The Audit and Governance Committee convened to review the council's financial management and risk assessments, and to consider reports from internal and external auditors. The committee approved a revised Internal Audit Charter and an updated Code of Corporate Governance, and also recommended an updated risk register to the cabinet for approval. The meeting included updates on treasury management, internal audit progress, and the corporate fraud team.

Risk Management

The committee reviewed the updated corporate risk register and agreed to recommend it to the cabinet for approval. A new risk, Community Cohesion (CRS002), was added to the register, with a risk score of 16. This was in response to concerns about the Bell Hotel, as well as broader issues around illegal immigration, welfare benefits and social housing. These issues were seen as potentially leading to civil unrest.

In response, the council has created a Community Cohesion Cell, involving partners from health, education, Essex Community Safety, the fire service, and the police. This group will work to promote stability and inclusiveness within the community. The council also stated that it would challenge the government on strategies that it felt were not conducive to the district and its communities.

The committee was assured that operational risk registers were in place at the directorate level, underpinning the corporate risk register. These registers are regularly reviewed and updated, with effective controls identified and managed. Mitigation actions are financially assessed to ensure they are cost-effective.

Other key risks identified in the register included:

• Local Government Reform (LGR): Rated at 20, this reflects the potential challenges and opportunities presented by the upcoming changes to local government structures.
• Cyber Security: Also rated at 16, highlighting the ongoing threat of cyber attacks and the need for robust security measures.
• Delivering a Balanced Budget: Rated at 15, this reflects the importance of maintaining financial stability and sustainability.
• Ensuring the Financial Viability of Qualis: Rated at 15, this reflects the importance of the council's arm's length companies¹ to the council's financial position.

Internal Audit Progress

The committee reviewed the Internal Audit Progress Report, which provided an update on the work of the internal audit and corporate fraud teams. The report highlighted key findings from audits and set out overdue audit recommendations.

One final report had been issued since the last committee update:

Contracts and Contract Management

This audit reviewed the systems and processes for managing the council's contracts and frequently used suppliers. It found reasonable assurance could be given. While there were examples of good practice, the audit noted that not all officers were aware of the need to monitor the four-year aggregated budget spend for each supplier. This is required to ensure compliance with procurement rules and to demonstrate value for money.

The audit also found that organisational and staffing changes had affected contract management, particularly where new officers had inherited responsibility for contracts without a handover process. The report recommended training on procurement rules and documented guidance for managing contracts.

The committee also:

• Approved the revised Internal Audit Charter, which has been updated in line with the newly adopted Global Internal Audit Standards (GIAS).
• Approved the updated Code of Corporate Governance, which has been reviewed and found to be up to date and fit for purpose.
• Noted the skills and knowledge analysis of the committee, which confirmed that the committee has a wide range of knowledge and experience.
• Noted the progress of the actions identified in the 2024/25 Annual Governance Statement (AGS).

Treasury Management

The committee considered the Treasury Management Quarter 4 Update 2024/25 and the Treasury Management Quarter 1 Update 2025/26.

Key points from the reports included:

• Borrowing: External borrowing increased by £0.08 million in 2024/25 and £12.82 million in Quarter 1 of 2025/26.
• Investments: Short-term investments decreased by £19.0 million in 2024/25.
• Service Investments: The total value of service investments was £51.226 million as of 31 March 2025, and £54.605 million as of 30 June 2025. These included loans to subsidiaries such as Qualis and home assistance loans.
• Commercial Investments: The balance sheet value of commercial property was £170.084 million as of 31 March 2025. The council also held a commercial loan with Qualis, with an outstanding balance of £30.0 million.

The reports also provided an overview of the economic background, financial markets, and credit ratings. They noted a slight increase in inflation and a further marginal decrease in interest rates.

Corporate Fraud Team

The committee received the Corporate Fraud Team Annual Summary 2024/25, which highlighted that all the work carried out by the fraud team for the year had been associated with tenancy-related fraud, specifically right-to-buy investigations. This had been driven by changes and a reduction in the level of discounts for right to buy.

The committee was advised that the corporate fraud team had received no additional resources to deal with the influx of right-to-buy applications.