ARAC minutes - 9 December 2025

Present

Chair’s welcome, apologies and declarations

The Chair welcomed everyone present to the meeting and thanked all for being flexible around timing.  ARAC noted the later start allowed MC to attend the Scottish Parliament’s Local Government, Housing & Planning Committee earlier in the day.  

ARAC noted apologies from Nicola Kane (NK) SHR Business Support Officer.  

There were no declarations of interest.

Minutes of the previous meeting, matters arising & audit log

ARAC considered and approved the minutes from the last meeting on 9 September 2025. 

ARAC considered matters arising and the audit recommendation status log. 

IM reported that SHR has had a first annual review with the Oracle Central Hub, which allowed it to share views on experiences to date.  The Board noted that this reflected feedback already provided to the Oracle Customer Service Board by MC.  IM also reported that SHR is investing £12K to bring in assistance from core Scottish Government to help resolve outstanding Oracle issues and assess if more resources need to be permanently embedded.

LC confirmed that Internal Audit systems audit work relating to Oracle was contracted out and she has not received the output as yet, but that she will share this with ARAC when available.  She explained that the core Scottish Government team is also engaging with the Scottish Government’s Oracle team and output around impact and risks will be shared with clients to enable them to take these into account.

LY explained that the External Audit team discusses assurances and controls when considering the annual report.  She reported that type one and two audit reports on Oracle will be produced and that she will report back on how assurances have been used and any issues flagged up. 

 ARAC noted the matters arising report and the audit recommendations status log. 

Internal Audit Progress Report

LC and PC presented an update on internal audit work.   LC highlighted key strategic messages from the Core Internal Audit Team and encouraged ARAC to consider if there are any wider lessons to take into account.   LC also updated ARAC on work to review the Audit Committee Handbook, explaining this is now at quality assurance stage.  ARAC noted that this was carried out by an external body and the related report should be available for the next ARAC meeting.   LC also highlighted the Risk in Focus publication and the counter fraud update.  

PC updated ARAC on the Serious Concerns review.  He reported that fieldwork has been completed and an exit meeting is due with the report being drafted.  PC indicated that there is likely to be one recommendation around system recording.  ARAC welcomed the work on serious concerns and noted timescales for finalising the report. 

PS also reported that he is seeking to commence early planning work for 2026/27 and this will align with the normal sequencing for SHR, with initial meetings in early 2026.  IM explained the planning approach and ARAC noted the work that both SHR and Internal Audit do in preparation. 

EF explained plans to handover the Chair role to DJ after March 2026.   ARAC noted that SHR Board will consider this in early 2026. 

ARAC noted the updates and welcomed the supplementary papers, agreeing that these were especially useful. 

Risk Register

IM presented SHR’s risk register to ARAC.  He explained that this was the same register recently provided to SHR Board and that Management Team are due to review it next on 18 December 2025.  IM provided some background to the changes made to the register.  He also highlighted uncertainties around SHR’s budget, explaining that once there is clarity this will likely impact risks and related decisions. 

ARAC considered the risk register and discussed:

• the risk systems used and how this related to SHR’s operating plan, which is the tool for setting out mitigation work;
• the format of the current register, noting the variety of approaches SHR has had in place over the years, welcoming plans to consider this in the first half of 2026;
• risk management versus risk control, mitigation conceptions, and the Board’s risk appetite; and
• feedback from Internal Audit on how risk management approaches can easily become an industry.

ARAC noted the risk register and welcomed further planned forthcoming discussions during 2026. 

ARAC self-assurance

CN presented ARAC’s self assessment review.  She explained that ARAC previously agreed to follow a format that annually alternates between a survey and a structured conversation, with this session as the opportunity for the conversation. 

CN highlighted self assessment questions to assist ARAC members shape the conversation and the self assessment checklist from the Audit Committee Handbook that she has completed to help inform discussions. 

ARAC considered the structured discussion materials and discussed:

• communications with SHR Board, noting the ARAC meeting pack and supplementary papers and shared with it via Connect and minutes are included in Board packs.   ARAC also discussed the consent agenda approach to ARAC updates at Board meetings, noting that any ARAC member including the Chair can seek for the update to be pulled from the consent agenda to allow for further discussion with the Board.  ARAC also noted the Board receives an annual statement of assurance from ARAC.  
• the difference between the formal scoring survey approach and the structured conversation;
• communications with staff, noting that staff can observe meetings and agreeing to promote this again, especially with those completing formal governance qualifications.  It also agreed members should highlight ARAC work when they are delivering all staff feedback sessions.  It noted that CN will discuss arrangements with DJ further when she takes over as ARAC Chair.  It also noted LC observed SHR’s approach in this area to be more proactive than other audit clients;
• relationships with auditors, noting positive feedback from both sets of auditors and agreeing that the private sessions also provide a useful route for any additional conversations that may be needed;
• risk management, noting the while there is work to follow in 2026, the existing risk reports are good quality and the active discussions reflect that ARAC is reflective around risk management;
• staff wellbeing mitigations,  noting that the Board will discuss the Civil Service People survey findings in February 2026, which will provide insight around this, alongside the corporate data on absences etc;
• the audit recommendations action log, agreeing this is a useful tool that works well and allows ARAC to keep track of progress;
• fraud, noting there have been no cases and an annual fraud and whistleblowing policy review will next be reported to ARAC in March 2026.  It also noted that SHR staff are aligned to civil service arrangements for whistleblowing;
• meeting arrangements, agreeing it is content and if there are opportunities to also include external speakers that would be welcomed.   ARAC noted CN is exploring the ARAC Chairs group and will share details with DJ.  ARAC also welcomed that the Scottish Government’s Director of Internal Audit has offered to meet with it during 2026; and
• membership transition, agreeing recent turnover in membership was manged effectively and welcoming plans in place for the Chair handover.  It also agreed it was content with the quality of papers and presentations and that member skills represented allow ARAC to fully understand the financial statements and provide for a variety of perspectives.

ARAC noted the checklist and thanked CN for keeping this up to date.  It asked her to work with EF and DJ on forward actions for ARAC.

Actions: CN, EF and DJ to work on forward actions for ARAC in response to the self assessment discussion.

Review of ARAC Terms of Reference

CN presented the annual review of ARAC’s Terms of Reference.  CN explained that she reviewed the current Terms of Reference and is not proposing any changes at this time.  CN reported that as the Audit Committee handbook review is due to be completed during 2026, ARAC may wish to consider carrying out the next ToR  review earlier than December 2026 to ensure it remains aligned.   ARAC noted CN will keep it updated on the scope of any handbook updates.  ARAC considered the review and discussed external audit planning, asking CN to consider if further wording under planning activity is required and if so insert a reference.  

ARAC agreed, subject to clarity around external audit plans to recommend the Terms of Reference to SHR Board for approval in February 2026.

Action: CN to consider if further wording around external audit under planning activity is required and if so insert a reference and recommend the Terms of Reference to SHR Board for approval in February 2026.  

Agenda Planner & AOB

ARAC considered and noted the agenda planner. 

There were no matters raised under AOB.

Private Session

ARAC held a private meeting with the auditors.