The Governance and Audit Committee of Kent County Council met on 25 March 2026 to discuss the external audit plans for the council and its pension fund, review the council's risk management strategy, and receive updates on counter fraud activities and schools' financial management. Key decisions included the approval of the updated Risk Management Policy and Strategy for 2026-2028.

External Audit Plan for Kent County Council

Grant Thornton presented the external audit plan for Kent County Council for the year ending 31 March 2026. The audit will focus on significant risks including management override of controls, the valuation of land and buildings, the valuation of the pension fund net asset/liability, and the Oracle system implementation and data migration. Materiality for the audit has been set at £59.5 million for the Council. The auditors will also be assessing the Council's arrangements for securing value for money, with particular attention to financial sustainability, governance, and improving economy, efficiency, and effectiveness. Specific areas of concern identified for value for money assessments include the ongoing cost pressures in Adult Social Care and SEND, and the decision to raise Council Tax by 3.99%, which is below the maximum allowable flexibility. The audit plan also notes potential governance weaknesses arising from recent changes in the administration's membership since the May 2025 elections. The audit fee for the Council is estimated at £475,501.

External Audit Plan for Kent Pension Fund

The audit plan for the Kent Pension Fund for the year ending 31 March 2026 was also presented by Grant Thornton. Significant risks identified include management override of controls, the valuation of Level 3 investments, the valuation of directly held properties, the actuarial present value of promised retirement benefits disclosure, and the Oracle system implementation and data migration. Planning materiality for the Fund has been set at £126.7 million. The audit fee for the Pension Fund is estimated at £136,773, which includes additional work for the 2025 triennial valuation data testing.

Statement of Accounts 2025/26 Preparation and Accounting Policies Update

The committee received an update on the timetable for the 2025/26 Statement of Accounts, with the draft unaudited accounts due by 30 June 2026. A key change to accounting policies for 2025/26 is the introduction of indexation for Property, Plant & Equipment assets, which will be applied annually between professional valuations. This change aligns with the CIPFA Code of Practice and International Accounting Standard 16. The report detailed the specific indices to be used for different asset types, such as the All-In TPI published by BCIS for specialised property, and CoStar and MSCI data for offices, retail, industrial, and residential properties. Right of Use assets will not have indexation applied, but will undergo desktop valuations every three years. Investment properties will continue to be revalued annually at fair value.

Treasury Management Strategy

The committee reviewed the Treasury Management Strategy for 2026-27, which had been approved by the County Council on 12 February 2026. The strategy maintains a prudent approach with no changes to the Council's borrowing or investment strategies or its prudential indicators for security, liquidity, and yield. The Capital Financing Requirement (CFR) is projected to increase slightly in 2027 before declining, indicating no new borrowing is foreseen for new capital programmes and that cash balances are expected to be sufficient for cashflow requirements. The strategy assumes a gradual decline in interest rates. The Council's chief objective for borrowing is to balance low interest costs with certainty of those costs, while maintaining flexibility. The strategy also outlines approved sources of borrowing and investment counterparties, with specific limits and credit rating requirements. Environmental, Social, and Governance (ESG) considerations are integrated into the investment decision-making process, with a preference for banks and funds that are signatories to UN Principles for Responsible Banking and UN Principles for Responsible Investment.

Review of the Risk Management Strategy, Policy and Programme

The committee was asked to approve the updated Risk Management Policy & Strategy for 2026-2028 and note the review of the risk management programme. The policy, which draws on ISO 31000:2018 and HM Treasury's Orange Book, has been shortened to a two-year lifespan due to local government reorganisation timelines. The review of the risk management programme highlighted ongoing work in integrating risk management into decision-making, utilising technology for risk visibility, providing training, embedding risk management in major change activities, and reviewing the Council's risk appetite. The policy emphasizes a commitment to embedding risk management throughout the organisation, promoting a positive risk culture, and managing risks in line with the Council's risk appetite. The report noted that the Council's risk management arrangements received a High assurance opinion from Internal Audit with Very Good prospects for improvement.

Schools Audit Annual Report

The committee received the Schools Audit Annual Report for the period April 2024 to March 2025. This report provides assurance for the Chief Finance Officer's annual statement to the Department for Education (DfE) regarding the financial management of Local Authority (LA) maintained schools. During the reporting period, 63 schools were visited as part of the financial compliance programme, with 93.45% of questions answered compliantly. Critical recommendations were most frequently identified in the areas of Procurement and adherence to the Schools Finance Policy. The report noted that the number of schools in financial deficit remained consistent, with three schools ending the year in deficit, a figure that remains well below the national average. The committee was assured that the comprehensive compliance programme, analysis of statutory returns, training, and support for schools provide adequate assurance for the CFO's statement.

Counter Fraud Update (Quarter 3)

The Counter Fraud team provided an update for Quarter 3 of the 2025/26 financial year. Key messages included £4,066,930 in savings identified through the Kent Intelligence Network (KIN) for the first three quarters, with KCC benefiting £487,505. Irregularities identified in the first three quarters amounted to £305,000 in savings, subject to full financial recovery. Proactive work has increased, with over 1,000 staff receiving training on fraud, bribery, and corruption risks. The team was shortlisted for the Public Finance Awards 2025 and received a Highly Commended for its activities. The report detailed irregularity referrals by directorate, with Adult Social Care and Health and Children, Young People and Education having the highest number of referrals. Blue Badge misuse remains a significant area of concern, with 302 referrals received in the period. The KIN has also been instrumental in identifying missing properties from the business rates and council tax valuation lists, generating significant revenue for KCC. The Counter Fraud Action Plan for 2025/26 is being delivered, with an increase in reported irregularities indicating greater awareness.