The Audit Committee of Durham County Council met on Friday 29 May 2026 to discuss a range of governance, audit, and financial matters. Key topics included the governance arrangements for the Aykley Heads development, the external auditor's strategy for the council and its pension fund, and the progress of internal audits across various council services. The committee also reviewed the council's risk management policies and the internal audit plan for the upcoming year.

Aykley Heads Company Governance Arrangements

The committee was scheduled to receive a presentation on the governance arrangements for the Aykley Heads development. This presentation, delivered by the Head of Inclusive Growth and Partnerships, was expected to cover the ambition for the Aykley Heads development, the structure of the joint venture (JV) with Muse Developments and Durham University, key contracts such as the Members Agreement and Conditional Land Sale Agreement, and the decision-making processes within the JV. The presentation was also intended to outline potential legal risks and their mitigations, including issues related to the viability of the scheme, breakdowns in partnership relationships, control over the site, and delays in delivery.

Audit Strategy Memorandum - Durham County Council

The committee was presented with the Audit Strategy Memorandum from the external auditor, Forvis Mazars LLP, for the year ending 31 March 2026. This document outlined the planned scope and timing of the audit, identified significant and enhanced audit risks, and summarised considerations regarding the auditor's independence. Key risks highlighted included the potential for management override of controls, the valuation of land and buildings, and the net defined benefit valuation for the Local Government Pension Scheme. The memorandum also detailed the audit team, the audit scope and approach, materiality levels, proposed audit fees, and the framework for value for money work.

Draft Audit Strategy Memorandum - Durham County Council Pension Fund

A similar Audit Strategy Memorandum was presented for the Durham County Council Pension Fund for the year ending 31 March 2026. This document also detailed the planned audit scope, timing, significant risks, and auditor independence. The primary risks identified for the pension fund included management override of controls and the valuation of investments within level 3 of the fair value hierarchy, particularly concerning unlisted property funds managed by CBRE and BCPP. The memorandum also outlined the audit team, materiality levels for the pension fund accounts, proposed audit fees, and the audit scope and approach.

Internal Audit Progress Report for the Period Ended March 2026

A report was presented detailing the work undertaken by Internal Audit for the period 1 April 2025 to 31 March 2026. The report aimed to provide assurance on internal controls, advise on areas needing improvement, report on grant certification and consultancy reviews, detail amendments to the audit plan, track progress on implementing audit recommendations, and report on performance against key indicators. Appendices to the report provided details on performance against the audit plan, final reports issued, actions raised and implemented, performance indicators, and details of limited assurance reviews. The report noted that 81% of planned productive audit days had been achieved, below the target of 90%, partly due to staff absences and a vacant post. It also highlighted that 95% of all due actions had been implemented.

Internal Audit Strategy, Charter and Plan 2026/2027

The committee was asked to review and approve the Internal Audit Strategy for 2026-2030 and the Internal Audit Charter. These documents had been updated to align with the Global Internal Auditing Standards (GIAS) in the UK Public Sector. The report also presented the proposed final version of the Internal Audit Plan for 1 April 2026 to 31 March 2027, which included provision for ongoing work from the previous year, deferred audits, planned assurance work, due diligence, service requests, grant certification, reactive work, and follow-up on recommendations. The estimated total days required for the 2026/27 plan was 4,010 days.

Other Scheduled Items

The agenda also included items such as the minutes of previous meetings, declarations of interest, and any resolutions relating to the exclusion of the public during the discussion of exempt information. Part B of the agenda, which was not open to the public, included a further report on the Internal Audit Progress Report for the Period Ended March 2026.