The Combined Fire Authority for County Durham and Darlington Audit and Finance Committee met on Thursday 17 September 2026 to review the financial outturn for the previous year, discuss the audit strategy for the upcoming year, and consider the authority's code of corporate governance. The meeting also included updates on short-term investments and long-term borrowing, as well as the internal audit progress report and plan.

Audit Strategy Memorandum Year Ended 31 March 2026

The committee was scheduled to consider the Audit Strategy Memorandum for the year ending 31 March 2026, prepared by Forvis Mazars LLP. This memorandum outlines the planned scope and timing of the audit, identifies significant and enhanced audit risks, and details considerations regarding auditor independence. The document also sets out the audit timeline, including planning, fieldwork, communication, and completion phases, and defines materiality levels for the audit. Key audit risks identified included management override of controls, the valuation of the net defined benefit liability and land and buildings, and the accounting for leases under IFRS 16, specifically the PFI liability. The proposed audit fee for the statutory audit work was £105,588.

Revenue and Capital Outturn for the Year Ended 31 March 2026

A report from the Director of Corporate Resources detailed the revenue and capital outturn for the financial year ending 31 March 2026, comparing actual expenditure and income against the original budget. The net revenue expenditure was in line with the original budget of £36.586M. Significant variances included an overspend on employees (£0.167M) due to a higher-than-budgeted pay award for firefighters, and an underspend on premises (£0.515M) partly due to reduced utility costs and an accounting adjustment for IFRS 16 implementation. Capital expenditure totalled £5.205M against a budget of £8.231M, with underspends in vehicles, plant and equipment (£0.847M) and the estates improvement programme (£2.179M) due to changes in planned timing and project start dates. Members were recommended to note this outturn position.

Short-Term Investments and Long-Term Borrowing – Period to 31 March 2026

An update was provided on the performance of the authority's short-term investments and long-term loans for the period ending 31 March 2026. Interest earned on short-term investments amounted to £578,982.65, exceeding the budgeted amount of £400,000.00. The balance invested at the quarter-end was £5,702,000.00, with investments held with Insight (Money Market Fund), Lloyds, and Bank of Scotland. The outstanding principal balance for long-term loans was £4,776,112.09, with loans from the PWLB Lending Facility maturing in 2071 and 2072. Members were requested to note this position.

Code of Corporate Governance

The committee was presented with a refreshed Code of Corporate Governance, updated to align with the CIPFA/SOLACE Delivering Good Governance in Local Government Framework (2016) and the 2025 Addendum. The revised code strengthens the authority's approach to ethical leadership, stakeholder engagement, sustainable outcomes, evidence-based decision-making, organisational capacity, risk management, internal control, transparency, reporting, and audit. It also incorporates current governance considerations such as equality, information governance, cyber security, artificial intelligence, environmental sustainability, partnership governance, workforce planning, organisational learning, and continuous improvement. Members were recommended to note the updated Code.

Statement of Assurance 2025/26

The report presented the 2025/26 Statement of Assurance for approval prior to publication. This statement forms part of the Authority's Assurance Framework and complements the Annual Governance Statement. It confirms the adequacy of the arrangements for managing financial, governance, and operational obligations for the year and evaluates adherence to the Fire and Rescue National Framework 2018. The statement indicated that financial, governance, and operational requirements were fully met during the year.

Internal Audit Progress Report

The Head of Internal Audit provided a report on the work undertaken by Internal Audit between 1 April 2025 and 31 March 2026. The report aimed to provide assurance on internal controls, advise on significant issues requiring control improvements, track progress on audit recommendations, and report on performance indicators. Of the 16 reviews scheduled for completion in 2025/26, 10 were complete or at draft/final report stage, and 2 were in progress. No reports had been issued with a Limited Assurance Opinion. Four recommendations were overdue against their original target implementation dates. The report also noted that the Annual Governance Statement had been approved in November 2025.

Annual Internal Audit Opinion and Report 2025/26

The Chief Internal Auditor and Corporate Fraud Manager presented their annual assurance opinion on the adequacy and effectiveness of the organisation's framework of governance, risk management, and internal control for the financial year 2025/26. Based on the work undertaken, a Moderate Assurance opinion was provided. This indicates that while there is a generally sound system of internal control, some weaknesses exist in the design and/or operating effectiveness of controls that require management action. The opinion is a key element of the authority's assurance framework and informs the Annual Governance Statement.

Annual Review of the System of Internal Audit Report 2025/26

This report detailed the outcome of the annual review of the effectiveness of the internal audit service. The review assessed the structure and resourcing of the audit team, conformance with Global Internal Audit Standards (GIAS), the prioritisation of audit work, and overall performance. The self-assessment confirmed that the service generally conforms with GIAS, with a Quality Improvement and Assurance Programme developed for further enhancement. The report noted that the last external assessment was in February 2022, and the next is due in 2027. The structure and resourcing level, including qualifications and experience, were deemed satisfactory.

Forecast of Outturn 2026/27 – Estimated Based on Expenditure and Income to 30 June 2026

The Director of Corporate Resources provided a forecast of the revenue and capital financial outturn for the year ending 31 March 2027, based on expenditure and income up to 30 June 2026. The forecast revenue outturn indicated an underspend of £364,000 (0.90%). Key variances included an underspend on salaries and wages (£501,000) due to a higher number of development firefighters and recent vacancies, and an overspend on ill health charges (£64,000), which is expected to be offset by a transfer from the pensions reserve. The capital budget forecast was expected to be in line with the budget of £10.924M. Members were asked to note the report.

Short-term Investments and Long-Term Borrowing – Period 30 June 2026 (Quarter 1)

An update was provided on the authority's short-term investments and long-term loans for the period ending 30 June 2026. Interest earned on short-term investments was £66,825.34, exceeding the budgeted amount of £50,000.00 for the year to date. The balance invested at the quarter-end was £7,045,000.00, with investments held with Insight (Money Market Fund), Lloyds, Bank of Scotland, and the Debt Management Office. The outstanding principal balance for long-term loans was £4,760,476.40. Members were requested to note this position.

Audit Plan 2026/27

The Head of Internal Audit presented the proposed Internal Audit Plan for the period 1 April 2026 to 31 March 2027. The plan, which had been considered and agreed by the Senior Leadership Team, is designed to provide assurance over governance, risk management, and control processes. It includes coverage of key financial systems, corporate governance risks, counter fraud activities, and ICT systems management. The plan is based on a risk-based approach and aims to deliver 86 productive audit days. Members were recommended to agree the plan.

Internal Audit Charter & Strategy

The committee was asked to review and approve the Internal Audit Strategy 2026-2030 and the Internal Audit Charter. The Strategy outlines how internal audit will deliver its mandate over the medium term, aligned with organisational objectives and risks, and in accordance with the new Global Internal Audit Standards (GIAS) in the UK Public Sector. The Charter, which had no changes since its approval in September 2026, also reflects the requirements of the GIAS and details the internal audit function's purpose, mandate, reporting relationships, and scope of services. Members were recommended to approve both documents.

Corporate Risk Register – Position on 30 September 2026

The Deputy Chief Executive provided details of the Corporate Risk Register as at 03 September 2026. The register summarises high-level risks facing the Service, including heightened terrorist threats, the potential for industrial action, failure to achieve savings via service transformation, and the impact of changes to public sector pension schemes. The report indicated that the residual risk scores for most of these risks had been reduced through mitigating actions, such as effective management of industrial relations, increased government funding for 2026/27, and ongoing monitoring of pension scheme changes. Members were requested to note the report.