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 updates on the annual statement of accounts and internal audit progress.

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 highlighted that a disclaimed audit opinion had been issued for the 2020/21 to 2023/24 accounts due to insufficient evidence to provide reasonable assurance over all in-year movements and closing balances. This situation, compounded by a lack of assurance over prior year opening balances, meant that EY was unable to confirm the 2024/25 accounts were free from material and pervasive misstatement, leading to an anticipated disclaimed audit opinion for this year as well.

Members raised questions regarding the valuation of investment properties and the Council's engagement with new external valuers. A significant weakness identified in the Council's Value for Money (VFM) arrangements related to financial sustainability, which had been broken down into two key risks: the need to identify recurring revenue savings to balance future budgets and the necessity to deliver the asset disposal programme to mitigate the impact of high external borrowing.

RESOLVED: The Draft Audit Results Report was noted.

Draft Auditor's Annual Report

The committee reviewed EY's draft Auditor's Annual Report, which included commentary on the Council's Value for Money (VFM) arrangements. The report detailed EY's work during the year, highlighting significant weaknesses and providing recommendations for improvement. EY identified two significant weaknesses in the Council's arrangements for financial sustainability that they intended to report by exception in the audit report. These were:

• Urgent identification of recurrent savings: To bridge the budget gap forecast by the Council's updated Medium Term Financial Strategy (MTFS).
• Improvement in asset disposal programme delivery: To increase the identification of asset sales and capital receipts, thereby reducing ongoing cost pressures on the Council's revenue budget.
• Replacement of short-term with long-term borrowing: To reduce the Council's exposure to interest rate risk and enhance certainty in medium-term financial planning.

During discussions, members inquired about property valuations, asset disposals, and the monitoring of capital receipts.

ACTION: The capital receipts live document is to be shared with all Members before the March Audit and Governance Committee meeting.

RESOLVED: The draft Auditor's Annual Report was noted.

Annual Statement of Accounts/External Audit Opinion - Update

The committee received a report from the Executive Head of Finance concerning the 2024/25 accounts. The report outlined that the unaudited accounts were published by 30 June 2025, with a statutory audit backstop date of 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 clarification regarding the date of the table showing the political make-up of the Council.

RESOLVED:

• Approval of the Statement of Accounts for 2024/25 was delegated to the Chair of the Audit and Governance Committee and the S151 Officer.
• The signing of the Letter of Representation for 2024/25 was delegated to the Chair of the Audit and Governance Committee and the S151 Officer.
• The 2024/25 accounts were confirmed as having been prepared on a going concern basis.

Internal Audit Progress Report Update

Neil Pitman, Head of 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 and key updates relevant to the committee's role. Discussions included questions about the agency staff audit and revised audit action dates.

ACTION: Actions for the Agency Staff audit are to be shared with the Committee by Peter Vickers, Executive Head of Finance, before the March 2026 Committee meeting. Confirmation will be sought from the Statutory Officer Group that changes to audit dates, once agreed by management, will require committee approval.

RESOLVED: SIAP's Report No. SIAP26/01 was noted.

Internal Audit - External Quality Assessment - Final Report

The committee received SIAP's External Quality Assessment Outcome Report. This report detailed the outcomes of an external assessment of SIAP against the new Global Internal Audit Standards in the UK Public Sector. The external assessor, John Chesshire of JC Training Ltd, concluded that SIAP generally achieves the Global Internal Audit Standards, placing them in the top quartile and representing one of the highest levels of achievement seen to date. Members sought clarification on SIAP's role concerning the Council's journey towards Local Government Reorganisation.

ACTION: SIAP's Internal Audit Strategy is to be shared with the Committee by Neil Pitman, Head of SIAP, before the March 2026 Committee meeting.

RESOLVED: SIAP's Report No. SIAP26/02 was noted.

Annual Capital Strategy 2026/27

The committee considered the proposed Capital Strategy for 2026/27 to 2028/29, including the Prudential indicators for capital finance for 2026/27. The report provided an overview of how capital expenditure, financing, and treasury management contribute to local public services, manage risk, and ensure future financial sustainability, in line with CIPFA's Prudential Code and Treasury Management Code of Practice . Members requested further information on Council borrowing at lower interest rates, the authorised limit, and the impact of delays in capital receipts.

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 proposed Treasury Management Strategy and Non-Treasury Investment Strategy for 2025-26, including borrowing and investment strategies and treasury management indicators. The report highlighted that Treasury Risk Management operates within CIPFA's Code of Practice on Treasury Management 2021. Members sought clarification on the Farnborough International loan repayments and the accuracy of property valuations by external valuers.

RECOMMENDED TO THE COUNCIL:

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

Quarterly Report of Treasury Prudential Indicators (Q3)

The committee received an update on Treasury Management and Non-Treasury Investment Operations for Quarter 3 of the 2025/26 financial year, reporting on compliance with Prudential Indicators. It was noted that the Council had exceeded its Treasury Management limits for investment in counterparties during Q3 due to high cash balances and fully invested money market funds. The Section 151 Officer authorised a temporary investment of £10m with another local authority, exceeding the £6m limit, which was considered low risk. Borrowing maturity continues to shift towards longer-term arrangements for cost certainty. Members sought clarification regarding the investment in the South Yorkshire Mayoral Combined Authority Police Fund exceeding the £6m limit, and were assured this was due to temporary high cash holdings and a favourable interest rate.

RECOMMENDED TO THE CABINET:

• Appreciation be given to the Finance Team for their work and progress.
• The contents of the report, regarding treasury management and non-treasury investment operations, be approved.

The meeting concluded at 9:34 pm.