The Audit Committee convened to review the external audit plan, risk management strategies, internal audit performance, and treasury management. Councillors approved the Internal Audit Plan and Charter, and noted the External Audit Plan, Internal Audit Assurance Ratings, and Internal Audit Progress Report. The committee also reviewed the draft final accounts for 2024/25 and the treasury management lending list.

External Audit Plan

The representative from Grant Thornton, Teignbridge Council's external auditor, presented the External Audit Plan to the committee, highlighting three significant risks that remained consistent with previous years. The representative noted that additional time would be needed to implement statutory recommendations previously brought to the Full Council. The committee was informed of the work carried out to determine materiality¹, the balance sheet provided to account for new assets and liabilities under the new CIPFA² code, and the new processes within the finance department that required consideration. The committee noted the External Audit Plan.

Risk Management

The Project Manager updated the committee on risk management, reporting that the spending and collection of Community Infrastructure Levy (CIL) funds was progressing well, and Section 106 agreements³ were being overseen by the legal team and logged in digital form. He explained the process of securing Section 106 agreements and how the funds are allocated, noting that the Highweek Scout Hut would be funded by such an agreement. The Project Manager noted that the implications of Local Government Reorganisation on CIL were not yet understood.

The committee also discussed the challenges in ensuring developers commence building houses after receiving planning permission, with the current housing target set at 720 homes. The council is looking at locating small sites for development by smaller developers. The committee noted the report.

Internal Audit

The Audit Manager presented the Internal Audit Plan to the committee, noting that the new Global Internal Audit Standards, effective from April, would shape future audit planning. The report included the mandate for internal audit and noted improved senior management engagement in ongoing audits. Most audits would be conducted by Devon Audit Partnership, including the Strata Audit, which Strata itself commissions.

The Audit Scrutiny Committee is to be renamed the Audit and Governance Committee, with responsibilities for signing off accounts and the Annual Governance Statement. The Constitution Review Group will continue its work with CFGS⁴ and the Monitoring Officer. DAP will provide a refresher audit training session in September, recommended for committee members.

The committee discussed how external auditors would respond to fraud, with input from the Grant Thornton representative. It was noted that fraud differs between the public and private sectors due to the nature of their customers. The committee requested comparisons of current and previous departmental audit results to ensure improvements were being made. The Internal Audit Plan and Charter were unanimously approved, following a proposal by Councillor Sally Morgan, Chair of the Audit Committee, and seconded by Councillor Charles Nuttall, Executive Member for Local Government Reorganisation and Devolution.

The Audit Manager also presented the Internal Audit Progress Report, noting that reports for four more audits were pending. The Annual Audit Opinion was nearing completion, although some services required additional time to respond to audit work and findings. The committee noted the Internal Audit Progress Report.

Financial Instructions Waiver and Exemptions

The Audit Manager presented the item to the committee, which considered the Financial Instructions Waiver included in the part 2 report. One waiver related to purchasing specialised equipment available from only one supplier. The committee noted the financial instructions waivers and exemptions.

Draft Final Accounts and Treasury Management

The committee reviewed the draft final accounts for 2024/25, the current authorised lending list, and the draft treasury management results for 2024/25.

The draft statement of accounts for 2024/25 had been published, slightly later than the prescribed date of 30 June 2025, due to challenges including resource availability, implementation of a new accounting standard⁵, delays in asset valuations, and adjustments related to prior-year transactions. The audit of the 2023/24 accounts was not fully completed, resulting in an audit opinion reflecting this and a disagreement over a 2021/22 transaction related to SANGS⁶. The council has been working with Grant Thornton and found guidance from CIPFA to resolve the difference of opinion, with proposed changes communicated to Grant Thornton, who will commence their audit of the 2024/25 accounts in the autumn.

The draft closing general reserves at 31 March 2025, were £2.5 million, an improvement on the original budget of £100,000, and in line with the February 2025 probable budget proposals to increase general reserves to £2.5 million. Variations to the original budget were mainly due to increased income from leisure memberships and investment income, alongside savings in staffing, utilities, and fuel costs. Some costs increased, including bed and breakfast provisions, audit fees, and insurance. Additional government grants were received for new burdens.

The Modern 25 agenda contributed to savings through reduced grants, increased income from concessions, increased CIL income allocation to revenue, using grants to fund substantive posts, and new charges for pest control.

The authorised treasury management lending list was approved at the February 2025 budget meeting, and officers continue to monitor ratings to ensure compliance with the council's lending criteria. The lending list was updated, with Close Brothers Ltd and Leeds Building Society moving from Tier 2 to Tier 3.

The council's treasury team continues to use internal borrowing to minimise interest costs. As of the end of 2024/25, the capital financing requirement (CFR) was £35.353 million. Implementing IFRS 16⁷ inflated the CFR due to leases, particularly for refuse vehicles. By using existing balances internally, the council saved approximately £195,950 over the year.

The average funds available for investment increased in 2024/25 by £0.55 million to £40.26 million, mainly due to an increase in capital grants unapplied. Net interest earned increased from £1,936,259 in 2023/24 to £1,995,833 in 2024/25, with the average rate achieved being 4.96%. The Bank of England's base rate decreased three times during the year, from 5.25% to 4.50%.

Following the withdrawal of LIBOR rates, the benchmark being used is now the compounded 12-month SONIA (Sterling Overnight Index Average), which represents the actual rates at which banks lend to one another. For 2024/25, this rate was 5.07%. In 2024/25 this was 5.02%. The slightly lower Teignbridge average is reflective of the need to keep a proportion of investments liquid in order to manage day to day cash-flow.

The committee noted the draft final accounts and treasury management results.