The Audit and Governance Committee of Shropshire Council met on Wednesday 15 July 2026 to review the council's financial outturn for the 2025/26 financial year, the annual treasury report, and the draft statement of accounts for the same period. The committee was also scheduled to discuss the overall assurance provided by the Annual Governance Statement and Code of Corporate Governance for 2025/26, and the internal audit performance and annual reports for 2025/26.

Financial Outturn Report 2025/26

The committee was scheduled to consider the financial outturn report for the 2025/26 financial year, presented by the Section 151 Officer, Duncan Whitfield. The report detailed a significant adverse variation from the General Fund budget, attributed to ambitious savings targets and unrecognised demand pressures in social care. The report indicated that the net adverse variation to the General Fund budget for the year amounted to £49.428 million, with net spending of £338.014 million against a budget of £288.586 million. Key factors affecting the year-end position included adverse variations impacting Care and Wellbeing (£26.3 million) and Children and Young People (£12.2 million). The report also highlighted that £19.637 million had been funded by Exceptional Financial Support (EFS), leaving £29.278 million to be funded from General Fund reserves and balances, resulting in a General Fund Balance of £5.000 million. Recommendations included noting the outturn variance, the funding from EFS, the level of the General Fund Balance, and the increase in Earmarked Reserves and Provisions.

Annual Treasury Report 2025/26

The committee was set to review the Annual Treasury Report for 2025/26, which provides details of the outturn position for treasury activities and compliance with the Council's policies. The report indicated that during 2025/26, the Council achieved all required targets for managing its financing arrangements, including day-to-day cashflow, short-term investments, and longer-term borrowings. Investment income of £2.409 million was secured. The report noted that returns on investment were marginally short of the benchmark (-0.14%), achieving a return of 4.19%. However, the Council's priority remained the security of funds and maintaining sufficient liquid balances, which sometimes meant foregoing higher interest rates on longer-term deals. The report also highlighted the inclusion of EFS borrowing in the 2025/26 position.

Overall Assurance: Annual Governance Statement and Code of Corporate Governance 2025/26

A report from the Section 151 Officer was scheduled for discussion regarding the overall assurance of the Council's Annual Governance Statement and Code of Corporate Governance for 2025/26. This item was marked as To Follow as it was awaiting updates to the action plan and risk mitigations.

Second Line Assurance: Approval of the Council's Draft Statement of Accounts 2025/26

The committee was scheduled to consider the Draft Statement of Accounts for 2025/26 prior to its external audit. The report indicated that the unaudited statement of accounts had been prepared by the statutory deadline of 30 June 2026. Grant Thornton had commenced the external audit, with completion planned for November 2026. The report noted that the final revenue outturn for 2025/26 was an overspend of £49.428 million, a 17.1% variance on the net budget. The final capital outturn showed a spend of £68.698 million, representing 88.79% of the revised budget. Earmarked Reserves and Provisions had decreased by £7.726 million, while the General Fund Balance had increased by £5.658 million. Delegated Schools' balances had decreased by £1.994 million. The report also detailed changes to the accounting policies used within the Draft Statement of Accounts for 2025/26, primarily relating to the frequency of asset revaluations and the use of indices in intervening years.

Second Line Assurance: Financial Outturn Report 2025/26

This report, also presented by the Section 151 Officer, provided a detailed review of Shropshire Council's financial outturn results for 2025/26, covering revenue, capital, and reserves and balances. It highlighted a significant adverse variation from the General Fund budget, attributed to ambitious savings targets and unrecognised demand pressures in social care. The report indicated a net adverse variation of £49.428 million to the General Fund budget for the year, with net spending of £338.014 million against a budget of £288.586 million. Key factors affecting the year-end position included adverse variations impacting Care and Wellbeing (£26.3 million) and Children and Young People (£12.2 million). The report also detailed the necessary application for Exceptional Financial Support (EFS) from the government to balance the financial position.

Second Line Assurance: Annual Treasury Report

This report provided details of the outturn position for treasury activities and highlighted compliance with the Council's policies. It stated that during 2025/26, the Council achieved all required targets for managing its financing arrangements, including day-to-day cashflow, short-term investments, and longer-term borrowings. Investment income of £2.409 million was secured. The report noted that investment returns were marginally short of the benchmark (-0.14%), achieving a return of 4.19%, with the priority remaining the security of funds and liquidity. The inclusion of EFS borrowing in the 2025/26 position was also highlighted.

Third Line Assurance: Internal Audit Performance Report

The committee was scheduled to receive an update on the internal audit work undertaken in the final quarter of the 2025/26 financial year. The report detailed that fifteen audit reports had been issued, with assurance ratings and service areas listed. Eleven draft reports were awaiting management responses. Of the reports issued, ten provided good or reasonable assurance, accounting for 67% of opinions delivered. The report indicated that no fundamental recommendations or unsatisfactory assurance opinions had been delivered during the final quarter.

Third Line Assurance: Internal Audit Annual Report 2025/26

The Head of Policy & Governance was scheduled to present the Internal Audit Annual Report for the financial year 2025/26. This report provided a comprehensive summary of all internal audit work completed during the year, performance against the approved internal audit plan, and the annual opinion on the Council's framework for governance, risk management, and internal control. The report indicated that 60 final audit reports were issued, resulting in 421 recommendations. Of the assurance opinions issued, 52% were rated as good or reasonable, with 48% resulting in a limited or unsatisfactory assurance opinion. The proportion of significant and fundamental recommendations had increased compared to the previous year. The Chief Audit Executive's opinion for 2025/26 was limited assurance, marking the seventh consecutive year with this rating, reflecting continuing significant weaknesses in areas such as budget monitoring, risk management, workforce resilience, debt recovery, and contract management.

Second Line Assurance: Annual Treasury Report

This report provided details of the outturn position for treasury activities and highlighted compliance with the Council's policies. It stated that during 2025/26, the Council achieved all required targets for managing its financing arrangements, including day-to-day cashflow, short-term investments, and longer-term borrowings. Investment income of £2.409 million was secured. The report noted that investment returns were marginally short of the benchmark (-0.14%), achieving a return of 4.19%, with the priority remaining the security of funds and liquidity. The inclusion of EFS borrowing in the 2025/26 position was also highlighted.

Exclusion of Press and Public

The agenda indicated that the committee would resolve to exclude the press and public during the consideration of exempt minutes and updates on fraud, special investigations, RIPA, contract rules exemptions, and third-line assurance matters.

Exempt Minutes of the Previous Meeting

The committee was scheduled to confirm the exempt minutes of the previous meeting held on 25 June 2026.

Date and Time of Next Meeting

The next meeting of the Audit & Governance Committee was scheduled for 11 September 2026 at 1:30 pm.