Audit and Governance Committee - Tuesday 27 January 2026, 4:00pm - Cotswold District Council Webcasting

Audit and Governance Committee
Tuesday, 27th January 2026 at 4:00pm 

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  1. Councillor Nigel Robbins
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  1. 04. To approve the minutes of the Committee held on 4 December 2025
    Status: In progress
  2. 04. To approve the minutes of the Committee held on 4 December 2025
    Status: Ended
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  1. David Stanley, Deputy CEO
  2. Councillor Nigel Robbins
  3. Officer
  4. Councillor Nigel Robbins
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  1. David Stanley, Deputy CEO
  2. Councillor Nigel Robbins
  3. Councillor Paul Hodgkinson
  4. Councillor Nigel Robbins
  5. David Stanley, Deputy CEO
  6. Councillor Nigel Robbins
  7. Councillor Paul Hodgkinson
  8. Councillor Nigel Robbins
  9. Officer
  10. Councillor Nigel Robbins
  11. David Stanley, Deputy CEO
  12. Councillor Nigel Robbins
  13. Councillor Nigel Robbins
  14. David Stanley, Deputy CEO
  15. Councillor Nigel Robbins
  16. Councillor Len Wilkins
  17. David Stanley, Deputy CEO
  18. Councillor Nigel Robbins
  19. Councillor Nigel Robbins
  20. Councillor Nigel Robbins
  21. David Stanley, Deputy CEO
  22. Councillor Nigel Robbins
  23. Councillor Nigel Robbins
  24. David Stanley, Deputy CEO
  25. Councillor Nigel Robbins
  26. Councillor Helene Mansilla
  27. David Stanley, Deputy CEO
  28. Councillor Nigel Robbins
  29. David Stanley, Deputy CEO
  30. Councillor Nigel Robbins
  31. David Stanley, Deputy CEO
  32. Councillor Nigel Robbins
  33. Councillor Tom Stowe
  34. David Stanley, Deputy CEO
  35. Councillor Nigel Robbins
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  1. David Stanley, Deputy CEO
  2. Councillor Nigel Robbins
  3. Councillor Paul Hodgkinson
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  6. Councillor Helene Mansilla
  7. David Stanley, Deputy CEO
  8. Councillor Nigel Robbins
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  1. Officer
  2. Councillor Nigel Robbins
  3. Councillor Tom Stowe
  4. Officer
  5. Councillor Nigel Robbins
  6. David Stanley, Deputy CEO
  7. Councillor Nigel Robbins
  8. Officer
  9. Councillor Nigel Robbins
  10. Councillor Nigel Robbins
  11. Councillor Nick Bridges
  12. Councillor Nigel Robbins
  13. Officer
  14. Councillor Nigel Robbins
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  1. Councillor Nigel Robbins
  2. Councillor Paul Hodgkinson
  3. Councillor Nigel Robbins
  4. Councillor Len Wilkins
  5. Councillor Nigel Robbins
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  1. 12. To exclude members of the public from item 13 (Exempt Matters)
    Status: In progress
  2. 12. To exclude members of the public from item 13 (Exempt Matters)
    Status: Ended
  3. Webcast Finished

Councillor Nigel Robbins - 0:00:00
January 2026.
I'm Councillor Nigel Robbins.
I'm chair of this committee.
I'd like to welcome all members, the public in attendance,
and those watching online.
You're very welcome.
Members of the public present are entitled
to record the meeting themselves,
provided this isn't disruptive to our proceedings.
We have one change in the published agenda.
The CSIRO report, item 10,
is going to be put at the end of the agenda. There is an exempt matter
following on from that from which members of the public will be
unfortunately excluded and we have to vote as a committee on that particular
action before we go ahead with it. In accordance with Regulation 11 of the
local authorities meetings and access to information regulations 2012 the public
need to be excluded from the meeting during consideration of that item of the
agenda number 13 as it involves the likely disclosure of exempt information
as defined in the local government act of 1972. Well having got all of that off
my chest, we can turn to apologies.
We have an apology from Jeremy Thayer for what I can only
describe as pastoral reasons.
You can ask me about that if you like.
But he is being ably substituted by Tom Stowe,
and welcome to this committee, Tom.

1 Apologies

And we also have apologies from Chris Bass,
one of our independent members.
I'm sorry he's not here today.
He's such a, makes such a good contribution.
I believe that's all, except there is a change in the
membership on the administration side.
As he's now become a cabinet member, Tony Dale is not going
to be continuing as a member of this committee.
He's going to be replaced by Paul Hodgkinson.
Good to see you, Paul.
Councillor Nigel Robbins - 0:02:12
Michael?
Sorry.
We also have Michael Van, who is substituting for John Waring.
Thank you for pointing that out.
Yes, I'm so used to see you here.

2 Substitute Members

I think of you as a member of the committee, but thank you very much for substituting for
John Waring.
Okay.

3 Declarations of Interest

Are there any declarations of interest that we need to know about?
And if so, can you please declare them, or declare them at the point where it really
becomes relevant if you've just noticed that it becomes relevant.

4 Minutes

We have a set of minutes that have been circulated, and I'd like you just to give your approval
of these, please.
They're not hugely long.
On page five of your papers, item four, minutes of the meeting of the 4th of December, 2025.
Page five.
Page six.
I will only criticise the use of the word atypical when untypical
is mentioned at the beginning of that big fat paragraph
in the middle of the page.
Other than that, I'm happy.
Page seven.
There's a point there about the full accounts audit,
but that is being dealt with at this committee as it expected. Page 8 and page
9 and page 10. So could you please vote if you're happy to exit these minutes
those who were here at the last meeting?
If you weren't here you can't.
You've tried but yes, okay. If you weren't...
So those who weren't here but are now, you need to abstain.
Are there any public questions that we haven't been informed about?

5 Public Questions

It seems not.

6 Member Questions

Item 6, are there any member questions? We don't have any member questions so we can

7 Audit and Governance Committee Work Plan

look at the committee work plan on pages 13 and 14 of our agenda.
I'll ask our Section 151 officer what he expects to be
on the agenda for April the 9th.
We've only got the strategic risk register.
David Stanley, Deputy CEO - 0:05:42
Thank you, Chair. So there will be change to the published work programme. You'll see
on page 14 listed against today's date is the internal audit progress report. That is
now being considered on the 9th of April meeting. So there are two substantive items included
on the work plan for the 9th of April. The strategic risk register, which will also include
the annual review of the risk management policy and the internal audit update
report that Lucy Carter from Southwest Audit Partnership will be providing. I didn't know chair if
Lucy wanted to give you a short verbal update in terms of where that progress has got to because I'm aware that it has been a
several meetings ago that you last had an update from from swap given the the cycle that we're in
at the current moment.
Councillor Nigel Robbins - 0:06:43
At the same time, my apologies for not introducing Rich Clark to this meeting.
Rich Clark is the CEO of SWOP, which is responsible for our internal audit facility.
So, are you willing to say something now, Lucy? Give us an update if that's possible.
Happy to, Chair.
Officer - 0:07:06
I think there was an administrative error which is why the report's not with
you today but we have since the last meeting of the committee concluded the
disaster recovery audit which was given a low substantial. We've also completed
the follow -up of the members allowances which I'm sure some of you will recall. I
think one of those agreed actions is still outstanding but we're just waiting
for I think that's to do with a reconciliation so we need to find it we
need to see an evidence of another reconciliation before we can close that
We have undertaken two audits in respect of data retention and digital exclusion.
We have a couple of audits in draught at the moment.
That is housing benefit and support.
We are just about to draught a report for the climate change audit.
We have a draught report ready for bank reconciliation.
All those reports will come to your next committee.
We continue to follow up all of your agreed actions and I believe at this point in time
there's only about ten, so I have no concerns in those respects.
I will bring a draught audit plan to the next meeting of this committee, for the committee
to feed into, which will have been discussed.
I'm having a workshop with ERT tomorrow to run through a draught audit plan.
That will come to your next committee for approval along with the internal audit charter
as well, which I need the committee to approve.
And I also, at the last committee,
it was mentioned about doing the audit effectiveness
review of the committee, audit effectiveness review,
and I wonder whether it would be appropriate to pop half
an hour in before the next committee meeting,
and we could run that as a little workshop
with the committee.
To me, that's very acceptable.
Councillor Nigel Robbins - 0:08:50
That sounds like an excellent idea.
Thank you, Lucy.
Can I also introduce Alex Walling,
for those who don't know her?
She's our external auditor representative.
Oh, sorry, there you are.
From our auditors, Bishop Fleming.
Thank you for coming, Alex.

