The Audit Committee of Middlesbrough Council is scheduled to meet on Thursday 25 September 2025 to discuss a range of topics, including complaints, risk management, information governance, audit progress, and the Dedicated Schools Grant. The committee will also review its work programme and consider the first annual report of the Audit Committee.

Dedicated Schools Grant Risk

The committee will receive information on the management of the Dedicated Schools Grant (DSG) risk within the Strategic Risk Register. The DSG is a ring-fenced grant from the government to fund education, with the high needs element used for children and young people with special educational needs and disabilities (SEND). A report included in the Public reports pack notes that Middlesbrough Council, like many other councils, is facing increasing pressure on its high needs budget, with a cumulative deficit of £22.213m forecast at 31 March 2025.

The report pack states that there is currently a statutory override in place, which has recently been extended until 31 March 2028, meaning that the DSG deficit does not need to be funded from the council's general fund resources. However, the report also warns that if the statutory override ceases, the council would need to add the cumulative deficit to its accounts, which would eradicate the Council's general reserves and would present a critical risk to the Council's overall financial viability .

The report pack says that the driving factors in the increased high needs expenditure are:

• Rising numbers of children with special educational needs
• Increasing numbers of children with an Education Health and Care Plan [EHCP]
• High levels of permanent exclusion

The committee will consider whether they have received sufficient information to be assured that there are appropriate arrangements in place to manage the risk.

First Annual Report of the Audit Committee

The committee will consider and approve the content of its first Annual Report, as set out in Appendix 1 - DRAFT Audit Committee Annual Report April 2024 - August 2025. The report covers the period from April 2024 to August 2025 and includes:

• The current level of compliance with the Chartered Institute of Public Finance and Accountancy (CIPFA) position statement on Audit Committees (2022)
• The results of the first annual review of effectiveness of the Audit Committee
• Work undertaken to improve compliance and a planned improvement programme for the Committee
• Delivery of activity against the Committee's Terms of Reference
• Key issues escalated and /or progressed in the last 12 months.

The committee will also approve the proposed response to the recommendations arising from the review of the Audit Committee's effectiveness. The finalised report will be presented at Full Council by the Chair of this Committee.

Risk and Opportunities Annual Assurance Report

The committee will review the Risk and Opportunities Annual Assurance Report 2024, which provides an overview of risk arrangements in the council and a mid-year update on the content of the council's Strategic Risk Register. According to the Report, risk management is a critical element of corporate governance and a statutory requirement for public sector organisations. The committee will consider whether the information provided assures them that management and oversight arrangements of Risk and the Strategic Risk Register are suitable and that plans to further strengthen those arrangements are sufficient.

The report pack notes that in the last six months one new strategic risk has been added:

• SR-16 Removal of the statutory override preventing the Dedicated Schools Grant (DSG) deficit from being met from general fund resources.

The report pack also notes that in five cases new assessments of risks were completed. As a result of these assessments the following has changed:

• SR-01 Failure to Maintain a balanced budget and Medium Term Financial Plan (MTFP) – Revised Risk Score: Likelihood reduced from Likely (4) to Possible (3)
• SR-02 Volatility in the demand and cost of adult social care Revised Risk Score: Likelihood reduced from Likely (4) to Unlikely (2)
• SR-09: Corporate Governance Arrangements Not Fit for Purpose Revised Risk Score: Likelihood reduced from Possible (3) to Unlikely (2).
• SR-10 Negative Impact of Mayoral Development Corporation. Revised Risk Score: Impact reduced from Major (5) to Moderate (3); Likelihood reduced from Possible (3) to Unlikely (2)
• SR-11 Failure to have strategic partnership working. Revised Risk Score: Impact reduced from Catastrophic (7) to Moderate (3).

Annual Complaints Report

The committee will discuss the Annual Complaints Report 2024-2025, which provides information about how the council is managing complaints made by local people. The report summarises complaints and compliments received from April 2024 to March 2025, alongside their outcomes, and shows how the council continues to learn from complaints and strengthen the managements complaints process. The report sets out an overview on the council's complaints process covering complaints statistics and trends, the outcomes, how the council continues to learn from complaints, how the council has worked towards the goals set within the previous annual report and planned actions to further strengthen the management of complaints during 2025/26. The report also outlines the governance in place to ensure complaints are managed in line with good practice and the expectations of the Local Government and Social Care Ombudsman (LGSCO).

The committee will consider whether it has sufficient information to be assured that the council's approach to managing complaints is robust.

Annual Report of the Senior Information Risk Owner (SIRO)

The committee will discuss the Annual Report of the Senior Information Risk Owner (SIRO), which sets out arrangements in place to ensure the proper governance of information within the council. The Report notes that the Head of Governance, Policy and Information, Ann-Marie Johnstone, acts as the council's Senior Information Risk Owner (SIRO) and as Senior Responsible Officer (SRO) for Biometrics and Surveillance and RIPA¹, and is the owner of the council's Information Strategy. The SIRO advises the Chief Executive and the council's management team on information risk, reporting quarterly to the internal risk management group and annually to the Leadership Management Team and to this Committee.

The committee will consider whether the information provided is sufficient to provide them with assurance that information governance arrangements that are in place are sufficient.

Audit Progress Report

The committee will receive an update on internal audit and counter fraud work undertaken, as detailed in the Internal Audit and Counter Fraud Progress Report. The Appendix 1 - Internal Audit Progress Report September 2025 includes a summary of current work in progress, internal audit priorities for the year, completed work, and follow-up of previously agreed audit actions. The Appendix 2 - Counter Fraud Progress Report September 2025 details a range of work including activity to promote awareness of fraud, work with external agencies, and the result of investigative work undertaken for the council.

The committee will also receive the Audit Progress Report - Middlesbrough Council and Teesside Pension Fund from Forvis Mazars. The report pack notes that Forvis Mazars are planning a balance sheet audit in 2024/25, and this work is planned to start in October 2025 with completion in February 2026. For the Teesside Pension Fund, Forvis Mazars' intention is to commence work in October 2025, with the view to being able to issue their opinion on the 2024/25 accounts in February 2026.

Work Programme

The committee will review its work programme.