The Regulation, Audit and Accounts Committee of West Sussex Council were scheduled to meet on 15 September 2025 to discuss the West Sussex Pension Fund, corporate risk management, and internal audit activity. The committee was also scheduled to review and comment on the Treasury Management Compliance Report.

West Sussex Pension Fund

The committee was scheduled to consider the West Sussex Pension Fund Audit Results Report from Ernst & Young (EY). The report summarised the status of the audit and contained findings related to areas of audit emphasis, views on accounting policies and judgements, and material internal control findings.

The committee was also scheduled to consider and note the Pension Fund's Statement of Accounts for 2024/25, with a recommendation for the Chair to approve and sign it when the County Council Accounts were available. The report noted that:

• Contributions and benefits paid had both increased year on year.
• Investment income received in 2024/25 was substantially higher than the prior year due to an increase in bond income.
• Investment assets were valued at £5.8bn, made up of Equities, Bonds, Private Equity, Private Debt, Infrastructure and Property.

The report also noted that estimated valuations used for the private equity portfolio and part of the private debt portfolio in the draft Statements had been replaced by confirmed valuations by the respective fund managers. The ACCESS equity and bond funds had been reclassified as Level 2 investments as pricing was no longer available on a public exchange.

Corporate Risk Management

The committee was scheduled to review a report on corporate risk management, which included an update on the assessment of particular areas of corporate risk. The report noted that the risk of failing to effectively adopt a new Enterprise Resource Planning (ERP) system had reduced in severity. It also noted that the uncertainty regarding the transferal of Integrated Care Board (ICB) responsibilities to the council and need to maintain effective partnerships to ensure positive outcomes for residents had been added to the corporate risk register.

The report also stated that officers were reviewing current directorate and corporate risks and identified mitigations to consider whether plans and projected impacts of either Local Government Reorganisation or devolution needed to be considered as additional factors.

Internal Audit

The committee was scheduled to note the Internal Audit Progress Report, which provided an overview of internal audit activity against assurance work completed in accordance with the approved audit plan, and an overview of the status of 'live' reports.

The committee was also scheduled to approve the Internal Audit Plan 2025-26 Q3 and note the follow up action completed against prior 'limited' and 'no' assurance reviews.

The report included a table summarising the activities of internal audit for the period up to August 2025.

The committee was also scheduled to note the Internal Audit Strategy 2025-28. The strategy included a vision, strategic objectives, and supporting initiatives for the internal audit function. The strategic objectives were:

• Agile Auditing: Innovate to explore a more agile approach to the audit process, building efficiencies and producing more timely feedback to the organisation.
• Optimisation of Standards: Embrace and prioritise conformance and embedding of the Global Internal Audit Standards in the UK Public Sector and maximising their potential to benefit the organisation and the internal audit function.
• Data Analytics by Default: Further engage with the organisation to enhance and optimise the full potential of data analytics in the internal audit process.

The committee was also scheduled to note arrangements for the pending external assessment of the Southern Internal Audit Partnership against the Global Internal Audit Standards in the UK Public Sector.

The committee was scheduled to approve the revised Internal Audit Charter 2025-26, which reflected personnel changes within the Southern Internal Audit Partnership's senior management team, and updated roles and responsibilities of Senior Management and the Regulation Audit & Accounts Committee.

Treasury Management

The committee was scheduled to review and comment on the Treasury Management Compliance Report, which detailed compliance against planned parameters as approved within the annual Treasury Management Strategy Statement. The report stated that during the first quarter of 2025/26 the County Council complied with all the relevant statutory and regulatory requirements related to its treasury management activities, and that there were no breaches of the approved TMSS (including the Annual Investment Strategy) during the period. The report also noted that the County Council continued to plan for external borrowing of up to £90.7m for capital purposes only during the second half of 2025/26, including the replacement of £24m existing Public Works Loan Board loans maturing between September 2025 and March 2026.

The report also provided an update on the Federated Hermes Property Unit Trust, stating that following a significant number of redemption notices being submitted during the summer of 2024, the Fund Manager continued to progress a merger with the Legal & General Managed Property Fund. It noted that the County Council had supported this merger throughout the process, on the understanding that as non-pension fund investor, the Council would not be eligible to invest in this Legal & General Fund, and that on the basis of a successful merger, the County Council would therefore receive full repayment based on the Federated Hermes and Legal & General's agreed market valuation on the actual merger date. It also stated that should all outstanding merger conditions be met, the planned merger date was 15 August 2025, at which point repayment would be made to the County Council as an ineligible investor in the Legal & General Fund, and that based on the current market valuation of the County Council's Federated Hermes property fund investment (£8.4m on 30 June 2025), this gave rise to a £1.6m realised loss against the Council's original £10m investment, with the recommendation that this was funded from the interest smoothing reserve in 2025/26.