The Audit Committee of Devon County Council met on Monday, 23 February 2026, to review audit progress, internal audit plans, risk management strategies, and financial reserves. Key decisions included endorsing the 2026/27 Internal Audit Plan and Charter, approving the Risk Management Strategy and Policy, and agreeing to a standing item for reporting exemptions from tender. The committee also resolved to write to the Secretary of State for Housing, Communities and Local Government regarding concerns about the timetable for local government reorganisation.

Devon County Council and Devon Pension Fund – Audit Progress Report and Sector Update

The committee received an update from Grant Thornton, the external auditors, on the progress of audits for Devon County Council and the Devon Pension Fund. Detailed audit planning and interim testing for Devon County Council were scheduled to commence in March 2026, with draft audit plans expected by 31 March 2026. Significant audit risk areas identified include management override of controls, valuation of land and buildings, valuation of the net defined benefit liability, and for the Pension Fund, the valuation of Level 3 investments. The implementation of the new Unit4 ERP financial system during 2025/26 will also be a focus for IT auditors.

Grant Thornton will also review financial sustainability, including actions to manage demand and costs in Adults' and Children's Services, and efforts to reduce the Dedicated Schools Grant (DSG) deficit. Governance arrangements and progress in strengthening the control environment within Children's Services, including Special Educational Needs and Disabilities (SEND), will also be assessed.

For the Devon Pension Fund, detailed audit planning and interim testing began in February 2026, with triennial valuation testing planned for April. Significant risks identified include management override of controls and the valuation of Level 3 investments.

The report also highlighted sector updates on national developments such as reforms following the local audit backlog, the Fair Funding Review, pressures relating to SEND, preventative spending guidance, and evolving expectations around business cases for net zero. The committee agreed to incorporate these sector updates into its forward plan.

The final audit fee for 2024/25 was confirmed as £363,772, and the scale fees for the 2025/26 audit were noted as £341,994 for the Council audit and £109,710 for the Pension Fund.

Internal Audit Draft Plan 2026/27

The committee reviewed the draft Internal Audit Plan for 2026/27, which is developed using a risk-based approach aligned with Devon County Council's strategic and operational priorities. The plan includes consideration of insights from prior work, emerging risks, and regulatory requirements, and will remain flexible to adapt to changes in risk or context. Key areas for audit coverage include Integrated Adult Social Care, Children & Young People's Futures, Climate Change, Environment & Transport, Public Health & Communities, and Corporate Governance. Further assurance work in Integrated Adult Social Care will be agreed following the release of the Care Quality Commission (CQC) inspection report. The committee endorsed the adaptive plan for 2026/27.

Internal Audit Charter and Strategy 2026/27

The committee reviewed and endorsed the Internal Audit Charter and Strategy for 2026/27, which formally defines the purpose, authority, and responsibilities of the internal audit activity in line with Global Internal Audit Standards (GIAS). A key discussion point was the relationship between the Audit Committee and the Devon Assurance Partnership Committee, with a resolution passed to request a proposal from the Head of Devon Assurance Partnership on how the Audit Committee will be informed about the work of the Devon Assurance Partnership.

Internal Audit Update

The committee received an update on the performance of Devon Assurance Partnership (DAP) during 2025/26 and the outcomes of completed work. The Head of Internal Audit's opinion was Reasonable Assurance on the adequacy and effectiveness of the internal control framework, with the exception of Children's and Young People's Futures, which received a Limited Assurance opinion due to a higher number of limited reviews. The committee requested that future reports include a direction of travel indicator for ongoing reviews. The report was noted.

2026/27 Devon County Council County Fund Balance and Earmarked Reserves Strategy

The committee reviewed the proposed County Fund Balance and Earmarked Reserves Strategy for 2026/27, which forms part of the 2026/27 Budget Book. The strategy aims to increase and manage reserves prudently, aligning with an external auditor recommendation. However, due to the late announcement of the Local Government Financial Settlement, the Council's budget meeting had been postponed. Consequently, this item was deferred to the next Audit Committee meeting.

