Agenda and minutes

(Where a member has a Disclosable Pecuniary Interest, the member must declare the interest to the meeting and leave the room without participating in any discussion or making a statement on the item, except where a member is permitted to remain as a result of a grant of dispensation).

There were none.

To sign as a correct record the minutes of the 20 March 2025 Governance and Audit Committee meeting (enclosed).

Consideration was given to the minutes of the 20 March 2025 Governance and Audit Committee meeting.

The Democratic Services Officer stated that advice had recently been received that the post title of the Internal Audit attendee within the minutes be amended to ‘Internal Audit Manager’.

AGREED:

That with the stated amendment, the minutes be signed by the Chairman as a correct record.

An update on actions that arose at the 20 March 2025 Governance and Audit Committee meeting and the tracking of outstanding actions (enclosed).

Consideration was given to the update on actions that arose at the 20 March 2025 Governance and Audit Committee meeting and the tracking of outstanding actions.

The Regarding action 43. 23/24 in respect of the Budget Book, the Head of Finance Delivery – Technical and Corporate (PSPS) and interim Director of Finance (Section 151 Manager) proposed that this action be closed based on the following:

• As live budget information was available through council IT systems (in SHDC’s case, the Unit 4 finance system) the practice of producing budget books had largely been rendered obsolete within local authorities. Budget managers had full access to the Unit4 system for monitoring purposes. 
  • Members were satisfied with this approach and agreed that the action be closed.

AGREED:

That the update on actions be noted.

To provide Members with the Annual Treasury Report 2024/25 in accordance with the Chartered Institute of Public Finance and Accountancy’s Code of Practice on Treasury Management to ensure best practice is maintained (report of the Interim Director of Finance and Section 151 Officer enclosed).

Consideration was given to the report of the Interim Director of Finance (Section 151 Officer) which provided members with the Annual Treasury Report 2024/25 in accordance with the Chartered Institute of Public Finance and Accountancy’s Code of Practice on Treasury Management to ensure best practice was being maintained.

The report was introduced by the Head of Finance Delivery – Technical and Corporate (PSPS) on behalf of the Interim Treasury Manager (PSPS). The Annual Treasury Management Review 2024/25 was at Appendix 1 which included the following areas information:

• Introduction
• The Council’s Capital Expenditure and Financing 2024/25
• The Council’s overall borrowing need;
• Treasury position as at 31 March 2025;
• The Strategy for 2024/25;
• Borrowing Outturn;
• Investment Outturn;
• The Economy and Interest Rates; and
• Other issues, including:
  • IFRS 9 fair value of investments;
  • Non-treasury investments; and
  • Changes in risk appetite.

Members considered the report and made the following comments:

• Members queried the shift in investment from banks to local authorities.
  • The Head of Finance Delivery – Technical and Corporate (PSPS) explained that local authorities offered attractive short-term rates, particularly at the end of the financial year if borrowing was required, and that these were considered secure government-backed investments.

• Members welcomed the Council’s strong financial position and praised the performance of the Finance team and Portfolio Holder. The Committee noted the favourable variance of £945,783 and recommended the report for approval by Council.

AGREED:

That following scrutiny of the Treasury Annual Report 2024/25, the comments of the Governance and Audit Committee be noted for consideration by Council at their meeting on 23 July 2025 when the document was to be considered for approval.

To provide an update on risk as at the end of March 2025 (report of the Assistant Director – Governance enclosed).

Consideration was given to the report of the Assistant Director – Governance which provided an update on risk as at the end of March 2025.

The Business Intelligence and Change Manager introduced the report to the committee. The Q4 2024/25 SHDC Risk Registers were at Appendix A.

The Q4 2024/25 SHDC Housing Revenue Account Risk Register was at Appendix B.

