The Governance and Audit Committee of Cardiff Council met on Tuesday 14 July 2026. The meeting focused on reviewing the Council's financial performance, governance arrangements, and risk management strategies for the 2025/26 financial year. Key discussions included the draft Statement of Accounts, the Annual Governance Statement, and the Corporate Risk Management report, with Audit Wales presenting their annual audit plan and findings.

Audit Wales Audit Plan and Findings

Audit Wales presented their annual audit plan for 2026, outlining their financial audit work on the Council's accounts and the Cardiff & Vale Pension Fund. Key risks identified for the financial audit included pension fund balance valuations, property, plant, and equipment valuations, and the consolidation of Cardiff Heat Network Limited for the first time. For the Pension Fund audit, risks included management override, investment asset balances, and the implications of Local Government Pension Scheme reforms.

In terms of performance audit work, Audit Wales highlighted improvements in their reporting, including a clearer explanation of value for money (VFM) and a more explicit focus on VFM in their audit criteria. Their work programme for the year included a focus on highways, counter-fraud measures across 12 local authorities, and a planned piece of work in conjunction with the Senior Management Team. Audit Wales committed to substantially completing their performance audit work programme by June 2027.

Councillor Mary McGarry raised a question regarding the valuation of land and buildings, specifically the application of indexation. Audit Wales confirmed they would be reviewing which indices have been applied to which asset categories and had been working alongside the Council's finance department to understand their approach.

Capital Planning Study

Charles Rigby from Audit Wales presented a study titled The Building Blocks: Capital Planning in Councils in Wales. This report, based on analysis across all 22 Welsh councils, identified that individual councils may have different opportunities for improvement in their capital planning. The primary recommendation was for councils to review their own arrangements, with Audit Wales providing a checklist for assurance. Key findings indicated a need for greater clarity on how capital programmes support strategic objectives, with less focus on achieving outcomes compared to monitoring spending and budget variances. The report also highlighted findings related to Welsh Government's provision of capital grants, including timing, notice, and duration.

Council officers, including Anil Hirani, Operational Manager for Capital, Corporate and Treasury, and Ian Allwood, Chief Finance Officer, commented on the report. They acknowledged the findings and highlighted the Council's response to the recommendations, including a commitment to reviewing asset management plans and enhancing the link between the corporate plan and capital programmes. Councillor Mary McGarry sought clarification on the breakdown of capital spending, specifically the remaining 17% not accounted for by new construction, conversion, and renovation. Charles Rigby explained this could include the purchase of assets like machinery or social care equipment. Dr Janet Weyburn inquired about the interplay between value for money, social value, ESG, and the sustainable development principle, which Charles Rigby explained are integrated into Audit Wales' examinations.

Governance and Risk Management

The Committee received the Governance and Audit Committee Annual Report for 2025/26, presented by Chris Pyke, Audit Manager. The report summarised the committee's work over the year and concluded that overall governance arrangements and internal controls are sound, with strategic risks appropriately identified and monitored. The report also highlighted areas for improvement, including budget management, financial resilience, treasury management, and internal controls.

The Committee also reviewed the Draft Annual Governance Statement (AGS) for 2025/26, which included statements from Senior Management, the Audit Manager, and the Committee itself. The AGS concluded that the Council demonstrates primarily strong application of good governance, with opportunities for improvement in compliance, control, and embedding assurance within new senior management structures. The report noted that three actions from the previous year's AGS would be carried forward into 2026/27 due to the implementation of new senior management structures.

The Corporate Risk Management report for Quarter 4 2025/26 was presented by Ian Allwood, Chief Finance and Deputy S151 Officer. The report detailed the status of corporate risks, noting a decrease in the 'Ensuring Access' risk rating and an increase in the 'Condition of School Estate' residual risk. Changes in responsibilities due to new senior management structures were also outlined. Councillor Mary McGarry raised a question about the need for a hot weather response plan, in addition to cold weather plans, which Ian Allwood acknowledged as a point for future consideration. Dr Janet Weyburn inquired about refreshment training for new risk owners to ensure consistency, which Ian Allwood confirmed was being addressed.

Finance

Chris Lee, Corporate Director of Resources and Section 151 Officer, provided a financial update. He reported a balanced outturn position for 2025/26, despite directorate pressures. The current year's budget is nearly £1 billion, with education and social services accounting for almost three-quarters of this. Key risks for the current year include an unagreed pay award, pricing risks due to geopolitical issues, and ongoing pressures within school budgets, particularly for Additional Learning Needs (ALN). The Medium-Term Financial Plan (MTFP) projects a budget gap of over £43 million for the next year and £167 million over the next four years. Chris Lee emphasised the need for corporate solutions and transformation, rather than a salami-sliced approach to savings.

The Committee also reviewed the Draft Statement of Accounts for 2025/26 for both Cardiff Council and the Cardiff and Vale of Glamorgan Pension Fund. The accounts were noted as being prepared in accordance with the CIPFA Code of Practice and legislative requirements. The public inspection period for these accounts was noted to run until 14 August 2026.

Internal Audit

Chris Pyke, Audit Manager, presented the Internal Audit and Investigation Team Progress Report for Quarter 1 2026/27. He highlighted the appointment of two new auditors to strengthen the team's capacity. The report noted three school audits with 'insufficient with major improvement needed' opinions, which have been escalated to the Director of Education for direct engagement with the schools. The team reported 100% client satisfaction for the year to date. The Internal Audit Annual Report for 2025/26 was also presented, giving an overall opinion of 'effective with opportunity for improvement' on the Council's control environment. Dr Janet Wademan raised questions about benchmarking data, particularly the lack of comparison with Core UK cities and the heterogeneity of Welsh local authorities. Chris Pyke explained the process for data sharing and the ongoing efforts to increase participation in benchmarking exercises.

Other Items

The Committee noted the outstanding actions list, correspondence, and the work programme update. The date of the next meeting was scheduled for 22 September 2026.

The meeting concluded with thanks to the committee members, external auditors, and officers for their contributions.