The Aberdeenshire Council Audit Committee met on Thursday, 2 July 2026, to review several internal audit reports and discuss the council's governance and financial statements. Key discussions included the governance of children's homes, the Integration Joint Board's controls, care home governance, voluntary severance processes, museum operations, and the implementation of the Place Strategy. The committee also considered the unaudited annual accounts for 2025/26 and the draft Annual Governance Statement.

Children's Home Governance

An internal audit report on Children's Home Governance found that while the council's overall governance and operational arrangements for its four children's homes are functioning effectively, providing reasonable assurance, there are areas for enhancement. The audit identified out-of-date policies and procedures, gaps in mandatory training monitoring, and overdue child plan reviews. Weaknesses were also noted in medication control, the management of young people's expenses, and payroll processes, particularly concerning staff breaks. A significant concern was raised regarding purchase card use, with instances of transactions contrary to council guidance, including missing receipts and prohibited expenditure. Management accepted the findings and committed to time-bound actions to address these issues, emphasising their commitment to corporate parenting responsibilities and avoiding stigma for young people.

Integration Joint Board (IJB) Governance and Controls

The audit of the Integration Joint Board's (IJB) governance and controls provided reasonable assurance, indicating a generally sound framework but highlighting areas for further strengthening. Issues were identified within the governance framework, including a lack of recent financial regulation reviews and the absence of a reserves policy. Risk management arrangements also required improvement, with inconsistencies in risk identification and reporting to the IJB Audit Committee. Performance reporting was noted as lacking detail on targets and full-year projections. Financial management and sustainability were areas of concern, with the medium-term financial strategy not fully supported by costed scenarios and no documented reserves policy. Budget monitoring, while improved, still showed variations in reporting and a lack of clear accountability for variances. Management acknowledged these findings, stating that 2025/26 was a year of stabilisation and that the focus is now on embedding stronger approaches and ensuring long-term financial sustainability.

Care Home Governance

An audit of Care Home Governance found reasonable assurance over the systems in place, with plans underway to improve oversight and deliver sustainable services. However, the review identified that strategic plans were high-level and did not specifically cover care homes, posing a risk to transformational delivery. The management structure was noted as area-based, potentially reducing functional oversight. Risk management and business continuity plans were locality-led rather than at a care home level. Consistent care home budget monitoring arrangements were also lacking, which had historically contributed to overspends. While strategic care home-specific performance indicators have been identified, monitoring arrangements are yet to be fully implemented. Management acknowledged these findings and confirmed that improvement work is already underway, integrated into the existing care home transformation programme.

Voluntary Severance

An audit of the Voluntary Severance (VS) scheme found reasonable assurance over the approach to its management, with processes and a toolkit in place. However, significant gaps were identified, including the absence of a council-approved VS policy and high-level procedures that did not fully cover discretionary payment rules. Application and review processes showed inconsistencies in documentation, with some applications exceeding the two-year payback criteria without recorded justification. Weaknesses were also noted in calculations, data accuracy, processing, and post-budget management. Recommendations were made to improve clarification and documentation of rules, requirements, and assumptions to ensure consistent application and appropriate control. Management acknowledged the findings and committed to working with finance to enhance recording and transparency in decision-making.

Museums Operations

An internal audit of Museums operations identified significant gaps and weaknesses, providing limited assurance over the management of heritage assets. While the museums remain accredited until August 2026, areas requiring enhancement included strategic plans and policies, record-keeping, loan management, preservation, and emergency plans. The audit highlighted that only around 10% of the estimated 250,000 museum items are recorded on the asset database, with unrecorded high-value items and incorrect location data. Loan agreements were frequently expired, lacked insurance documentation, and had missing condition reports. Preservation monitoring was not consistently reviewed, and emergency plans were outdated or untested. Staffing capacity was cited as a factor impacting progress on improvements. Management acknowledged the findings, noting the service's ongoing recovery and transformation, and committed to addressing the identified gaps, particularly in preparation for re-accreditation.

Place Strategy Implementation

The audit of the Place Strategy implementation found limited assurance, with significant gaps and weaknesses identified. While the strategy itself is comprehensive, its implementation has not progressed consistently. Key issues included incomplete governance frameworks, inconsistent officer oversight, and a lack of overarching SMART plans for prioritisation and oversight. Training on the practical implementation of the Place Strategy was uncertain for some officers and elected members. Service operational plans showed inconsistent detail regarding place-based considerations. Crucially, the development of Place plans, intended to translate strategic intent into local action, is largely not in place, with original deadlines missed. Budget setting and monitoring have not yet been directly informed by Place and Wellbeing Assessments or local plans. Management accepted the findings and committed to reviewing the end-to-end approach to implementing the Place Strategy, including refreshing governance, establishing a prioritised delivery plan, and strengthening performance management.

Annual Governance Statement and Unaudited Annual Accounts

The committee was asked to consider the draft Annual Governance Statement (AGS) for 2025/26. The AGS affirmed that the council has maintained a robust governance framework aligned with the CIPFA/SOLACE framework, with all identified self-assessment actions completed. The statement highlighted strengths in risk management, performance management, and financial sustainability, supported by internal and external audit assurance. The committee was also presented with the unaudited Annual Accounts for 2025/26. A key point raised was a delay in system upgrades impacting the recording of property, plant, and equipment indexation, with adjustments to be made in July 2026 and reported in October. The committee was informed that the audited accounts would be presented in October 2026, following external audit by Grant Thornton.

The committee was recommended to consider and approve the draft Annual Governance Statement.