The Audit and Governance Committee of Worcestershire Council was scheduled to discuss the council's statutory accounts for 2025/26, progress on internal audit plans for the upcoming year, and the financial position of the Adults and Communities Directorate. The committee was also set to review updates on performance and risk management, business continuity, and the appointment of independent members.

Statutory Accounts 2025/26 Progress, Accounting Policies and Estimates

The committee was scheduled to receive an update on the progress of the 2025/26 statutory accounts. The report outlined the proposed accounting policies for the year, which had been updated to incorporate changes from external audit feedback and internal reviews. It also detailed the management arrangements for identifying and evaluating accounting estimates. The preparation work for the statutory accounts was reported to be on target, with draft statements due for publication by 30 June 2026 and external audit sign-off by 31 January 2027. The report also noted that Worcestershire County Council (WCC) would not be preparing group accounts for 2025/26, as its interest in Worcestershire Children First (WCF) was not considered material following the ending of the WCF contract. The West Mercia Energy Joint Committee (WME), of which WCC is a constituent authority, was to be accounted for as a joint venture in the 2025/26 Group Accounts. The report detailed the material accounting estimates that affect balances and transactions for the year, including the valuation of land and buildings, depreciation and impairment, measurement of financial instruments, and the valuation of defined benefit net pension fund liabilities.

Internal Audit Progress Report

The committee was presented with the Internal Audit Progress Report for 2025/26. The report indicated an improving corporate governance picture, moving from 'needs improvement' towards 'satisfactory'. Out of 43 planned reviews for 2025/26, 26 had been completed, with a further 11 at various stages of planning or fieldwork. The assurance overview showed 4 'substantial', 8 'satisfactory', 3 'needs improvement', and 2 'unsatisfactory' reports. Two 'unsatisfactory' reports concerning Debt Management were highlighted, requiring immediate corrective action due to significant risks and five 'high' priority recommendations each. The report also detailed changes to the 2025/26 audit plan, including the addition of the Household Support Fund and Debt Management: Gypsy Debt, and the removal of Continuing Health Care and Local Transport Funds/BSIP. The National Fraud Initiative (NFI) 2024/26 cycle was progressing, with matches received and being investigated by services. The Economic Crime and Corporate Transparency Act 2023 (ECCTA) was also discussed, with an action plan in place to mitigate potential risks.

Internal Audit and Counter Fraud Plans 2026/27

The committee was asked to approve the Internal Audit Charter, Strategy, Annual Internal Audit Plan, and Counter Fraud Plan for 2026/27. The plans were developed considering significant organisational changes, including financial challenges, new systems, and preparation for devolution. The audit plan aimed to address emerging risks and developing areas for the Council, while also covering material and cross-cutting systems. A dedicated resource for counter fraud activity was being recruited, and the plan assumed successful recruitment. The audit plan included a balance of reviews across key business functions, with a focus on higher-risk areas and new systems. Agile auditing was being incorporated to provide a more flexible and responsive approach. The Counter Fraud Plan outlined priorities aligned with the Fighting Fraud Locally strategy, focusing on prevention, detection, and investigation, including work on procurement, payroll, direct payments, and pensions. The Economic Crime and Corporate Transparency Act (ECCTA) was also a key consideration for the counter fraud plans.

Adults and Communities Directorate – January 2026 Debt Position Statement

This report provided an update on the debt position for the Adults & Communities (A&C) Directorate as of 31 January 2026. The total debt outstanding for the directorate had decreased by £1m since January 2025 to £24.2m. While Adult Social Care debt had increased by £900k, this was offset by a reduction in Communities debt. Key highlights included an increase in client charging invoices raised, with overall collection rates of 85.2% to date, and a significant amount of debt (£49m across all directorates) collected by the Debt and Legal teams in the last 12 months. The report detailed the breakdown of debt by service type, with Residential and Nursing Care accounting for 68% of Adult Social Care debt. The increase in Court of Protection (COP) cases and debts with Legal Services were noted as challenging areas for collection. Initiatives to improve client engagement and increase Direct Debit take-up were ongoing, though progress remained slow. The report also covered Deferred Payment Agreements (DPAs), which represent a longer-term debt secured against property.