Overview of changes included:

• A proposal to remove the ‘Retention of Staff’ risk from the SHDC Risk Register as this was covered within the Partnership Risk Register;
• A reduction in the ‘Net Zero Target’ risk which reduced from high to medium following the Cabinet approved plan;
• A new Fraud Risk Register had been included following advice from auditors;
  • The ‘Procurement’ risk had been reduced following completion of the Procurement Card audit actions;
  • Fraud risk relating to ‘Council Tax - Credit Refund and Income’ had reduced due to improved controls.
• The risk relating to ‘listening to tenants’ on the HRA Risk Register had reduced following the appointment of the lead officer and adoption of the Engagement Strategy; and
• The register had been reformatted to improve readability.

Members considered the report and made the following comments:

• Members requested more information regarding the ‘Trust’ risk SELCP02.
  • The Business Intelligence and Change Manager responded that an increased risk score was to be considered by the Senior Leadership Team (SLT) as a result of the political opinion differences across the partnership. More details would come forward when they were known.
  • The Assistant Director – Governance added that the score had not changed and that SLT kept the Trust risk under review via established partnership mechanisms.

• Members stated that an informal session to understand the Risk Register more fully would be useful.

• Members welcomed the F-06 ‘Council Tax – Credit Refund and Income Fraud’ risk and queried when this was applied and whether potential related controls had impacted the ‘lower’ risk score.
  • The Business Intelligence and Change Manager would investigate and report back to the committee after the meeting.

• Members referred to risk SHDC-OP-33 ‘Parkwood Leisure Provision’ which stated ‘need action date to review’ and queried if a date had been confirmed.
  • The Business Intelligence and Change Manager would liaise with the risk owner so that an action date could be included.

• Members referred to risk SHDC-OP-35 ‘Planning Software retiring 2027’ and queried if progress was on track for completion by the 31 March 2026 target date and whether Local Government Reorganisation (LGR) placed an increased risk on the project.
  • The Business Intelligence and Change Manager confirmed that the project was on track and that the size of the project would warrant a distinct area within the risk register in due course. The current Planning system was to become unsupported and therefore the project needed to be undertaken/completed regardless of LGR. Due diligence would take place regarding future contracts in this respect.

• Members confirmed that residents had welcomed the work being undertaken following implementation of the Tenant Engagement and Influence Strategy.

• Members stated that  ...  view the full minutes text for item 5.

To provide the Council with an Annual Report and Opinion for 2024/2025, drawing upon the outcomes of Internal Audit work performed over the course of the year (report of the Head of Internal Audit (Lincolnshire County Council) enclosed).

Consideration was given to the report of the Head of Internal Audit (Lincolnshire County Council) which delivered an annual opinion and report to inform the Annual Governance Statement, concluding on the adequacy and effectiveness of the Council’s governance, risk and control framework.

The Head of Internal Audit (Lincolnshire County Council) attended remotely to present the report to members which detailed the following:

• The role, approach and coverage of Internal Audit;
• The Internal Audit Opinion;
• Governance, risk and control overview and observations;
• Additional observations;
• Quality assurance, improvement and performance;
• Disclosure of non-conformance;
• Summary of audit work completed and assurance ratings awarded were at Appendix 1. An error was noted on this document in that the ‘Follow Up Payroll Reconciliation’ had achieved a substantial assurance opinion rather than the stated adequate assurance; and
• Whilst it was noted that 100% of the plan had been delivered, only 56% had been completed on-time and the Internal Audit Manager was leading on systematic changes to achieve improvements.

Members considered the report and made the following comments:

• Members referred to the Limited Assurance Review given for Insurance and requested more information regarding the circumstances, specifically to include commentary on the quality of contract monitoring and whether TRF were still contracted to the council.
  • The Interim Director of Finance (Section 151 Officer) would provide a written response after the meeting.

• Members referred to the ‘Limited Assurance Review Finance Systems – Bank Reconciliations’ and queried the number of bank accounts held by the council and whether managers were now following correct procedures.
  • The Head of Finance Delivery – Technical and Corporate (PSPS) responded that:
    • SHDC held one bank account. The other bank accounts mentioned within the document related to those held by Boston Borough Council and East Lindsey District Council; and
    • Regarding adherence to procedures, all actions had been completed and reconciliations were completed within 10 working days of the month-end.
  • Members requested that future SHDC reports identify and focus on the number of bank accounts held by South Holland.

