The Audit Committee of Scottish Borders Council met on Monday 21 September 2026 to review a range of financial and risk management reports. Key discussions included the Director of Risk Management's presentation on corporate risks, the Annual Treasury Management Report for 2025-26, and the External Audit Annual Audit Report for 2025-26. The committee also considered the Scottish Borders Council Annual Accounts for 2025-26 and internal audit updates.

Director Risk Management Presentation

Chris Myers, Director of Adult Social Work and Care, presented an overview of the council's risk management approach, focusing on risks within the adult social work and care department. He also provided an update on a specific risk related to the chief social work officer, which is recorded on the corporate risk register. The presentation covered various corporate risks, including those related to major incidents, property, and capital projects, with a focus on mitigation strategies and ongoing work to address identified weaknesses. Several red-rated risks were highlighted, including IT skills gaps within Property Services, property maintenance challenges due to the condition of assets, and fire risks within Waste Services. Health and safety in Waste Services was also identified as a significant red risk following a previous incident. The committee noted the presentation, with discussions covering topics such as bottle-bank collections and the process for returning properties to communities.

Annual Treasury Management Report 2025-26

Suzy Douglas, Director of Finance, presented the Annual Treasury Management Report for the financial year ending 31 March 2026. The report detailed the council's treasury management activities, confirming compliance with the CIPFA Code of Practice on Treasury Management and the Prudential Code for Capital Finance. Key findings included that the council remained under-borrowed against its Capital Financing Requirement (CFR) and that capital expenditure for the year totalled £82.3 million. The report also highlighted that investment returns remained robust, with the council achieving an average rate of return of 4.17% on internally managed funds, exceeding the benchmark SONIA rate of 4.01%. The council's borrowing was primarily short-term, reflecting expectations of falling interest rates. The report confirmed that borrowing levels remained within the authorised limit and operational boundary.

External Audit Annual Audit Report 2025-26

John Boyd from Audit Scotland presented the proposed Independent Auditor's Report and the draft Annual Audit Report for the 2025-26 financial year. He confirmed that the audit work was substantially complete and anticipated issuing an unmodified audit opinion. The report highlighted that there were no significant findings or key audit matters identified. Audit adjustments were processed by the council to correct misstatements in the financial statements, including those relating to land and buildings, right-of-use assets, and income and expenditure with the Integration Joint Board (IJB). The report also noted that the council had made good progress in implementing prior-year audit recommendations.

Scottish Borders Council Annual Accounts 2025-26

Suzy Douglas, Director of Finance, presented the audited Annual Accounts for Scottish Borders Council and its group for the year ended 31 March 2026. Audit Scotland confirmed that the accounts were free from material misstatement and provided an unqualified independent audit opinion. The Annual Audit Report concluded positively on the council's financial management, financial sustainability, vision, leadership and governance, and use of resources. Four recommendations for improvement were identified, along with a further recommendation from the Best Value audit concerning performance reporting with community planning partners. Management accepted all recommendations and committed to enacting them within agreed timescales. The committee was also presented with the audited accounts for Bridge Homes LLP, Lowood Tweedbank Ltd, and SB Inspires LLP, and noted the accounts for the Scottish Borders Council Charitable Funds.

Internal Audit Work to July 2026

Jill Stacey, Chief Officer Audit and Risk, provided an update on internal audit activity from April to July 2026. Two final assurance reports were issued: Lone Working Health and Safety and Financial Inclusion Service. The Lone Working report resulted in six medium-rated recommendations, all accepted by management. The Financial Inclusion Service report found that the team was applying the five principles of the Scottish National Standards for Information and Advice Providers effectively, with performance exceeding targets. Internal audit work in progress included audits on Looked After Children, Behaviour in Schools, Contract Management, and Tree Protection. The report also detailed consultancy and other work undertaken by the internal audit function, including participation in various governance groups and training initiatives.

Internal Audit Recommendations Update Q1 2026-27

Jill Stacey also presented an update on the implementation status of internal audit recommendations as of the first quarter of 2026-27. The report indicated an improved picture compared to the previous quarter, with a significant number of actions completed and an increase in overall progress. Six actions were overdue, with four attributed to long-term staff absences. The report highlighted that all internal audit recommendations from previous years (2021/22, 2022/23, and 2023/24) were now marked as complete. The committee was asked to acknowledge the progress made by management in implementing these recommendations.