8 Annual Treasury Management Strategy and Annual Non-Treasury Investment Strategy 2026/27

I think then we can move on to the next item on our agenda,
which is the Treasury management out -turn.
Those of you who were at the last council meeting will know
that the policies and strategy were under examination.
This is the current out turn of treasury management,
and I'm going to turn over to.
Thank you, Chair.
David Stanley, Deputy CEO - 0:09:40
I think there's probably a mistake in the paper you have
in front of you, Chair, that this is the strategy
for the forthcoming financial year, not the out turn report.
We'd be doing very well
to present you the out turn report before we finalised
the year, although we have been reporting regularly on
Treasury management performance.
In terms of this agenda item, this is the annual
Treasury management strategy and the non -Treasury
management investment strategy.
Bit of a mouthful.
It covers two things.
Those of you that were in the room or online earlier
this afternoon would have had the benefit of our
in close is a training session on treasury management.
That explains what treasury management is,
so it's the management of the council's cash in effect
and what the strategy sets out is how that would be approached
both from an investment side, so where we have excess cash,
how we make best use of that and sets out the parameters
for how those investments would be made.
So it sets out the risks around that,
How we would make investments in terms of the quality of the investment that we're making
in terms of their credit ratings.
It also looks at durations, how diversified that is, the level of how we would invest
with each type of counterparty.
And that's set out in Annex A of the report, particularly on page 35, table 5 shows you
the cash limit per organisation that we're recommending that you consider for recommendation
to council and that sets out for the different counterparties what that exposure would be.
Then over the page on page 36 are the all important Treasury management credential indicators.
We're required to set those for the year and then report through this committee whether
we've complied with those indicators or not. And then starting on page 40 and 41 is appendix
one of Annex A, so it does get a little bit difficult to follow this, is what I have typically
called in previous reports the backward -looking economic history of the world, but actually
it's relatively up to date for January 2026. It does reference the Bank of England's decision
to reduce interest rates in December and where the budget was in terms of what that meant
for the economy and where inflation was prior to the most recent release of inflation data,
which will go back up.
And appendix two tries to demystify some of the terminology that we've got within the
report.
So, for those of you that were on the Treasury management training will no doubt have memorised
what we mean by money market funds, strategic pooled funds, and real estate investment trusts.
But rather than me dwelling on part A, on part B, I'll invite members to ask questions.
Annex A, which follows on page 47, deals with the non -Treasury management investment strategy,
which for those of you that are new
to this particular committee
or are substituting for other members,
that covers off effectively anything that we invest in
that isn't defined as day -to -day treasury management.
There's a list on page 52, table three.
For us is largely the investment properties
the council has acquired over recent years.
and we are required through the non -Treasury investments strategy to provide members with
information on the proportionality of investments, their performance, and also consider how they
are contributing to the wider Treasury position of the Council.
But I'll stop there and either myself, Michelle or Sian would be happy to take questions.
Thank you, David.
Thank you.
Councillor Nigel Robbins - 0:14:02
Councillor Hodgkinson.
Thank you.
Councillor Paul Hodgkinson - 0:14:08
My first words at this, my new committee.
I'm looking at David and anyone else who wants to answer, looking at page 52 in my online,
the online papers, I hope it's the same for the paper, the physical papers, in terms of
property, property held for investment purposes.
And obviously this relates to commercial property which has had a rougher, rougher period recently.
But to my mind the only price that really matters is what we paid when we bought the property.
And therefore, although we're looking here at gains or losses,
is that gain or loss?
Are we talking about the gain or loss in just that year?
Or are we looking back at all to what we paid, what the council paid when we bought those properties originally?
Because obviously that is relevant
given
If we paid X and we've got Y then you know that that's an either a deficit or a gain
and
Clearly it's not just about that is it it's also about the income we've derived over the period since we bought it as well
So my question, my overall question is, what did we buy these various properties for?
We've got one, two, three, four, five listed.
What did we buy them for and how does that compare to the value now?
We understand your question.
Councillor Nigel Robbins - 0:15:41
They were bought at various points, not all at the same time.
So it might be quite difficult to give a ready answer to that.
But I'll have...
Thank you, Chair.
David Stanley, Deputy CEO - 0:15:51
I can cover off some of that question.
So the Council does record and has available the original purchase price for some of those properties.
But particularly the top line investment property within the district, which covers a number of different investment properties, that wasn't readily available at the time of publication.
So rather than printing an incomplete list of those prices, I took the decision to only
show the value in the accounts for the previous year.
So the way we show this is for the reader of this particular report for members to show
what the value was in 2024 and what the final value was in 2025 and what the expectation
is in 2026.
It's fair to say for the last three out -of -district investment properties, collectively we paid
significantly more than the value that's shown in there.
There is an unrealized loss on those properties that we have been accounting for through the
statement of accounts to ensure that we're reflecting the fair value of those through
the given year.
The format for reporting this through the Treasury management strategy doesn't take
into account the value of rental income that those investment properties would have generated.
Now, I can provide that as additional information and given this is a draught of that report,
it's something we can consider for inclusion in the council version of the report because
this will be a recommendation to full council.
But there will have been investment income, rental income from those out of district properties
that will have mitigated some of those capital losses.
It's a little bit more complex than that
in terms of how we account for that,
but I do take the point from Councillor Hodgkinson
that to show the value only 12 months, 18 months ago
doesn't tell the whole storey.
But there is some accounting adjustments
that we make on an annual basis
to ensure that the values that we're reflecting
in the accounts are reasonable and based on up -to -date information we are required to
value the investment properties on an annual basis and that's what's reflected in our statement
of accounts. But for the purposes of Treasury management, we are looking at the value over
the current forthcoming financial year. So what's our expected valuation in terms of
March 26th, but I can provide that information because it's
more complete, but it wasn't a full set of information
for this report.
Please follow up.
Councillor Nigel Robbins - 0:18:37
I don't know whether that's satisfactory, but you'll get
more information.
You've got a problem with the technology.
There we are.
Yeah.
Thank you, David.
Councillor Paul Hodgkinson - 0:18:51
I guess from my perspective as a new member of this committee
It would be helpful and I'm sure others may find it to to know what was originally
Paid for those properties and where we are at now, so I appreciate it's not in this report
But I would really like that information to see where we're at. Please. Thank you. I
Councillor Nigel Robbins - 0:19:12
Don't know whether annex has got anything to say on this in the way that the external auditors treat
the value of properties such as this, which originally were
devised for, obtained for income purposes.
Do you have any comments to make on how you treat the?
Not specifically, obviously, as long as you're treating them
Officer - 0:19:34
correctly in line with the CIPFA code, and obviously as long as
you, whatever methodology determine you want to use,
you can substantiate and argue.
because sometimes these things aren't always clear -cut and therefore would be
for the finance team or the appropriate officer to determine why they're doing
what they're doing.
Councillor Bridges.
Councillor Nigel Robbins - 0:19:57
Keeping on page 52, the top investment isn't named, there's probably a reason why it needs to be anonymous,
