The Audit and Governance Committee met to discuss internal audit activity, the internal audit plan for the second half of 2025-26, and the external auditor's annual report. The committee approved the Half 2 Internal Audit Plan for 2025-26 and noted the progress against the 2025/26 Internal Audit Plan as of 29 August 2025, and the findings reported.

Internal Audit Plan Half 2 2025/26

The committee approved the Internal Audit Plan for the second half of 2025/26, which runs from 1 October 2025 to 31 March 2026. The plan, prepared by SWAP Internal Audit Services (SWAP), is designed to enable SWAP to provide an informed annual audit opinion, based on coverage of key business objectives, risks, and risk management procedures.

The plan includes audits of:

• Fees and Charges: This audit will assess how fees are set, ensure transparency and consistent application, and verify the rationale for annual price increases. It will also benchmark fees to identify any omissions from the fees and charges book.
• Biodiversity Net Gain (BNG): This audit will examine how the council is managing the new BNG requirement for new developments, which aims to enforce a 10% increase in biodiversity¹.
• Community Asset Transfers: This audit will assess the community asset transfer process, compliance, and its connection to the council's wider strategic asset management.
• Creditors: Deferred from the 2024/25 plan, this review will assess the council's processes for making accurate and timely payments to suppliers, including payment approval processes.
• Income Generation: A cross-directorate review to consider the effectiveness of income generation approaches in discretionary services, such as cultural services.
• Risk Management: This review will assess the council's updated risk management process, as the key governance process has not been audited since 2021/22 and the council has recently revised its risk management policy and strategic and operational risk registers.

Internal Audit Activity Progress Report

The committee noted the Internal Audit Activity Progress Report for quarter one of 2025/26. The report outlined progress in delivering the 2025/26 Half 1 Internal Audit Plan and summarised outstanding internal audit actions as of 29 August 2025.

Key points from the report included:

• Three reviews (two assurance audits and one support activity) had been finalised.
• One audit and one support activity had been completed.
• One audit was at the draft report stage, six audits were in progress, and two audits were being scoped.
• 55% of planned Half 1 reviews had either started or been completed.
• The council had 93 open agreed actions, compared to 108 in the last report.

The report also highlighted that officers responsible for management actions now receive a monthly email highlighting any actions that are overdue or that have a timescale falling in the next 30 days, which is prompting officers to provide updates on AuditBoard independently.

External Auditor's Annual Report Year Ending 31 March 2025

The committee received the External Auditor's Annual Report from Peter Barber, Key Audit Partner, from Grant Thornton. The report summarised work undertaken during 2024/25 and commented on the council's value for money (VfM) arrangements.

The report highlighted a continued positive direction of travel during 2024/25, with the council making further progress in strengthening VfM arrangements. However, the report also noted that further work is required to develop fully effective arrangements.

Key findings from the report included:

• The council recorded a small underspend (£0.712 million) against budget on the General Fund for 2024/25 and has further strengthened General Fund balances in year.
• The council has proactively taken steps to return the Housing Revenue Account (HRA) to financial sustainability as 2024/25 progressed, including rebasing the 2024/25 HRA budget in July 2024.
• The council is currently restructuring to create a Project Office that can oversee savings delivery corporately.
• Relationships between officers and members appear to be working well, facilitating decision making.
• The draft 2024/25 financial statements were produced ahead of the end of June 2025 deadline.
• The Local Government Association carried out a review of progress with previous recommended actions in November 2024 and was able to report that 89% of all previous recommendations around governance, scrutiny and standards have now been implemented by the council.

The report also included a key recommendation that steps taken so far to rebuild sustainability in the HRA should be advanced, reflecting the outcome of the recent Stock Condition Report and should be embedded into business practice.

External Audit Plan 2024 – 2025

The Key Audit Partner, Peter Barber, from Grant Thornton presented the External Audit Plan 2024 – 2025 and highlighted key points.

Discussion included the process whereby the Actuary for the Devon Pension Fund provided details of the net position for EDDC to ensure that this is properly reflected in EDDC's accounts.