The Governance and Audit Committee of Kent County Council met on Thursday, 15 October 2026, to review the council's financial statements, audit findings, and governance arrangements for the 2025-26 financial year. Key discussions focused on significant financial sustainability risks, particularly concerning Adult Social Care and the Dedicated Schools Grant deficit, as well as the effectiveness of the Governance and Audit Committee itself and the ongoing Oracle Cloud Programme implementation. The committee approved the Annual Governance Statement and the Statement of Accounts for 2025-26, and authorised the signing of Letters of Representation for both the Council and the Kent Pension Fund.

Auditor's Annual Report and Audit Findings

Grant Thornton UK LLP presented their interim annual report and audit findings for Kent County Council and the Kent Pension Fund for the 2025-26 financial year. The auditors indicated they intended to issue an unqualified opinion on the Council's financial statements, noting that Kent County Council was among a minority of local authorities to publish its accounts by the required deadline.

Significant risks identified during the audit included management override of controls, the valuation of land and buildings, pension valuations, and the implementation of the new Oracle finance system. While no material errors were found in the financial statements produced using the Oracle system, delays were experienced in obtaining period-end reports and supporting information for debtors and creditors. A recommendation to improve reporting arrangements for the next year-end process was accepted by officers.

The auditors also highlighted four significant weaknesses in the Council's arrangements for securing economy, efficiency, and effectiveness:

• Financial Sustainability - Adult Social Care: Persistent overspends in Adult Social Care and Health (ASCH) have significantly reduced reserves, posing a risk to ongoing financial sustainability. This was identified as a continuing significant weakness.
• Financial Sustainability - Dedicated Schools Grant (DSG) deficit: The Council has been spending more on Special Educational Needs and Disabilities (SEND) than the funding provided through the DSG, leading to an increasing deficit. Forecast deficits for 2026/27 and 2027/28 remain unresolved, creating risk to financial sustainability. This was also identified as a continuing significant weakness.
• Governance and Audit Committee (GAC) effectiveness: A review of the GAC's effectiveness identified areas for further development, including member engagement, relationships between members and officers, and the provision and take-up of member training. This was identified as a new significant weakness.
• Oracle Cloud Programme implementation: Delays and cost escalations in the Oracle Cloud Programme's phase two implementation indicated that programme delivery arrangements had not been optimal. This was identified as a new significant weakness.

Key recommendations were made for each of these areas, including placing an organisational focus on managing financial sustainability risks within ASCH, urgently delivering the SEND Reform Plan to mitigate the DSG deficit, developing a governance improvement programme, and incorporating lessons learned from the Oracle Cloud Programme into future delivery arrangements.

For the Kent Pension Fund, the audit progressed smoothly, with draft accounts and supporting evidence of a high standard. The auditors intended to issue an unqualified opinion, with remaining steps including the receipt of a signed letter of representation. One adjustment of approximately £4.4 million was made due to updated valuation information for investments. Four recommendations were identified, but these did not affect the accuracy of the accounts or the proposed audit opinion.

Annual Governance Statement (AGS)

The Monitoring Officer, Petra Der Man, presented the draft Annual Governance Statement (AGS) for 2025-26. The AGS provides an assessment of the Council's governance arrangements and supports the Council's best value duty. It incorporates findings from Internal Audit and the external auditors. The statement highlighted the implementation of a decision-making application and efforts to strengthen the effectiveness of the Governance and Audit Committee. The Monitoring Officer emphasised the importance of consistent and transparent governance arrangements, particularly in light of significant organisational and political change, including the uncertainty surrounding Local Government Reorganisation (LGR). Members discussed the emphasis on transparency and noted that any financial implications from a judicial review concerning LGR would be reflected in budget processes, not the 2025-26 Statement. An action to develop a mechanism for the GAC to oversee savings plans was to be included in the updated action list.

Draft Statement of Accounts

Brendan Arnold, Corporate Director of Finance and S151 Officer, and Joe McKay, Acting Chief Accountant, presented the draft Statement of Accounts for 2025-26. They highlighted the Council's achievement of a clean audit opinion and the successful production of the accounts using the new Oracle Cloud finance system. A significant accounting change for 2025/26 was the introduction of indexation to the valuation of property, plant and equipment assets, which had been considered by the external auditors without significant issues. Members sought clarification on updated figures and confirmed the accounting treatment for a joint venture. Officers agreed to review the narrative regarding the final budget position and the Dedicated Schools Grant.

The Committee resolved to:

• NOTE the Kent County Council Auditor's Interim Annual Report 2025–26.
• NOTE the Audit Findings Reports for Kent County Council and the Kent Pension Fund.
• APPROVE the Annual Governance Statement for 2025–26.
• APPROVE the Statement of Accounts for 2025–26.

Letters of Representation

The Committee approved the Letters of Representation for Kent County Council and the Kent Pension Fund, authorising the Chair and the Section 151 Officer to sign them on behalf of the Council, which is a final step in the audit process.

The meeting also included standard agenda items such as apologies, declarations of interest, and the minutes of the previous meeting.