but I'm interested really with the bottoms three which are outside of our area.
one of them is a Tesco's. So why are we investing in Tesco's in
Seaford when we could have been investing in Tesco's here in Cirencester?
David Stanley, Deputy CEO - 0:20:33
I shall say in terms of the top line of that table that is covering a number of
different properties so it's not that it's being secretive as to what that is
but we have a number of small investment properties within the district so
rather than having a table that might go on
for two or three sides of A4.
It's grouped together because each investment property
on its own probably isn't material enough
in relation to the rest of it.
They're grouped up.
It's just a way of summarising that.
Now we do have on the council's website
a list of all the details of all the properties
that we own as part of the asset register.
So we can provide that breakdown to members if that helps.
But there are a number of investment properties.
In terms of the Tesco's that's outside a district,
a decision was taken some years ago around 2016,
2017 to acquire a number of out of district properties.
And that was a very conscious decision by the administration
and officers at the time.
There are some advantages and disadvantages with out
of district investments.
One of the risks with an in district investment where you
become the landlord of a property is those tenants may be seeing that the council is
the landlord and they might want to engage with the council as the landlord to negotiate
the rental reductions.
It's much more that there is some risk mitigation in having a portfolio of properties that spread
a bit wider in terms of that management of the tenant, but also to diversify the risk
because the council would then be more exposed because it made significant investment in
district to the performance of the local economy in the district.
So there would have been clear rationale that would have been
taken 2017, 2018, by the administration at the time,
to make those investments.
Councillor Nigel Robbins - 0:22:19
Yeah, it's a, that's a historic act.
Since then, of course, government has made it very
clear that they don't want local authorities to acquire property
simply for the purpose of income generation.
You know, you need to have some element of satisfying your corporate aims through that
purchase.
Councillor Stowe.
Councillor Nigel Robbins - 0:22:41
Thank you, Chair.
Just looking Arling Close obviously play a key role in the Treasury management.
So I'll note that the contract expires at the end of February.
I'm just wondering if that's going to be renewed.
And then separately while we're still on Arlin Close,
if we look on page 57, 8 .3, it shows where we've got,
obviously, internal expertise.
However, once we go beyond that, the sort of expertise
of our internal staff, we then engage with Arlin Close.
Who decides and who works out, you know, where that level is
of expertise and where Arlin Close need to step in?
David Stanley, Deputy CEO - 0:23:24
To address the first point, we do have a contract with Arlene Close, which has the option to
extend for a two -year period.
That was considered by Commissioning and Procurement Board at the back end of last year.
And in light of local government reorganisation, because it's a shared contract with Publica
and the other Publica partner authorities, there was an agreement to extend that contract
So it takes it up to 2028, given the state of the market in terms
of there are very, very limited number of local authority
treasury advisors.
In fact, there's only two.
There's Arlene Close and there's MUFG.
In terms of the, I suppose, the handoff between officers and
Arlene Close, Arlene Close are there to provide expert advice.
So, they will provide us with details of the counterparties.
They will provide us with recommendations on to how we could make investments, the duration
of those investments, and what might be constituted to be a sound investment or not.
The decision rests with myself and the Treasury Management team.
So, Arlene Close provided advice.
we act on that advice or we choose not to act on that advice.
For members, to give you that assurance, it would be a very
difficult position for me to be in to say, well, Arlene Close
provided advice not to invest in X, Y, and Z, but we thought we
knew better, so we invested in X, Y, and Z.
So there is a fine line between their advice and how we follow
that through, and I think given some of the issues historically
in the sector and Arlene Close in their training session were reminding members of the Icelandic
Bank crisis in 2008 -2009. I am conscious of that type of advice around when to invest
and when not to invest and we take that into account in our daily considerations of the
Treasury management position of the Council.
Councillor Nigel Robbins - 0:25:39
Councillor Len Wilkins - 0:25:42
Councillor Wilkins. Thank you, Chair. Just to satisfy my curiosity,
going back to page 52, what's the difference between an investment property within the
Cotswolds district and an investment property inside the Cotswolds district? I would have
David Stanley, Deputy CEO - 0:25:57
none in terms of it's an investment property, we differentiate on investment properties
within and outside of the district purely for reporting purposes to give members a sense
of the proportionality.
So there were three properties that were out of district that were acquired, but the council
did have a number of investment properties within district that either acquired whilst
it was a district councillor in some cases may have been acquired in becoming a district council in 1974.
Councillor Nigel Robbins - 0:26:35
My question about these properties would be at what point
do we decide that the
property market, the commercial property market is not going to improve and we get rid of these properties.
Councillor Nigel Robbins - 0:26:49
Comment to make about that David?
Councillor Nigel Robbins - 0:26:57
from these properties, but the capital value is going down, isn't it?
David Stanley, Deputy CEO - 0:27:02
That's exactly the point. So what
that table shows is the value
has reduced and the value since purchase has reduced, but in the meantime
the Council has benefited from and continues to benefit from a level of rental income.
However, that level of rental income is lower than what was achieved when those properties were first acquired.
So there is a fine judgement to make in terms of the reliance the council may have on that
investment income on an annual basis to support the revenue budget.
So could the council afford to dispose of a property and forego the investment income
that that brings into the authority?
The other consideration is, is there an active and willing market of buyers and sellers?
So there is an estimate of O value of that investment property but for that transaction
to work you have to have someone willing to pay the price that you as a council are willing
to accept.
So you could end up crystallising quite a significant capital loss if you go to the
market at the wrong time and there's only one willing buyer but that willing buyer is
only prepared to offer you half of what you're expecting.
So that is something that is under review.
So I did yesterday meet with strategic housing and property team to go through the performance
of the three investment properties and we'll be considering that with the cabinet member
and the leader in terms of when to plan, if to plan for disposing of those properties.
The other reason you may seek to dispose of investment property is if you need to generate
capital receipts.
So for those of you familiar with the position in other authorities, there are other authorities
such as Woking and Spelthorn in Surrey that are having to dispose of significant number
of assets, investment properties, because their level of debt is unsustainable and they
need to reduce that down.
That's not the position this council's in, so it allows us more time to make a very considered
choice weighing up a number of different factors.
But clearly if we were in a very difficult financial position where we needed to raise capital receipts, that would be one option.
But that's not where this council is.
Councillor Nigel Robbins - 0:29:27
So that kind of decision has to be made by the council itself.
It's not the kind of decision that we can turn to Arling Close. This is very much the kind of decision we have to make.
Councillor Wilkins.
Councillor Nigel Robbins - 0:29:40
I thought Arlington's, during their presentation, said there was a limit imposed by the government
when we had to take the loss. And it's already been deferred twice, and he said this time
I think it will stay to that.
David Stanley, Deputy CEO - 0:30:00
In the Treasury management training there was reference to the statutory override on
unrealized losses on our pooled funds.
So they're the long -term treasury investments,
but they're very similar to what you see here
in the investment properties.
But that's a particular type of investment
where the council has had the statutory override in place,
but it hasn't had to provide in its balance sheet
an equivalent amount to cover that loss of.
