Agenda Document Pack - Audit and Risk Committee - 29/06/2026
Perth and Kinross Council · 29 June 2026
Back to Audit and Risk Committee — 29 June 2026 and its agenda
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Ambition | Compassion | Integrity Our vision is for a Perth and Kinross where everyone can live life well, free from poverty and inequality Council Building 2 High Street Perth PH1 5PH 22/06/2026 A hybrid meeting of the Audit and Risk Committee will be held in the Council Chamber on Monday, 29 June 2026 at 13:00. If you have any queries please contact Committee Services on (01738) 475000 or email Committee@pkc.gov.uk. THOMAS GLEN Chief Executive Those attending the meeting are requested to ensure that all notifications are silent on their device and other devices are in silent mode. Please note that the meeting will be broadcast online and recorded. The recording will be publicly available on the Council’s website following the meeting. Members: Councillor David Illingworth (Convener) Councillor Bob Brawn (Vice-Convener) Councillor Liz Barrett Councillor Andy Chan Councillor Ken Harvey Councillor Iain MacPherson Councillor Grant Stewart Page 1 of 314
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Audit and Risk Committee Monday, 29 June 2026 AGENDA MEMBERS ARE REMINDED OF THEIR OBLIGATION TO DECLARE ANY FINANCIAL OR NON-FINANCIAL INTEREST WHICH THEY MAY HAVE IN ANY ITEM ON THIS AGENDA IN ACCORDANCE WITH THE COUNCILLORS’ CODE OF CONDUCT. 1 WELCOME AND APOLOGIES 2 DECLARATIONS OF INTEREST 3 MINUTE OF MEETING OF AUDIT AND RISK COMMITTEE OF 23 MARCH 2026 FOR APPROVAL (copy herewith) 5 - 8 4 OUTSTANDING BUSINESS STATEMENT (copy herewith 26/189) 9 - 10 5 UNAUDITED 2025/26 ANNUAL ACCOUNTS (DRAFT) Report by Chief Finance Officer (copy herewith 26/190) 11 - 140 6 PERTH AND KINROSS COUNCIL BEST VALUE THEMATIC WORK - ASSET MANAGEMENT Report by Audit Scotland (copy herewith 26/191) 141 - 168 7 INTERNAL AUDIT FOLLOW UP Report by Chief Internal Auditor (copy herewith 26/192) 169 - 178 8 INTERNAL AUDIT UPDATE Report by Chief Internal Auditor (copy herewith 26/193) 179 - 182 9 INTERNAL AUDIT REPORT - 25-04 HEALTH AND SAFETY (copy herewith 26/194) 183 - 216 10 INTERNAL AUDIT REPORT - 25-07 INSURANCE (copy herewith 26/195) 217 - 236 11 INTERNAL AUDIT REPORT - 24-04 AFFORDABLE HOUSING (copy herewith 26/196) 237 - 254 12 INTERNAL AUDIT ANNUAL REPORT AND INTERNAL AUDIT OPINION 2025/26 Report by Chief Internal Auditor (copy herewith 26/197) 255 - 260 13 INTERNAL AUDIT MANDATE AND CHARTER 261 - 274 Page 3 of 314
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Report by Chief Internal Auditor (copy herewith 26/198) 14 INTERNAL AUDIT STRATEGY AND PLAN 2026/27 Report by Chief Internal Auditor (copy herewith 26/199) 275 - 280 15 NATIONAL FRAUD INITIATIVE 2024/25 OUTCOMES Report by Chief Internal Auditor (copy herewith 26/200) 281 - 284 16 STRATEGIC RISK ANNUAL REPORT Report by Strategic Lead - Legal and Governance (copy herewith 26/201) 285 - 314 IT IS RECOMMENDED THAT THE PUBLIC AND PRESS SHOULD BE EXCLUDED DURING CONSIDERATION OF THE FOLLOWING ITEM(S) IN ORDER TO AVOID THE DISCLOSURE OF INFORMATION WHICH IS EXEMPT IN TERMS OF SCHEDULE 7A TO THE LOCAL GOVERNMENT (SCOTLAND) ACT 1973 P1 STRATEGIC RISK ANNUAL REPORT - SR06 P2 INTERNAL AUDIT FOLLOW UP - APPENDIX 2 - ACTIONS WITH A COMPLETION DATE UP TO APRIL 2026 WHICH HAVE YET TO BE COMPLETED • Exempt Reason 6 - Information relating to the financial or business affairs of any particular person (other than the authority). • Exempt Reason 15 - The identity of a protected informant. P3 PARKDALE PROGRESS UPDATE • Exempt Reason 15 - The identity of a protected informant. Page 4 of 314
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Audit and Risk Committee Minute of hybrid meeting of the Audit and Risk Committee held in the Council Chambers on Monday 23 March 2026 at 1.00pm. Present: Councillors D Illingworth, B Brawn, A Chan, L Barrett, K Harvey, I MacPherson and G Stewart. In Attendance: S Walker, Strategic Lead – Finance and Business Support; J Ridgway and S Welch (Finance and Business Support); M Smith (Housing and Communities); L Colledge (Customer and Digital Services); S Thompson (Health and Social Care Partnership); J Clark, K Molley, A Brown and M Pasternak (Legal and Governance). Also in Attendance: R Browne and P Bryan (Audit Scotland). Councillor D Illingworth, Convener, Presiding. 1. Welcome and Apologies/Substitutions The Convener welcomed everyone to the meeting. 2. Declarations of Interest There were no declarations of interest made in terms of the Councillors’ Code of Conduct. 3. Minute of Meeting of the Audit and Risk Committee of 1 December 2025 for Approval The minute of meeting of the Audit and Risk Committee of 1 December 2025 was submitted and approved as a correct record. 4. Perth and Kinross Council Draft Annual Audit Plan 2025/26 There was submitted a report by Audit Scotland (26/68) (1) providing an overview of the planned scope and timing of the 2025/26 audit of Perth and Kinross Council’s annual accounts and (2) outlining the audit work planned to meet the audit requirements set out in auditing standards and the Code of Audit Practice, including supplementary guidance. R Browne, Audit Scotland, provided a briefing summary of the report. Councillor L Barrett expressed that even though Audit Scotland are not in a position to bring the audited accounts to committee in September for consideration, she queried if Audit Scotland would be able to finalise work with Perth and Kinross Council earlier as the delay in the audit could have an impact on budget preparations for next year. R Browne confirmed Audit Scotland intend to finalise work earlier than 3 Page 5 of 314
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last year as they appreciate the pressures on the finance team ahead of the budget setting process. The Convener referred to the best value audit that was due to be undertaken early next year and queried if the audit would be reliant on the Local Government Benchmarking Framework, R Browne confirmed that controller of audit report on best value and community planning would take account of Audit’s Scotland conclusions on Perth and Kinross Council’s performance management and performance reporting arrangements, which the Local Government Benchmarking Framework would form part of. Members thanked officers from Audit Scotland for their report. Resolved: The contents of the Perth and Kinross Council Annal Audit Plan 2025/26 as detailed in Report 26/68, be noted. 5. Internal Audit Update There was submitted a report by Chief Internal Auditor (26/69) presenting a summary of Internal Audit’s work undertaken as part of the Internal Audit Plans for 2024/25 and 2025/26. In response to a question from the Vice-Convener regarding the assurance and advisory assignment in relation to the arrangements for disposal of 4 chalets at Double Dykes Gypsy Travellers Site, J Clark confirmed that there are occasions where senior managers request internal audit for a specific piece of investigative work because of complaints or a degree of uncertainty and the service require assurance that the activities being undertaken are appropriate. J Clark confirmed there were a few minor areas for improvement around communication which would be taken forward for future activity but advised that a separate audit report was not required and the service were content with the outcomes. Resolved: The progress with Internal Audit activity, be noted. 