The North East Museums Finance, Audit and Risk Committee met to discuss the audit highlights and statement of accounts for 2024/25, an internal audit progress report, and policy updates regarding health and safety and business continuity. The committee reviewed the audit findings, highlighting key areas such as revenue recognition, management override, and related party transactions. They also discussed and noted the Internal Audit Progress Report and the updated Health and Safety Policy Statement and Business Continuity Management Plan.

Audit Highlights and Statement of Accounts 2024/25

The committee reviewed the audit findings from Kinnair Associates Limited, focusing on key risk areas identified in the audit planning memorandum. The audit report stated that the audit of North East Museums' (NEM) financial statements was substantially complete, and the auditor did not anticipate making any modifications to their report. The agreed audit fee was £12,640.

Key audit matters discussed included:

• Revenue recognition: The risk of errors in revenue recognition was considered low due to the nature of income from Arts Council England (ACE) grants and client contributions, which are agreed in advance.
• Management override: Controls over transaction authorisation were confirmed, with no evidence of management override.
• Related party transactions: Procedures for identifying and disclosing related parties were reviewed, with no unusual transactions requiring additional review noted.
• Accounting Estimates: With the exception of the investment valuation risk in TWAM Enterprises Ltd, no significant accounting estimates were identified within the financial statements.
• Cash Balance: Confirmation of the cash balance held on behalf of NEM was obtained from Newcastle City Council.

A key area of discussion was the valuation of the investment in TWAM Enterprises Ltd, with a cost of £271,000. The draft financial statements of TWAMe indicated a profit of £9,000, with draft net assets of £162,000. The committee discussed whether to impair the value of the investment. The audit team presented two potential values using basic assumptions:

1. Current Net Book Value (NBV) of TWAMe: £162,000
2. Present value of £10,000 over 10 years at 5%: £81,000

The committee agreed that no impairment of the investment cost should be made in the 2024/25 financial statements, as a reorganisation involving TWAMe was to be proposed which, if accepted, may amend the balance sheet of TWAMe and / or the criteria on which an impairment value would be based.

The committee was asked to consider the matters raised in Kinnair Associates Limited's Audit Highlights Memorandum report and the draft statement of accounts for 2024/25.

Internal Audit Progress Report

The committee received an update on the progress of the 2025/26 audit plan, as detailed in the North East Museums Internal Audit Progress Report September 2025. The plan includes 25 days of audit work to provide assurance on governance, risk management, and control environments.

As of the meeting, the audit of Venue Security had commenced, and terms of reference and provisional start dates had been agreed for the remaining planned audits.

The scheduled audits for 2025/26 are:

• Venue Security (7 days, November 2025)
• Woodhorn Museum (7 days, November 2025)
• Trading Company and Development Trust (Income) (7 days, March 2026)
• Financial Systems Testing and IT audit outcomes (1 day, June 2026)
• Audit planning and attendance at Finance, Audit and Risk Committees (3 days)

The committee was asked to note the progress against the 2025/26 audit plan and the 2025/26 performance indicators.

Policy Updates

The committee reviewed updated versions of the North East Museums Corporate Health and Safety Policy Statement 2025 and the North East Museums Business Continuity Management Plan 2025, as outlined in the Report 8 - Policy Updates.

Key changes to the Health and Safety Policy Statement include:

• Expanded commitment of the North East Museums Leadership Team to include discharging responsibilities for implementing the policy, ensuring effective governance, and making adequate resources available.
• Expanded ways of achieving commitments, such as assessing activities involving significant risks, monitoring health and safety arrangements, and consulting with trades unions and employees.

Changes to the Business Continuity Management Plan include:

• Updated plan maintenance text to reflect annual renewal or significant changes, whichever occurs first.
• Added text stating that a hard copy of the plan should be kept off-site by all staff on the distribution list and within each venue.
• Specified that validation exercises will take place at least twice a year at all year-round opening venues and at least once a year in seasonal venues.

The committee was invited to review and comment on the revised policies and recommend them for approval by the Strategic Board.

Other Matters

• Councillor George Kasfikis joined the meeting after apologies were received from A Morton and S Green, making the meeting quorate.
• Detlev Anderson, Kinnairs Associates Limited, declared that he was undertaking work at The Maltings, Berwick upon Tweed, and Richard Gregory's partner was a Trustee of the Natural History Society of Northumbria.
• The minutes of the meeting held on 12 March 2025 were approved as a correct record and signed by the Chair.
• The Finance, Audit and Risk Committee noted the North East Museums Director Update.
• The Finance, Audit and Risk Committee noted the future coverage in the Strategic Internal Audit Annual Plan.
• The next meetings were scheduled for 26 November 2025 and 11 March 2026 at the Laing Art Gallery.
• The press and public were excluded from the remainder of the meeting due to the discussion of commercially sensitive information, as per paragraph 3 of part 1 of schedule 12A of the Local Government Act 1972¹.