Audit & Governance Committee - Thursday 25 June 2026, 7:00pm - Epping Forest District Council webcasts

Audit & Governance Committee
Thursday, 25th June 2026 at 7:00pm 

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  1. Vivienne Messenger
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  1. Cllr Steven Heather
  2. Cllr Martin Morris
  3. Vivienne Messenger
  4. Cllr Jon Whitehouse
  5. Vivienne Messenger
  6. Cllr Jon Whitehouse
  7. Sarah Marsh
  8. Hannah Crawshaw
  9. Nicola Sayers
  10. Owen Sparks
  11. Nicola Sayers
  12. Cllr Jon Whitehouse
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  1. Vivienne Messenger
  2. Cllr Jon Whitehouse
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  1. Owen Sparks
  2. Cllr Jon Whitehouse
  3. Cllr Martin Morris
  4. Cllr Jon Whitehouse
  5. Heather Kneale
  6. Cllr Jon Whitehouse
  7. Owen Sparks
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  1. Owen Sparks
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  7. Owen Sparks
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  9. Owen Sparks
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  1. Owen Sparks
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  3. Cllr Martin Morris
  4. Owen Sparks
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  6. Owen Sparks
  7. Cllr Martin Morris
  8. Owen Sparks
  9. Cllr Martin Morris
  10. Owen Sparks
  11. Cllr Jon Whitehouse
  12. Owen Sparks
  13. Cllr Jon Whitehouse
  14. Owen Sparks
  15. Cllr Jon Whitehouse
  16. Owen Sparks
  17. Cllr Jon Whitehouse
  18. Owen Sparks
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  20. Cllr Martin Morris
  21. Owen Sparks
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  1. Sarah Marsh
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  3. Cllr Paul Kelleher
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  6. Cllr Martin Morris
  7. Sarah Marsh
  8. Cllr Martin Morris
  9. Sarah Marsh
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  1. Sarah Marsh
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  1. Sarah Marsh
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  3. Cllr Paul Kelleher
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  6. Sarah Marsh
  7. Cllr Martin Morris
  8. Sarah Marsh
  9. Cllr Martin Morris
  10. Sarah Marsh
  11. Cllr Jon Whitehouse
  12. Sarah Marsh
  13. Cllr Jon Whitehouse
  14. Cllr Jay Gupta
  15. Sarah Marsh
  16. Cllr Jon Whitehouse
  17. Owen Sparks
  18. Cllr Jon Whitehouse
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  1. Sarah Marsh
  2. Hannah Crawshaw
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  1. Owen Sparks
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  4. Owen Sparks
  5. Cllr Martin Morris
  6. Owen Sparks
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  1. Owen Sparks
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  8. Webcast Finished

Vivienne Messenger - 0:00:00
This meeting is to be webcast.

1 Webcasting Introduction

I'd like to remind everyone that this meeting will be filmed and live or recorded and uploaded
to the internet and will be capable of repeated viewing.
Therefore, by participating in this meeting, you are consenting to being filmed and to
the possible use of those images and sound recordings.

2 ELECTION OF CHAIRMAN AND VICE CHAIRMAN

The second item is for the election of the Chairman and Vice -Chairman.
Can I seek nominations please for the Chairman?
Cllr Steven Heather - 0:00:37
I'd like to nominate Councillor Whitehouse as Chairman.
I'll second that then.
Cllr Martin Morris - 0:00:41
And seconded. Right, okay. Thank you very much.
Vivienne Messenger - 0:00:43
Councillor Whitehouse, would you like to take the...
Do you want to take a show of hands on this or is that normal?
Cllr Jon Whitehouse - 0:00:56
Are there any other nominations?
Vivienne Messenger - 0:00:58
No.
Cllr Jon Whitehouse - 0:01:07
Okay.
Well, welcome, everyone, to the first Audit and Governance Committee meeting of the new
Council year, particularly welcome to our two new members.
It's good to have you joining the committee.
Thanks to those of you who attended the session
at six o 'clock.
I think it'd be helpful if we just did quick introductions.
So, Councillor Kelleher, you may not know everyone here.
So perhaps if we can, obviously you know Ms. Vessinger
from Democratic Services, if you could introduce yourselves there.
Sarah Marsh - 0:01:54
My name is Sarah Marsh and I'm Head of Internal Audit.
Hannah Crawshaw - 0:01:58
My name is Hannah Crawshaw and I'm an Internal Auditor.
Nicola Sayers - 0:02:06
Owen Sparks - 0:02:07
Hi, I'm Istvart, I'm Strategic Director and Chief Finance Officer.
Nicola Sayers - 0:02:12
Hello, my name is Nicholas Sayers and I'm Head of Legal and Deputy Monitoring Officer.
Cllr Jon Whitehouse - 0:02:21
We are joined online by representatives of the external auditors.
We need to elect a vice chair of the committee.
Understand Ms Heiberg's willing to continue.
But are there any nominations for Vice Chair?
I'm happy to nominate Ms Heiberg.
Anyone wanting to second that?
I'll second it.
Okay.
Thank you very much.
Any other nominations so we can inform Ms Heiberg that she's been elected?
Thank you very much.
Our next thing is apologies for absence.

3 Apologies for Absence

Are there any apologies for absence, please?
Vivienne Messenger - 0:03:15
I've just had apologies from Cecil Heiberg.
Cllr Jon Whitehouse - 0:03:20
It's also worth noting we're one member down at the moment because we didn't fill all the
positions at the annual council meeting, so I'd assume we'll address that at the next
council meeting if the...
Okay.
Thanks very much.

4 Declarations of Interest

Are there any declarations of interest?
Nope.

5 Minutes

We've got the minutes on pages 5 to 8 of the agenda.
Are people happy to confirm those as accurate record?
Thank you very much.

6 Matters Arising

And were there any matters arising there that don't come up elsewhere on the agenda, I think
we cover everything.
Okay.