Performance and Risk Management Update

The committee was requested to review the latest corporate performance and risk position, approve the new combined Corporate Performance and Risk Management Policy Statement, Strategy, and Risk Appetite, and note progress on the Corporate Performance and Risk Management System (CPRMS). The report indicated that out of 93 corporate Key Performance Indicators (KPIs), 53 had been updated in Q3 2025/26, with 10 showing a change in RAG assessment. Four indicators had improved from Amber to Green, while one had deteriorated from Amber to Red: Residents Viewpoint Survey Response. Several indicators were noted as having changed from Green to Amber, including Children's Social Care complaints progressing from Stage 2 to Stage 3, and Education Health and Care Plans completed within 20 weeks. Conversely, some indicators had improved from Red to Amber, such as Adult Social Care complaints completed in 6 months, audits completed to milestone dates, and telephony calls answered within 120 seconds. The Corporate Risk Register listed 148 risks, with 30 designated as corporate level. Six risks remained rated as red, including Financial Instability, Serious harm or death of a child or young person, and Impact of external provider market on Council budgets. The report also detailed the new combined Corporate Performance and Risk Management Policy Statement and Strategy, which aimed to provide a consistent approach to performance and risk management, and noted progress on the CPRMS system.

Corporate Business Continuity Position - Update

This report provided an update on the processes supporting Business Continuity within Worcestershire County Council. The Council has a statutory duty to ensure the resilience of its services during disruptions. The Emergency Planning team is responsible for coordinating business continuity efforts, and a revised approach has been developed, including a corporate business continuity policy and plan. Directorate-level plans are also being revised and adapted. Call cascade procedures are being implemented and tested to ensure rapid communication during a business continuity event. Future plans include exercising business continuity plans, developing support for schools, and providing business continuity planning support to critical commissioned services.

Independent Member Appointment to the Audit and Governance Committee Update Report

The committee was asked to note the update on the appointment of Independent Members to the committee. Following a recommendation to Council in September 2025, which was agreed in November 2025, the Council decided to appoint independent members. This addressed an External Audit recommendation from 2023/24 and recent Auditor's Annual Report guidance. CIPFA guidance recommends two co-opted members to supplement knowledge, provide continuity, and ensure a non-political focus. Interviews were held on 19 February 2026, and due to the strong calibre of candidates, both were offered independent member positions. This action was considered cost-effective and aimed to enhance governance within the Council.

Treasury Management Update Quarter 3 2025-26

This report provided an update on the Council's treasury management activities for the third quarter of the 2025-26 financial year. It included an economic update, a review of the Council's investment portfolio and borrowing strategy, and a review of compliance with Treasury and Prudential Limits. CPI inflation had fallen, and the Bank of England had begun to cut interest rates. The Council's investment portfolio stood at £31m as at 31 December 2025, with an average yield of 4.33% against a benchmark of 0.06%. The Council's borrowing stood at £673.3m as at 31 December 2025, with a forecast of £731.6m by 31 March 2026. The report detailed the Council's borrowing strategy, including consideration of alternative funding sources and the practice of internal borrowing. Compliance with Treasury and Prudential Limits for 2025/26 was confirmed, with projected debt remaining within approved limits. The report also included the Treasury Management Strategy for 2025-26, outlining policies on capital expenditure, borrowing, investments, and creditworthiness.

Work Programme

The committee was asked to note its future work programme, which included scheduled discussions on draft annual statutory financial statements, external audit plans, internal audit reports, corporate performance and risk, income and debt management, treasury management updates, and annual governance updates. The next meeting was scheduled for 29 May 2026.