But it's broadly similar in terms of the effect as what you see on this table
Councillor Nigel Robbins - 0:30:45
Councillor Mancilla my colleague here
Councillor Helene Mansilla - 0:30:52
Thank you chair and yeah, I have two questions David
so if I'm
May I take you to annex a?
4 .6, where we said that we have to prioritise security and liquidity.
So the first question is, if rates drop and something goes wrong in the market, are we
still safe?
And if it gets bad, how bad could we get?
The second question, if we go on the same annex, annex A above to the tables above,
is table 1 and table 5, more specific probably.
We can see that under the long -term holdings header, we've got the pooled funds and the property investment.
investment. How risky are those investments and how quickly can we get the money out if
we need it? Thank you David.
I'm looking. Sorry, is my report different or?
David Stanley, Deputy CEO - 0:32:32
in terms of addressing 4 .6. So the council in its short -term investments as was shown
on the slides by Arlene Close makes a number of short -term investment decisions largely
in money market funds and largely in the debt management office. Both of those short -term
deposits are closely linked to the Bank of England base rate and included within the
Treasury management strategy in our estimates of future income in 26, 27 is an estimate
of where we think or are in close have helped us think whether that bank base rate will
be during the course of the year. So when we're making an assessment of that interest
rate and the investment income were taking into account both the cash balance and the
level of the bank rate.
The current position on the bank rate is it was reduced in December.
Arlen Close think that during the course of the calendar year of 2026 there will be two
further interest rate reductions, taking it to a low of 3 .25 percent.
And that's probably where they think it will stabilise in the
near medium term.
Now, as with any forecast, a forecast is generally wrong.
I'm old enough to remember when our Treasury Management
Revisors were saying in 2009 the interest rate won't go any lower
than what it was, and it did go lower to 0 .1 percent.
And then for the next 10 years they said the interest rate is
going to go up and it stayed the same.
So what we are in is probably a slightly different interest rate environment with the combination
of relatively sticky and volatile inflation, although at a lower level than it was two
or three years ago.
And that plays on the mind of the Bank of England in terms of the timing of any interest
rate reduction.
So because those interest rate reductions are spread out during the course of a calendar
a year and are of only 0 .25%, that does allow a little bit of headroom in that assessment.
So the timing of those changes and the significance of those changes tends to get priced in by
the markets of what we're offered as an interest rate by money market funds anticipates a rate
reduction in a future period.
In terms of the second point and table 4 .5, and I'm thinking of the longer -term
holdings of investments in pooled funds, the real estate investment trusts and
Councillor Nigel Robbins - 0:35:15
David Stanley, Deputy CEO - 0:35:16
the cash fund plus. That's on page 25, colleagues. On page 25, that is showing
that we have twelve and a half million pounds worth of longer -term pooled fund
investments, but that will tail off according to that forecast
by March 2028 with a planned reduction in pooled funds.
And that's largely because of the need to ensure that the
council has adequate liquid balances available to support
its day -to -day activities.
But as with any long -term investment, there is a price of
extracting yourself from the investment.
And what we have with the pooled funds at the moment is a position where up to the end
of December 2025, a £870 ,000 net capital reduction against the investment that was
made.
We've benefited from the statutory override on IFRS 9, which means that the Council has
not had to cover that unrealised loss.
should that statutory override not be extended past its currently due to expire on the 31st
of March 2029, then the Council would need to make sure it had adequate reserves and
balances to cover off any unrealized loss at the balance sheet point.
But largely, we hold those pooled funds for long -term investment income that has been
significantly above the bank base rate in the mid 2010s and early 2020s. But clearly
as our cash balance has become more constrained, as those of you that will recall that we've
had many discussion around the waste vehicles and should we go and acquire £6 million of
waste vehicles and use internal funds to do that, that will reduce our ability to maintain
that long -term position on pooled funds. So that's really where that reduction is
coming from but there is a cost of exiting some of those funds because if
there has been a capital loss then we might crystallise that capital loss. So
again as with investment properties timing is it is critical in
understanding what the nature of a disposal or a change would be.
Councillor Nigel Robbins - 0:37:35
Thank you for that. I don't know whether Councillor Mansour is going to repeat her
question about the level of risk, but that seems to me would
be quite challenging.
But have a go at it, David.
David Stanley, Deputy CEO - 0:37:46
The level of risk we've got, so we have a rather risk -averse
position in terms of our Treasury management position.
There are, and it would probably be useful for me to provide this
committee with some of the many graphs that are provided with
the benchmarking that are enclosed too.
What that shows is there's a graph with lots of sort of dots
on it that's showing your return linked to your risk position.
Arlene Close will work out based on the type of counterparty,
the duration and the amount you've got invested,
what your weighted average risk for investment is and then map
that against the level or percentage return you're getting.
And what you're aiming to be is not one of the outliers where
you're getting either a poor return for lots of risk,
or you're getting a very high return for very high risk,
you're trying to congregate somewhere in the middle.
That's what the benchmarking slides show,
and I'll share some of those with the committee
after this meeting, because we've got the Q3 position.
That's probably a better way of explaining
how we judge whether or not a investment return is good,
but it also quantifies the level of risk
that we're prepared to accept.
Thank you for that. Are there any further questions?
Councillor Nigel Robbins - 0:39:03
Councillor Stavrou.
Thank you, Chair.
Councillor Tom Stowe - 0:39:09
The Deputy CEO has just spoken about the sort of complications and costs of withdrawing from the pooled funds.
And I'm just wondering whether there could potentially be any or whether there has been in the past
be any specific sort of combination of factors which could actually make it more prudent to borrow externally rather than to rely on
internal borrowing because you've got that opportunity cost where you're going to miss
out on a potential return.
David Stanley, Deputy CEO - 0:39:40
So there are a number of factors that we take into account in terms of assessing how to
finance the capital programmes.
We can either use internal resources, be that capital grants, capital receipts, or revenue
or earmarked reserves, or we can go externally and look at what is available either through
the likes of the Public Works Loans Board or other providers of external debt.
The current interest rate environment for both short -term and long -term borrowing is
more expensive than the opportunity cost that we'd forgo on around about a 3 .5, 4 % return
on our investments.
That does change, and I can remember back in sort of early
2021 when borrowing very short -term money from other
local authorities was as cheap as 0 .08 % interest.
Borrowing 50 -year money from PWB was as inexpensive as 1 .62 %
for 50 -year money.
So there can be situations where if the interest rate is
relatively low, that locking into long -term borrowing at those rates, it is unlikely to
get less expensive than that if you delayed that acquisition. Clearly, there's a balance
to strike between using internal resources and external funding. The other factor that
comes into play with external borrowing is the need to charge minimum revenue provision,
which is effectively the prudent amount to set aside for the repayment of that external debt.
That adds to the cost of capital.
So when we're looking at financing of the capital programme, we do need to take into account MRP
on top of any interest and principle that needs to be repaid in a given year.
So that does tend to make borrowing for short -term assets like the waste fleet far more expensive
than using your own internal resources.
Councillor Nigel Robbins - 0:41:45
Thank you for that explanation. Are there any other questions? If not, then I think
we can indicate our approval of the Treasury Management Strategy in the usual fashion.
If you could raise your hands, please. And if you could also, at the same time, your
approval of the non -Treasury Management Strategy. Thank you very much.