7 Audit & Governance Committee - Work Programme

So we can move on to the work programme, which is on page 9.
And you'll see from that that it's a mixture of very regular items that we look at, like
every committee and there's other stuff that comes out in a cycle like the
various external audit reports. Was there anything you wanted to say about the
Owen Sparks - 0:04:28
the work plan? Mr Sparks? Just regarding the meeting on the 28th of January in
liaison with external audit we are thinking about moving that forward a
week. If members are happy just give us a little bit more time because that's where
the council come for approval.
Yeah, I don't imagine members have got any issue with that
Cllr Jon Whitehouse - 0:04:46
as long as it doesn't clash with any existing council
meetings or commitments.
I imagine you've checked that already.
So OK, we can agree to move that.
I mean, there's an opportunity for members to ask if there
want things to be added or integrated
in to the work plan on the year ahead.
I mean, a couple of things that I thought members
might want to look at over the next 12 months were quite often the issue of AI comes up
at this meeting, it's come up at full council a couple of times when we've had audit committee
reporting back and possibly reports similar to the one we had on procurement at the last
meeting might be helpful, but interested in members' views. We'll need to pick up the
recommendation next to an audit about governance and oversight of the government review of
subsidiary companies and I think as a sort of matter of routine you know the
progress towards rebuilding assurance the external audit will be keeping an
eye on through those reports I don't know if there's anything else members
minds that they feel might come up over the year that they want to look into a
Cllr Martin Morris - 0:05:59
bit more council Morris I wonder if there should be something to look at
LGR in terms of the way it's planned and the control over its progress.
It's a pretty major piece of work.
I'd have expected to see something in here about looking at LGR.
Cllr Jon Whitehouse - 0:06:16
Okay, yeah, I mean it comes up in the risk register obviously, but we've been looking
at it in a bit more detail about what the governance around that is.
And certainly I went to a training session with the East of England Government Association
a couple of months ago and a lot of that was about the fact there are legal deadlines to
hit, there are governance things involved in making sure that joint arrangements and
things are set up in the run up to LGR and that's the sort of thing you might want assurance
about. So are members happy that we take that away with officers and look at those issues
and how they might be best addressed? Yes.
Heather Kneale - 0:06:56
I was going to ask if we could have some more information around QALIS and the governance
of that because I think it comes up so frequently in the papers for today's meeting and it's
obviously going to be a big focus on the audit.
So I was going to ask that anyway.
So I would be very much in favour of having more assurances around the governance and
financial stability of QALIS.
Cllr Jon Whitehouse - 0:07:21
Yeah, no, I think that's very pertinent issue.
As we've picked up in previous audit and government meetings, there has been a review
of the governance and there's a report that went over in scrutiny at the last meeting
and will come to cabinet, I think, shortly, which independent members won't have seen
but probably should see.
So yeah, again, perhaps we can pick that up and work on how best to deal with that.
Mr Sparks.
Owen Sparks - 0:07:51
Perhaps we can circle out the report as part of the minutes to independent members.
I think that would be really helpful.
Okay.
Cllr Jon Whitehouse - 0:07:58
I mean you are entitled, according to the terms of reference, to all the papers and
things that are required to do the role.
So, yeah, that would be, I think that would be helpful and then we can pick up any issues
that come up from that.
Okay.

