The Audit and Governance Committee of Worcestershire County Council met on 9 December 2025 to discuss several key areas, including updates on external audit recommendations, internal audit progress, risk management, debt management and treasury management. The committee was also scheduled to review its work programme for the coming months. The meeting was to be held at the Council Chamber, Wychavon District Council, Civic Centre, Pershore, WR10 1PT.

Update on 2024/25 External Audit Recommendations and Financial Statements

The committee was scheduled to receive 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 included the draft Audit Findings Report for Worcestershire County Council, prepared by Grant Thornton, the council's external auditors.

The Chief Financial Officer recommended that the committee note progress on the 2024/25 Interim External Audit Report Recommendations, and the Audit Findings Reports for Worcestershire County Council and Worcestershire Pension Fund. The committee was also to consider whether it wished to receive any further reports on findings or information contained in the report, and whether there were issues arising from the reports to draw to the attention of the council.

The report pack noted that Grant Thornton had given Worcestershire council an assessment of 'red' for Financial Sustainability, 'amber' for Governance, and 'red' for Improving Economy, Efficiency and Effectiveness.

The report pack also included a tracker of actions relating to statutory, key and improvement recommendations made in the External Auditor's Annual Report 2024/25. These included:

• SR1: Addressing the increasing Dedicated Schools Grant (DSG) deficit¹ and developing a deficit management plan.
• KR1: Addressing budget pressures, reducing reliance on Exceptional Financial Support (EFS), and agreeing a reserves replenishment plan.
• KR2: Implementing the savings and transformation programme to address the budget gap and reduce reliance on EFS.
• KR3: Improving performance management by developing a golden thread² from the corporate plan through business planning processes.
• KR4: Working with partners to ensure the SEND priority actions are delivered to the timescales required by Ofsted³ and the CQC⁴.
• IR1: Enhancing risk management arrangements by aligning risk and performance and finance reporting.
• IR2: Ensuring completed audit reports are shared with the Audit Committee and including audit recommendations in the internal audit progress reports.
• IR3: Demonstrating objectivity and independence between the Counter Fraud and Internal Audit Team.
• IR4: Addressing weaknesses in Annual Governance Statement (AGS) processes.
• IR5: Improving procurement and contract management arrangements by updating the Procurement Strategy and contract standing orders to reflect the Procurement Act 2023⁵.

Internal Audit Progress Report 2025-26

The committee was scheduled to receive the Internal Audit Progress Report 2025-26. The report noted 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 stated that the overall opinion was that of an improving corporate governance picture, and that the arrow was moving towards the top of 'needs improvement' to the bottom of 'satisfactory'.

The report pack included a summary of the status of internal audit progress:

• Not Commenced: 2
• Planning Stage: 4
• Fieldwork stage: 13
• Report Stage: 0
• Complete: 20
• Removed - Outside of Authority's control: 1
• Removed - Not a significant risk: 0
• No longer a requirement to undertake the certification: 1

The report pack also included a list of all the finalised reviews for 2025/2026 since the September Audit and Governance Committee Progress Report. These included:

• Capital Transport Grant
• Focused School Audit - Hagley
• Performance Data (Rolling Programme)
• Suspense Accounts/VAT
• Bus Subsidy (Revenue) Grant
• BACS Bureau
• Data Retention and Data Handling (Rolling programme)
• Disabled Facilities Grant
• Artificial Intelligence and the Corporate use

The report pack noted that the External Auditor's report 'Interim Auditor's Annual Report, Year ending March 2025' recommended that completed audit reports are reported to the Audit and Governance Committee by exception.

The report pack also included an overview of the key National Fraud Initiative Fraud Risk Report results and the number of matches.

Annual Governance Statement Update

The committee was scheduled to receive an update on the Annual Governance Statement (AGS). The report pack noted that the Accounts and Audit (England) Regulations 2015 require the Council to prepare an AGS which must accompany the Statement of Accounts.

The AGS is primarily retrospective, reporting on the assurance framework and measures in place for the financial year 2024/25, and considering any significant issues of governance up to the date of publication of the Statement of Accounts.

The report pack stated that to achieve this for 2025/26 and to ensure the Council remains compliant with legislative requirements, a working group has been established.

The report pack noted that as part of the 2024/25 AGS, 3 areas were highlighted for 2024/25, and 6 areas were reported as key focus areas for 2025/26. The 2024/25 areas included financial sustainability, market instability (adult social care) and serious harm or death of a child or young person. Reported areas for 2025/26 included working with the new administration, financial sustainability, devolution and local government reorganisation, performance framework, good governance practice and continued focus on training and development for all employees.

Performance and Risk Management Update

The committee was scheduled to receive a performance and risk management update. The report pack included a new combined performance and risk summary report.

The report pack noted that a total of 96 corporate indicators were being monitored. The status of these indicators (within the reporting period) is summarised below:

• Red: 26
• Amber: 14
• Green: 54
• No Assessment: 2

The report pack stated that the Corporate Performance and Risk Management System (CPRMS), launched on 23 September 2025, replaced Excel-based performance and risk spreadsheets on SharePoint.

The report pack also noted that the Council risk register lists 149 risks and 31 of those risks are designated corporate level. Five corporate risks, each scoring 20 or above, were flagged red: Continuing Health Care, unstable structures at Leapgate Old Railway Line, financial instability, serious harm or death to children or young people, and strategic fire risk across organisations.

Debt Management

The committee was scheduled to receive an update on debt management. The report pack noted 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 stated 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 also included a table showing the October 2025 debt position for each Council Directorate and classification of customer group.

Treasury Management Mid-Year Update to 30 September 2025

The committee was scheduled to receive the Treasury Management Mid-Year Update to 30 September 2025. The report pack noted 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 included an economic update for the first part of the 2025/26 financial year, a review of the Council's investment portfolio for 2025/26, a review of the Council's borrowing strategy for 2025/26, and a review of compliance with Treasury and Prudential Limits for 2025/26.

The report pack stated 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 (Average 7-day SONIA) of 3.97%.

The report pack also noted that the Council's borrowing activity between 1 April and 30 September 2025, can be summarised as follows:

• £56m of new loans were taken.
• £46.8 million of debt matured.
• There was £610.18 million of debt outstanding at 30 September 2025 at an average rate of 3.849%.

Work Programme

The committee was scheduled to note its future work programme and consider whether there were any matters it would wish to be incorporated. The scheduled items for the next meeting on 5 March 2026 were:

• Internal Audit Progress Report 2025/26
• Internal Audit Plan 2026/27
• Adult and Communities Directorate - Debt Position Statement
• Corporate Performance and Risk Q3
• Treasury Update & Strategy Update
• Training Session - TBD

The scheduled items for the meeting on 29 May 2026 were:

• Draft Annual Statutory Financial Statements for the year ended 31 March 2026
• External Audit – Council and Pension Fund Audit Plans and Informing the Audit Risk Assessment

The scheduled items for the meeting on 24 July 2026 were:

• Internal Audit Annual Report 2025/26
• Internal Audit Progress Report 2026/27
• Internal Audit EQA Outcome Report
• Corporate Performance and Risk
• Income and Debt Management
• Treasury Management Report and update Q4
• Training Session - TBD

The scheduled items for the meeting on 18 September 2026 were:

• Annual Governance Update
• Internal Audit Progress Report 2026/27
• Corporate Performance and Risk Quarter 1
• Treasury Management Update
• Accounts progress report
• Income and Debt Management
• Training Session – TBD