The Audit and Risk Management Panel reviewed the performance of the Internal Audit and Anti-Fraud team for the second quarter of the financial year, noting improvements and the impact of new legislation. The Panel also received an update on the council's treasury management and capital programmes, highlighting borrowing levels and capital expenditure forecasts. Finally, the Panel considered its own self-assessment, evaluating its effectiveness and performance against good practice principles.

Internal Audit and Anti-Fraud Performance

The Audit and Risk Management Panel received a report detailing the performance of the Internal Audit and Anti-Fraud team for the second quarter (Q2) of the 2025/26 financial year. The report indicated improvements in the team's performance compared to previous years, with a continued focus on the follow-up process for audit recommendations. The council's first internal audit strategy, approved in June 2025, is progressing with identified actions being implemented.

For anti-fraud measures, the team handled 106 referrals in Q2, concluding 59 investigations. A significant development discussed was the Economic Crime and Corporate Transparency Act 2023¹, which introduces a corporate offence of failure to prevent fraud from September 2025. This legislation aims to increase transparency, enhance fraud prevention, and shift corporate culture towards proactive fraud prevention. The council is conducting a gap analysis of its current arrangements against Home Office guidance, with updates on revised policies and risk registers to be presented in March 2026.

During the discussion, members raised concerns about potential downward trends in fraud identification, but it was explained that this was partly due to the cyclical nature of proactive initiatives like the National Fraud Initiative (NFI). The panel also discussed the council's fraud training provision, noting that while not mandatory, targeted sessions have been provided, and the team is reviewing its prevention processes. The role of the housing department's unoccupied, authorised occupation team in investigating fraud risks was clarified, with the internal audit team providing advice, support, and conducting audits rather than day-to-day investigations.

Treasury Management and Capital Mid-Year Update

The Panel reviewed the mid-year update on the council's treasury management and capital programmes for 2025/26. The treasury management report indicated that the council's net external borrowing had increased by £89.255 million as of 30 September 2025, primarily due to new Public Works Loans Board (PWLB)² loans. The report also noted a decrease in short-term money market investment rates following reductions in the Bank of England's Bank Rate. The interest rate forecast suggested further rate cuts were anticipated.

Regarding the capital programme, the total forecast expenditure for 2025/26 was £363.32 million. The report detailed variances across various programmes, with notable underspends forecast in Housing Development (General Fund and Housing Revenue Account) due to factors such as reduced Right to Buy sales and challenges in delivering new homes. Discussions also touched upon the council's asset review and the potential disposal of surplus assets to generate capital receipts, which could impact the revenue position and mitigate the capital programme deficit. The council's borrowing strategy was discussed in the context of the Capital Financing Requirement (CFR) and the Liability Benchmark (LB), with a projected increase in the borrowing requirement over the coming years.

Audit and Risk Management Panel Self-Assessment and Evaluation

The Panel considered the outcome of its annual self-assessment and evaluation, conducted against the good practice principles outlined in the CIPFA guidance, Audit Committees: Practical Guidance for Local Authorities and Police 2022 edition. The assessment indicated a strong performance, with a total score of 186 out of a possible 200 in the self-assessment against good practice questions, and a score of 48 out of 50 for effectiveness.

The assessment highlighted that the Panel has a dedicated committee, reports directly to Full Council, and maintains its advisory role. Members noted that while training and development arrangements are in place, there is scope for improvement in formalising the evaluation of members' knowledge and skills. The Panel also discussed areas where it could further enhance its impact, such as more explicitly demonstrating its contribution to the effectiveness of performance management arrangements. The self-assessment indicated a positive trend in the Panel's performance over the past year.