6. Internal Audit – 25-09 Petty Cash There was submitted a report by Chief Internal Auditor (26/70) presenting an audit undertaken on Petty Cash as part of the Internal Audit Plan for 2025-26, which was approved by the Audit & Performance Committee in June 2025. Councillor L Barrett queried if officers had confidence that the implementation of the new procedures would be completed by the end of the month. S Walker reassured members that the new procedures were in place and that the system should go live the following week. S Walker advised that further communication would be shared with colleagues involved in the process and ongoing training would be Page 6 of 314
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provided. S Walker confirmed that the consistency of approach through the consolation of finance should have a positive impact. In response to a question from the Convener, J Clark confirmed that the item was included in the internal audit plan because of initial work that had been undertaken within a social care establishment. J Clark added that there were areas that could have had further impact across the Council and she had taken the decision to have a standalone audit to look at the entirety of the control environment rather than just one establishment. Members thanked J Clark, her team and other relevant officers for their work on the audit. Resolved: The contents of Report 26/70, be noted. 7. Internal Audit – 25-05 Housing Regulator Submission There was submitted a report by Chief Internal Auditor (26/71) presenting an audit undertaken on Housing Regulator Submission as part of the Internal Audit Plan for 2025-26, which was approved by the Audit & Risk Committee in June 2025. The Vice-Convener referred to the issue of accessing properties and queried if anything further could be done as the issue would continue to be raised throughout future audits. M Smith confirmed that even though the team are very reluctant to do so, provision had been put in place to enforce access to properties for safety checks, if required. M Smith added that in terms of the safety elements, the team should be able to achieve 100% but confirmed that the target may not have yet been met for a specific period at time of reporting. The Vice-Convener referred to the gypsy/traveller sites, Double Dykes and Bobbin Mill, and queried if following the replacement of the chalets and general upgrades, if the Social Housing Charter Outcomes would be achieved long term. M Smith confirmed that further information would be shared with members following the meeting. The Convener queried if the interim target to address the Energy Efficiency Standard for Social Housing (EESSH) failures of 114 properties in March 2026 was expected to be achieved. M Smith confirmed that further information would be shared with members following the meeting. Members thanked J Clark, her team and other relevant officers for their work on the audit. Resolved: The contents of Report 26/71, be noted. Page 7 of 314
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8. Internal Audit Follow Up There was submitted a report by Chief Internal Auditor (26/72) presenting current summary of Internal Audit’s ‘follow up’ work relating to actions due for completion up to September 2025. Resolved: The current position in respect of the agreed actions arising from Internal Audit’s work, outlined in Appendix 1 to Report 26/72, be noted. IT WAS AGREED THAT THE PUBLIC AND PRESS SHOULD BE EXCLUDED DURING CONSIDERATION OF THE FOLLOWING ITEM IN ORDER TO AVOID THE DISCLOSURE OF INFORMATION WHICH IS EXEMPT IN TERMS OF SCHEDULE 7A TO THE LOCAL GOVERNMENT (SCOTLAND) ACT 1973 P1. Internal Audit Follow Up – Appendix 2 There was submitted a report by Chief Internal Auditor (26/72) presenting a current summary of Internal Audit’s ‘follow up’ work relating to actions due for completion up to September 2025 (Parkdale Care Home). Resolved: The current position in respect of the agreed actions arising from Internal Audit’s work, outlined in Appendix 2 to Report 26/72, be noted. Page 8 of 314
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AUDIT AND RISKCOMMITTEE OUTSTANDING BUSINESS STATEMENT (OBS) (Report No. 26/189) Please note that this statement sets out outstanding decisions of this committee along with an update and estimated completion date. Actions which are overdue are shaded for ease of reference. Where an update reflects that an action is complete then the Committee’s agreement will be sought to its removal from the OBS. No Minute Reference Subject Title Outstanding Action Update Lead Officer /Service Action due Action Expected 10. 23 March 2026. Item 7. IA - Housing Regulator Submission Regarding the gypsy/traveller sites at Double Dykes and Bobbin Mill, information to be shared with members on the replacement of the chalets and general upgrades and if these would long-term help meet Social Housing Charter Outcomes. Information was sent to members via email on 10 June 2026. Elaine Ritchie Complete 29 June 2026 11. 23 March 2026. Item 6. IA - Housing Regulator Submission Information to be shared with members on the interim target of 114 properties in March 2026 to address the Energy Efficiency Information was sent to members via email on 10 June 2026. Elaine Ritchie Complete 29 June 2026 4 Page 9 of 314
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No Minute Reference Subject Title Outstanding Action Update Lead Officer /Service Action due Action Expected Standard for Social Housing (EESSH) failures and if officers are confident that the target would be achieved. Page 10 of 314
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit and Risk Committee Date of Meeting: 29 June 2026 Report Title: Unaudited 2025/26 Annual Accounts (Draft) Report Number: 26/190 Report Author: Alison O’Brien, Corporate Accounting Manager Scott Walker, Chief Finance Officer Organisational Lead: Scott Walker, Chief Finance Officer ___________________________________________________________________ 1. Purpose 1.1 This report presents the Council’s unaudited 2025/26 Annual Accounts (draft) in accordance with the Local Authority Accounts (Scotland) Regulations 2014. 2. Structure of the Report 2.1 The information in the report is structured as follows – 1. Purpose 2. Structure of the Report 3. Recommendations 4. Background 5. Annual Accounts 6. Final Outturns 7. Next Steps 8. Conclusion 9. Impact Value Assessment 10. Appendices 3. Recommendations It is recommended that the Committee: 3.1 Authorises the Chief Finance Officer to sign the unaudited 2025/26 Annual Accounts – see paragraph 5.6. 5 Page 11 of 314