8 External Audit Planning Report 2025/26

So if you're happy with that, we can move on to the external audit planning report.
Those of you who were at the previous meeting will see how this sort of follows on last
time we were signing off the end of last year's work and this is a planning for the forthcoming
year's work.
So are you going to introduce us, Mr Sparks?
Owen Sparks - 0:08:39
Just very briefly and I'll hand over to Debbie who's online here.
This report really presents external audit planning report for 25 -26.
Obviously EY prepared that report within the agenda and it outlines the proposed approach
and scope and timetable for the review and external audit in line with statute and professional
requirements.
I'm just going to hand over to Debbie then to go through the report in a bit more detail.
any questions members might have.
Thanks very much. Over to you.
Thank you Owen.
So as Owen has said, this is our report
which sets out the plans of the
2025 -26 audit.
So it goes through some background
information, it summarises
the risks that we've identified, both
in relation to financial statements
and also value for money, and
our response to those risks.
Before I take you through the key message of the report, I thought
it might just be worth talking a little bit about rebuild
which is mentioned in the report in a number of places,
and obviously you've covered that in the work programme,
saying in terms of how you're going to get some further updates on the rebuild process.
So in terms of where our theme sits,
we obviously were not able to complete any audit procedures in 23 -24
because of the fact that the predecessor auditors,
although they issued unmodified opinions on your prior years,
they weren't issued until December, which meant all the backstop dates,
there was just insufficient time for us to undertake an audit,
particularly a year one audit. Therefore there is one year's full gap in insurance that we
have where we did not undertake any audit procedures. For last year 24 -25 we were able
to complete most of our procedures and therefore started to rebuild some assurance naturally
and through that process. Our focus this year will be very much on completing all planned
procedures for 25 -26. Again that will give us some natural rebuild around the balances
and then what we're also looking at is how we plug the gaps, I call it, in the audit
work that was not undertaken in relation to 2324. That's particularly looking at how we
build insurance over reserves, which is obviously key for the authority in terms of what your
usable reserves are as well as what the unusable reserves are within the financial statements.
We've been going through a risk assessment process for all of our clients. That is close
to completion now and as part of that we've been identifying the reserves that we need
to rebuild that assurance over and starting to identify the audit procedures we'll need
to undertake to build that assurance. We'll therefore plan to have discussions with the
finance team before the end of July to talk through that in more detail in terms of what
that would look like and what capacity it is worth, both within the council and within
EY as auditors, to actually do that additional work this current year. So that will be a
dialogue that we'll be having around what's required and then is that possible this year
or would that have to be deferred to a subsequent year. The key thing we want to make sure we
do is that we don't divert any resources from doing 25 and 26 and completing all the planned
procedures for that year, so that needs to be a sensible discussion that we have around
that. So then I'll just really just take you through the report in terms of the plan. We
which is on page 39, I think, of our numbering,
page 50 of your numbered pack.
And that's that set for Larrag, which was issued,
which sets up the expected timetable to move
to kind of qualified and then unmodified opinions.
As I've already said, you are one year behind
because we couldn't do procedures in 23, 24,
but we do only have the one year full gap
and some small gaps from last year.
So in terms of that position,
that's probably slightly better than some of the bodies
where there's more years of disclaimed opinions.
In terms of the risks, we've set those out on page 8 and page 19 of the report.
Again, page 8 is our numbering, page 19 is the PAC numbering if you're referring to that.
And I'll just take you through the key elements of that in one second while I just get to my correct page reference.
So the key risks that we've identified are probably very similar to the previous year.
So we've got our initial risk of management override of controls.
And for all of the risks we identify whether they are purely applied to the council or whether they also apply to the group accounts because they are also a risk in the component accounts that form part of those.
So management override is a risk of both the council and group.
Our procedures to address those risks are generally looking at journal postings, management
override possible in areas such as estimations and any unusual transactions.
We then also consider this a particular risk in terms of possible fraud in revenue and
expenditure recognition and that's through the inappropriate capitalisation of revenue
expenditure and that's because that basically takes expenditure out of the general fund
and allows the council to finance that through other routes such as capital resources or
borrowings. That risk doesn't apply to the components within the group, that then applies
to the council. We then have valuation of land and building assets that are valued at
existing use value and investment properties and that's another significant risk we've
identified at a group level and that's because of the judgements that need to be applied
and the estimation techniques that need to be applied. We've also identified the recoverability
the QALYST loan. We've noted that as obviously a council only risk. That again is the same
as in the prior year and that's also been touched on in the prior items of this meeting.
Then we've also got a further significant risk in relation to the group financial statements
and that relates to the fact that last year we were not able to complete all the procedures
on the group and therefore we have a significant risk around that and Terry Verder was consolidated
for the first time this year so we don't have assurance over those processes.
I would note that in the previous year we were not able to place reliance on component
auditors because of some guidance we gave it into independence. We've now been able
to resolve that issue and we expect to be able to replace reliance on the component
auditors and we'll be issuing group instructions to those auditors and relying on their work.
We've then got IFRS 16 which is the new lease accounting standard which came into effect
last year. We were not able to complete our plan procedures in that area last year and
therefore continue to identify that as a risk. We then have the pension assets at the council
level. That's always identified as an inherent risk because again it's a material estimate
that requires judgement and use of specialists. So we always identified it as a risk. We have
some additional procedures this year that we need to undertake in relation to pensions
because it's a triennial valuation, which means that we'll be asking for assurance over
the membership data which is provided to the actuary to provide that triennial valuation
and we'll be seeking that assurance from the auditor of the pension fund.
We then have another valuation risk which is around council dwelling valuations, not
as significant as the other risks for existing use value because there is more market available
information, but these again are very large balances with some judgements included. And
And then we have our final valuation risk,
which is our own land and buildings valued at DRC,
which is Depreciated Race Replacement Costs.
So that tends to be used as specialised assets.
Our view is that there's less judgement and uncertainty
for those assets because it's based very much
on build costs and recent land transactions.
So again, there's more data that we can use
to validate those valuations.
So we still have it as a risk, but we've reduced that risk
and slightly by desegregating that balance.
I would also note, I don't think we refer to it
in this report, but CIFSA have issued
Bulating Number 22 this year,
which changes the approach that authorities
should adopt to valuation of property,
plant and equipment, and that allows the use
of indexation with full valuations
undertaken every five years.
The council has determined still to undertake
a full reevaluation, to my understanding,
for 25, 26, and we will therefore be
we've undertaken our procedures based on that.
The expectation would be that then in subsequent years
indexation would be applied to those valuations
rather than a full revaluation.
If I can then just refer you to materiality.
So we've set our materiality based on gross expenditure
at a level of 2 % and based on the previous year's accounts
that gives us a figure of around 2 .8 million.
We will obviously update that
once we get the financial statements.
We calculate a level for group and for council
of those levels are the same based on the previous year audited financial statements.
We then set a level at which we actually perform our audit procedures and that's called performance
materiality and we've set that at 50 % of materiality. That's based on the fact that last year was
our first year audit, we couldn't complete all planned procedures and therefore we set
it at a lower level. We would hope that next year we could maybe be looking to increase
that to our maximum level of 75%.
That can then take you on to Value for Money,
which is on page 11 of our reporting, page 22 of your PAC.
So we've noted there the three criteria
that we need to consider.
So we look at financial sustainability, governance,
and arrangements to include improved economic efficiency
and effectiveness.
Similar to the previous year, we've identified risks
in relation to all of those areas,
linked to the QALYs group.
And I don't think members will be surprised by that
based on the discussions we've just had.
So there's obviously potential financial impacts
of QALYs on the council.
There's the recoverability of the loan
and the council's investment in QALYs.
There's also the governance arrangements,
which as you've noted, there has been a review of those
to ensure that the council has sufficient oversight.
And then improving the economy efficiency and effectiveness.
And that's very much in relation to the delays
in QALYs projects and how that's impacting
on the service improvements that they was aimed to improve.
On the next slide we've noted our recommendations
were made last year in relation to those three areas
and we'll be following up on those
