Agenda item

1.      The report was presented by Lucy Nutley and Paul Dossett from Grant Thornton.  Some of the key points highlighted to Members included:

          a)      The accounts were published in full by the deadline of 30 June 2025, which was an improvement on the prior year.

          b)      Review of accounts identified minor changes and no notable omissions, which Ms Nutley confirmed was good news.

          c)      Successful collaborations across the organisation resulted in the Finance and Internal Audit teams working well with the external auditors, resulting in good progress as completion stage approached.

          d)      No additional significant material misstatement had been identified and Members were directed to pages 98 and 99 of the report pack which provided a brief update on the work conducted to date on the significant risks, identified by Grant Thornton at planning stage. Members were also directed to page 100 which showed progress on sample testing with the bulk of which being complete.

          e)      The accounts and audit findings report were due for presentation at  

                 the October 2025 Governance and Audit Committee meeting.

2.      In answer to Member comments and questions, the following was said:

          a)      LOBO (Lender Option Borrower Option) loans currently held by the Council were financial instruments Grant Thornton reviewed as part of the ongoing accounts work. At present, no information had been provided which indicated the status of the LOBOs in Kent had changed. Whilst the risks associated with LOBOs were recognised, in absence of any information which reflected cause for concern, they were not considered relevant for the 2024 – 2025 accounts or to the financial sustainability of the Council.

          b)      Financial instruments, inclusive of LOBOs, would be included in the Treasury Management Strategy. It was explained to Members that this was a long-standing active strategy which managed both cash and debt.

          c)      The Treasury Management Group was due to be resurrected, and they would continue to monitor the strategy as part of the governance arrangements in place to manage these risks.

          d)      It was confirmed that the briefing session scheduled for 16 October would be circulated to Member diaries, once some final details had been finalised.

          e)      It was confirmed that the Government had not announced a definitive direction of travel or figures associated with fair funding 2.0.  Lobbying had taken place, in particular with the County Council Network, to ensure cost pressures faced by upper tier county areas were being addressed in the review. A policy document was due for publication and the MHCLG (Ministry of House, Communities and Local Government) Civil Servants had given assurance that an indication of trajectory of travel and the impact on Kent County Council could be gleaned from that.

          f)       The External Auditor’s sector updates included challenge questions, not always asked during Committee meetings. It was expected that Members would reflect on these questions and ask for a response or an update from officers at a later point. The current aim was to ensure the external audit report contained the sort of questions which Members could ask, alongside their own enquiries.

          g)      The agenda for the Committee included several standing items for Members to regularly review. It was suggested that Members could meeting to discuss additional items for inclusion on the agenda and officers could assist by suggesting items featured in the both the external and internal audit reports as well as the Annual Governance Statement for Member consideration.

          h)      On the specific issue of debts owed to, and from, the ICB (Integrated Care Board) it was initially anticipated that the Council would attend binding arbitration however, now mediation was more likely.  The meeting was in the process of being set up and planned to take place in the coming weeks. The primary nature of the dispute centred around who was responsible for the cost of patients upon discharge from hospital. It was confirmed that KCC held a detailed list of all individuals and the sums they owed, as well as a process for conclusion.

          i)       Mr Betts confirmed that, in relation to an earlier point made concerning asylum-seeking children, there was a distinction between children discharged throughout the rest of the country, as all the associated costs were covered by a grant from central government. The local authority covered the share of its individual children, as with any other local authority. It was agreed that the amount the Council spent, and the amount funded by Central Government would be reviewed to establish the most appropriate place for reporting.

3.      Members unanimously agreed to ask the relevant officers to review and

          answer the model questions set out in the Grant Thronton report (pages

          102 onwards) and if answers were not available, officers would provide

          these at the next Committee meeting.  Members also agreed this should

          be added to the Work Programme as a standing item.

4.      RESOLVED that the Committee NOTED the External Auditor’s Progress Report for assurance; AND

          RESOLVED that the Committee REQUESTED that the relevant officers reviewed and provided answers to the model questions set out by External Auditors.  If answers were not available, officers would provide these at the next meeting of the Governance and Audit Committee.

          RESOLVED that the address of the External Auditor’s model answers be added as a standing item to the Governance and Audit Work Programme.