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3.2 Notes that it is anticipated that the unsigned audited 2025/26 Annual Accounts will be considered by the Audit & Risk Committee on 30 November 2026 – see paragraph 7.6. 4. Background 4.1 The Local Authority Accounts (Scotland) Regulations 2014 sets out the following in respect of the unaudited Annual Accounts: (5) The proper officer must ensure that financial statements give a true and fair view of the financial position of the local authority and its group at the end of the financial year and the transactions of the local authority and its group for that year. (6) Once the proper officer is satisfied as to the matters set out in paragraph (5), the proper officer must certify these matters by signing and dating the statement of responsibilities and the balance sheets contained within the Annual Accounts and then submit the Annual Accounts to the auditor. (7) The Annual Accounts must be submitted to the auditor no later than 30 June immediately following the financial year to which the Annual Accounts relate. (8) The local authority must publish a copy of the Annual Accounts submitted to the auditor, clearly identified as an unaudited version, on a website of the authority from the date they are submitted until the date on which the audited Annual Accounts are published in accordance with regulation 11. (9) A local authority or a committee of that authority whose remit includes audit or governance functions must meet to consider the unaudited Annual Accounts as submitted to the auditor. (10) The meeting referred to in paragraph (9) must be held no later than 31 August immediately following the financial year to which the Annual Accounts relate”. 5. Annual Accounts 5.1 The Annual Accounts are prepared in accordance with the 2025 CIPFA Code of Practice on Local Authority Accounting (“the Code”). 5.2 These accounts also comply with the Local Authority Accounts (Scotland) Regulations 2014 which came into force in October 2014. Page 12 of 314
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5.3 The Annual Accounts include a Management Commentary, which provides users of the financial statements with integrated information on management’s view of performance, position and progress (including forward looking information). This is set out on pages 1 to 21 of the unaudited Annual Accounts (draft) which are attached at Appendix 1. 5.4 The Regulations require an annual review of the effectiveness of a local authority’s system of internal control by Elected Members. This requirement was met with the approval of the Annual Governance Statement by the Scrutiny Committee on 3 June 2026 (Report No. 26/158 refers). The Statement is set out from page 22 of the unaudited Annual Accounts (draft). 5.5 The Regulations also require consideration of the unaudited Annual Accounts by those charged with governance at a meeting to be held no later than 31 August. This report (and the unaudited Annual Accounts (draft) attached at Appendix 1) is before the Committee today to ensure compliance with the statutory requirements prior to submitting them to the appointed auditor (Audit Scotland) and making them available for public inspection. 5.6 ACTION: Following consideration of the draft unaudited Annual Accounts the Committee is asked to authorise the Chief Finance Officer to sign the unaudited 2025/26 Annual Accounts. 6. Final Outturns 6.1 The 2025/26 final outturns were considered by the Finance and Resources Committee on 24 June 2026 (Report No. 26/181 refers). This was the fifth report to the Committee on 2025/26 and included the unaudited final position on the revenue and capital budgets. 6.2 On completion on the unaudited 2025/26 Annual Accounts (draft), the level of unearmarked Reserves was £17.790 million or 3.5% 6.3 Furthermore, the level of earmarked Reserves included in the unaudited 2025/26 Annual Accounts (draft) is £43.143 million. 7. Next Steps 7.1 The audit of the Annual Accounts will take place between July and October 2026. 7.2 Audit Scotland (supported by Council officers) will consider whether the Annual Accounts: • Give a true and fair view, in accordance with applicable law and the 2025 Code, of the state of the affairs of Perth and Kinross Council and its Group as at 31 March 2026 and of the income and expenditure for the year then ended; Page 13 of 314
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• Have been properly prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, as interpreted and adapted by the 2025 Code; and • Have been prepared in accordance with the requirements of the Local Government (Scotland) Act 1973 and the Local Government in Scotland Act 2003. 7.3 The Companies Act requires auditors to give an explicit opinion on whether the strategic report and governance statement have been prepared in accordance with legal requirements. Audit Scotland’s policy is to apply Companies Act requirements on a best practice basis, and will include opinions to the auditor’s report on whether the: • Management commentary has been prepared in accordance with statutory guidance. • Annual Governance Statement has been prepared in accordance with the proper practices set out in the good governance code. 7.4 The results of the external audit will be summarised in the Draft Annual Audit Report which incorporates the International Standard on Accounting (ISA) 260: Report to those Charged with Governance. 7.5 The Council has been advised that the external audit report is not expected to be available by 30 September 2026. On that basis, it is anticipated that this Audit Scotland report will be considered by the Audit and Risk Committee, along with the unsigned audited 2025/26 Annual Accounts, at its meeting scheduled for 30 November 2026. 7.6 ACTION: The Committee is asked to note that it is anticipated that the unsigned audited 2025/26 Annual Accounts will be considered by the Audit and Risk Committee on 30 November 2026. 7.7 The unaudited 2025/26 Annual Accounts will be available for public inspection between 1 July and 21 July 2026 (inclusive) with any objections being sent to the auditor by 22 July 2026. 8. Conclusions 8.1 The unaudited 2025/26 Annual Accounts will be submitted to the Controller of Audit by 30 June 2026 following authorisation by the Chief Finance Officer. Page 14 of 314
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9. Impact and Value Assessment 9.1 This is an operational report, and as such, an impact and value assessment is not required. 10. Appendices • Appendix 1 – Unaudited 2025/26 Annual Accounts (draft) Page 15 of 314
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Corporate & Democratic Services PERTH AND KINROSS COUNCIL ANNUAL ACCOUNTS 2025/26 UN-AUDITED 5 Page 17 of 314
