The Combined Fire Authority for County Durham and Darlington Audit and Finance Committee is scheduled to meet on Thursday 17 September 2026. The meeting's agenda includes a review of the audit strategy for the year ending 31 March 2026, an examination of the revenue and capital outturn for the year ended 31 March 2026, and discussions on the authority's financial position regarding short-term investments and long-term borrowing.

Audit Strategy Memorandum Year Ended 31 March 2026

The committee is scheduled to consider the Audit Strategy Memorandum for the year ending 31 March 2026, prepared by Forvis Mazars LLP¹. This document outlines the planned scope and timing of the audit, identifies significant and enhanced audit risks, and details considerations regarding auditor independence. The report from Forvis Mazars LLP, signed by James Collins, Engagement Lead, indicates that the audit fieldwork is planned to take place between September and December 2026, with communication and completion expected in December 2026. The memorandum also details the audit scope for group entities, including County Durham and Darlington Fire and Rescue Authority, Vital Fire Solutions, and CDDFR Community Interest Company. Significant financial statement areas such as operating income, operating expenses, and property, plant, and equipment are highlighted, along with the planned audit work and percentage coverage. Specific risks identified include management override of controls, net defined benefit liability valuation, and the valuation of land and buildings. An enhanced risk is noted for the accounting of leases under IFRS 16, specifically concerning the PFI liability valuation. The report also sets out materiality levels for consolidated and parent-only financial statements, with overall materiality for the consolidated statements set at £1,136,000 and for the parent-only statements at £1,133,000. The proposed audit fee for the year ended 31 March 2026 is £105,588.

Revenue and Capital Outturn for the Year Ended 31 March 2026

A report from the Director of Corporate Resources will present the revenue and capital outturn for the year ended 31 March 2026, comparing actual expenditure and income against the original budget. For the revenue outturn, the net expenditure was in line with the original budget of £36.586M. Significant variations include an overspend of £0.167M on employees due to a higher-than-budgeted pay award for firefighters, and an underspend of £0.515M on premises, partly due to an accounting adjustment for IFRS 16 implementation. Supplies and Services showed an underspend of £0.522M due to IT initiative savings, while Contingencies had an underspend of £0.561M. Capital Financing showed a significant overspend of £4.368M, largely due to a revenue contribution to finance capital expenditure to avoid borrowing at a time of high interest rates. Government Grants and Other Income exceeded the original budget, offsetting some expenditure. The report also details transfers to and from earmarked reserves, including a £1.928M transfer from the Modernisation Reserve to fund capital expenditure. For the capital outturn, total expenditure was £5.205M against an original budget of £8.231M, resulting in an underspend of £3.026M. This underspend is primarily attributed to changes in the planned timing of vehicle, plant, and equipment replacements (£0.847M) and a change in the start date for the new service headquarters building (£2.179M).

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

The Director of Corporate Resources will also provide an update on 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 average return earned was 4.02%, close to the average Bank of England base rate of 4.04%. The balance invested at the quarter-end was £5,702,000.00. Long-term borrowing outstanding at 31 March 2026 totalled £4,776,112.09, comprising two loans from the PWLB Lending Facility with maturity dates in 2071 and 2072.

Code of Corporate Governance

The committee will review the refreshed Code of Corporate Governance, which has been updated to align with the CIPFA/SOLACE Delivering Good Governance in Local Government Framework (2016) and its 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. The code is presented as the authority's public statement on how it will apply the seven principles of good governance.

Statement of Assurance 2025/26

A Statement of Assurance (SoA) for 2025/26 will be presented for approval prior to publication. This document forms part of the authority's Assurance Framework and complements the Annual Governance Statement (AGS). The SoA 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 foreword by Steve Helps, Chief Fire Officer, and Cllr Paul Sexton, Chair of the Combined Fire Authority, expresses satisfaction that business was conducted in accordance with proper standards and law, and that public money was properly accounted for and used economically, efficiently, and effectively. The SoA indicates that financial, governance, and operational assurance requirements were fully met for the year.

Internal Audit Progress Report

The Head of Internal Audit will provide a report on work undertaken between 1 April 2025 and 31 March 2026. The report aims to provide assurance on internal controls, advise on significant issues requiring control improvements, and track progress on audit recommendations. Appendix 1 shows that 16 reviews were scheduled, with 10 complete or at draft/final report stage, and 2 reviews cancelled or deferred. No reports were issued with a Limited Assurance Opinion. Four recommendations are overdue against their original target implementation dates.

Annual Internal Audit Opinion and Report 2025/26

The Chief Internal Auditor and Corporate Fraud Manager will present 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 is provided, indicating 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. This opinion will inform the Authority's Annual Governance Statement (AGS).

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

This report will present the outcome of the annual review of the effectiveness of the internal audit service. The review assessed the structure and resourcing level, conformance with Global Internal Audit Standards (GIAS), the prioritisation of audit work, and overall performance. The self-assessment confirms that the service generally conforms with GIAS. The next external assessment is due in 2027. The report details the qualifications and experience of the audit team, noting a high level of experience among employees.

Forecast of Outturn 2026/27 – Estimated Based on Expenditure and Income to 30 June 2026 (Quarter 1)

The Director of Corporate Resources will present a forecast of the revenue and capital outturn for 2026/27, based on expenditure and income up to 30 June 2026. The forecast revenue outturn indicates an underspend of £364,000 (0.90%). This includes an underspend on Salaries & Wages due to a higher number of development firefighters and recent vacancies, and an overspend on Ill Health Charges which is expected to be covered by a transfer from the pensions reserve. Premises show a forecast overspend due to essential repairs. Income is forecast to be £104,000 less than budget, largely due to a reduced sum received for pensions grant. The capital budget forecast is expected to be in line with the budget of £10.924M. The report also details the authority's reserves position, with an estimated closing balance of £4.321M at 31 March 2027.

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

An update on the authority's short-term investments and long-term loans for the period ending 30 June 2026 will be provided. Interest earned on short-term investments was £66,825.34, exceeding the year-to-date budget of £50,000.00. The average return earned was 3.28%, while the average Bank of England base rate was 3.75%. The balance invested at the quarter-end was £7,045,000.00. Long-term borrowing outstanding at 30 June 2026 was £4,760,476.40.

Audit Plan 2026/27

The Head of Internal Audit will present the Internal Audit plan for the period 01 April 2026 to 31 March 2027. The plan is based on a risk-based approach and aims to provide assurance over governance, risk management, and control. It includes coverage of strategic risks, financial management systems, ICT systems, and counter fraud activities. The plan is designed to deliver 86 productive audit days.

Internal Audit Charter & Strategy

The committee will 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, aligning with organisational objectives and risks, and embracing new ways of working. The charter defines the purpose, authority, and functions of the internal audit service, adhering to the Global Internal Audit Standards (GIAS) in the UK Public Sector. The strategy emphasizes an agile, risk-based approach, a robust programme of core assurance, and offering high-quality insight and advice.

Corporate Risk Register – Position on 30 September 2026

The Deputy Chief Executive will present the Corporate Risk Register as of 03 September 2026. The register currently lists six high-level risks facing the Service, detailing the original risk, gross risk score, and residual risk score after mitigating actions. Risks include heightened terrorist threats, the potential for industrial action, failure to achieve savings from service transformation options, deviations from Medium-Term Financial Plan assumptions, insufficient government funding for capital programmes, and changes to public sector pension schemes. Several risks have seen their scores reduced due to mitigating actions and updated intelligence.