The Audit and Governance Committee of Worcestershire County Council was scheduled to meet on 25 September 2025 to discuss a range of topics, including the external audit of the Worcestershire Pension Fund, internal audit progress, performance and risk management, counter fraud measures, business continuity, income and debt management and treasury management. The committee was also scheduled to consider the appointment of an independent member and its future work programme.

External Audit of Worcestershire Pension Fund

The committee was scheduled to note the Pension Fund Audit Findings Report for 2024/25. A representative from Grant Thornton was expected to present the findings.

The Audit Findings Report noted that the audit was substantially complete, and that there were no matters that would require modification of the audit opinion or material changes to the financial statements, subject to outstanding matters including:

• Derivatives receipt of valuation figures from Auditor's experts and subsequent testing
• Review of Other Information within Worcestershire County Council accounts
• Final quality review by Audit Manager and Engagement Lead
• Receipt and review of the final Pension Fund Annual Report
• Receipt of management representation letter
• Review of the final set of financial statements

The report stated that Grant Thornton anticipated issuing an unqualified opinion on the financial statements.

The report also covered the local and national context, including:

• The government's decision to reduce the number of Local Government Pension Scheme (LGPS) asset pools, and the impact on the Worcestershire Pension Fund.
• The 2025 valuation, which will not impact the 2024/25 financial statements.
• The Virgin Media case[^2], and its potential impact on the LGPS. [^2]: In June 2023, the High Court ruled in the case of Virgin Media v NTL Pension Trustees that certain defined benefit pension scheme amendments were invalid as they were not accompanied by the correct actuarial certification. This ruling was appealed and on 25 July 2024, the Court of Appeal upheld the decision of the High Court.
• Government proposals around the backstop, which introduced a series of backstop dates for local authority audits.

The report also detailed the approach to materiality¹, setting materiality for the financial statements at £79.70m, performance materiality at £59.775m, and specific materiality for the fund account at £19.5m. The report identified management override of controls and the valuation of level 3 investments² as significant risks. The report included a summary of adjusted and unadjusted misstatements, and an action plan to address issues identified during the audit.

Internal Audit Progress

The committee was scheduled to review the Internal Audit Progress Report. The report noted that the overall opinion of the council's corporate governance was improving, moving towards 'satisfactory'.

As of the end of August 2025, 69% of the total planned audits were either complete or at the planning, fieldwork or report stage. The report detailed the status of reviews, including:

• Placements (Satisfactory)
• Full School Audit - Wolverley (Satisfactory)
• S106 monies (Needs Improvement)
• Emergency Planning (Substantial)
• Business Continuity (Needs Improvement)
• Basic Needs/Higher Needs (N/A)
• Direct payments (Satisfactory)

The report noted that actions exceeding their deadline by more than three months had reduced since the last report, with one remaining in relation to the audit on the Integrated Equipment Store.

The report also provided an update on the National Fraud Initiative (NFI) 2024/26 cycle, and the Economic Crime and Corporate Transparency Act 2023.

The report detailed work being undertaken by Internal Audit in respect of anti-fraud and corruption, and the offence of failure to prevent fraud, including collaboration with the Performance Team, quarterly meetings with Assistant Directors, annual review of policies and strategies, and liaising with training and development.

The report also provided an update on the External Quality Assessment (EQA) undertaken in March 2025, and the Internal Audit Quality Assurance and Improvement Plan (QAIP).

Performance and Risk Management

The committee was scheduled to receive an update on corporate performance and the latest risk position.

The report included a performance summary table, highlighting the number of corporate KPIs rated as red, amber, green, and no assessment.

The report also included a risk management report, detailing corporate level risks, current and proposed controls. 32 risks were designated corporate level, with 5 flagged as red.

The report also provided an update on the Corporate Performance and Risk Monitoring System (CPRMS), which was launched in July for Performance indicators and will be extended to risk management during September.

Counter Fraud Overview

The committee was scheduled to note the Counter Fraud Overview report. The report noted that the Internal Audit Team provides strategic and counter fraud assistance to Worcestershire County Council, and that the Council is committed to implementing and maintaining the highest standard of corporate and financial governance and ethical behaviour.

The report detailed the Council's obligations under the Criminal Finances Act 2017 and the Economic Crime and Corporate Transparency Act 2023, and the measures in place to prevent tax evasion and fraud.

The report also referenced the Council's Whistleblower's Code, Codes of Conduct for Members and Officers, and Anti Money Laundering Policy.

The report included an appendix relating to the 5 pillars of Fighting Fraud and Corruption Locally, detailing the counter fraud measures Worcestershire County Council has in place.

Corporate Business Continuity Position

The committee was scheduled to note an update on processes supporting Business Continuity in Worcestershire County Council.

The report noted that the Council has a statutory duty to undertake business continuity practices to ensure resilience of the organisation from disruption, ensuring that critical services can continue.

The report detailed the overarching governance arrangement for business continuity, key documents which support business continuity activity, and corporate business continuity activity.

The report also outlined future planning, including exercises scheduled for 2025 and 2026.

Income and Debt Management

The committee was scheduled to note the Income and Debt Management report. The report provided an update on the overall indebtedness of the Council's debtors.

The report noted that the collection of income remains extremely challenging, with debt in progress as at 30 August 2025 being £24.2m, of which 81% relates to Adults and Communities.

The report detailed collections using the phone payment solution, Midcall, and the electronic distribution of invoices and reminders to customers.

The report included tables and graphs showing the debt position, value of invoices raised, and debt collection activity.

The report also detailed write-off activity and the top 20 customer debts by value.

Treasury Management Update

The committee was scheduled to note the Treasury Management Update Report for quarter 1 of 2025-26.

The report outlined the economic background against which decisions have been made, and provided an update on the performance of the treasury management function.

The report included an economic update, a review of the Council's investment portfolio, a review of the Council's borrowing strategy, and a review of compliance with Treasury and Prudential Limits.

The report noted that UK inflation rose to 3.6% in June, and that the Bank of England Governor Andrew Bailey has signalled that more rate cuts are ahead after sharp falls in employment.

The report also noted that the average level of funds available for investment purposes during the quarter was £61m, and that the Council held £99.4m of investments as at 30 June 2025.

Independent Member Appointment

The committee was scheduled to consider the appointment of an Independent Member to the Audit and Governance Committee.

The report evaluated the advantages and disadvantages of appointing an independent member, and noted that while there is no specific legislative requirement to have such a role, key institutions promote such an appointment to satisfy industry Standards.

The report detailed the benefits of an independent member, including enhanced objectivity, independence and accountability, improved public confidence, broader expertise, and compliance with best practices.

The report also outlined the disadvantages of an independent member, including limited organisational knowledge, potential for misalignment, resource implications, confidentiality and sensitivity risks, and limited influence.

The report included an outline job description and personal specification for the role.

Work Programme

The committee was scheduled to note its future work programme and consider whether there are any matters it would wish to be incorporated.