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Contents Management Commentary ........................................................................................................................................................... 1 Annual Governance Statement .................................................................................................................................................. 22 Independent auditor’s report to the members of Perth and Kinross Council and the Accounts Commission (to follow) 28 The Financial Statements ........................................................................................................................................................... 31 Movement in Reserves Statement ........................................................................................................................................... 31 Comprehensive Income and Expenditure Statement ............................................................................................................... 32 Balance Sheet .......................................................................................................................................................................... 33 Cash Flow Statement ............................................................................................................................................................... 34 Statement of Responsibilities for the Annual Accounts ......................................................................................................... 35 Notes to the Financial Statements ............................................................................................................................................ 36 1. Accounting Policies .............................................................................................................................................................. 36 2. Accounting Standards that have been issued but have not been adopted ........................................................................... 46 3. Critical Judgements in Applying Accounting Policies ........................................................................................................... 46 4. Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty .................................................. 47 5. Adjustments between Accounting Basis and Funding Basis under Regulations .................................................................. 48 6. Expenditure and Funding Analysis ....................................................................................................................................... 49 7. Transfer (to)/from Earmarked Reserves ............................................................................................................................... 52 8. Other Operating Expenditure / Income ................................................................................................................................. 53 9. Financing and Investment Income and Expenditure ............................................................................................................. 54 10. Taxation and Non Specific Grant Income ........................................................................................................................... 54 11. Material Items of Income and Expense .............................................................................................................................. 54 12. Premiums and Discounts on Debt Rescheduling Written Down ......................................................................................... 54 13. General Grants, Bequests and Donations .......................................................................................................................... 54 14. Expenditure and Income Analysed by Nature .................................................................................................................... 55 15. Agency Services ................................................................................................................................................................. 55 16. External Audit Costs ........................................................................................................................................................... 56 17. Termination Benefits........................................................................................................................................................... 56 18. Post-Employment Benefits ................................................................................................................................................. 56 19. Related Parties ................................................................................................................................................................... 61 20. Leases ................................................................................................................................................................................ 62 21. Property. Plant and Equipment ........................................................................................................................................... 64 22. Heritage Assets .................................................................................................................................................................. 69 23. Investment Properties......................................................................................................................................................... 70 24. Intangible Assets ................................................................................................................................................................ 72 25. Assets Held for Sale ........................................................................................................................................................... 72 26. Long Term Debtors............................................................................................................................................................. 72 27. Inventories .......................................................................................................................................................................... 72 28. Debtors ............................................................................................................................................................................... 73 29. Creditors ............................................................................................................................................................................. 73 30. Provisions Other than Bad and Doubtful Debts .................................................................................................................. 73 31. Usable Reserves ................................................................................................................................................................ 74 32. Unusable Reserves ............................................................................................................................................................ 74 33. Impairment Losses ............................................................................................................................................................. 