9 Annual Capital Strategy

And we now turn to the annual capital strategy, the draught that's been put in front of you.
I think I'm going to have to ask you to kick off again, David, if you don't mind. That's
on page 67 of your papers.
Thank you, Chair.
So this is the annual capital strategy
for the Council, it is draught.
This is based on draught assessment of our capital programme
and capital expenditure.
David Stanley, Deputy CEO - 0:42:59
Those numbers will change because there will be a new version
of the capital programme that will be presented
to cabinet and council in February,
and we will then ensure that the capital strategy
and the treasury management strategy are updated
prior to being included in the council papers
to reflect those new numbers.
What the capital strategy sets out
is pretty much well covered on page 69,
that very first paragraph.
It is a high level view of how the council approaches
is its capital expenditure, how it approaches, how it would finance it. And it is linked
to the priorities that the council has got. So given the council has its corporate plan,
its corporate strategy that was recently updated in September that sets out, these are the
things the council will achieve between 2025 and 2028. The capital strategy sets out how
that would utilise capital resources
to achieve those particular objectives.
So the strategy is then set out in page 71.
That sets out in slightly more detail
those high level objectives and the strategic context
and purpose for the capital strategy.
Resources are set out in section two
with a nice coloured chart on 73.
And then when you get onto pages 74 and 75, you'll see how the capital financing and the
estimates of capital expenditure are currently drafted.
For those of you that are looking at page 75 on delivering goods services, the 7 .1 million
in 26 -27, that's where you'll find the current projection for the waste fleet.
And then when you turn back to page 74,
how that would be financed,
you'll see that there is zero debt attached
to the capital programme.
So the aim of what we're doing with this capital strategy
is to deliver on the corporate objectives,
corporate priorities, including replacing the waste fleet.
We have enough internal resources to not require
the council to borrow externally to do that.
So the rest of the strategy sets out that wider approach,
particularly table three on page 77
shows how capital receipts would be received.
That's really important given the conversation
on the previous item, given we do have a number
of investment properties and other assets
that we could dispose of to generate capital receipts,
but you'll see that there is a very low level
of capital receipts that are forecast.
Most of the capital receipts, in fact,
almost all of the capital receipts
subject a little bit of rounding comes through from UBICO repaying us for the
vehicle purchase it's a circular thing we buy the vehicles we then make an
asset charge to UBICO for the use of those vehicles and then that we get a
capital receipt a deferred capital receipt back from UBICO so effectively
revenue funding gets returned to us as capital funding. I don't intend to say
much more about the capital strategy. There is some crossover to the treasury management
strategy so there is some repetition but this is much more a high level how we approach
capital expenditure and how we would finance it.
Councillor Nigel Robbins - 0:46:40
Thank you David. Any questions about this capital strategy?
Councillor Paul Hodgkinson - 0:46:49
Councillor Hodgkinson. It's really a point making a point rather than asking a
question if that's okay. I mean I think I just want to congratulate the officers
and the cabinet for actually coming up with a capital strategy which means that
we don't have to look elsewhere I borrow money to do all the good things that
have been talked about by David there including replacing some of the waste
with the waste fleet, not easy to say.
That is great, and I think it's very good.
It's good financial management.
It's prudent, and it means that we're not having to go out
to the marketplace to borrow out interest rates,
which are a little higher than we've been used to in the past,
even though they've come down.
So I just wanted to say that.
I think it might reflect on the decision some years ago
Councillor Nigel Robbins - 0:47:36
to outsource the waste management of this council,
because I can suspect that there'd be a real temptation to delay the replacement
of that fleet until rather too late because it was our own fleet and it was
our own money going in to replace it. I don't know but that's I speculate
that's one of the more positive indications for having outsourced it.
Councillor Mancilla.
Councillor Nigel Robbins - 0:48:08
Thank you, Chair.
Right, so I've got the pages now because I'm looking at the online version and I didn't
have any pages there.
But yeah, if I can take you to page 72, please, and it's 2 .1.
We say, David again, this is for you.
We are saying that no borrowing.
Councillor Helene Mansilla - 0:48:41
But what happens if the capital receipts and the loan repayments don't land or the costs run over?
Thank you.
And the second question, let me find my bearings here.
If I can take you to page 76.
Is it page 76?
Sorry, just give me a tiny second.
Yeah. Oh, no, sorry, 74.
And I'm looking at table number one, capital financing.
And I'm looking at the line near the bottom above the subtitle,
where we read unmarked revenue reserves.
and looking at the years 2026, 2027 and the consecutive year.
And my question there is, are we using a marked reserves cover
gaps and what's the impact on future flexibility and service
risk?
Thank you, David.
David Stanley, Deputy CEO - 0:49:43
So in terms of paragraph 2 .1, should we no longer get capital receipts from asset sales?
Should loan repayments or other sources of internal funding not turn up when we need
them to finance the capital programme?
There's probably two things that we would need to do.
One is look at the extent of capital expenditure.
expenditure, is there options to reprofile that capital expenditure to ensure that we're
not undertaking capital expenditure that isn't necessary.
Plans do change because we have a capital programme that runs for four -plus years.
And secondly, we would look at alternative ways to finance capital expenditure if there
are no other adjustments that can be made.
That is why the Treasury Management Strategy and the Capital Strategy at this stage do
not remove the option for the Council to undertake prudential borrowing.
If there was a need for the Council to spend significant capital money on a new office
block or more trucks than we've currently budgeted for, by ruling out prudential borrowing
you make that much more difficult to achieve.
So, the option is there, but we will go through the same process that we've been through so
far in understanding what is the impact of externally borrowing, what is the impact of
slowing down capital expenditure, do the objectives still get achieved.
So, we'll be looking at what is possible before we suddenly go, well, those capital receipts
haven't turned up, the asset sales haven't turned up, so the first thing we do is pick
the phone to PWB and say we need two million pounds to allow us
to continue doing what we're doing.
So we'd review the plans.
In terms of table one, earmarked revenue reserves, I may need
some assistance from Michelle helping me out with the detail
because we've summarised this in one particular line.
Some of the earmarked reserves that are being utilised to
the capital programme is us drawing down some of the extended producer
responsibility funding that we've had in the current year and we have confirmed
for next year we have set aside 30 % of that in an E -Mart reserve. We are going
to utilise part of that to fund part of the waste fleet replacement programme. From
the quarter to financial performance report that was considered by cabinet at
their January meeting. There was also a transfer of around about 150 ,000 of excess parking
income received during the current year to an earmarked reserve. That will be then released
in 26, 27 to pay for the replacement car park ticket machines. So in most cases, and I will
get the breakdown to members because this is at a summary level, I've identified through
review of the reserves ways in which the capital programme can be financed to free
up enough capital receipts to enable us to then present the position that set
out the capital strategy where we're not undertaking prudential borrowing for the
waste fleet. So we have looked at ways in which existing parts of the capital
expenditure can be financed from other internal sources. Off the top of my head
One of those is looking at the way in which we finance the leisure centre replacement
equipment, and the other is how we finance the provision of affordable housing in Down
Anthony.
But I'll get the exact figures there on a spreadsheet, which I'll probably need time
to interrogate.
Thank you, David.
Councillor Nigel Robbins - 0:53:35
Are there any more comments or questions, please?
If not, then I think we can move on to the external audit report