as part of the audit process.
We've included a bit more detail on the significant risks
in the next section but I wasn't gonna go through that
in any detail.
What I would just take you to is the group scoping
where we provided a little bit more detail on page 43
of your pack and that sets out the different elements of the group and we've got more
detail in the appendix as well. So we have full scope engagements for Hollis Commercial
and for the council and then we have specific scope apologies for the other elements of
the group. And as I said we'll be issuing instructions to component auditors to ask
for the procedures that we need to be undertaken, we need to be able to level that we need them
to work to and then we will also undertake a review of the working papers and files to
ensure we can place reliance on their work. Then just to take you through the audit team,
I'm still saying as a partner but we've got a change in your senior manager from Sanchita
who did the planning last year to Ian Young who's another experienced senior manager who
has now taken over on that audit. We've also noted the specialists that we plan to use,
that's EY really states where we will assess that in further detail once we're undertaking
our detailed assessment of the property valuations. We'll be using our pension specialist again
and we're also using our strategy and transactions team to have a look at the expected credit
loss in relation to QALYs. In terms of any of the points I really just wanted to note,
probably just a timetable for the audits. So the audit is due to start in October with
completion in November. We are required to report under the NAR code to you on our value
for money work through our auditor's annual report
by the end of November.
So we'll be issuing that to management by that date.
We won't be in a position to conclude our audit
at that point because we'll only be completing
our substantive procedures.
But we are planning to, as I say, conclude
before the backstop date, which is the end of January
this year, and as Owen has only notably suggested,
maybe just bringing that committee forward a little bit
to allow for any last minute hitches or problems
so we're not absolutely up against the backstop date.
but we are able to substantially complete all of our work and produce draught reporting before the Christmas break.
Very happy to take any comments or questions on the plan.
There are a fair number of risks in there but they are broadly in line with the risks that you would have reported to you last year.
Cllr Jon Whitehouse - 0:21:18
Thank you very much for that lot in there.
Members was there anything you wanted to ask about or comment on?
Councillor Moyce, yeah.
Cllr Martin Morris - 0:21:29
Thanks very much for a very detailed plan.
It mentions QALYST in a lot of different places.
I mean, we've got valuations, loans, ongoing financial performance, provisions for write -offs.
Probably, would it be possible to have all of that pulled together into a single part
of the plan rather than scattering it about in lots of different sections?
I think I find that easier to understand.
And on page 40, I know this is about the 24, 25 audit
where it's essentially saying that all that requires
improvement tend to be about resource availability.
Is that still an issue ongoing, or do you expect that to have
been resolved for completing all the assurances you need for
the previous years?
So that's two questions.
I'll take the first one first on Qualis.
I totally understand the point you're making.
I think the issue is that the Qualis issue does impact on both value for money,
but also the financial statements audits and does impact in different ways.
What we can do is maybe give some consideration to when we report back in our audit results report
and audit exam report, whether we can maybe pull together a summary of Qualis issues that might be helpful to members at that point.
I'll pause at that point to see if that would be helpful to you.
Cllr Martin Morris - 0:22:56
Obviously the plan is the plan we've issued it, but in terms of reporting the outcome
of the work we can try and see if we can do it, pull together some consolidated, some
more year -to -year policy issues.
Members did seem to be nodding at that point.
Cllr Jon Whitehouse - 0:23:09
Yes, okay, thank you, Chair.
In relation to the capacity issue, I think we reported in last year's audit results report
that year one was always going to be a challenge.
We, you know, every audit firm has different methodologies, different ways of working,
and so we were very much getting to know each other as an audit team and a finance team last year.
I think we made good headway on that.
There was certainly a lot of learning and we've also had some wrap -up sessions,
things we completed last year and are doing some more training sessions with the finance team,
which the finance team asked us to do, so we are arranging those.
So I think year two should be better because we've kind of had that learning of year one,
but it's probably for Owen to comment on how comfortable he is with the capacity and his team to support the audit this year.
Yes, I'll ask Mr Sparks to come in.
Cllr Jon Whitehouse - 0:23:57
It did leap out when I looked at the timetable that the process of the audit coincides exactly with the process of budget preparation
and the deadline date is about the same time as the budget agenda is being published.
So I do hope there's some sitting down and matching resources between the two teams so
that the greatest demands, as it were, from the auditors come when the council's best
able to meet them.
But I'll hand over to Mr Sparks.
Owen Sparks - 0:24:29
I think as Debbie said, we've been pretty much talking consistently for over a year
on the planning really.
Having said that, we are a district council.
We have a small finance team.
We have budgets set in, we have LGR, we have a lot going on.
I think we're prioritising this.
Obviously what we want to do is get that rebuild done,
especially moving into LGR as well.
So again, it's important to have that close relationship
and we're looking at capacity and making sure we've got resources
available at the right time.
But it is going to be challenging for us.
And I think just to add to what Oli just said,
Cllr Jon Whitehouse - 0:25:01
that we have put in some time earlier in the year to do sample selection.
So that means we draw the high subs for anti -testing around
income expenditure, debt as creditors, PPE additions. We can pick our samples earlier.
I think we've got that scheduled in for June and July. I'm just looking at that in August,
actually that same four. But hopefully that then will give the council's finance team
the time whilst we've then disappeared to make sure that all of those samples are selected
and are ready for us when we come back in October. We do fully recognise the challenges
of doing an audit in that period because of the budget setting, etc. The difficulty is
with the backstop date of January,
the audits do have to happen in that period.
There's no way we can complete all of our audit work
before you get to the budget process.
There's just not sufficient capacity in the system.
But going forward, as audit deadlines start to change
over the coming years,
that may be something that's easier to avoid,
but at the moment it's impossible
to avoid doing some audits in that period.
Yeah, no, I think we understand the backstop date
can't be shifted.
I suspect it's going to be some things like this good advance awareness of when crucial
people are off on holiday and that sort of stuff, isn't it?
So that, you know, unexpected things don't come forward.
Members, anything else you wanted to pick up?
It was good to hear the issue about auditing the subsidiary companies has been dealt with.
You do mention in the report that when the report was published that you're awaiting
responses on their independence from the other external auditors. Have those now come through?
Yeah, we've had a number of calls with NSORs providing that. We clarified the guidance
that was in AGN01, which was a problem last year, which basically was much more restrictive
around audit services or non -audit services apology that audit firms could provide, which
basically meant that the services that NSOR provides meant that it was not permissible
for us to replace reliance on and that guidance has now been clarified that we don't have
to apply that. Therefore we just needed to assess the nature of the services they provided
in a bit more detail to ensure that we could place reliance on sufficient safeguards in
place and that management of the subsidiaries had a sufficient role in terms of key judgments
that were being made. I think the services that provided for my recollection are account
we might be paid well on tax as well. So all of those services we have to assess to say
are we comfortable that that doesn't present any risk to independents and we haven't
got to that position.
Okay, that's good. Thanks very much. Mr stocks.
Owen Sparks - 0:27:39
Again, just to give members comfort, the publication deadline for the counts is 30 June and the
counts will be published before that deadline so you'll see them appear next week. So
again just for members can have a preamble if they choose.
OK, well thanks very much.
Cllr Jon Whitehouse - 0:27:56
There's no more comments from members or non -members.
The only other thing I'd pick up on
is I think it's fair to say the committee is committed
to wanting to see assurance rebuilt and note what you've
said about prioritising the current year stuff
and then looking to plug the gaps.
But I think we very much hope that between you and the staff at EFDC we can move on to
that so that we do see progress on that issue as well as on the current years or the past
years accounts.
Thank you for your time tonight.
As I was saying just to add to that point actually on the rebuild we are planning to
issue a plan update.
The target for that is end of July.
Obviously there isn't another formal audit committee until September.
we will issue that plan update to management and discuss that with them and I guess it's
whether the committee would like that circulating somewhere before September so you are cited
on what that plan looks like or whether you have to wait until the September meeting to
see that.
Yeah, I mean it sounds like it would be useful to see, doesn't it, and then we can have it
formally on the agenda when it comes to it.
Okay.
Well, we're asked to note that report, so I'll take it that members are happy to note
that and thank you very much for your time tonight, you're welcome to stay, you're welcome
to leave.
Thank you very much, in light of the heat I'm going to leave because I'm not in an air
conditioned office at the moment so I'm slightly melting.
That seems very reasonable.
Okay so thank you for your time, we look forward to seeing you again and we will move on to

