The Governance and Audit Committee of Kent County Council met on Thursday 23 July 2026 to discuss a range of critical governance and financial matters. Key discussions included the draft Annual Governance Statement, the annual review of committee effectiveness, and updates on treasury management, counter-fraud activities, and internal audit progress. The committee noted concerns regarding the Council's governance arrangements, the effectiveness of the committee itself, and the significant financial pressures facing the authority, particularly concerning the Dedicated Schools Grant deficit and the Oracle Cloud programme.

Draft Annual Governance Statement

The committee reviewed the draft Annual Governance Statement (AGS) for 2025/26, a statutory document outlining the Council's governance, risks, and controls, and looking forward to future challenges. Members expressed concerns that governance arrangements were deteriorating, citing examples of interrupted responses to the Leader's speeches and a lack of follow-up on issues raised by the committee. Councillor Harry Rayner (Leader of the Conservative Group) proposed an amendment to ensure that the committee's comments were taken into account in the final statement. Officers acknowledged these points would be noted and incorporated. The draft AGS will be further refined with additional input from members and officers before its final presentation to the County Council in September.

Annual Review of Committee Effectiveness

The committee discussed the annual review of its own effectiveness, based on survey results from members and an exit interview with a former independent member. While the review acknowledged the committee's performance in providing basic oversight, a majority of members felt significant improvements were needed. Concerns were raised about low Member engagement, a lack of understanding of the committee's role, and the risk of groupthink. The report highlighted a need for further development of training, particularly Part B training sessions, to clarify the committee's purpose and remit. There was also a call for greater transparency from officers and a desire for Cabinet members to attend meetings more regularly to answer questions on red-rated items. The committee agreed to consider these recommendations for improvement.

Treasury Management Update

The committee received an update on treasury management activities for the financial year 2025-26. The Council maintained a prudent approach, meeting all prudential indicators for liquidity, security, and interest rate risk. External borrowings reduced by £122.2 million, and investments decreased by £159.9 million. A saving of £2.9 million was made against the interest cost budget, primarily due to early debt repayment and improved investment earnings. However, concerns were raised about the Council falling below its minimum liquidity value of £75 million on occasion, and the complexity and risk associated with LOBO loans. The committee also discussed the discontinuation of the Treasury Management Group, with some members expressing a belief that this has led to a lack of transparency.

Counter Fraud Update

The counter-fraud team reported a nearly 28% increase in reported irregularities compared to the previous year, which was seen as a positive sign of improved awareness and reporting. Actual losses were down, and work continues to support management in identifying and managing fraud risks. The GRECO evaluation identified good practices in preventing and detecting corruption, but also highlighted areas for improvement in transparency. The team's action plan for 2026-27 will focus on building a strong counter-fraud culture. A proposal was made to hold an exempt item on the risks of fraud arising from Local Government Reorganisation (LGR) at the next meeting.

Annual Review of Counter-Fraud Policies

The committee reviewed amendments to the Anti-Money Laundering, Anti-Bribery, and Anti-Fraud and Corruption policies. A point of contention arose regarding the shift in approval of these policies from the Governance and Audit Committee to the Corporate Management Team (CMT). Ms Camilla Black (Independent Member) questioned the basis for this change and the potential risks. Councillor Harry Rayner proposed a motion requesting the administration to alter the committee's terms of reference to continue receiving and approving these policy reviews, arguing that moving them to CMT meant officers were marking their own homework. This motion was seconded by Councillor Alister Brady (Leader of the Labour Group) and passed by a vote of ten in favour, one against, and one abstention.

Internal Audit Progress Report

The Interim Head of Internal Audit, Russell Smith, presented the progress report, detailing 14 completed audits. Two audits received a limited assurance opinion: one on Business Continuity Planning (BCP) within the Growth, Environment and Transport (GET) directorate, and another on Essential Living Allowance within the Children, Young People and Education (CYPE) directorate. While compliance rates for BCPs have improved since the audit, concerns were raised about the lack of management oversight prior to the audit highlighting issues. The committee also discussed the low completion rate for budget manager training and the lack of submitted resource accountability statements from corporate directors.

Internal Audit Annual Report and Opinion

Russell Smith presented the Internal Audit Annual Report for 2025-26, concluding that an Adequate assurance opinion could be assigned to the Council's governance, risk management, and internal control arrangements. While 50% of audit coverage achieved substantial or high assurance, this was noted as a slight decrease from the previous year. The report highlighted themes of concern including governance/management oversight, assurance monitoring and risk, processes and procedures, and resources. The committee noted the report and the Adequate opinion.

Internal Audit Rolling Annual Plan 2026/27

The committee reviewed the proposed rolling Internal Audit Plan for 2026/27, which aims for greater flexibility in adapting to emerging risks. The plan includes coverage for high corporate risks, with a noted gap in coverage for climate change, which will be reconsidered. The committee agreed to the proposed plan, the Internal Audit Strategy, and the Internal Audit Charter, and noted the key performance indicators for 2026/27. Councillor Alister Brady raised concerns about the Family Hub project not being included in the audit plan, and Councillor Mark Hood expressed dismay that climate change risks were not being prioritised.

Draft Annual Governance Statement

Petra Der Man, the Monitoring Officer, presented the draft Annual Governance Statement (AGS) for 2025/26. She emphasised that the statement was still in draft form and invited further input from members and officers. Members, including Councillor Mark Hood and Councillor Harry Rayner, reiterated concerns about the deteriorating governance arrangements, citing issues with Member engagement, interruptions during council meetings, and a perceived lack of transparency. The committee agreed to provide further comments on the draft AGS.

Annual Review of Committee Effectiveness

The committee discussed the annual review of its own effectiveness. The review, based on member surveys and an exit interview, indicated that while the committee provided basic oversight, significant improvements were needed. Key themes included low Member engagement, a need for better understanding of the committee's role, and the risk of groupthink. Recommendations included developing a more robust Part B training programme, reviewing the committee's online site, improving agenda prioritisation, and potentially inviting Cabinet members to meetings more regularly. The committee agreed to consider these recommendations.

The meeting concluded with the committee agreeing to defer the exempt item RB44 to the next meeting.