summary. The SPSO will be interested to see this development. There is no evidence of information being cascaded to operational management to implement improvements at front-line service delivery. Page 233
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10 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 No complaints were required to be investigated by the SPSO in 2023/24, our performance is considered to be very good. Most teams/services have a single point of contact for complaints and regular discussions take place, especially where issues arise. We do not publish the content of individual complaints but we do publish a high level overview of the number of complaints and our complaints performance. Stage two complaints are investigated by someone completely independent to the situation and is usually a Head of Service. The investigating officer cannot have had any involvement in the specific situation that the complaint relates to. Sufficient measures are in place to assess satisfaction with the complaints process separately from dissatisfaction with specific outcomes relating to the subject matter of the complaint to exclude undue/subjective negativity. The Panel may wish to consider how we assess satisfaction with the complaints process. This can often be difficult as there is a distinct difference between someone being happy with the process but not necessarily happy with the outcome. One option would be to benchmark what other Council’s do and see if there are any learning points to consider in terms of improving. Customer satisfaction is difficult to gauge, it is subjective, often closely linked to whether the complainant agrees or disagrees with the outcome. Customer satisfaction survey response rate is low and this is comparable with other Councils across the Local Authorities Complaints Handlers Network (LACHN). Improvements identified as a result of learning from complaints are shared equitably throughout the Council to avoid recurrence in other service areas. The Panel may wish to consider how the Council learns from complaints. The most important element to emerge from a complaint is learning and using that information to inform improvements. Identified improvements may be relevant in more than one area of the Council, therefore the Panel may wish to consider how this learning is cascaded equitably throughout the Council and if there are any ways that this can be improved. It is not a quantitative assessment but a quality assessment on how we are improving and what we can do to continue. We publish an Annual Report on complaints which includes some examples of lessons learned and improvements made as a result, “You said and We did”. It was suggested that it might be useful to draw this out further e.g. to the website. Page 234
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11 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 It is important to admit that we make mistakes. The Council is on a journey for continuous improvement along with the members of the public. This information is made available to DMTs and separately to Heads of Service and Service single points of contact for Complaints. It is important that services share successful improvements to managing complaints. It would be useful and of value if the Panel were able to suggest areas for improvement to help cascade information across the Council. It may be beneficial to undertake a benchmarking exercise to establish what measures are taken within other Councils. (This exercise was undertaken but received only 4 responses that were of very limited use, these can be viewed within Appendix 1.) How do we translate what we say in terms of good governance and meeting the needs of the SPSO into relaying that to our community so they have an understanding on how we use complaints to improve. Making changes as a result of complaints shows that we are listening and taking notice, two examples were provided regarding email system failure and use of acronyms within Council reports. Stage 1 complaints can be resolved relatively informally and as a result the outcome might not necessarily require to be recorded. Sufficient, comprehensive training and guidance is in place to assist Members and Officers decide when to progress communications as complaints, expressions of dissatisfaction or an enquiry. The Panel may wish to consider whether there is clear distinction and understanding regarding what is and is not a complaint. There may, at times, be confusion when a communication is received, as to whether it should be treated as a formal complaint or is an expression of dissatisfaction. Would further guidance, training and support help develop a more consistent approach. People may disagree with the Council on a number of areas but the mere fact there is a disagreement is not the basis for a complaint. The manner of how a disagreement may have arisen may be the basis of a complaint. Members induction slides contain useful information with a lot of focus on how we use the complaints data for improvements and other aspects on governance that may arise. Page 235
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12 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 4. Overall Conclusion and Findings 33. Based on the information obtained over the course of the review the panel has concluded that: • The Council’s Complaints Handling Procedure is a useful, comprehensive document that is based on the Scottish Public Sector Ombudsman’s (SPSO) Model Complaints Handling Procedure with additional guidance on local application. • Sufficient comprehensive guidance is available to all Council employees via the Council’s intranet resource, the “HUB”. This guidance is supported by a suite of templates provided by the Compliance and Regulatory Team, including some useful examples. • The most important element to emerge from a complaint is learning and using that information to inform improvements. Suitable oversight is in place via monthly, quarterly and annual reporting mechanisms. This information is made available to DMTs and separately to Heads of Service and Service single points of contact for Complaints, however, there is no evidence of information being cascaded to operational management from senior management. • Customer satisfaction is subjective and difficult to assess, the return rate for surveys is low and those that are returned are often biased by those who are unhappy with the outcome as opposed to the complaints process. • New elected Members are provided with induction training promptly after elections take place as well as regular development sessions to explain what is and is not considered to be a complaint and how these matters should be addressed. 34. The review has identified 2 findings which have been discussed with management. These, and the management responses, are detailed in Exhibit 3. Exhibit 3 – Findings No. Recommendations Management Response 1 Satisfaction with the complaints process It is difficult to gauge satisfaction due to the poor return rate of surveys issued upon completion. The complaints system administrator may wish to consider whether there would be any benefit in having a further stage in the reminder process, given the current level of engagement from complainers. Noted This can be investigated, however, this may be additional work for no guaranteed benefit. Most people respond, based on the outcome of their complaint, not necessarily in terms of the spirit of the survey, i.e. on the process. This is reflected in the limited benchmarking. 2 Learning from Complaints There is insufficient evidence of lessons learned identified being implemented as a result of the complaints process despite having been cascaded within and across the Council’s Service areas. Noted Improvement actions are identified and shared with Heads of Service and Service Reps. There is a current requirement for Heads of Service to ensure that Page 236
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13 Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 No. Recommendations Management Response Whilst lessons learned are discussed at senior management level and details cascaded to ensure that improvements should be identified and can be used to inform improvements across all Council service areas, this is not always evident in terms of process within individual service areas/teams. As part of the cascade arrangements, Heads of Service should confirm to Legal and Regulatory Services how identified improvement actions which have been shared with them and with their Service Representatives have been or will be implemented in practice for inclusion in the annual report. Management should consider cascading learning to all Council employees via periodic bulletins where it is deemed that there is sufficient benefit for wider circulation (linked to monthly/ quarterly reporting) to share insights with all involved in service delivery. improvement actions have been completed, and this is confirmed to L&RS by the Service Rep updating the Oracle case form – this is simply not always done. Most improvement actions relate to the individual complaint and actions taken to reduce the likelihood that a similar issue will arise again for that individual, where it is something that affects other areas of the Service, then they should be discussed at DMT and cascaded as appropriate. Services already have “Service Reps” and they fill that champion role – but issues with getting confirmation that improvement actions have been completed and the case file updated continue. Page 237
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Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 APPENDIX 1 Review of Argyll and Bute Council’s Learning from Complaints compared to other Councils The Scrutiny officer prepared four questions for submitting to other councils to assess if there are any lessons we can learn to share improvement ideas across the Council. The Compliance and Regulatory Officer issued these questions to the Local Authority Complaints Handlers Network on behalf of the Panel with a view to reach across as may local authorities as possible, unfortunately, only 4 responses were received despite an additional reminder being sent. The response from one Council indicated that they receive a good return rate in relation to feedback surveys and were contacted to obtain further information, unfortunately they did not respond. The limited information received is detailed below: Responses to questions submitted to other Councils No. Question Responses 1 Surveys requesting feedback on satisfaction with the complaints handling process have a low return rate, have you taken or are you planning to take any additional action to encourage a greater responses rate? If so, what are those actions? We stopped surveys a number of years ago as we had to do manually, and response was little. We are in the process of getting a new system and hoping that it will be able to issue a survey once complaint is complete. Ours are over 50% and we are happy with that. We ask customers to opt into our surveys. If they do, they get one. We review the feedback and incorporate it into our annual report, but beyond that we don’t do anything with it. If we had time, we would do more with it, but we just don’t have the resource. We have not taken any action to encourage a greater response rate. We are aware that the return rate is low and is skewed towards those who are unhappy. 2 Have you considered any alternative means of gauging satisfaction with the complaints process within your Local Authority? If so, what are these? As an authority we are looking at customer satisfaction across services and how best to capture. No No, we haven’t considered any alternative methods. Again, this is a resource issue. No, we haven’t but it is something that we should look at in the future. 3 By addressing complaints received, services are able to identify improvements, can you please advise if these improvements are shared across other service areas within your Local Authority? If so, how are these improvements communicated and is there any information gathered to evidence successful implementation? Improvements are shared within Management Teams within Services only unless they have implications for all Services. Only shared in our annual report, we include some “stories”. This is an area for improvement for us. Sharing learning is not happening in the way it should. We do not communicate this directly with Services, however, we do share it with our Information Management Group and publish it in our Quarterly and Annual Complaints Monitoring report. We are currently looking at developing a Power BI dashboard to make this more widely accessible and introducing shared learning across Services at our internal Complaint Handlers and Co-ordinators Network. Page 238
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Argyll and Bute Council – Scrutiny Report – Complaints Process 2024/25 No. Question Responses 4 Is improvement information currently shared across other Local Authorities? If so, how is this communicated? No. No. Beyond looking at the benchmarking and considering anything that comes up at LACHN meetings, we don’t share improvement information. No Page 239
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 12 JUNE 2025 LOCAL GOVERNMENT IN SCOTLAND – FINANCIAL BULLETIN 2023/24 1.0 EXECUTIVE SUMMARY 1.1 The ‘Local Government in Scotland – Financial Bulletin 2023/24’ forms part of a series of overview reports, published by the Accounts Commission. These provide an independent overview of the financial and operational performance of Scotland’s local government sector. 1.2 The purpose of this report is to highlight 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 is also provided. 1.3 It is recognised that in the current financial and economic climate, the management of budget pressures in respect of pay and other inflationary cost increases, together with increasing demands for key services, will continue to be challenging. Opportunities for efficiency savings will require to be maximised, whilst maintaining service improvements, through transformation. 1.4 Argyll and Bute Council is well placed to respond to these challenges, in terms of compliance with the Accounts Commission report recommendations. Robust financial planning will continue to support the financial sustainability of the council. 1.5 The Audit and Scrutiny Committee is requested to note the contents of the report. Page 241 Agenda Item 11
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 12 JUNE 2025 LOCAL GOVERNMENT IN SCOTLAND – FINANCIAL BULLETIN 2023/24 2.0 INTRODUCTION 2.1 The Accounts Commission publish a series of overview reports, which provide an independent overview of the financial and operational performance of Scotland’s local government sector. The ‘Local Government in Scotland – Financial Bulletin 2023/24’ report examines councils’ financial performance during 2023/24. This follows the unprecedented challenges of the Covid-19 pandemic and cost of living crisis and sits against a backdrop of the whole of the Scottish public sector facing challenges to its financial sustainability. 2.2 The report sets out: • Councils’ funding and budget-setting; • Councils’ financial performance; and • Councils’ position at the end of 2023/24 and the financial outlook. A copy of the full report is given at Appendix 1 for information. 3.0 RECOMMENDATIONS 3.1 The Audit and Scrutiny Committee is requested to note the contents of the report. 4.0 KEY FACTS AND ANALYSIS 4.1 A summary of key facts from across Scottish local authorities, covering Funding and Budgets, Financial Performance, and Financial Position and Outlook is provided at Page 3 of the Accounts Commission report. The position of Argyll and Bute Council, alongside Scottish local government in general, in respect of Page 242
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Financial Performance, and Financial Position and Outlook key facts, is given within Appendix 2. 4.2 In addition, the report provides further analysis and displays some information in graphical format, outlining the position of Argyll and Bute Council, alongside other Scottish local authorities, where available. Key points worth noting include the following: a) The total budget gap across Scottish councils (27 councils) represented 4.8% of net cost of services. Argyll and Bute ranked 14 (from 27 councils) in terms of highest 2023/24 budget gap, as a percentage of net cost of service, at 4.4%. This authority wholly met the budget gap by increased council tax and savings, both recurring and non-recurring, while councils across Scotland bridged over a quarter of the total budget gap using reserves (18 councils). Financial flexibilities (10 councils) and other measures (11 councils) were also used to meet the budget gaps across Scotland. b) The use of reserves and other non-recurring measures is unsustainable unless they are used to support service transformation and generate future savings. Argyll and Bute ranked 4 (from 27 councils) in terms of the highest reliance on non-recurring savings as % of overall savings target to meet the 2023/24 budget gap. Non- recurring savings accounted for 28% of Argyll and Bute Council’s savings target, while the total across Scotland (27 councils) accounted for 15%. c) Borrowing was used to finance 15% of total capital expenditure incurred during 2023/24 within Argyll and Bute Council, while this accounted for 49% of all capital funding across Scotland. d) Argyll and Bute Council currently has a 3 year capital plan, while most councils reported having a 5-10 year capital plan in place. e) Few councils reported documenting information on committed reserves in performance monitoring reports. Argyll and Bute Council report on reserves and balances on an ongoing basis throughout the year, as part of the financial monitoring reporting pack to Policy and Resources Committee. f) The report suggests that delivering transformation successfully requires resources to be committed towards it. Most councils (27 from 30 returning data) reported holding reserves earmarked for transformation. Of the 26 providing information on the value held, a total of £270 million was reported, about 13% of the committed General Fund balance. Most councils’ transformation reserves were equivalent to no more than 2% of net cost of services but some earmarked a Page 243
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significantly higher proportion. Argyll and Bute earmarked £30m to support transformation, the equivalent of 10% of net cost of services. This comprised major strategic change and transformation projects, including £9m Learning Estate Investment, £7m Rothesay Pavilion and £4m Biodegradable Municipal Waste (BMW) Ban. 5.0 KEY MESSAGES 5.1 In 2023/24, councils’ total revenue and income fell, including another real terms decrease in revenue funding from the Scottish Government. Councils are increasingly reliant on identifying savings, which becomes progressively more difficult year-on-year, and again used reserves to remain within their agreed budgets. 5.2 In 2023/24, capital funding remained constrained, with councils borrowing more and managing a range of complex funding models. Capital funding from the Scottish Government reduced slightly in real terms, continuing a longer- term trend. Capital expenditure was lower than planned. Councils continue to borrow more to enable investment in their estates and council debt, and annual interest costs, continue to increase. 5.3 In 2023/24, usable reserves, which are those that can be used to support service delivery, reduced and most are already committed for specific purposes. This presents an ongoing challenge for councils reliant on reserves to balance their budgets, as well as to longer-term financial sustainability. Using reserves to routinely balance budgets is not sustainable. 5.4 Councils need to intensify transformation activity, progressing at scale and pace to ensure their financial sustainability. How councils plan to use their reserves, make savings and transform their services needs to become more transparent. The need to consult local communities and clearly communicate the implications for local services of the budget decisions taken has never been more important. 6.0 ACCOUNTS COMMISSION REPORT RECOMMENDATIONS 6.1 An assessment of Argyll and Bute Council’s current position in terms of compliance with the Accounts Commission report recommendations, together with potential future improvement actions, where relevant, are outlined within Appendix 3. Page 244
