The Audit and Governance Committee of Rushmoor Borough Council met on Wednesday, 10 June 2026, to review the external audit planning report for 2025/26 and the internal audit annual opinion for the same year. The committee also discussed the unaudited statement of accounts and the annual governance statement for 2025/26, and received updates on treasury management, corporate health and safety, and the financial recovery working group.

External Audit Proposed Audit Planning Report 2025/26

Ernst & Young (EY) presented their proposed audit planning report for the 2025/26 audit. The report outlined EY's audit approach and scope, aligning with the requirements of the Local Audit and Accountability Act 2014 and the National Audit Office's Code of Audit Practice. A key focus for the upcoming audit will be rebuilding assurance following a disclaimed audit opinion in previous years. This involves strengthening the control environment, ensuring high-quality working papers and audit evidence, and active engagement from management. EY highlighted significant risks related to the valuation of property, plant, and equipment, and investment property, due to the complex assumptions and judgements involved. The audit materiality for 2025/26 was set at £1.65 million, representing 2% of the forecast gross expenditure. The committee was informed that EY's independence had not been compromised.

Internal Audit Annual Audit Opinion 2025/26

The Southern Internal Audit Partnership (SIAP) presented their Annual Audit Opinion for 2025/26. The report concluded that the Council's framework of governance, risk management, and control is considered Reasonable, with audit testing demonstrating that controls are working in practice. SIAP's external quality assessment confirmed that they generally conform to the Global Internal Audit Standards in the UK Public Sector. However, several areas were identified as requiring improvement, including:

• Agency Staff: A No Assurance opinion was given due to a lack of formal policies and procedures, non-compliance with procurement legislation and contract standing orders, and issues with mandatory training registration and IR35 status checks.
• Disabled Facility Grants (DFG): A Limited Assurance opinion was issued, primarily concerning the procurement of contractors and surveyors, the absence of a contractor framework, and a lack of Disclosure and Barring Service (DBS) checks for contractors. DFG documentation was also not being maintained in accordance with the retention policy.
• Pay360: A Limited Assurance opinion was given due to deviations from National Cyber Security Centre (NCSC) best practices regarding password expiry and length, ad-hoc access reviews, and reliance on a single administrator account. There was also a lack of proactive monitoring of user authentication activity and defined ownership of PCI DSS compliance.
• Union Yard: A Limited Assurance opinion was issued, with reports submitted prior to 2021 lacking sufficient information for fully informed decision-making. The project's risk register also had instances where materialised risks were not specified with their full impact, and some entries lacked defined mitigating actions or updates.
• Effectiveness of Financial Rules: A Limited Assurance opinion was given due to a lack of clear documentation for responsibilities and execution of controls, with some virements over £50,000 not reported to or approved by Cabinet, and a lack of approval trails for those below the threshold. Not all authorised signatories for bank accounts had been properly authorised, and the dual signatory requirement for cheques over £25,000 was not being enforced.

SIAP noted that where weaknesses were identified, appropriate corrective actions and timescales for improvement were agreed with management.

Unaudited Statement of Accounts and Annual Governance Statement

The committee reviewed the unaudited Statement of Accounts for 2025/26. Members were informed that the preparation of the statement and the audit scrutiny provided reassurance regarding the Council's financial position. An informal workshop was scheduled for September or October to provide members with an overview of the statement and the external auditor's findings.

The Annual Governance Statement for 2025/26 was also presented for approval. Members sought clarification regarding the Corporate Governance Group being on hiatus and were advised this was pending a review of its terms of reference. The committee requested that future internal audit work consider the operation and use of exemptions to normal decision-making procedures. The Annual Governance Statement was subsequently approved.

Treasury Management and Non-Treasury Investment Operations and Prudential Indicators

The committee considered reports on Treasury Management and Non-Treasury Investment Operations for the outturn of 2025/26 and Quarter 1 of 2026/27. It was noted that all activities were conducted within approved Treasury Management Practices, with a move towards longer-term borrowing to provide cost certainty and reduce interest rate exposure. The committee recommended to the Cabinet that the reports be approved.

Corporate Health and Safety Arrangements 2025/26

An update was provided on the Council's corporate health and safety arrangements. The overall health and safety risk profile was noted as low, with most high-risk activities contracted out. The number of accidents and incidents remained low and stable. Members sought clarification on the meaning of Other in incident reports, which was explained as referring to third-party reporting. Measures to protect staff from abusive behaviour were discussed, including training, incident reporting, and access to counselling.

Status of the Financial Recovery Working Group

A verbal update was given on the Council's financial position and the Financial Recovery Working Group. The majority of actions required to balance the budget had been completed, with only a few capital receipt matters outstanding. Following the announcement of Local Government Reorganisation (LGR), the Council's financial strategy shifted to maintaining service delivery and preparing for the new authority. Members expressed concern regarding ongoing financial risks and emphasised the importance of regular Member oversight. The committee supported a proposal for Cabinet to establish a politically balanced Member working group to meet monthly and review the Council's financial management for the remainder of the Council's term. The Chair agreed to write to the Leader of the Council to recommend this to Cabinet.