77 34. Grants ................................................................................................................................................................................. 77 35. Capital Expenditure and Capital Financing ......................................................................................................................... 78 36. Public Finance Initiatives and Similar Contracts ................................................................................................................. 78 37. Authorisation of Annual Accounts ....................................................................................................................................... 81 38. Contingent Liabilities .......................................................................................................................................................... 81 39. Financial Instruments ......................................................................................................................................................... 82 Page 18 of 314
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40. Devolved School Management (DSM) Schools .................................................................................................................. 87 41. Operating Activities............................................................................................................................................................. 87 42. Investing Activities .............................................................................................................................................................. 87 43. Financing Activities ............................................................................................................................................................. 87 44. Cash and Cash Equivalents ............................................................................................................................................... 88 45. Trust Funds ........................................................................................................................................................................ 88 46. The Statutory Loans Fund .................................................................................................................................................. 89 Housing Revenue Account Income and Expenditure Statement ............................................................................................ 91 Statement of Movements on the Housing Revenue Account Balance ..................................................................................... 92 The Accompanying Notes to the Housing Revenue Account Income and Expenditure Statement .......................................... 93 Council Tax Income Account ..................................................................................................................................................... 94 The Accompanying Notes to the Council Tax Income Account ................................................................................................ 95 Non-Domestic Rate Income Account ........................................................................................................................................ 96 The Accompanying Notes to the Non-Domestic Rate Income Account .................................................................................... 97 Charitable Trusts ........................................................................................................................................................................ 98 Common Good ............................................................................................................................................................................ 99 The Accompanying Notes to the Common Good Accounts.................................................................................................... 100 Group Accounts ........................................................................................................................................................................ 101 Group Movement in Reserves Statement............................................................................................................................... 101 Group Comprehensive Income and Expenditure Statement .................................................................................................. 102 Group Balance Sheet ............................................................................................................................................................. 103 Group Cash Flow Statement .................................................................................................................................................. 104 Reconciliation of the Single Entity Deficit for the Year to the Group Deficit ............................................................................ 105 Notes to the Group Accounts .................................................................................................................................................. 106 1. Combining Entities ............................................................................................................................................................. 106 2. Nature of Combination........................................................................................................................................................ 107 3. Financial Impact of Consolidation and Going Concern ....................................................................................................... 107 4. Group Comprehensive Income and Expenditure Statement – Financing and Investment Income and Expenditure .......... 107 5. Group Balance Sheet – Investments .................................................................................................................................. 107 6. Group Balance Sheet – Short Term Debtors (net of provisions) ........................................................................................ 107 7. Group Balance Sheet – Short Term Creditors .................................................................................................................... 108 8. Group Balance Sheet – Pension Liability ........................................................................................................................... 108 9. Group Cash Flow Statement .............................................................................................................................................. 108 10. Group Cash Flow – Investment Activities ......................................................................................................................... 108 11. Group Cash Flow – Financing Activities ........................................................................................................................... 108 Remuneration Report ............................................................................................................................................................... 109 Glossary .................................................................................................................................................................................... 119 Page 19 of 314
