The Audit Committee of Darlington Council is scheduled to meet on 13 October 2025 to discuss a range of topics, including the audit strategy, anti-fraud measures, treasury management, property funds, information governance, ICT strategy, and ethical governance. The committee will also be asked to approve the minutes from their July meeting.

Audit Strategy

The Audit Committee will be presented with the Audit Strategy Memorandum 2024/25 from Forvis Mazars, the council's external auditor. The memorandum outlines the planned audit approach for the year ending 31 March 2025, including significant risks and key areas of judgement.

The report pack highlights the auditor's responsibilities, which are derived from the Local Audit and Accountability Act 2014 and the Code of Audit Practice issued by the National Audit Office (NAO). These responsibilities include forming an opinion on whether the financial statements are prepared in accordance with the Code of Practice on Local Authority Accounting and forming a view on the council's arrangements to secure value for money¹. The report pack notes that Gavin Barker, Director at Forvis Mazars, and Campbell Dearden, Senior Audit Manager, are part of the audit team.

The report pack states that a key area of focus for the audit will be rebuilding assurance following the disclaimed audit opinions for 2022/23 and 2023/24. The report pack says that the National Audit Office (NAO) has issued guidance for auditors on how to rebuild assurance for audit years that have been disclaimed, and that this provides an opportunity to adopt a 'Proof in Total' approach, which will require more limited procedures than would otherwise be the case.

Other significant risks identified in the report pack include:

• Management override of controls
• Valuation of property, plant and equipment
• Defined benefit pension valuation
• Implementation of IFRS 16, Leases² # Anti-Fraud and Corruption Arrangements

The Audit Committee will review the Anti-Fraud and Corruption Strategy for 2025-2026. The report of Andrew Barber, Audit and Risk Manager, notes that fraud is estimated to cost the public sector £702m a year in the UK, with around £302m of that in local government.

The strategy is aligned with the CIPFA Code of Practice on Managing the Risk of Fraud and Corruption, which has five themes:

• Acknowledge Responsibility
• Identify Risks
• Develop a Strategy
• Provide Resources
• Take Action

The report pack states that the strategy is endorsed by Elizabeth Davison, Director of Operations, and Councillor Roz Henderson, Chair of the Audit Committee.

The report pack notes that the council participates in the National Fraud Initiative (NFI) data matching exercises.

Audit Services Activity

The Audit Committee will receive a progress report on audit services activity. The report of Andrew Barber, Audit and Risk Manager, outlines progress to date on audit assignment work and consultancy activity.

The report pack states that the report provides members with detailed feedback on the performance of the service and the position in relation to completion of audit work.

The report pack says that the first section of the report is to provide members with feedback on the management of the risks on the corporate risk register, and that the report is not an assessment of the risk itself but an assessment of some of the controls in place to manage the risk.

The report pack notes that the next section breaks down audit results against a set of key governance processes, and that the list of themes has been updated primarily to provide a greater degree of clarity and aid understanding.

The report pack states that the penultimate section is progress against the balanced scorecard, and that the key measures in this section are adequate resources and portfolio coverage.

Mid-Year Prudential Indicators and Treasury Management

The Audit Committee will review the Mid-Year Prudential Indicators and Treasury Management Monitoring Report 2025/26. The report of Elizabeth Davison, Executive Director of Resources and Governance, seeks approval of the revised Treasury Management Strategy and Prudential Indicators.

The report pack states that the mandatory Prudential Code governs the council's borrowing and requires council approval of controls, called Prudential Indicators, relating to capital spending and borrowing.

The report pack notes that the key proposed revisions to Prudential Indicators relate to the Operational Boundary, which will reduce slightly to £182.456m, and the Authorised Limit, which will reduce to £276.297m, due to lower than originally estimated debt levels.

The report pack includes interest rate forecasts provided by Link Asset Services as of 31 August 2025.

Property Funds

The Audit Committee will receive a report on the council's property fund investments. The report of Brett Nielsen, Assistant Director of Resources, provides information concerning the council's property fund investments.

