Agenda and minutes

Apologies for absence were received from Councillor David Meredith (Chair of the Committee), and the Parish Council Co-opted Member Alan Smith.

The Committee Vice-Chair, Councillor Roger Bennett, chaired the meeting in the absence of the Chair of the Committee.

To invite Councillors to declare any Disclosable Pecuniary Interests and/or Other Disclosable Interests they may have in items on the agenda, and to confirm the nature of those interests.

There were no declarations of interest.

Members of the public have an opportunity to speak at meetings of the Audit, Governance and Standards Committee.  In order to do so members of the public must register by 12 noon on the day of the meeting.  A maximum of 15 minutes will be allocated to public speaking.

There were no members of the public who had registered to speak at this meeting.

Members were advised that this item had been deferred to the next meeting, when the granting of general, individual and outside body dispensations to Members would be considered as part of a single report.

The Director of Finance and Section 151 Officer presented the Revised Annual Governance Statement 2023/24 and 2024/25 report for Committee’s consideration.

Members were advised that annual governance statements were prepared every year alongside statements of accounts and set out the key governance issues for the organisation. The Committee was informed that, following work undertaken by the external auditors, significant governance issues had been identified that had not previously been fully reflected in the Annual Governance Statements previously submitted for 2023/24 and 2024/25.

It was reported that the revised governance statements included additional wording and commentary relating to the expected disclaimer audit opinions for the two years, the Section 24 statutory recommendation, housing services regulatory judgment, VAT compliance and the implications of disclaimer opinions on the future annual governance statements.

During consideration of the report, Members welcomed the submission of revised governance statements before the Committee and felt that this provided additional transparency in terms of updating the Committee on the additional governance issues as soon as they came to light.

A correction was requested on page 19 of the report, where reference was made to Bromsgrove Council rather than Redditch Borough Council.

Members also noted the work that had been undertaken over the last couple of years to improve performance reporting, the quality of data on the performance dashboard and more detailed narrative around performance now being provided to elected Members.

Members further discussed the impact of the problems created by the implementation of the TechOne ledger system and the longer-term impact this had on the ability of the Council to submit financial statements in a timely manner, the impact of staff turnover in the Council’s finance team and audit delays nationally impacting on timely auditing of accounts.

RESOLVED that

1)    The revised Annual Governance Statements (AGS) for 2023/24 and 2024/25 as attached at Appendix 1 and 2, particularly the additional wording in red, be endorsed.

2)    The significant governance issues identified since the original accounts were produced, and the additional assurance now included int the revised AGS documents in response to the external auditor’s request be noted.

3)    The revised Annual Governance Statements for inclusion alongside the Statement of Accounts for the relevant financial years be approved.

The Committee considered the External Audit Completion Report for the 2023/24 and 2024/25 financial years, presented by representatives from Ernst & Young. The External Auditors present outlined the purpose and scope of the report, the auditor’s statutory responsibilities, and outlined the audit findings and Value for Money considerations.

Members were advised that the report had been prepared within the context of national delays to local authority audits, as well as local challenges, including the auditors who had initially been appointed having been unable to take up the role resulting in late appointment of current external auditors as well as delays with completion of prior years’ accounts. It was noted that the Council’s previous auditor, Grant Thornton, had issued statutory recommendations, in October 2022 and November 2023, with respect to the flawed implementation of Council’s new financial system (ERP) and the subsequent failure of the Council to publish the 2020/21, 2021/22 and 2022/23 draft financial statements in accordance with statutory requirements.

The External Auditors reported that they had reviewed the actions taken by the Council in response to these statutory recommendations. The External Auditors were satisfied that further statutory recommendations were not currently required.

The External Auditors reported that they had completed the work required under the international auditing standards for the Council’s financial statements for both 2023/24 and 2024/25. The External Auditors intended to issue a disclaimer opinion on the Council’s financial statements for both of these years. This meant that no assurance could be provided on the accuracy of the financial statements. It was clarified that this position reflected in part the historic issues for those years rather than current financial management arrangements, although the Value for Money section of the report identified six risks of significant weaknesses which remained relevant to the Council.

In relation to Value for Money arrangements, Members were informed that the audit considered three key criteria: financial sustainability, informed decision-making, and the effectiveness and efficiency of resource use. The auditors clarified that they reported by exception where significant weaknesses were identified rather than providing an overall assurance conclusion.

The Committee’s attention was drawn to a number of significant weaknesses identified within the Value for Money part of the report. These included delays in publishing the draft financial statements for 2023/24, capacity and capability issues within the finance team linked to staff turnover and reliance on interim arrangements, and weaknesses arising from the Council’s management of VAT and accounting processes. It was also noted that the Council’s C3 regulatory judgement from the Regulator of Social Housing represented a significant weakness in governance and service delivery arrangements.

The auditors reported that, whilst some areas such as capital programme underspends and maintenance-related complaints within the Housing Service had been identified as risks, these had not been assessed as significant weaknesses, although recommendations for improvement had been made.

