Apologies for absence were received from Cllrs Samir Jassal and Ektaveen Thandi; Cllrs Alan Metcalf and Tony Rana substituted.

The minutes of the Finance and Audit Committee held on Tuesday, 11 February 2025 were agreed and signed by the Chair.

No declarations of interest were made.

The Committee were provided with a verbal update of the progress to date on the work of external audit.

The Public Sector Audit Manager advised that:

• Grant Thornton had continued pursuing bespoke procedures for the 2023/24 financial period with a specific focus on transactions relating to the Charter, the new group structure and the Aviva transaction
• Following production of the 2023/24 financial statements, which the Councils senior officers had indicated expected to be completed by the end of March 2025, they would be subject to an inspection period of thirty working days following which, Paris Williams (Grant Thornton – Director) would issue a disclaimed opinion for the statements. The reason for giving a disclaimed opinion would be due to the Government imposed back stop date of the 28th of February being surpassed which did not give Grant Thornton sufficient time to provide assurances on the accounts
• The audit findings report for 2023/24 would be submitted to the next F&A meeting for Committee review
• In due course, the 2024/25 Audit Plan would be provided and another risk assessment conducted where it was hoped assurances could be built back up in line with the timeline that would be set out at the F&A Committee meeting in September 2025, ultimately resulting in an unqualified opinion being issued on accounts in the upcoming years

Members noted the update. 

The Committee were presented with a report that sought their endorsement of the Accounting Policies to be used in formulating the Financial Statements for the authority for the financial year 2024/25.

The Principal Accountant (General Fund) explained that the Code for 2024/25 had been published and a review of the Council’s accounting policies had been conducted to ensure that those were in line with the requirements of The Code.

The Principal Accountant (General Fund) advised that there had been one change since last year; from 1st April 2024, a new International Financial Reporting Standard, IFR16, came into effect for Local Authorities. IFRS16 introduced a new “Right of Use” asset class to the

balance from 2024/25 onwards and recognised the corresponding lease liability. It applied to all leases – property, plant and equipment, vehicles and land.

The Principal Accountant (General Fund) assured Members of the expectation that the new standard would have minimal impact to the Council as there were limited lease arrangements in place. As in previous years, a member training session would be held to coincide with the production of the 2024/25 financial statements and a section would be included pointing out what things were different due to IFRS16 compared to what was seen prior to its implementation.

The Accounting Policies had been submitted to the external auditor for review and if any significant changes were identified, they would be reported back to Members at a future Committee.

In response a question posed by the Chair, the Principal Accountant (General Fund) explained that for the last three financial years where the accounts were subject to a disclaimed opinion, the materiality threshold was set at the level seen in last formally completed accounts which was 2019/20, around £1.3 million. The Public Sector Audit Manager added that for the Councils accounts for 2024/25, the materiality threshold would be broadly similar to 2023/24 accounts; a lower percentage to calculate the threshold had been used as Grant Thornton were pursuing a cautious approach the first year following the backstop; the threshold would be reviewed in subsequent years.

Resolved that Members endorsed the use of the Accounting Policies as outlined at

Appendix One to this report, subject to comments from the Council’s external auditor.

The Committee were presented with a report that presented the outcome of the annual risk identification and analysis exercise, the purpose of which was to assist in the development of Gravesham Borough Council's Corporate Risk Register for 2025/2026.

The Assistant Director (Corporate Services) directed Members to appendix one which held the Risk Management Strategy 2025/26. The Strategy was reviewed annually and there were no updates or amendments proposed, therefore the Strategy was not presented for approval and for information only.

During the mid-year review of the 2024/2025 Corporate Risk Register, the

Finance and Audit Committee requested for the following areas to be considered

during development of the 2025/2026 register:

• Local Government Devolution
• Financial Stability and lack of government funding
• The increased public use of artificial intelligence (AI) including use by the Council’s external Partners such as Kent County Council. It was advised that in 2023 the Government added AI to their National Risk Register.
• Incorporating the risk from the Council’s Capital Programme and several large upcoming projects into the risk register

Responses to the above suggestions were outlined in section 3.3 of the report.