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7.0 CONCLUSION 7.1 Argyll and Bute Council is well placed in terms of compliance with the Accounts Commission report recommendations, with opportunities for further improvement identified. A review of capital is already planned for 2025/26 and this will provide an opportunity for greater convergence between capital and revenue financial planning. 7.2 Against a backdrop of historic real terms standstill/reducing Local Government Finance Settlements and the global economic climate, the management of budget pressures in respect of pay and other inflationary cost increases, together with increasing demands for key services, will continue to be challenging. Opportunities for efficiency savings will require to be maximised, whilst maintaining service improvements, through transformation. Robust financial planning and modelling will continue to support financial sustainability. Transformation should be a key focus of future service planning and decision making, in order to safeguard the financial sustainability of the council. 8.0 IMPLICATIONS 8.1 Policy - None 8.2 Financial - Opportunities for enhancement of capital arrangements 8.3 Legal - None 8.4 HR - None 8.5 Customer Service - None 8.6 Risk - Financial risk will continue to be monitored and reported 8.7 Climate Change - None 8.8 Fairer Scotland Duty - None 8.9 Equalities - protected characteristics - None 8.10 Consumer Duty - None 8.11 Island Communities - None 8.12 Children’s Rights and Wellbeing - None Page 245
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Kirsty Flanagan Executive Director with responsibility for Financial Services Councillor Ross Moreland, Policy Lead for Finance and Commercial Services 11 March 2025 For further information contact: Carolyn Earl, Interim Head of Financial Services carolyn.earl@argyll-bute.gov.uk APPENDICES Appendix 1 – ‘Local Government in Scotland – Financial Bulletin 2023/24’, a report by the Accounts Commission Appendix 2 – Key Facts Appendix 3 – Compliance with Recommendations Page 246
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Local government in Scotland Financial bulletin 2023/24 Prepared by Audit Scotland January 2025 APPENDIX 1 Page 247
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2Financial bulletin 2023/24 Contents Key facts 3 Key messages 4 Recommendations 6 Introduction 7 1. Council funding and budgets 9 2. Financial performance 15 3. Financial position and outlook 24 Appendix 1 34 Accessibility You can find out more and read this report using assistive technology on our website www.audit.scot/accessibility. Page 248
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3 Key facts Some of these are based on a sample – see paragraph 4 for further information on our methodology Funding and budgets • 1.8 per cent: the real-terms reduction in revenue funding from the Scottish Government in 2023/24 compared to 2022/23 • 21 per cent: the proportion of Scottish Government revenue funding that was ring-fenced or directed towards national policy commitments in 2023/24 • £759 million: the budget gap identified by our sample of 29 councils at the start of 2023/24. The 2024/25 budget gap identified by all 32 councils was £585 million • 1.2 per cent: the real-terms reduction in capital funding from the Scottish Government in 2023/24 compared to 2022/23. Financial performance • 3.3 per cent: the real-terms reduction in councils’ total revenue funding and income in 2023/24 compared to 2022/23 • 9 out of 29: the number of councils that reported overspends against their agreed revenue budgets • 11 out of 30: the number of councils that achieved all their planned savings • 25 out of 30: the number of councils that reported lower expenditure than planned across their capital programmes in 2023/24 • £19.8 billion: councils’ net debt in 2023/24, a 15.8 per cent increase on 2022/23, as councils become more reliant on borrowing to finance their capital programmes. Financial position and outlook • 5 per cent: the decrease in councils’ total usable reserves • 84 per cent: the proportion of the General Fund that is committed • 12 out of 29: the number of councils that made unplanned use of their reserves in 2023/24 to manage budget pressures • 15 out of 30: the number of councils that have long-term financial plans in place, with councils reporting difficulty planning for the longer term due to future uncertainty. Key facts 3Key factsKey factsPage 249
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4Key messages Key messages Key messages Key messages Despite an increase in overall revenue and capital funding for councils in 2024/25, and the Scottish Government’s budget proposals in December 2024 indicating a further real terms uplift in funding for 2025/26, the financial outlook for Scotland’s councils remains challenging. 1 In 2023/24, councils’ total revenue and income fell, including another real terms decrease in revenue funding from the Scottish Government. Councils are increasingly reliant on identifying savings, which becomes progressively more difficult year-on-year, and again used reserves to remain within their agreed budgets. 2 In 2023/24, capital funding remained constrained, with councils borrowing more and managing a range of complex funding models. Capital funding from the Scottish Government reduced slightly in real terms, continuing a longer-term trend. Capital expenditure was lower than planned. Councils continue to borrow more to enable investment in their estates and council debt, and annual interest costs, continue to increase. 3 In 2023/24, usable reserves, which are those that can be used to support service delivery, reduced and most are already committed for specific purposes. This presents an ongoing challenge for councils reliant on reserves to balance their budgets, as well as to longer-term financial sustainability. Using reserves to routinely balance budgets is not sustainable. Page 250
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Key messages 5 4 Councils need to intensify transformation activity, progressing at scale and pace to ensure their financial sustainability. How councils plan to use their reserves, make savings and transform their services needs to become more transparent. The need to consult local communities and clearly communicate the implications for local services of the budget decisions taken has never been more important. Page 251
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6RecommendationsRecommendations Recommendations In 2025, councils should: • Report on the savings made within their management commentaries more comprehensively, including provision of comparisons to savings targets agreed during budget-setting, and whether they were recurring or non-recurring (paragraphs 29 - 30). • Ensure that the impact of capital underspends, future borrowing projections and of using financial flexibilities on their indebtedness are reported clearly alongside the impact of these on future revenue budgets (paragraphs 34 - 41). • Ensure reserves policies indicate explicitly and clearly the impact of financial flexibilities on reserves held; the nature, level of and intended timing of the deployment of committed usable reserves held; and the level of uncommitted and contingency funding held within General Funds (paragraph 54 and Case study). • Prioritise service transformation, considering the impact of current service delivery models on longer-term financial sustainability, including the medium-term impact on reserve levels (paragraphs 61 - 62). • Ensure that financial sustainability becomes a central focus of financial monitoring and reporting, making greater use of financial sustainability indicators within reports to elected members and within their regular public reporting and financial strategies and plans (paragraphs 63 - 67). We note progress against the recommendations from our Financial bulletin 2022/23 in Appendix 1. Page 252
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Introduction About this report 1. This report is part of a series of overview outputs produced by the Accounts Commission which together provide an independent overview of the financial and operational performance of Scotland’s local government sector. 2. This report examines councils’ financial performance in 2023/24. This follows the unprecedented challenges of the Covid-19 pandemic and cost-of-living crisis and sits against a backdrop of the whole of the Scottish public sector facing challenges to its financial sustainability. The bulletin sets out: • councils’ funding and budget-setting • councils’ financial performance • councils’ position at the end of 2023/24 and the financial outlook. 3. In spring 2025, we will publish a budget briefing examining the 2025/26 budgets set by councils, including analysis of anticipated budget gaps and the decisions made by councils when setting their budgets. This will be followed by a report focused on service performance later in 2025. Methodology 4. The primary sources of information for this report are councils’ 2023/24 accounts and annual audit reports, a data request issued to councils in October 2024 and Scottish Budget documents. 5. Our findings are based primarily on: • The 2023/24 annual accounts for 29 councils (20 audited and nine unaudited). At our 2 December 2024 deadline, accounts were unavailable for Clackmannanshire, Eilean Siar and East Dunbartonshire and these councils are not included in our 2023/24 analysis (or comparisons to previous years). • Supplementary information from 30 councils collected via a data return issued to council directors of finance and was also reviewed by appointed auditors. At our 25 November 2024 deadline, data returns were unavailable for Clackmannanshire and Eilean Siar and these councils are not included in our analysis. We also utilised 7IntroductionPage 253
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Introduction 8 elements of data returns previously submitted to us in support of our Financial bulletin 2022/23 report. • Scottish Government Budget documents. Our analysis of Scottish Government funding reports on the funding position for all 32 of Scotland’s councils. 6. When looking at trends, we convert some figures to real terms. This adjusts financial information from past and future years to prices for the year under review (ie, 2023/24). This is to take account of inflation so that trend information is comparable. To adjust for inflation, we use gross domestic product (GDP) deflators, which are published quarterly by HM Treasury. GDP deflators are the standard approach adopted by both the UK Government and Scottish Government when analysing public expenditure. 7. Financial trend data (both capital and revenue) relating to funding, income or expenditure will generally be shown in real terms. Financial information from the councils’ accounts’ balance sheets remains unadjusted. This includes trend analysis on reserves, sources of capital finance, borrowing and debt. These are not adjusted to real terms as they are already subject to revaluations within the councils’ accounts to reflect current prices. Page 254
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1. Council funding and budgets Both revenue and capital funding from the Scottish Government to councils were reduced in real terms in 2023/24, with councils once again setting budgets that required significant gaps to be addressed. Councils are reliant on Scottish Government funding which makes up over 60 per cent of income 8. As the largest source of funding or income for councils, at over 60 per cent, Scottish Government funding shapes the fiscal environment that councils operate in. Currently councils receive a single year settlement, with a draft allocation published in the Scottish Budget in December. This is revised throughout the year and in recent years a low initial settlement has been followed by large additional transfers during the financial year. 9. In 2023/24, the Scottish Government allocated councils total revenue and capital funding of £13.7 billion. This settlement was higher than before the pandemic but in real terms funding was reduced year-on-year since 2020/21. The 2024/25 settlement has reversed this trend and the 2025/26 draft settlement published in December 2024 indicates another real-terms uplift in funding for councils (Exhibit 1, page 10). 10. This initial 2025/26 draft settlement allocates £15 billion of revenue and capital funding to councils, a 5.8 per cent real terms increase on the 2024/25 draft settlement. Increases to revenue funding include an uplift to the general revenue grant, funding for pay awards and teachers’ pensions. Increases to capital include additional funds to support inter- islands connectivity and climate change. There is still uncertainty as to how increased employers’ National Insurance (NI) contributions, announced by the UK Government, will be funded. The Convention of Scottish Local Authorities (COSLA) estimates these will be an additional £265 million cost pressure for councils in 2025/26. 11. The funding increase for councils recently announced as part of the Scottish Government’s 2025/26 draft budget in December 2024 does not change the fact that the financial outlook remains challenging (Part 3). We will examine the implications of the Scottish Budget for councils’ own budget-setting in our next Local government in Scotland publication, Local government budgets 2025/26. 91. Council funding and budgetsPage 255
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1. Council funding and budgets 10 Exhibit 1. Scottish Government revenue and capital funding to councils since 2018/19 in real terms Funding in 2023/24 was higher than before the pandemic but in real terms has reduced year-on-year since 2020/21. This trend reversed in 2024/25 and 2025/26 sees a further funding uplift. 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2018/19 Outurn Autumn budget revision Draft budget 13 14.313.6 14.7 14.6 14.2 13.7 13.7 Funding was higher than before the pandemic but in real terms has reduced year-on-year since 2020/21 Funding increased in 2024/25 and 2025/26 sees another uplift Draft Budget Allocation Note: Draft budget allocations include transfers from other portfolios. 2020/21 and 2021/22 totals include Covid-19 funding allocations. Barnett consequentials (and other funding) will be allocated to 2024/25 in the Spring Budget Revision. The draft 2025/26 settlement will be subject to additional in-year allocations that are already included in earlier year totals. Source: Scottish Government Budget documents Revenue funding from the Scottish Government fell by 1.8 per cent in real terms in 2023/24, despite significant in-year allocations 12. In 2023/24, revenue funding from the Scottish Government (at the spring revision) was £12.7 billion, a 4.2 per cent cash increase on the previous year but 1.8 per cent lower in real terms. General revenue grant funding and non-domestic rates combined decreased by 1.5 per cent. Specific revenue grants saw no cash increase which meant a reduction of 6.9 per cent in real terms. £ billion Page 256
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1. Council funding and budgets 11 13. Some further Scottish Government funding received by councils, although not formally ring-fenced, is provided with the expectation that it is directed to specific purposes. This is announced and distributed to councils in-year. In 2023/24, councils received an additional £1.6 billion at the autumn revision including additional funding to support teachers’ salaries as well as the expected transfers from other portfolios including health and education. A further £0.3 billion was transferred from other portfolios at the spring revision. 14. In 2023/24, we calculated that ring-fenced and directed funding amounted to almost £2.7 billion, which is 21 per cent of Scottish Government revenue funding to councils. This is lower than in 2022/23. In the 2024/25 Scottish Budget, following a commitment in the Verity House Agreement to reduce the level of ring-fenced funding, a number of ring-fenced or directed items were ‘baselined’ into the general revenue grant. This includes all £522 million of the early learning and childcare specific revenue grant and £429 million of in-year transfers including adult social care Living Wage funding, Free Personal and Nursing Care and Free School Meals Intervention. While no longer ring-fenced, spending will still need to be directed towards these policies. In the 2025/26 Scottish Budget, initial indications do not show any significant alterations. Councils identified £759 million of budget gaps at the start of 2023/24, and planned to use savings and reserves to address these 15. Councils set their own budgets in February and March for the financial year ahead using the initial allocation from the Scottish Government. At the time of setting their 2023/24 budgets, councils in our sample of 29 identified a cumulative budget gap of at least £759 million for the year. This represented a budget gap of 4.8 per cent of the total net cost of services. 16. To close the budget gap and set a balanced budget, councils took a range of actions. Over 90 per cent was covered by agreeing: • to make £260 million of recurring savings (34 per cent of the total share) • to make a further £30 million of non-recurring, one-off savings (four per cent) • to use £202 million of reserves (26 per cent) • to raise £144 million through increases to council tax (19 per cent) • to use £73 million of funding released via application of financial flexibilities (nine per cent)1 (Exhibit 2, page 13). 1 The budget gap and values that make up the bridging actions vary from those published in last year’s Financial bulletin as the sample is different and additional data returns were received post publication that are now included. During the budget- setting process, councils may identify a budget gap, which is the difference between their anticipated expenditure for the year and the funding and income they expect to receive. Councils will identify and agree bridging actions to allow them to set a balanced budget. This may include an agreement on savings to be made during the year. Page 257
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1. Council funding and budgets 12 17. The use of reserves and other non-recurring measures is unsustainable and is only a temporary plug for a budget gap in that one year. The gap will remain in future years until recurring measures such as recurring savings or increases to income are found or the service cost base is reduced. 18. The setting of council tax levels is an important mechanism available to councils in delivering a balanced budget. In 2023/24, councils increased their tax by an average of 5.4 per cent. This was used to bridge 19 per cent of the overall budget gap. The Scottish Government imposed a council tax freeze for 2024/25, instead providing £144 million to ‘fully fund’ the freeze to the equivalent of a five per cent increase. The Cabinet Secretary for Finance and Local Government confirmed during her budget statement in December 2024 that there will be no council tax freeze or cap for 2025/26. Page 258