11 2024/25 External Audit Report and Audit Opinion

and audit opinion.
Alex, I'm sorry we've kept you waiting so long.
You know, if the circumstances arise you'd like to leave
earlier then let us know in advance if we put your item earlier on the agenda
but still you're still relatively a new face to us so there may be something you
can gain from enduring a full meeting but you're introducing it to your item
Officer - 0:54:25
please go ahead. Thank you chair I'm intrigued that you say I'm a newish face
but there you go I certainly don't feel particularly new so I've been doing the
job an awfully long time.
So the report that you've got in front of you,
members may recall at the last committee we presented
what we call the auditor's annual report,
which basically focused on the value for money aspects
of the work that we actually do.
The report that you've got in front of you is looking
at the audit of the financial accounts for 24, 25.
I'm not going to talk through page by page,
we're pleased to know, but if I can just pull out
some salient points.
So as I say effectively this report brings together the findings from the accounts work that we've done
The accounts work is nearly there. So on page one one one of the document you got in front of you
We at the time we gave an update on where we were in terms of the work
And we've highlighted some areas that were outstanding
In terms of those areas the vast majority of them are cleared and we're working with finance on some queries around
leases in particular. Obviously, once we get past all that, sort of, clearing the queries,
obviously, we then, all this work is subject to review. That's not to say I haven't been
a manager and I haven't been reviewing as we go through, we always do, but obviously,
there will be a final review. So, I'm not saying there won't be any more questions,
I'm afraid, but hopefully, we're getting to the end of it.
So in terms of the, I'm just going to turn over the page and add 112.
So you recall last year was our first year as your external auditor, and we use a RAG rating around the accounts and the audit process.
And here we've highlighted that we were given a green to four of the categories that we actually look at, and one around readiness for audit.
We gave an amber around that.
And the reason for that is,
I suppose it's a bit of six, one half a dozen of the other,
if I'm being completely honest.
So the accounts were produced as expected
by the due deadline and that in line with our audit plan.
There were some delays in resolving queries
and getting some of the information back
from the staff at the council.
But we do recognise that sometimes that's outside
of the control of the finance team,
because sometimes we may be asking for information that comes from somewhere else within the council and
an experience my experience of working with lots of different councils is sometimes they're not those other departments not always as
Responsive toward its requests as the finance team are and we also did have some illness on our side as well
So that delayed things and obviously they were bumping into the budget period so that that created some issues
So that's what we've assessed in terms of the RAG rating.
Our anticipated audit report is what we call unmodified, so it's an unqualified, but obviously it will reflect the significant weakness that we talked about in the last meeting around the procurement and the issues.
So it will actually bring that out because obviously our opinion covers both the accounts and the value for money aspects that we look at.
What I should have said when I started, and I apologise for not saying this upfront, is
actually this is a good audit report that you've got in front of you. In terms of the
audit adjustments which are listed on page 119, there are two disclosure changes and
that's it. So there are no major issues with the accounts themselves and I think the finance
and ourselves have worked well together. So as I say, the lack of lots of issues actually
reflects the calibre of the unaudited accounts that were presented to us. So can I commend
the finance team for that? We also list at the bottom of page 119 a small number of unadjusted
items. And these are the items that are listed in the revised letter of representation that
that Michelle handed out at the beginning of the meeting. Because as part of the letter
of representation, we need you as the body that are actually approving the accounts to
just be happy with why management are not adjusting the accounts of these items. Usually
it's because of materiality and I think in this case it is materiality. Because obviously
if you amend one figure in the accounts often there's a ripple effect and it affects lots
of different figures within the accounts.
Those, as I say, are set out in the letter of rep.
So we also list out on page 120 onwards anything
that we found as part of our audit work.
Again, there's not a lot there, I have to say.
I always feel a bit disappointed as the external auditor
that we don't find the origins.
But there are many issues in there.
Again, I think this committee represents the calibre of those unaudited accounts that you
had in front of you.
I am going to turn to page 123 now.
Always a thorny issue.
I will come on to fees in a minute.
The audit certificate, members may recall that we couldn't issue the audit certificates
for last year because there was some issues around, it was the NEO effectively doing their
whole of government accounts work. And because of some changes around the ISA 600 group accounts,
they couldn't actually, their work was elongated, shall we say, so we couldn't give the certificates
until later on in the day. In the past often the certificates have been issued with the
opinion. It's probably more of a formality these days, but obviously until we issue that
certificate actually the audit remains open and you can't advertise it as such. But as
I say it is more of a formality than anything, but I bring that to your attention and that
will say that within the opinion. And then onto audit fees. I can't avoid the elephant
in the room because people always ask questions around audit fees. So obviously your scale
fee is actually set by PSAA. It's nothing to do with us as a firm, so that's set nationally
each year by PSAA and advertised. We've put in for two fee variations which obviously
will have to go to PSAA for their approval. The first is around the additional procedures
that we have done around the implementation of IFRS 16. This is a common, IFRS 16 was
new this year, so we have done some additional work. The amount of work that we actually
had to do was obviously dependent on how much you actually had in your accounts, but obviously
one of the things we needed to look at was what are the processes that you have actually
followed to identify those particular leases and look at the completeness aspects of things.
So actually, if you've got everything in your accounts,
you should have in your accounts.
So that did lead to additional work.
This is common in all local authorities,
so this isn't unique to Cotswold.
The second one is unique to Cotswold,
and that's around the VFM.
So I mentioned that in the auditor's annual report,
we highlighted significant weakness
around the arrangements around procurement.
In order to get to that position,
we had to do some additional work
Because of the sensitivity of that work, the vast majority of that work was actually done
by me.
So obviously it's a relatively senior level and we use the rates that are set by PSAA
when actually undertaking any work like that.
So we submit to PSAA how many hours we've spent on a certain thing and they obviously
know the fees per individual grade and they calculate it.
And that's how we come to the 7 ,475.
So we've set out a total there.
As I say, in due course they will go to PSAA and they will scrutinise them.
I think they usually come back to the CFO and actually talk to them about it and just
make sure they're happy with it as well.
So that's all I was going to say in terms of this report.
I'm more than happy to take questions if there are any.
Councillor Nigel Robbins - 1:02:58
Here's your opportunity to ask questions and challenge the external auditor.
Thank you, Chair.
Councillor Tom Stowe - 1:03:07
Page 119, we've got the unadjusted items which haven't been adjusted because they're not
considered materially important, I suppose, in the larger picture.
what stage and what sort of level does something become materially important
Officer - 1:03:27
and needs adjustments? In these particular issues obviously it is
the council to determine whether they consider the material to the accounts.
Would they, you know, if they amended for these numbers would actually change the
readers view of the accounts. We as external auditors obviously set a
working to, I forget what the figure is, it's 2 % of your gross revenue expenditure. I think
it's actually set out earlier on in the report. So that's just over a million. So that's what
we are actually working to. But obviously it's for the council to determine whether
they think the numbers are material to their accounts, or as I say, would change if an
individual reader was actually looking at the accounts, they'd have a different view
with your pension figure, something like that.
Councillor Nigel Robbins - 1:04:20
Other people may have noticed it as well, and in fact Alex
commented on it on page 112 about difficulties in resolving
queries and fulfilling requests.
And you said it was six of one and a half a dozen of the other.
