The Audit and Governance Committee of Worcestershire County Council is scheduled to meet on Tuesday, 9 December 2025, to review a range of topics including the council's financial statements, audit recommendations, risk management, and debt management. The committee will also discuss the Internal Audit Progress Report, the Annual Governance Statement, and the Treasury Management Mid-Year Update.

External Audit and Financial Statements

The committee will be provided with an update on the 2024/25 external audit recommendations and the annual statutory financial statements for the year ending 31 March 2025. The report pack includes the Update on 2024/25 External Audit Recommendations 2024/25 Financial Statements inc Externa, the Worcestershire PF - Audit Findings Report 2024-25 - updated for IAS19 distribution 260, the External Audit 2024-25 Full Action Tracker 2025-26, and the WCC Interim Auditors Annual Report 2024-25.

The report pack indicates that Grant Thornton ¹ are the council's external auditors and are responsible for producing an annual audit report. The report pack also says that the external auditor is required to reach a formal conclusion on whether the council has put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, and that the external auditor reported to the council that their assessment of Worcestershire was 'red' for Financial Sustainability, 'amber' for Governance, and 'red' for Improving Economy, Efficiency and Effectiveness.

The report pack states that the external auditors made one statutory recommendation to the council regarding the Dedicated Schools Grant (DSG) deficit². The council agreed to accept the statutory recommendation within the report.

The report pack also indicates that the committee will be asked to consider whether it wishes to receive any further reports on findings or information contained in the report, and whether there are issues arising from the reports to draw to the attention of the council. The report pack states that authorisation will be sought for the Chair, Councillor Dan Birch, in consultation with the Vice-Chairman, Councillor Jabba Riaz, to approve the Final Accounts Pack, including the Statement of Accounts for the financial year ended 31 March 2025, at a later date subject to receipt of the Audit Opinion.

Internal Audit Progress

The committee will receive the Internal Audit Progress Report 2025-26. The report pack states that the role of the council's Internal Audit Service is to enhance and protect organisational value by providing independent assurance, advice and insight into the council's risk management, governance, and internal control processes. The report pack states that the overall opinion is that of an improving corporate governance picture, and that with clear signs of real improvement within key areas continuing, a reduction in the number of recommendations past their implementation deadline, the work of internal audit returning three 'needs improvement' reports in the first 8.5 months of the financial year from 20 completed pieces but with no 'critical' actions, overall opinion is starting to move towards 'satisfactory'.

The report pack states that the external auditor's report recommended that completed audit reports are reported to the Audit and Governance Committee by exception, and that for the 2025/2026 year to date, it is adjudged that there are no reports which require reporting in full to the committee or any risks associated to those reports that require special mention.

Annual Governance Statement

The committee will be asked to note the Annual Governance Statement (AGS) 2024/25 Progress Report. The report pack states that the AGS is completed by the Strategic Leadership Team and the Chief Officer Group based on information provided by senior officers across the organisation, and assesses the effectiveness of the council's Governance arrangements by reference to the principles of good governance in accordance with CIPFA/SoLACE Delivering Good Governance in Local Government Framework³. The report pack states that to ensure the council remains compliant with legislative requirements, a working group has been established, comprised of the Chief Financial Officer, the Monitoring Officer, the Chief Accountant, the Chief Internal Auditor, the Assistant Director for HR Organisation Development and Engagement and the Head of Performance Services.

Performance and Risk Management

The committee will review the latest corporate performance and risk position. The report pack includes a new combined performance and risk summary report, and notes progress on the Corporate Performance and Risk Management System (CPRMS). The report pack states that a total of 96 corporate indicators are being monitored, and that 71 indicators have been successfully updated during the second quarter of 2025/2026. The report pack states that the CPRMS, launched on 23 September 2025, replaced Excel-based performance and risk spreadsheets on SharePoint⁴, and standardises data collection and reporting, improves performance and risk visibility, highlights non-compliance, and aligns with the 2025 risk management strategy.

Debt Management

The committee will receive an update on debt management. The report pack states that as at 31 October 2025, debt in progress (all invoices older than 30 days ) is £23.9m of which £19.1m (80%) relates to Adults and Communities. The report pack states that the Debt and Legal Teams have maintained their clearance rates with an average of £4.4m collected each month in the last 12 months. The report pack states that the current stability of debt levels could be viewed positively, however, the Debt and Legal Team's objective is to try to change the behaviour of customers and increase their overall propensity to pay, and that current experience is that while many customers will ultimately pay when pushed, there is a clear reluctance to pay on the receipt of an invoice with some customers actively waiting to be contacted.

Treasury Management

The committee will receive the Treasury Management Mid-Year Update to 30 September 2025. The report pack states that the Council employs MUFG Corporate Markets as its treasury management advisor, and officers hold regular meetings with them concerning existing and future potential economic circumstances regarding both investments and short/long-term borrowing. The report pack includes an economic update for the first part of the 2025/26 financial year, a review of the council's investment portfolio and borrowing strategy for 2025/26, and a review of compliance with Treasury and Prudential Limits for 2025/26. The report pack states that the council held £50.9 million of investments at 30 September 2025, and the investment portfolio yield for the first 6 months of the year is 4.41% against a benchmark of 3.97%. The report pack states that the council's borrowing activity between 1 April and 30 September 2025 included £56m of new loans taken, and £46.8 million of debt matured, and that there was £610.18 million of debt outstanding at 30 September 2025 at an average rate of 3.849%.

Work Programme

The committee will note its future work programme and consider whether there are any matters it would wish to be incorporated. The report pack includes the schedule of meetings for 5 March 2026, 29 May 2026, 24 July 2026 and 18 September 2026.