The Audit Committee of North Yorkshire Council is scheduled to meet on 29 September 2025 to discuss a range of topics including commercial governance, audit progress, and the effectiveness of governance arrangements within the Environment Directorate. The committee will also review a draft of its annual report. Members of the public are permitted to attend the meeting as observers.

Commercial Governance Review

The committee is scheduled to discuss a review of commercial governance, following up on a previous report presented in March 2024. The review considers Local Authority Companies owned (or part-owned) by the council, including:

• Bracewell Homes Limited
• NY Highways Limited (Teckal¹)
• First North Law Limited
• Brierley Homes Limited
• Align Property Partners Limited
• Align Property Services Limited (Teckal)
• Nynet Limited (Teckal)
• Yorwaste Limited (Teckal)
• Veritau Limited (Teckal)

The report includes updates on eleven recommendations made in the previous report, and also considers feedback from a recent review undertaken by Veritau.

According to the report pack, an officer group has been established, made up of commercial, finance and legal team representatives. The responsibilities of this group include monitoring companies' performance against the recommendations set out in the report and supporting good company governance.

The eleven recommendations from the previous governance review were:

1. To require all companies to include conflicts of interest as a standing agenda item at board meetings.
2. To develop an in-depth policy for dealing with conflicts of interest for all directors and council appointed directors. This will supplement the current policy in the constitution.
3. For all directors to provide annual declaration of interests and for all companies to keep an up-to-date register of interests.
4. For all companies and directors to undergo refresher training relating to their roles and responsibilities and Directors Duties and how this may interact with their obligations and roles within the Council.
5. That the board membership for companies is reviewed and consideration given to whether Elected members should stand down as directors (except Veritau and Yorwaste) on the basis that the Shareholder Committee provides the elected member oversight of commercial entities.
6. To ensure that each company business plan contains the following information unless there are very specific reasons not to:

• a. Minimum of 3 future years financial forecasting including details of any key assumptions.
• b. Opportunities
• c. Risks
• d. Pipeline of work
• e. Major developments
• f. Key performance indicators
• g. Teckal test results (where applicable)

1. A phased approach to implementing the recommended changes to Back Office Service Level Agreements.

• a. In 2024, to review and refresh the back-office SLAs for financial year 2024/25, documenting the agreed charges in advance and the details of service to be provided;
• b. 2025/26 to put in place the SLA framework with standardised terms and conditions.

1. That work is undertaken to review each entity and agree the level of audit required in line with their requirements and complexity which ensures there is a balanced approach whilst providing the necessary reassurance.
2. All Teckal companies to complete annual Teckal calculations and report within the business plan.
3. All companies to complete annual risk register reviews and include the risk register within the business plan; with the register being monitored periodically during the year.
4. For the governance arrangements for Bracewell Homes to be updated to ensure consistency with other Brierley Group entities and the CIPFA best practice guidance

The report also notes that some Local Authority Companies are wholly owned by the council, but decisions have recently been taken to dissolve them, and they were therefore not reviewed. These are:

• NYNet 100 Limited
• Brimhams Active Limited (Teckal)
• Hambleton District Holdings Limited
• Maple Park (Hambleton) LLP

Central Northallerton Development Company Limited was not covered by the review because of its limited trading activity.

The report pack includes a draft policy to cover 'Managing Conflicts of Interest in Relation to Council Owned Companies', which is intended to provide a practical guide for officers and councillors who may have a role in connection with council companies.

The report recommends that the Audit Committee notes the actions set out in section 5 of the report.

External Audit Progress Report

The Audit Committee will receive an update on the progress of external audits for both North Yorkshire Council and the North Yorkshire Pension Fund. The report, prepared by Forvis Mazars, indicates that the audit work is ongoing, with findings expected to be reported to the Committee in October. The Auditor's Annual Report for 2024/25 is expected to be issued in draft by the end of November 2025.

The report also includes details of backstop arrangements, which are statutory deadlines for the publication of audited annual accounts. For the financial year 2024/25, the backstop date is 27 February 2026.

With regard to the North Yorkshire Pension Fund, the report notes delays in the provision of working papers to support investment-related transactions and balances in the financial statements.

The report also summarises three national publications:

• National Audit Office (NAO): Code of Audit Practice, November 2024
• NAO report: Improving local areas through developer funding, June 2025
• Financial Reporting Council: Audit Quality, July 2025

Internal Audit and Counter Fraud Progress Report

The committee will receive a progress report on internal audit and counter-fraud activities.

According to the report pack, twelve audits have been finalised since the last report to the Committee, and four audits are at the draft report stage. Twelve audits are in progress with a number of these nearing the final stages of fieldwork. A further eleven audits are at the planning stage.

One of the completed audits relates to the Scarborough Waterpark, and the report asks members to consider whether there were any lessons to be learnt from the Scarborough Waterpark review, particularly in respect of North Yorkshire Council's current regeneration projects.

The report pack states that counter fraud work has helped the Council to achieve £144.8k in savings. The team has completed 8 investigations. In addition to delivering savings, their investigations have resulted in 5 warnings being issued to individuals and an application for a school place being rejected. There are 82 ongoing investigations.

The report also notes that Veritau's Information Governance Team (IGT) continues to handle a significant number of information requests received in accordance with the Freedom of Information Act 2000 (FOI) and Data Protection Act 2018 (DPA).

The report recommends that Members note the progress made in delivering the 2024/25 Internal Audit programme of work and the other assurance related services provided by Veritau, and consider the Scarborough Waterpark report and recommend to the Executive that it be treated as a 'lessons learned' exercise in respect of the Council's current decision making processes.

Assessment of Effectiveness of Governance Arrangements - Environment Directorate

The Audit Committee will consider a report on the effectiveness of governance arrangements within the Environment Directorate.

The report pack states that the overall conclusion of the assessment is that the governance arrangements operating in the Directorate in the last year have met the Council's expected principles of good governance, as set out in the Council's local code of governance.

The report considers Highways & Transportation, Waste Management, Environment & Climate Change, Integrated Passenger Transport (IPT), Fleet and Operations, Harbours, Licensing, Regulatory Services, and Registrars, Bereavement and Coroners Service.

The report also considers the Directorate Risk Register, which represents the principal risks that may materially impact on the performance and financial outcomes of the Directorate.

The report recommends that the Committee notes the review of the effectiveness of governance arrangements in the Environment Directorate, and the Directorate Risk Register, and provides feedback and comments on the Environment Directorate Risk Register and any other related internal control issues.

Draft Annual Report of the Audit Committee

The committee will consider the draft annual report of the Audit Committee for the year ended 30 September 2025, prior to its submission to Full Council. A copy of the draft annual report is included in the report pack.

The report recommends that Members consider and approve the draft annual report of the Audit Committee, subject to amendments made following the 29 September 2025 meeting, prior to its submission to full Council.