The Audit and Governance Committee of Rushmoor Council met on Wednesday, 28 January 2026, to review the draft audit results report and the draft auditor's annual report for the year ended 31 March 2025. The committee also received an update on the annual statement of accounts and the external audit opinion, along with progress reports from internal audit.

Draft Audit Results Report

The committee received the Draft Audit Results Report from Ernst & Young (EY), the Council's external auditors. Simon Mathers, Director at EY, presented the findings, which summarised the status of the 2024/25 audit. The audit aimed to express an opinion on the financial statements and address statutory and regulatory requirements.

EY informed the committee that a disclaimer of opinion had previously been issued on the Council's financial statements for the years 2020/21 to 2023/24 as part of the national effort to reset and recover local government audits. For the 2024/25 financial year, while assurance over the closing balance sheet and in-year transactions had improved, sufficient evidence had not yet been obtained to provide reasonable assurance over all movements and balances. This lack of assurance over the 2023/24 opening balances, following the prior year's disclaimer, also prevented full assurance over the 2024/25 figures and comparative disclosures. Consequently, EY advised that they were unable to confirm that the 2024/25 accounts were free from material and pervasive misstatement and anticipated issuing a disclaimed audit opinion for this year as well.

During the discussion, members raised questions regarding the valuation of investment properties and the process the Council used to engage new external valuers. The committee noted that a significant weakness in the Council's Value for Money (VFM) arrangements related to financial sustainability. This weakness had been disaggregated into two specific risks: the urgent need to identify recurrent savings to balance future budgets and the necessity to deliver the asset disposal programme, given the high level of external borrowing.

The committee resolved to note the Draft Audit Results Report.

Draft Auditor's Annual Report

The committee received EY's draft Auditor's Annual Report, which included commentary on the Council's Value for Money (VFM) arrangements for the year ended 31 March 2025. The report detailed EY's work during the year, highlighting significant weaknesses and providing recommendations for improvement.

EY informed the committee that they had identified two significant weaknesses in the Council's arrangements concerning financial sustainability, which they intended to report by exception in the audit report. The recommendations were:

• Urgently identify recurrent savings to bridge the budget gap forecast by the Council's updated Medium Term Financial Strategy (MTFS).
• Improve the delivery of the asset disposal programme, both in terms of identifying asset sales and the level of capital receipts achieved, to reduce the ongoing cost pressures this created on the Council's revenue budget.
• Continue to seek to replace short-term with long-term borrowing to reduce the Council's exposure to interest rate risk and allow for more certainty in its medium-term financial planning arrangements.

Members raised questions about property valuations, asset disposals, and how capital receipts could be monitored. An action was agreed for Peter Vickers, Executive Head of Finance, to share the capital receipts live document with all members before the March committee meeting.

The committee resolved to note the draft Auditor's Annual Report.

Annual Statement of Accounts/External Audit Opinion - Update

The committee received a report from the Executive Head of Finance, Peter Vickers, regarding the 2024/25 accounts. The report outlined that the unaudited accounts were required to be published by 30 June 2025, with the statutory audit backstop date being 27 February 2026. Due to prior years having disclaimed opinions, the external auditors could only provide limited assurance for 2024/25. Work to rebuild assurance was ongoing, with an unqualified opinion anticipated for the 2026/27 financial year accounts.

Two amendments were noted within the report: a reference to the regeneration of the Civic Quarter in Farnborough, and clarity over the date of the table showing the political make-up of the Council.

The committee resolved to delegate the approval of the Statement of Accounts for 2024/25 and the signing of the Letter of Representation for 2024/25 to the Chair of the Audit and Governance Committee and the S151 Officer. They also confirmed that the 2024/25 accounts had been prepared on a going concern basis.

Internal Audit Progress Report Update

Neil Pitman, Head of the Southern Internal Audit Partnership (SIAP), presented the Internal Audit Progress Report as at December 2025. The report provided an overview of internal audit activity against the approved audit plan.

During discussions, questions were raised regarding the agency staff audit and revised audit action dates. Actions were agreed for Peter Vickers to share the actions for the Agency Staff audit with the committee and to confirm with the Statutory Officer Group that changes to audit dates would require committee approval.

The committee resolved to note SIAP's Report No. SIAP26/01.

Internal Audit - External Quality Assessment - Final Report

The committee received SIAP's Report No. SIAP26/02, detailing the outcomes of the External Quality Assessment (EQA) of the Southern Internal Audit Partnership against the new Global Internal Audit Standards in the UK Public Sector. The external assessor, John Chesshire, reported that SIAP had achieved an excellent result, generally achieving the Global Internal Audit Standards. Of the 52 standards, SIAP fully achieved 46 and generally achieved the remaining six, with no areas of partial conformance or non-conformance.

Members sought clarification on SIAP's role concerning the Council's journey towards Local Government Reorganisation. An action was agreed for Neil Pitman, Head of SIAP, to share SIAP's Internal Audit Strategy with the committee.

The committee resolved to note SIAP's Report No. SIAP26/02.

Annual Capital Strategy 2026/27

The committee considered the Executive Head of Finance's report on the proposed Capital Strategy for 2026/27 to 2028/29, including the Prudential indicators for capital finance for 2026/27. The strategy outlined how capital expenditure, financing, and treasury management activities contribute to local public services, manage risk, and ensure future financial sustainability.

Members requested further information on the Council borrowing at lower interest rates, the authorised limit, and the impact of delays in capital receipts.

The committee recommended to the Council that the Capital Strategy for 2026/27 to 2028/29, including the Prudential indicators for capital finance for 2026/27, be approved.

Annual Treasury Management and Non-Treasury Management Strategy 2026/27

The committee reviewed the Executive Head of Finance's report on the proposed Treasury Management Strategy and Non-Treasury Investment Strategy for 2025-26, including borrowing and investment strategies and treasury management indicators.

Members sought clarification on the Farnborough International loan repayments and the accuracy of property valuations by external valuers.

The committee recommended to the Council that:

• the Treasury Management Strategy 2026-27 and the Annual Borrowing Strategy 2026-27 be approved;
• the Annual Non-Treasury Investment Strategy 2026-27 be approved; and
• the Minimum Revenue Provision (MRP) Statement be approved.

Quarterly Report of Treasury Prudential Indicators (Q3)

The committee received an update on the Treasury Management and Non-Treasury Investment Operations for Quarter 3 of the financial year 2025/26. It was noted that during Q3, the Council had exceeded its Treasury Management limits for investment in counterparties. The Section 151 Officer had authorised a temporary investment of £10m with another local authority, above the usual £6m limit, due to high cash balances and fully invested money market funds. This was considered low risk due to local authorities' access to Public Works Loan Board (PWLB) borrowing. Borrowing maturity was noted to be shifting towards longer-term arrangements for cost certainty.

Members sought clarification regarding the Council's investment in the South Yorkshire Mayoral Combined Authority Police Fund, which had exceeded the £6m local authority limit. They were assured that this was due to holding excess cash at the time and the borrowing being at a low interest rate.

The committee recommended to the Cabinet that appreciation be given to the Finance Team for their work and progress, and that the contents of the report be approved.