The Audit and Standards Committee of Staffordshire County Council convened to discuss internal audit processes, external audit plans, corporate governance, risk management, and standards for panel appointments. The committee approved the updated Code of Corporate Governance for 2025 and the updated Risk Management Policy Statement and Strategy Update for 2025. Members also reviewed the Financial Reporting Council's (FRC) report and the committee's forward plan.

External Audit Plans

Richard Lee, a director at KPMG, presented the external audit plans for both the council and its pension fund. KPMG has been appointed by Public Sector Audit Appointments Limited (PSAA) as the external auditor for the council and pension fund.

Council Audit Plan

The audit will focus on financial statements and value for money arrangements, following guidance from the National Audit Office (NAO). A materiality level of £29 million has been set, meaning errors above this threshold could affect the audit opinion. Errors above £1.4 million will be reported to the council.

Three significant risks were identified:

• Valuation of Land and Buildings: The risk of incorrect valuations due to the judgements and estimates made by valuers.
• Management Override of Controls: The risk of management manipulating accounts through journals.
• Pension Scheme Numbers: The risk of inaccuracies in the valuation of the pension scheme due to reliance on actuaries and the magnitude of the pension numbers.

The audit will also address changes to lease accounting standards.

Richard Lee explained the concept of materiality:

So for the council, it's a big number. It's 29 million pounds. But in the context of that 1.3 billion pound of expenditure, clearly much smaller value. And that level of materiality is what we determine to be whereby somebody picking up the accounts cold, if there was a mistake in there for 29 million pounds, they might form a different opinion of what the council's activities and performance is like.

In response to a question about disclaimed opinions¹ over the last few years, Richard Lee noted that local government has faced challenges in audit delivery due to accounting issues, capacity, and quality. KPMG aims to ensure timely audit delivery and is working with the finance team to address challenges.

Pension Fund Audit Plan

The pension fund audit has a materiality level of £76 million, reflecting the fund's size, with a reporting threshold of £3.8 million. The audit will focus on management override and the valuation of directly held property. Other risks relate to the investments held by the pension fund. The audit work is up to date, and a clean opinion is anticipated.

KPMG affirmed its independence from the council and pension fund.

Councillor Simon Tagg asked about the fees set by the PSAA, noting increases way above inflation. Rachel Spain, the Chief Accountant and Deputy Section 151 Officer, acknowledged the substantial increase but stated that the PSAA had provided some warning, allowing for inclusion in the current year's budgets. She added that while the council can consult with the PSAA, there is limited scope to challenge the scale fees.

Code of Corporate Governance

The committee approved the updated Code of Corporate Governance for 2025. The code aligns with the principles of good governance in the UK public sector, including accountability, transparency, integrity, stewardship, leadership, and effectiveness. The code is based on the CIPFA/SOLACE Framework² and aims to ensure the council meets the highest standards of governance.

The key changes in the updated code are highlighted in yellow, indicating strengthened areas and additional controls. These changes will be tracked by the Corporate Assurance Board.

Councillor Simon Tagg raised concerns about a potential external audit of council finances by a political party, referencing the doge effect . He questioned how corporate governance would be safeguarded during such a process. Kate Loder, the county solicitor and monitoring officer, responded that no formal request or notification of such an audit had been received.

Risk Management Policy

The committee approved the updated Risk Management Policy Statement and Strategy Update for 2025. Lisa Andrews, the Assistant Director for Internal Audit, Risk Management and Insurance and also Adult and Children's Financial Services, stated that the updated policy aims to strengthen risk management arrangements within the council. The policy is being rolled out through workshops led by the risk and insurance manager and Zurich, the council's insurance partners. A detailed toolkit will also be provided to help council staff manage risk effectively.

David Webster, an independent member of the committee, asked for the strategic risk register and proposed risk mitigation plans to be presented to the committee more often. Lisa Andrews confirmed that this information would be incorporated into the forward plan for the next meeting.

Councillor Matthew Wallens asked whether risk identification covered external contracts, such as those with Amey³ and adult social care contracts, or just internal county staff. Lisa Andrews clarified that the policy covers risks related to service delivery, including those undertaken by external providers.

Standards Panel Appointments

The committee approved the nominations for the standards panel for 2025-2026, as proposed by the group leaders. The appointed members are Councillor Thomas Baker, Councillor Andrew Clissett, Councillor Craig Humphreysson, Councillor Jon Pendleton, and Councillor Alex Farrell.

Kate Loder explained the role of the standards panel in addressing complaints against members, noting that the panel makes decisions based on evidence presented, with the accused member invited to attend and an independent person present.

Financial Reporting Council (FRC) Report

The committee received a report from the FRC, providing assurance of external oversight of the council's external auditors. Rachel Spain noted that the report provides assurance about the FRC's quality checking processes for audits conducted nationally. She also drew attention to the backstop dates for audits, aiming for a return to normal timescales by the 2026-2027 accounts.

Forward Plan

The committee reviewed the forward plan, outlining the items to be considered at future meetings. Lisa Andrews highlighted the draft annual governance statement, settlement agreements annual report, value for money risk assessment, and National Fraud Initiative update as key items for discussion on 30 September.

David Webster requested that internal audit progress reports be included in the forward plan. Lisa Andrews confirmed that discussions were underway to determine how best to provide this information.

Councillor Simon Tagg asked about the timeline for the new code of conduct proposed by the government. Kate Loder responded that no date had been given but that the council was ready to review and implement the code once it is released.