9 Treasury Management Quarter 4 Update 2025-26

the Treasury Management Report which I believe is Mr Sparks to introduce.
Owen Sparks - 0:29:43
Thank you, Janice. This is the regular Treasury management report that the committee receives
on a quarterly basis. This sets out the position for quarter four, so the year end position
for 25 -26. Some of the key points, external borrowing has increased by £24 .7 million
during the year to support the capital programme, which gives a net borrowing figure of £262 .3
million pounds. Treasury investments, that's the money we invested, were 15 .6 million pounds
during the year and there were no breaches of any potential indicators or treasury limits.
The report sets out quite detailed economic context and as members be aware it's been a
it's been another bumpy year economically. We've started off with US trade tariffs and obviously
conflicts that have happened later on in the year with Iran. And again, what that's meant
is inflation and interest rates have obviously remained stubbornly high during the year.
That obviously then impacts guilt rates, which impacts our cost of borrowing as a Council.
So we borrow our money from the Public Works Loan Board at a weighted average rate of 3 .49%,
an average maturity rate of 11 years.
And our investment balance is that 15 .6 million pounds,
average returns of 3 .8 % during the year.
And remembering that the council needs to maintain
that balance between liquidity and security over yield.
As I said, all the treasure activities
comply with the CIPFA code
and the council's treasure management strategy,
with the council maintaining strongly liquidity
and within all the authorised limits for indicators that have been set.
During the year capital expenditure totalled £58 .6 million and the capital finance requirement
– that's our underlying need to borrow – reduced to £346 .3 million during the
year, affecting capital receipts and programme slippage that members would have seen as part
of the out -of -term report that went to cabinet previously.
Debt remains below that borrowing limit, demonstrating that prudent use of internal borrowing.
So in conclusion the Council's Treasury Management performance for quarter four will be managed
robust, we fall compliance against all indicators.
Boring is increased in line with the capital programme requirements as we assume at the
beginning of the year.
More investment risk exposure has been managed prudently.
Thank you, Chair.
Thank you very much for that.
Cllr Jon Whitehouse - 0:32:19
I think the Treasury Management reports are one of those ones that does take a bit of
getting your head round, because there's so many figures
and bits of jargon and so forth in it.
But we see them very regularly, so that it's,
get the chance to pick up on what's happening there.
Were there any questions that people wanted to ask
or comments we wanted to make?
Oh, Councillor Morris.
Cllr Martin Morris - 0:32:51
Yes, thanks. A couple of questions. Page 79 gives you the borrowing, the Councillor's
borrowing. It's all from the PWLB but there's no short -term borrowing? We don't do any?
It's all funded internally, is it somehow? Any short -term requirements?
Owen Sparks - 0:33:11
Yes, we don't do short -term borrowing but you can do. A lot of that is done between
local authority, you can do it on a short term basis.
But again, our strategy has been to use
internal cash balances where we can,
and obviously then try and stabilise infrastructures.
Thank you.
Cllr Martin Morris - 0:33:28
And on page 83, it mentions something about
MRP not applying, so where instead we've switched
to a floating charge?
But I didn't really understand what that meant.
Is it kind of secure or not?
Owen Sparks - 0:33:45
So that relates to the specific element of our capital expenditure and that's on the
resources that Qualis have used to buy the three investment properties outside of the
borough.
So it relates particularly to them, we've got a charge over the assets but we're not
writing down the debt on an annual basis because we've got a charge over the assets.
It's only for that specific bit of capital expenditure.
Cllr Martin Morris - 0:34:08
Right, so there's a EFDC has a legal charge over those assets if there was a default?
Yeah.
Okay.
And the next question was, okay, there's a section on the liability benchmark.
Could you explain that to me again?
Because I never really fully understand what that chart is trying to tell me.
Owen Sparks - 0:34:32
There seem to be various lines on it and I never quite understand what it all means.
So very simply what that's trying to do is to show our underlying need to borrow over
the forecast period.
That's what it does, it looks at the amount of borrowing we've got now, where the capital
programme's going and it shows we've got some resources on our balance sheet anyway, that's
cash equivalents, but it's showing that we're going to need to borrow over the forecast
period.
So on that graph, the gap that's not coloured in by the dark colour is around the line Need
to Borrow.
And you know we talk about our Need to Borrow, our CFR, so it reflects at the moment we're
significantly under borrowed against that CFR, but at some point that will catch up
and that's really reflecting that and showing how that looks.
Cllr Martin Morris - 0:35:28
So I suppose a more specific question. The dark bit is outlined as fixed rate loans,
but presumably everything else is floating rate loans or something? Or is that not...
Owen Sparks - 0:35:37
It's internal borrowing at the moment. It's all internal borrowing.
But we will need to buy more, so that lump will get bigger because we will need to buy
the forecast. Thank you very much.
Cllr Jon Whitehouse - 0:35:51
I was going to ask about, this is back to the page 79, where there's a further roll
out to Qualist so they can complete developments, because until they're completed they can't
sell them.
We can't get any money back, I suppose is the logic.
How many more times do we expect to be lending to qualities given that the development programme is now winding down?
Owen Sparks - 0:36:26
So the remaining development areas, obviously with Springwood, I was going to point to it but I'll get it wrong.
The idea is that should be completed late summer, that's the current projection.
So obviously once that is done, then those developments will be complete and the borrowing there won't be any need for
additional borrowing from Council
So we're not expecting any more drawdowns
Cllr Jon Whitehouse - 0:36:50
to happen or we're not expecting a drawdown to happen after
Owen Sparks - 0:36:58
That's completed. Yeah, that's yes. Okay. So once that's completed which should be sort of middle of this financial year
Cllr Jon Whitehouse - 0:37:05
Then those drawdowns should be complete. Okay, that's good to hear and just sort of picking up on the external audit bits
which did talk about tightening up on documentation of the conditionality of the loans. Can you
say a bit about what conditions are now imposed when money is drawn down and how that's
altered?
Owen Sparks - 0:37:24
That's part of that review that went through Ovi and Scrutiny. So part of that is it's
a link between individual loans and the overarching loan facility. We just need to make sure the
I linked it explicitly and we'll do that as part of the review we're doing as part of
the action plan for the quality review.
So there are individual loans have got those schedules but it's linking it to the over -racing
facility and that's what we need to do.
But that's part of the plan we're doing now.
So it's a sentient exercise in updating documentation as you go?
It is, yes.
Yeah.
Okay, fine.
Cllr Jon Whitehouse - 0:37:58
And I suppose the other thing looking at the repayment, again it sort of picks up on the
and Lord it talking about making provision and getting an understanding of how much money
will need to be written off over the NTFS. How often is that looked at?
Owen Sparks - 0:38:17
So we've done that as part of budget setting and that's reflected in the MTFP. So we do
that on an ongoing basis. What we are doing, we're refining it as and when we get as much
certainty as we can over what's happening with those commercial developments and then
we do it on an ongoing basis.
So again, it will be,
we do it sort of on a quarterly basis, I suppose,
but it's done on an ongoing basis
as in when we get the quarterly updates,
then do the quarterly reports and the quality position,
we build that into those assumptions
and look at how it's changed significantly
when we review that position.
And are you seeing much movement at the moment?
No, it's been consistent for the last year.
It's just really the timing of it,
but it's been consistent the actual amount.
Okay, right.
Okay, Chris Moyes, you want to come back?
Cllr Jon Whitehouse - 0:39:01
Cllr Martin Morris - 0:39:05
About the provisions for QALYST against, the council will lend them money basically to
build properties and things, and currently the value of the property is a bit lower than
the amount of money that we've lent them.
So you'd expect to see some provision for potential losses.
How are you calculating those exposures?
I mean, is there a method that you use and is it externally defined or have you defined
that method?
Owen Sparks - 0:39:35
So that's the key part of what external audit look at and we use our Treasury Advisors,
Arlin Close, and they calculate something called an expected credit loss and that shows
what that loss is forecast to be and that's what we make a provision for and that's what
EY looked to make sure is consistent robust and what we include the MCHF.
Okay, members, anything else on this report?
Cllr Jon Whitehouse - 0:39:57
Okay, so can we note it?
Thanks very much.

10 Annual Report of the Head of Internal Audit 2025/26

So we can move on to Agenda Item 10 from pages 96 onwards, and that's the annual report
of the Head of Internal Audit.
And I'll pass over to Ms Marsh.
Thank you, Chair.
Sarah Marsh - 0:40:15
Each year I am required under the Global Internal Audit Standards to give an annual conclusion
on the governance, risk management and internal controls within the Council. This statement
gets fed into the annual governance statement, which you have later on. It is a really important
piece of work that I need to produce.
But it's a good news storey, so I'm going to take you to the box on page 97, and I'm going
to read it out verbatim.
Based upon the results of our undertaking during the year, it is the head of internal
audit's overall conclusion that the Council has adequate and effective governance, risk
management arrangements and control processes, where there have been significant issues that
have been accepted by management and properly corrected.
That's the highest accolade I can give.
So saying it's adequate and effective, that's a really good thing.
The rest of the report goes on to explain how I come to that conclusion.
So if I take you to the top of page 98, there's a list there of all the audits that were taken
through the year compared to previous years.
Of the 10 audits that we've undertaken, eight of them are of substantial or reasonable assurance.
Unfortunately, we did have two limited assurance audits there. They were the tree strategy
one, which we have reported previously, and the commercial rents one, which has been reported
within the progress report, which is later on. The good news is that the weaknesses when
they've been identified were worked on for both cases immediately, and those on the whole,
the tree strategy recommendations have all been implemented.
Yes, being implemented.
And the commercial rents one as well.
So I don't rely just totally on those 10 audits.
So there's a lot of work that goes on in the background.
So we have the tracker process.
That's really important to make sure
that recommendations made are actually being implemented.
Otherwise there's no point making recommendations.
And that's the reason why we bring
all overdue recommendations to the audit committee
in the progress report.
As I say, we have the other sources of assurance.
So the internal audit team is within the council.
We have our eyes and ears open.
We give advice, we attend working groups
and things like that.
So we do work with our corporate fraud team
on any special investigations.
And they're at the bottom of page 99.
So we did an interesting piece of work
around our housing contractor and found out that procurement processes weren't working
as expected and they've now been tightened up. As I say, we give advice and there's some
key groups within the council that we sit on, including the monthly corporate governance
group, which the statutory offices also sit on. We've got strategic information governance,
health and safety and the portfolio steering group is around project management. We've
done some work with senior managers and we're just rolling that out lower down now around
the Economic Crime and Transparency Act to make sure that we're fully compliant with
those new requirements. Moving on to the effectiveness of the Audit Committee, page 100. So it's
that your internal audit function is good and dynamic.
And people ask me, well, Sarah,
who audits the internal auditors?
Well, we do get audited.
We have to be audited every five years.
And the last time that took place was in 23.
We were fully compliant with all the different standards
that we have to follow.
As I say, the global internal audit standards
came into effect from April 25.
and they cover every organisation across the world
regardless of sector.
We have some specific ones for the UK public sector.
I've done a gap analysis against those new standards
and I'm pleased to say that we are fully compliant.
Also to help us to keep on track,
we have a suite of performance indicators
and they're on the top of page 101
and we've hit all our targets.
That is a really good news storey. New for this year in my annual report is the forward
look. That is a requirement of the global internal audit standards. That is lifted from
the strategy that I gave to you in March. I don't intend going through the appendices,
but happy to take any questions.
Cllr Jon Whitehouse - 0:45:08
Okay, thank you very much for that. Members, any questions or comments on the report?
Cllr Paul Kelleher - 0:45:14
Gaskillah. Hello, good evening. Just a quick one. The
report concludes that the Council has an overall satisfactory control environment. Looking
ahead to 26, 27, what does the internal audit consider to be the single biggest governance
Sarah Marsh - 0:45:37
or control risk that's facing the Council, if any?
So my audit plan is based on the risks of the Council.
So it's very much taken on the corporate risks
and on there, the same ones that I would pick up
if I was doing it myself is financial sustainability.
And also we've got LGR, which could come along
and blow us a little bit, of course.
There's always things like cyber security, data protection, retention of staff, there's
a whole host of things.
There's no one single one.
Councillor Moyes.
Cllr Jon Whitehouse - 0:46:15
Cllr Martin Morris - 0:46:17
I just wanted to come back on the question about commercial rents, because it does say
in here, largely met.
When I read further on in the report in the internal audit monitoring on page 137, it
something is mentioned about significant work.
So a bit unclear about this.
I mean, have the audits recommendations been met or not?
And if they have been met, what's the significant work?
Thank you.
Sarah Marsh - 0:46:47
So the significant work talks about the work
that's been taken by officers to address the issue.
So it was already known that there
were problems within the commercial rents arena.
And our audit just went that little bit further and said there's more work that needs to be
done and it needs to be done faster.
So the recognition is that significant work is and was already taking place and we just
need to make sure that that does take place.
It carries on.
Cllr Martin Morris - 0:47:23
So that is going to, when that work is complete it will complete the audit recommendation.
Is that my understanding correct?
Sarah Marsh - 0:47:30
So we have a suite of recommendations that we made and we're tracking those and as soon
as they become overdue they will come to the audit committee.
Hopefully they will implement them within the agreed timescales and therefore you won't
ever see them.
Cllr Jon Whitehouse - 0:47:46
We are a council that relies quite a lot on or has a disproportionate lead to the high
proportion of income generated from commercial rent.
It's an important area to know about and to ensure is delivering for the council.
I think it's also helpful to see all the references in the report to the work internal audit does
outside the formal internal audits in terms of advice and monitoring and
you know picking up, supporting the wider councils priorities so thanks for
that. Anything else people want to raise or mention? Okay well we actually need to
as well as noting the report we're asked to agree the council has operated
adequate and effective governance risk management arrangements and control
processes. Obviously people who have been on the committee last year have seen a
succession of reports and monitoring from internal audit. Are members happy to
agree that? Okay thank you, thank you very much and perhaps you can pass on our
thanks to the members of the team who aren't here on their work over the past year.

