The Audit Committee of Aberdeenshire Council met on Thursday 28 May 2026 to review the council's annual audit report, performance against the Local Government Benchmarking Framework, and various internal audit reports. Key decisions included noting the annual audit report for 2025/26, approving an improvement plan for the Local Government Benchmarking Framework, and expressing assurance over the progress made in addressing outstanding audit recommendations for Landscape Services.

Annual Audit Committee Report 2025/26

The committee considered the draft Annual Audit Committee Report for 2025/26, which provides an overview of the committee's work during the year. Councillors were asked to comment on the report, which will form part of the council's Annual Performance Report to be considered by Full Council on 24 September 2026. The report highlighted the committee's continued focus on the council's internal control environment amidst ongoing financial and workforce pressures, with particular attention given to corporate governance, internal audit processes, and reducing outstanding audit recommendations. The committee also noted the increase in financial regulation breaches to 548 in 2025/26, an increase from 500 in the previous year, and discussed the measures being put in place to address this, including updated financial regulations, guidance for budget holders, and planned training sessions.

Local Government Benchmarking Framework - Overview Report and Improvement Plan 2024-25

The committee reviewed the council's performance against the 2024/25 Local Government Benchmarking Framework (LGBF) indicators. It was noted that 51 out of 108 indicators were below the Scottish average. An improvement plan was presented and approved, outlining actions to address areas where performance falls below the Scottish average, particularly those aligning with council priorities. These improvement actions will be incorporated into Directorate Strategic Plans and monitored through the council's performance reporting cycle. The LGBF data will be included in the Annual Performance Report to Full Council on 24 September 2026. Areas identified for improvement included costs related to Environmental Health, planning and building standards, waste collection, sports facilities, and museums. Satisfaction levels for libraries, local schools, museums, galleries, and refuse collection were also noted as areas requiring attention. In Education and Children's Services, lower quartile performance was evident in literacy and numeracy attainment, and senior phase attainment for pupils from the most deprived areas.

Internal Audit Reports

Teachers Payroll: An audit of teachers' payroll found a moderate net risk, with reasonable assurance provided. While the process is largely system-driven with clear segregation of duties, areas for improvement were identified, including late and incomplete documentation, inconsistent supporting records, and gaps in approvals for additional payments. A major risk was identified concerning sickness pay calculations, with potential for underpayment and reputational damage. Management accepted the findings and has actions in place to strengthen controls.

Electric Vehicle Infrastructure: An audit of the council's participation in the Regional Electric Vehicle Infrastructure Programme provided reasonable assurance with a moderate net risk. While a formal partnership structure and contractual framework are in place, improvements are needed in transparency of decision-making, consistency of governance, financial oversight of grant claims, and contract management reporting. A higher risk area was identified concerning collaborative arrangements, where limited evidence of formal approvals and risk assessments reduced assurance over the council's initial decision-making.

Levelling Up Fund: An audit of the Levelling Up Fund projects, Cultural Tides: North Sea Connections in Aberdeenshire, which includes the Macduff Marine Aquarium and the Peterhead Cultural Quarter, found a moderate net risk and reasonable assurance. While governance and oversight arrangements are generally sound, weaknesses were identified in procurement, grant funding and income generation, compliance with Memorandum of Understanding requirements, and payment controls. The Peterhead Cultural Quarter project, in particular, has experienced significant delays and cost pressures, highlighting the need for strengthened project management and procurement.

Review of Outstanding Recommendations of Internal Audit Report 2504 - Landscape Services

The committee reviewed the progress made on outstanding recommendations from the Internal Audit Report 2504 concerning Landscape Services. Following discussions and updates, the committee voted to express assurance over the actions taken by the service and decided not to proceed to a Stage 2 workshop. This decision was made after considering the ongoing work to implement new systems and policies, including the development of a new policy for memorial benches and trees, and the transition to a new IT system called Abavus. While some recommendations have been closed, others have revised completion dates, with the overall assurance being that the service is making progress despite challenges.

Internal Audit Update Report

The committee received an update on the work of Internal Audit, noting that five audits had been finalised and 19 audit recommendations had been closed since the last update. The report detailed progress against the approved Internal Audit Plan for 2025/26 and highlighted the status of management actions in response to previous recommendations. The committee was asked to note the update report, the progress of the Internal Audit Plan, and the progress made by management in implementing recommendations.

The meeting also included the confirmation of minutes from a previous meeting, a statement on equalities, and a review of outstanding business. The committee agreed to the public sector equality duty and noted the minutes of the previous meeting. The statement of outstanding business indicated that most items remain open, with updates expected at future meetings.