In response to the report by the External Auditor, the Director of Finance and Section 151 Officer explained that the Council accepted the findings of the report and was committed to  ...  view the full minutes text for item 6.

The Q4 2025/26 Risk Management report was presented for Members’ consideration. The report provided an overview of the Council’s corporate and departmental  risks for the period up to the end of March 2026, together with an update on progress made in strengthening the Council’s risk management framework.

Members were informed that significant work had been undertaken to review and refresh the Council’s approach to risk management. Assistant Directors had completed reviews of corporate risks, and a programme of training had been delivered across the organisation with the aim of embedding risk management practices more effectively. In addition, Internal Audit had reviewed the current risk management processes and would undertake a further review later in the year, or early in the next calendar year, once updated strategies and refreshed risk registers were in place.

It was reported that an officer Strategic Risk Management Group had recently been convened to review all corporate risks and that this group would continue to meet going forward. Consideration was also being given to involving a Member Risk Champion in future risk reviews in order to strengthen Member oversight of risk management.

The Committee was advised that the report set out the definition of corporate risks and included details of current risk levels. In particular, there were three risks identified with high inherent risk scores of 20 or above. The report also highlighted risks that had been closed, new risks that had been added, and a number of risks that had been amended. Members noted that a separate section detailed the latest position in respect of service-level risks.

During consideration of the item, Members raised a number of detailed queries regarding specific risk areas. Questions were asked in relation to the ‘Failure to meet waste requirements of the Environment Act 2021’ risk, with Members seeking further information on the progress to date, ongoing financial and operational pressures, and the potential financial implications in the event of a failure to meet the statutory compliance requirements, particularly with regard to the introduction of food waste service. Additional queries were raised regarding procurement, including the extent of progress made in updating policies, any gaps in staff training, and the assurance that the Council was fully compliant with legislative requirements.

Members also queried risks associated with the Renters’ Rights Act and requested clarification on the implications of non-implementation, the risks that remained outstanding, and the actions planned to mitigate these risks for both the Council as a landlord and for tenants. Concern was expressed that this risk may have been understated, and it was suggested that it should be upgraded a medium risk within the Council’s Corporate Risk Register until a comprehensive mitigation plan had been developed and reported.

Significant concern was raised in relation to outstanding remedial fire safety works. Members noted that a substantial number of fire remedial actions remained unresolved and that progress appeared limited. Members emphasised the importance of ensuring timely completion of these works and requested clarity on expected completion timescales and contingency arrangements in  ...  view the full minutes text for item 7.

The VAT Recovery Progress Update report was presented. Members were advised that the report had previously been considered by the Executive Committee. The report was presented before the Audit, Governance and Standards Committee due to the financial implications of the matter, a significant cash repayment from HMRC, which had a direct impact on Treasury Management, an area that fell within the Committee’s remit. Secondly, the Committee had asked to review the actions agreed with HMRC to ensure that penalty suspensions remained in place.

Members were informed that the Council had been unable to submit VAT returns between April 2021 and October 2024 due to issues linked to the implementation of the Council’s financial system (TechOne), and associated issues of staff turnover and misalignment of processes in relation to VAT. It was reported that corrective action was being taken, with  the initial Error Correction Notice submitted to HMRC after monthly VAT returns were reinstated in November 2024 and a subsequent Notice submitted in November 2025.

The Committee was advised that the Council had received a net cash repayment of approximately £19.9 million from HMRC. Whilst this improved the Council’s cash position, Members were reminded that the underlying accounting transactions had already been recognised in previous financial periods. It was emphasised, however, that the return of these funds had implications for the Council’s Treasury Management strategy and would need to be incorporated into future financial planning considerations.

In relation to compliance, Members were informed that HMRC had agreed to suspend financial penalties on the condition that the Council implemented and maintained a number of specific actions. These actions included strengthened processes for VAT returns and enhanced assurance arrangements and conditions were detailed in the report. Audit, Governance and Standards Committee oversight had been requested to ensure that these requirements were being met on an ongoing basis.

The Committee was further advised that the Council had been working closely with external specialists, PS Tax, to strengthen its VAT arrangements. Although VAT returns were currently produced through a manual process, it was reported that returns were now being submitted on a monthly basis and that confidence in the revised processes had significantly improved. Members were reassured that additional assurance measures had been introduced and that regular updates would be provided to the Committee to demonstrate compliance with HMRC requirements.

Officers also highlighted improvements in resourcing within the VAT team. A permanent member of staff had been appointed to focus on VAT work, supported by additional temporary resource to enhance accuracy and ensure the timely submission of returns. Training on VAT was being delivered within the finance team and to managers across the organisation.

During discussion, Members welcomed the recovery of funds and the strengthened processes now in place. However, questions were raised regarding why the issue had not been identified sooner. In response, it was noted that the complexity of the TechOne finance system implementation and problems with that implementation, as discussed under previous agenda items, had contributed to the delay in detection. Members  ...  view the full minutes text for item 8.

The Financial Compliance Report was presented to the Committee for consideration. Specific areas of the report were highlighted.