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1. Council funding and budgets 13 Exhibit 2. The bridging actions councils identified within their 2023/24 budgets as a proportion of net cost of services Recurring savings and using reserves made up the majority of how councils intended to meet their identified budget gaps. Fife Glasgow Dundee East Ayrshire Renfrewshire North Lanarkshire Dumfries and Galloway Inverclyde Midlothian East Lothian West Lothian Aberdeenshire City of Edinburgh Argyll and Bute Scottish Borders South Ayrshire North Ayrshire Stirling East Renfrewshire Falkirk Perth and Kinross Aberdeen Angus Highland West Dunbartonshire South Lanarkshire Moray Scotland 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Increase to council tax Use of reserves Financial flexibilities Other Agreed savings recurring Agreed savings non-recurring Note: In addition to the three councils whose 2023/24 annual accounts were not available, Shetland and Orkney are excluded from this chart as both are outliers due to their high use of reserves to set their budget, reflecting the councils’ regular utilisation of the returns from significant investments and harbour income. Shetland’s bridging actions made up 35 per cent of their net cost of services (over 80 per cent of which related to reserves use). Orkney’s bridging actions made up 13 per cent of their net cost of services (of which over 90 per cent was use of reserves). Source: Council data returns (2023) and Councils’ annual accounts 2023/24 (audited and unaudited) Page 259
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1. Council funding and budgets 14 With Scottish Government capital funding remaining constrained, councils are increasingly reliant upon borrowing to fund planned investment decisions 19. Capital funding from the Scottish Government (at the spring revision) fell by 1.2 per cent in real terms between 2022/23 and 2023/24 and was 21 per cent lower than 2018/19. Both the general capital grant and specific capital grant have decreased in real terms. The specific capital grant, the proportion of funding that is ring-fenced for specific uses, was much lower than five years ago and has been relatively static for the past three years. This is due to the completion of the capital element of the Early Learning and Childcare Expansion Programme. Councils received £70 million of capital funding for use in 2023/24, by allowing an equivalent amount of revenue reserves to be released, and a further £22 million of funding to support the cost of local government pay awards (for example by allowing councils to use this instead of planned transfers from revenue budgets). 20. Capital funding was reduced further in 2024/25. The initial draft allocation for 2025/26 saw an increase compared to 2024/25 but capital funding remains lower than 2023/24 and earlier years. The longer-term reduction in capital grants means councils are having to finance their chosen investment in new facilities by other means. Councils are now more reliant on other sources of finance, such as borrowing, transfers from their revenue budgets and making use of financial flexibilities, than has previously been the case (paragraphs 33 - 41). Page 260
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15 2. Financial performance Councils increasingly relied on savings and reserves to ensure they remained within agreed revenue budgets; capital expenditure was lower than planned and borrowing increased. Improvements in how councils report their savings are still needed. Councils’ total revenue funding and income fell by 3.3 per cent in real terms in 2023/24, with income from service fees still below pre-pandemic levels. 21. In addition to Scottish Government funding and council tax, councils receive funding and income from several other sources, including fees and charges for using services and council house rents (Exhibit 3). 22. In 2023/24, from our review of 29 councils’ annual accounts, councils received £21.2 billion in revenue funding and income. This is £540 million more than 2022/23 but represents a real terms decrease of 3.3 per cent (£725 million) as increases in income have not kept pace with inflation. In 2023/24, total funding and income fell back to 2019/20 levels. 2. Financial performance Exhibit 3. Sources of council funding and income in 2023/24 The proportion of funding from each source is similar to 2022/23. GRG NDR Council Tax Grants (including Scottish Government & others) Customer and client receipts HRA rents Interest receivable & similar charges 1% (£0.2 billion) 7% (£1.4 billion) 9% (£1.8 billion) 16% (£3.4 billion) 13% (£2.8 billion) 14% (£3 billion) 40% (£8.5 billion) Note: Interest receivable refers to the interest that has been earned by investments, loans, or income to be received from overdue invoices. Source: Councils’ annual accounts 2023/24 (audited and unaudited) (based on 29 annual accounts) Page 261
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2. Financial performance 16 23. Council tax is an important source of income for councils, providing £2.8 billion in 2023/24. The proportion has remained static for the last five years at around 13 per cent of total funding and income. In 2023/24, councils received £11 million more income from council tax than in 2022/23, which is a 0.4 per cent real terms increase. 24. Income from customer and client receipts dropped significantly during the pandemic and has not yet returned to previous levels. Customer and client receipts are 12 per cent (£253 million) lower in real terms than in 2019/20. Councils reported receiving lower income than budgeted for as a reason for service overspends in 2023/24 across a broad range of services, with parking and waste the most common. However, the picture is mixed and for some councils and service areas increased income offset expenditure and led to services underspending against their budgets. Income generation, and the limited capacity to increase this, was cited by a number of councils as a risk to financial sustainability. Overall, councils remained within their agreed revenue budgets, but some services spent more than planned 25. In 2023/24, councils managed net budgets of around £15 billion, compared to £13.4 billion in 2022/23. Overall, councils reported a revenue budget underspend of £111 million or 0.7 per cent. This is around half the variance seen in 2022/23. Since 2019/20 there has been a small overall underspend each year and, except for 2020/21, this variance has decreased year-on-year. Despite the overall underspend, nine reported overspends against their agreed revenue budgets. 26. Councils reported both underspends and overspends at a service level, with workforce issues and income a common theme for both (Exhibit 4, page 17). Page 262
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2. Financial performance 17 Exhibit 4. Council overspends and underspends at a service level and reasons for them Workforce issues and income generation are a common theme for both. Service area Reasons for Overspends • Reported in a wide range of service areas with culture and leisure, children and families, education and adult social care being noted most often. • Service area overspends were mostly attributed to a lack of funding, workforce pressures and general cost increases. • Underperformance of a range of income streams also contributed to overspends in some councils. Underspends • Education and early years were referred to most often. • Communities, culture and leisure, and planning and economic development were also identified by some councils as areas of underspend. • Underspends in education and early years were often attributed to lower than anticipated demand and unfilled staff positions. • Underspends were sometimes attributed to more favourable income position, such as generating greater income than budgeted for and receiving additional VAT reimbursements. • Workforce issues, such as challenges with recruitment, and high vacancy levels, were also identified as a cause of underspends. Note: Culture and leisure services were reported in both but twice as often as an area of overspend than an underspend. Source: Council data returns Page 263
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2. Financial performance 18 Councils delivered significant savings, but some remain reliant on one-off measures and reporting against savings targets should be more transparent 27. From our sample of 30, 28 councils set a savings target in 2023/24, totalling £362 million, with £332 million (92 per cent) being achieved. This is significantly higher than the savings target reported by the same councils last year (£214 million). 28. Of the 30 councils: • eleven achieved their full savings target or more • thirteen missed their target but achieved 80 per cent or more • four achieved less than 80 per cent of their target • two councils (Fife and Orkney) did not have savings targets in place. 29. Not all councils could split savings targets or achieved savings information into recurring or non-recurring categories. Where we have a breakdown of how savings were achieved (27), 85 per cent (£244 million) were achieved on a recurring basis, compared to 82 per cent in 2022/23. Non-recurring savings accounted for 15 per cent of total savings achieved, at £42 million (Exhibit 5, page 19). Page 264
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2. Financial performance 19 Exhibit 5. Proportion of savings targets achieved in 2023/24, split by recurring and non-recurring savings (based on 27 councils that can split their savings in this way) Some councils continue to rely upon one-off measures to deliver in-year savings. 0 20 40 60 80 100 120 Shetland East Dunbartonshire Scottish Borders Aberdeenshire Highland Falkirk Argyll & Bute South Ayrshire Midlothian East Lothian Stirling City of Edinburgh Glasgow Dumfries & Galloway Perth & Kinross North Ayrshire Angus East Renfrewshire West Dunbartonshire Renfrewshire South Lanarkshire East Ayrshire North Lanarkshire Inverclyde West Lothian Dundee City Moray Scotland Percentage % of total target - recurring % of total target - non-recurring Note: In addition to the two councils that did not submit a data return, a further three councils are excluded from this exhibit. Aberdeen City sets a savings target to be achieved in the year but does not differentiate between recurring and non-recurring savings for monitoring purposes. The savings target was achieved for 2023/24. Fife and Orkney did not have a savings target in place in 2023/24. Source: Council data returns Page 265
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2. Financial performance 20 30. In our Financial bulletin 2022/23 we recommended that councils prioritise the achievement of recurring savings and avoid reliance on non-recurring measures. The overall extent of progress against our recommendation is difficult to assess due to a lack of detail and transparency in reporting on savings performance. Non-recurring savings are not always included in savings targets or performance information so it remains difficult to assess the overall reliance on these or, indeed, the overall savings achieved. 31. Additionally, a review of management commentaries within annual accounts found that not all councils are reporting progress against savings plans and, for the majority that are, these largely focus on their previous or future plans. The majority lacked detail on areas such as performance trends and, again, often did not report if savings were recurring or non-recurring. 32. Councils have identified the need to generate future savings as they undertake wider-scale transformation, redesign how services are delivered and consider their future policies on fees and charges for accessing services. This will need to be done in consultation with their partners and citizens. Councils should report more transparently the nature of their savings and how these could impact services on an ongoing basis. Capital expenditure was 20 per cent lower than planned and funded by increased borrowing 33. The value of council estates, mainly council owned property (including buildings and schools) and equipment, increased by £5 billion in 2023/24 to £51 billion. This reflects continuing investment by councils and, in 2023/24, capital expenditure was £3.5 billion. This is comparable in cash terms to 2022/23. Borrowing increased again in 2023/24 to £1.7 billion, a significant increase of £406 million (31 per cent) since 2022/23, and up £1.2 billion (196 per cent) since 2018/19. Borrowing was used to finance 49 per cent of total capital expenditure (Exhibit 6, page 21). 34. From our sample of 30 councils providing information through the data return, 25 reported a capital underspend in 2023/24 of £755 million. This equates to 20 per cent of councils’ total capital budget. This is less than the underspend of 24 per cent in 2022/23; however, it is still higher than the 17 per cent reported in 2018/19. Significant underspends were reported for both General Fund (23 per cent of budget) and HRA capital programmes (15 per cent of budget). Councils reported a range of project types and reasons for why capital underspends had occurred (Exhibit 7, page 21). Page 266
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2. Financial performance 21 Exhibit 6. Capital expenditure split by sources of finance, in cash terms Borrowing and government grants remain the most significant means of financing capital investment. 2022/23 2023/24 -0.5 0 0.5 1 1.5 2 Other contributions and Public Private Partnership (PPP) Internal loans fund repayments available to reinvest Government grants Capital receipts Capital Funded from Current Revenue (CFCR) An increase in borrowing billion Note: Internal loans fund repayments are an annual charge that recognise capital costs in the revenue budget. Once repaid, they allow borrowed funds to be used elsewhere. Capital receipts are income councils generate from selling existing assets. Revenue transfers is capital expenditure funded from service revenue budgets. Source: Councils’ annual accounts 2022/23 and 2023/24 (audited and unaudited) Exhibit 7. Type and reasons for underspends on councils’ capital programmes Project type Reasons for Underspends • School and early learning building projects. • Housing projects. • Large-scale infrastructure projects (with a small number of councils underspending in relation to projects being delivered as part of their City Deals). • Project and programme slippage, caused by a range of supply chain and capacity issues. • Project delays caused by cost, contract and legal negotiations and unexpected issues arising during the course of works. • Project deferment. Source: Council data returns Page 267
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2. Financial performance 22 35. Managing their capital programmes is an important tool for councils to control their annual expenditure. All but two councils reported having a multi-year capital plan in place. These covered a range of periods from five to 30 years, with most covering five to ten years. South Lanarkshire and Stirling councils both reported only having an annual capital plan in place. A multi-year plan allows councils to manage their capital spending over this period. 36. However, consistently failing to invest in estates and infrastructure increases the risk that asset failures may impact services, projects will become more expensive to deliver, and that maintenance spending will need to increase due to assets becoming older. It also impacts the ability of councils to manage their overall estates, identify surplus assets and consider the efficiency of partnership working, including co-location with other services. Borrowing means debt has again increased, and further borrowing will be needed to invest in new schools 37. Due to the increased reliance on borrowing to fund investment, councils’ net debt has now risen to £19.8 billion. This is an increase of 15.8 per cent from 2022/23 and a 29.7 per cent increase since 2018/19. All but one council increased their debt in 2023/24. The cost of servicing debt has risen, with a 16 per cent rise in interest payable and similar charges since 2022/23. Interest payable as a proportion of net cost of services, was six per cent compared to five per cent in 2022/23. 38. Under LEIP, councils borrow to meet the cost of building new schools, with the Scottish Government providing revenue grant funding over a 25-year period linked to specific outcomes (maintenance, energy efficiency, digital infrastructure and job creation) to meet maintenance and life-cycle costs. Councils, however, need to fund the £1 billion cost of building schools, including any interest on the money borrowed to fund this. The programme has faced significant delays and cost increases and, to complete the programme by the planned date of 2027, significant further borrowing by councils will be needed. 39. Alongside investing and maintaining their own estates, councils have made use of a range of different Public Private Partnership (PPP) contracts to invest in their estates. A number of earlier Private Finance Initiative (PFI) contracts are now nearing the end of their terms. Councils are having to prepare for, and manage, complex closing arrangements. Councils have already entered into negotiations relating to contracts that are ending, with 10 PFI contracts due to expire by the end of 2030. In September 2019, the Scottish Government announced it would support £1 billion of capital investment in the school estate on a match-funding basis. In consultation with councils, this created a joint £2 billion Learning Estate Improvement Programme (LEIP), enabling additional investment without the use of private finance contracts. Councils provide upfront capital funding and Scottish Government revenue follows over 25 years for achievement of outcomes. Page 268
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2. Financial performance 23 40. By making use of financial flexibilities across 2022/23 and 2023/24, councils have been able to reprofile the debt associated with PPP contracts. This has allowed councils to recognise significant gains from annual contractual payments they have previously made, recognising these within their usable reserves. Future capital expenditure will be able to be offset against these, but they are not cash backed. This means the need for councils to borrow to finance their future capital investment has not changed, nor have their current external debts. Alongside LEIP projects, councils have already committed to significant future borrowing. 41. Councils set and agree their borrowing and treasury management strategies individually, deciding on what is a prudent and affordable level of debt under the Prudential Code. As part of this, a range of indicators are considered, including the cost of servicing their debts, to show that capital plans are affordable and sustainable. Increased borrowing means increased costs that will need to be met annually from revenue budgets. While auditors have not expressed specific concerns about the level of borrowing (in the 15 annual audit reports that were available at the time of our review), it is a factor in the assessment of financial sustainability and auditors are expressing greater concerns about the overall financial sustainability of councils (paragraph 58). Between 2020 and 2024, the Scottish Government permitted councils to make use of a range of financial flexibilities to manage financial pressures. One of these related to service concessions (including PPP) and allowed councils to reprofile debt repayments. This offered an immediate benefit of significant one-off increases to reserves but these are not cash backed, and debt payments will need to be made for longer, deferring costs to later years which has implications for future revenue budgets. Page 269
