The Audit Committee of Derbyshire County Council was scheduled to discuss the Statement of Accounts for 2024-25 and the External Auditor's reports. The meeting was scheduled to take place at County Hall, Matlock, Derbyshire DE4 3AG.

Statement of Accounts 2024-25

The committee was scheduled to review the Statement of Accounts for the financial year 2024-25. This comprehensive document, detailed in the Public reports pack Tuesday 24-Feb-2026 14.00 Audit Committee.pdf, outlines the Council's financial performance and position. It includes the Comprehensive Income and Expenditure Statement, Balance Sheet, Cash Flow Statement, and Movement in Reserves Statement, along with supporting notes and accounting policies.

A key aspect of the discussion was expected to be the Council's financial performance during 2024-25, with a report from the Director of Finance, Mark Kenyon BA(Hons) FCPFA, detailing revenue outturn and portfolio expenditure. The report highlighted an overall Council underspend of £0.287m for 2024-25, after utilising £18.879m from reserves. Significant variances were noted in Adult Care (£21.127m overspend) and Children's Services and Safeguarding and Education (£27.336m overspend), contrasted with underspends in Corporate Services and Budget (£4.645m) and Highways Assets and Transport (£7.320m).

The Statement of Accounts also detailed the Council's reserves and commitments, noting a General Reserve balance of £39.566m at 31 March 2025. It further outlined the Council's response to the cost of living crisis, including the distribution of £10.691m in Household Support Fund grants, and its ongoing Homes for Ukraine response. Capital expenditure for 2024-25 was reported at £106.630m, with a decrease compared to the previous year mainly due to reduced spend on the Derby and Derbyshire Waste Treatment Centre.

The report also addressed the Council's borrowing strategy, aiming to maintain borrowing and investments below underlying levels, and noted an expected additional borrowing requirement of up to £333m by March 2028. The Council's financial outlook was presented, highlighting risks associated with savings achievement, service pressures, pay awards, the economic climate, and borrowing costs. The report also detailed budget pressures within Children's Social Care, the Dedicated Schools Grant (DSG) deficit (£44.847m at 31 March 2025), Schools and Learning, Adult Social Care, and Waste Disposal.

A significant point of discussion was expected to be the prior period adjustments related to the Council's Depreciated Replacement Cost (DRC) methodology for Property, Plant and Equipment (PPE) and Heritage Assets. This issue, identified by the External Auditor, led to an overstatement of £524.199m at 31 March 2024. The report detailed the effect of these restatements on the Comprehensive Income and Expenditure Statement and Balance Sheet for 2023-24.

The report also included implications for financial instruments, including fair value estimates and the impact of interest rate rises. It detailed related party transactions, including those with county council controlled companies, joint ventures, and central government bodies. The Derbyshire Pension Fund's financial position was also outlined, noting a total net pensions liability of £56.986m at 31 March 2025.

The Statement of Accounts also included the Council's Accounting Policies, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the CIPFA Code of Practice on Local Authority Accounting.

The report concluded with recommendations for the Audit Committee to approve the Statement of Accounts 2024-25, as required by the Accounts and Audit (Amendment) Regulations 2024 to meet the statutory deadline.

External Auditor Reports

The committee was scheduled to receive reports from the external auditor, Forvis Mazars LLP. These reports, detailed in the Public reports pack Tuesday 24-Feb-2026 14.00 Audit Committee.pdf, would have provided an overview of the audit approach, risk summary, significant findings, and control deficiencies.

A key focus was expected to be the disclaimer of opinion on the financial statements for the year ended 31 March 2025, due to the inability to obtain sufficient appropriate audit evidence before the statutory backstop date. This disclaimer was attributed to the late publication of draft accounts, insufficient time for audit procedures, and issues with prior period adjustments related to property valuations. The report highlighted significant weaknesses in financial sustainability, particularly concerning the Dedicated Schools Grant (DSG) deficit and the Council's reliance on reserves. Governance was also identified as an area for improvement, with concerns raised about the effectiveness of internal controls and the implementation of audit recommendations.

The report also detailed specific deficiencies in internal control, including issues with IT general controls related to user access and privileged access, and the lack of annual declarations of interest for members. Recommendations were made to address these deficiencies, such as revising user access parameters, ensuring timely removal of access for leavers, and implementing annual declarations of interest.

The external auditor also noted deficiencies in property valuations, with a recommendation for the Council to ensure all land and buildings are revalued every five years. Payroll reconciliation issues and the absence of formal signed lease documentation for some leased assets were also highlighted.

The report included a summary of adjusted and unadjusted misstatements, and a discussion of fraud considerations. It also provided an assessment of the Council's arrangements for securing economy, efficiency, and effectiveness in the use of resources, identifying three significant weaknesses in financial sustainability and governance.

Finally, the report confirmed the independence of Forvis Mazars LLP and outlined other communications. The external auditor's report for the Derbyshire Pension Fund was also scheduled for review.