The Audit Committee of Aberdeenshire Council met on Wednesday 15 April 2026 to review internal and external audit reports. Key discussions included significant control weaknesses in the management of commercial and industrial lets, progress on the Route Map 2030 and Beyond initiative, and the external auditor's plan for the 2025/26 financial year. The committee also received updates on the Care Management System project and the Local Government in Scotland Financial Bulletin.

Commercial and Industrial Lets Audit Findings

An internal audit report highlighted significant control weaknesses in the management of Aberdeenshire Council's commercial and industrial lets. The audit, which assessed processes for letting, rental income recovery, and managing voids, found that the control framework provided only limited assurance. Specific issues identified included outdated procedures and documentation, significant gaps in tenancy management records, and material control failures in income recovery and billing. For instance, nearly £1 million in rent was not collected from one commercial tenant due to a decade-long suppressed billing instruction, and another public sector tenant occupied a property for three years without a formal agreement or charges. The audit also noted inconsistencies in how tenancy processes were applied and recorded, a lack of consistent oversight of tenancy deposits, and limited formal reporting and performance monitoring. These findings echo issues identified in a 2020 audit, suggesting a lack of sustained improvement. Management acknowledged the findings, attributing some issues to staff turnover and workload pressures, and outlined plans for restructuring the team, reviewing processes, and introducing new reporting mechanisms. Despite these plans, the committee expressed a lack of assurance, ultimately deciding to refer the matter to the Business Services Committee for further scrutiny.

Waste Management Audit

An internal audit of waste management services found that the control framework provided reasonable assurance, with a moderate risk level. The audit confirmed robust governance, procurement, payment controls, income management, and budget monitoring. However, areas for enhancement were identified in the waste strategy, risk management, and stock management. The Council's Waste Management Plan, Waste Strategy 2019-2023, has been extended beyond its end date and is on hold pending the publication of the new Scottish Household Recycling Code of Practice, potentially breaching legislative obligations. Risk registers for the Directorate and Environment and Sustainability Service were also found to be outdated. Stock management at the Jackieshillock site was noted as poor, with inadequate controls over storage and security. Management acknowledged these findings and agreed to implement the recommendations to strengthen operations.

Route Map 2030 and Beyond: Stage 1 Scrutiny

The Infrastructure Services Committee reviewed the Stage 1 scrutiny report concerning the Route Map 2030 and Beyond initiative, following an internal audit report. The committee concluded that they were assured by the Stage 1 report and that a Stage 2 workshop was not required. This decision was based on the progress made in addressing audit recommendations, including the development of SMART outcomes for the action plan, the establishment of a revised Environment and Climate Change Policy that removes the interim emission reduction target of 75% by 2030 while retaining the Net Zero by 2045 target, and the alignment of council plans with national climate change guidance. The committee was informed that further work is required by services across the council to address areas within new Scottish Government documents, including the Climate Change Duties: Statutory Guidance for Public Bodies and Scotland's Climate Change Plan 2026–2040.

Landscape Services Audit and Stage 1 Update

An internal audit report on Landscape Services identified recommendations relating to procurement governance, budgetary control, internal recharges, and fees and charges. The service has since implemented a structured improvement plan, overseen by regular engagement with Finance and senior management. The Infrastructure Services Committee, having reviewed a Stage 1 report, concluded that they were assured by the actions taken by the service and that a Stage 2 workshop was not required. Key improvements include revised procurement arrangements, strengthened budget monitoring through monthly meetings and access to Power BI dashboards, and a review of recharge rates and seasonal staffing levels. A comprehensive review of fees and charges is underway, with a draft Memorial Bench and Tree Policy being developed. Contractual and insurance arrangements for external works have also been strengthened through the adoption of the Hard FM Minor Works Framework.

Care Management System: Stage 1 Report

A Stage 1 scrutiny report on the Care Management System project, following an internal audit, indicated that all internal audit recommendations have now been closed. The project, which involves implementing a replacement system called Eclipse, has seen a reset of governance with a new Project Board comprising chief officers. Responsibility for the project has transferred to Customer and Digital Services. While the overall delivery risk remains high until key milestones are achieved, the project has a clear timetable with agreed milestones, and the new system will be implemented based on the Scottish Framework with potential for future development. The project team has a good relationship with the supplier, and the current CareFirst system will be supported until September 2028, with data backups in place. The committee was assured by the progress and the robust governance arrangements, meaning a Stage 2 workshop was not required.

Local Government in Scotland Financial Bulletin 2024/25

The Audit Committee received a summary of Audit Scotland's Local Government in Scotland Financial Bulletin 2024/25 and its supplements. The bulletin highlights significant and structural financial pressures across local government, noting that incremental efficiencies alone are insufficient. It emphasizes the need for strong medium-term planning, clear savings delivery, and careful management of reserves and debt. For Aberdeenshire Council, the implications include continued pressure on core grants, a negative real-terms funding outlook, and constraints on local flexibility due to ring-fenced funding. The Council's Medium-Term Financial Strategy reflects these uncertainties, with prudent flat cash settlement assumptions. The report also noted that across the sector, usable reserves have fallen, and many councils have made unplanned use of reserves. Aberdeenshire Council's own Medium-Term Financial Strategy and Reserves Strategy aim to address these issues by increasing working balances and controlling the use of reserves. The committee was asked to note the key messages and implications for the Council's financial sustainability and the actions being taken to strengthen financial planning, reporting, and assurance.

External Audit - Annual Audit Plan 2025/26

The committee reviewed the External Auditor's Annual Audit Plan for 2025/26, prepared by Grant Thornton UK LLP. The plan outlines the scope, timing, and planned audit fees, identifying key areas of risk and judgement. Significant risks for the audit include management override of controls, the valuation of land, buildings, and council dwellings, and the valuation of the defined benefit pension scheme liability. The plan also details the approach to auditing group accounts, IT controls, and wider scope and best value arrangements, with financial sustainability identified as a significant wider-scope risk. The committee was informed that the baseline audit fee is £519,980, with potential for additional fees related to group audit procedures. The plan also covers other audit responsibilities, including the National Fraud Initiative and the audit of charitable trusts. The committee was recommended to review and note the plan.