This meeting was scheduled to receive reports on a number of topics, including the Council's Statement of Accounts 2023-24, the ASCH department's risk management procedures, the Derbyshire Pension Fund, the Council’s Anti-Money Laundering Policy and the Internal Audit Charter. It was also scheduled to consider the reports of the external auditor, Forvis Mazars.

Adult Social Care & Health (ASCH) Risk Management

The Committee was scheduled to review Derbyshire County Council's Adult Social Care and Health (ASCH) risk management procedures. Simon Stevens, Executive Director of ASCH, and Ellie Houlston, Director of Public Health, were expected to attend the meeting.

The Committee was scheduled to be given an overview of risk management in the ASCH department, to discuss how effective the procedures were and to consider the principal risks. It was scheduled to review information provided in Appendix 2 of the report, which detailed the risk relating to the safeguarding of adults at risk. Appendix 3 of the report was scheduled to be considered, which provided an abridged version of the full ASCH risk register, updated to Quarter 2 2024-25.

Statement of Accounts 2023-24

The Committee was scheduled to consider the pre-audit Statement of Accounts for 2023-24, which included the Derbyshire Pension Fund accounts. A notice of delay in publishing the pre-audit Statement of Accounts 2023-24 was published on 31 May 2024, and the certified pre-audit accounts were published on 4 October 2024. The public inspection period commenced on 7 October 2024 and concluded on 15 November 2024.

The Statement of Accounts also contains the Annual Governance Statement, which was scheduled to be considered by the Committee on 16 July 2024. The Committee was scheduled to approve the Statement of Accounts at a later meeting; it was reported that this would need to take place by the backstop date of 28 February 2025.

A copy of the pre-audit Statement of Accounts was appended to the report pack.

Pre-Audit Statement of Accounts 2023-24

The Committee was scheduled to consider the Council's pre-audit Statement of Accounts¹ for 2023-24. The accounts were scheduled to be approved at a later meeting.

The pre-audit Statement of Accounts appended to the report included a narrative report, which detailed the Council’s revenue expenditure and summarised the revenue outturn for 2023-24. A final net overspend of £21.682m was reported. This was after £14m of additional net transfers from earmarked and general reserves, on top of the £23.707m planned use of the budget management reserve, and the use of an additional £13.401m of departmental reserves.

The overspend in 2023-24 follows the outturn position for 2022-23, which resulted in the Council utilising £55m of its reserves in order to manage its budget to meet inflationary, demand and pay award cost pressures.

The report identified the main overspends as being in Adult Care (£9.296m) which related mostly to an overspend on purchased services and unachieved savings, and in Children’s Services (£20.754m), mostly because of increased demand for placements for children in care and high demand for safeguarding services.

The report noted that as at 31 March 2024, the balance of the Council's general reserve was £40.182m. This was after the Council’s 2023-24 overspend of £21.682m and an agreed release of £31.803m from earmarked reserve balances. It stated that the minimum level of General Reserve for an organisation the size of the Council is around 3% of the Council’s net spending and commented that if there was a similar overspend in 2024-25 as in 2023-24, this would see the General Reserve fall below the minimum level.

The report also detailed the Council’s capital expenditure. In 2023-24 the Council’s capital expenditure was expected to increase by £65.236m compared to the previous year. The Council was expected to spend £229.150m, but actual expenditure was only £165.544m. The report noted that the Council had changed its approach to capital financing and had switched to using internal and short-term borrowing and available capital receipts rather than funding projects from revenue contributions.

The report noted an improvement in the Council’s pensions position. A total net pensions asset of £240.258m was reported as at 31 March 2024. This was a change of £210.935m from 31 March 2023. The improvement was due to gains arising from changes to the financial assumptions used to measure LGPS scheme liabilities in the actuarial valuation as at 31 March 2022, and the return on LGPS scheme assets in 2023-24. The report noted that this had contributed to an increase in the Council’s unusable reserves.

