The Audit and Governance Committee of Boston Borough Council convened to discuss key financial and governance matters, including the external audit plan, financial statements, treasury performance, and risk management. The committee reviewed and agreed to the accounting policies for 2024/25 and noted the Q3 Treasury Report, the Quarter 3 Risk Report, the Internal Audit Progress Report, the Combined Assurance Status Report 2024/25, and the Internal Audit Plan 2025/26. The committee also received an update on the Regulation of Investigatory Powers Act (RIPA) 2000.

External Audit Plan and Strategy

Rosie Kelly, Engagement Manager at KPMG, presented the external audit plan and strategy for the year ending 31 March 2025, stepping in for James Boyle. Materiality for the financial statements was set at £1.2 million. The plan highlighted three significant risks:

• Valuation of land and buildings
• Management override of controls
• Valuation of post-retirement benefit obligations

Councillor Gilbert asked about the use of the Depreciated Replacement Cost (DRC) model for land and buildings valuations, which the report stated could be uncertain. Rosie Kelly clarified that the valuation method is prescribed by the code of local government accounting practice and depends on the asset type.

Councillor Gilbert also sought more details on how the council would mitigate the management override of controls, which the report described as vague. Rosie Kelly explained that this is a presumed significant audit risk that auditors have to raise and address in every organisation, and that KPMG had not identified any specific additional risks of management override related to the audit.

Councillor Gilbert questioned the efficiency programme, noting that it was a long list of potential efficiencies allocated to lead officers, making it difficult to determine if savings were falling behind. Rosie Kelly confirmed that this point was still outstanding, pending full implementation of a formal plan by September 2025.

Adam Cartwright, Co-opted Independent Member, asked why KPMG had chosen the materiality percentage that they had. Rosie Kelly explained that the auditors consider the use of the financial statements and what monetary value would influence decisions when reading them. She added that KPMG had opted for 2.6% of forecasted expenditure, which was higher than the previous year, due to increased confidence in the accounts and the stable environment in which the council had operated.

Adam Cartwright also raised concerns about a lack of governance in keeping records of meetings, specifically budget setting and efficiency finding meetings with councillors, and senior leadership team (SLT) meetings. James Gilbert clarified that notes are now taken at all SLT meetings, alongside the agenda.

Adam Cartwright also asked about the performance of leisure contracts with Parkwood Leisure. As no one present could provide an answer, it was agreed that this would be taken as an action.

Gideon Charles Hall, Co-opted Independent Member, asked about a report that had not been signed by the manager. Samantha Knowles confirmed that the finance team were following up on this. She explained that the reports were monthly or quarterly monitoring meetings that the finance team hold with budget managers to create the forecast for the financial outturn or the financial quarterly monitoring report. She added that the council was looking at using technology such as co-pilot to transcribe these meetings and also to generate an action plan from them.

Financial Statements Accounting Policies

Nicole Hayes presented the report on the council's accounting policies for 2024/25. The main change was the introduction of IFRS 16 leases¹, which requires the council to recognise a right-of-use asset with a corresponding liability on the balance sheet for leases with a term of more than 12 months, unless the asset is of low value. Councillor Gilbert asked what was considered to be a low value asset. Nicole Hayes said that SIPFA² stated around £10,000, but that PSPS³ were working with the section 151 officer⁴ to find an appropriate value for the council. Councillor Gilbert also asked about depreciation, and whether the council was managing to cover it. Nicole Hayes explained that depreciation is a complex accounting adjustment, and that council tax is not used specifically to fund depreciation.

The committee approved the accounting policies for 2024/25.

Quarter 3 Treasury Report

Sean Howsam, Interim Treasury Manager (PSPSL), presented the Quarter 3 Treasury Report for 2024-25. The report provided an update on treasury management performance and activity. Key points included:

• Economic growth was flat.
• Earnings increased by 4.4%.
• Inflation was running at 2.6%.
• The Bank of England base rate had gone down to 4.75%.
• Investments totalled just under £40.4 million, compared with £31.7 million in Quarter 2, due to additional grant funding being received.
• Property fund investments had a net asset value of just over £15.1 million, a reduction of just under £2.2 million.
• There was a favourable variance on investment income of just over £500,000 above budget, with a forecast outturn of around £714,000.

Councillor Gilbert asked how much exposure there was to the commercial market within the BlackRock UK property fund and real estate funds. Sean Howsam said he would have to take that question away.

