The Governance and Audit Committee of Kent County Council met on Wednesday, 28 January 2026, to review the Corporate Risk Register, discuss the performance of the council's wholly-owned companies, and receive updates on external audit progress. Key decisions included noting the Corporate Risk Register, which highlighted increased risks in budget variances and the delivery against the Safety Valve Agreement, and reviewing the financial performance of the council's subsidiary companies, with a focus on dividend returns and operational challenges.

Corporate Risk Register

The committee received an update on the Corporate Risk Register, which is reviewed twice annually. The register indicated an increased risk in two areas:

• CRR0059: Risk of significant adverse variance to the level of savings and income agreed in KCC's budget. This risk remains rated as High. Despite a previous reduction, a significant in-year forecast overspend, particularly in the Adult Social Care and Health directorate, has led to the rating being increased back to the maximum level.
• CRR0068: Delivery Against Safety Valve Agreement. This risk has been raised to the maximum rating. The council is no longer on target to eliminate the in-year deficit or clear the accumulated deficit from previous years by the end of the current Safety Valve Agreement in 2027-28. The draft 2026/27 budget risk register forecasts a Dedicated Schools Grant (DSG) accumulated deficit of approximately £135 million by the end of 2025-26, with an in-year deficit exceeding £65 million. While government assistance has been indicated, it is not guaranteed, posing a significant risk.

The committee also noted a de-escalated risk in CRR0063: Capacity to Accommodate and care for Unaccompanied Asylum Seeking (UAS) Children, which has been managed at its target level for over a year and will now be monitored at a directorate level.

A risk reduction was noted for CRR0067: SEND Delivery Improvement, focusing on the sufficiency of improvements in areas identified by Ofsted. Continued progress, acknowledged by the Department for Education, has led to the risk being reduced to its target residual level.

CRR0009: Future financial and operating environment for Local Government remains at a High level, despite the re-introduction of a multi-year settlement for 2026-29. Funding from central government and local taxation continues to be less than spending pressures, with no certainty of additional central government funding for social care, adding further demands on core funding.

A draft risk has been created for CRR0069: Local Government Reorganisation (LGR), capturing key risks from KCC's perspective as the process evolves.

The committee was asked to note the report for assurance.

Performance of Kent County Council's Wholly Owned Companies

The committee reviewed the performance of KCC's wholly-owned companies and joint ventures for the year ending 31 March 2025. Overall, the companies continue to face challenges including public sector budget constraints, financial pressures affecting schools, and increased competition leading to pressure on operating margins. Companies are focusing on growth and cost efficiencies, exiting non-profitable contracts where possible.

Key financial returns to KCC include dividends from profitable companies and contributions from services managed by Commercial Services Kent Limited on behalf of KCC. For 2024-25, KCC received £5.5 million in dividends (compared to £3.1 million in the prior year) and a £4.5 million contribution from Commercial Services Kent (up from £3.9 million). Bowerhouse II Solar Ltd provided a rebate of £760,000.

The statutory accounts for the companies were externally audited by UHY Hacker Young and received unqualified audit certificates. KCC's wholly-owned companies are also subject to internal audit by KCC's Internal Audit team.

The committee was asked to note the contents of the report for assurance.

External Auditor's Progress Report

The committee received an update from the external auditors, Grant Thornton, on their progress. The audit of the 2024/25 financial statements for Kent County Council was signed off on 4 November 2025, with Whole of Government Accounts (WGA) procedures still ongoing. The completion certificate is expected in the coming months.

For the 2025/26 audit, initial planning discussions have taken place, with fieldwork due to begin at the end of January. The audit plan will be issued to the March Governance and Audit Committee. The IT Audit team will be involved in procedures related to the data migration from Oracle EBS to Oracle Fusion.

For the Kent Pension Fund's 2025/26 audit, the plan will also be issued to the March committee, taking into account the fund's triennial valuation.

Grant Thornton's Value for Money work will assess risks of significant weakness in financial sustainability, governance, and the effective use of resources. Their plan will be issued to the March committee.

The auditors also noted ongoing work on Teachers' Pensions certification claims and confirmed that audit fees for 2025/26 have been published by PSAA.

The committee was asked to note the external auditor's progress report.