AGREED:

That the Internal Audit Annual Report and Opinion 2024/25 be noted.

To note the External Audit Plan and Strategy for the year ended 31 March 2025 (report of the Director – KPMG enclosed).

Consideration was given to the report of the Director – KPMG which provided members with the External Audit Plan and Strategy for the year ended 31 March 2025.

The Director – KPMG attended to present the report to members which detailed the following:

• Overview of planned scope including materiality;
• Significant risks and other audit risks which related to:
  • Valuation of land and buildings;
  • Management override of controls;
  • Valuation of postretirement benefit obligations; and
  • Group – Valuation of Investment Properties;
• Mandatory communications;
• Value for money;
• Audit team at Appendix A;
• Audit cycle and timetable at Appendix B;
• Fees at Appendix C;
• Confirmation of independence at Appendix D;
• KPMG’s audit quality framework at Appendix E;
• Statement of effectiveness of KPMG’s system of quality management at Appendix F;
• Understanding of IT at Appendix G;
• Revised requirements for the Group Audit at Appendix H; and
• Financial Reporting Council’s (FRC) areas of focus at Appendix I.

Members considered the report and made the following comments:

• Members referred to page 24 of the report regarding the setting of the 2024/2025 Financial Plan and queried why recommendations relating to the inclusion of the financial performance of South Holland Homes, Welland Homes and PSPS were not accepted by management.
  • The Interim Director of Finance (Section 151 Officer) would provide a written response after the meeting.

• Members referred both to commentary on page 26 of the report regarding deadline omissions within the ‘developing the 2024/25 efficiency plan’; and page 39 of the report in respect of ‘future savings within the efficiency programme’ where specific savings plans beyond 2024/25 had not been outlined. Were there any reasons why such matters could not be addressed now?
  • The Interim Director of Finance (Section 151 Officer) responded that the issue would be addressed as part of the proposed change to the 2026/27 Budget setting process (at Agenda item 11 of the current meeting) where efficiency programmes would be identified in advance of budget setting.

• Members queried whether Senior Leadership Team (SLT) meetings and decisions were now being recorded following performance improvement observations at page 38 of the report. Members were also concerned that a clear record of decisions and actions that arose from meetings undertaken at any level were circulated to officers to enable feedback and concerns to be raised. 
  • The Assistant Director – Governance (Monitoring Officer) responded that:
    • SLT meetings were now being recorded;
    • All decisions made under executive arrangements were published on the Council’s website, barring exempt information; and
    • Actions from informal team meetings were dealt with at a service level according to team culture and practice and may be captured within meeting notes or circulated via email.

• Member queried how often the Fraud Risk Register would come forward to the committee.
  • The Business Change and Intelligence Manager responded that the Fraud Risk Register had been presented to the committee for the first time at the current meeting but would be presented to the Committee regularly as part of the quarterly Risk Register.

• Members referred to the commentary in respect of  ...  view the full minutes text for item 7.

To seek approval of the Annual Governance Statement 2024/25 (report of the Assistant Director – Governance enclosed).

Consideration was given to the report of the Assistant Director – Governance which sought approval of the Annual Governance Statement 2024/25.

The Assistant Director – Governance introduced the report and highlighted the following main points:

• The Annual Governance Statement 2024/25, at Appendix 1, was a statutory report required to be approved by the Governance and Audit Committee prior to the Statement of Accounts and which included the following areas;
  • Point 1 and Point 2 outlined the Scope of Responsibility and Purpose of the Governance Framework respectively;
  • Point 3 detailed the Council’s review of the effectiveness of its governance arrangements against the key elements identified in the CIPFA SOLACE model: Delivering Good Governance in Local Government: Framework;
  • Point 4 presented the Council’s review of the effectiveness of its Governance framework and system of internal control;
  • Point 5 outlined the actions taken in respect of significant Governance issues identified in 2024/25; 
  • Point 6 commented on the Council’s Combined Assurance Report 2024/25; and
  • Point 7 summary and approach for 2025/26.