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24 3. Financial position and outlook Using reserves to manage financial pressures and stay within agreed budgets is not sustainable. Usable reserves fell in 2023/24, and most are committed for specific purposes. Progress on transformation and reform must be prioritised to ensure longer-term financial sustainability. Councils’ usable reserves remain higher than before the pandemic, mainly due to the use of financial flexibilities, but decreased in 2023/24 42. Holding and using reserves is a normal, and helpful, way of managing council finances but reserves are a one-off resource meaning councils need to carefully plan and monitor how these are being used. Using reserves to support services in the short term is not sustainable unless they are used to support service transformation and generate future savings. 43. In 2023/24, councils’ total usable reserves decreased by five per cent to £4.1 billion which equates to around 25 per cent of net cost of services. The overall decrease is attributed to a fall in capital reserves along with a very modest increase in revenue reserves (Exhibit 8, page 25). 44. Usable reserves remain £1.66 billion higher than before the pandemic. Revenue reserves were boosted in recent years by: • Covid-19 funding, but these are largely exhausted with only around £67 million remaining earmarked (2.8 per cent of the committed General Fund balance) • making use of financial flexibilities related to service concessions, resulting in reprofiled debt and significant one-off increases to reserves. Although an accounting adjustment, and not cash backed, these can be used to support services. 3. Financial position and outlook Usable reserves can be used to support service delivery, and to meet in-year expenditure (and are sometimes referred to as cash backed reserves). Unusable reserves represent accounting adjustments to reflect things such as an increase in the value of council-owned buildings. They generally cannot be routinely accessed or used to support services. Page 270
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3. Financial position and outlook 25 Exhibit 8. Councils’ usable reserves, 2023/24 compared to 2022/23 and 2018/19 Revenue reserves are higher than pre-pandemic but have remained relatively static in the last year. 0 .5 1 1.5 2 2.5 3 3.5 4 £ billion Revenue Capital 2018/19 2022/23 2023/24 Note: Total usable reserves were £4.1 billion in 2023/24. Between 2022/23 and 2023/24 revenue reserves increased by 0.8 per cent, capital reserves fell by 33 per cent. Total usable reserves are 68 per cent higher than in 2018/19, up from £2.4 billion (90 per cent increase in revenue reserves, four per cent decrease in capital reserves) Source: Councils’ annual accounts 2023/24 (audited and unaudited) Page 271
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3. Financial position and outlook 26 45. The overall decrease in usable reserves in 2023/24 is notable as they have been increasing significantly in recent years. Two-thirds of councils still increased their total usable reserves, but this is largely attributable to councils making use of financial flexibilities (a number of councils accounted for this in 2022/23, while others introduced it in 2023/24). 46. Around a third of councils saw their total usable reserve fall in 2023/24, including some large decreases related to the drawing down of committed reserves. These reserves were used for Equal Pay settlements, pay awards, budget support and the further deployment of Covid-19 reserves. General Fund reserves increased slightly but over 80 per cent are committed for specific purposes 47. General Fund reserves (excluding the HRA element which not all councils have) continued the upward trend of the past five years, increasing by three per cent in 2023/24 to £2.8 billion. This equates to 17 per cent of net cost of services and is driven by growth in committed reserves. Uncommitted reserves have remained constant at between two and three per cent of net cost of services (Exhibit 9, page 27). 48. In 2023/24, over 80 per cent of the General Fund was committed. This means that it has been allocated for specific purposes and is not readily available for other uses. The General Fund is the principal usable revenue reserve held by councils. It can be used for a wide range of purposes, including bridging budgets gaps as it can be used to finance spending on services or some elements of capital spending. The Housing Revenue Account (HRA) reserve can only be used to fund spending on council-owned housing. Committed reserves have been allocated (or earmarked) for specific purposes and are not readily available for other uses. Uncommitted reserves can be deployed more easily and, because of the nature and scale of it, the uncommitted element of the General Fund can be considered to represent a degree of contingency funding. Page 272
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3. Financial position and outlook 27 Exhibit 9. Councils’ General Fund balance between 2018/19 and 2023/24, split by committed and uncommitted General Fund reserves are increasing but over 80 per cent is committed. 2019/20 2020/21 2021/22 2022/23 2023/24 2018/19 General Fund committed General Fund uncommitted £730m £360m £848m £467m £0.9bn £0.3bn £0.9bn £0.3bn £1.9bn £0.4bn £2.2bn £0.4bn £2.3bn £0.4bn £2.4bn £0.5bn Source: Councils’ annual accounts 2023/24 (audited and unaudited) Some councils’ levels of uncommitted reserves are low, but they have specific reserves earmarked for contingency 49. Councils have reserve policies in place, which set out the rationale for the minimum level of uncommitted reserves held by the council. Most have an agreed minimum level, usually two per cent of their net budgeted revenue expenditure, although four councils have set this higher. 50. In 2023/24, nine councils had an uncommitted reserves level of less than two per cent of net budgeted revenue expenditure. However, a review found that in many cases these low reserve levels were planned decisions and the levels were deemed to be sufficient and/or supported by additional committed funds for contingencies. Aberdeenshire, South Ayrshire and West Dunbartonshire all had uncommitted reserves below their minimum level and intend to review this during 2024/25. Page 273
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3. Financial position and outlook 28 51. While councils hold uncommitted reserves for contingencies, around a third reported also earmarking some reserves specifically for contingencies to either manage budget risks or specific risks, such as adverse weather. The nine councils providing information on the value of the reserves earmarked for contingencies reported a total of £50 million. Councils continue to use their reserves to manage budget pressures, but this is not sustainable 52. While overall usable reserves levels remain high, there is evidence that councils are continuing to use reserves to support service spend and this is not sustainable. In 2023/24: • Councils bridged over a quarter of their budget gap using reserves (£202 million). • Twelve councils reported making unplanned use of reserves in 2023/24, to support in-year spending and to balance the outturn position. This was most often to cover the cost of the 2023/24 pay award; to address specific service or project pressures, or to provide financial support to IJBs. 53. Usable reserves held as a proportion of spending has reduced. In 2023/24, 15 councils held usable reserves that were over 20 per cent of their net cost of services, which is less than 2022/23 (20 councils) but still higher than before the pandemic (nine councils). This indicates that reserves are increasing at a slower rate than expenditure, even with use of financial flexibilities. One council had total usable reserves of less than ten per cent of their net cost of services. Councils could improve how clearly they report on how they intend to use their reserves 54. With the use of reserves to support services and the low level of uncommitted reserves across the sector it is increasingly important that councils report how and when the intend to make use of their reserves (Case study 1, page 29). Page 274
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3. Financial position and outlook 29 Case study 1. Councils could be more transparent within their published plans about how they intend to make use of reserves A review of councils’ management commentaries found that all councils clearly identify key areas of reserves and explain their purpose, with most identifying their minimum reserve level. All but two councils reported, through their data return, that they formally document or publish at least some information about their committed reserves. Committed reserves information is usually documented in councils’ accounts or financial outturn reports, and sometimes in other formats, such as reserves reports. Few councils reported documenting information in performance monitoring reports. Nearly all councils publish and document a full costed breakdown of committed reserves categories and details of what has been drawn down within the year. Although most formally document what is committed for major initiatives, this information is not always published. Only two thirds of councils document or publish information on planned spend for future years. Source: Council data returns and Council annual accounts 2023/24 (audited and unaudited) Recent changes to pension contribution rates offer councils a short-term window to reduce costs 55. The result of the 2023 triennial revaluation showed a significantly improved funding position across Scotland’s 11 local government pension funds. Councils are using this as an opportunity to lower their employer contributions and reduce their costs in the short-term. The 12 councils who are members of Strathclyde Pension Fund are reducing their contribution rates from 19.3 per cent to 6.5 per cent for 2024/25 and 2025/26 (increasing to 17.5 per cent in 2026/27), significantly reducing their annual contribution costs for two years. Other councils are making more modest reductions to their contribution rates of between two and three percentage points. Ensuring medium- and long-term financial sustainability is a significant challenge 56. The risks to financial sustainability are well known. These include external factors such as increased demand, demographic changes and the need to invest significantly to address certain policy areas such as climate change and its impact. There are also specific pressures that councils identified as presenting risks to achieving future financial balance/ sustainability including: Page 275
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3. Financial position and outlook 30 • Uncertainty about future funding: single-year settlements, ring-fencing of funding and directed funding for specific Scottish Government policies limiting local flexibility (for example, teacher numbers, social care provision and IJB allocations). • Council tax freezes: while there is no freeze in 2025/26, the Scottish Government froze council tax between 2008/09 and 2016/17, and in 2021/22, and capped increases at three per cent in 2017/18 and 2018/19. The risk of future freezes is seen as a main challenge to ensuring medium- to long-term financial sustainability. Even when ‘fully funded’ a council tax freeze suppresses the growth of the council tax base over that period and the income generated when the freeze is lifted is lower than if councils were able to make tax-raising decisions at a local level. • Pay awards and employers’ NI costs: overspends have been caused by pay awards, with some councils reporting that the budgets provided are not enough to cover the costs or these costs are unfunded. In 2023/24, three councils made unplanned use of reserves to meet pay awards and there is ongoing uncertainty about the scale of future annual offers. There is now also uncertainty over how increased employers’ NI contributions will be funded. • Inflationary pressures: general pressures and some specific issues that impact the delivery of capital programmes (costs of goods and services, service demand, public perception, borrowing, funding, increasing standards and difficulty with asset sales). • Savings: some councils cited the challenge of identifying and achieving recurring savings. 57. Most councils reported that financial sustainability was a significant challenge. Some specific challenges reported by councils include: • Angus Council reported the need for change if they are to be financially sustainable over the medium to long term. The scale of reductions required could leave some services unable to function. • East Lothian Council identified critical risks to its fiscal sustainability and reported managing their financial environment as the highest ever scoring risk on their Corporate Risk Register. • Inverclyde Council reported that ongoing depopulation may mean significant future funding reductions. • Orkney Islands Council highlighted the growing contribution from reserves to meet in-year service costs as being unsustainable. • Shetland Islands Council reported they were financially unsustainable on the basis of current plans. Page 276
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3. Financial position and outlook 31 58. Alongside councils’ own assessment of their financial sustainability, many auditors highlighted in their 2023/24 annual audit reports (15 available for review) the challenges councils face in achieving financial balance in future years and securing long-term financial sustainability. These centred on the scale of budget gaps; the need to keep on top of savings plans; low levels of uncommitted reserves; unsustainable cost bases and the difficult choices to be made. Councils have medium-term financial plans in place but must now make progress on transformation and reform 59. While several councils reported confidence that they had robust processes and actions in place to ensure they were financially sustainable, councils largely reported that it is difficult to plan into the future without clarity on medium- or long-term government funding and priorities, stating there is general economic uncertainty and volatility. This difficulty, however, underlines the importance of councils ensuring that they have a clear understanding of risks to their financial positions, effective risk management processes to monitor these, and indicative forecasts informed by scenario planning. 60. All councils that provided data returns to us reported having medium- term financial plans in place, with most of these spanning 3-5 years (25 out of 30 councils). Most councils (25) reported that they reviewed their financial plans in 2024. Half of councils (15 out of 30) have a long- term financial plan in place and, for those that do, most cover a 10-year period. 61. As we set out in our recent Transformation in councils report, councils must prioritise and progress the delivery of their plans for transformation. And a step change is needed in terms of scale and pace. That could look like new innovative approaches to service delivery, reconsidering which services could be more effectively delivered by other partners, exploring opportunities for new income generation (including those that are being legislated for) or identifying how economies of scale could be achieved by sharing services. 62. Delivering transformation successfully requires resources to be committed towards it and it is positive to see that most councils (27 from our data return sample of 30) reported holding reserves earmarked for transformation. Glasgow, Orkney and Shetland did not. Of the 26 providing information on the value held, a total of £270 million was reported which is about 13 per cent of committed General Fund balance and equates to two per cent of the net cost of services. Most councils’ transformation reserves were equivalent to two per cent or lower of net cost of services, but some earmarked a significantly higher proportion. Argyll and Bute earmarked the equivalent of ten per cent of net cost of services, Scottish Borders six per cent, and Aberdeenshire, East Lothian and Highland all earmarked five per cent. Transformation is our next Best Value thematic focus and we will be auditing councils’ plans for transformation as part of the 2024/25 annual audit. Page 277
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3. Financial position and outlook 32 Councils could make more use of financial sustainability indicators, including to inform their longer-term planning 63. Assessing and monitoring financial sustainability is essential. Councils use a range of indicators to do so, but the type used, and extent of their use, varies. The Local Government Benchmarking Framework includes sustainability indicators, currently being reviewed by Directors of Finance, to ensure that they remain appropriate, and CIPFA also recommends indicators. Councils are not required to use specific indicators and have discretion as to how they assess their own financial sustainability. 64. We asked councils how they assess and monitor financial sustainability, including how this is reported to elected members: • Around three-quarters of councils use the Local Government Benchmarking Framework Indicators and the CIPFA level of reserves indicator. • Around a third of councils use the CIPFA change in reserves and reserves sustainability measures. • Some councils reported that they use their own equivalent calculations or different indicators including outturn against expenditure, ratio of council tax to overall funding, ratio of financing costs to net revenue stream, external debt and borrowing levels, and recurrent versus non-current budget mitigation. 65. Most councils reported that they assess and monitor financial sustainability more generally, such as via the regular monitoring of budgets, reserves and the capital financing requirement; and carrying out periodic risk assessments. For example, East Ayrshire Council’s ‘East Ayrshire Performs’ reports financial and service performance information about the council publicly, including a suite of financial resilience indicators, focusing on council reserves and liquidity but also capital financing, investment and borrowing. 66. Most councils include and consider financial indicators within their financial plans, with 17 councils including an analysis of financial sustainability and/or resilience indicators within their medium-term financial plans and nine within their longer-term plans. 67. All councils reported to us that elected members had been provided with a summary of the council’s medium- to long-term financial sustainability but more needs to be done to regularly and formally report upon the consideration of financial sustainability. This should be reported publicly, as a minimum, as part of annual budget-setting papers and within annual refreshes of financial plans. Page 278
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3. Financial position and outlook 33 Financial outlook 68. Within this report we outline the financial challenges Scotland’s councils are now facing. While indications are that the 2025/26 budget will result in increased funding, and councils are now free to vary council tax rates, it is unlikely that increased funding and income will be able to keep pace with increasing costs. In recent years councils have been able to increase the reserves they hold, but much of this has been due to additional Covid-19 funding, use of financial flexibilities and other one- off actions. The initial benefits of these measures, and the reserves that councils were able to build, do not negate the need for significant reform and transformation. 2023/24 saw a reduction in usable reserves and while this represented only five per cent of these reserves, this was equivalent to over eight per cent of the usable reserves held as recently as 2019/20. 69. How councils plan to use their reserves, make savings and transform their services needs to become more transparent as financial sustainability issues are to be addressed. The need to consult local communities and clearly communicate the implications of budget decisions has never been more important. 70. Our next Local government in Scotland publication, Local government budgets 2025/26, will examine the steps that Scotland’s councils take as they set their budgets for 2025/26, setting out the finalised funding settlement from the Scottish Government, decisions taken in setting council tax and the steps they intend to take to fund and transform services. Page 279