A couple of things occurred to me.
Of course, at the time we were extracting ourselves from
publicer, and I just wondered whether that had any effect on
our ability to get hold of information and reports
that you needed.
And, yes, I just wanted to be reassured, really, that next
time around that that won't be so problematic.
David Stanley, Deputy CEO - 1:05:09
I'll provide a short response from the council. So a lot of the delays in
responding to audit queries is largely because they relate to valuations that
are fixed assets and those valuations aren't held by finance and maintained by
property and assets team. And some of that requires some consideration of
whether or not the information that's been provided to the external valuer is
accurate or not. So in some instances, and this isn't a specific example, what can
be picked up by the external auditor is that the evaluation has been prepared on
a particular basis using a floor area of five square metres, yet the plans that
submitted along with the valuation said six square
metres, which of those is right?
So that doesn't necessarily generate a rapid response,
but we also funnel all the queries that the auditor has
through Michelle and the team to ensure that we're
having a review of the queries as they come
through, because some queries can be responded
to relatively quickly, but also to make sure we have
good oversight of exactly the type of issues that
are coming up from the auditors' review of the
financial statements and they're run through all the supporting statements.
As has been noted in previous auditor reports, there is a single point of failure in the
audits that get undertaken at this council.
We have a very concentrated finance team.
There is Michelle, there is Hazel, there is Andrew Moran, and there is Dragos and Alice
support and myself to support that.
So at particular times in the audit process, the finance team might be undertaking more
than one task.
I think in an ideal world, what we'd like to be able to reassure members and reassure
external auditors is we'd take on several additional staff at the time of the audit
to ensure that those queries can be responded to before they're asked, so that we're not
causing undue delay to that audit.
but the nature of where we are with the council,
the nature of the cost of service delivery,
I'm mindful that that might not be the most appropriate use
of public money to staff HAPO Finance team
to deal with what may be lots of queries,
it may be no queries,
but we do need to have a much tighter response
on those fixed asset queries.
It is largely through queries around the valuation,
the basis of evaluation, whether the floor plans have been submitted to support that.
And a lot of that is making sure we've got adequate records management.
It's not a specific CDC issue.
It's been an issue in almost every authority I've been in that some
of the records you've got will date back several tens of years, if not further.
So actually which is the correct floor measurement
of a particular building that you've got on your books.
It can change over time, people's memory over time is what's the right version.
I have known external auditors to engage Google Maps on a screen and get their ruler out and
measure a building to say, well, your internal plan say it's that, but our measurement is
something else.
That is some of the types of questions that we do have to deal with, so it does make you
go back to the prime records and understand what is it that we've asked to be valued and
have we given the valuer and the external to correct information.
I think Michelle wants to come in as well, Chair.
Yes, please, go ahead.
Yeah, I just agree with what David said, really,
Councillor Nigel Robbins - 1:08:52
Officer - 1:08:54
and I think Alex alluded to in her presentation as well that I
think the longer the audit goes on,
the harder it is to be 100 % dedicated to all those queries
that are coming in, because obviously we have conflicting
deadlines with all the other stuff that we've got to do in a
small team.
So I think if we can try and make it more concentrated and
stick to a timetable that would probably help us in the coming year.
Councillor Nigel Robbins - 1:09:17
Thank you but the particular illustration you gave us suggests that
that kind of thing might well occur in the future. Yeah but you need to be
prepared to cope with it. Thank you.
Councillor Nigel Robbins - 1:09:34
Councillor Nick Bridges - 1:09:37
Right, Councillor Bridges please. Thank you. On page 139 under the section called
savings and second paragraph.
There's a word missing.
I'm assuming it means influence.
But I read out to you, local government reorganisation
in the English devolution white paper
and the proposals for local government finance reform
will exert significant over the prospects for the council
finances over the MTFS period.
Is the missing word influence?
Your
I would suggest influence is probably the word that's missing. I don't think we'd have used a different any
Control it wouldn't be control
It's more likely that the prospect of local government reorganisation will have some impact in the immediate short term
It's going to influence the way in which the council
approaches its savings programme because any savings that are deliverable after
31st March 2028 won't accrue to the council and won't solve any funding gap
Councillor Nigel Robbins - 1:10:55
that we've got this side of LGR. I think Councillor Bridges was just showing off.
He read the report in such detail and spotted the mistake. Can I ask Alex,
Apropos the narrative report, were you, the audit firm,
happy with the narrative report?
Officer - 1:11:19
Yes, so we look at the narrative report in terms of does it
contain the areas that CIP, the CIP, the code expects.
So there are certain things that it expects you to have in there
in terms of typos and areas to cover.
We also look at it in terms of the figure, anything that's in there that's actually in the accounts
and make sure that it's consistent. So in one place you're not saying we're making a deficit,
somewhere else you're saying you're making a surplus.
But we also read through it, but clearly not in as much detail as some people have.
We look through it to just see if it's telling the storey of what we know about the council.
So again, it is quite possible within narrative reports to make its own.
Everything's lovely in hunky -dory and rosy and you know full well from dealing with the
council, reading committee papers, that's not the case.
So we kind of look at it in the round really.
Thank you for that.
Councillor Nigel Robbins - 1:12:15
Oh, sorry, is there somebody else?
Of course, I think he's going.
Okay.
So bridges.
Councillor Nigel Robbins - 1:12:23
So I'm probably showing off again.
Councillor Nick Bridges - 1:12:27
On page 152, we're talking about COVID.
Can I take it that all that's now closed?
Can we put COVID into the into into a dark place and forget about it.
And secondly, on page 159, I was looking at you may have mentioned this before scale fees
and things.
There's a difference between 136941 and if you add up the two figures next to it of about
£109, does that mean that your fee has gone up by £109 above what we would expect on
scale?
Councillor Nigel Robbins - 1:13:08
I can come in, Chair.
Alex, you can comment and then David can, if you are.
Councillor Nick Bridges - 1:13:21
I hope so. I might have to defer to David on this one. We will have looked at this table
and I would have been happy with it. It may be just the way it's been laid out, but I'd
defer to David on this one.
So in terms of page 152 and the notes to the comprehensive income expenditure account,
there would have been in a prior year to 2023 -24 reference to COVID grants. It's shown for
completeness because they are zeros, but COVID grants are no longer paid. I would suggest
if you're in central government, COVID is far from over in terms of the financials.
there was a significant amount of debt
owing to the government on bounce back loans and other things.
So that may still come through in central government,
but as far as local government's concerned, that's over.
In terms of page 159, note B7 on the external audit costs,
there are two external audiences that we have engaged.
One is Bishop Fleming and the other is KPMG.
We'll have a look at the total scale fee
that's in here in the note versus the scale fee that's in the report. It might just be
a timing difference in terms of the finalisation of the scale fee in the report of 151327 is
the same, but some of the additions to the scale fees, it's the timing of when those
were agreed. So I think that relates to the scale fees as agreed for the 23 -24 audit that
were paid in 24 -25, but I'll provide a written response to the committee, because what you've
got set out in this report is the scale fees in relation to the audit of the 24 -25 accounts
and the additionality on them. But the timing of when we agreed and got certificate for
the audit in relation to 23 -24 was a month later, and we didn't get the certificate until
the new financial year.
So it might just be a time indifference,
but we'll look into that.
Councillor Nigel Robbins - 1:15:36
Now, we're not expected to do other than note the report here
today, although I know you want me to sign the letter of
representation, which I'm perfectly happy to do.
Are there any other questions or comments before we move on
to the next item, the information and government
governance update and senior information risk owner.
I'm interested to know that our director, Angela Cleridge,

