Agenda and draft minutes

(Where a member has a Disclosable Pecuniary Interest the Councillor 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 Governance and Audit Committee meeting held on 30 January 2025 (enclosed).

AGREED:

That the minutes from the Governance and Audit Committee meeting held on 30 January 2025 be signed by the Chairman as a correct record.

An update on actions that arose at the 30 January 2025 Governance and Audit Committee meeting and the tracking of outstanding actions (enclosed).

Consideration was given to the actions that arose at the 30 January 2025 Governance and Audit Committee meeting.

• Regarding action 54b, members requested a breakdown of the £31,316.74 attributed to ‘other expenses’ in respect of medical insurance, group life insurance and income protection costs. 
  • The Deputy Chief Finance Officer (PSPS) responded that, of the £31,316.74, circa £20,000 per year was the budgeted cost for private medical care. Further information would be investigated and report back to members after the meeting.

• Regarding action 51. 23/24, members requested that the Pension training include a short introduction explaining the basics of local authority pensions.

• Members referred to the minutes of the 30 January 2025 Governance and Audit Committee meeting and asked for further officer responses in respect of the following:
  • An update on any action taken in respect of the £192,000 variance noted for the ‘Efficiencies Requirement’ at minute item 55 ‘Annual Governance Statement 2023/24 and Financial Statements 2023/24’;
  • An update on any action taken in respect of floor areas and building condition evidence required by KPMG;
    • The Deputy Chief Finance Officer (PSPS) responded that the valuation team had visited the assets as part  of the 2024/25 valuation process and had undertaken inspections and taken measurements where necessary. The draft valuations were due to be completed by 31 March 2025. The final valuations would be received in April 2025.

AGREED:

That the update on actions be noted.

To review and agree the Accounting Policies for inclusion in the Financial Statements 2024/25 (report of Deputy Chief Executive – Corporate Development (S151) enclosed).

Consideration was given to the report of the Deputy Chief Executive – Corporate Development (S151) which asked the Governance and Audit Committee to review and agree the Accounting Policies for inclusion in the Financial Statements 2024/25.

The Deputy Chief Finance Officer - Corporate (PSPS) and the Finance Manager – Corporate (PSPS) attended for this item.

The Deputy Chief Finance Officer - Corporate (PSPS) introduced the report and highlighted the following main points:

• That Accounting Policies were the specific principles and practices applied by the council in the production and presentation of the financial statements;
• It was considered good practice for the Governance and Audit Committee to consider and agree the Accounting Policies in advance of the production of the draft accounts;
• The proposed Accounting Policies for the 2024/25 financial year were at Appendix 1 and these had been prepared in line with the CIFA code on local authority accounting for 2024/25;
• The Accounting Policies did not change significantly each year unless major changes to accounting rules and regulations had taken place.
  • Paragraph 2.1 of the covering report outlined one substantial change with the Code of Practice in 2024/25 following the introduction of a new accounting standard ‘IFRS 16 Leases’. The impact of this standard on the Financial Statements was considered minimal; and
  • As outlined at Paragraph 6 of the Accounting Policies, a Business Improvement District (BID) had been set up during 2024/25 for which the council acted as a billing authority under the scheme with income being passed to the BID. In accordance with the CIPFA code of practice, no income or expenditure relating to the BID would be included in the council accounts.
• The draft Accounting Policies would be reviewed upon receipt of the template accounting policies from external treasury advisors; and
• The 2024/25 unaudited Financial Statements needed to be  completed by the statutory deadline of 30 June 2025 and would be presented to the Governance and Audit Committee upon completion.

Members considered the report and made the following comments:

• Members requested that should minor changes to the Accounting Policies come forward to the committee, that these be highlighted within the document for ease of identification.

• Members queried Note 7 in respect of remeasurements comprising ‘contributions paid to the Lincolnshire County Council pension fund’.
  • The Deputy Chief Finance Officer – Corporate(PSPS) responded that the payments to Lincolnshire County Council were primary contributions to the pension fund at 23.8% and secondary contributions which funded the deficit payment. Such payments were not allowed to be funded from the General Fund but were accounted for via transactions/adjustments from the pension reserve. Information on this area would be requested to be added to the June pension training to enhance member understanding. 