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Appendix 1 Progress against the recommendations in Local Government in Scotland Financial Bulletin 2022/23 Councils should: Progress/ status Prioritise the achievement of recurring savings and avoid reliance on non-recurring savings to enhance longer-term financial sustainability In progress/Limited progress The overall extent of progress against this recommendation is difficult to assess due to a lack of detail and transparency in reporting on recurring and non-recurring savings performance (paragraph 30). An updated recommendation on savings performance and transparency is included in this report. Ensure that management commentaries are open and transparent, include a clear link between budget outturn and the financial performance in the accounts and report on the achievement of planned savings targets In progress Our review of 2023/24 management commentaries found that that most councils reported outturn against budget with significant variations explained. However not all councils provided sufficient information on savings target achievement. An updated recommendation on savings performance and transparency is included in this report. Provide clear statements about reserves policy and explicitly set out the purpose of committed reserves within their annual accounts. This will enhance the level of assurance that councils can provide regarding their ongoing financial sustainability Complete / In progress A review of available councils’ management commentaries found that key areas of reserves were clearly identified, with the purpose explained and the majority identifying a minimum reserve level. However publication of committed reserve information was less well evidenced (Case study 1). An updated recommendation on greater transparency of reserves is included in this report. Cont. 34Appendix 1Page 280
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Appendix 1 35 Councils should: Progress/ status Ensure effective and timely consultation and engagement with communities on the options that must be considered to achieve a balanced budget In progress Less than half of councils stated, via our data return, that public consultation was undertaken when preparing budgets for 2023/24. In our Local government budgets 2024/25 publication, 24 out of 32 councils stated they undertook community engagement on financial pressures. We will follow this up in our budget briefing in Spring 2025 when we look at councils’ 2025/26 budget setting. Strengthen their monitoring and reporting of financial resilience including clearer and more public-facing use of performance against financial resilience indicators and measures. Financial resilience indicators should be a component of councils’ medium and longer-term financial plans to provide assurance that they are balancing short-term pressures with robust planning for long- term financial sustainability In progress Most councils reported that they assess and monitor financial sustainability, with financial indicators used in financial plans, with 17 explicitly using these within their medium- and long-term financial plans (paragraphs 63 - 67). An updated recommendation on the use of financial indicators in monitoring and reporting is included in this report. Work with the Scottish Government to build momentum and accelerate progress in the development of a fiscal framework for local government to enhance the clarity and certainty of budgets for councils in future years In progress We understand that COSLA and the Scottish Government have been progressing the development of a fiscal framework Page 281
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Local government in Scotland Financial bulletin 2023/24 Audit Scotland, 4th Floor, 102 West Port, Edinburgh EH3 9DN Phone: 0131 625 1500 Email: info@audit.scot www.audit.scot ISBN 978 1 915839 60 2 Page 282
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Appendix 2 Local Government in Scotland – Financial Bulletin 2023/24 Key Facts Financial Performance Local Government in Scotland Argyll and Bute Council 3.3%: the real-terms reduction in councils’ total revenue funding and income in 2023/24 compared to 2022/23 • Total revenue funding and income from government grants, fees and charges, and Council Tax increased by £19.8m or 6.9% from £287.6m in 2022/23 to £307.4m in 2023/24, representing a standstill in real terms (per the report, standstill budget equivalent to 6.9% reduction in real terms) 9 out of 29: the number of councils that reported overspends against their agreed revenue budgets • Net underspend of £4.9m reported (prior to £3.2m earmarkings), mainly in respect of debt charges (£5.9m underspend), partially offset by overspends across and RIS and unbudgeted severe weather costs not covered by the Bellwin Scheme 11 out of 30: the number of councils that achieved all their planned savings • 100% or £2.6m of non-recurring savings target achieved • 97% or £6.6m of recurring savings target achieved • 98% or £9.2m of £9.4m savings target achieved overall (92% of savings across 28 councils achieved) 25 out of 30: the number of councils that reported lower expenditure than planned across their capital programmes in 2023/24 • Slippage of £28.7m approved throughout 2023/24 • Overspend of £4.7m on revised budget of £33.2m for the year due to income profiling, with no variance projected over the £219.8m programme £19.8 billion: councils’ net debt in 2023/24, a 15.8% increase on 2022/23, as councils become more reliant on borrowing to finance their capital programmes • Net debt (excluding PPP/Finance Leases) increased by £20m or 29% from £69m as at 31 March 2023 to £89m as at 31 March 2024 • The Capital Financing Requirement increased by £7m or 4% from £180m as at 31 March 2023 to £187m as at 31 March 2024 Page 283
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Appendix 2 Continued Financial Position and Outlook Local Government in Scotland Argyll and Bute Council 5%: the decrease in councils’ total usable reserves • The balance of usable reserves has increased by £28m or 30% from £94m as at 31 March 2023 to £122m as at 31 March 2024, largely in respect of an increase of £29.4m in the General Fund balance (£35.7m Service Concessions) 84%: the proportion of the General Fund that is committed • As at 31 March 2024, the General Fund balance totalled £115.7m, of which £107.4m or 93% was earmarked for specific purposes, £6m or 5% general contingency (2% of net expenditure) and £2.3m or 2% unallocated 12 out of 29: the number of councils that made unplanned use of their reserves in 2023/24 to manage budget pressures • It was not necessary to make an unplanned use of reserves during 2023/24 • Budget pressures were managed within overall available budget resources 15 out of 30: the number of councils that have long-term financial plans in place, with councils reporting difficulty planning for the longer term due to future uncertainty • Medium term (3-5 years) Revenue Budget 5 year financial plan set out within annual budget pack and updated on an ongoing basis throughout the year, as part of the Budget Outlook report • Medium term (3-5 years) 3 year Capital Plan set out within annual budget pack and updated on an ongoing basis throughout the year, as part of the Capital Monitoring report Page 284
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Appendix 3 Local Government in Scotland – Financial Bulletin 2023/24 Compliance with Recommendations Recommendation Current Status 1. Report on the savings made within their management commentaries more comprehensively, including provision of comparisons to savings targets agreed during budget-setting, and whether they were recurring or non-recurring. Fully compliant with recommendation. 2. Ensure that the impact of capital underspends, future borrowing projections and of using financial flexibilities on their indebtedness are reported clearly alongside the impact of these on future revenue budgets. Partially compliant with recommendation. • The capital plan is reflected within the borrowing requirements set out within the approved Treasury Management Strategy, with the impact of slippage in the capital programme reflected within updated borrowing projections, reported as part of the regular monitoring of the capital programme and of treasury management strategy and activity. • Improvements can be made to deliver longer term capital planning and greater convergence between capital and revenue budgets. It is anticipated that this will be addressed as part of the review of capital arrangements to be undertaken during 2025/26. 3. Ensure reserves policies indicate explicitly and clearly the impact of financial flexibilities on reserves held; the nature, level of and intended timing of the deployment of committed usable reserves held; and the level of uncommitted and contingency funding held within General Funds. Fully compliant with recommendation. Page 285
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Recommendation Current Status 4. Prioritise service transformation, considering the impact of current service delivery models on longer-term financial sustainability, including the medium- term impact on reserve levels. Examples of good practice/compliance exist. • Significant resources earmarked for investment in transformation to deliver service reform and efficiencies, supporting future long term savings and financial sustainability. Budget savings include targets to be delivered from service reviews (Education and RIS), predicated on service efficiency and redesign. • Additional resources have also been made available to HSCP, specifically to support transformation and longer term financial sustainability. • This will continue to be a key focus in making the best use of our available resources, including the transfer of budget underspends to reserves and earmarking of reserves for specific purposes. 5. Ensure that financial sustainability becomes a central focus of financial monitoring and reporting, making greater use of financial sustainability indicators within reports to elected members and within their regular public reporting and financial strategies and plans. Largely compliant, with good evidence of compliance. However, opportunities for further improvement should be considered within future monitoring and reporting in respect of greater use of financial sustainability indicators, where appropriate. • Policy and Resources Committee review and approve financial monitoring reports, as required, on an ongoing basis throughout the year. This includes reporting on the revenue and capital budget monitoring, revenue budget outlook, reserves and balances, financial risks. • Treasury management strategy and activity, including Prudential and Treasury Indicators, ensuring that our capital plans are prudent, affordable and sustainable are scrutinised by committee and referred to full Council for approval. • Council considers the longer term revenue budget outlook, the reserves and balances position, financial risk and the capital plan, as part of the annual budget setting process. • Council requires to approve the audited annual accounts, including key financial indicators within the management commentary; and also considers the annual audit report, covering financial sustainability as a key theme. Page 286
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE CUSTOMER SUPPORT SERVICES 12 JUNE 2025 LOCAL GOVERNMENT BENCHMARKING FRAMEWORK (LGBF): 2023/24 1.0 INTRODUCTION 1.1 This report provides a high-level summary of Argyll and Bute’s performance as reported in the Local Government Benchmarking Framework data. 2.0 RECOMMENDATIONS It is recommended that the Audit and Scrutiny Committee: 2.1 Considers the contents of this report and notes the trend of net improvement across the council’s functions. Page 287 Agenda Item 13
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE CUSTOMER SUPPORT SERVICES 12 JUNE 2025 LOCAL GOVERNMENT BENCHMARKING FRAMEWORK (LGBF): 2023/24 3.0 DETAIL 3.1 All Scottish Councils engage with the Local Government Benchmarking Framework (LGBF), which is managed by the Improvement Service. The purpose of the LGBF is to enable local authorities to improve their performance through benchmarking and the sharing of good practice. The Accounts Commission noted in their recent Best Value report the council’s intention to use LGBF indicators in our self-assessment activity. This is being picked up as part of the ongoing Performance Excellence Project. In addition, the use of the LGBF in the context of our newly agreed corporate plan was discussed at the Chief Officer’s group on 29th April. Further sessions have been agreed with Heads of Service to identify relevant Key Performance Indicators (including those relevant indicators from the LGBF) that will support the Council to monitor progress against the priorities set out in the Corporate Plan. 3.2 In an effort to produce more timely data, the Improvement Service made changes to its publication schedule last year. Six indicators are now being updated monthly. However, for the purposes of this report, data for the most recent full years for which data are available are used, with comparisons being made with previous years. 3.3 The number of indicators within the LGBF has grown over time from 55 in 2010/11 to the current 108 (see Appendix 1). The breadth of areas covered by the indicators has also expanded over time and currently covers the following service areas. • Corporate services • Social Work services • Culture and Leisure • Environmental Services • Housing Services (Argyll and Bute does not submit any data in this area) • Corporate Assets / Property • Economic Development • Financial Sustainability • Tackling Climate Change It is worth noting that these ‘service areas’ have been identified by the Improvement Service and do not match directly to Services within the council’s organisational structure. Page 288
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3.4 The geography and demography of our area impact on indicators in a variety of ways. For some indicators, we recognise we cannot improve our performance relative to other councils (for example the cost of providing pre-school, primary, and secondary education per pupil, and indicators relating to roads conditions, where we consistently perform toward the bottom of the fourth quartile) 3.5 Despite the caveats around our population profile and geography, the proportion of indicators in the bottom performance quartile has been decreasing over time. 3.6 Figures 1 and 2 show an overall pattern of relative improvement in recent years. 3.7 The data needs to be treated with a degree of caution as it does not show continuous improvement by individual indicators. Performance of a single indicator may fluctuate from year to year; also, the number of indicators reported varies from year to year. Rather, the figures show the percentage of indicators within each performance quartile to give a high-level overview of the council’s performance relative to other local authorities. This profile of indicators has shifted to suggest a pattern of relative improvement. Where performance falls within the quartiles 1 and 2, performance is above the Scottish average. 3.8 In the last year, 60% of indicators for Argyll and Bute were in quartiles 1 and 2 (25% in quartile one, and 35% in quartile two). Figure 1: Performance by quartile (2022/23 and 2023/24). Figure 2: Percentage of indicators in each LGBF performance quartile over recent years. Page 289
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3.9 A comparison of the data for the years 2022/23 and 2023/24 shows that, for the 99 indicators for which comparison can be made: • 23 indicators moved to a higher quartile, suggesting improved relative performance. (This compares to 34 moving to a higher quartile reported last year) • 65 indicators stayed within the same quartile (this compares to 34 reported last year) • 11 indicators moved to a lower quartile, suggesting worsening relative performance (this compares to 29 reported last year) • 3 indicators moved out of quartile four, compared to 4 moving in. 16 indicators were in quartile four for both the latest and the previous year. These include the previously mentioned indicators relating to cost of pre- school, primary and secondary education per pupil and roads conditions 3.10 For further information about how councils are collectively performing across Scotland, and how challenges facing local authorities have impacted on performance, see the National Benchmarking Overview Report 2023-24 3.11 For further information about performance for individual indicators and comparisons with our ‘family groups’ of councils, see the Improvement Service’s Local Government Benchmarking Framework Dashboard. 0 5 10 15 20 25 30 35 40 45 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 Percentage of indicators in each quartile Year Indicators in each LGBF performance quartile over time: Argyll and Bute Quartile 1 Quartile 2 Quartile 3 Quartile 4 Page 290
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3.12 As part of the Performance Excellence Project, we are continuing to engage with managers to understand how they currently use the LGBF and to encourage more effective use in the future. 4.0 CONCLUSION 4.1 This report has outlined our performance position relative to other Scottish local authorities as revealed by the Local Government Benchmarking Framework data. Overall, the picture is a positive one, suggesting net overall improvements in performance. 4.2 Work to improve the effectiveness and efficiency of how we use the Local Government Benchmarking Framework data as part of our wider benchmarking activity will continue as part of the Performance Excellence Project. 5.0 IMPLICATIONS 5.1 Policy: none arising directly from this report. 5.2 Financial: none arising directly from this report. 5.3 Legal: none arising directly from this report. 5.4 HR: none arising directly from this report. 5.5 Customer Service: none arising directly from this report. 5.6 Risk: none arising directly from this report. 5.7 Climate Change: none arising directly from this report. 5.8 Fairer Scotland Duty: none arising from this report. An IIA is not required for performance reporting. 5.9 Equalities: none arising from this report. An IIA is not required for performance reporting. 5.10 Consumer Duty: none arising from this report. An IIA is not required for performance reporting. 5.11 Island Communities: none arising from this report. An IIA is not required for performance reporting. Page 291
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5.12 Children’s Rights and Wellbeing: none arising from this report. An IIA is not required for performance reporting. Kirsty Flanagan Executive Director with responsibility for Customer Support Services Policy Lead: Councillor Mark Irvine 16 May 2025 For further information contact: Jane Fowler, Head of Customer Support Services, jane.fowler@argyll-bute.gov.uk Chris Carr, OD Project Officer, chris.carr@argyll-bute.gov.uk APPENDICES Appendix 1: List of Local Government Benchmarking Framework indicators Page 292
