The Governance and Audit Committee of South Holland Council met on Thursday 2 July 2026 to review a range of financial and governance reports. Key discussions were scheduled to include the Quarter 4 Risk Report for 2025/26, the Combined Assurance Status Report for the same period, and the Internal Audit Annual Report and Opinion for 2025/26. The committee was also set to review the draft Annual Governance Statement for 2025/26, receive an update on the rescheduling of Housing Revenue Account borrowing, and consider the Annual Treasury Report and Unaudited Financial Statements for 2025/26. Finally, the committee's work programme was scheduled for review.

Quarter 4 Risk Report 2025/26

The committee was scheduled to receive an update on risk management as at the end of March 2026. The report, authored by John Medler, Service Director – Legal and Governance, was intended to provide an overview of the Council's strategic risk register, partnership risks, fraud risks, and Housing Revenue Account (HRA) risks. The report indicated that the strategic risk profile remained largely stable, with most risks being managed at or near their target levels. A new risk relating to artificial intelligence (AI) governance and oversight had been added as a medium risk. Updates were also provided on various specific risks, including those related to the Environment Act implementation, local plan timelines, and budget uncertainties. The report also detailed the risk scoring matrix and the 4 Ts of risk control: Terminate, Tolerate, Transfer, and Treat.

Combined Assurance Status Report 2025/26

This report, from the Senior Leadership Team and authored by John Medler, Service Director – Legal and Governance, was intended to provide a record of assurance against the Council's critical services and key projects. It aimed to offer a triangulated view of assurance from management, corporate and/or third-party sources, and Internal Audit. The report indicated that all key areas had been subject to assurance procedures, with an overall good level of assurance across the authority. Specific directorate summaries were included, highlighting strengths and areas of concern. The Communities Directorate reported one activity remaining red-rated: Tree Risk Assessment, due to historic backlogs and specialist capacity issues. The Corporate Development Directorate noted 'Financial Resilience' as a red-rated critical activity. The Programme Delivery & SIRO Directorate reported no red-rated critical activities, with only Spalding Cemetery listed as amber. The Growth Directorate also reported no red-rated critical activities, with several areas listed as amber. The report on Strategic Partnership Working (PSPS Delivered Services) indicated no red-rated critical activities, with a number listed as amber. Key Projects also showed no red-rated critical activities, with several listed as amber, including the implementation of the Uniform system and the upgrade/replacement of 2008 servers.

Internal Audit Annual Report and Opinion 2025/26

The Head of Internal Audit, from Lincolnshire County Council, was scheduled to deliver an annual opinion and report to inform the Annual Governance Statement. The report was expected to conclude on the adequacy and effectiveness of the Council's governance, risk, and control environment. The report indicated that 100% of the audit plan had been completed. However, the overall opinion on the frameworks of governance, risk, and internal controls was 'Limited', suggesting that the control framework was not operating effectively to mitigate key risks and that several key controls were absent or not being applied effectively. Specific findings highlighted inconsistencies in the application of governance arrangements, particularly concerning the UKSPF grant review, and a lack of formalised risk management practices. The report also noted that while management actions were agreed upon, their timely implementation remained an area for improvement. The report detailed specific audit reviews completed, including those with 'Limited' and 'No Assurance' ratings, such as the UKSPF Grant Review.

Draft Annual Governance Statement (AGS) 2025/26

This report, authored by Rebecca James, Scrutiny and Policy Officer, and presented by Russell Stone (Executive Director – Finance) and John Medler (Service Director – Legal and Governance), was intended for the committee's review. The AGS aims to review the effectiveness of the Council's governance arrangements for the 2025/26 period and includes a proposed Action Plan for improvements in 2026/27. The statement evaluates the Council against the key principles of the CIPFA/SOLACE 'Delivering Good Governance in Local Government: Framework'. The report indicated that while the Council believed its governance arrangements were largely fit for purpose, areas for improvement identified by Internal Audit would be addressed. An action plan was to be presented, outlining steps to strengthen risk management, improve the timeliness of audit action implementation, and continue work towards Local Government Reorganisation.

Rescheduling of Public Works Loan Board Housing Revenue Account Borrowing

This report, authored by Sean Howsam, Treasury & Investments Manager (PSPSL), and presented by Russell Stone, Executive Director of Finance/S151 Officer, provided a written update on the S151 Officer's delegated decision to reschedule Housing Revenue Account (HRA) Public Works Loan Board (PWLB) borrowing. The report detailed an opportunity to repay £67.456m of existing borrowing at a discount of £18.372m and replace it with £50m of new PWLB borrowing. This rescheduling was expected to result in an annual saving on interest payments of £83,469 and a credit to the HRA revenue account of £1.837m annually for ten years. The committee was asked to note the S151 Officer's decisions made under delegation.

Annual Treasury Report 2025/26

Authored by Sean Howsam, Treasury & Investments Manager (PSPSL), and presented by Russell Stone, Executive Director of Finance & Section 151 Officer, this report detailed the Council's treasury activities and actual prudential and treasury indicators for 2025/26. It was intended to provide members with a review of the Council's capital expenditure, financing, economic updates, investment portfolio, borrowing strategy, debt position, and compliance with Treasury and Prudential Indicators. The report highlighted a favourable variance in interest received and a significant credit to the HRA revenue account from the premature repayment of PWLB borrowing. The average rate of return on treasury investments was reported as 4.54%. The report also included commentary on the economic climate and interest rate forecasts, noting volatility due to the Middle East conflict.

Unaudited Financial Statements 2025/26

Presented by Ellie Stacey, Head of Finance Delivery - Technical and Corporate (PSPS Ltd), this report requested the committee's review of the unaudited Financial Statements for 2025/26. The statements were prepared in accordance with the Code of Practice and the Council's accounting policies. A significant change noted was the move to a five-year rolling valuation programme for property, plant, and equipment, with annual indexation applied in intervening years. The net worth of the Council, as shown in the Balance Sheet, had increased by £43.154m, primarily due to increases in asset valuations and capital grants received. The report also detailed the consolidation of subsidiary companies, South Holland Local Housing Community Interest Company, Welland Homes Limited, and the Council's share of Public Sector Partnership Services Ltd, into the group accounts.

Rebuilding Assurance Risk Assessment Outcome for the Year-Ending 31 March 2026

This report from KPMG outlined the results of their risk assessment procedures undertaken as part of the 2025/26 audit, focusing on rebuilding assurance following previous disclaimed audit opinions. The assessment identified risks of material misstatement concerning Property, Plant and Equipment additions, the Capital Receipts Reserve, Capital Grants Unapplied, and Unusable Reserves. The report detailed the procedures planned to address these risks, with work scheduled for the 2025/26 audit year. Specific procedures included confirming the eligibility of capitalised expenditure, reconciling asset disposals to capital receipts, and verifying the accuracy of transfers to and from various reserves.

Governance and Audit Committee Work Programme

Authored by Andrea Tait, Democratic Services Team Leader, and presented by Rhonda Booth, Democratic Services Manager, this report set out the Work Programme for the Governance and Audit Committee for the 2026/27 municipal year. It detailed regular and ad hoc items, their authors, purposes, and frequencies. The report also included a schedule of training undertaken by committee members since 2023 and suggested future training topics. The committee was asked to consider the programme and identify any additional items for discussion to ensure its relevance and currency. The report also highlighted the importance of the committee's role in overseeing risk management and corporate governance.