Members were advised that the Council’s financial procedure rules, which form part of the governance framework within the Constitution, had recently undergone a comprehensive review. As part of this process, enhancements had been implemented alongside updates to procurement arrangements. It was explained that these changes strengthened the Council’s overall control environment and provided a more robust framework for decision-making, reinforcing governance and supporting effective financial management going forward.

The Committee was informed that, in respect of statutory financial reporting, the Council was now largely up to date with required returns. The only outstanding area related to the Whole of Government Accounts. Members were advised that a newly appointed Chief Accountant was now in post and actively progressing the Council’s accounts, with the expectation that attention would subsequently turn to finalising the outstanding Whole of Government Accounts returns. This work was anticipated to bring the Council back into compliance with national reporting requirements.

In relation to the Council’s Financial Stability Plan, Members noted the recent appointment of a permanent Section 151 Officer, which was described as a significant and positive step in providing strategic leadership and direction for the Council’s finance function. Officers also confirmed that further work would be undertaken to review staffing arrangements within the Finance team to ensure sufficient capacity and expertise were in place to support the Council.

Members received an update on the Council’s TechOne financial system. It was reported that ongoing improvement work was being carried out, with notable progress achieved in recent months. Officers explained that a health check of the system had been completed and that a revised project plan was being developed to address remaining issues and ensure that the system was fully fit for purpose, enabling it to effectively support the organisation’s financial processes.

The Committee also considered developments in procurement and financial training. It was reported that procurement training was being delivered across the organisation, which was positively received. In addition, training and compliance requirements had been strengthened in key areas such as purchase card usage, purchase orders and Government Procurement Cards (GPC). Officers emphasised that these measures would continue to be a focus moving forward in order to embed good practice and ensure consistent compliance across the Council.

During the discussion, a Member raised a query regarding the TechOne finance system, noting that it had been a longstanding issue and the main contributing factor to the situation regarding the backlog in the completion of Statements of Accounts faced by the authority over the past few years. It was requested that, following the conclusion of the ongoing review work, a detailed report be presented to a future meeting of the Committee. The purpose of this would be to provide assurance to Members regarding the adequacy of improvements and the overall robustness of the system.

The resolutions as set out in the report were agreed by the Committee.

RESOLVED that

1)    The Committee  ...  view the full minutes text for item 9.

Members considered the appointment of a Risk Champion for this municipal year. The nomination for Councillor Rita Rogers was proposed and seconded and on being put to the vote

RESOLVED that

Councillor Rita Rogers be appointed as Risk Champion for the 2026/27 municipal year.

Members considered the Committee Work Programme. A number of additions to the Committee’s Work Programme were requested, as raised in previous parts of the meeting:

·       Update on progress made with upgrading the TechOne financial system – a standalone report to a future Committee meeting.

·       Fire Remedial Actions and Renters’ Rights Act Corporate risks – an expanded narrative to be provided on these risks in future Risk Management reports to Committee. Committee to consider inviting Risk Owners for these items.

·       Update on progress in Workforce Strategy actions – a standalone report to a future Committee meeting.

·       Whistleblowing, Anti-Fraud, and Corruption Strategies – strategies to be presented at the next Committee meeting in July.

It was agreed that these items would be added to the work programme as standalone items or incorporated as part of the risk management reports going forward.

The other items already scheduled for the meetings in the 2026/27 municipal year were noted.

RESOLVED that

the Audit, Governance and Standards Committee Work Programme be updated as per the pre-amble above.

Should it be necessary, in the opinion of the Chief Executive, during the course of the meeting to consider excluding the public from the meeting on the grounds that exempt information is likely to be divulged, it may be necessary to move the following resolution:

“That, under Section 100 (A) (4) of the Local Government Act 1972, the public be excluded from the meeting for the following matter(s) – to be specified – on the grounds that it/they involve(s) the likely disclosure of exempt information as defined in the relevant paragraphs (to be specified) of Part 1 of Schedule 12 (A) of the said Act”.

These paragraphs are as follows:

Subject to the “public interest” test, information relating to:

·         Para 1 – any individual;

·         Para 2 – the identity of any individual;

·         Para 3 – financial or business affairs;

·         Para 4 – labour relations matters;

·         Para 5 – legal professional privilege;

·         Para 6 –  a notice, order or direction;

·         Para 7 – the prevention, investigation or prosecution of crime

may need to be considered as ‘exempt’.

The Committee agreed that the exclusion of the public and press would not be necessary for Minute No. 13 – Minutes (of the Previous Meeting) – as the Committee would not be discussing the contents of the exempt minute record of that meeting.

The Committee remained in open session for Minute No. 13 (Agenda item 13) – Minutes.

To confirm the accuracy of the minutes of the meeting of Audit, Governance & Standards Committee which took place on 24^th February 2026, including of the exempt minutes record of that meeting.

The Committee considered the minutes of the meeting of Audit, Governance and Standards Committee held on 24^th February 2026, including the exempt minutes record of items considered in closed session at that meeting.

RESOLVED that

the minutes of the meeting of Audit, Governance and Standards Committee held on 24^th February 2026 be approved as a true and correct record and signed by the Chair.