The Audit Committee of Durham County Council met on 29 September 2025 to discuss governance arrangements, risk management, and audit findings. Items on the agenda included the Oracle Fusion project, the Annual Governance Statement, and health and safety performance. The committee was also scheduled to discuss compliance with international auditing standards and receive updates from the external auditor and the internal audit service.

Oracle Fusion Programme

The committee was scheduled to receive a presentation on the governance arrangements for the Oracle Fusion project¹. The presentation, by the Head of Corporate Finance and Commercial Services and Nigel Cass, Oracle Fusion Programme Director, was expected to cover the background to the Oracle decision, the current systems position and scope, and the rationale for change.

The presentation was also expected to refer to a Socitm review from 2022/23, which found that the council's technology systems had evolved over time, resulting in numerous individual applications and data silos. The review recommended rationalising the estate onto a smaller number of modern platforms.

The report pack stated that the rationale for changing to Oracle Fusion included:

• Organisational efficiencies
• Limited improvement/modernisation opportunities with the current Oracle EBS 12.1 system
• Limitations to additional commercial opportunities
• Improved cyber security
• Improved system performance

The presentation was also expected to cover progress to date, the functionality and initial scope of Oracle Fusion, and the benefits of the system. Assurances sought, benefits management, resource requirements, and risks of project failure were also scheduled for discussion. The report pack included a diagram of the Oracle Fusion Programme Governance Structure, and a summary of governance highlights. It also detailed the programme's workstreams and resourcing, and a look ahead to future implementation. According to the report pack, the target go-live date for Oracle Fusion Core Finance, Procurement, and core Human Capital Management (HCM) modules was April 2027, with Oracle Fusion Payroll, Absence, and Time & Labour to follow in October 2027.

Annual Governance Statement

The committee was scheduled to consider the draft Annual Governance Statement for the year April 2024 to March 2025. The report of the Corporate Director of Resources stated that the Accounts and Audit (England) Regulations 2015 require the council to prepare an Annual Governance Statement, which must accompany the Statement of Accounts.

The report pack stated that the Annual Governance Statement demonstrates the council's compliance with the principles of good governance. It was noted that the current membership of the Audit Committee consisted of elected members who were not part of the committee prior to May 2025, but that the statement reflected the governance arrangements and performance for the financial year 2024/25, in accordance with the council's approved Governance Framework.

The review concluded that seven actions should be included in the plan of improvements to strengthen governance arrangements during 2025/26:

• Implement the Poverty Strategy and Action Plan.
• Review the organisational approach to information governance.
• Transform service delivery through a locality-based approach and a series of service reviews.
• Deliver the Milburngate Development redevelopment project in Durham City.
• Deliver Aykley Heads Strategic Innovation District in Collaboration with Durham University and in partnership with MUSE.
• Improve Adult Health and Services following a Care Quality Commission assessment.
• Address low referral rates for statutory support and increasing complexity in demand for children's mental health.

Compliance with International Auditing Standards

The committee was scheduled to discuss a report of the Corporate Director of Resources regarding compliance with International Auditing Standards. The report provided members with proposed responses to the External Auditor's International Standards for Auditing request to support and inform their continuous planning prior to the final stage of Durham County Council's (including Pension Fund) 2024/25 Accounts.

The report responded to specific questions, under International Standards for Auditing (ISA), in respect of the council's arrangements for preventing fraud in the annual accounts (ISA240), council compliance with laws and regulations (ISA250), litigation and claims (ISA501) and the going concern status (ISA570).

Report of the Audit Committee

The committee was scheduled to consider a report of Councillor Tom Redmond, Vice Chair of the Audit Committee, for the period September 2024 to August 2025. The report set out details of the work of the Audit Committee during the period and how the Audit Committee continued to oversee good governance across the council.