• Members referred to Note 8 of the Accounting Policies and requested an explanation regarding ‘indicative conditions that arose after the reporting period’.
  • The Deputy Chief Finance Officer – Corporate(PSPS) responded that:
    • This could occur where transactions of material value had taken place following the balance sheet date, but prior to the audit  ...  view the full minutes text for item 66.

To consider the draft Indicative External Audit Plan and Strategy for the year ending 31 March 2025 (report of the Director - KPMG enclosed).

Consideration was given to the report of KPMG regarding the draft Indicative External Audit Plan and Strategy for the year ending 31 March 2025.

The External Audit Manager (KPMG) introduced the report and highlighted the following:

• A status update in that almost all planning and risk assessment procedures had been completed;
• Materiality levels: a lower materiality had been set for the valuation of land and buildings following the disclaimed audit opinion for the previous year;
• Significant risks;
• Group involvement; and
• Value for money procedures; these were ongoing but there were no anticipated significant risks to the current arrangements;

Members considered the report and made the following comments:

• Members queried the audit fees outlined on page 26 of the report which had increased to £154,600 although it was believed that these should follow a Public Sector Audit Appointments (PSAA) fixed scale increase of 9.5%.
  • The External Audit Manager (KPMG) responded that the ISA 315 fee had been included in the scale fee for 2024/25 whereas it had been shown as a new separate item in 2023/24. An inflationary increased had also been applied.

• Members referred to page 9 of the report in respect of pension valuations and queried whether any significant changes were to be expected following the Covid pandemic.
  • The External Audit Manager (KPMG) responded that auditors did not have issued data to comment on any noticeable increases due to ill-health or early retirements post-covid and recommended that insights be gathered from Human Resources departments or through direct contact with the pension fund.

AGREED:

That the draft Indicative External Audit Plan and Strategy for the year ending 31 March 2025 be noted.

To provide Members with an update on Treasury Management performance and activity to ensure best practice is maintained (report of the Director of Finance enclosed).

Consideration was given to the report of the Director of Finance which provided members with an update on Treasury Management performance and activity to ensure best practice was maintained.

The Interim Treasury Manager (PSPS) introduced the report and the Treasury Management Update at Appendix 1, which included the following areas:

• Treasury Management update for the quarter period to 31 December 2024;
• Economic update with commentary provided by MUFG Corporate Markets (formerly Link Group);
• Interest rate forecasts;
• Annual Investment Strategy;
• Borrowing;
• Debt rescheduling;
• Net treasury position; and
• Compliance with Treasury and Prudential Indicators at Appendix 1A

Members considered the report and made the following comments:

• Members referred to the HRA Capital Expenditure on page 104 of the agenda pack and queried the changes to the approved budget of £300,000 for major adaptations.
  • The Interim Treasury Manager (PSPS) responded that expenditure detail did not fall under the remit of the Governance and Audit Committee however the information was available within the reports to Cabinet which were readily available online.

• Members referred to the Housing Revenue Account Capital Expenditure 2024/25 on page 104 of the agenda pack and, as a number of scheme improvements were required for council housing stock, queried the forecasted underspend of the Disabled Facility Grants (DFG) and  the credit balances of some of the budget lines (from Wignal’s Gate S106 to LAHF2 Tulip Fields Holbeach).
  • The Interim Treasury Manager (PSPS) responded that:
    • The DFG spend relied on applications coming through to the council; and
    • The credit balances on the budget lines would have resulted from an underspend at the end of the 2023/24 financial year with a resulting accrual to 2024/25. Expenditure in the current financial year would clear the accrual.
  • The Assistant Director – Wellbeing and Community Leadership added that:
    • DFGs were funded through the Better Care Fund and passed to the council via Lincolnshire County Council;
    • The purpose of DFGs was to support necessary upgrades for non-HRA properties and therefore the SHDC Housing Team were not involved;
    • The fulfilment of DFGs was complex and each case required an assessment and referral from an Occupational Therapist; and
    • The relevant council team was active and adequately resourced to process such applications in a timely manner.

