The Audit and Governance Committee of Cotswold District Council met on Tuesday 27 May 2025 to review the council's financial health, governance, and audit plans. Key decisions included the approval of the Risk and Opportunity Management Strategy and the adoption of an updated Whistleblowing Policy.

External Auditors' Annual Report 2023/24

The committee received an update on the findings of the external audit for the 2023/24 financial year. Alex Walling, Key Audit Partner from Bishop Fleming, presented the audit completion report. While processes were still being refined in Bishop Fleming's first year auditing the council's accounts, the audit was largely smooth with no significant issues identified. Minor audit adjustments were mostly presentational, with one unadjusted misstatement of £90,000 related to the Gloucestershire pension fund deemed immaterial. The committee noted that the audit opinion deadline was 28 February 2025, with the audit certificate to be delivered by the National Audit Office (NAO). The committee approved the minutes of the previous meeting, subject to a minor amendment, and delegated authority to the Deputy Chief Executive and S151 Officer to approve the 2023/24 Statement of Accounts.

Local Code of Corporate Governance

The committee reviewed and adopted the latest version of the Local Code of Corporate Governance for Cotswold District Council. The Director of Governance and Development presented the annual report, outlining the seven principles of good governance. Two amendments were requested for inclusion in the 2024/2025 version: updating terminology from AONB to Cotswold National Landscape and quantifying the success of Crowdfund Cotswold and SpaceHive.

Annual Treasury Management Strategy and Annual Non-Treasury Investment Strategy 2025/26

The committee considered the draft Treasury Management Strategy and Non-Treasury Investment Strategy for 2025/26. The Treasury Management Strategy Statement (TMSS) and Non-Treasury Investment Strategy were prepared in accordance with CIPFA's Prudential Code and the Treasury Management Code of Practice . The draft Treasury Management Strategy outlined how the council intended to manage and invest its surplus cash, with an estimated total investment of £27.5 million for the forthcoming financial year. The committee noted that the IFRS 9 statutory override, set to expire on 31 March 2025, would require councils to account for unrealised losses on pooled funds, impacting financial flexibility.

Internal Audit Progress Report

The Assistant Director of SWAP Internal Audit Services presented a summary of the audit work concluded since the last meeting. The report covered eight final audit reports, three with substantial assurance, two with reasonable assurance, and one with limited assurance. Additionally, two advisory reports were issued due to service transitions from Publica. The committee raised concerns about data protection and data breaches, and the lack of corporate monitoring of sickness absence reporting. A broader issue regarding internal controls was identified as services transferred from Publica to the Council. The committee also noted significant gaps in budget monitoring, particularly regarding oversight of members' expenses and the lack of evidence for claims.

Annual Capital Strategy 2025/2026

The committee considered the Capital Strategy for 2025/26. The strategy outlined the council's long-term ambitions, available capital resources, and approach to capital expenditure, aligning with corporate priorities and emphasising sustainability, risk management, and governance. The committee expressed disquiet around the potential loss of the statutory override IFR9 and discussed the implications for local authorities. They also discussed investment properties and their location, noting that the purchase of properties outside the district had been funded by capital receipts. The committee undertook to consider the Draft Capital Strategy and provide feedback to the Cabinet and Council.

Risk Management Policy

The committee approved the Risk and Opportunity Management Strategy. This strategy sets out the council's approach to risk and opportunity management, including definitions, roles, responsibilities, and how risk is embedded within the organisation. The strategy was reviewed following the transition of services back into the council to reflect current arrangements.

Annual Governance Statement – Action Plan Update

The committee noted the progress update for the Annual Governance Action Plan for 2024/25. The plan includes ten key actions covering areas such as Freedom of Information, Complaints Process, New service delivery models, Council Constitution and Code of Corporate Governance, Emergency Planning and Business Continuity, Risk Management, Financial Management, Procurement, Peer Review, and Legislative Changes. All actions were reported as either complete or amber, indicating that while not fully completed, action was being taken to ensure delivery.

Internal Audit Plan and Charter

The committee was presented with the Internal Audit Plan and Charter and Mandate for 2025/26 for consideration and approval. The proposed Internal Audit Plan for 2025/26 is a risk-based plan, with a 12-month rolling approach to ensure agility and responsiveness to emerging risks. The Internal Audit Charter and Mandate defines the role, responsibility, status, and authority of internal auditing within Cotswold District Council.

Update on Government Overhaul of Local Audit in England

The committee received a briefing on Local Audit Reform following the government's consultation response. The government has committed to a package of reforms aimed at fixing the local audit system, including the creation of a Local Audit Office (LAO) to streamline and simplify the system, manage auditor appointments and contracts, and oversee quality. The reforms also address financial reporting, capacity and capability within the audit market, and measures to clear the backlog of outstanding audits. The council will need to consider the adequacy of its governance arrangements for the Audit and Governance Committee in light of these reforms.

2024/25 External Audit Plan

The committee considered and noted the 2024/2025 External Audit Plan from Bishop Fleming, the council's external auditors. The plan outlines the key financial risks that could potentially result in a material misstatement within the draft statement of accounts, with materiality set at £1.014m. Planning work for value for money arrangements was ongoing, with no risks of significant weakness identified at that stage. The audit fee for 2024/25 was confirmed as £151,327.

Counter Fraud and Enforcement Unit Update Report

The committee received an update on the counter fraud activities of the council. The report detailed progress on work streams, including fraud risk mitigation for grant schemes and polygamous working. The Gloucestershire Multi-Agency Approach to Fraud (MAAF) webpage was in development to raise awareness and provide guidance on fraud scams. The report also highlighted results from data matching exercises, which had led to increased Council Tax revenue and the application of civil penalties. The committee was informed of the ongoing work in relation to business grant schemes and the recovery of funds.

Whistleblowing Policy

The committee approved and adopted an updated Whistleblowing Policy. The revised policy enhances clarity and understanding, highlights key legislation, and details the roles and responsibilities of Members, Officers, and other parties. It also includes updated information on reporting concerns to the Office for Environmental Protection. The policy applies to all employees of the Council and Publica, with protections for those who raise concerns in good faith.

Annual Standards Update

The committee received an update on standards and issues, including Code of Conduct complaints for the year ending 31 March 2025. The report noted a reduction in formal complaints compared to the previous year, but a considerable increase from two years prior. The majority of complaints related to town and parish councillors, with bullying and harassment being a common theme. The committee also noted the government's consultation on strengthening the standards and conduct framework for local authorities in England and the Committee on Standards in Public Life's response to this consultation.

2024/25 Draft Accounting Policies

The committee considered and approved the draft accounting policies for 2024/25. These policies outline the accounting principles, bases, conventions, rules, and practices applied by the council in preparing its financial statements, ensuring alignment with the latest CIPFA Code of Practice on Local Authority Accounting. Three amendments were proposed for the 2024/25 accounting year, relating to employee benefits, financial instruments, and leases. The committee agreed that further necessary amendments would be included in the draft and final statements of accounts.