Members considered the report and made the following comments:

• Members requested that access to quarterly financial data be communicated to Governance and Audit Committee members.
  • The Interim Director of Finance (Section 151 Officer) responded that:
    • Whilst the seeking of assurance around control systems and governance fell within the remit of the Governance and Audit remit, the financial monitoring element was a Cabinet function and, in this respect, the financial information was freely available to view within public agenda report packs;
    • Scrutiny of financial information could be undertaken by an Overview and Scrutiny Committee;
    • As part of the Internal Audit process, a consultancy audit review had taken place for the financial year 2024/25 which had provided the Committee with assurance in respect of the budget monitoring systems and processes in place; and
    • At the request of members, the link to the live budget information would be circulated to members.

AGREED:

That the Annual Governance Statement 2024/25 be approved.

To present the unaudited Financial Statements including Narrative Report for the Committee’s review, in line with best practice (report of the Interim Director of Finance and Section 151 Officer enclosed).

Consideration was given to the report of the Interim Director of Finance (Section 151 Officer) which presented the unaudited Financial Statements including Narrative Report for the Committee’s review, in line with best practice.

The Head of Finance Delivery – Technical and Corporate (PSPS) (formerly known as the Deputy Chief Finance Officer – Corporate (PSPS) as noted within the report) presented the report to members which included the following:

• Narrative Report;
• Statement of Responsibilities;
• Core Financial Statements:
  • Comprehensive Income and Expenditure Statement;
  • Movement in Reserves Statement;
  • Balance Sheet;
  • Cash Flow Statement;
  • Notes to the Accounts;
• Supplementary Financial Statements:
  • Housing Revenue Account Income and Expenditure Statement;
  • Movement on the Housing Revenue Account Statement;
  • Notes to the Housing Revenue Account Statement;
  • Collection Fund Statement;
  • Notes to the Collection Fund Statement;
  • Group Accounts; and
  • Glossary of terms.

The following points were highlighted:

• That the draft Financial Statements 2024/25 had been published on the deadline date of 30 June 2025 and external auditors had commenced their audit work on 7 July 2025;
• Paragraph 2.4 of the covering report highlighted the new accounting standard regarding leases. This standard would not impact the taxpayer and was purely presentational from an accounting perspective for the financial statements;
• The 2024/25 budget outturn provided a £317,000 surplus position. Full details of the variances were available in the 8 July 2025 Cabinet report; and
• The Financial Statements commenced at page 21 of the report.

Members considered the report and made the following comments:

• Members referred to the ‘Debt Impairment’ narrative on Note 4 of the Notes to the Accounts and queried if the £1.705m Housing Benefit overpayment was deemed to be tolerated or could it be minimised.
  • The Head of Finance Delivery – Technical and Corporate (PSPS) responded that:
    • Following the CIPFA Code of Practice, and as outlined in Note 4, the Council was required to state the impact upon provision should debt collection rates deteriorate and as such, the amount stated represented the volume being pursued as opposed to written off; and
    • Debt was closely monitored on a quarterly basis.
  • The Interim Director of Finance (S151) added that such debt was pursued rigorously over several years with write off only undertaken where repayment was deemed not possible due to circumstances such as death, bankruptcy or abscondence.

• Members referred to ‘Impairment Allowance – Bad Debt provision’ on page 12 of the report and queried the £85000 outturn against a revised budget of £13000.
  • The Head of Finance Delivery – Technical and Corporate (PSPS) responded that:
    • Cabinet had approved the referenced write off value in November 2024, of which £135000 related to sundry debts and £12000 for housing benefit overpayments;
    • The value was represented on the Balance Sheet as ‘bad debt provision’ and thereby reduced the level of the provision; and
    • Following this, an assessment of debts owed to the Council was undertaken as of 31 March 2025 which ascertained the required provision at year end and resulted in a higher required contribution to the bad debt provision from revenue, owing to  ...  view the full minutes text for item 9.

