The Audit and Governance Committee of Cambridgeshire and Peterborough Combined Authority met on Thursday 25 June 2026 to discuss bus franchising, review the ethical framework, and consider updates to the Authority's constitution. Key decisions included approving the updated Gifts and Hospitality Policy, subject to the registration threshold remaining at £50, and agreeing to reconvene the Constitution Working Group to address further updates.

The committee received a comprehensive update on the Bus Franchising Scheme, noting the Mayor's Independent Review and the proposed Strategic Delivery Plan. Discussions also covered the administration of the ethical framework, including the Code of Conduct and Gifts and Hospitality Policy, with amendments recommended to the Constitution and Code of Conduct. Furthermore, the committee reviewed recent changes to the Constitution resulting from the English Devolution and Community Empowerment Act 2026 and agreed to reconvene the Constitution Working Group. Updates were also provided on CPCA activities, treasury management outturn, draft financial statements, and the provisional external audit plan. The committee noted the draft Annual Internal Audit Report, which provided a positive assurance opinion, and approved the Internal Audit Plan and Charter for 2026/27. Progress on internal audit actions was endorsed, and an update on procurement and grant activity was considered. Finally, the committee reviewed the Corporate Risk Register and undertook deep dives into the Bus Reform Programme and Peterborough Station Quarter risks.

Bus Franchising: Independent Review into Bus Franchising Implementation Pathways, Strategic Delivery Plan and Next Steps

The committee received an update on the Bus Franchising Scheme, noting the Mayor's Independent Review into Implementation Pathways and the subsequent Strategic Delivery Plan (SDP). Leon Daniels OBE, Chair of the Independent Review, addressed the committee remotely, answering questions regarding financial sustainability, the impact of congestion, governance, market appetite, depot provision, and fleet strategy. While the review acknowledged the potential for franchising to move risks from operators to the authority, it highlighted the need for control over service provision and financial decisions. Concerns were raised about the financial modelling, particularly regarding the impact of a frozen mayoral precept and the potential need for service reductions. The committee also discussed the importance of depot provision, with proposals for CPCA-owned depots in Peterborough and Cambridge, and the phased introduction of competitively tendered franchise contracts. The report noted that the Bus Services Act 2025 allows for direct award of initial franchise contracts, which could smooth the transition.

Monitoring Officer Update on the Administration of the Ethical Framework, including the Code of Conduct and Gifts and Hospitality and Ombudsman's Annual Review Letter

The committee received an update on the ethical framework, noting that one Code of Conduct complaint had been considered and closed with no further action. Amendments to the Constitution and Code of Conduct were proposed to reflect new legislative requirements regarding the publication of home addresses on Disclosable Pecuniary Interest forms. The committee discussed the proposed updated Gifts and Hospitality Policy, including a suggestion to increase the registration threshold from £50 to £100. While some members expressed concern about transparency, others highlighted the administrative burden of declaring low-value items and the increasing strategic role of the Mayor. Ultimately, the committee resolved to approve the updated policy but with the registration threshold remaining at £50. The committee also noted the letter from the Local Government and Social Care Ombudsman, which confirmed a nil return for complaints investigated during the reporting period.

Updates to the Constitution

The committee reviewed proposed amendments to the Authority's Constitution, necessitated by the enactment of the English Devolution and Community Empowerment Act 2026. The Monitoring Officer explained that due to the pace of legislative change, some amendments would be made under delegated authority for immediate legal compliance, while more substantial changes would be presented to the Combined Authority Board. The committee supported reconvening the Constitution Working Group to consider further updates, with several members volunteering to participate.

Draft Statement of Accounts and Annual Governance Statement 2025/26

The committee received the draft Statement of Accounts and Annual Governance Statement for 2025/26. Officers advised that the draft Statement of Accounts would be published by the statutory deadline of 30 June 2026, with only minor amendments anticipated. The committee was informed of the progress in the external audit process, with an expectation of moving from a disclaimed audit opinion to a qualified opinion for the 2025/26 accounts, aiming for an unqualified opinion in 2026/27. Clarification was sought and provided regarding increases in Member remuneration, the inclusion of the Mayor's Chief of Staff in senior officer disclosures, and the apparent rise in Legal and Governance expenditure, which was attributed to mayoral election costs. Members requested further information on the role and accountability of the Mayor's Chief of Staff.

2025/26 Treasury Management Outturn Report

The committee reviewed the report on treasury management performance for the year ended 31 March 2026. It was noted that no breaches of Prudential or Treasury Management Indicators had occurred, and that the Authority's cash balances were managed prudently. Treasury Investments totalled £196 million, significantly exceeding forecasts and resulting in Treasury Management income of £9.8 million, surpassing the revised budget. Officers explained that higher cash balances at the start of the year were due to upfront funding receipts, and that while balances had historically trended downwards, current investments were achieving higher than average returns due to favourable interest rates and the Authority's ability to lend for longer periods. The committee also discussed the backloaded profile of capital expenditure, noting that this reflected the timing of claims from delivery partners and year-end accounting processes.