10 Information Governance Update & Senior Information Risk Owner (SIRO) Annual Highlight Report 2024/25

has acquired a new title, a CSIRO, another useful piece
of jargon for us, and I'm going to leave it to her.
If you've got her online, which we appear to have Angela,
Hello. Good. Hello, Chair. Can you hear me okay?
Hello. I'm going to leave it to you to explain what your new role involves and how it's going to impact on us in audit and governance. Over to you.
Thank you very much, Chair. And good evening, members. So I'm currently sitting in Shire Hall in Gloucester, so apologies that I can't be with you.
Actually, it's not my new title.
It's a title that's been allocated to our CEO.
So I'm actually the sub tonight presenting the item for you.
So let me tell you a little bit about what it's about.
So every local authority is obliged to have a Senior Information Risk Officer,
known as the SIRO.
That's the more snappy title.
So every local authority has one.
And with the insourcing of staff from Publica last year,
The CSIRO responsibility moved from Publica to Cotswold District Council and our CEO was
nominated to be the CSIRO.
So an annual report from the CSIRO is good practise.
It's not absolute, but it's good practise.
And I believe this is the first time that this committee has seen one.
So why have you got one?
So a few headlines really to pull out.
So firstly, it's to demonstrate to the committee that,
or reassure members that we at CDC,
with support from our colleagues in public care,
are meeting all our legal obligations
under such items as data protection,
freedom of information,
and some of the other sort of information type legislation.
So that's the first task.
The second thing is to give members visibility
of information governance and cybersecurity risks.
And our approach to monitoring and managing those risks,
which might include data breaches,
it could be related to artificial intelligence,
which as we all know, AI is rapid at the moment
in terms of its development,
and it could be cybersecurity,
all rapidly developing areas and all can be of concern.
And I suppose the third thing is, you know, this committee is a key component in our governance
framework.
It's absolutely what you're here to do.
It's in the title of the committee.
So it's important that as a committee, you see you have exposure, accountability, and
transparency to all these risks, and it's part of your oversight of risk management.
So that's why I'm reporting this evening.
So you might notice there are two asks for you this evening.
One is just to note the report of the CSIRO.
And as I say, it's the first time you've seen this,
but also to approve that in subsequent years
or subsequent reports, they actually come with the order,
the AGS, the annual governance statement.
So, I mean, historically we've been in a position
where we haven't had one of these.
This is for the year 2024, 25.
So actually now it's starting to get a few months old from the end of the year.
But if we get into a rhythm of bringing them forward in around about July after the year end,
we'll get into that rhythm for the remaining time that CDC has got left.
So a couple of other sort of headlines.
You'll notice that part of the report is backward looking.
So it's telling you about what's happened in 24, 25.
It's telling you about numbers, what we've done, how we tried to mitigate our risks.
We talk about training, you know, we talk about other areas.
And this ties back to some of the other work that you've heard about this evening and we'll
hear about later on.
Obviously, Lucy in her verbal update mentioned about data retention as an example.
That's in the report.
But it's also forward looking.
So it's telling the committee about work that we have been undertaking in 25, 26, but also
continue to undertake and monitor as the legislative framework keeps them moving and evolving.
So as I say, happy to take any questions. If they're particularly technical, such as AI or
whatever, I may have to come back to you, or there may be other colleagues in the room who can help.
but essentially tonight looking for any questions that you've got and two asks
one is if you're happy to note the report and secondly happy to receive it
in conjunction or accompanying with the AGS in subsequent years. Thank you Angela.
Councillor Nigel Robbins - 1:21:03
Before we agree to those two requests we're going to ask people for their
comments or questions. Councillor Hodgkinson. Yeah thank you. I'm just
Councillor Paul Hodgkinson - 1:21:13
looking at Angela, I'm looking at post 94 and it's talking up in terms of looking
backwards as you said I'm just looking at data breaches now there have been a
very small number most of them were in quarter two and all of those were low
what's described as low level but I just wanted to get a feel for what what that
was what happened how is it described as low level and what sort of thing are we
talking about? So I think Councillor Hodgson said that might be something that I could
give it I don't have the details to hand so I think that is something that with
with all of your agreement I could do a written note back to the back to the
members of the committee and as you say give you some headlines in terms of what
those breaches were and also why we deem them to be low -level. I mean it's it will
be typically where perhaps two documents have gone in one envelope you
know the document might be addressed to person A but actually person B's also
got into the same envelope it could be something like that we've had that
before it could be that an email address has been misread or something has been
sent through to the wrong person but rather than speculate I'd prefer to give
you you know a written response in terms of what those breaches were and why they
Councillor Nigel Robbins - 1:22:33
Councillor Len Wilkins - 1:22:40
are low level. Thank you. Councillor Wilkins. Page 5 of the cyber report 3 .4 does say what
low and medium in terms of the.
That's an exempt item, Councillor Wilton.
Okay.
You can't talk about that.
Not a problem, no.
Special.
Councillor Nigel Robbins - 1:22:57
Sorry, I do have a question.
And I've also got one for our visitor as well.
Let's deal with that first of all.
On page 95, apparently there's a council -wide review
of our current retention schedule being undertaken.
Could somebody please explain what that means?
Do you know, Angela?
Shall I go first?
Yes, please.
And actually, as you talked about our visitors,
so every local authority, and this has been in arrangements
for a number of years now, has to have what we call a data
retention schedule.
So for example, it details how long we keep documents
or emails or electronic.
So it could be, how long do we keep your register of interest once you've ceased to be a member?
It could be, how long do we keep email traffic?
It could be, how long do David and Michelle and accounts colleagues keep the year -end
accounts?
So we have to have a schedule where we set out everything that we have and how long we
keep it for.
And it's important as a local authority that we don't keep documents longer than we've
said that we should do.
So, the audit that was referred to, as I say, Lucy introduced it in her verbal update, the
data retention audit, that was excellent timing for us because, as I say, with services transferring
back to the council in 24 and 25, it gave us that impetus, right, we need to renew it,
we need to have a look, we need to cheque, are we keeping any of our information longer
than we need to?
What are we doing so that if we do have to destroy or, you know,
delete documents, are we doing it in a properly
controlled environment?
So we already have a data retention schedule,
but we're updating it at the moment and making sure
that we comply with it.
Thank you for that.
Councillor Nigel Robbins - 1:24:54
I have another question.
On page 92, you talk about having an internal
complaints procedure for data issues.
Individuals now must complain to the organisation first before
escalating to the information commissioner.
Can I ask you if we had examples of people within this
organisation who complained straight to the information
commissioner without talking to their departmental head or to
some senior person in the organisation?
So this refers to members of the public.
So it doesn't talk about internal grievances.
It talks about, so for example,
if a member of the public or a business is unhappy
with a service that they receive from the council,
let's say it's planning, people are often, you know,
want to raise issues about such areas,
but it could be a misbin.
You know, there are many reasons
by which people will want to raise a complaint
or businesses want to raise a complaint against service delivery.
So our internal procedure says we have now a two -stage, it was something that this committee
agreed, it used to be three, it's now a two -stage complaints process.
So the complaint comes in and it will be responded to by an officer in that team.
If the member of the public isn't satisfied, they can come back again and it will be reviewed
by an independent, more senior person who will respond.
And at that point, if the member of the public is still not satisfied, then they can go to
what used to be called the ICO, the Information Commissioner's Office, and is now, they've
had a rebrand, they're now called the Information Commissioner.
So that process is to handle complaints that come in from the public.
And to answer your question, Chair, do individuals go straight to the Information Commissioner?
Yes, they do.
Some will not want to, you know, the matter is so important to them, so urgent to them, they won't want to explore the complaints procedure first.
But it's the, but the information commissioner will always say you've got to exhaust the organisation's complaints procedure.
They don't want to be, they have enough complaints coming their way. They don't want to have more than they need to.
Councillor Nigel Robbins - 1:27:13
I misunderstood that. Thank you for explaining it.
Councillor Nigel Robbins - 1:27:29
We can probably fulfil your requirements. First of all, we do note the report. Thank you very much for that.
And for contacting us and reporting to us online.
And secondly, could I ask you to raise your hands to approve
that the annual report, whether it's from Angela or from our
CEO, comes to the Audit and Governance Committee within
the annual governance statement.
Are we happy with that?
Yeah, I think you've explained the case very well.
That's unanimous that we must look at this.
Thank you very much.

12 Matters exempt from publication

Councillor Nigel Robbins - 1:28:29
Before we need to make a decision about the potentially exempt item, we need to go back
to the external audit report.
Unlike the original paper, the revised paper that we've got

11 2024/25 External Audit Report and Audit Opinion

here, we obviously noted the completion report and the
statement of accounts from Bishop Fleming.
But we didn't actually authorise the delegation of authority to
our S151 officer to approve the statement of accounts subject
to completion of the outstanding audit work.
there is still some work to be done.
So I'm going to ask you to reflect on that and hopefully
indicate your approval that we delegate that to David
to complete.
Thank you very much indeed.
And I've already taken it upon myself to sign the letter
of representation.
You're fully at liberty to disagree with me, but if you'd
like to agree that I should be doing it on your behalf, raise
your hands. Thank you. Well, I can't vote on my end case because I've already done that,

12 Matters exempt from publication

haven't I? Right. I think we can now move on. And this is a decision we have to make
which closes down public access because this is clearly a high security matter when we're
looking at IT risk of IT fraud and breaches of security.
So I'm going to ask you, please, if you would like to,
and if you would, vote in favour going into a secure session,
an exempt session, so that we can look at the work
on the big papers.
Yeah.
Okay.
Yes, thank you very much.
I think we're unanimous.
.
.

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