Councillor Lina Savickiene asked if there was any risk for the council's assets or investments in the near future, given the war in Ukraine and other global events. Sean Howsam acknowledged that tariffs were likely to have an adverse effect in relation to inflation, but that higher interest rates would be good for the council's investments.

Quarter 3 Risk Report

Suzanne Rolfe, Group Manager – Insights & Transformation, presented the Quarter 3 Risk Report 24/25. She highlighted a new addition to the risk register template: an action tracker RAG⁵ rating. Councillor Richard Austin BEM asked what was being done to try and reduce the high risks to medium or low. Suzanne Rolfe explained that some risks, such as the budget risk, were inherently high due to external factors. She offered to go through the register in detail with the committee outside of the meeting.

Councillor David Middleton asked if the council had insurance to cover any cyber attacks, given a recent attack on Witham Fourth Parish Council. Suzanne Rolfe said she would circulate details about the cyber risk to the committee, as it was better to do so via email rather than in a meeting.

Councillor James Cantwell asked if there were any risks on the register that were expected to be improving but were not. Suzanne Rolfe said there was nothing that she would raise as an issue of concern.

Councillor Gilbert asked how much detail there was about the overall situation from the private sector's perspective, in terms of void vacant properties, declining value of commercial property, and businesses not paying their business rates. Suzanne Rolfe said she would pick that up with the lead officer.

Councillor Gilbert also raised concerns about staff welfare and absenteeism, and whether the emphasis on efficiency was undermining individual members of staff.

Aileen Whatmore, Head of HR, and Rachel Robinson, Group Manager for Organisational Development, then provided an update on staff wellbeing. Rachel Robinson presented a report summarising baseline information and existing interventions. She noted that staff poll data showed positive increases over the past year in employees feeling informed, supported, and valued at work. Aileen Whatmore added that HR proactively flagged any mental health-related absences and provided support materials to line managers.

Councillor Gilbert asked if the people who were off sick were sent the same questionnaires to answer. Aileen Whatmore said that managers were asked to provide the questions to the people that were off sick, but that the returns were anonymous.

Internal Audit Progress Report

Matthew Waller, Internal Audit Manager, presented the Internal Audit Progress Report. He noted that 99% of the 2024/25 plan was complete, and that the team were already working on the 2025/26 quarter one audits. He also noted that a payroll reconciliations follow-up had been completed, moving from a limited assurance opinion to substantial.

Adam Cartwright asked about budget overspends and what was being done. Matthew Waller said that the section 151 officer had wanted these escalated. Samantha Knowles clarified that the £20,000 escalation had now been closed off, and that variances greater than £20,000 were now identified within the budget monitoring action plans.

Councillor Middleton noted that over half the people surveyed did not understand how to set a budget. Brendan Arnold said that this was probably associated with disengagement, and that the council would look to see an enhanced communications endeavour around the whole process of budget formation.

Combined Assurance Status Report

John Medler, Assistant Director – Governance & Monitoring Officer, presented the Combined Assurance Status Report 2024/25. He explained that the report produces a full record of assurance of the council's key critical services, key risks, partnerships and projects, and supports the internal audit team to identify areas for their consideration as part of next year's internal audit plan.

Councillor Austin asked what plans or actions were being taken to encourage new investment in Boston. As no one present could answer the question, it was added to the action list.

Councillor Gilbert asked about the impact of local government reorganisation on Boston as a town centre economy, and whether any thought had been given to the effect of having fewer good quality jobs. James Gilbert said that submissions to government would be expected to articulate the economic benefits to an area of the proposals that are brought forward.

Councillor Cantwell asked if street lighting was classified as an asset where the council had to have a decarbonisation plan. As no one present could answer the question, it was added to the action list.

Councillor Savickiene said that the scores for health and local economy should be higher than medium. She also asked what strategy the council should take to integrate people coming from Europe and make them aware of what was happening.

Councillor Barrie Pierpoint, Chair of the Committee, said that the chief executive's summary stated that levels of assurance sit lower than we would ideally seek, and asked how the council was going to overcome these. This was added to the action point.

Internal Audit Plan

Matthew Waller presented the internal audit plan for 2025/26. He said that the plan was flexible, and could be changed as new risks arose.

Regulation of Investigatory Powers Act (RIPA) 2000 - Update

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