External Audit - 2025/26 Provisional Audit Planning Report

The committee received the provisional audit planning report for 2025/26 from the External Auditors. It was noted that the audit risk assessment remained largely unchanged from the previous year, with the primary change relating to the valuation of Property, Plant and Equipment due to new CIPFA indexation requirements. No significant risks or weaknesses were identified in the Value for Money assessment at this stage. The External Auditors confirmed that the audit recovery programme was progressing as planned and reaffirmed the expectation that the Authority would move from a disclaimed to a qualified audit opinion for the 2025/26 accounts, with the aim of achieving an unqualified opinion for 2026/27.

Internal Audit - Progress Report

The committee received an update on the progress of the 2025/26 and 2026/27 Internal Audit Plans. For 2025/26, all planned audits were complete, with the remaining reports in draft awaiting management responses. The 2026/27 plan was underway, with one review in progress. The committee noted the positive progress in implementing internal audit actions, although concerns were raised about the age of some overdue actions. Officers explained improvements to the monitoring process, including monthly reminders and regular progress meetings, and acknowledged the need for more realistic target dates.

Internal Audit - Draft Annual Internal Report 2025/26

The committee received the draft Annual Internal Audit Report for 2025/26, which provided a Positive Assurance Opinion on the Combined Authority's risk management, governance, and internal control arrangements. This marked the second consecutive year of a positive opinion. The report highlighted good engagement from management and staff, and a strong tone from senior leadership supporting continuous improvement. While some reports remained in draft pending management responses, these were not expected to affect the overall assurance opinion. The committee also discussed the Contract Management audit, which was still in draft pending the finalisation of the management action plan.

Internal Audit Strategy 2026/27 - 2028/29, including the 2026/27 Internal Audit Plan

The committee considered and approved the Internal Audit Plan and associated Internal Audit Charter for 2026/27. The plan was noted to be risk-based, with clear links to the Combined Authority's strategic risks, and incorporated feedback from the committee, including bringing forward the review of bus franchising. The strategy also included provision for follow-up reviews to verify the implementation of agreed recommendations. Members discussed the potential inclusion of the Spatial Development Strategy in future work programmes.

Internal Audit Action Tracker Report

The committee received a report on the implementation of Internal Audit actions. It was noted that there were 7 open actions, with 5 overdue, representing a reduction in open actions since the previous report. Concerns were raised about the age of some overdue actions, and officers explained improvements to the monitoring process, including monthly reminders and regular progress meetings. The committee emphasised the need for more specific and clearly defined audit actions to facilitate timely closure.

Procurement and Grant Update

The committee received an update on procurement behaviour and grant issues, noting improved compliance and governance, including increased visibility of procurement activity and a reduction in waivers. The implementation of a new contract management system was highlighted as a priority. While direct awards had increased, they remained compliant with Contract Procedure Rules. Members welcomed the inclusion of grant award information but stressed the need for enhanced reporting on grant governance, outcomes, and unspent funding. The committee also requested that future procurement reports use financial years instead of calendar years and sought clarification on a specific procurement waiver. Officers acknowledged the need for additional procurement capacity to support the proposed bus franchising programme.

Standing Items - Updates and Comments

Updates were received on Local Government Reorganisation, with officers advising that while there were no immediate implications for the Combined Authority, workstreams were continuing to assess potential impacts. Discussions also touched upon the interaction of LGR with the Combined Authority's governance arrangements, voting rights, and decision-making processes. The committee noted that the Fraud Prevention item was deferred to an exempt session, and there were no Health and Safety updates.

Work Programme

The committee noted the draft Work Programme for the 2026/27 Municipal Year, with the Spatial Development Strategy to be added. The Chair proposed, and it was agreed, that Internal Audit would undertake a review of the Authority's HR severance and disciplinary arrangements. The committee also noted the establishment of a Combined Working Party with the Overview and Scrutiny Committee on bus franchising to avoid duplication and improve efficiency.

Date of Next Meeting

The committee noted that their next meeting was scheduled for 10am on Thursday 10 September 2026.

Corporate Risk Register and Deep Dive

The committee reviewed the Corporate Risk Register, Dashboard, and Heatmap for May 2026. It was noted that there were no changes to overall risk ratings since the previous report, with the exception of one risk closure. Two risks remained above risk appetite: the Bus Reform Programme's potential failure to deliver and the occurrence of fraud within CPCA. Updates to the Devolution risk description were noted to include Police and Fire Reform and the Spatial Development Strategy. The committee also discussed the deep dive into Peterborough Station Quarter (PSQ), noting that while controls were in place, the residual risk was moderate. The schedule for future risk deep dives was also presented.

Exclusion of Press and Public

It was resolved that the press and public be excluded from the meeting for the discussion of exempt information relating to the Strategic Delivery Plan for bus franchising.

Re-admittance of Press and Public

The press and public were re-admitted to the meeting.

Future Provision of Internal Audit

Members considered and commented upon the proposal to secure new internal audit services. The committee noted that the current internal audit provider, RSM, had received a positive assurance opinion for the second consecutive year. Discussions also covered the potential impact of devolution on the committee's workload and the need for continued monitoring of capacity and capability.

The committee noted and endorsed progress on the implementation of Internal Audit Actions.