AGREED:

That the Q3 Treasury Report 2024/25 at Appendix 1 be noted.

To advise Members of any RIPA regulatory activity in the last 12 months and any work needed to ensure arrangements across the Partnership remain up to date and provide assurance that our legal obligations are effectively managed (report of the Assistant Director - Regulatory and Senior Responsible Officer (SRO) for RIPA enclosed).

Consideration was given to the report of the Assistant Director – Regulatory and Senior Responsible Officer (SRO) for RIPA which advised members of any RIPA regulatory activity in the last 12 months and any work needed to ensure arrangements across the Partnership remained up to date and provided assurance that the council’s legal obligations were effectively managed.

The Group Manager Public Protection introduced the report on behalf of the Assistant Director – Regulatory and SRO for RIPA who had given his apologies, which included:

• Background to the report;
• That no RIPA activity (covert activity) had been undertaken by Partnership councils within the last two calendar years;
• That the Regulation of Investigatory Powers Act 2000 Partnership Policy was up to date and therefore did not require any revisions;
• A new Partnership Body Worn Camera Policy and a new Partnership CCTV Policy were being developed during 2025/26; and
• Details in respect of officer training.

Members considered the report and made the following comments:

• Members queried why there had not been any RIPA activity over the last two years.
  • The Group Manager Public Protection responded that:
    • Whilst criminal investigations were regularly undertaken, RIPA only applied to directed surveillance activity (for covert operations) which required authorisation from the Magistrates Court;
    • Prior to authorisation, the Magistrate would need to be satisfied that overt means of surveillance had been exhausted;
    • Most cases could be addressed through the availability of the many overt means of surveillance, such as freely available information on the internet or overt CCTV cameras;  and
    • The use of directed surveillance remained a useful mechanism and would be pursued if considered proportionate to an investigation.

• Members noted the current three-year rolling programme of RIPA training for officers and asked how this worked for new officers.
  • The Group Manager Public Protection responded that:
    • Internal E-Learning RIPA training was accessed for officers; and
    • The subject of criminal investigations was integral to the professional qualifications of some roles, such as Environmental Health Officers, which involved an understanding of wider criminal processes including RIPA.

• Members queried why the new policies, and therefore associated improvements, were taking so long to implement.
  • The Assistant Director – Wellbeing and Community Leadership responded that the cautious considerations of policy content regarding utilisation of advanced technology required due preparation and production time to ensure a correct balance was achieved for communities. 

• Members queried whether the CCTV cameras had face recognition function.
  • The Assistant Director – Wellbeing and Community Leadership responded that:
    • Face recognition technology was installed in some of the newly installed cameras, but the function was not yet activated. The Partnership was keen to apply caution regarding the deployment of advanced technology relating to CCTV face recognition and the new policy needed to ensure that face recognition technology was correctly and usefully utilised. Where available, the clothing identification function had been activated which had provided positive outcomes; and
    • The council worked collaboratively across infrastructures with the Office for the Police and Crime Commissioner and Lincolnshire Police.

AGREED:

That the Regulation of Investigatory  ...  view the full minutes text for item 69.

To provide the Committee with an update of Internal Audit activity as at March 2025 (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 provided the Governance and Audit Committee with a progress report update on audit work undertaken.

Henceforth, for minute 70 only, all references to ‘Head of Internal Audit (Lincolnshire County Council)’ should be read as ‘Internal Audit Manager (Lincolnshire County Council)’.

The report was introduced by the Head of Internal Audit (Lincolnshire County Council) and provided the committee with the following information:

• The role of Internal Audit;
• The purpose of the document:
• Performance dashboard;
• Update on Internal Audit activity: two quarter 4 audits were at the final stages of completion; and three follow up reviews had been completed, with improved assurances given in all three cases;
• Analysis of ‘live’ audit reviews;
• Executive summaries had been provided regarding the assurance opinions given;
• Planning and resourcing;
• Work plan 2024/25 overview; and
• Appendix 1 reported on the tracking of overdue medium and low priority actions, of which there were none.