The report identified that the Audit Committee had made a significant and continuing contribution to the council's governance, internal control and risk frameworks during the last twelve-month period by:

• Striving to help support the council deliver its objectives and priorities by being both a proactive and reactive body
• Continuing to raise the profile of the Internal Audit, Corporate Fraud and Risk Management Service
• Independent questioning and contributing to the development and oversight of the internal audit plan
• Seeking assurance on the effectiveness of corporate risk management arrangements
• Improving the accountability of service managers to respond to outstanding internal audit reports and the implementation of agreed internal audit recommendations
• Continuing to provide regular challenge and demanding accountability on the effectiveness of the implementation and operation of key systems both financial and non-financial
• Challenging the level of internal audit resource and their work to ensure that the service is effective and delivers a reliable assurance opinion on the council's control framework
• Challenging how the council responds to the risk of fraud and receiving information on the levels of detected fraud and the council's continuing response
• Championing the work of the Corporate Fraud Team
• Receiving and commenting on the work of the councils appointed external auditor, Forvis Mazars
• Challenging how the Annual Governance Statement has been prepared, reviewing the assurance framework that is in place and satisfying themselves that the council's governance arrangements are effective

Audit Strategy Memorandum

The committee was scheduled to discuss the Audit Strategy Memorandum Durham County Council Pension Fund – Year Ending 31 March 2025. The report of the External Auditor summarised the audit approach, including the significant audit risks and areas of key judgement identified, and provided details of the audit team.

The report pack stated that the auditors were responsible for forming and expressing an opinion on whether the financial statements were prepared, in all material respects, in accordance with the Code of Practice on Local Authority Accounting.

The report also stated that the auditors were required to consider the appropriateness of the Corporate Director of Resources' use of the going concern assumption in the preparation of the financial statements.

Health, Safety and Wellbeing Performance

The committee was scheduled to discuss the Annual Health, Safety and Wellbeing Performance Report 2024/25. The report of Corporate Leadership Team provided the annual report on Health, Safety and Wellbeing (HSW) performance for 2024/25.

The report pack stated that Health and Safety (H&S) and Occupational Health Services (OHS) continued to play an important role during 2024/25 in supporting achievement of statutory compliance and provision of corporate services aimed at ensuring employees and all others affected by work activities were as safe and healthy as possible.

The report also stated that the council had continued with a positive approach to employee wellbeing, and this was reflected in the achievement of the better health at work award maintaining excellence status.

The committee was also scheduled to discuss the Quarter One 2025/26 Health, Safety and Wellbeing Performance Report. The report of the Corporate Director of Resources provided an update on the council's Health, Safety and Wellbeing (HSW) performance for Quarter one 2025/26.

Strategic Risk Management Progress Report

The committee was scheduled to discuss the Strategic Risk Management Progress Report for 2025-26 Review 1: Covering the Period 01 April 2025 – 31 July 2025. The report of the Corporate Director of Resources highlighted the strategic risks facing the council and provided an insight into the work carried out by the Corporate Risk Management Group between April and July 2025.

The report pack stated that all risks are formally reviewed three times each year, which contributes to improved performance, decision-making, and governance.

Internal Audit Progress Update Report

The committee was scheduled to discuss the Internal Audit Progress Update Report Period Ended 31 March 2026. The report of the Corporate Director of Resources provided an update on the work undertaken by the Internal Audit Service during the period 1 April 2025 to 30 June 2026, as part of the Internal Audit Plan for 2025/26.

The report pack stated that the report provided an overview of performance against the Internal Audit Plan 2025/26 and aimed to:

• Provide a high level of assurance, or otherwise, on internal controls operating across the council that have been subject to an Internal Audit of systems and processes
• Advise of any issues where controls need to be improved in order to effectively or better manage risks
• Advise of other types of audit work carried out such as grant certification or advice and consultancy reviews where an assurance opinion on the control environment may not be applicable
• Advise of any amendments to the Internal Audit Plan previously agreed
• Track the progress of responses to Internal Audit reports and the implementation of agreed audit recommendations
• Advise of any changes to the audit process
• Provide an update on performance against the key performance indicators agreed as part of the Audit Plan

A portion of the meeting was expected to be held in private, during which an exempt version of the Internal Audit Progress Update Report would be discussed.