The Corporate Governance Committee of Leicestershire County Council met on Friday 26 June 2026 to discuss a range of important governance, financial, and risk management matters. Key decisions included the approval of a revised Local Code of Corporate Governance, noting the progress of the external audit, and receiving updates on risk management, treasury management, and counter-fraud activities.

External Audit Progress Report

The committee received an update on the progress of the external audit for the 2025/26 financial statements for both the County Council and the Pension Fund. Representatives from Grant Thornton UK LLP, the Council's external auditors, confirmed that interim audits had been completed and that the final audits were on track to commence at the end of June and August respectively. The audit findings report and the Auditor's Annual Report, which includes commentary on the Council's value for money arrangements, are scheduled to be presented to the Committee in November 2026. The committee was asked to note the progress of the external audit.

Risk Management Update

A comprehensive update on risk management was presented, highlighting the current status of the Corporate Risk Register (CRR) and emerging risks. One risk, relating to the long-term financial impact of asylum seekers, was removed from the CRR due to reduced exposure following the closure of a large accommodation site and improved national controls. Emerging risks discussed included the impact of the Iran conflict, which has led to increased supplier requests for inflationary price uplifts, particularly in highways, waste, and transport. While most pressures have been negotiated down, taxi contracts remain a potential cumulative risk. Early signs of supply chain disruption were also noted, though they had not yet affected service delivery. The committee was also updated on the Local Government Reorganisation (LGR) consultation, with the Council having submitted its response and awaiting a decision expected in July. Preparatory work across key areas such as finance, HR, and assets is progressing. The committee was asked to approve the status of the corporate and strategic risks, make recommendations on areas for further examination, and note the updates on the Iran war and LGR.

Annual Treasury Management Report 2025/26

The committee received the annual treasury management report for the financial year 2025/26. The report detailed the Council's treasury management activities over the last quarter, including an economic summary from their advisors. Inflation rates were noted as volatile, with expectations of a rise before reducing in the coming year. The Bank of England's base rate, while reduced from its high in 2024, remained higher than initially forecast. The report indicated that the total amount invested decreased from £346 million to £336 million during the quarter, with new investments placed at an average rate of 3.85%. The weighted average duration of the portfolio also decreased. The report highlighted the early repayment of £15 million of Public Works Loans Board (PWLB) debt, incurring a premium of £3.5 million but projecting a net saving of approximately £400,000 per annum. The Council's external debt at the year-end reduced to £131 million. The committee was asked to note the contents of the report.

CIPFA Financial Management Code 2026/27

The committee was informed about the Council's compliance with the CIPFA Financial Management Code for 2026/27. This code supports good practice in financial management and helps local authorities demonstrate their financial sustainability. Officers had completed a self-assessment of the Council's compliance, which indicated that the Council meets the requirements of the code with some minor areas for improvement. Internal Audit had reviewed the self-assessment and found no issues to report. The committee was asked to note the report.

Head of Internal Audit Service – Annual Report 2025/26

Neil Jones, Head of Internal Audit and Assurance Service, presented his annual report for 2025/26. He provided a conclusion of reasonable assurance that the Council's arrangements for governance, risk management, and control were overall adequate and effective during the year. This conclusion was based on a strong program of audit work, continued engagement with senior management, transparent reporting of governance issues, and regular updates to the corporate risk register. While 61 audits were completed, eight resulted in high importance recommendations or partial assurance conclusions, which are actively followed up. Assurance was also gained from Nottingham City Council's internal audit work on shared services and the external auditors' annual report. The committee was asked to note the report and agree that it be circulated to all members of the Council.

Provisional Draft Annual Governance Statement 2025/26

The committee reviewed the provisional draft Annual Governance Statement (AGS) for 2025/26. This statutory document serves as the Council's public accountability statement on the effectiveness of its governance arrangements. The AGS highlighted that the Council's governance arrangements remain fit for purpose, but also identified areas requiring improvement. Two new significant governance issues were identified for 2025-26: issues relating to the Members' Code of Conduct, concerning the volume and nature of complaints and their impact on public confidence, and the deficit balances in maintained schools, with a net deficit of £3.6 million and ongoing financial pressures. The committee was asked to consider the draft AGS and confirm if it reflects their understanding of governance across the Council, noting that any comments would be considered for incorporation into the final draft.

Local Code of Corporate Governance

The committee was presented with a revised Local Code of Corporate Governance, which aims to ensure the committee's remit is up-to-date and aligned with best practice. Key changes include the removal of standards and conduct responsibilities (now transferred to the new Constitution and Ethics Committee), the inclusion of responsibility for approving the Annual Governance Statement, and a clearer presentation of the committee's functions under thematic headings. The committee was asked to approve the revised terms of reference.

Annual Counter Fraud Report 2025/26

Neil Jones presented the Annual Counter Fraud Report for 2025/26, summarising the Council's activities in combating fraud, corruption, and financial irregularity. The Council maintains a zero-tolerance approach to fraud. The report detailed that 17 new investigations were commenced, with 12 closed during the year. Cases covered various areas including employee matters, social care, insurance claims, blue badge misuse, and cyber-related incidents. The financial outcomes were often difficult to quantify, but examples included the rejection of an exaggerated insurance claim and recoveries from a provider. The report emphasized the value of prevention and deterrence, improved controls, and awareness. Emerging risks include AI-enabled fraud and cybercrime. The committee was asked to note the report.

Resilience and Business Continuity Annual Update

Zafar Saleem provided an update on the Council's resilience and business continuity activities. He highlighted the statutory obligation under the Civil Contingencies Act to present this report annually. The report detailed the Council's business continuity function, the methodology for identifying critical suppliers, and the ongoing training program for managers. Lessons learned from previous incidents, such as an IT outage and Storm Claudia, have been incorporated into action plans. The Council also collaborates through the Resilience Forum, delivering training and conducting exercises, including a major exercise called Exercise Mercury focusing on a large-scale road traffic accident. The committee was asked to note the report.

Annual Report on the Operations of Contract Procedure Rules

Kay Springthorpe presented the annual report on the operation of the Contract Procedure Rules for the period 1 April 2025 to 31 March 2026. The report showed a significant reduction in approved exceptions to the rules, from 75 in the previous year to 27. This improvement was attributed to better procurement planning, compliance, and oversight, with the Corporate Procurement Board playing a key role. There was an increase in approved contract extensions and modifications, which was explained as reflecting individual operational requirements rather than a single trend. The report also detailed three contracts awarded under the Provider Selection Regime (PSR). The committee was asked to note the contents of the report.

Terms of Reference

Fiona McMillan presented a report seeking the committee's approval for revised Terms of Reference. These revisions were necessary to reflect constitutional changes approved by the County Council, specifically the transfer of responsibility for member standards and conduct to the new Constitution and Ethics Committee. The revised terms of reference remove conduct-related responsibilities and refocus the committee on its core role as the Council's Audit and Governance Committee. The committee was asked to approve the revised terms of reference.

Annual Report of the Corporate Governance Committee 2025/26

Fiona McMillan presented the annual report of the Corporate Governance Committee for 2025/26. The report summarised the work undertaken by the committee throughout the year to provide independent assurance on the Council's governance, risk management, internal control, and financial control arrangements. It highlighted key governance themes and areas requiring continued focus, including the Medium Term Financial Strategy (MTFS), ongoing pressures in SEND and social care, and adapting to emerging risks and forthcoming organisational change. The report would be forwarded to full Council. The committee was asked to consider and approve the draft annual report.

The meeting concluded with the Chairman thanking all officers for their reports and attendance. The next meeting was scheduled for 18 September 2026.