Members considered the report and made the following comments:

• Regarding the Budget Monitoring review, members queried the following results from the budget holder survey:
  • The low 39% response rate.
    • The Head of Internal Audit (Lincolnshire County Council) responded that Improvements to response rates would be sought from management however it was appreciated that officers received many requests for information;
  • That only 38% had agreed that training provided made the process effective and efficient:
    • The Head of Internal Audit (Lincolnshire County Council) responded that actions had been agreed with finance colleagues and that the issues had been quickly addressed with the undertaking of further training sessions; and
  • That only 54% were clear on their role as budget managers.
    • The Director of Finance responded that:
      • Work was underway with finance colleagues to review processes and provide beneficial adjustments and improvements to service teams and the budget holding community;
      • Ongoing training needs were to be pursued, and resolution intentions could be shared with the committee following further consideration and work in this area; and
      • It was not unusual to find challenges in this area due to staff turnover and different software systems utilised across the sector.

• Members queried when the Housing Act 2023 audit review would recommence, and when the report from the Regulator for Social Housing (RSH) was to be published.
  • The Head of Internal Audit (Lincolnshire County Council) responded that upon agreement with management, the Housing Act 2023 internal audit was paused when the RSH announced the start of their SHDC housing inspection. The internal audit would be recommenced on completion of the RSH inspection;
  • The Housing Transformation Manager (HRA) added that the RSH report would be published, as a public document, in July 2025.

• Members queried why the Governance and Audit Committee were  not shown the ‘budget versus actuals’ throughout the year, as any significant differences were not brought to their attention until the end of the year.
  • The Director of Finance responded that:
    • The regular review of the ongoing budget was a primary Cabinet function for  ...  view the full minutes text for item 70.

To review the Combined Assurance Status Report 2024/25 (report of the Senior Leadership Team enclosed).

Consideration was given to the report of the Senior Leadership Team which asked the committee to review the Combined Assurance Status Report 2024/25

The Assistant Director – Governance (Monitoring Officer), the Assistant Director – Leisure and Culture, the Assistant Director – Wellbeing and Community Leadership and the Assistant Director – Strategic Projects attended for this item.

The Assistant Director – Governance (Monitoring Officer) introduced the report which came forward to the committee on an annual basis as part of the Corporate Governance Framework.

The Combined Assurance Status Report 2024/25, at Appendix 1, included the following areas:

• Overview of assurance;
• Chief Executive Summary;
• Strategic risk;
• Deputy Chief Executive Key Messages;
• Strategic Partnership Working (PSPS delivered services)
• Key projects;
• Key partnerships; and
• Emerging risks.

Members considered the report and made the following comments:

• Members stated that a general issue regarding the collection of waste had been encountered within wards. What were the difficulties and actions required to overcome the issue.
  • The Director of Finance stated that a written response would need to be provided after the meeting.

• Members queried whether the asset register had been updated.
  • The Head of Internal Audit (Lincolnshire County Council) responded that:
    • An action to update the asset register had resulted from the Insurance audit;
    • Managers had reacted quickly to the assurance review findings; and
    • A follow-up report on the matter would be included in a future Internal Audit progress report to the committee.

• Members requested clarification of the intended meaning of the overall assurance ‘RAG’ key message outlined on page 9 of the report.
  • The Head of Internal Audit (Lincolnshire County Council) responded that the RAG management tool presented a ‘point in time’ overall assurance management viewpoint of service areas, combined with performance and risk information. 

AGREED:

That after reviewing the Combined Assurance Status Report 2024/25, the committee was assured that the findings illustrated that the assurance framework was operating effectively as part of the Council’s corporate governance arrangements.

To set out the annual plan for internal audit activity for 2025/2026 (report of the Head of Internal Audit Lincolnshire County Council enclosed).

