The Hastings Borough Council Audit Committee convened to discuss internal audit standards, review the annual governance statement, and assess treasury management. The committee approved the Annual Governance Statement for publication and endorsed actions related to the CIPFA Code of Practice for the Governance of Internal Audit. They also reviewed the Global Internal Audit Standards self-assessment and Quality Assurance and Improvement Plan.

Annual Governance Statement

The committee approved the Annual Governance Statement (AGS) for 2024/25, which is a legal requirement for local authorities¹ to publish alongside their statement of accounts. The AGS reflects the council's commitment to good governance and aims to build public trust by demonstrating compliance with the Local Code of Corporate Governance and the principles set out in the CIPFA/SOLACE Framework.

The statement identified significant weaknesses in the council's governance arrangements:

• The Local Code of Corporate Governance has not been updated recently.
• Key governance documents and procedures are out of date or inaccessible.
• Cabinet did not formally consider or approve the council's strategic risks in 2023/24.
• Clear performance management processes for the Chief Executive and senior officers are not in place.
• Cabinet has not received regular updates on the financial position of Hastings Housing Company and there should be a review of the company's purpose.

The AGS included an action plan to address these weaknesses, with the Senior Leadership Team responsible for monitoring its delivery and reporting progress in the next AGS.

CIPFA Code of Practice for the Governance of Internal Audit

The committee reviewed the council's self-assessment against the new CIPFA Code of Practice for the Governance of Internal Audit in UK Local Government, which supports authorities in establishing internal audit arrangements. The code is designed to work alongside the new Global Internal Audit Standards (GIAS).

The self-assessment revealed that the council generally conforms with the code, with a few areas needing attention:

• Explaining how the council complies with the code in its Annual Governance Statement (to be addressed in the 2025/26 AGS).
• Producing an annual report on the audit committee's effectiveness.
• Including conclusions on the effectiveness of internal audit in the audit committee's annual report.

The committee approved an action plan to implement the necessary actions by the end of 2025/26.

Global Internal Audit Standards (GIAS)

The committee reviewed the results of the Internal Audit Service's self-assessment against the new Global Internal Audit Standards (GIAS) and the resulting Quality Assurance and Improvement Programme (QAIP). Mark Winton, Chief Internal Auditor, reported that the self-assessment found extremely high levels of conformance, with none of the identified actions being considered significant. The committee also approved the updated Internal Audit Charter, which has been reviewed to ensure that it correctly reflects and references the new GIAS.

Internal Audit Progress Report

Mark Winton, Chief Internal Auditor, presented the Internal Audit Progress Report for Quarter 1 (April 2025 - June 2025). The report summarised work completed against the council's Internal Audit Plan 2025/26. Two strategically important audits, Corporate Governance and Organisational Resilience (Impact of Savings Plans), received partial assurance opinions. The report noted that without significant intervention by council officers to improve the control environment, it is likely that the overall audit opinion will remain Partial for 2025/26.

The Corporate Governance audit revealed weaknesses in the current arrangements, including an outdated Local Code of Corporate Governance and a lack of regular review of key governance policies. The Organisational Resilience audit found no overarching policy or process for managing the identification and impact of savings plans, and that reporting of savings may not be reflective of their actual anticipated delivery.

Treasury Management Update

Kit Wheeler, Chief Finance Officer, presented the Treasury Management Update for Quarter 1 2025/26. The report provided an economic update and interest rate forecasts from the council's treasury management advisors, MUFG Corporate Markets. The report noted that investment rates have started to taper downwards during the first quarter of 2025/26 and are expected to fall further if inflation falls through 2025 and 2026 and the Monetary Policy Committee (MPC) loosens monetary policy more substantially.

The average level of funds available for investment purposes during the quarter was £19.74m. The weighted average return of the portfolio at 30 June 2025 was 4.34%. The council has overperformed against the benchmark backward looking Sterling Overnight Index Averages (SONIA) rate of 4.31% by 3 bps. The council's budgeted investment return for 2025/26 is £1,178,000, and performance for the year to date is forecast to exceed the budget by £5,000 to achieve total returns of £1,183,000.

The council also has longer term investments with CCLA in a Property Fund and Better World Cautious Fund (BWCF). The value of the Property Fund as 30 June 2025 was £1,812,624, which is £187,375 (9.37%) below the initial investment amount of £2,000,000. The dividend yield on the net asset value is 4.7%. The value of the Better World Cautious Fund as 30 June 2025 was £2,678,804, which is £321,195 10.71%) below the initial investment amount of £3,000,000. The dividend yield is 3.36%.

As at 30 June 2025, the council had outstanding external debt of £63.9m comprising of 22 individual loans from the PWLB with an average rate of interest of 2.81%. It is anticipated that borrowing of £5.952m will be required this financial year to fund expenditure on the capital programme.

The report also provided an update on loans to other organisations, including The Foreshore Trust, The Source, and Hastings Housing Company. A detailed report on potential options for Hastings Housing Company will be presented at a future Cabinet meeting.