The Audit and Standards Committee of Melton Council met on Tuesday 28 July 2026 to review the council's financial governance and audit processes. Key discussions included the annual report on procurement exemptions, the internal audit annual report and opinion for 2025/26, and the draft Annual Governance Statement for the same period. The committee also received updates on the internal audit progress report, the provision of internal audit services, and the external auditor's strategy for regaining assurance.

Annual Report on Procurement Exemptions 2025/26

The committee reviewed the annual report on procurement exemptions for the financial year 2025/26. This report, which satisfies an external audit recommendation, details procurements that did not go through a standard competitive procedure. Dawn Garton, Director for Corporate Services, presented the report, highlighting that the exemptions applied were for relatively low-value items and had genuine reasons for their approval. Councillor Leigh Higgins questioned an exemption for the Country Park Bridge reinstatement, valued at just under £57,000, which was approved on the basis of risk mitigation. Councillor Simon Orson, who was leader of the council at the time, confirmed that the cabinet had been briefed and that the delay in the bridge project was partly due to obtaining agreement from the Environment Agency and ensuring the bridge was future-proofed. The committee approved the report.

Internal Audit Annual Report and Fraud Log 2025/26

Rachel Ashley-Caunt, Chief Internal Auditor, presented the Internal Audit Annual Report and Opinion for 2025/26. The overall assurance opinion for the year was Moderate Assurance, consistent with previous years. This opinion is based on the council's governance, risk, and control framework, informed by internal audit work throughout the year. The report indicated that no assurance opinions of less than moderate assurance were given during the year, and no audits with an opinion of high organisational impact were reported. However, the implementation rate of agreed management actions had dropped compared to the previous year. Councillor James Mason noted that the range of assurance opinions had become more bunched in the middle, with fewer outliers, and asked for an explanation. Rachel Ashley-Caunt explained that while the comparator is useful, it's not a direct comparison as different areas are audited each year, and some years may involve auditing riskier areas. Councillor Helen Cliff, Deputy Mayor, sought clarification on the term independent assurance in the report, which Rachel Ashley-Caunt explained was to inform the Annual Governance Statement and the committee's review of the council's controls. The committee noted the report.

Draft Annual Governance Statement 2025/26

Clive Tobin, Assistant Director for Governance and Democracy (Monitoring Officer), presented the draft Annual Governance Statement (AGS) for 2025/26. This statement, a statutory requirement, reviews the effectiveness of the council's system of internal control and governance arrangements. Councillor Leigh Higgins expressed concern that the AGS did not include a statement regarding the planning service, citing issues with effective use of resources and a lack of direct answers to questions. She stated she would not vote for the AGS in its current form. Clive Tobin explained that the planning service's issues were considered to be in hand with an ongoing process and action plan, and therefore not seen as a risk requiring inclusion in the statement. Councillor Leigh Higgins remained unconvinced, arguing that there was still a risk and that the planning directorate's governance should be included. Councillor James Mason also raised concerns about asset management, describing it as a golden thread that ran through previous reports with no apparent progress. He stated he could not support the paper without reassurance on asset management. Following further discussion, Councillor Holmes proposed deferring the paper to allow for amendments to address the concerns raised regarding the planning service and asset management. The committee agreed to defer the paper, subject to liaising with the chair on proposed amendments.

Internal Audit Progress Report

Rachel Ashley-Caunt provided an update on the delivery of the Internal Audit Plan for 2026/27. Since the last committee update, seven audit reports had been finalised, none of which received an opinion of less than moderate assurance. These included audits on anti-social behaviour, landlord health and safety, the asset development programme, key financial controls, procurement compliance, private sector housing, and disaster recovery within the Leicestershire ICT Partnership. Councillor Simon Orson raised concerns about the implications of Local Government Reorganisation (LGR) on the council's capacity and the pace of work, suggesting a degree of complacency. Rachel Ashley-Caunt confirmed that LGR implications would be factored into the scoping of future audits. The committee noted the report.

Provision of Internal Audit Services

Dawn Garton, Director for Corporate Services, presented a proposal to extend the current delegation agreement for the provision of internal audit services with North Northamptonshire Council for a further two years, until 31 March 2029. She highlighted that the service was high-performing, represented good value for money, and offered resilience and access to specialist services. Councillor James Mason commented on the irony of North Northamptonshire Council undertaking this work during a period of local government reorganisation, drawing parallels with issues experienced in Northamptonshire during its own reorganisation. The committee approved the proposal in principle and recommended it to the full Council.

Regaining Assurance Strategy

Helen Lillington from Grant Thornton, the external auditor, presented the Regaining Assurance Strategy. This report outlines the plan to rebuild audit assurance following disclaimed audit opinions for the years 2020/21 to 2024/25. Melton Borough Council has been provisionally assessed as Category C under the MHCLG capacity assessment framework, indicating that while an ISA-compliant approach is possible within the build-back period, there are significant operational difficulties. Key challenges include the complexity of the council's reserves, particularly those relating to property, plant and equipment, and pensions. The council's capacity to support the build-back process is also a concern, exacerbated by recent staff losses in the finance team. The strategy proposes a three-year plan to achieve an unmodified audit opinion by 2027/28, with a focus on in-year transactions and closing balances for the 2025/26 audit, targeted for sign-off by 30 November 2026. Councillor Helen Cliff asked for clarification on the different categories, and Councillor Simon Orson inquired about the consequences for the council if it failed to meet the build-back requirements. Dawn Garton explained that the current finance team has experienced 100% turnover since November 2025, making it difficult to recruit staff with the necessary breadth of skills and historical knowledge. She stated that her priorities were budget monitoring, business as usual, and supporting LGR, rather than trying to gain assurance over past years' accounts. The committee noted the report.