The Audit and Governance Committee of Gloucestershire Council met on Thursday 23 July 2026 to review a range of reports concerning the council's financial management, risk, and audit activities. The meeting's agenda included updates on treasury management, risk management, internal audit progress, and counter-fraud efforts, alongside the approval of key governance documents.

KPMG Value for Money Risk Assessment

The committee was scheduled to consider a report from KPMG regarding their value for money risk assessment for the year ended 31 March 2026. The report was expected to outline KPMG's assessment of the council's arrangements for financial sustainability, governance, and improving economy, efficiency, and effectiveness. A key finding highlighted in the report was a risk of significant weakness associated with the Dedicated Schools Grant (DSG) deficit, which had increased to approximately £124.7 million. KPMG intended to assess the council's recovery plan and SEND Reform Plan in response to this risk.

Annual Report: Treasury Management

A report was scheduled to be presented on the council's treasury management activities for the financial year 2025/26. This annual report, prepared in accordance with CIPFA's Code of Practice on Treasury Management, was to provide an overview of borrowing and investment activities, economic background, and compliance with prudential indicators. The report noted that treasury management activities were influenced by economic uncertainty, including US trade tariffs and the conflict in the Middle East, which led to volatility in interest rates. The council continued to borrow funds internally for capital schemes, finding it advantageous as long-term borrowing rates exceeded investment returns. Investment activity generated £11.0 million in interest, equivalent to 4.73%. The report also detailed environmental, social, and governance (ESG) considerations in investment policies, including disinvestment from funds with fossil fuel exposure.

Annual Report on Risk Management Activity

The committee was scheduled to receive an update on the changes and improvements made to the council's risk management framework during 2025-26. This included a review of the Strategic Risk Register following the approval of a new Council Strategy. The report highlighted the introduction of Target Risk scoring and ongoing work to align the framework with the emerging Local Government Reorganisation (LGR) process. Key achievements included a zero-based review of the Strategic Risk Register with the Corporate Leadership Team (CLT) and an update to the Risk Management Toolkit. Planned work for 2026-27 includes aligning the framework with LGR, potentially replacing the performance and risk reporting system, and embedding Target Risk scoring further.

Annual Report of the Head of Audit Risk Assurance (ARA)

The committee was to review the annual report of the Head of Audit Risk Assurance (ARA) for 2025-26. This report provides an opinion on the adequacy and effectiveness of the council's framework of governance, risk management, and control. The Head of ARA was expected to provide an Acceptable level of assurance, indicating that key controls are in place and mostly effective, though some improvements may be required. The report noted an increase in the number of Limited assurance opinions compared to the previous year, particularly in areas such as Local Authority Maintained Schools, Build Back Better Grant Scheme, and Deprivation of Liberty Safeguards (DoLS). The report also highlighted ongoing concerns regarding cyber security, recruitment and retention, financial pressures exacerbated by inflation, and the Dedicated Schools Grant (DSG) deficit.

Counter Fraud Team Annual Report 2025-26

The committee was scheduled to receive the annual report of the Counter Fraud Team (CFT) for 2025-26. The report was to review the team's activities, including investigations into corporate fraud, other referred allegations, and debt recovery. In 2025-26, the CFT received 90 new referrals relating to the council. The report also outlined high-level workstreams for 2026-27, focusing on policy development, fraud risk management, fraud alerts, awareness training, and multi-agency collaboration. A successful court case involving a former employee was highlighted, resulting in a suspended prison sentence and compensation order. The CFT also reported on its collaboration with the Debt Recovery team and its participation in the National Fraud Initiative (NFI) data matching exercises.

Internal Audit Activity Progress Report 2026-27

This report was to provide an update on the progress of internal audit activities against the approved Internal Audit Plan for 2026-27. It was to summarise audits completed, assurance levels provided, and the number of outstanding recommendations. Audits completed included Local Authority Maintained Schools, Street Works Compliance, Street Lighting Maintenance Contract, and Deprivation of Liberty Safeguards (DoLS), with most receiving Acceptable assurance. The Build Back Better Grant Scheme received a Limited assurance opinion due to inconsistencies in documentation, data sharing, and monitoring. The report also detailed the status of open recommendations, noting a reduction in overdue recommendations compared to previous periods.

Internal Audit Strategy 2026-27

The committee was asked to approve the Internal Audit Strategy for 2026-27. The strategy outlines ARA's mission and vision, focusing on aligning audit coverage with strategic objectives and key risks, embracing innovative auditing approaches, workforce planning, creating financial value, and fostering a culture of continuous improvement. Key initiatives include leveraging AI and data analytics, developing a bespoke Audit Management System, and enhancing staff skills.

Internal Audit Charter and Code of Ethics 2026-27

The committee was asked to approve the Internal Audit Charter for 2026-27 and note the accompanying Code of Ethics. The Charter details the purpose, mandate, authority, responsibilities, and position of Internal Audit within Gloucestershire County Council, ensuring conformance with the Global Internal Audit Standards (GIAS) in the UK Public Sector. The Code of Ethics outlines principles of integrity, objectivity, competency, due professional care, and confidentiality, aligning with the Seven Principles of Public Life.

Internal Audit Quality Assurance and Improvement Programme (QAIP) 2026-27

This report presented the QAIP for 2026-27, detailing internal and external assessments of the Internal Audit service's conformance with GIAS and the Code of Practice. The QAIP aims to promote continuous improvement and ensure the efficiency and effectiveness of the service. The report included performance targets for 2026-27, such as audit coverage, report production timeliness, and client satisfaction. It also outlined the Internal Audit Service Improvement Plan for 2026-27, addressing areas like recruitment, the development of a new Audit Management Software, and improving commerciality. A self-assessment against GIAS indicated Generally Conforms across most domains.

Annual Review of the Council's use of the Regulation of Investigatory Powers Act 2000 (RIPA)

The committee was to receive an annual review of the council's use of Directed Surveillance and Covert Human Intelligence Sources (CHIS) during 2025/26. The report indicated that there were no applications for Directed Surveillance or CHIS during this period. The review aimed to ensure that surveillance activities were conducted appropriately and in compliance with the Human Rights Act 1998.

Annual Schools' Assurance Statements

This report provided an overview of the annual schools' assurance statements for audits finalised between July 2025 and June 2026. The process involves Internal Audit conducting school audits, followed by Chairs of Governors providing statements on the implementation of recommendations. The report highlighted that while ten schools confirmed all recommendations had been implemented, several others had outstanding recommendations across high, medium, and low risk categories. These outstanding recommendations were to be followed up in the next monitoring round.

Annual Report of the Chair of the Audit and Governance Committee

The Chair of the Audit and Governance Committee was scheduled to present their annual report for 2025-26. This report summarises the committee's achievements, including its oversight of internal and external audit, risk management, treasury management, and the annual statement of accounts. The report noted the committee's satisfaction with the council's governance, risk management, and internal control framework, and highlighted the importance of the committee's role in overseeing upcoming transformations, including local government reorganisation and the adoption of AI technologies.

Exempt Progress Report

An exempt progress report was scheduled to be discussed in conjunction with agenda item 13 (Internal Audit Activity Progress Report 2026-27). Information regarding this report is restricted.