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1 | Perth and Kinross Council Annual Accounts 2025/26 Management Commentary 1. Introduction These Annual Accounts contain the financial statements of Perth and Kinross Council and its group for the year ended 31 March 2026. This management commentary outlines the key messages in relation to financial planning and performance for financial year 2025/26 and how this has supported delivery of the Council’s strategic objectives. This commentary also looks forward, outlining the future financial plans for the organisation and the challenges and risks which it will face as it strives to meet the needs of the people of Perth and Kinross. A glossary of terms is set out from page 119. 2. Who are we, our vision and priorities The Council is situated in a central location in Scotland. It covers a geographical area of around 5,286 km² and has an estimated population of 154,420 (2024 mid-year estimate). Between 2001 and 2024, the population of Perth and Kinross increased by 14.4% (Scotland 9.5%). This is the 7th highest percentage change out of the 32 council areas in Scotland. The latest population projections (2022) indicate that between 2022 and 2032, the population of Perth and Kinross is projected to increase from 151,130 to 161,688. This is an increase of 7.0%, which compares to a projected increase of 4.4% for Scotland as a whole. Like all councils, external factors such as inflationary pressures facing households in recent years has only added to the increasingly complex challenges we face, against a backdrop of the most testing financial circumstances local government has ever experienced. This means that it will be impossible to continue doing the same things we have done in the past and we are rethinking how we work with, and within, our communities and with all of our partners to achieve the best outcomes for the people of Perth and Kinross. The current Corporate Plan 2022–2027, approved in December 2022, sets out a vision for “a Perth and Kinross where everyone can live life well, free from poverty and inequality”. It sets out the Council’s corporate outcomes which are aligned with its organisational values and designed to address or mitigate the impact of the many challenges the Council and its communities are facing both now and in the future. We are committed to working in partnership and better engaging with people and communities to ensure that they are involved and can have their say on where the Council must focus time and resources. The strategic outcomes are underpinned by seven key priorities, aimed to address or mitigate the challenges, focus our work where it is needed most, and support the delivery of our vision: • Tackling poverty • Tackling climate change and supporting sustainable places • Developing a resilient, stronger and greener local economy • Enabling our children and young people to achieve their full potential • Protecting and caring for our most vulnerable people • Supporting and promoting physical and mental wellbeing • Working in partnership with our communities – which is woven through all of the key priorities above. The priorities incorporate the careful consideration of the feedback received from our communities, elected members, partners and staff about what is important for Perth and Kinross. They are also evidence-based and reflect the areas of greatest need and those that we can most directly influence in our work. Importantly, the Corporate Plan sets the strategic direction for the Council and will act as a guide when making difficult decisions around where to invest funding and resources to support their achievement and ensure we have the greatest impact. The Plan is not designed to stand alone but is supported and strengthened by a wider strategic framework which overarches several areas of work all designed to contribute to our vision and outcomes. It connects the vision of the Council and its partners to the detailed plans that guide the delivery of our services. This framework ensures that all Council plans and strategies are driven by, and focused towards, the delivery of a single shared vision for the area and our services, connecting everything we do. 1 | Perth and Kinross Annual Accounts 2025/26 Page 20 of 314
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2 | Perth and Kinross Council Annual Accounts 2025/26 The main components of our Corporate Plan’s wider strategic framework are as follows: • The Local Outcome Improvement Plan (LOIP) sets out the actions that the Community Planning Partnership will take to address inequality and improve outcomes across key areas. The LOIP is currently being refreshed to focus on three shared priorities – poverty, employability and health and wellbeing – enabling stronger alignment across partners and a clearer focus of collective effort on the areas of greatest need. This will support a more coordinated and collaborative approach to tackling long-standing inequalities. • The Transformation and Change Strategy is a five-year strategy which sets out our extensive transformation programme, acting as enabler to deliver on our corporate priorities. Delivery of the Transformation and Change programme will be underpinned by our “one council”, no wrong door approach, including our organisational-wide cultural and behavioural change programme. This also sets out our clear commitment to fully embed our values of Ambition, Compassion, and Integrity and work in partnership with communities to improve outcomes for all. • The Financial Strategy, which details how we will address financial challenges, identifies thirteen principles to support the sustainability of the Council both now and in the future. • The People and Culture Strategy 2024-2028 sets out our commitment to the people in our teams and our communities, to ensure we have capacity and people in the right places to deliver our vision. It will support the organisation to deliver a sustainable approach to workforce development, culture and behaviours and effective workforce planning. It underpins our transformation and change programmes to enable us to deliver the best public services focussed on need and within available resources. The Corporate Plan demonstrates our commitment to improving services, improving the quality of lives for people in Perth and Kinross and making best use of our resources and funding. We will continue to deliver effective and efficient services, delivering best value through working collaboratively with our partners to deliver our shared outcomes To achieve our vision, we have outlined clear outcomes, priorities, actions, and measurements of performance. which will ensure