The Audit and Governance Committee of Surrey County Council met on 3 June 2026 to review the council's treasury management activities, internal audit performance, and counter-fraud efforts for the 2025/26 financial year. Key decisions included noting the treasury management outturn report, approving the chief internal auditor's annual opinion, and acknowledging the counter-fraud annual report.

Treasury Management Outturn Report 2025/26

The committee reviewed the council's treasury management activities for the financial year ending 31 March 2026. The report confirmed that the council remained compliant with all prudential indicators and the Chartered Institute of Public Finance and Accountancy's (CIPFA) Treasury Management Code of Practice. Gross borrowing increased by £148 million to £1.2 billion, primarily to finance the capital programme. The council continued its strategy of maximising internal borrowing and utilising short-term borrowing for cash flow management. £110 million of new long-term borrowing was undertaken to provide interest cost certainty.

Discussions highlighted the council's borrowing strategy, which aims to balance lower interest costs with cost certainty. The report detailed interest rate movements, noting that gilt yields saw a rapid rise towards the end of the financial year due to geopolitical events, impacting borrowing costs. The council's investment activity focused on short-term, low-risk instruments, with an average daily cash investment of £88.8 million. The weighted average return on investments for the year was 4.06%.

Financially, there was an overspend on interest payable due to higher-than-budgeted interest rates, but this was partially offset by an over-recovery of interest receivable due to higher interest rates and cash balances. The committee noted the council's compliance with debt and investment limits, and the maturity structure of borrowing was within the set limits.

Chief Internal Auditor's Annual Report and Opinion 2025/26

The committee received the Chief Internal Auditor's annual report, which provided an opinion on the adequacy of Surrey County Council's control environment. The report concluded with an opinion of Reasonable Assurance that the council had an adequate and effective framework of governance, risk management, and internal control for the period 1 April 2025 to 31 March 2026. This was an improvement from the previous year, partly due to the stabilisation of the MySurrey ERP system and improved control environments in key financial systems.

The report detailed that 98.1% of the audit plan was delivered, with 96% of planned audit days completed. All performance targets were met. Nine audits received partial assurance opinions, with three of these seeing improvements to reasonable or substantial assurance following follow-up reviews. Areas identified for improvement included contract management arrangements, Deprivation of Liberty Safeguards (DoLS), and corporate governance policies.

Key financial systems, including the General Ledger, Revenue Budgetary Control, and Capital Programme, all received Substantial Assurance. The report also highlighted work on cyber security, noting the increasing volume of cyber-attacks and the council's efforts to bolster its security arrangements.

The committee noted the work undertaken and the performance of Internal Audit, determining that the council's arrangements for internal audit had proven effective.

Counter Fraud Annual Report 2025/26

The committee reviewed the summary of counter-fraud work completed between 1 April 2025 and 31 March 2026. The report detailed that 54 allegations were received, an increase from the previous year, with the majority raised by council management. Investigations covered areas such as false representation, abuse of position, and theft. The estimated value of fraud prevented or detected was approximately £4.2k, primarily from car club misuse.

The report highlighted proactive fraud prevention work, including the refresh of the Counter Fraud Strategy and updated fraud risk assessments. Fraud awareness sessions were delivered to staff. The National Fraud Initiative (NFI) exercise identified potential savings of £1.5 million across various datasets, including pension gratuities, concessionary travel passes, and Blue Badges.

Partnership working with district and borough councils on a countywide Single Person Discount review and an Empty Homes review resulted in increased revenue collection and the bringing of properties back into use. The committee noted the fraud activity completed during the year.

Audit and Governance Committee - Annual Report 2025/26

The committee reviewed its own annual report for 2025/26, which summarised its work, membership, attendance, and training. The report highlighted the committee's role in overseeing the adequacy of the council's governance, risk, and control arrangements. Key areas of focus included risk management, counter fraud, the draft and mid-year Annual Governance Statements, and various internal and external audit reports. The committee noted the progress made against improvement actions and approved the report for submission to the County Council.

The committee also noted the date of its next meeting would be 15 July 2026.