Risk Management Strategy and Policy

The committee reviewed and endorsed the new Risk Management Strategy and Policy for 2026-2030. This document outlines the council's risk position, updates on risk management arrangements, and confirms the Audit Committee's role. It includes a new approach to risk appetite and changes to the risk scoring matrix.

Risk Management Update

The committee received an update on the council's risk position, noting that there are currently 111 recorded risks, with three assessed as 'Very High' and 37 as 'High'. The 'Very High' risks relate to:

• Failure to deliver the Council's responsibilities and goals regarding SEND.
• The risk of a successful cyber attack on DCC's digital data and operational resilience.
• Risks to the health, safety, and well-being of DCC's people, including the risk of harm from civil unrest or malicious activity, and the risk of a terrorism event impacting Devon's residents, businesses, and visitors.

The historic risk concerning the health, safety, and well-being of DCC's people has been separated into two distinct risks to more accurately reflect key concerns. The committee discussed the new risk of Local Government Reorganisation and the council's capacity to manage and respond to it, noting the significant challenges faced by other councils undergoing similar processes. The Chief Executive highlighted the cumulative pressures on the organisation and the need for careful consideration of LGR.

As a result, the committee resolved that the Chair of the Audit Committee, in partnership with the Deputy Leader and Cabinet Member for Local Government Reorganisation and Water Quality, would write to the Secretary of State for Housing, Communities and Local Government outlining concerns regarding the risks associated with a rushed timetable for local government reorganisation.

A new risk management system is being developed on Microsoft SharePoint, expected to be operational from 1 April 2026, to improve data monitoring and performance. New draft risks concerning cyber attacks on DCC partners and local government reorganisation were also noted.

Update on the Development of a Strategic Performance Framework

The committee received an update on the development of the new Strategic Performance Framework, which aims to ensure a consistent organisational approach to performance reporting aligned with the Council's Strategic Plan 2025-2029. The framework will be implemented in three phases, with Phase 1 substantially completed. The Strategic Scorecard, developed under this framework, will be presented to Cabinet in March 2026. The committee noted that its role is not to scrutinise individual performance measures but to receive regular updates on the framework's development.

Exemptions from Tender Overview (Direct Contract Awards) April to December 2025

The committee reviewed a report summarising exemptions from tender granted between April and December 2025, noting that this reporting frequency is moving to a three-month rolling cycle. The total value of exemptions granted during this period was £6,769,737 across 61 instances. The report highlighted that the higher value was influenced by five significant projects, including the Cullompton relief road and Tiverton High School fire safety works. The committee agreed to add a standing item to its agenda for regular reporting of all exemptions from tender.

Audit Committee Self-Assessment Summary Report

The committee reviewed the summary of its self-assessment against CIPFA's 2022 Position Statement. The assessment indicated alignment with CIPFA principles, with clear areas for development identified, including the production of an annual report, development of a training programme, and establishing an improvement plan. The committee endorsed the actions arising from the self-assessment and agreed to incorporate them into its future work and development plans. Direction of travel indicators will be included in future reports to track progress.

Cabinet Response to Audit Committee Task Group Recommendations

The committee noted the Cabinet's formal response to the recommendations made by the Audit Committee Task Group concerning the future delivery model for highway maintenance. Cabinet agreed with all four recommendations, which aim to strengthen governance, clarity, and member engagement in council decision-making.

Audit Committee Annual Report - Process for Completion

The committee reviewed the proposed approach for preparing its Annual Report for the period May 2025 to April 2026. To ensure timely submission to the Council's Annual General Meeting in May 2026, the committee delegated authority to the Chair and Vice Chair, in consultation with the Director of Legal and Democratic Services, to approve the final version of the report. This aligns with CIPFA good practice and strengthens accountability.

Matters or Information Circulated to Members

The committee noted the circulated matters, including a response from Councillor Denise Bickley, Cabinet Member for Children's Services (SEND), to the Secretaries of State for Education and Health and Social Care regarding national responsibilities and funding for health provision in Education, Health and Care Plans (EHCPs). Also noted was a response from Councillor Helen Brown, Chair of the Corporate Infrastructure and Regulatory Services Scrutiny Committee, regarding the future delivery model for highways maintenance.