11 Audit and Governance Committee Annual Report for 2025/26

Thanks very much. Well let's move on. Our next item is the audit, the annual report
this committee which needs to be presented to full council and that starts on page 117.
Who is going to introduce this one?
Ms Marsh.
Sarah Marsh - 0:49:15
So we don't have to do an annual report of the Audit Committee but in line with good
practise from SIT for guidance we do that.
I think it's a really good idea because it shouts out the great work that the Audit Committee
does.
As we did in the training earlier today, there's such a wide range of things that you look
at as a committee and you do it well here at Epping.
The report's split into a couple of different areas. I want to take you first to page 117
in the terms of reference review. So again, in line with good practise, you need to make
sure that your terms of reference are still relevant and fit for purpose. They've been
benchmark against the guidance issued by CITFA and we are proposing that no changes are required
to your current terms of reference. The rest of the report then talks about all
those different areas that you cover, external audit, internal audit, risk management and
such on. In line with good practise, we look at the audit committee effectiveness and that
starts on page 123. So members who have been on the committee for a while remember that
we had a workshop back in November, an actual in -person one, where we just talked about
what the Audit Committee should be doing, we sort of benchmarked ourselves, you know,
what could we do better, everyone can do things better. And there was just a couple of action
points there that we just needed to make sure that actually happened. So, you know, we need
to arrange that you have that private conversation
with the external auditors so that there's no offices
at present so you can have an honest conversation.
They can say how good the council is or isn't
at doing their statement of accounts
and you can feed back to external auditors
if you've got any concerns or about the work that they do.
I mean, you already meet with me on an annual basis
with our offices present.
Just need to keep an eye on value for money.
So with the external auditors ramping up their work now,
a lot of your assurances can be done from their value for money statement. But if there's
more assurances that you need, then we just need to consider that.
The workshop found that the briefings that you have and the training sessions are really
helpful and we're going to continue that throughout the year. We need to deliver some training
to all members, not just on the audit committee around risk management. And the training is
already delivered on the statement of accounts as well. We also talked about
about the committee size as well because you're actually quite small compared to
some other councils but there is no set number that you should have on a
committee and it was all about making sure that members turn up and
participate in meetings so it was decided that we didn't actually need to
increase the size of the committee. Quality rather than quantity, I think we can say.
And then you wanted some more information around procurement practises. That has been
coming up as a theme in some of the outstanding recommendations and that was delivered to
you back at the March meeting. So overall, I commend and thank you the Audit Committee
for being great.
Cllr Jon Whitehouse - 0:52:40
Okay, thank you for that.
Yeah, it was a comprehensive report from pages 120 to 124.
Did members have any comments or changes they wanted to make either to that or to the terms
of reference?
No.
Can I take it then that we're happy to agree the annual report?
Thanks members.
And we note the terms of reference.
for them to change would actually be changed to constitution but clearly we
could ask for that if that's what we felt was was necessary. Right well we can