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Appendix 1: List of Local Government Benchmarking Framework indicators Indicator Code Indicator Title Service Area C&L01 Cost per attendance at Sports facilities Culture & Leisure Services C&L02 Cost per Library Visit Culture & Leisure Services C&L03 Cost per Museum Visit Culture & Leisure Services C&L04 Cost of Parks & Open Spaces per 1,000 Population Culture & Leisure Services C&L05a Proportion of adults satisfied with libraries Culture & Leisure Services C&L05b Proportion of adults satisfied with parks and open spaces Culture & Leisure Services C&L05c Proportion of adults satisfied with museums and galleries Culture & Leisure Services C&L05d Proportion of adults satisfied with leisure facilities Culture & Leisure Services CHN01 Cost per Primary School Pupil Children's Services CHN02 Cost per Secondary School Pupil Children's Services CHN03 Cost per Pre-School Education place Children's Services CHN04 % of Pupils Gaining 5+ Awards at Level 5 Children's Services CHN05 % of Pupils Gaining 5+ Awards at Level 6 Children's Services CHN06 % of Pupils from 20% most Deprived Areas Gaining 5+ Awards at Level 5 Children's Services CHN07 % of Pupils from 20% most Deprived Areas Gaining 5+ Awards at Level 6 Children's Services CHN08a Gross Costs of 'Children Looked After' in residential- based services per child per week Children's Services CHN08b Gross Cost of "Children Looked After" in a community setting per child per Week Children's Services CHN09 Proportion of children being looked after in the community Children's Services CHN10 Proportion of adults satisfied with local schools Children's Services CHN11 Proportion of pupils entering positive destinations Children's Services CHN12a Overall Average Total Tariff Children's Services CHN12b Average Total Tariff SIMD Quintile 1 Children's Services CHN12c Average Total Tariff SIMD Quintile 2 Children's Services CHN12d Average Total Tariff SIMD Quintile 3 Children's Services CHN12e Average Total Tariff SIMD Quintile 4 Children's Services CHN12f Average Total Tariff SIMD Quintile 5 Children's Services CHN13a % of P1, P4 and P7 pupils achieving expected CFE level in Literacy Children's Services CHN13b % of P1, P4 and P7 pupils achieving expected CFE level in Numeracy Children's Services CHN14a Literacy Attainment Gap (P1,4,7 Combined) Children's Services CHN14b Numeracy Attainment Gap (P1,4,7 Combined) Children's Services CHN17 Proportion of Children meeting developmental milestones Children's Services CHN18 Proportion of funded early years provision which is graded good/better Children's Services CHN19a School attendance rates (per 100 pupils) Children's Services Page 293
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Indicator Code Indicator Title Service Area CHN19b School attendance rates (per 100 'looked after pupils') Children's Services CHN20a School exclusions rates (per 1,000 pupils) Children's Services CHN20b School exclusions rates (per 1,000 'looked after pupils') Children's Services CHN21 Participation rate for 16-19 year olds (%) Children's Services CHN22 Proportion of Child Protection re-registrations within 18 months Children's Services CHN23 Proportion of LAC with more than 1 placement in the last year Children's Services CHN24 Proportion of children living in poverty (after housing costs) Children's Services CLIM01 CO2 emissions area wide per capita Tackling Climate Change CLIM02 CO2 emissions area wide: emissions within scope of LA per capita Tackling Climate Change CLIM03 CO2 emissions from Transport per 1000 population Tackling Climate Change CLIM04 CO2 emissions from Electricity per 1000 population Tackling Climate Change CLIM05 CO2 emissions from Natural Gas per 1000 population Tackling Climate Change CORP01 Support services as a percentage of Total Gross expenditure Corporate Services CORP03b Proportion of the highest paid 5% of employees who are women Corporate Services CORP03c Gender pay gap (%) Corporate Services CORP04 Cost per dwelling of collecting Council Tax Corporate Services CORP06a Sickness absence days per teacher Corporate Services CORP06b Sickness absence days per employee (non-teacher) Corporate Services CORP07 Percentage of income due from Council Tax received by the end of the year Corporate Services CORP08 Percentage of invoices sampled that were paid within 30 days Corporate Services CORP09 Proportion of SWF Crisis Grant decisions within 1 day Corporate Services CORP10 Proportion of SWF Community Care Grant decisions within 15 days Corporate Services CORP11 Proportion of SWF budget spent Corporate Services CORP12 Proportion of DHP funding spent Corporate Services CORP- ASSET01 % of operational buildings that are suitable for their current use Corporate Services CORP- ASSET02 % of internal floor area of operational buildings in satisfactory condition Corporate Services ECON01 Percentage of Unemployed People Assisted into work from Council Programmes Economic Development ECON02 Cost of Planning & Building Standards per planning application Economic Development ECON03 Average time per business and industry planning application (weeks) Economic Development ECON04 Proportion of procurement spent on local enterprises Economic Development Page 294
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Indicator Code Indicator Title Service Area ECON05 No of business gateway start-ups per 10,000 population Economic Development ECON06 Investment in Economic Development & Tourism per 1,000 population Economic Development ECON07 Proportion of people earning less than the living wage Economic Development ECON08 Proportion of properties receiving Superfast Broadband Economic Development ECON09 Town Vacancy Rates Economic Development ECON10 Immediate available employment land as a % of total land allocated for employment purposes Economic Development ECON11 Gross Value Added (GVA) per capita Economic Development ECON12a Claimant Count as a % of Working Age Population Economic Development ECON12b Claimant Count as % of 16-24 Population Economic Development ENV01a Net cost per Waste collection per premises Environmental Services ENV02a Net cost per Waste disposal per premises Environmental Services ENV03a Net cost of street cleaning per 1,000 population Environmental Services ENV03c Street Cleanliness Score Environmental Services ENV04a Cost of roads per kilometre Environmental Services ENV04b Percentage of A class roads considered for maintenance treatment Environmental Services ENV04c Percentage of B class roads considered for maintenance treatment Environmental Services ENV04d Percentage of C class roads considered for maintenance treatment Environmental Services ENV04e Percentage of unclassified roads considered for maintenance treatment Environmental Services ENV05 Cost of Trading Standards and environmental health per 1,000 population Environmental Services ENV05a Cost of Trading Standards, Money Advice & Citizens Advice per 1,000 population Environmental Services ENV05b Cost of environmental health per 1,000 population Environmental Services ENV06 Proportion of total household waste arising that is recycled Environmental Services ENV07a Proportion of adults satisfied with refuse collection Environmental Services ENV07b Proportion of adults satisfied with street cleaning Environmental Services FINSUS01 Total useable reserves as a % of council annual budgeted revenue Financial Sustainability Page 295
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Indicator Code Indicator Title Service Area FINSUS02 Uncommitted General Fund Balance as a % of annual budgeted net revenue Financial Sustainability FINSUS03 Ratio of Financing Costs to Net Revenue Stream - General Fund Financial Sustainability FINSUS04 Ratio of Financing Costs to Net Revenue Stream - Housing Revenue Account Financial Sustainability FINSUS05 Actual outturn as a percentage of budgeted expenditure Financial Sustainability HSN01b Gross rent arrears (all tenants) as a percentage of rent due for the year Housing Services HSN02 Proportion of rent due in the year that was lost due to voids Housing Services HSN03 Proportion of council dwellings meeting Scottish Housing Quality Standards Housing Services HSN04b Average number of days taken to complete non- emergency repairs Housing Services HSN05a Proportion of council dwellings that are energy efficient Housing Services SW01 Home care costs per hour for people aged 65 or over Adult Social Care Services SW02 SDS (DP + MPB) spend on adults as a % of total adult social work spend Adult Social Care Services SW03a % of people 65+ with long-term care needs who are receiving personal care at home Adult Social Care Services SW04b % of adults supported at home who agree that their services and support had an impact in improving or maintaining their quality of life Adult Social Care Services SW04c % of adults supported at home who agree that they are supported to live as independently as possible Adult Social Care Services SW04d % of adults supported at home who agree that they had a say in how their help, care or support was provided Adult Social Care Services SW04e % of carers who feel supported to continue in their caring role Adult Social Care Services SW05 Residential costs per week per resident for people aged 65 or over Adult Social Care Services SW06 Rate of readmission to hospital within 28 days per 1,000 discharges Adult Social Care Services SW07 Proportion of adult care services graded good or better Adult Social Care Services SW08 Number of days people spend in hospital when they are ready to be discharged, per 1,000 population (75+) Adult Social Care Services Page 296
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ARGYLL & BUTE COUNCIL LEGAL AND REGULATORY SUPPORT FINANCIAL SERVICES AUDIT AND SCRUTINY COMMITTEE 12 June 2025 STATEMENT OF GOVERNANCE AND INTERNAL CONTROL 1. INTRODUCTION 1.1 This report advises that the statement of governance and internal control for 2023/24 has been reviewed and updated which allows the Council to include a statement of governance and internal control in the Annual Accounts for 2024/25. 2. RECOMMENDATIONS 2.1 2.2 2.3 The Committee note the updates in the Action Plan for 2024/25. The Committee consider and approve the content of the areas for further development for 2025/26. The Committee consider and approve the draft statement of governance and internal control for 2024/25. 3. DETAIL 3.1 CIPFA and SOLACE published a revised Framework for ‘Delivering Good Governance in Local Government’ in 2016. The Framework was defines seven core principles that should underpin the governance of local authorities and provides a structure to assist authorities with assessing their own approach to governance. 3.2 3.3 The Council is required to prepare a statement of governance and internal control confirming the Council’s position in regard to the seven core principles for 2024/25. The draft document which is attached at Appendix 1 provides details of the position for 2024/25 and includes an update on the ‘areas for further development’ identified in the 2025/26 document. It has been approved by ELT. Once approved the statement of governance and internal control is included in the Council’s Annual Accounts for 2024/25 and identifies areas within the Council where work to improve its governance arrangements will be being undertaken in 2025/26. 3.4 The seven principles contained in the local code are: Page 297 Agenda Item 14
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1. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law. 2. Ensuring openness and comprehensive stakeholder engagement. 3. Defining outcomes in terms of sustainable economic, social and environmental benefits. 4. Determining the interventions necessary to optimise the achievement of the intended outcomes. 5. Developing the entity’s capacity, including the capability of its leadership and the individuals within it. 6. Managing risks and performance through robust internal control and strong public financial management 7. Implementing good practices in transparency, reporting, and audit to deliver effective accountability 3.5 The review of the effectiveness of the system of governance and internal control is informed by the: • work of council officers • work of External and Internal Audit • Statements of Governance or Internal Control provided by external bodies • external review and inspection reports • recommendations from the Audit and Scrutiny Committee 4. CONCLUSION 4.1 This review gives assurance about the robustness of the Council’s governance arrangements. 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 5.8 Fairer Scotland Duty: none 5.9 Equalities: none 5.10 Consumer Duty: none 5.11 Island Communities: none 5.12 Children’s Rights and Wellbeing: none Page 298
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Douglas Hendry Executive Director with responsibility for Legal and Regulatory Support Kirsty Flanagan Executive Director with responsibility for Internal Audit For further information please contact: Iain Jackson, Governance, Risk and Safety Manager - 01546 604188 Paul MacAskill, Chief Internal Auditor - 01546 604108 Appendices Appendix 1 - Draft Statement of Governance and Internal Control 24/25 Page 299
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1. BACKGROUND AND SCOPE OF RESPONSIBILITY Argyll and Bute Council’s (the Council) governance framework includes the systems, processes and culture by which the Council is controlled, engages with communities and monitors the achievement of strategic objectives. The Council conducts its business in accordance with the law and proper standards. The Council has a duty to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to the economic, efficient and effective use of public money. The system of internal control is a key part of the framework and is designed to manage risk to an acceptable level. In discharging these responsibilities, the Council has put in place proper arrangements for the governance of its affairs and the stewardship of the resources at its disposal. The Council has approved and adopted a Local Code of Corporate Governance (the Code) which is consistent with the principles and requirements of the CIPFA/SOLACE revised Framework for ‘Delivering Good Governance in Local Government. This Statement explains how the Council has complied with the Code and meets the requirements of current good practice. 2. THE GOVERNANCE FRAMEWORK The Code details how the Council will demonstrate compliance with the fundamental principles of corporate governance for public sector bodies. The seven key principles of our governance arrangements in 2023/24 are described in the Code, along with our supporting principles and key aspects of our arrangements to ensure compliance. 1. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law. We have four values, which underpin all that we do and provide a sound basis to achieve transformation to ensure we meet the challenges of the future and deliver quality services. These values are that we have a workforce which is: Caring Committed Collaborative Creative The Council has developed a change programme ‘Connect for Success’ with the seven principles – One Council One Place Approach, Purpose and Mission Focus, Employee Empowerment, Data and Evidence Driven Decision Making, Learning Council, Agile and Maximise Opportunities that Technology Offers - Connect for Success We have developed and communicated an Ethical Framework within the Council's Constitution, which defines standards of behaviour for Members and staff. Protocols for Member/Officer relations are also detailed within the Constitution. The Councillors’ Code of Conduct is set out at a national level, applying to all members in Scottish local authorities and is incorporated into the Council’s Constitution as part of the ethical framework which also includes a protocol for the Monitoring Officer. Each Members interests can be found in their respective profiles at Members Interests is publically available for inspection. In addition, the Constitution has a section on conduct at meetings and meeting agendas require declarations of interest to be made where appropriate. Standing orders for meetings are included within the Council’s constitution and training and support is provided to members on their role in Council committees. Anti-fraud and whistleblowing policies are in place and the Council has adopted the Page 301
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Scottish Public Services Ombudsman’s (SPSO’s) Model Complaints Handling Procedure. The Council complies with CIPFA’s Statement on the Role of the Chief Financial Officer in Local Government. In addition, Professional advice on the discharge of statutory social work duties is provided to the Council by the Chief Social Work (CSWO). A structure of governance and framework across our day to day activities and which supports accountability, control, risk management and appropriate overview of the Council are outlined in the diagram below: Constitution, Governance, Risk Management and Accountability Page 302
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2. Ensuring openness and comprehensive stakeholder engagement. We have established clear channels of communication with the community and other stakeholders through our Communication Strategy. Key mechanisms include: Consultation Diary The Council has developed a consultation section on its website which hosts all consultations run by the Council and includes a section which publicises the results and/or outcome of the Decision Making / Procedural Council and Committee Structure Council and Committee Terms of Reference Council and Committee Standing Orders Scheme of Delegated Functions Standing Orders Relating to Contracts Councillor's Code of Conduct Corporate Governance Executive Leadership Team and Senior Management Team Risk Management Integrity HR and Individual Capability Strategic Planning Performance Management Framework Community Planning and Empowerment Stakeholder Engagement Financial Governance Internal Control ALEO Governance Scheme of Delegation ALEO Governance Framework Risk and Governance Reporting Financial and Operational Performance ALEO Risk Register Asset Governance Corporate Asset Management Strategy Corporate Asset Managment Plan and Capital Plan Records Management Information Management and Security Local Development Plan ICT and Digital Strategy Major Programmes/Projects Capital Investment Programme Conservation Area Regeneration Scheme (CARS) Projects Campbeltown, Helensburgh, Oban, Rothesay & Dunoon (CHORD) Projects Marine Asset Management Plan Rural Growth Deal Annual Status and Options Report External and Internal Audit and other regulatory inspections Page 303
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consultation and the resultant decisions that have been taken, showing how they were informed by the consultation process. This is part of our commitment to You Said, We Did information sharing for the public. Consultations provide communities with an opportunity to get involved with wide ranging aspects of the council’s work and life in Argyll and Bute. These include for example, play park funding, active travel routes, primary school consultations, and the council’s customer service strategy. Keep in the Loop Service Over 14,000 customers currently subscribe to receive notifications across 22 different subscription services. In 2024/25 386,303 email notifications, newsletters and alerts were issued via the Keep in the Loop Service to its subscribers. 'Myaccount' This is a secure sign-in service for accessing online public services in Scotland. It provides the ability to set up an online account and use it to access a growing range of online public services, Scotland-wide, including Argyll and Bute Council services. Currently 19,231 customers have linked their national Myaccount to the Argyll and Bute Council instance and use it to access and personalise their interaction with the Council on a range of services e.g. it gives authenticated access to our Council Tax and Benefits Portal. Public Performance Reporting The Council’s website makes all relevant performance information available to the public. This includes information on performance scorecards, budgets and other service related information. This promotes open accountability to the public for its performance against agreed policies and standards. As part of phase two of the Performance Excellence Project a review of the council's approach to public performance reporting is being undertaken. It also includes all copies of the Council’s financial accounts and papers for all Council and Committee Meetings, supplemented by webcasts of meetings. Accessibility In 2024/5 77% of 528,606 customer interactions through the council’s Customer Engagement Team were made using digital self-service. This very high proportion is because of the scope and quality of the digital services provided. In order to ensure maximum accessibility for everyone and meet our equalities responsibilities, the Council’s website is independently assessed against the international WCAG2.2 standard and in April 2025 it scored 99% and was the second highest ranked website in Scotland. The website had 4,501,450 page views in 2,868,330 separate sessions in 2024/25, an increase of 5.4% on the previous year. A new online service for all council employees called MyCouncilWorks was completed and it had 512,000 page views. In addition our 24/7 voice automated telephone service had 41,309 calls and collected £2.2m in automated phone payments. The council also fully reviewed and updated it Customer Service Strategy with a focus on inclusivity and accessibility. Community Engagement To support strengthening communities, community empowerment and engagement, the Council has in place: • An officer Community Engagement Strategy Group which has supported the development and implementation of the Council’s Engagement Framework; advising on best practice in engagement tools and techniques, and supporting skills development and capacity within the Council to effectively engage with communities which has included training for officers, elected members and communities. On this group sit those officers with expertise in engagement from a range of services across the Council, including those from Corporate Communications and the Communities & Page 304
