The Audit Committee of Devon County Council met on Thursday, 18 June 2026, to review the council's financial and governance arrangements. Key decisions included the approval of the Annual Governance Statement, agreement on the Audit Committee Charter Compliance Plan, and a review of the internal audit plan for 2026/27, which will be adapted to accommodate work on Local Government Reorganisation.

External Audit Plan for Devon County Council (2025/26)

Grant Thornton presented their audit plan for Devon County Council for the year ending 31 March 2026. The plan outlines the significant audit risks, including management override of controls, the implementation of the new Unit 4 finance system, and the valuation of land, buildings, and the pension liability. The materiality figure for the audit has been set at £31 million. The auditors will also focus on value for money arrangements, with particular attention to the Dedicated Schools Grant deficit, ongoing pressures in Children's Services, and the effectiveness of the council's governance in these areas. The audit fieldwork is scheduled to be completed by the end of November 2026 to meet upcoming regulatory deadlines.

External Audit Plan for Devon Pension Fund (2025/26)

Grant Thornton also presented their audit plan for the Devon Pension Fund for the year ending 31 March 2026. Significant risks identified include management override of controls, the valuation of Level 3 investments, and the new Unit 4 system implementation. Planning materiality for the fund has been set at £100 million. The audit will also cover the triennial valuation of the pension fund, which determines future employer contribution rates. The audit fee for the pension fund is £109,710, with additional costs anticipated for the triennial valuation testing and the new system implementation.

Annual Internal Audit Report 2025/26

Hannah Hellier, Senior Assurance Manager from Devon Assurance Partnership (DAP), presented the Annual Internal Audit Report for 2025/26. The report indicated an overall Reasonable Assurance opinion for the council as a whole, with Limited Assurance for Children's Services. Improvements were noted in the control framework, although further work is required in Children's Services, particularly concerning data accuracy. The report highlighted progress in SEND services, moving from No Assurance to Limited Assurance . The DAP team has finalized 59 audits and has 12 ongoing, with seven at the draft report stage.

Annual Governance Statement

The Director of Finance and Public Value and the Director of Legal and Democratic Services presented the Annual Governance Statement for 2025-2026. This statement, a statutory requirement, outlines how the council has ensured its business has been conducted lawfully and to proper standards. The committee was asked to approve the draft statement, with a proposed amendment to include reference to the newly established Local Government Reorganisation (LGR) Scrutiny Committee. Councillor Alan Connett, Chair of the Audit Committee, proposed and Councillor Debo Sellis seconded the approval of the statement, with the amendment.

Internal Audit Plan Update 2026/27

Joe McCormick, Deputy Head of Devon Assurance Partnership (DAP), presented an update to the Internal Audit Plan for 2026/27. The plan has been revised to increase capacity for work related to Local Government Reorganisation (LGR), which is considered a significant risk and opportunity for the council. Some lower-risk audits have been removed from the plan to free up resources for LGR-focused assurance work. The approach to following up on audit recommendations will also change from detailed reviews to management action tracking. The committee discussed concerns about the removal of audits related to data protection and information security, but were assured that LGR is a significant risk and the plan remains agile. The committee also recommended that management responses to audit reports should be provided within eight weeks.

2026/27 Devon County Council County Fund Balance and Earmarked Reserves Strategy

Matt Thorpe, Director of Finance and Public Value, and Catherine Long, Deputy Director, presented the County Fund Balance and Earmarked Reserves Strategy for 2026/27. This strategy, approved by Cabinet and County Council earlier in the year, aims to rebuild reserves to improve financial resilience. The strategy includes planned annual contributions to reserves and limits the use of reserves by making greater use of Flexible Use of Capital Receipts. The report noted that the council's reserves have declined compared to other county councils, and the strategy aims to address this. The strategy also addresses the Dedicated Schools Grant (DSG) deficit, with government support expected to cover 90% of historic deficits. The committee was asked to note the report.

Exemption from Tender Overview

Justin Bennetts, Assistant Director for Procurement, presented the quarterly overview of exemptions from the tender process for January to March 2026. During this period, 35 direct contract awards totalling £1.5 million were agreed. The annual overview for 2025-26 showed a total contract award value of £8.5 million across 97 instances, an increase in value but a decrease in the number of projects compared to previous years, largely due to five large, unusual exemptions. The committee discussed the transparency of including contractor names on the register of exemptions and the safeguards in place to prevent contract extensions being made solely for convenience, particularly in light of Local Government Reorganisation.