Since the report had been written, there had been several additions to the responses:

• Kent County Council had confirmed that due to its financial position it had withdrawn council tax incentive payments from all districts including Gravesham

·        Confirmation had been received that Kent & Medway had not been included in the government's Devolution Priority Programme however Council Leaders of all fourteen council’s in Kent and Medway had been invited to continue with plans for the creation of unitary authorities. It was recommended that a trigger be included under Risk 1 and/or Risk 2 concerning where local authorities or organizations made decisions on local funding or finances which had a material negative impact on the Council

·         The key corporate documents and processes would be updated to reflect that the STG Building Control Partnership Business Plan for 2025-2028  was approved at the last Cabinet meeting on 24 February 2025

During development of the draft copy of the 2025/2026 Corporate Risk Register, Management Team, Senior Officers and Members were contacted and requested to identify and evaluate new risks and analyse existing risks currently recorded in the 2024/2025 Corporate Risk Register. The Assistant Director (Corporate Services) directed Members to paragraph 3.2 of the report which held a summary of the Council’s seven identified risks . Further information on the  seven identified risks could be found in appendix two to the report.

The Committee asked for the following suggestions to be incorporated into the Corporate Risk Register 2025/26:

1. Under Risk 1, the trigger should be – ‘Delivery slippage of large projects in the Capital Programme and changes in the cost benefit analysis’
2. Under Risk 2 – Add trigger wording to the effect of – KCC’s financial decision making was negatively affecting the Council, and it was out of the Council’s hands how those decisions were made
3. Under Risk 3 – Include reference to risk being significant due to external partners such as  ...  view the full minutes text for item 64.

The Committee was provided with an overview of the Chartered Institute of Public Finance Accountants (CIPFA) Financial Management Code 2019, along with an annual self-assessment that was undertaken in January 2025 to identify compliance and areas for further consideration.

The Assistant Director (Corporate Services) explained that the Financial Management Code (FM Code) was designed to support good practice in financial management and to assist local authorities in demonstrating their financial sustainability. The FM Code consisted of 17 financial management standards grouped into six categories which was outlined at 2.1 of the report. The self-assessment conducted during January 2025 concluded that there were no significant improvements to be made.

The Assistant Director (Corporate Services) explained that the code and the Councils approach to the Code had been discussed with the Section 151 Officer. Additionally, the report had been considered by the Council’s Management Team and had received their comments and endorsement.

As it was a self-assessment, the Chair asked the Assistant Director (Corporate Services) to outline areas where improvements could be made, to which the Assistant Director (Corporate Services) advised that:

·      Increased independent views of the Council’s accounts were planed; having a third party to review the balance sheets and benchmarking exercises to improve transparency

·      It was the intention to provide a more detailed training programme for staff and Members on various finance topics

·      Bringing the accounts back on track so that they were up to date and assurances could be given on the balances 

The Chair thanked the Assistant Director (Corporate Services) for his reflective comments.

Members noted the report.

The Committee’s approval was sought for the Internal Audit Charter.

The Head of Internal Audit & Counter Fraud explained that from 01 April 2025, the current Public Sector Internal Audit Standards (PSIAS) would be replaced, and the council’s internal audit function would instead need to be delivered in accordance with the Institute of Internal Auditor’s (IIA) Global Internal Audit Standards. It was a requirement of the new Standards to have an Internal Audit Charter in place, which was presented to senior management and the Finance & Audit Committee for review and approval.

The Head of Internal Audit & Counter Fraud further explained that although it was also a requirement of PSIAS, with the current Internal Audit Charter approved by the Finance & Audit Committee on 12 February 2024, the new Standards introduced additional requirements around the content of the Internal Audit Charter, including introducing a requirement to establish and document the internal audit function’s ‘mandate’, which, in the case of local authorities, was provided by the Accounts & Audit Regulations 2015.

The Internal Audit Charter had therefore been updated to ensure it met those requirements, and the updated version for 2025/26 was provided at appendix two for Members approval.

The Head of Internal Audit & Counter Fraud directed Members to the reporting table in section seven advising that there would be changes to timing; the Committee was assured they would receive the same level of information just in a slightly different format.

Resolved that Members approved the Charter presented at appendix two.

The Committee’s approval was sought for the Internal Audit Strategy 2025-28 and the Internal Audit Quality Assurance & Improvement Programme (QAIP).

The Head of Internal Audit & Counter Fraud advised that in light of the new requirements introduced by the new Institute of Internal Auditor’s (IIA) Global Internal Audit Standards, it became necessary to develop a strategy specifically for Internal Audit and that was provided

at appendix two for Members’ approval.

