The Derbyshire County Council Audit Committee is scheduled to convene on Tuesday, 15 September 2026, to review a comprehensive set of financial and governance reports. Key discussions are expected to centre on the Draft Statement of Accounts for the year ended 2025/26, the Annual Governance Statement for the same period, and an assessment of the Council's going concern status. The committee will also receive updates on the Corporate Risk Register, climate change risks, the effectiveness of internal controls, and the local code of corporate governance. Additionally, the Internal Audit Plan for 2026-27 will be reviewed mid-year, alongside a progress report on internal audits and counter fraud activities.

Draft Statement of Accounts for 2025/26

The committee is scheduled to review the pre-audit Statement of Accounts for the year ended 2025/26. This document, published on 14 August 2026, has been sent to the Council's external auditor, Forvis Mazars¹. The public inspection period for these accounts began on 17 August 2026 and will conclude on 28 September 2026. The report indicates that no queries or objections have been received to date. The Statement of Accounts includes core financial statements such as the Comprehensive Income and Expenditure Statement, Balance Sheet, Cash Flow Statement, and Movement in Reserves Statement, as well as Pension Fund Accounts and the Annual Governance Statement. The report highlights a net overall Council underspend of £1.964m for 2025-26. Significant variances are detailed, including an £8.818m overspend in Adult Care, largely attributed to market pressures and double running costs from in-house care home re-provision, and a £27.518m overspend in Children's Services and Safeguarding and Education, primarily due to agency residential placements and rising costs for care packages for disabled children. Conversely, Business Services and Council Efficiency reported a net underspend of £4.861m, mainly due to high vacancy levels. The report also details capital expenditure, which was £119.565m in 2025-26, slightly higher than the previous year, with various schemes deferred to future years. The Council's General Reserve stood at £36.990m at 31 March 2026, considered appropriate given the challenges. The report also addresses the Council's response to the rising cost of living, distributing £9.524m of Household Support Fund grants.

Annual Governance Statement 2025/26

The committee will consider the Annual Governance Statement (AGS) for 2025/26, which outlines the Council's corporate governance arrangements. This statement is prepared in line with the CIPFA/SOLACE Delivering Good Governance in Local Government Framework. The review process involved assessing governance arrangements against this framework, reviewing Executive Director Assurance Matrices, and considering external assessments. The AGS notes that governance frameworks are largely in place and operating, but improvement activity is needed to strengthen consistency, visibility, and assurance, particularly in areas relying on awareness or legacy arrangements. Key changes in 2025-26 include updates to the Constitution to reflect new Cabinet portfolios and committee structures, and amendments to Council Procedure Rules. The report highlights that while the Council is mainly compliant with the Code of Practice on Good Governance for Local Authority Statutory Officers, an action plan has been developed for improvements. The Council's engagement with the Local Government and Social Care Ombudsman (LGSCO) is noted, with a 100% compliance rate for recommended remedies, although there was an increase in complaints, particularly relating to Children's Services and SEND. The Internal Audit Annual Opinion for 2025/26 concluded a Limited level of assurance, indicating continued significant weaknesses in some high-risk areas, though progress has been made.

Assessment of Going Concern

The Director of Finance, as Section 151 Officer, will present an assessment of the Council's status as a 'going concern' for the purpose of preparing the Statement of Accounts for 2025/26. This assessment assumes the Council's functions and services will continue in operational existence for the foreseeable future. The report will consider the Council's current and projected financial position, governance arrangements, and the applicable regulatory and control environment. Factors underpinning this assessment include a net revenue underspend of £1.964m in 2025-26, though significant pressures remain in Adult Care and Children's Services. Capital expenditure was £119.565m in 2025-26. The Council's General Reserve balance was £36.990m at 31 March 2026, considered adequate. The report notes the ongoing procurement process for the Derby and Derbyshire Waste Treatment Centre did not result in bids, and an options appraisal is underway. The Director of Finance will conclude on the appropriateness of preparing the accounts on a going concern basis.

Corporate Risk Register 2026-27 Quarter 1

The committee will review the Corporate Risk Register for the first quarter of 2026-27. This register details the most significant risks to the Council's strategic and operational purpose. The report highlights several risks, including the County Council not operating within its available funding, potential disruption from Local Government Reorganisation (LGR), and failure to manage contracts effectively. Risks related to safeguarding vulnerable children and adults are also detailed, with some showing increased severity. Notably, the risk of Failure to deliver Cabinet decision to reinstate Waste Treatment Centre and best value for residents has increased to 'Red' due to procurement process issues. Information governance and data security is also rated 'Red' due to the Information Commissioner's Office's interest in the Council's performance in handling Subject Access Requests.