Treasury Management Annual Report 2023-24

The Committee was scheduled to review the Treasury Management Annual Report² for 2023-24, which included the Council’s borrowing and investments positions.

The report noted that the Council’s Treasury Management Strategy for 2023-24 was approved at the Council meeting on 15 February 2023 and stated that the Council had borrowed and invested substantial sums of money and was therefore exposed to financial risks, including the loss of invested funds and the revenue effect of changing interest rates. The report also commented that short-term interest rates were high but were expected to fall in the coming years and so it was likely to be more cost effective over the medium-term to either use internal resources, or to borrow short-term loans instead.

Anti-Money Laundering Policy

The Committee was scheduled to be asked to approve an amended version of the Council’s Anti-Money Laundering Policy³ after the latest review of the policy.

The report explained that money laundering involved exchanging criminally obtained money or other criminal property for 'clean' money with no obvious link to its criminal origin, in order to legitimise its possession. The Policy is designed to ensure that all employees are aware of the legislation and offences relating to money laundering.

“Whilst money laundering may most commonly be associated with organised crime, employees of the Council could be exposed to it while carrying out their everyday activities such as cash handling or transactions that appear to make no commercial or economic sense from the perspective of the other party.”

Internal Audit Charter

The Committee was scheduled to consider and endorse a revised version of the Internal Audit Charter⁴ and recommend to Cabinet that it be approved as Council Policy.

The existing Charter was considered by the Committee on 20 September 2022 before being approved by Cabinet on 23 February 2023, but the report noted that a significant rewrite had been undertaken following the External Quality Assessment (EQA) review, which reported to the Committee on 30 January 2024. It stated that the rewrite was intended to:

“• eliminate unnecessary complexity and make the Charter more accessible and easier to understand. • provide clear accountability on the responsibilities of key officers including the Chief Audit Executive and Senior Management, together with the role of the Audit Committee. • outline the new Internal Audit quality assurance framework that will deliver the agile and data driven service, which will ensure the Unit consistently aligns to current best practice. • implement a new ‘Audit Working Protocol’ to assist in the delivery of a high-quality Internal Audit service that maintains the confidence of Executive Management and the Council’s Audit Committee.”

Internal Audit Progress Report

The Committee was scheduled to receive the Internal Audit Progress Report⁵ as at 31 October 2024.

The report reviewed the progress that had been made on the Internal Audit Plans that were approved at meetings on 19 March and 17 September 2024. Of the planned audits, the following were scheduled to have been completed by 30 September 2024:

• Contract Management (CST⁶)
• Cyber Security (CST)
• Registrar Service (Adult Social Care and Health [ASCH] )
• Thematic School Reviews – Data Protection (Children’s Services)
• Management of s.106 income (Children’s Services)
• Spend in Residential Homes (Including visits to 4 homes) (Children’s Services)
• Public Health - Safeguarding (ASCH)
• Public Health - Substance Misuse Funding (ASCH)
• Review of Waste Management (incl. System) (Place)
• Concessionary Fares (Place)

The report also provided an update on the Internal Audit team’s Continuous Auditing work, the process for tracking recommendations and the team’s performance indicators.

Reports of the External Auditor

The Committee was scheduled to receive the reports of the external auditor, Forvis Mazars, a leading global professional services network.

Derbyshire Pension Fund Audit

The Committee was scheduled to consider the Derbyshire Pension Fund - Audit Completion Report 2023-24 - FINAL which was prepared by Forvis Mazars, the Council’s external auditors.

The report detailed the external audit work that had been completed for the financial year ending 31 March 2024. It was expected that the audit would be concluded with an unqualified opinion, and no matters were identified that would prevent this. The report highlighted that at 31 March 2024, the Pension Fund held investments within Level 3 of the fair value hierarchy⁷ of £3,590.8m (including directly held properties), which accounted for 55.5% of net investment assets. It noted that these assets were harder to value because they did not have a publicly available quoted price and that the report pack contained a sensitivity analysis to quantify the uncertainty of the valuation.