Consideration was given to the report of the Head of Internal Audit which set out the draft Internal Audit Plan 2025/26

The Head of Internal Audit (Lincolnshire County Council) introduced the report, and the following points were highlighted:

• That the established Internal Audit Team for SHDC would continue into 2025/206;
• The declaration that the Internal Audit Team fully conformed with internal audit standards;
• The team were not aware of any conflicts of interests in carrying out internal audits for South Holland District Council;
• The Internal Audit Plan 2025/26 (from page 6 of the document) was linked to the council’s strategic risks and corporate priorities. The reviews would inform the annual audit opinion provided by the Head of Internal Audit at the end of the year; and
• The committee would be advised of any adaptations to the plan which resulted from risk changes during the year.

Members considered the document and made the following comments:

• Members queried whether any guidance was in place regarding the rotation of auditor teams.
  • The Head of Internal Audit (Lincolnshire County Council) confirmed that their strategy to rotate auditors after a certain period fell within guidance and that the practice served to provide a fresh perspective on matters.

• Members welcomed the Section 106 audit review.

AGREED:

That the Internal Audit Annual Plan 2025/26 be noted.

To provide an update on the Council’s current strategic risks (report of the Assistant Director – Governance enclosed).

Consideration was given to the report of the Assistant Director – Governance which provided the committee with an update on key risks.

The Business Intelligence and Change Manager and the Housing Transformation Manager (HRA) attended for this item.

The Business Intelligence and Change Manager introduced the report, and the following main points were highlighted:

• All strategic risks had been reviewed by risk owners, the Senior Leadership team and the internal governance clinic;
• The risk spread for South Holland, the Partnership and the South Holland Housing Revenue Account (HRA) was summarised at point 2 of the covering report;
• A previous reporting error on the HRA risk report had been noted and rectified;
• The following two new risks had been identified:
  • ‘The impact of Awaab’s Law’ on the HRA Risk Register which related to the risk in respect of resources to meet the requirements of the new legislation due to commence in October 2025. A response to the draft legislation had been submitted in March 2025 and the council awaited a steer to landlords from the Ministry of Housing, Communities and Local Government (MHCLG); and
  • ‘Local Government Reform’ was noted on the Strategic Risk Register and would become more dynamic and detailed as risks were identified over time.

Members considered the report and made the following comments:

• Members referred to the Local Government Reform (LGR) risk SHDC24 and suggested that a related risk around staff engagement and perception be considered.
  • The Business Intelligence and Change Manager responded that:
    • The suggestion would be relayed to the Senior Leadership Team;
    • Risk SHDC24 would likely be split into sub-category areas as these were identified; and
    • A key mitigation around this risk was already in place with the regular undertaking of staff communications and briefings in respect of LGR developments.

• Members referred to risk Economic Growth risk SHDC09, and queried whether recent global events had affected this risk position further since the report was produced:
  • The Business Intelligence and Change Manager responded that the risk was expected to remain high due to external factors.

• Members referred to the Council Financial Positions SHDC16 risk and queried whether the risk would be further affected by internal draining board costs.
  • The Business Intelligence and Change Manager would investigate the matter and provide a response after the meeting.

• Members referred to the Impact of Awaab’s Law SHDCHRA13 risk, and queried the action taken when a damp or mould report was received and whether the volume of reports had increased.
  • The Housing Transformation Manager (HRA) responded that:
    • A triage process was in place which prioritised the severity of damp and mould in a property alongside associated risks due to vulnerabilities of the household;
    • A recent report was presented to the Performance Monitoring Panel and Cabinet on the performance of multiple items of Housing Repairs which included the council’s approach to damp and mould;
    • A specific report was coming forward in May 2025 on the council’s performance in respect of damp and mould, and a further report in July 2025 on the  ...  view the full minutes text for item 73.

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 and stated that:

• Appendix 1 had been updated with items coming forward to the committee:
  • Since the agenda had been published, confirmation had been received that two pending items ‘Whistleblowing Policy’ and ‘Counter Fraud and Corruption Policy’ would be coming forward to the committee in September 2025; and
  • Work was underway with relevant officers to schedule items for the 2025/2026 Work Programme update which would be presented to members at the next committee meeting.
• Appendix 2 provided an update of the committee’s training record. Since the agenda had been published, the date for the virtual Pensions training session had been confirmed as 9 June 2025.

AGREED:

That the Work Programme of the Governance and Audit Committee be noted.

There were none.