The Audit Committee of Devon County Council met on Wednesday 30 September 2026 to review audit progress reports, financial controls, and strategic performance. Key decisions included accepting audit progress reports for Devon County Council and the Devon Pension Fund, approving the revised Internal Audit Plan for 2026/27, and accepting updates on exemptions from tender, counter fraud activity, strategic performance, risk management, and financial controls.

Devon County Council and Devon Pension Fund Audit Progress Report and Sector Update

The committee received an update from Grant Thornton LLP on the progress of the audits for Devon County Council and the Devon Pension Fund. Peter Barber, Key Audit Partner, explained that the audit of Devon County Council's financial statements was slightly behind schedule due to challenges with the new Unit4 financial system, which generated a significantly larger volume of transactions than anticipated. Despite this, Grant Thornton was working closely with council officers to recover the position and aimed to complete the work by the end of November. The Value for Money conclusion for the county council was also in progress. For the Devon Pension Fund, the audit was nearing completion, with an unmodified opinion expected. The committee was also informed about a consultation by the Ministry of Housing, Communities and Local Government on revised statutory guidance for the Best Value Duty, and it was noted that the Society of County Treasurers had drafted a response. A request was made for a future report on how the risk of unregistered placements in children's social care is being mitigated.

2025/26 Devon Pension Fund Audit Findings Report

Beth Bowers, Director with Grant Thornton, presented the audit findings for the Devon Pension Fund, stating that the audit was complete subject to final quality reviews. She confirmed that Grant Thornton intended to issue an unmodified opinion, having identified no issues of significance that would impact the opinion or require significant adjustments. Chrissa Viente, Audit Manager, provided further detail, noting that while IT controls were rated as 'green' following further evidence, there were some control recommendations regarding management override of controls. The report also detailed minor unadjusted misstatements related to investment valuations, which were not considered material. Councillor Simon Rake raised concerns about the materiality thresholds, questioning whether a figure of £6 million could be considered trivial. Ms Bowers explained that materiality is proportionate to the fund's assets, which are nearly £7 billion, and that while all issues are considered, only those exceeding the materiality threshold are reported to the committee. Councillor Paul Hayward declared himself a member of the Debt and Pension Fund. Catherine Long, Interim Deputy Director of Finance and Public Value, clarified that a significant jump in a related party transaction figure from £20,000 to £6.8 million was due to a typo in a text disclosure note, not an adjustment impacting primary statements.

Revised Internal Audit Plan 2026/27: Review of Audits and Recommendations

Joanne McCormick, Head of Devon Assurance Partnership, presented the revised Internal Audit Plan for 2026/27. The plan had been updated to reflect the pause in Local Government Reorganisation (LGR), allowing for the reintroduction of some previously paused audits. Ms McCormick also detailed a new management action tracking system, which would provide more timely oversight of outstanding actions and risk mitigation. The committee noted the cancellation of three reviews: Smoke-free Generation Grant, County Farms (due to significantly reduced debt levels), and Corporate Performance Approach (as corporate performance dashboards are in place). Councillor Debo Sellis inquired about the cancellation of the County Farms audit, and Catherine Long explained that improved debt recovery processes and a reduction in debt levels had made the audit no longer necessary.

Exemption from Tender Overview - Quarterly Report

Justin Bennetts, Assistant Director within the Finance and Public Value Service, presented the quarterly overview of exemptions from tender contract awards for April to June 2026. He reported 36 direct award projects with a total value of just over £1.3 million, which was lower than the average quarterly value. Eight of these related to the appointment of interim or consultant personnel outside the council's usual agency provider. Mr Bennetts highlighted that only two projects exceeded £100,000. Councillor Sally Morgan asked about the number of exemptions related to LGR, and Mr Bennetts estimated that only about three were directly related, with others being influenced by uncertainty. Matt Thorpe, Director of Finance and Public Value, confirmed that the council was tracking the costs associated with LGR, which amounted to just over £2 million, and that a joint request to the government for support was being submitted.

Counter Fraud Quarter 1 Report

Rachel Worsley, Counter Fraud and Assurance Manager from Devon Assurance Partnership, presented the Counter Fraud Quarter 1 Report. She highlighted that £1 lost to fraud is a pound unavailable for frontline services. The report detailed work on deploying a corporate counter-fraud risk register, reviewing intelligence alerts, and progress on the National Fraud Initiative (NFI), which had generated over 25,800 data matches. While no fraud cases had been identified through the NFI to date, it had provided assurance over data integrity and strengthened controls, with an estimated preventative and deterrent benefit of £26,800. The team had investigated 25 allegations, with one remaining live as of 30 June. Councillor Debo Sellis inquired about work with the communications department to highlight the risks of fraudulently obtaining money, and Ms Worsley confirmed that communications would go out during International Fraud Awareness Week in November. Timothy Beard, an independent member, noted the significant increase in investigations compared to the previous year, which Ms Worsley attributed to increased officer awareness following fraud awareness training. Councillor Simon Rake observed the different scales of reporting, contrasting the £6 million materiality threshold with the £26,000 saving from blue badge fraud. Councillor Paul Hayward described the report as a fantastic report and a cause for celebration. Ms Worsley clarified that the statement about integrating counter-fraud activity across services meant a desire to examine more departments, but this was limited by the team's resources and data protection requirements.

