The Audit Committee of Derbyshire Council met on Tuesday 14 July 2026 to review departmental risk management, financial performance, and internal audit reports. The committee was scheduled to discuss updates on the Counter Fraud Strategy, the National Fraud Initiative, and the Internal Audit Charter.

Place Department Risk Management

The committee was scheduled to receive an overview of risk management arrangements within the Place department from Claire Brailsford, interim Executive Director of Place. The report highlighted five key risks on the strategic risk register for the Place department:

• Failure to adapt to extreme, adverse and more variable weather: This risk relates to the increasing frequency and intensity of extreme weather events and changes in average climate conditions, impacting infrastructure, service delivery, and the workforce.
• Failure to deliver Cabinet decision to reinstate Waste Treatment Centre and best value for residents: This concerns the challenging process of implementing the decision to reinstate and operate the Waste Treatment Centre at Sinfin.
• Failure to respond to emergency situations: This risk addresses the Council's ability to effectively respond to major incidents, such as severe weather, fires, utility losses, or pandemics, while maintaining critical services.
• Failure to maintain highways assets: This risk pertains to the potential for damage or harm to the public and employees due to inadequate maintenance of highways, and the failure to comply with statutory duties.
• Failure to maintain countryside sites and waterways: This risk relates to the potential for damage to human health, the environment, or assets due to inadequate maintenance of these areas, and failure to comply with statutory duties.

Performance Monitoring and Budget Monitoring Outturn 2025-26

The committee was scheduled to review the Council Plan performance and the Revenue Budget outturn for the financial year 2025-26, as at 31 March 2026. The report indicated that 20 out of 25 Strategic Objectives showed good progress, with one requiring action and four needing review.

Financially, the Council reported a net underspend of £2.009m against the Revenue Budget of £794.018m for 2025-26. This underspend was attributed to savings from holding vacancies and additional income, as well as greater savings in Corporate Budgets than initially forecast. However, significant overspends were noted in Children's Social Care (£27.490m) and Adult Social Care (£8.818m), largely due to demand and cost pressures.

A significant cumulative deficit of £93.308m on the Dedicated Schools Grant (DSG) at 31 March 2026 was also highlighted. The report detailed government plans to resolve 90% of local authorities' DSG High Needs deficits accrued to the end of 2025-26 through a High Needs Stability Grant, subject to the submission and approval of a local SEND reform plan.

The report also covered the use of Flexible Capital Receipts, savings delivery targets, and the aged debt profile. Two requests for budget carry-forwards into 2026-27 were noted: £0.500m for the Tour de France Femmes event and £0.600m for property and facilities management inflation.

Internal Audit Charter Update

Mark Lunn, Assistant Director of Finance (Audit), was scheduled to present proposed updates to the Internal Audit Charter. This document defines the purpose, authority, independence, and scope of Internal Audit within the Council. Key changes included replacing Managing Director with Chief Executive, removing specific references to IT Forensic Capabilities due to technological evolution, strengthening management responsibilities for audit recommendations, and adding safeguards for the Chief Audit Executive's dual role.

Counter Fraud Strategy Update

The committee was to review an updated Counter Fraud Strategy for 2026-27, previously named the 'Anti-Fraud and Anti-Corruption Strategy'. The reframed strategy aims for a more proactive and operational approach to preventing, detecting, and responding to fraud. It strengthens alignment with the Economic Crime and Corporate Transparency Act 2023, including a new section on the Failure to Prevent Fraud offence. Emerging risks such as procurement fraud, bribery, and the use of Artificial Intelligence were also addressed. Governance arrangements were updated to reflect current organisational structures, and a centralised reporting mechanism for fraud referrals was introduced.

National Fraud Initiative Update

The committee was to be informed about the outcomes of the National Fraud Initiative (NFI) 2024-25 exercise and preparations for the 2026-27 exercise. The 2024-25 exercise, which included adult social care data for the first time, resulted in 60 identified instances of financial recovery or adjustment totalling £213,548. Preparations for the 2026-27 exercise were underway, with a focus on data privacy and notification requirements.

Internal Audit Annual Report 2025-26

Mark Lunn was scheduled to present the Internal Audit Annual Report for 2025-26. The report's overall opinion remained Limited, citing the continued presence of significant control issues in high-risk areas and inconsistent implementation of agreed improvements. While progress was noted in audit coverage and recommendation tracking, these improvements were not yet sufficiently embedded across the organisation to support a higher level of assurance. Key challenges identified included the timely and consistent delivery of agreed actions, alongside strengthened ownership and accountability. A focused improvement plan was agreed to address these areas.

Internal Audit Progress Report

This report was to update members on the progress against the approved Internal Audit Plans for 2025-26 and 2026-27 as at 25 June 2026. It detailed the work undertaken, including the completion of the 2025-26 audit plan, which comprised 85 audits and reviews. The report also highlighted that two audits deferred from the 2025-26 plan had been completed in the 2026-27 plan.

Internal Audit Reviews with No or Limited Assurance Opinions

This item, presented in the exempt part of the meeting, was intended to provide transparency on specific control weaknesses identified in audits that resulted in 'No' or 'Limited' assurance opinions. These opinions indicate significant weaknesses and non-compliance in key areas of governance, risk management, and control, exposing the Council to high risks and reputational damage.

Report of the External Auditor: Audit Strategy Memorandum Year Ending 31 March 2026

Daniel Watson from Forvis Mazars LLP was scheduled to present the Audit Strategy Memorandum for the Derbyshire Pension Fund for the year ending 31 March 2026. The memorandum outlined the planned scope and timing of the audit, significant and enhanced audit risks, and considerations regarding auditor independence. Key risks identified included management override of controls and the valuation of investments within Level 3 of the fair value hierarchy. The report also detailed the planned audit approach, materiality levels, and proposed audit fees.

Report of the External Auditor: Audit Strategy Memorandum Year Ending 31 March 2026 (Derbyshire County Council)

Daniel Watson from Forvis Mazars LLP was also scheduled to present the Audit Strategy Memorandum for Derbyshire County Council for the year ending 31 March 2026. This report outlined the planned audit scope and timing, significant and enhanced audit risks, and considerations of auditor independence. Key risks identified included management override of controls, the valuation of land and buildings (including heritage assets), and the net defined benefit liability. The report also detailed the approach to rebuilding assurance following previous disclaimed opinions and outlined planned procedures for the 2025-26 audit. Materiality levels and proposed audit fees were also presented.

The meeting also included a section on Required Communications from the external auditor, detailing their responsibilities and how they would communicate with the Audit Committee. The report also outlined the definitions of materiality, significant risk, enhanced risk, and key audit matters. Finally, Appendix B detailed current year updates and forthcoming accounting issues, including changes to non-investment asset valuation requirements and the new IFRS 18 standard on Presentation and Disclosure in Financial Statements.