To ensure that the Committee receives a thorough briefing on the system that the Council wishes to use in preparation of the 2026/27 Budget, is able to ask questions of the Section 151 Officer and able to gain assurance from the arrangements described (report of the Interim Director of Finance and Section 151 Officer enclosed).

Consideration was given to the report of the Interim Director of Finance (Section 151 Officer) which sought to ensure that the Committee received a thorough briefing on the system that the Council wished to use in preparation of the 2026/27 Budget, was able to ask questions of the Section 151 Officer and able to gain assurance for the arrangements described.

The Interim Director of Finance (Section 151 Officer) introduced the report to members which detailed:

• Background to the report;
• Review;
• Existing process: key risks and issues;
• Budget setting and risk mitigation;
• Principles underpinning re-design; and
• Budget process: key elements.

The following main points were highlighted:

• The report sought the views of and assurance from Committee members in respect of the system the council was planning to adopt in its preparations for the 2026/27 budget setting process;
• The proposed budget process and key elements were outlined at point 6.1 of the report;
• During this transition year, the Governance and Audit Committee would be invited to join the 2026/27 budget scrutiny event alongside the Joint Performance Monitoring Panel and Policy Development Panel, whose remit included the budget scrutiny function.

Members considered the report and made the following comments:

• Members welcomed the report and agreed with the approach outlined therein.

• Members requested a report come forward to the Committee which tracked the progress of the plan.
  • The interim Director of Finance (S151) confirmed that the suggested report would be provided.

AGREED:

1)     That the report be noted;

2)     That the committee confirmed its assurance that the process outlined was suitable for the Council; and

3)     That, at the request of members, a progress report come forward to the Governance and Audit Committee which tracked adherence to the plan.

Evaluating the impact and effectiveness of the Governance and Audit Committee (report of the Scrutiny and Policy Officer enclosed).

Consideration was given to the report of the Scrutiny and Policy Officer which evaluated the impact and effectiveness of the Governance and Audit Committee.

The Scrutiny and Policy Officer introduced the report to members and

the following main points were highlighted:

• The self-assessment process had been re-introduced to the Committee in 2024/5 which had resulted in the Action Plan at Appendix 1;
• In preparation for the report at the current meeting, members  had received a questionnaire which was completed separately and anonymously;
• The report presented the results of the questionnaire at Appendix 2 which highlighted the following development areas:
  • Knowledge and skills, including a better understanding of the role and purpose of the Governance and Audit Committee;
  • A greater understanding of the role for those charged with Governance; and
  • An evaluation of knowledge, skills and training needs of Committee members to be undertaken.
• The current meeting gave Members the opportunity to discuss support they required and provide input to the Governance and Audit Committee Action Plan for 2025/26.

Members considered the report and made the following comments:

• Members suggested that a skills audit be undertaken.
  • The Scrutiny and Policy Officer would arrange for this to take place outside of the formal meeting.

• The Chairman encouraged both new and existing members to attend training sessions when they were offered.

AGREED:

That following review of the Governance and Audit Committee Self-Assessment Plan Action Plan from 2024/25, the committee agreed to new actions to work towards during 2025/26.

To set out the Work Programme of the Governance and Audit Committee (report of the Democratic Services Manager enclosed).

Consideration was given to the report of the Democratic Services Manager which set out the Work Programme of the Governance and Audit Committee.

The Democratic Services Officer introduced the report to members and highlighted the following:

• Appendix 1 at page 313 of the agenda pack listed the meetings scheduled for the current municipal year and had been populated with expected items coming forward to each meeting. The budget process tracking report, requested at agenda item 11, would be added; and
• Appendix 2 from page 317 of the agenda pack listed the training that committee members had received since the inception of the current administration in 2023. Since the last meeting, members had received training on ‘Pensions’ from Lincolnshire County Council and a separate training session had been delivered by an external provider which covered the range of aspects required for an ‘Effective Audit Committee’.

Members considered the report and made the following comments:

• Members welcomed the recent ‘Pensions’ and ‘Effective Audit Committee’ training which they found very informative in assisting in their role on the Committee.

AGREED:

That the work programme of the Governance and Audit Committee be noted.

There were none.