12 Corporate Fraud Team Annual Summary

move on to agenda item 12 and that is the corporate fraud team annual summary
Sarah Marsh - 0:53:25
and I believe it's you again Miss Marsh. Sorry, it's a Sarah Marsh show today. Martin Crow my corporate fraud team manager he
He apologises for not presenting this. The key messages he wanted to get across on this
was that last year, as we were telling you throughout the year, the focus of the work
of the corporate fraud team was on right to buys. We had that huge surge in right to buys
with the government change on criteria. It is good to know that they finally got through
all that work because they decided to make sure we still do 100 % checking of every right
to buy. Some councils decided to do it on risk basis but until you start looking at
them you don't know what the risk basis is. And it's been really good because it has unearth
some areas where we've stopped the right to buy or people have pulled out because they
realised that perhaps it wasn't the right thing for them.
And also while they've been doing that work as well they have been continuing on with
other day -to -day work, so tenancy fraud again is another big area that they look at.
And throughout the report there's various case studies to give you a flavour of the
sort of things that they look at as a team.
And happy to take any questions.
Thank you.
Cllr Jon Whitehouse - 0:54:47
I think it shows the breadth as well as the depth of what the Counter Fraud team get involved
in.
Did members have any questions or comments they wanted to make?
Councillor Canner.
Hi, thank you.
Just a quick one.
Cllr Paul Kelleher - 0:54:58
Are you seeing any emerging fraud trends at all
that have not been before?
Anything sophisticated?
Sarah Marsh - 0:55:09
Answers, no.
No, I'm gonna keep an eye out
because we know what's going on within the council,
We're also part of a wider Essex fraud group as well.
So we're keeping an eye out to see what's happening
in other councils as well.
But there's no, there's no, nothing in particular
coming up the ranks.
Councillor Moyes.
Thanks.
Cllr Martin Morris - 0:55:39
Yeah, so the report sort of indicates quite well
all the activities that were undertaken during the year.
Could you give us, or give me a bit, a better view
about how do you decide where to look for fraud?
I mean, there's many, many different possibilities.
You look all over the place.
You've obviously examined in detail some areas,
but how do you decide where you're going to look?
Is that what brings things to the top of the list?
Sarah Marsh - 0:56:09
So there is a fraud reporting process
both internally and externally.
So a lot of our referrals come from that.
Again, it's like internal audit,
corporate fraud is part of the organisation, so they go around and talk to people and they
go, oh, this looks a bit funny, can you come and give us a bit of help on this?
One of the examples we had there was around HMOs, they knew something wasn't quite right
and they weren't quite sure what to do and they've got the powers to look at various
data sets and things like that and to give the wisdom of what to look for and things
like that. The charge back one was an interesting one as well. It was a piece of work that was
done with internal audit. Again, that was officers bringing it to our attention and
we go, oh, yes, it doesn't seem about right so let's have a look at it.
So it's been there and understanding what we are looking at. We also completed, starting
to complete a series of fraud risk assessments across the whole of the council.
So again, we're just getting the message out there, you know, we've got a corporate
fraud team, come and use us, come and talk about things and just getting everyone's
awareness up.
So is there a document that backs this up?
I mean, can we see it?
Cllr Martin Morris - 0:57:28
You know, your approach?
I mean, I'm just looking for something a bit more structured than, I mean, it's a
good explanation, but, you know, is there something more structured that we can look
Sarah Marsh - 0:57:38
Cllr Martin Morris - 0:57:39
that shows how this works in terms of targeting areas.
Sarah Marsh - 0:57:42
No, it's not written down,
but I think we were planning and doing some fraud training
for councillors, including audit committee members.
So we'll get that accelerated.
That'd be helpful for you.
And we have a counter -fraud strategy,
Cllr Jon Whitehouse - 0:58:00
which I suppose is a high level document, isn't it?
The other, I did think when the question about trends and so forth, obviously what we keep hearing a lot about at the moment is cyber fraud and defending against that.
Most of that would sit with IT, wouldn't it, rather than with the counter -fraud team.
Okay, alright.
Sarah Marsh - 0:58:24
Cllr Jon Whitehouse - 0:58:26
Just a question.
Cllr Jay Gupta - 0:58:29
Is there any investigation of some of these shops opening and closing very quickly, like
some barber shops on Epping High Street that appear and disappear and vape shops and whether
there's actually any customers for these shops?
I don't know.
It looks very strange to me.
Sarah Marsh - 0:58:50
So what we deal with at the council is fraud within the council or being perpetrated against
the council shops and not in our emit.
Cllr Jon Whitehouse - 0:59:02
I'm presuming the one relevant area would be non -payment of business rates, wouldn't
it?
And if people had evidence of that, they should submit it presumably to the NNDR department
or directly to the fraud team.
Yeah, I mean, this may be a question you can't answer,
but on the sort of cyber fraud thing,
I've noted the amount of attention that's going into,
I was going to say trying to catch staff out,
that's unfair.
Yeah, yeah, yeah.
Educating staff and councillors about, you know,
what phishing looks like and so forth.
I mean, is that proving effective?
Are we finding, I mean,
these are attempts aren't going to diminish, are they?
But are we finding that people are good
at not clicking on dodgy links
and have we suffered any fraud through that means?
Owen Sparks - 1:00:07
I think like everyone, the Council is under attack constantly from people trying to get
under our firewalls, whether that's through emails or direct approaches. So there's a
whole strategy around trying to support officers, Councillors to be aware. So obviously you
would have had some of those emails. What we're doing reviewing those, because people
are getting used to them, so we're trying to do it from all different angles. We're
doing some more tailored scenarios now to individual areas.
So we're looking to evolve that whole process.
Another thing obviously is part of the IT strategy
is looking at how we make our own networks
and infrastructure resilient as possible.
And that's just part of an ongoing activity.
Every time obviously you develop it,
things change and you develop it again.
So that's just part of the whole strategy
and training officers,
dis -awareness against all aspects of it really,
and that is ongoing and we're trying to do it in different ways that resonates with people
and to reflect the changing ways that people are being, I'd say, attacked, but I'll be
in, you know, yeah, basically.
Okay, well, thanks very much for that.
Cllr Jon Whitehouse - 1:01:19
So we're asked to, no, I'm going to say, yes, we're asked to note that, so we're happy to
do that.
Thank you very much.
And thank you to Mr. Crowe and his team for his work on that.

13 Internal Audit Progress Report

So we can move on now to the internal audit progress report from pages 136 onward.
Thank you.
Sarah Marsh - 1:01:43
The report sets out the work that we've been doing since the last time.
So we've had three final reports issued.
Two substantial assurance, which is good news
for the council.
Does actually make it a bit boring for us
when things are working well, but no, it is good news.
So that's payroll and that was the off street
parking income.
We've already talked about the commercial rents
limited assurance and the work that's going on
as we speak to make sure that all be addressed.
The report also talks about the work of the corporate fraud team at the back.
I'm now going to pass over to Hannah for the last bit to talk about the tracker.
Thank you.
Hannah Crawshaw - 1:02:36
So we have one high priority recommendation at the moment on the tracker and two medium
overdue recommendations.
The high priority tree strategy recommendation is progressing and the majority of the trees
have been inspected, which was part of the recommendation.
I've had an update today from the ICT service manager regarding the two overdue recommendations,
and I'm pleased to say that the cyber security recommendation is now complete.
We have had our certification through for this year, so that one is complete.
And in regards to the major incident management strategy, I'm just waiting for evidence of
completed work that we have done and then I'll be able to take that recommendation off
the tracker too.
Thank you.
Thank you for that.
Cllr Jon Whitehouse - 1:03:27
It's good there are so few outstanding recommendations.
You're able to give us some of them, each and every one of them, which is actually a
good sign.
Any questions on the internal audit progress report?
I know it's got three internal audit studies carrying over from last year which are going
on.
Are you content that you'll be able to catch up?
Events happen, but are you content, apart from events, that you'll be able to catch
up over the year?
Sarah Marsh - 1:04:00
I do make reference in the progress report that we have got some long -term sickness at
the moment so it has meant that we're reprioritising our, well we're actually
prioritising our audits. Normally at the beginning of year I split out all the
different audits given back to the different auditors so that they can do
that work until we know how things are done and doing everything in a risk
priority order and then agreeing that with the Council. So I am hopeful
that we are going to hit and make sure that we complete our plan but I can
say that hand on heart but we are looking at resources and managing that
Cllr Jon Whitehouse - 1:04:41
risk. That's fair enough thanks very much so members happy to note that