DAP Counter Fraud Annual Report 2025/26

Tony Rose, Head of Devon Assurance Partnership (DAP), introduced Rachel Worsley, the new Counter Fraud and Error Manager. The report detailed counter fraud activity for 2025/26, assuring the committee that Devon County Council has effective arrangements to prevent, detect, and respond to fraud and error. The National Fraud Initiative (NFI) exercise identified 25,806 matches, with 9 errors and £215.92 recovered. The report also highlighted the importance of data quality and control improvement. The committee discussed the low number of processed matches and the reasons behind it, including changes in Section 151 officer roles and the NFI key contact. The committee confirmed it was assured with the effectiveness of Devon County Council's arrangements to prevent, detect, and deter fraud and error.

Quarter 4 Strategic Performance Report

Toby Elliott, Assistant Director of Performance and Policies, presented the Quarter 4 Strategic Performance Report. The report detailed the development of the council's Strategic Performance Framework and Scorecard, which aligns with the Strategic Plan 2025-2029. The scorecard includes 35 indicators to monitor progress towards strategic goals. The committee discussed the development of the annual delivery plan for 2026-27, noting that it will be informed by Local Government Reorganisation and will be presented to Cabinet in July. Concerns were raised about the flexibility of the plan, and the committee resolved to note the intention for the annual delivery plan to go to Cabinet in March 2027 and for officers to monitor its approach.

Risk Management Update

Brad Hutton, Senior Assurance Manager, presented the Risk Management Update. A new Very High risk concerning a successful cyber attack on a partner or supplier was added to the register, reflecting recent high-profile breaches. Other very high risks include successful cyber attacks on the council's own systems, unsuccessful delivery of SEND responsibilities, and the risk of harm to personnel, assets, and buildings. The report detailed progress made in enhancing the risk management framework, including the approval of a new policy and strategy and the launch of a new supporting system. Ongoing work includes embedding the new policy and strategy, training staff, and managing risks associated with LGR. The committee reviewed the risk position and noted the updates.

Audit Committee Charter Compliance Plan

Tony Rose and Joe McCormick from the Devon Assurance Partnership presented the Audit Committee Charter Compliance Plan. This plan outlines how the committee will meet the requirements of the Global Internal Audit Standards (GIAS), including ensuring the internal audit function has sufficient authority, unrestricted access, and appropriate resourcing. The plan details actions for the committee to review the internal audit charter annually, approve the risk-based audit plan, and provide input on the Chief Audit Executive's performance. The committee agreed the plan.

Senior Finance Officer Role – Settling-In Update

Matt Thorpe, Director of Finance and Public Value, and Catherine Long, Deputy Director, provided a verbal update on their roles and the finance team. They discussed their focus on a smooth transition, meeting the team, and addressing staffing changes, including retirements and resignations. They highlighted the ongoing work on closing accounts, preparing the statement of accounts, and establishing the 2026/27 budget. The increasing focus on LGR activity was also noted, with the finance workstream having officially commenced. They acknowledged the challenges of maintaining focus on council operations while supporting LGR and expressed confidence in the experienced team, despite some new personnel in key roles. Councillor Debo Sellis suggested brainstorming ways to produce more concise information for members.

Exclusion of the Press and Public

The committee resolved to exclude the press and public from the following item of business due to the likely disclosure of exempt information relating to financial or business affairs.

Unit 4 Finance System – Assurance Update

The committee noted the overall assurance position following the first year of Unit 4 implementation, including associated challenges, risks, and mitigating actions. They requested a future report on Financial Controls.

The Audit Committee approved the draft Annual Governance Statement, subject to the inclusion of reference to the newly established Local Government Reorganisation (LGR) Scrutiny Committee. They also reviewed and considered amendments to the Internal Audit Plan for 2026/27, requesting a further review of proposed changes and a report on the outcomes at the next meeting. The committee confirmed it was assured with the effectiveness of Devon County Council's arrangements to prevent, detect, and deter fraud and error, and reviewed the counter fraud activity for 2025/26. They noted the development of the Strategic Performance Scorecard and the intention for the annual delivery plan to go to Cabinet in March 2027, agreeing to monitor its approach. The committee reviewed the risk position and noted updates to the risk management arrangements. Finally, they agreed the Audit Committee Charter Compliance Plan.