we are held accountable, can report consistently, and remain focussed on the areas that matter to people in our communities. While this is a five-year plan, we know that there will be things outwith our control that will change. We will regularly review and monitor our performance against each of the key priorities to ensure that they are still relevant and effectively contribute to our vision, while also informing the development of our next Corporate Plan. As part of this ongoing approach, work has commenced on the development of the Council’s next Corporate Plan, which will take effect from 2027. This reflects the Council’s commitment to ensuring that its strategic direction remains current, responsive and aligned to emerging national priorities, local need and the evolving financial context. The development process will build on evidence from performance reporting, benchmarking and engagement with communities, partners and elected members, ensuring that future priorities and outcomes are clearly focused on prevention, addressing inequality and delivering long-term, sustainable impact for Perth and Kinross. 3. The Annual Accounts 2025/26 The Annual Accounts report the financial performance of the Council. Their main purpose is to demonstrate the stewardship of public funds which have been entrusted to it for the delivery of the Council’s vision and strategic objectives. The requirements governing the format and content of the Council’s Annual Accounts are contained in the Code of Practice on Local Authority Accounting in the United Kingdom 2025/26 (the 2025 Code). The 2025/26 Annual Accounts have been prepared in accordance with this Code. 4. The Financial Plan To support the delivery of the strategic objectives during 2025/26, Perth and Kinross Council approved a balanced gross revenue budget of £623.034 million for the General Fund (February 2025). In addition, the Housing and Social Wellbeing Committee approved a gross HRA revenue budget of £38.293 million for the Housing Revenue Account (January 2025). As part of its consistent approach to longer term financial planning, the Council has in place a Medium Term Financial Plan through to 2031/32 that was approved by Council in December 2025, a final Revenue Budget for 2026/27, and provisional Revenue Budgets for 2027/28 and 2028/29 that were approved in February 2026. The Council has also approved a Council Tax Strategy through to 2028/29. The HRA Budget was also updated in January 2026. The Financial Strategy approved in June 2022 remains in place. Councils need to account for their spending and income in a way which complies with the legislative requirements. Most day to day spending and income is recorded within the General Fund and the costs and income in relation to the management of our housing stock are recorded within the Housing Revenue Account. Key to the delivery of Council Services is investment in the assets which are used to deliver these services (including schools, houses and transport infrastructure) and the utilisation of capital funding to stimulate development and regeneration in local areas. At the start of 2025/26 the Council budgeted for gross capital investment of £134.7 million on General Fund activities and £22.1 million in respect of the Housing Revenue Account. This expenditure is funded from borrowing, government grants, other external contributions, capital receipts, revenue contributions and earmarked reserves. The Council approved a new 6- year delivery programme for 2026/27 to 2031/32 at its meeting on 4 March 2026. 2 | Perth and Kinross Annual Accounts 2025/26 Page 21 of 314
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3 | Perth and Kinross Council Annual Accounts 2025/26 5. Performance Management Our Corporate Plan sets out our vision and seven strategic priorities for the period 2022-2027: 1. Tackling poverty 2. Tackling climate change and supporting sustainable places 3. Developing a resilient, stronger and greener local economy 4. Enabling our children and young people to achieve their full potential 5. Protecting and caring for our most vulnerable people 6. Supporting and promoting physical and mental wellbeing 7. Working in partnership with communities The Corporate Plan sets out clear outcomes, actions and performance measures, which we can be held accountable for and consistently report progress against. Performance against priorities and actions within the Corporate Plan are detailed within the Corporate Annual Performance Report (APR). The Council has a statutory duty to publish performance information for comparison and benchmarking purposes to its citizens and communities. In meeting this duty, we actively participate in the Local Government Benchmarking Framework (LGBF). Following the national report being published and the majority of the last of the 2024/25 data being published by the Improvement Services at the start of 2026, detailed individual services profiles with data comparing trends and ranks were produced for all Strategic Leads to consider and identify any relevant improvements. For 2024/25, analysis is based on 110 LGBF indicators using recently published data (2024/25 unless stated otherwise) available on the LGBF Dashboard. Within this, there are 90 non-cost indicators (performance and satisfaction indicators), and 20 cost indicators. Locally we do not rank cost indicators as reduced costs do not necessarily mean improved outcomes for local communities. According to the LGBF national report, long term performance nationally remains positive with 66% of LGBF indicators improving since the base year (2010), compared to 54% for PKC. However, it should be noted that in the base year (2010) we were considered a very high performing council compared to the national average. Data from the most recent year shows that nationally the rate of improvement (42%) slightly exceeds the rate of deterioration (39%), while for PKC, improvement (50%) demonstrates a wider margin and exceeds deterioration (35%). For PKC non-cost indicators (performance and satisfaction), the latest data shows a positive shift, with the proportion improving increasing from 38% to 47% compared to the previous year, alongside a rise in those indicators remaining the same (from 9% to 16%) as detailed in the chart below. The Improvement Service rank all indicators in terms of their performance across the 32 Scottish local authorities, then consider these in ranking groups, known as quartiles. For PKC overall, 56% of indicators were in the top 2 quartiles and for non-cost indicators 52% (performance) and 82% (satisfaction). Looking at how PKC performance indicators sit within these quartiles gives a sense of how PKC is performing in comparison to other local authorities. However, it is necessary to consider that legitimate variations in data will exist across councils due to local policy choices and demographic profiles. Performance Summary The 2024/25 Annual Performance Report (APR) was considered by Scrutiny and Performance Committee on 17 September 2025 and by Council on 29 October 2025. This report details the Council’s performance against our priorities for 2024/25, and the full range of information is available online at PK Performs. This includes the Council’s Annual Performance Report, Best Value Thematic Management Report, case studies and links to further relevant information, such as the Local Government Benchmarking Framework. 3 | Perth and Kinross Annual Accounts 2025/26 Page 22 of 314