14 Risk Management

report thanks very much which brings us the final report of the evening which is
Owen Sparks - 1:04:56
the risk management report we're in back to Mr Sparks. Thank you chair this is the
regular update on risks that the council is facing.
Again, it picks up sort of the main corporate risks,
which are supported below with directorate risks
and service risks.
That's part of what you talked about earlier,
the risks that are affecting us.
So the risks have been reviewed
and it's been to senior leadership team
and to corporate governance group.
There have been no changes to the risk assessment
from previous time the committee considered those risks.
Having said that, things have moved on a little bit in one area since we did this report.
But the key risks, which again we've touched on really, remain.
Scissory company risk, which is red.
Housing pressures, which again relates to demand for homelessness accommodation.
Cyber security, which again we've spoken about tonight.
Planning performance, obviously that situation has changed over the last couple of weeks.
So again, we will be looking to review that area going forward.
Pilot management, which has been on the register for a while.
And the other one is community cohesion.
Again, it's unchanged but still remains red.
So they're the red risks that are unchanged since last time.
And so we will be reviewing, as I said,
the planning risk at the moment as well.
OK, thanks very much.
We've got the summary at the front.
Cllr Jon Whitehouse - 1:06:17
And then the appendix goes into quite some detail
about how the risks have changed over time
and how they're being mitigated and monitored.
Obviously, this comes to us regularly
and then goes on to Cabinet to look at as well.
So we've got the opportunity to suggest any changes
or challenge any of the conclusions
that are suggested here,
or to highlight anything that we think has been missed.
So I'll throw it open to members.
Councillor Moyes.
Yeah, I just had a couple of questions on this.
Cllr Martin Morris - 1:07:02
One was on the risk of ICT001, which is cybersecurity,
which we have talked about it.
If I look in the section on further actions,
it mentions something about DR. And it says something like,
you know, DR is expensive and testing it is expensive.
I wasn't clear if that meant that it hadn't been tested or whether...
It wasn't very clear what it meant.
I mean, if it hasn't been tested, then it could be bad.
It has been tested.
Owen Sparks - 1:07:34
What that is referring to is we're looking at various options
for how to achieve a bus disaster recovery approach.
So we are looking at other options, and as technology moves along,
there's other things we can do, so we're exploring those options.
So, just to confirm, it has been tested,
but you're looking for other ways of doing your disaster recovery.
Cllr Martin Morris - 1:07:55
My second question was about the difference between FIN 002, which is related to QALYST,
which has a residual risk of 15, and the risk PLA 005, which is the quality of majors.
And now that also has a residual of 15.
So PLA 005 is no longer a risk, is it, because it's an issue?
because I think it refers to the fact that we might get
designated, which we have been.
So it's no longer on the risk list and it's an issue.
But my question really is, well, that had the same residual
measure as QALYST.
So one of these residual risks has become an issue.
You know, so that implies to me that if QALYST has a residual of
15, that could also easily become an issue very quickly.
Is there any comment on how that's been dealt with?
Owen Sparks - 1:08:51
So obviously we are aware that some issues will crystallise for policy.
What the assumption with this particular risk is, as we go through the review and come to
Cabinet, we'll then have that direction which members will have endorsed and then we'll
be able to review it on the back of that and those actions that members are supporting
has taken to address everything.
I imagine it won't leave the risk register.
Cllr Jon Whitehouse - 1:09:16
Now the risk has been crystallised,
it will morph into the risk is that we stay in under a direction
and don't have a way out of it or something.
But obviously that lies primarily with the cabinet
to indeed planning committees to think about.
OK, anything else from anyone?
Okay, so we're happy to note the risk register before it goes off to cabinet.
Thanks very much.
In fact, we're referring it to cabinet, not just noting it.
Lovely.
Okay, well, thanks very much for your time.
Oh, Mr. Sparks.
There is supplementary.
Thank you for reminding me.
Yes.

17 Annual Governance Statement 2025/25

So supplementary is the annual governance statement which will in due course form part
of the statement of accounts.
Who's going to introduce this one?
Mrs Sparks.
Owen Sparks - 1:10:20
I think Sarah's touched on a lot of this already so I'll make the introduction fairly brief.
So the council is required to do an annual governance statement under the council regulations
The draught AGS, if you like to call it, will be published alongside the accounts next week.
So this takes a set out, an overview of the Council's governance arrangements and how
effective they are.
It picks up areas of improvement we can make going forward and has those highlighted in
the report and also identifies some of the actions we've taken looking back to last
years AGS and really that brings together, what's it say, Sarah's work and wider aspects
of basically comfort and evidence that those actions are working effectively.
It also includes getting assurance statements from senior officers as well to make sure
they're in their own areas, governance is working appropriately.
So the AGS is set out in the report and shall we go into any comments that members may have?
Cllr Jon Whitehouse - 1:11:30
Thanks very much. It's a slightly different format I think this year than we've had in
previous years, isn't it, which sort of chunks it down into intersections a bit more, obviously.
You know, we have the opportunity to suggest any changes or things if members want to or
approve it as it is. It seems pretty comprehensive. Councillor Moyes.
Cllr Martin Morris - 1:11:49
Yeah, I just had a question about the one about it says the authority has carried out
a credible and transparent financial resilience assessment.
And in the action column it seems to mainly mention LGR.
Presumably the credible transparent financial resilience is more than what's going to be
considered in LGR.
So I was not sure that the action quite came up to what I expected it would be, if you
Owen Sparks - 1:12:24
I think the resilience and approach refers to the SIT for financial management model
that we've undertaken a review of, which basically is good practise benchmarking against how
we manage the financial affairs and the council.
Obviously LGR is forward looking about making sure we've really got, which we've sort of
spoken about, those governance arrangements and some financial risks associated with that
and the wider delivery risks associated with that going forward.
Cllr Jon Whitehouse - 1:12:57
I suppose the thing I'd say about this is it's not an assertion that everything's gone perfectly or there's no room for improvement.
I think that is picked up in the fact that there is the action table at the end of the AGS.
But it is a statement that policies and procedures are in
place that we can pick up where things need improvement or aren't
running purposely, and that there's process then in order
to put measures in place.
So any more comments or questions?
If there aren't, I will ask you to approve the,
Are we referring this anywhere or are we approving this tonight?
It just says Review and Comment.
I think it's just reviewing, obviously then it will get endorsed by the Chief Executive
Owen Sparks - 1:13:57
and the Leader for Publication.
And then it's external, it will then make sure it's consistent with their understanding
of the Council.
Fine.
Cllr Jon Whitehouse - 1:14:06
OK, so we've reviewed it, we've heard a couple of comments and we send it on its way.
So thank you very much members, thank you to officers for supporting the meeting and
see you all next time.
Thanks very much.
Cllr Jay Gupta
District councillor for North Weald Bassett ward
Reform UK
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Cllr Steven Heather
District councillor for Waltham Abbey South and Rural ward
Conservative Party
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Cllr Paul Kelleher
District councillor for Waltham Abbey North ward
Reform UK
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Heather Kneale
Co-optee - Audit & Governance Committee
View profile Heather Kneale
Sarah Marsh
Chief Internal Auditor
Epping Forest District Council
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Vivienne Messenger
Democratic Services Officer
Epping Forest District Council
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Cllr Martin Morris
District councillor for Waltham Abbey North ward
Labour Party
View profile Cllr Martin Morris
Nicola Sayers
Head of Legal
Epping Forest District Council
View profile Nicola Sayers
Owen Sparks
Interim Strategic Director / S151 Officer
Epping Forest District Council
View profile Owen Sparks
Cllr Jon Whitehouse
District councillor for Epping East ward
Liberal Democrats
View profile Cllr Jon Whitehouse