The report pack states that the 2017/18 Treasury Management Strategy included the provision to invest in units in property funds up to £20m per fund with a total maximum of £40m. After due diligence and review, Lothbury, CCLA³ and Hermes were selected, and investments of £10m were made in each fund. The report pack notes that following the termination of the Lothbury Property Fund, the council has reinvested the proceeds to date into another property fund, UBS Triton Property Fund.

The report pack states that to date, the property funds have provided over £8m in income (dividends), providing the council with additional resources to invest in services through the Medium Term Financial Plan (MTFP).

The report pack notes that in the summer of 2024, the council received notification from Hermes that a large number of redemption requests (22% of the fund value) had been received by the end of the second quarter of 2024, and as a result, the management of the trust had notified that the trust was no longer viable in a reduced form and therefore would look into options for the future, including a merger or wind up of the trust. The report pack states that following an EGM, investors agreed to merge subject to certain conditions been met, these conditions were met and the merger completed on 15 August. As Darlington were not able to qualify for the merged fund, they received payment of £8.896m on 20 August.

Information Governance Work Programme

The Audit Committee will receive a progress report on the Information Governance Programme. The report of Elizabeth Davison, Executive Director: Resources & Governance, notes that the Systems and Information Governance Group (SIGG) is required to report six monthly to the Audit Committee on progress and planned developments of the information governance programme.

The report pack states that delivery of the information governance programme has provided the assurance required to reduce almost all of the council's information risks to an acceptable level.

The report pack notes that recent/ongoing work includes:

• The Microsoft Office 365 Programme.
• Digital Darlington Strategy and Artificial Intelligence (AI).
• ICT work plan.
• Web Team work plan.
• Systems and Process Teamwork plan.
• Information Governance Team Work Plan.
• Work to achieve the target for the completion of on-line mandatory information governance training courses.

The report pack states that the area of highest priority in the information governance programme is the Digital Darlington Strategy and Artificial Intelligence (AI).

The report pack notes that the Digital Darlington Strategy 2025-30 was approved by Cabinet on 4 March 2025, and progress with the strategy is reported to the Systems and Information Governance Groups (SIGG) on a quarterly basis.

The report pack states that in relation to digital exclusion, the council has submitted an application to the Department for Science, Innovation & Technology's (DSIT) Digital Innovation Fund.

The report pack notes that in relation to Maximising the benefits of existing ICT systems and explore, assess, and implement emerging technologies, the council has established an Artificial Intelligence Strategy & Ethics Group.

The report pack states that the council has concluded its role in testing an AI meeting transcription and summary tool called Minute, which was produced by the Incubator for Artificial Intelligence (i.ai) and sits in Government Digital Service (GDS) which is part of DSIT.

ICT Strategy Implementation

The Audit Committee will receive a progress report on the ICT Strategy Implementation. The report of Andy Evans, Head of ICT Services – Xentrall Shared Services, notes that the Extended Leadership Team (ELT) is required to report six-monthly to the Audit Committee on progress in relation to the implementation of the ICT Strategy.

The report pack states that the revised ICT Strategy focuses on three strategic priorities:

• ICT Governance and Service Development
• ICT Strategic Architecture
• Council Service Development and Transformation

The report pack notes that Darlington Council has been awarded PSN (Public Service Network) certification by the Cabinet Office for the financial year 25/26 and work is already under way to prepare the 26/27 submission.

The report pack states that a key achievement in service development has been the creation of a dedicated Cyber Security function within the wider Security and Assurance Team.

Ethical Governance and Member Standards

The Audit Committee will receive an update report on Ethical Governance and Member Standards. The report of Amy Wennington, Assistant Director, Law and Governance Monitoring Officer, gives members an update of information about issues relevant to member standards since matters were reported to the Committee in April 2025.

The report pack notes that a new Ethics and Integrity Commission (EIC) is to be established to drive up standards in public life, and that the Chair of the Committee on Standards in Public Life (CSPL) will also be Chair of the EIC.

The report pack reminds members that the Localism Act 2011 makes provision for a member to ask the Monitoring Officer to withhold details of a pecuniary interest, if disclosure could lead to the member or a connected person being subject to violence or intimidation.

The report pack states that the Monitoring Officer will provide refresher training on the Members' Code of Conduct in October 2025.

The report pack includes a range of data sets that it is hoped will assist in monitoring the ethical health of the council.