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Partnership Team. The Council’s Communications Team has developed an engagement app for services to use, and the Council’s Communities & Partnership Team has resources and expertise to support hard-to-reach groups, community organisations and remote communities, to have a voice in decision making. • A Community Development service, with a focus on improving active citizenship and capacity building by delivering best practice in community development through a responsive and effectively targeted programme of Community Development support, internally to the Council and externally within communities across Argyll and Bute. • A range of training and resources to help build the knowledge, skills and confidence of community organisations and development trusts, including publishing webinars on key topics of relevance to community organisations. • Funding support to help empower community organisations to take forward priority projects and activities in their area: Monthly funding alert | Argyll and Bute Council (argyll-bute.gov.uk), hosting GrantNet for self-service funding searches, supporting funding applications through the Community Funding Toolkit, and undertaking tailored funding searches on request. • The annual delivery of a Supporting Communities Fund grant award scheme which community groups can apply for (up to £1500 each), including offering advice and support on applications and other funding routes. • Resourcing community council liaison activities, including training and support activity, helping to build the capacity of community councils. Delivering capacity building to communities to increase the use of the Gaelic language and to make it more accessible and visible. • Resourcing and supporting delivery of the statutory requirements under Part 3 (Participation requests) and Part 5 (Asset transfer requests) of the Community Empowerment (Scotland) Act 2015. Council departments are also provided with support in relation to Part 9 of the Act (Allotments). The Council also has a statutory lead role to ensure Community Learning and Development provision in Argyll and Bute is set out in an Argyll and Bute Community Learning and Development Strategic Plan, and this is delivered through collaboration with its Arms-length External Organisation (ALEO) partner, Live Argyll, and the Argyll and Bute Third Sector Interface (TSI). The Council continues to promote the Community-led action plan toolkit (developed in partnership with Scottish Community Development Centre) to help support communities interested in developing a local Community-led Action Plan. The Council also provides support for communities interested in development a Place Plan: Local Place Plans | Argyll and Bute Council (argyll-bute.gov.uk). The Council directly resources the management of the Community Planning Partnership (CPP) to bring partners together, including the community, to deliver the statutory requirements under Part 2 (Community Planning) of the Community Empowerment (Scotland) Act 2015, including a Local Outcomes Improvement Plan. Support is also provided to the four Area Community Planning Groups The Community Planning Partnership seeks to ensure that young people are engaged in community planning and has implemented the following: Page 305
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• The 3 local Members of the Scottish Youth Parliament (MSYPs) are invited to attend the Community Planning Partnership Management Committee meetings on a rotational basis. • The Area Community Planning Groups (ACPGs) invite members of local youth forums to attend meetings when they are held in their local areas, with information passed on to young people by youth workers who are kept updated on any developments. • The revised Scheme of Establishment for Community Councils outlines the requirement to encourage young people to attend and participate in community council meetings and the age to become a community councillor was lowered to be 16, to encourage more young people to become involved. The Council also provides opportunities for community organisations to engage with Community Planning and Community Development through the following resources: Community Development Bulletin, Community Planning Bulletin, Gaelic Newsletter, Community Planning Podcast. Council/Committee Meetings Meetings are always held in public, unless one of the statutory exemptions in the Local Government (Scotland) Act 1973, schedule 7A applies to the content of the report. Agendas for and minutes of meetings are detailed on the Council’s website. When schedule 7A applies papers are adjusted to ensure that the maximum amount of content is in the public domain. The Council’s Constitution defines the roles and responsibilities of the administration, committees, scrutiny and officer functions, with clear delegation arrangements and protocols for effective communication. The Standards Commission Advice Note for Councillors on Distinguishing between their Strategic Role and any Operational Work has previously been included in an Elected Member Seminar and is hosted on the Members Resource page on the Hub for ease of reference. 3. Defining outcomes in terms of sustainable economic, social, and environmental benefits. Our Corporate plan sets out our, and our community planning partner’s, vision for Argyll and Bute’s economic success to be built on a growing population. It also defines our mission “To make Argyll and Bute a place people choose to live, learn, work and do business” and establishes our outcomes, priorities and approach to delivering on our shared ambition with our community partners. We have a Performance Improvement Framework (PIF) that ensures performance is integral to the work of the Council. The PIF is focused not just on measuring what we do but on measuring the difference we make in terms of our outcomes. Asset management planning and capital investment is structured to consider and balance the combined economic, social and environmental impact of policies and plans when taking decisions about service provision. The Council has put arrangements in place to comply with key elements of the Community Empowerment Act. In determining how services and other courses of action should be planned and delivered the Council is increasingly engaging with internal and external stakeholders. Community benefit is an important consideration in the procurement of goods and services. The Council has acknowledged the effects of the ‘Cost of Living’ within Argyll and Bute and during 2024/2025 client gain achieved by the Flexible food and Fuel fund project reached £5.2 million. This project, supporting the most vulnerable low income households and those using foodbanks in our area to access short-term grants to cover the cost of food and fuel in the short term. In the longer term support through the provision benefit maximisation, money Page 306
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advice and energy advice services is provided by third sector partner agencies. In addition, this year the Council has issued 1,300 Scotland Loves Local Gift Cards to low income households in the year ensuring the £110,000 loaded onto the gift cards is spent in Island based local businesses in Argyll and Bute. The Council and the Third Sector Interface is supporting the Poverty Alliance on a project entitled “Taking Action on Rural Poverty” which is looking at new ways of addressing rural poverty in Argyll and Bute by reducing the rural poverty premium. The Council has also provided a one-stop-shop webpage where individuals and families can access energy advice, money advice and links to the services the Council provides in this area and those provided by third sector partner organisations. Throughout 2024/25, Argyll & Bute Council actively drove forward its commitment to reducing carbon emissions, guided by our Decarbonisation Plan. We continued to deliver a range of projects aimed at lowering our environmental impact. This included tangible progress in enhancing energy efficiency within our buildings, advancing renewable technology installations such as the solar PV system at Cardross Primary School, and progressing the transition towards a lower-emission fleet. Efforts to minimise waste sent to landfill also remained a key operational focus. A significant development in 2024/25 was commencing the adoption of the Scottish Government's ClimateOS platform. This strategic tool is set to enhance our climate action planning capabilities, a positive step being embraced by local authorities across Scotland. These dedicated actions and project deliveries during the year reinforce our steadfast commitment to achieving Scotland's net zero targets and ensuring a greener Argyll & Bute. 4. Determining the interventions necessary to optimise the achievement of the intended outcomes. Decision makers receive detailed information indicating how intended outcomes would be achieved together with the implications associated with the proposals covering financial, risks and mitigations, integrated impact assessment, acting sustainably, carbon management, island proofing, and changes to schemes, by way of the compulsory sections of the Committee report. The Council’s Executive Leadership Team (ELT) meet regularly with the administration to discuss their key priorities and requirements for decision making in addition there is regular survey and feedback on their needs and a regular review of governance arrangements to ensure that decision making is fully supported. In determining how services and other courses of action should be planned and delivered the Council is increasingly engaging with internal and external stakeholders. Community benefit is an important consideration in the procurement of goods and services. The Council fosters effective relationships, collaborative working and contractual arrangements with other public, private, and voluntary organisations in delivering services that meet the needs of the local community as stated in the Council’s Corporate Plan 5. Developing the entity’s capacity, including the capability of its leadership and the individuals within it. Elected Member Development The Council has signed up to the Improvement Service’s Continuing Professional Development Framework for Elected Members. All Elected Members are provided with opportunities to progress personal development plans so that individual training needs and aspirations are identified and support provided as appropriate. This is complemented by a Page 307
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comprehensive seminar and workshop programme which addresses a wide range of topics and strategic issues. Additional training was undertaken by Elected Members in relation to the technology, knowledge and skills necessary to support the transition to a virtual environment including webcasting of strategic Committee meetings and the operation of meetings on a hybrid basis, enabling a mixed attendance of members being physically or virtually present. Officer Development The Council has frameworks in place to support officer development. These underpinned by our corporate behaviours and delivered through the corporate training programme and leadership development programmes. In 2024/25 these frameworks are being redesigned to better reflect the principles of Connect for Success. During 2024/25 Executive Coaching for Chief Officers was introduced. While the corporate behaviours and Argyll and Bute Manager programme are being redesigned all content from the previous courses are available on LEON (the Councils eLearning platform). A new coaching conversations training programme has also been added to the corporate training programme to support managers with empowering team members and having coaching conversations. 6. Managing risks and performance through robust internal control and strong public financial management. Internal Financial Control Our standing orders, financial instructions, scheme of delegation and supporting procedure notes/manuals clearly define how decisions are taken and the processes and controls in place to manage risks. These are reviewed and updated on an annual basis. We ensure compliance with relevant laws and regulations, internal policies and procedures, and that expenditure is lawful. The Council’s Monitoring Officer advises on compliance with our policy framework, ensuring that decision making is lawful and fair. Furthermore, the Council has a designated Data Protection Officer and all services have Information Asset Registers along with appropriate guidance on how data should be managed. Our financial management arrangements conform to the CIPFA Statement on the Role of the Chief Financial Officer and we ensure that our independent Audit and Scrutiny Committee undertakes the core functions identified in CIPFA’s Audit Committees – Practical Guidance for Local Authorities. The Council has a proactive, holistic approach to tackling fraud, theft, corruption and crime, as an integral part of protecting public finances, safeguarding assets, and delivering services effectively. It is based upon the national counter fraud standard CIPFA’s Code of Practice on ‘Managing the Risk of Fraud and Corruption’. The Council has a system of internal financial control designed to manage risk to a reasonable level. It is based on a framework of regular management information, financial regulations, administrative procedures (including segregation of duties), management supervision, and a system of delegation and accountability. Development and maintenance of the system is undertaken by officers within the Council and the named bodies mentioned below. Internal Financial Controls and Prevention Are these in Place? Comprehensive budget systems Financial and budget monitoring systems Financial and Performance reporting systems Clearly defined Capital Expenditure guidelines Page 308
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Project Management processes and disciplines An effective Internal Audit Section An effective Counter Fraud Team Internal controls cannot eliminate risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. This annual review also covers the other bodies whose activities are incorporated into our Group Accounts and reliance is placed on the formal audit opinion contained in the financial statements of each individual body. • Dunbartonshire and Argyll and Bute Valuation Board • Live Argyll • Argyll and Bute Integration Joint Board The Council’s risk management processes are well developed. In particular the: • Strategic Risk Register is updated twice a year and approved by the SMT • Chief Executive presents the Strategic Risk Register to the Audit and Scrutiny Committee on an annual basis • Operational Risk Registers are updated quarterly by departmental management teams. • Internal Audit will perform an audit of compliance with risk management arrangements every three years. • The CIA performs an annual strategic risk assurance mapping exercise. 7. Implementing good practices in transparency, reporting, and audit to deliver effective accountability Internal Audit The Council and its Group bodies have internal audit functions, which operate to Public Sector Internal Audit Standards. The work of internal audit is informed by an analysis of the risk to which the Council and its Group bodies are exposed, with annual internal audit plans prepared based on that analysis. The Council's Audit and Scrutiny Committee endorses the preparation methodology and annual internal audit plan and monitors the performance of Internal Audit in completing the plan. In addition, the Council has developed a hybrid meeting facility enabling physical and virtual attendance at meetings with a public broadcast function so that members of the public can see and hear meetings of the Council’s strategic committees’ live increasing openness and transparency. The Chief Internal Auditor (CIA) provides the Audit and Scrutiny Committee with an annual report on internal audit activity in the Council and an opinion of the assurance can be taken regarding the systems of governance and internal control and whether they are operating effectively. This is an independent and objective opinion of the CIA based on work carried out in conformance with the Public Sector Internal Audit Standards to fulfil statutory Internal Audit provision. Internal audit provides members and management of the Council with independent assurance on risk management, internal control and corporate governance processes. External audit has, and continues to, use the work of internal audit. The Annual Accounts and Report sets out the financial position in accordance with relevant accounting regulations. Page 309
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Review of the Adequacy of Effectiveness of the Council’s Governance Framework The Council has appropriate management and reporting arrangements to enable it to satisfy itself that its approach to corporate governance is adequate and effective in practice. The legislative framework of local government defines a number of posts which are primary to the Council’s governance arrangements. These include the Chief Executive, Pippa Milne fulfilling the role of Head of Paid Service. As Monitoring Officer, the Executive Director Douglas Hendry: • oversees the implementation of the Code and monitoring its operation • reports annually to the Council on compliance with the Code and any changes required to maintain it and ensure its effectiveness. Specific responsibilities are assigned to the Executive Director Kirsty Flanagan as the Council’s Chief Financial Officer (S95 Officer), to ensure that public funds are properly accounted for. In recognition of the significant role that the Chief Financial Officer has in relation to financial performance and the financial control environment, CIPFA has set out key principles that define the core activities and behaviours that belong to the role. These include, being a key member of the Leadership Team, being actively involved in and influencing decision making, and leading the delivery of good financial management across the whole organisation. The Council have appointed a Data Protection Officer in line with the requirements of the UK-General Data Protection Regulations and the Data Protection Act 2018. FINANCIAL SUSTAINABILITY It is anticipated that the Scottish public sector will continue to face a very challenging short and medium term financial outlook with uncertainty over the level of Scottish Government funding. The current one year only financial settlements provide very little medium term budget certainty. Furthermore, the continued ring-fencing of monies and additional policy commitments, which are not always fully funded, limit financial flexibility and create additional budget pressures. In addition to uncertainty around future funding levels, there are also prevailing levels of economic uncertainty, with continued volatility in financial markets. Against a backdrop of historic real terms standstill/reducing Local Government Finance Settlements and the global economic climate, the management of budget pressures in respect of pay and other inflationary cost increases, together with increasing demands for key services, will continue to be challenging. The Council undertakes financial planning to provide a longer term view of its financial position over future years. Financial estimates are provided within its medium term financial outlook over a five year period, to provide a longer term view of the Council’s estimated budget gap. The financial outlook is underpinned by planning assumptions in respect of available funding, cost and demand pressures, pay and non-pay inflation, together with potential measures to balance the budget. These assumptions are reviewed and updated on an ongoing basis, with the outlook prepared to reflect best case, worst case and mid-range scenarios. The Council has a strong track record in effective financial management, as recognised by previous years’ annual external audit reports, and is well placed to manage future financial challenges. The annual audit report for the year ended 31 March 2024 also recognises that the Council has effective financial planning arrangements in place to support financial sustainability. In addition to its revenue budget outlook, the Council provides regular update Page 310
