The Nottingham City Council Audit Committee is scheduled to meet on 26 September 2025 to discuss a range of topics, including progress reports on external and internal audits, HR and equality compliance, and the council's finance improvement plan. Councillors will also note the recommendation tracker and work programme, and review the corporate risk register. Some of the discussion on the finance improvement plan and corporate risk register will be held in private session.

External Audit Progress

The committee will receive an update from Grant Thornton, the council's external auditor, on their progress. The report pack includes Grant Thornton's Audit progress report and sector updates , which provides an overview of the audit's current status, including:

• Confirmation of group materiality
• Group audit scope and risk assessment
• Regaining assurance
• Financial statements - headlines
• Financial statements - significant risks
• Long term assets
• Current assets
• Current liabilities
• Long term liabilities
• Income
• Expenditure
• Other primary statements/audit areas not covered elsewhere
• Disclosures
• Group accounts
• Progress against previous audit recommendations
• Audit deliverables
• Sector updates
• Audit committee resources

The report pack notes that previous audits of the council's financial statements have been protracted and challenging, and that a disclaimer of opinion¹ was issued for each of the 2019/20, 2020/21, 2021/22 and 2022/23 financial years. Because of this, Grant Thornton do not expect to be able to undertake sufficient work to support an unmodified audit opinion on the 2024/25 financial statements.

The report pack also notes that the council has received grant funding of £191,793 under a Section 31 Grant Determination to support the build-back of assurance.

The report pack states that the audit of the Council's Financial Statements has now begun, and that Grant Thornton are currently approximately two months into a five-month audit process. It notes that the council published its financial statements on 13 July 2025, after the 30 June 2025 deadline, but that this represents a significant effort from the finance team.

The report pack also identifies a number of significant risks, including:

• Management override of controls
• Risk of fraud in revenue recognition
• Risk of fraud in expenditure recognition
• Valuation of land and buildings, including council dwellings
• Valuation of investment properties
• Valuation of net pension liability

The report pack includes a table that sets out the progress update for each significant risk area.

The report pack also sets out a number of key questions for the Audit Committee to ask, including:

• Have we calculated what impact the Spending Review will have on the assumptions in our medium-term financial plan?
• If the impact is negative, what mitigation is planned?
• What impact do we expect the Fair Funding Review to have on our medium-term financial plan?
• Have we calculated what level of support we will need from transitional arrangements?
• What mitigations are we planning if we don't receive transitional support?
• How much do we currently spend per annum on contracts with small and medium-sized enterprises and voluntary, community and social enterprises?
• Do we test whether our suppliers pay their creditors within appropriate timescales?
• Which outsourced services, if any, have we assessed to test whether outsourcing is still the best solution?
• What changes to governance structures do we expect the new ten-year health plan to have on us?
• How are we preparing?
• How are repairs and maintenance and replacement costs for our leisure estate reflected in our medium-term financial plan?
• Are we on track to cover replacement costs for the leisure estate?
• How do we capture and report accommodation costs?
• Have we calculated whether costs are matched by grant income received? How are we managing any difference?
• What are our safeguarding responsibilities? What assurance do we have that we are meeting them?
• What assurance do we have that we are meeting our duty of care to children and vulnerable adults?

Internal Audit Progress

The committee will receive an update on the progress made against the Internal Audit Plan for 2025-26. The report pack includes the Internal Audit Update , which provides an overview of the work carried out to date, and the Enc.1 for Internal Audit Update which summarises audits delivered and progress.

The report pack notes that, to date, Internal Audit has delivered and made progress on 26 of the 43 planned reviews and are at approximately 25% completion. As at 31st August 2025, 7 audits have been completed with 4 final reports issued and 3 drafts reports produced awaiting directors sign off. 10 audits are at fieldwork/testing stage and 9 are at planning stage.

The report pack also notes that there has been a request from corporate leadership team to defer the following:

• Three reviews relating to ICT due to the recent comprehensive review carried out by an external organisation in March 2025.
• A review in Housing Benefits audit to be deferred to next year due to the close proximity in time to the last audit report which was agreed in November 2024.
• A review in Finance pending the appointment of a new Director of Finance.

The committee will also be asked to review and approve the Internal Audit Charter. The report pack notes that the update to the Charter has been made as a result of the changes to internal audit standards globally which have been mandated by the relevant internal audit standard setters in the UK.

The key changes from the previously approved charter are summarised as:

• Introduction of the Internal Audit Accountabilities Framework
• Enhanced Governance and Oversight Responsibilities
• Strengthened Independence and Reporting Lines
• Expanded Scope and Methodology
• Revised Engagement and Follow-Up Protocols
• Quality Assurance and Improvement Programme (QAIP)
• Updated Legal and Professional Requirements
• Revised Code of Ethics
• Improved Usability and Structure

The Corporate Counter Fraud Team (CCFT) continues to work successfully toward the completion of their annual plan. At the time of this report, they have identified and secured a cumulative value of circa £504k against the annual target of £400k.

HR and Equality Compliance

The committee will receive the Annual Report of HR and EDI Compliance . The report provides assurance that the council is compliant with employment and equality law, and evaluates the effectiveness of internal controls, policies and training in promoting compliant, fair, and inclusive workplace practices.

The report pack notes that employers in the UK are bound by a range of legal obligations during the recruitment and onboarding process, including the Equality Act 2010[^3], the Rehabilitation of Offenders Act 1974, and the Data Protection Act 2018.

The report pack also notes that the Council's people management policies are subject to review to ensure alignment with current employment law, ACAS codes of practice and recognised best practice. During 2024/2025, 58 people management policies were reviewed and updated to reflect recent legislative changes and to maintain compliance.

The report pack identifies an area for improvement with compliance is where a manager has started an employee working for NCC or for internal recruitment an employee has started in a new position before the completed pre-employment checks have been received by EMSS.

Finance Improvement Plan

The committee will receive a progress report on the Council's Finance Improvement Plan (FIP). The Finance Improvement Plan Progress Update report provides an update to the Audit Committee on the progress made against the Council's FIP since the last reported position to the committee in June 2024.

The report pack notes that in November 2024, the Corporate Leadership Team (CLT) and the Commissioners agreed that the effectiveness of the Council's Financial Management arrangements needed a review, and the Chartered Institute of Public Finance and Accountancy (CIPFA) were engaged to review the current FIP deliverables and programme objectives.

The report pack also notes that CIPFA carried out a reconciliation between the FIP and NCC Improvement Plan and advised that the current FIP underpins a number of the NCC Improvement Programme.

Corporate Risk Register

The committee will receive an update on the corporate risks faced by the council. The Corporate Risk Register Update report notes that the corporate risk register continues to be a live document with regular updates to the risks by risk owners.

The report pack also notes that activities within the improvement plan are continuing with a number of areas, including:

• Delivery of risk management training by Zurich for senior management at Senior Leadership Forum
• Refresh of the corporate risk register which include a lesson learnt log and issues log
• Monthly reviews and updates of DLT risk registers with individual DLTs.
• Piloting of SharePoint / Power BI risk site / dashboard with Communities, Environment and Resident Services Directorate
• Live SharePoint site for Corporate Risk register
• Risk Management Forum set up to share risk management news and practices throughout the Council
• Realigning the risk appetite with CLT.

The report pack also notes that the Council's risk management strategy was refreshed and approved at Executive Board on 22nd July 2025.

Other Items

The committee will also note the Recommendation Tracker and Work Programme.