2026-06-04-MIJB-A&R-Item-5.7-Midlothian-Integration-Joint-Board-Internal-Audit-Annual-Assurance-Report-202526-Appendix-1
Midlothian Council · 4 June 2026
Back to Midlothian Integration Joint Board - Audit and Risk Committee — 4 June 2026 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
Internal Audit Annual Assurance Report 2025/26 for the Midlothian Integration Joint Board 1 Introduction 1.1 The CIPFA Code of practice for the Governance of Internal Audit in UK Local Government requires that the Audit & risk Committee must review the Chief Audit Executive annual conclusion on governance, risk management and control and Internal Audits Performance against its objectives. This report provides that conclusion for review by the Audit & Risk Committee of the Midlothian Integration Joint Board. 2 Opinion on the Governance, Risk Management and Internal Control 2.1 My opinion is that the Midlothian Integration Joint Board’s governance arrangements, risk management and systems of internal control are reasonable. There has been very good progress made by Management during the year and there are no outstanding Internal Audit actions 2.2 The MIJB operates under good public sector practice governance arrangements through its Board and Committee meetings that support scrutiny and transparency of decisions made. There is good compliance by the MIJB of the requirements of the Public Bodies (Scotland) Act 2014 and the guidance through its Directions to Partners (NHS Lothian and Midlothian Council) for the delivery of the services. The vision, strategic objectives and outcomes going forward are reflected following extensive consultation in the Strategic Plan 2025-2035, approved by the Board in February 2025. 2.3 The current MIJB Local Code of Corporate Governance (Local Code), which was approved by the Board on 8 April 2021, sets out the framework and key principles, which require to be complied with, to demonstrate effective governance. The Local Code complies with the CIPFA/SOLACE ‘Delivering Good Governance in Local Government Framework’ (2016) in all significant aspects. It reflects the changing context of integration and the appropriate framework for effective governance of the MIJB’s business, including its role as the strategic commissioning body i.e. setting out when responsibility lies with the Board or where reliance is placed on the arrangements in place at its Partners. Governance arrangements in place are generally sound and are being further developed. The Internal Audit high level review and assessment of the Local Code has identified aspects of governance arrangements where some improvement is required mainly to assist management of increasing financial risks. 2.4 A Risk Management Policy, reporting regime and risk register highlighting the MIJB strategic risks, mitigating controls, residual risk and accompanying actions have been regularly reviewed, updated and reported during the year to the Audit and Risk Committee to fulfil its oversight role to monitor the IJB’s risk management arrangements. The MIJB Risk Management Policy was reviewed and a revised Risk Management Policy will be submitted to the Audit & Risk Committee in June 2024 and was approved by the MIB Board in October 2024. 2.5 In presenting a budget setting paper in March 2025 both partners had either offered or indicated increases of 11% for the 2025/26 MIJB funding leaving a £6.835million financial pressure remaining. Application of Operational and Strategic redesign recovery actions of £5.801million resulted in a remaining unbalanced budget position of £1.034 million with a reported expectation that sustainability funding for NHS Lothian would allow the setting of a balanced budget. The reliance on continued recovery plan savings and significant increases in partner budget
Page 2
support continues to highlight the significant financial position risks for the MIJB. Maintaining financial reporting of achievement of recovery actions, as well as overall budget position throughout the year will continue to be vital for the Board. Regular reporting has been provided to the Board on the financial position and the progress of the recovery actions during the year. The Midlothian IJB Medium term financial strategy 2025-28 was then presented to the MIJB Board in March 2026 highlighting a growing financial deficit position rising to £13.68 million per annum by 2028/29. 3 Internal Audit Annual Plan work undertaken 2025/26 3.1 We summarise below the work we have undertaken to obtain assurances over the arrangements in place for each area considered with conclusions on the effectiveness included. Local Code of Corporate Governance 3.2 In considering the delivery of integrated services, we carried out a high level review of the Local Code of Corporate Governance to assess compliance with the requirements of the following seven core principles set out in the 2016 CIPFA/SOLACE Framework: clarity of roles and responsibilities including arrangements for the operation of Standing Orders; behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law; ensuring openness and comprehensive stakeholder engagement; defining outcomes in terms of sustainable economic, social, and environmental benefits; determining the interventions necessary to optimise the achievement of the intended outcomes; developing the entity’s capacity, including the capability of its leadership and the individuals within it; and implementing good practices in transparency, reporting, and audit to deliver effective accountability. The MIJB has mostly strong control and governance processes in place however the ongoing challenges of maintaining a sustainable medium term financial position are noted and are being monitored through the Governance processes. In addition the need for an appropriate complaints process is being worked on in conjunction with Midlothian Council. Strategic Planning 3.3 In considering the delivery of integrated services we attended the MIJB meetings to observe planning, approval, monitoring and review activity of the Midlothian Health and Social Care Integration Joint Board’s business and performance. The Internal Audit Report of Strategic Planning Provided substantial assurance and was presented to the MIJB Audit & Risk Committee in December 2025 it had one recommendation which was for IJB management should ensure that the Consultation and Engagement Statement, Housing Contribution Statement and Market Facilitation plan were finalised as soon as possible, and this occurred at the IJB Board in October 2025. Risk Management 3.4 We carried out a high level assessment of processes for managing and monitoring risks to determine the effectiveness of arrangements for managing uncertainty over the achievement of the strategic objectives of the MIJB. Risk Management has remained affective for MIJB throughout the 2025/26 financial year.
Page 3
Financial Management 3.5 The MIJB Medium Term Financial Strategy 2025-2028 approved at the March 2026 IJB Board projects a £13.68million annual overspend by the 2028/29 financial year and therefore continued focus on the transformation and feedback processes in place is required to ensure financial sustainability of the MIJB remains in place. Substantial control processes are in place and operating, however these must remain under review to ensure that they remain effective. Further Annual Audit Work 3.6 Furthermore Midlothian Council’s Internal Audit resources were also deployed in undertaking the following annual audit work for the MIJB during the year: Recommendations Follow-Up Review which has concluded in that all recommendations made by Internal Audit have been implemented. Administration of Audit Scotland Reports (Monitor publication of Audit Scotland reports and co-ordinate submission by Management of relevant Audit Scotland Reports to the MIJB Audit and Risk Committee / Board). Audit Committee Self-Assessment (Development of templates that will assist the Chair in undertaking a self-assessment of the MIJB Audit and Risk Committee against the 2022 revised CIPFA best practice guidance and in implementing any areas of improvement in support of their development). Attendance at Board / Committee meetings (Prepare for and attend MIJB Board / Audit and Risk Committee meetings and assisting in arranging the MIJB Board Self-evaluation). Planning for 2026/27 (Update Audit Universe, develop and consult on coverage within the MIJB Internal Audit Annual Plan 2026/27). 3.7 For assurance purposes, the MIJB Audit and Risk Committee was made aware of reports by other bodies that relate to the business of the MIJB including those by the Partners’ Internal Auditors, Audit Scotland and other national scrutiny and audit bodies. 4 Recommendations and actions arising from Internal Audit Annual Plan 2025/26 4.1 Internal Audit provide recommendations as part of the specific reports completed throughout the year of which all the recommendations have now been implemented. 5 Global Internal Audit Standards (GIAS) 5.1 I can confirm that the 2025-26 self-assessment of practices against has indicated that Midlothian Council’s Internal Audit function conforms with the requirements of the professional standards, being Global Internal Audit Standards as modified by the Uk Public Sector Application note for 2025/26.
Page 4
Duncan Stainbank Bsc (Hons) CPFA MIJB Chief Internal Auditor 26 May 2026