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reports on capital plans, reserves and balances, financial risks and treasury management activity, in accordance with its approved strategies. The Council is taking a longer term approach to budget planning and recognises that opportunities for budget savings will require to be delivered, whilst maintaining services, in line with its key strategic objectives and within available budget resources. Service transformation, underpinned by robust financial planning, will continue to be a key focus, in order to safeguard the financial sustainability of the council. HEALTH AND SOCIAL CARE INTEGRATION The Argyll and Bute IJB has been established as a separate legal entity from Argyll and Bute Council and NHS Highland, with its own board of governance. The IJB comprises eight voting members with four Elected Members nominated by Argyll and Bute Council and four Board members from NHS Highland. In addition, there are a number of non-voting appointees representing other sectors and stakeholder groups, such as the Third Sector, Independent Sector, Patients and Service Users, Carers and Staff. The arrangements for the operation, remit and governance of the IJB are set out in the Argyll and Bute Integration Scheme which has been prepared and approved by Argyll and Bute Council and NHS Highland. It has also been approved by the Scottish Government. The IJB, via a process of delegation from the Health Board and Local Authority as outlined in the Scheme of Integration has responsibility for the planning, resourcing and operational delivery of all health and social care services within Argyll and Bute. The Council places reliance on the IJB’s framework of internal controls and similarly the IJB places reliance on the procedures, policies and operational systems of the Council and the Health Board. The IJB operates within an established procedural framework. The roles and responsibilities of board members and officers are defined within Standing Orders, the Integration Scheme, Financial Regulations and Standing Financial Instructions. The IJB has proportionate internal audit arrangements in place to provide independent assurance on risk management, corporate governance and the system of internal control. A risk based internal audit plan developed and commissioned for 2024/25 and the IJB’s internal auditor has issued a formal annual report providing their independent opinion on the effectiveness of the IJB’s risk management, internal control and governance processes. The overall conclusion of the Internal Auditor is to provide a reasonable level of assurance on the adequacy of internal controls and governance arrangements within the IJB. During 2024-25 the IJB has progressed A number of areas for development in respect of governance have been progressed and this has resulted in a marked improvement in the way in which the IJB operates and is governed. The action plan is now fully implemented, highlights included the development of the Workforce plan, the roll out of the Integrated Performance Management System, the development of the engagement strategy and training and development for IJB members. The IPMF is now subject to review. The operating environment going forward is very challenging as funding allocations have not kept pace with cost and demand increases. The increase in the employer national insurance rate and threshold is having a material impact on commissioned service providers is increasing cost and service risk further. The impact of an increasing older population with on- going recruitment constraints and workforce shortages is adding to the challenge. The HSCP is working to address its workforce gaps throughout the area and across many professions in a variety of ways. For example, it is seeking to address key worker accommodation shortages in partnership with the Council, Shelter and the Social Housing Sector and is constantly trying new approaches to attract workers from outside Argyll & Bute. The Health and Care Staffing act is still in the early stages of its implementation and this will continue to impact upon staffing models through 2025/26 along with reduction in the working week (NHS) and other Page 311
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implications from pay awards. The financial constraints are so severe that the HSCP will be implementing its financial recovery plan and making reductions to its service offer. These risks and challenges are particularly acute in many of our rural and island communities which are experiencing increasing costs along with very small scale, lifeline services which are become ever more difficult to sustain or operate in a financially efficient way. The HSCP will seek to balance the financial pressures it, and its partners, are currently experiencing with the care needs of the communities it serves. The IJB approved a budget for 2025/26 which indicates that financial recovery actions are required to identify further savings in year and that additional funding from NHS Highland may be required. The budget is also dependent upon the allocation of non-recurring pension fund savings and use of remaining reserves, this approach means that the scale of the challenge in 2026/27 is expected to be even more severe. The management of longer-term financial sustainability is a priority and service change and transformation plans aimed at addressing this require to be developed, consulted upon and implemented during the course of 2025/26. The delivery of the short term savings and recovery plan is a priority for the HSCP particularly as it seeks to manage down spend on expensive agency and locum staff whilst maintaining the safety of services. UPDATE ON AREAS FOR DEVELOPMENT IDENTIFIED IN PREVIOUS ANNUAL GOVERNANCE STATEMENTS The 2023/24 Annual Governance Statement identified a number of areas for further development. A summary update for each area is provided in the table below. Area 2024/25 Update Preparation for the implementation of the Visitor Levy in 2026 - Work with the Digital Office, improvement Service, City of Edinburgh and Highland Council on the development of a new digital platform for the billing and collection of the new levy. (Head of Financial Services/Head of Development and Economic Growth – March 2025) The Council has completed its public consultation on the visitor levy and is now analysing the 3300 responses received prior to reporting back to the council for a potential decision in August 2025 on whether to proceed or not. Work also continues on creating a digital platform for the billing and collection of the levy taking into account issues raised through each councils’ respective consultations with the public. A decision on whether or not to proceed using this platform will be taken following decision at Committee in August on the Visitor Levy. Preparation for new processes being implemented including the practice around Initial Referral Discussions relating to child protection, there will be a need to audit and develop practice further and the development of an action plan based on the findings will help improvement and the need to consider the staffing structures which support this vital area of work. (Head of Children, Families and Justice – March 2025) New IRD guidance has been developed and was launched on 28th April 2025. Following this event on going monitoring and auditing will be carried out to judge the effectiveness of this new guidance. . Housing Emergency declared by the Council in June 2023 - Utilise outputs from the Housing Summit held, to develop a multi-stakeholder Action Plan, and synthesise the relative elements of this into a revised Local Housing Strategy Action Programme. (Head of A multi stakeholder action plan has been prepared and approved by the council. This action planned has informed a new housing strategy that has also been approved by the council and forwarded to the Scottish Government. A new housing delivery group has also been established to focus on delivering the actions identified in the action plan. Regular updates on progress are presented to the Councils EDI Committee. Page 312
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Development and Economic Growth – March 2025) The revaluation of properties for building insurances purposes - Estates will undertake a revaluation programme for the general portfolio, together with a programme of recorded inspections of vacant properties. (Head of Commercial services March 2025 During 2024/25 Estates completed the revaluation of general properties within MAKI and H&L areas and it is intended to complete OLI and B&C areas in 2025/26. Reports were also submitted to DMT in relation to vacant property inspections and it was agreed on 24/3/25 that a working group of officers would be set up to progress this matter in conjunction with the council’s insurers Publication of the Annual Procurement Report for the Council – This will promote our obligations set out in the Procurement Regulations. (Head of Legal and Regulatory Support – March 2025) Complete – https://www.argyll- bute.gov.uk/sites/default/files/2024- 08/Annual%20Procurement%20Report%202023-24.pdf The Licensing Board will undertake a review of its Licensing Policy statement as required in terms of the Licensing (Scotland) Act 2005. (Head of Legal and Regulatory Support – March 2025) A review of the Licensing Policy is ongoing at the moment with the intention of submitting a report to the meeting of the Licensing Board in September on the outcome of the review. Continued to March 26 – see below The use of Cloud Storage – Following results of the Internal Audit, put in place actions to ensure optimum, appropriate and secure use of cloud storage is applied across all applications. (Head of Customer Support Services – March 2025) The Audit of Cloud Computing Services was completed in May 2024 with a substantial level of assurance. All actions have been completed Further enhance school engagement with national programmes and community partnership approaches supporting young people to build their confidence, increase mental health awareness and promote diversity. (Head of Education, Performance & Improvement – March 2025) Education have engaged in a number of programmes and approaches, e.g., Time for Inclusive Education (TIE), the LGBT Youth Project Charter, the CORRA Foundation to further develop an inclusive curriculum that celebrates diversity, the Rights Respecting Schools programme which raises the profile of rights across our schools, the Mentors in Violence Prevention Programme (MVP) which is a peer mentoring programme that uses and active bystander approach to addressing gender based violence and the ADP School Support Service to provide evidence based, up to date Alcohol and Drugs education to pupils and parents/carers. ISSUES FOR FURTHER DEVELOPMENT The review of governance and internal control has identified the following areas for consideration during 2025/26, particularly in the context of continuous improvement within the Council: • An Internal Audit in Non-Domestic Rates (NDR) has identified that the current appeal process needs to be improved to enhance independent decision making and checking. A new independent panel of managers, separate from Finance, will be Page 313
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established to adjudicate on NDR appeals, improving impartiality and robustness of decisions. (Head of Financial Services – March 2026) • The Internal audit of IR35-Off Payroll Working compliance reported assurance as limited. A comprehensive Policy and Procedures drafted for approval. To be implemented 2025-26 in order to minimise any risk to the council. (Head of Financial Services – March 2026) • Further embedding good governance and information management in the MS365 project and the roll out of Teams - Once the business case has been approved for the next stage of the MS365 project and the roll out of teams the service will ensure appropriate governance and information management arrangements are in place. (Head of Legal and Regulatory Support – March 2026) • Financial Recovery – pressures deriving from increasing demand, workforce shortages and reduced real terms funding in Health and Social Care. Plans under development to reduce expenditure and service provision. (Chief Officer – March 2026) • Reduce risk in long term housing supply by identifying long term strategic expansion sites at scale which will create better economies of scale in terms of servicing infrastructure and site de-risking. Produce Strategic Development Frameworks for the two main population and commerce centres, Helensburgh and Oban. (Head of Development and Economic Growth – March 2026) • The Licensing Board will undertake a review of its Licensing Policy Statement as required in terms of the Licensing (Scotland) Act 2005. This will ensure that the Policy Statement continues to reflect the Board’s current practice and policy and is updated as necessary to ensure compliance with the statutory licensing objectives. The review will include an extensive consultation exercise with internal and external partners, agencies and the public. (Head of Legal and Regulatory Support – March 2026) • Ensure continuing improvement in the quality of LTA and pupil learning experiences across all schools. Expanded programme of observation, feedback and support relating to Learning, Teaching and Assessment by the central team for targeted schools. (Head of Education, Performance & Improvement – March 2026). • Strengthen professional learning opportunities for Head Teachers and the Education Central Team in line with the new Leadership Progression Framework. Plan and create a suite of Professional Learning sessions for Head Teachers and system leaders, focusing on key local priorities and involving external partners where possible. Continue to develop the Newly Appointed Head Teacher programme. (Head of Education, Performance & Improvement – March 2026). • Single Authority Model - Continue exploring the potential for a single authority model including elements such health and social care. (Chief Executive March 2026) • Budget Planning - Develop a longer term savings plan enabling a more strategic approach to transformation and service redesign. (Chief Executive March 2026) • Agree option for continuity of waste service following the end of the PPP Contract (Head of Roads and Infrastructure - September 2026). • External residential placements for children - Strengthening the governance arrangements of external placements even further. Monitoring commissioning visits, goals of placements and discharge planning. (Head of Children, Families and Justice - March 2026). • Stabilisation of staffing - Addressing absences and vacancies. (Head of Children, Families and Justice - March 2026). • The council’s Insurers identified an issue around the revaluation of properties for building insurance purposes. A phased approach of revaluations was implemented with General properties for the OLI and B&C areas to be completed in 2025/26 - Estates will complete a revaluation programme for the General portfolio. (Head of Commercial Services - March 2026) Page 314
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• Succession Planning - 28% of Property Service staff are 55 or over Succession planning essential to ensure continuity of service provision. (Head of Commercial Services - March 2026) CONCLUSION The conclusion from the review activity outlined above and our opinion is that reasonable assurance can be placed upon the adequacy and effectiveness of Argyll and Bute Council’s systems of internal control and governance. Although areas for further improvement have been identified, the annual review demonstrates sufficient evidence that the Council’s Local Code of Corporate Governance is operating effectively and that the Council complies with that Local Code in all significant respects. Systems are in place to regularly review and improve governance and systems of internal control. Page 315
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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 12 June 2025 Reports to Committee Services by 19 May 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 2024/25 ➢ Short Term Lets ➢ Asbestos Management ➢ Bridges Asset Management Plan ➢ Trading Standards ➢ External Placements ➢ IFRS 16 – Leasing ➢ Disclosure Checks – Live Argyll Chief Internal Auditor Quarterly Verbal Update by Chair(s) of Scrutiny Panel Chair and Vice Chair of Audit & Scrutiny Committee Quarterly Internal Audit 2024-25 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 2025 Forvis Mazars – Mark Outterside Annual Local Government in Scotland – Financial Bulletin 2023-24 Head of Financial Services Annual Local Government Benchmarking Framework Report Chris Carr, OD Project Officer Annual Treasury Management Annual Report 2024-25 Head of Financial Services Annual Statement of Governance and Internal Control Governance, Risk and Safety Manager Annual 26 June 2025 – Special Meeting Unaudited Annual Accounts for year ending 31 March 2025 Head of Financial Services Annual 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 2024/25 ➢ Chief Internal Auditor Quarterly External Audit Progress Report Forvis Mazars – Mark Outterside Quarterly Verbal Update by Chair(s) of Scrutiny Panel Chair and Vice Chair of Audit & Scrutiny Committee Quarterly Page 317 Agenda Item 15
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Audit & Scrutiny Committee Work Plan 2025 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 Register – 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 2024/25 ➢ Chief Internal Auditor Quarterly Verbal Update by Chair(s) of Scrutiny Panel Chair and Vice Chair of Audit & Scrutiny Committee Quarterly Performance Reporting Update (to include reference to LGBF) Chief Executive/Head of Customer Support Services/HR & OD Manager – Carolyn Cairns/Jennifer Coyle Quarterly 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 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 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 Page 318
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Audit & Scrutiny Committee Work Plan 2025 2025-26 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 Update 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 2025/26 ➢ Chief Internal Auditor Quarterly Verbal Update by Chair(s) of Scrutiny Panel Chair and Vice Chair of Audit & Scrutiny Committee 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 2025/26 Head of Financial Services Annual Local Government Benchmarking Framework Report Chris Carr, PD Project Manager Annual Unaudited Annual Accounts Head of Financial Services Annual Treasury Management Annual Report for year ending 31 March 2026 Head of Financial Services Annual Statement of Governance and Internal Control Governance, Risk and Safety Manager Annual Page 319
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