The Audit Committee of Stockport Council met on Wednesday 19 March 2025 to review various financial and governance reports. Key discussions included updates on STAR Procurement, internal audit progress and plans, corporate risk management, and the council's annual governance statement. The committee also approved the proposed accounting policies for the 2024/25 Statement of Accounts and noted the external auditors' annual report.

STAR Procurement Update

The committee received an update on STAR Procurement, a shared service for procurement involving Stockport and several other councils. Discussions highlighted STAR's income generation, with £800,000 generated from service sales in their highest performing year. The Procurement Act 2003, which came into effect on 24 April 2024, was noted for its benefits in increasing transparency and introducing new rules for higher-value contracts. The National Procurement Policy Statement, due to be implemented from 24 February 2025, will enable faster policy changes. Changes to the Council's contract procedure rules will be necessary to align with the Procurement Act. STAR Procurement had also participated in a scrutiny review by the Corporate, Resource Management & Governance Scrutiny Committee, focusing on social value. A successful Meet the Buyer event attracted over 300 delegates. STAR Procurement is adapting its governance to accommodate new partners while maintaining core values. The committee requested consideration be given to reviewing lower-value contracts (under £25,000) to encourage engagement with small and medium-sized businesses and stressed the importance of consequences for contractors failing to deliver promised social value. The committee noted the presentation.

Annual Governance Statement (AGS) Progress and Arrangements

The committee received the second update on the Council's Annual Governance Action Plan, which arises from the latest Annual Governance Statement (AGS). This report detailed the three key governance issues facing the Council and the controls in place to manage them. A discussion took place regarding efficiency savings proposed in the Council's budget and the necessity of adopting new technologies and embracing transformation in the coming year. The committee resolved to note the report.

Furthermore, the committee considered the proposed arrangements for completing the Annual Governance Statement for 2024/25. It was noted that the final AGS would be presented to the Audit Committee alongside the Annual Statement of Accounts. The committee resolved to approve the proposed process for the completion of the Annual Governance Statement for 2024/25.

Internal Audit Progress and Planning

The committee reviewed the Internal Audit Progress Report for October 2024 to February 2025, which outlined the progress made against the Risk-Based Internal Audit Plan. It was noted that two unplanned audits had been conducted, and clarification was sought on their impact and resource allocation. It was explained that unplanned work was accommodated with additional resources and risk assessments, though some planned audits might be delayed. The importance of transformation and adapting to new working methods was emphasised. The committee also heard suggestions for mandatory training for councillors on handling sensitive information. A question was raised regarding the different audit opinions (substantial, moderate, limited, no opinions), their determination, and the implementation of recommendations, with an emphasis on addressing high-priority recommendations and a focus on follow-up actions. The council's provision of audit services to academies on a commercial basis was discussed, with a note on balancing this with other responsibilities. The committee resolved to note the report.

The committee then considered the Internal Audit Plan, Charter, and Strategy for 2025-26, which outlines the key areas for internal audit resource allocation in the next financial year. Concerns were raised about the team's capacity to deliver the planned work, with a suggestion to utilise capacity from elsewhere in the Council for lower-level audits for staff development. Questions were also raised regarding the budget allocation and project scope for highways maintenance and cemetery management. A discussion on the use of Artificial Intelligence (AI) across the council highlighted potential risks related to diversity and decision-making. It was stated that an audit on AI and cybersecurity was underway, with a focus on careful consideration of AI's impact. The importance of AI as a tool, rather than a replacement for human decision-making, was stressed, along with its potential to create capacity and improve outcomes. The scope of the audit on council buildings and facilities management contracts would be determined through discussions with directors and key risks. The committee resolved to approve the 2024/25 Internal Audit Plan and Charter.

Assurance Map and Quality Assurance

The committee reviewed the 2025/26 Assurance Map, a tool designed to provide insights for both the Corporate Leadership Team (CLT) and the Audit Committee, ensuring compliance with Global Internal Audit Standards and supporting the audit planning process. The committee resolved to note the report.

The committee also noted the Quality Assurance and Improvement Programme (QAIP) for internal audit for 2025/26, along with the self-assessment results for 2024/25. This report outlined the proposed basis for the external assessment of the Council's internal audit function. The committee resolved to note the QAIP and the self-assessment results.

Corporate Risk Register Update

A Quarter 4 update on the Corporate Risk Register was presented, noting minor narrative changes to most risks. Key points highlighted included:

• Demand Pressures: Remaining at the highest risk level, with ongoing economic uncertainty and cost-of-living impacts exacerbating pressures, particularly in social care.
• School Places (Risk 9a): While mainstream provision is considered manageable, SEND provision remains challenging due to increasing numbers of children with complex needs.
• Climate Emergency (Risk 12): Increased focus on preparing for and mitigating the impacts of extreme weather and climate change, with global emission reduction targets not being met.
• Workforce (Risk 14): Recruitment and retention issues persist, particularly in social work, though the overall picture has improved.
• Integrated Care System (Risk 15): Increased to high risk due to significant budget overspends and challenges in bringing expenditure within resource envelopes, impacting all partners.
• Dedicated Schools Grant (DSG) (Risk 17): A new risk has been added concerning the DSG deficit, with potential implications for the Council's financial standing if the statutory override is not extended beyond 2026.

The committee also noted considerable upside risks, including financial resilience, changes to employer national insurance contributions, homelessness, Deprivation of Liberty Safeguards (DOLS) backlogs, SEND transport costs, management of council buildings (including RAAC), academisation, interest rate impacts, inflation, and cyber risks. The committee resolved to note the report.

Statement of Accounts - Accounting Policies

The Director of Finance presented proposed accounting policies for the Council's 2024/25 Statement of Accounts. A significant update includes the adoption of IFRS16 Leases, which removes the distinction between finance and operating leases for lessees, requiring the recognition of right-of-use assets and lease liabilities on the balance sheet. This aims to better reflect assets and liabilities from lease contracts. While the impact is still being assessed, it is unlikely to be material. The committee noted the report and resolved to approve the proposed accounting policies for adoption in the 2024/25 Annual Statement of Accounts.

Auditors' Annual Report and External Audit Progress

The committee received the external auditors' (Forvis Mazars) Annual Report for 2023/24. The report confirmed an unqualified audit opinion on the financial statements, issued on 13 February 2025. The auditors also concluded that the Council has proper arrangements in place for securing economy, efficiency, and effectiveness in its use of resources, with no significant weaknesses identified. The committee resolved to note the report.

Forvis Mazars also submitted a report detailing their progress in delivering their responsibilities as external auditors for the year ending 31 March 2025. This included information on the financial statements audit and value for money arrangements. The committee resolved to note the report.