The strategy sets out a vision for the internal audit function by the end of the strategy period in 2028, and identified three strategic objectives that would drive progress towards attaining that vision:

• Aligning internal audit coverage to key strategic objectives and risks
• Optimizing the workforce planning and talent management processes, ensuring the Council could attract, develop and retain internal audit staff; and
• Delivering a positive impact

The QAIP at appendix three had been designed to support the Strategy, and it included details around how the internal and external assessments would be managed, along with a number of performance measures. Unlike previous years, the day-to-day performance monitoring was no longer included within the QAIP as it had been focused on broader measures; however, those day-to-day measures would be recorded within the internal audit plan. There would be some changes to when the Committee received some of the usual reports. In the Summer, the service’s self-assessment against the new standards along with an action plan to address any non-conformance areas would be presented. Moving forwards, the service would report annually each summer on progress against the strategy, using the measures in the QAIP to demonstrate and support any areas of improvement as well as progress with any actions to address conformance with the standards.

Unlike previous years, the review of the QAIP would be focused on achievements against the listed measures rather than whether it remained fit for purpose. The measures outlined in the QAIP would not be included in the periodic updates but as they have always been annual measures in the past, the committee would still be receiving the same level of information.

In response to the Chairs question, the Head of Internal Audit & Counter Fraud advised that, the team were aware that the documents would need to be updated and had been working through them; there were still a few areas to check but so far, the team hadn’t identified any significant non-conformance. There were areas to improve on, such as assurance mapping but having spoken to other colleagues across Kent and listening to their action plans, the Head of Internal Audit & Counter Fraud felt that the team were already completing a lot of the necessary actions, but they weren't necessarily retaining and recording that information. The team were going to have to make some slight changes to the processes to make sure everything was in place to demonstrate and evidence that they were meeting the requirements but there shouldn’t be any significant changes. The action plan being brought to the Committee would address matters if the service were  ...  view the full minutes text for item 67.

The Committees approval was sought for the Councils Internal Audit Plan 2025/26 (Q1-Q2) which was prepared in line with the requirements of the Standards and was based on a risk assessment of all auditable areas within the council. The six factors were outlined at 2.2 of the report.

The Head of Internal Audit & Counter Fraud advised that:

·      Whilst the entire year had been mapped out for administrative purposes, the plan presented at appendix two covered the first six months of the year and mainly incorporated the reviews that were highest scoring in the independent assessment, although attempts had been made to take into account demands on services to ensure the team did not conduct a review at an inappropriate time, such as while finance were dealing with final accounts

·      The risk assessment will be reviewed in July to reflect any changes in risk priorities and prepare the plan for the second half of the financial year, which would be presented alongside the first update report in September

·      There were some small differences in sections 1-3 of the plan document, which were to ensure conformance with any new requirements in the standards and also alignment with the other documents presented this evening, but nothing had substantively changed on previous years.

·      The only key difference for this year was in section five for monitoring and review. As noted in the previous item, the measures in the QAIP were about showing continuous development and improvement of the IA function, while the measures in the plan were about performance against the operational targets. Those measures would be included in the periodic updates presented to the committee to demonstrate the team’s performance in year 

In response to questions from the Chair, the Head of Internal Audit & Counter Fraud explained that:

·      The business case template would be incorporated into the scope of the review for ‘Financial planning & budget setting (general fund)’ and would be communicated to the auditor allocated that piece of work

·      A target wasn’t in place on the number of agreed actions because the team were not able to know how many actions were going to come out of any one review. However, there was a target for the proportion of agreed actions that were implemented by their agreed date but in terms of numbers it couldn’t be predicted how many there may or may not be, so the aim was that any agreed actions were completed by the agreed date, which was the overall target of IA5

Resolved that Members approved the Internal Audit Plan 2025/26 (Q1-Q2) presented at appendix two.

The Committees approval was sought for the Counter Fraud Plan for 2025/26. There would not be a service specific strategy for counter fraud as it was covered by the councils overall counter fraud and corruption strategy

The plan for 2025-26 had been designed around four keys’ areas of activity and detailed the proposed work to be undertaken in the below areas:

• Fraud Awareness and Prevention
• Pro-Active Counter Fraud Activity
• Responsive Investigation Activity
• Other Counter Fraud Activity

The Head of Internal Audit & Counter Fraud advised that the proactive work to be completed during 2025/26 was not listed in the report as it was confidential information, but the team were scoping out several pieces of planned work.

The key change to the document was outlined in section five of the report; in line with the changes made to internal audit, there would be two sets of measures in place.

Resolved that Members approved the Counter Fraud Plan 2025/26 presented at appendix two.