The Audit and Governance Committee convened to discuss several key reports, including the external and internal audit progress, limited assurance audits, proposed amendments to the council's financial regulations, and the net zero risk register. The committee supported the updated Net Zero Risk Register to be recommended to Council for approval. Councillors also reviewed action plans associated with audits that received limited assurance.

Here's a more detailed breakdown of the meeting:

External Audit Progress

The Manager, Grant Thornton, the council's external auditor, provided an update on the 2024/25 audit, highlighting that Exeter City Council was not impacted by the 'backstop'¹ and had received a clean audit opinion. The audit plan was issued in July, but the draft financial statements were delayed due to issues with property, plant, and equipment valuation. The audit also identified risks of significant weakness in both governance, and improving economy, efficiency and effectiveness. The committee noted the report.

The audit firm also provided sector updates, including:

• An overview of local audit reforms and the establishment of a new Local Audit Office (LAO) from 1 April 2026.
• Challenges faced by local authorities implementing IFRS 16².
• A new report on climate change.
• An update on local government reorganisation.

Internal Audit Progress

The Assistant Director, SWAP, presented the Internal Audit Progress Report for the first quarter of 2025/26. 26% of the audit plan had been completed or was in progress. The report highlighted that the council had 106 active agreed actions, with four overdue, and that a monitoring system for actions agreed within audit reports was now operational. The committee noted the report.

Limited Assurance Audits

The Strategic Director for Corporate Resources presented a report detailing action plans for recent limited assurance audits. Since the last report, SWAP had finalised two further audits with limited assurance: Information Governance, and Payroll Self Service.

Key points:

• Information Governance: As part of a senior leadership restructure, leadership for information governance would transfer to the Head of Service Digital and Data in October 2025. An action plan was in place to address the audit's findings, including updates to key policies and a rollout of SharePoint.
• Payroll Self Service: The audit identified areas for improvement to strengthen controls and mitigate risks related to fraud and non-compliance. Actions included a review of payments and allowances, updates to guidance for employees and managers, and system improvements in collaboration with MHR Global (iTrent).

The Audit and Governance Committee noted the report and the actions to be taken.

Amendments to the Council's Financial Regulations

The Strategic Director of Corporate Resources presented proposed changes to the council's financial regulations. The proposed changes included:

• Amending thresholds for approving budget virements³
• Introducing rules for approving supplementary budgets.
• Introducing a lower limit for raising sundry debtor invoices.
• Amending the thresholds for approval of debtor write-offs.
• Amending the thresholds for the disposal of assets.

Other minor changes to the regulations included:

• Clarifying that the financial regulations apply equally to the control of both General Fund and HRA finances and to revenue and capital finances
• Clarifying the controls required in relation to financial and accounting systems
• Clarifying the role of the Monitoring Officer
• Clarifying that internal audit is now provided through South West Audit Partnership
• Inclusion of a section on maintenance of reserves
• Inclusion of a section on maintenance of a fixed asset register
• Clarifying the role of the Money Laundering Reporting Officer
• Inclusion of a section on credit notes
• Inclusion of a section in respect of external audit
• Updated to reflect that the Council ceased issuing cheques
• Regulations relating to income and debtors (invoices raised) split into two distinct sections
• Clarified the treatment of credit balances when sundry debtor invoices overpaid
• Inclusion of a section on new leases in
• Inclusion of a section on internal transactions
• Clarified responsibilities in relation to holding a corporate credit card

The proposed changes to authorisation limits were informed by a benchmarking exercise comparing Exeter's current limits with those of neighbouring authorities. For example, East Devon District Council allows Directors and Assistant Directors to write off debts up to £10,000 without consultation.

The report [Financial Regulations covering report] recommended that Council approve the revised financial regulations.

Net Zero Risk Register

The Strategic Director of Place presented the six-monthly review of the City Council's Net Zero Risk Register. The register assesses risks associated with delivering Net Zero within the City Council, adaptation measures to protect council services, and mitigation measures to reduce the effects of climate change.

The Net Zero Risk Register risks remained high reflecting additional financial, and capacity needed to achieve Net Zero. The Net Zero team are constantly looking at ways to reduce corporate GHG emissions through behaviour change or innovative solutions in reducing operational GHG emissions; securing external funding to speed up the delivery of the action plan is critical.

Three of the Net Zero Team previously had temporary contracts. Going forward, their posts will be funded through income generated through the temporary car park on the former Bus Station Site, as agreed at Council on 10 June 2025. This will free up some of the Net Zero budget that would of previously been earmarked for salaries, and can now be directed towards projects, research and delivery from April 2026.

The Net Zero team commissioned SWEEG to develop a Costed Organisational Carbon Footprint Projections to 2030 study, this was reported to Executive July 2025 and will be presented at Strategic Scrutiny September 2025.

As a result of work undertaken, two mitigation measures identified on the risk register have been addressed. Permanent contracts have been secured for three of the Net Zero team employed on temporary contracts, and the Costed Organisational Footprint Projection report, to be discussed at Strategic Scrutiny on 11 September 2025, will inform Service Plans and a revised Carbon Reduction Plan.

The committee supported the updated Net Zero Risk Register to be recommended to Council for approval.