Climate Change Risks to Council Services

A 'deep dive' into the effectiveness of risk management for the strategic risk 'Failure to adapt to extreme, adverse, and more variable weather' is scheduled. This report will provide information on the Council's arrangements for identifying, assessing, managing, and monitoring climate-related risks. It will also offer an opportunity to discuss whether these arrangements provide sufficient assurance that climate-related risks are being effectively managed and to identify any further information or action required. The Council responded to Defra's invitation to produce a voluntary climate change risk assessment report (ARP4) in 2024. The report notes that arrangements for reporting, monitoring, and corporate oversight are still developing, with a proposed lead officer reporting process expected by the end of December 2026. The Council's Environmental Sustainability Strategy, approved in July 2026, includes Theme 6: Preparing for more adverse and extreme weather, outlining actions related to resilience, response, and planning.

Review of the Effectiveness of the System of Internal Control

The committee will review the effectiveness of the Council's system of internal control, as required by the Accounts and Audit (England) Regulations 2015. This review considers the Council's constitution, committee structure, scheme of delegation, policies, and procedures. It will also take into account the work of internal and external audit, including the Internal Audit Annual Opinion, which concluded a Limited level of assurance for 2025/26. The report notes that while progress has been made, significant weaknesses persist in high-risk areas, and timely implementation of agreed actions is crucial. The Council's response to the Local Government and Social Care Ombudsman's recommendations is also a factor, with a 100% compliance rate for remedies, although there was an increase in complaints, particularly concerning SEND.

Local Code of Corporate Governance

The committee is asked to approve the updated Local Code of Corporate Governance. This document outlines the Council's governance and accountability arrangements, structured around the seven core principles of the CIPFA/SOLACE Delivering Good Governance in Local Government Framework. The code has been reviewed and updated, with proposed changes to reflect new Cabinet portfolios, committee structures, and recommendations from the Code of Good Practice on Corporate Governance for Statutory Officers.

CIPFA Financial Management Code

An update on the Council's compliance with the CIPFA Financial Management Code will be presented. The Council is considered substantially compliant, with some areas for improvement identified, particularly concerning the embedding of financial management into organisational culture, enhancing management information, and strengthening financial systems development.

Performance Monitoring and Budget Monitoring/Forecast Outturn 2026-27 - Quarter 1

This report will provide an update on the Council Plan performance and the Revenue Budget outturn position for 2026-27 as at Quarter 1 (30 June 2026). The Council is forecasting a net underspend of £1.183m against its Revenue Budget. However, some portfolios are forecasting overspends, including Adults Care (£2.114m) and Children's Services (£3.187m), which are being mitigated by underspends in Corporate Budgets. The report also details the significant cumulative deficit on the Dedicated Schools Grant (DSG) of £93.390m at 31 March 2026, with a forecast in-year deficit of £80.455m for 2026-27. The Council is awaiting a decision from the Department for Education regarding potential funding for these deficits. The report also outlines the planned use of Flexible Capital Receipts (FCR) to fund Local Government Reorganisation (LGR) preparation costs, estimated at £10.172m for the County Council.

Internal Audit Plan 2026-27 Mid-Year Update

The committee will review the mid-year progress of the Internal Audit Plan for 2026-27. The report indicates that several reviews are ongoing and will continue into the second half of the year, partly due to two vacant posts within the Internal Audit Service. The revised programme includes additional coverage for Disposal of Assets, Fleet Management, Dedicated Schools Grant (Part 2), Taxi Usage, Policy Compliance, and the CM2000 Digital System. The report also highlights that the Internal Audit Annual Opinion for 2025/26 concluded a Limited level of assurance, indicating continued significant weaknesses in some high-risk areas.

Internal Audit Progress Report

This report provides a status update on the Internal Audit Plan for 2026-27, including progress against the approved plan, service performance, resourcing, and counter fraud activity. As of 1 September 2026, 7 out of 30 approved audit areas are complete, with 16 in progress and 7 yet to commence. Two Limited assurance reports have been issued for Hire Vehicles and The Coppice Primary School and Nursery. Substantial Assurance was provided for Digital Systems: Procurement and Project Governance, and the Public Health Ring Fenced Grant. The report also details counter fraud and investigation activity, noting four investigations undertaken to date, with two referred to management and two ongoing.

Derbyshire Pension Fund Audit Completion Report 2025-26 External Auditor

The committee will receive the External Auditor's Audit Completion Report for the Derbyshire Pension Fund for the year 2025-26. This report will detail the findings of the external audit of the pension fund's accounts.

Exclusion of the Public

The committee will consider moving into an exempt session to discuss specific items where the public may be excluded due to the disclosure of exempt information.

Exempt Items

Internal Audit No & Limited Assurance Report

This report, considered in the exempt part of the meeting, will provide details on Internal Audit reviews that have resulted in No or Limited assurance opinions, highlighting specific control weaknesses.

Digital Risk Register

This item, also considered in the exempt part of the meeting, will provide an update on the Digital Risk Register.