The ESPO Finance, Audit and Risk Committee met on Wednesday 7 October 2026 to review the external audit of the 2025/26 financial statements and the Head of Internal Audit Service's annual report for 2025-26. The committee received and considered the external auditor's findings, noting an unmodified audit opinion and endorsing management's responses. They also approved the Head of Internal Audit Service's annual report, which concluded that ESPO's governance, risk management, and control arrangements remained adequate and effective.

External Audit of the 2025/26 Financial Statements

The committee received the external audit findings report for the year ended 31 March 2026 from UHY Williamson Croft. The auditors issued an unmodified audit opinion, confirming that the financial statements presented a true and fair view of ESPO's financial position and performance. No material weaknesses in internal control, significant governance issues, or material compliance concerns were identified.

However, the audit did identify several areas for improvement. These included:

• Catalogue advertising income: Invoices for some suppliers were not raised before the year-end, leading to an understatement of income by £167,937. This was due to a missed billing requirement and a number of other suppliers being missed from the January 2026 billing.
• Trade debtors: A sample of customers revealed unmatched amounts totalling £23.6k, leading to an extrapolated potential variance of £91,814. The auditors noted this was a worst-case calculation and not necessarily indicative of unpaid amounts.
• Trade creditors: For one supplier, Total Gas & Power, payments made post-year-end totalling £5,198k were not fully matched to pre-March 2026 invoices, resulting in an extrapolated potential variance of £423,712. Again, this was considered a worst-case calculation.
• Sales cut-off: Four invoices relating to March 2026 were posted in April 2026, and a Total Gas & Power supplier invoice should have been accrued. The net impact was considered trivial.
• Stock Valuation: Issues were noted with stock control in the extension warehouse, which is manually maintained. Variances in a sample of five items led to an extrapolated potential adjustment of £43,754.
• Stock Provision: Differences were found between the auditors' recalculations and original calculations for stock provision, arising from management overrides. The total potential variances from these overrides were £64,108.

The auditors also highlighted potential improvements in the control environment:

• Payroll documentation: Contracts were not always signed by both employee and employer. ESPO will implement a refreshed onboarding checklist to ensure signed contracts are retained.
• Rebate testing: The recognition of rebate income relies on supplier honesty, posing a risk of income leakage. While ESPO uses the Tussell tool to cross-reference spend data, the process is reliant on the accuracy of supplier reports. Recommendations include formalising reconciliation protocols, enhancing supplier engagement, and documenting discrepancy resolutions.
• Catalogue Advertising - Income Cut-off (Missed Billing): The billing process relies on manual communication, creating a risk of overlooked or delayed billable items. It was recommended that the income department be given direct access to the contributions tracker and that a periodic reconciliation be introduced.
• Inaccurate stores proof of delivery evidence: The current process of scanning delivery sheets is prone to human error. An electronic proof of delivery (ePOD) application solution was recommended.
• Stock Provision Overrides: A clearer report of all manual overrides performed in conjunction with the stock provision was recommended.

The committee endorsed the management responses and actions arising from the audit.

Head of Internal Audit Service - Annual Report 2025-26

The committee received and approved the Head of Internal Audit Service's Annual Report for 2025-26. The report concluded that No significant governance, risk management or internal control failings have come to the HoIAS' attention therefore substantial assurance is given that overall ESPO's governance, risk management and control arrangements have remained adequate and effective.

Key highlights from the report included:

• Positive conclusions were given in all three components of governance, risk management, and control.
• The majority of planned internal audit work was achieved.
• The Leicestershire County Council's Internal Audit Service (LCCIAS) generally conforms to internal audit standards.
• Client satisfaction with the Internal Audit Service was exceptionally strong at 100%.

The report also detailed the progress against the 2026-27 Internal Audit Plan. As of 21 September 2026, several audits had been completed, with most receiving Substantial Assurance. Other audits were in progress at various stages, including testing, scoping, and preparatory work. No high importance recommendations had been raised to date.

Date of Next Meeting

The date of the next meeting was scheduled for 24 February 2027 at 11:00 am.

Exclusion of the Press and Public

The committee resolved to exclude the press and public from the remaining items of business in accordance with the Local Government Act 1972, as these items were likely to involve the disclosure of exempt information.