Strategic Performance Quarter 1 Report

Toby Elliott, Assistant Director of Performance and Policy, presented the Quarter 1 Strategic Performance Report, detailing the ongoing implementation of the Council's Strategic Performance Scorecard. He explained that the scorecard was an interactive dashboard and that changes had been made to indicator definitions and RAG (Red, Amber, Green) calculations. Mr Elliott outlined plans to publish the dashboard internally and provide more detailed information for each measure, including benchmarking, trend analysis, and supporting indicators. Councillor Debo Sellis asked how priorities were determined, and Mr Elliott stated they came directly from the Strategic Plan. Councillor Simon Rake raised concerns about the potential for constant changes to measures, and Mr Elliott acknowledged the need for a formal validation process for future changes. Timothy Beard questioned the specificity of some headline measures, and Mr Elliott explained that these were indicative measures supported by additional supporting measures to provide context. Councillor Alan Connett expressed concerns about the clarity of the relationship between the Strategic Performance Board and the Audit Committee, particularly regarding risk reporting, and suggested deferring the decision on the report to allow for clarification. Councillor James Pachewski, Cabinet Member for Finance, reassured the committee that the intention was not to diminish the Audit Committee's role but to strengthen Cabinet and senior officers' oversight. Councillor Paul Hayward requested more context for the RAG ratings on the dashboard. The committee agreed to accept the ongoing implementation of the Council's Strategic Performance Scorecard and requested a further update at the December meeting, pending further work.

Risk Management Update

Brad Hutton, Senior Assurance Manager, presented the Risk Management Update. He highlighted the current risk position, with four Very High risks: Successful Cyber Attack, Successful Cyber Attack on a Partner/Supplier, Unsuccessful delivery of SEND responsibilities, and the risk of harm to personnel, assets, and buildings. Mr Hutton noted the successful launch of a new Risk Management system and Power BI dashboard, which provided enhanced data and reporting capabilities. He also confirmed that work on Local Government Reorganisation (LGR) risk management was being preserved despite the pause. Councillor Laura Ottery inquired about the risk appetite journey and when this would be visible, and Mr Hutton indicated that by the next committee meeting, they should be able to demonstrate this visually. The committee accepted the risk position for 2026/27 including notable changes, reviewed the updates to the risks as supported by Devon Assurance Partnership, and requested the risk register be shared with all Members in a future member bulletin.

Assurance on Financial Controls

Catherine Long, Deputy Director of Finance and Public Value, provided an update on financial controls, focusing on debt recovery, duplicate payments, mispayments, and social care overpayments. She reported that a strengthened debt recovery policy and enhanced Power BI reporting had improved visibility of outstanding debt. Regarding duplicate and mispayments, she explained that an initial increase following the Unit4 system go-live was attributed to system immaturity and the introduction of a self-service model for requisitioning, but that improvements and training had led to a marked decrease. All identified mispayments in 2025/26 were recovered. Social care overpayments remain a significant challenge, with aged debt at £963,448 as of 31 August 2026. A new Overpayment Recovery Assessment Group (ORAG) has been introduced to provide greater consistency and oversight to recovery decisions. Councillor Simon Rake inquired about the breakdown of aged debt, and Ms Long explained the categories included government bodies, corporate debt, county farms, and overpayments. Councillor Debo Sellis asked about difficulties experienced by recipients during overpayment recovery and preventative measures. Ms Long stated that overpayments often occurred due to delays in updating circumstances and that while recovery processes were in place, prevention remained a key weakness. She also confirmed that staff using the Unit4 system undergo training. Councillor Rake raised concerns about a third-party provider identifying 40 overpayments, suggesting a breach of trust. Ms Long clarified that this referred to 40 separate overpayments identified by an analyst during system migration, not 40 to a single supplier, and that the trust had not been lost. The committee accepted the update on debt recovery & write off policies, principles and reporting, accepted the update on the Standard Duplicate Payments / Mispayments, accepted the update on Social Care Overpayments, and the Council's current overpayment aged debt position and the actions being taken to Prevent, Discover and Recover these debts, and requested an update report at the March meeting.

Matters or Information Circulated to Members

This item noted information previously circulated to members, including a response from Alison McGovern MP regarding LGR risks.

Committee Forward Work Plan

Neil, from Democratic Services, presented the committee's forward work plan, highlighting recent improvements such as the production of an annual report, meetings with auditors, revised terms of reference, and the inclusion of the forward plan as a standing agenda item. The committee accepted the forward work plan.

The meeting concluded with the Chair thanking members and officers, and noting the next meeting would be on 14 December.