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4 | Perth and Kinross Council Annual Accounts 2025/26 The APR uses a series of 54 Key Performance Indicators (KPIs) and targets to measure performance over the reporting period. Performance against 2024/25 targets includes 18 areas where the target has been met or exceeded and 18 areas where the target has not been met. Further information is available at PK Performs. Out of the 54 indicators, 61% are moving in a favourable direction, 22% in an unfavourable direction, 9% remain static and 7% are either not available or it’s not appropriate to make a comparison. KPI Overview KPI Annual Change Change since last reporting year is favourable Change since last reporting year is unfavourable Change since last reporting year is static No data available to make comparison N/A 33 12 5 4 KPI performance against target Met or exceeded target ✔ Target not met ✖ Target not set 24/25 Target set but data not yet available Not appropriate to set target 18 18 7 3 8 The following graphs provide an overview of trends within the KPI data between 2023/24 and 2024/25, or the most recent year available. Caution should be applied when interpreting this data, as trends will only be indicative of performance. Trends should be considered in the context of the current operating environment, challenges and whether we control, influence or are informed by the data. 4 | Perth and Kinross Annual Accounts 2025/26 Page 23 of 314
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5 | Perth and Kinross Council Annual Accounts 2025/26 For 2024/25 a selection of performance outcomes are set out in the following table: Tackling Poverty • Our Local Child Poverty Action Plan is a joint plan with NHS Tayside and sets out our ambitions to mitigate the impact poverty has on our children. In addition, the Anti-Poverty Task force has developed a tackling poverty strategy and action plan to shift the focus from reactive to preventative work, whilst ensuring that the lived experience of those dealing with poverty is central to this work. • Perth and Kinross has made encouraging progress in reducing child poverty. The local rate is now 3.8% below the national average, nearly double the previous gap of 2%. This improvement has raised the area’s ranking to 7th nationally for lowest child poverty rates. While these results are promising, data will be closely monitored over the next two years to ensure the trend is sustained. • A network of public, third sector, and community organisations collaborated to deliver holistic family support, focusing on employability, income maximisation, and wellbeing. Strategic efforts across all partner organisations supported parents into work by providing access to affordable housing, transport and childcare and employability support. • Fuel use advice was provided to 1,638 households via SCARF in 2024/25. This shows an apparent decline in numbers but is due to the measure only reflecting Council-funded services, with other contributing services from previous years (such as the Heat Project) being funded elsewhere. • We helped remove barriers to employment for parents by providing 3,229 childcare places across the public and private sectors and funding 300 Strong Start places for 2-year-olds. • In October 2024, our Welfare Rights and Welfare Fund teams won the Institute of Revenues, Rating and Valuation’s Excellence in Social Inclusion Performance Award for Scotland, recognising their impactful work in prisons and foodbanks across urban and rural communities. • We generated £9.2 million in additional income for Perth and Kinross residents through the benefits system; this is a £700k increase on last financial year and reflects stronger service promotion and improved follow-up efforts to better track financial outcomes. • The number of new affordable homes in Perth and Kinross (including new builds and buy-backs) has increased from 173 in 2023/24 to 264 in 2024/25, more than achieving our target of 210. • In 2024/25, 564 tenants received £203,000 in financial assistance through our Tenancy Sustainment Fund (TSF), helping them manage arrears and maintain stable housing. The fund uses a flexible, person-centred approach to ensure support reaches those who need it the most. • Our rent collection strategy continues to deliver exceptional results, achieving an in-year collection rate of 100.17% in 2024/25, up from 99.15% the previous year. This result, supported by a 53-week rent year, reflects the success of our tenant-focused approach that balances financial rigour with personalised support. At the same time, current and gross rent arrears have both decreased from 2023/24 to 2024/25 by 1.56%, and 2.15% respectively. • We continue to champion the Scottish Government’s Fair Work Action Plan by embedding fair work practices across our own operations and encouraging local employers to do the same. We ensure that all businesses receiving Council grant funding pay the living wage to their employees and through our Futures for All Employer Recruitment Incentive (ERI), we provided financial and employability support to 48 businesses – 20 in Perth and 28 in rural areas. 5 | Perth and Kinross Annual Accounts 2025/26 Page 24 of 314
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6 | Perth and Kinross Council Annual Accounts 2025/26 All participating employers paid the living wage to new recruits (except apprentices), with a focus on helping individuals facing barriers to employment to access fair work opportunities. Key areas for improvement: Better understand and capture the value of preventative spend and how funds are allocated to develop a budgeting approach based on identified need and overall wellbeing. Review actions contributing to ongoing reduction in child poverty levels to identify and enhance the most effective interventions. Expand Fast Online Referral Tracking system referral pathways and deliver Support and Connect training to frontline staff and partners to provide a more consistent and comprehensive support service. Tackling climate change and supporting sustainable places • 440 properties were upgraded to meet the Energy Efficiency Standard for Social Housing (EESH) standards in 2024/25. As of March 2025, 87% of properties meet EESH - a 5% improvement from the previous year. • A £6.5 million refurbishment began at the Double Dykes Gypsy Traveller site in Perth, replacing existing chalets with more energy efficient homes. Five chalets were delivered by April 2025 with energy-efficient heating and hot water systems and renewable technology. • Over £3 million in grants were issued by March 2025 through the Home Energy Efficiency Programmes for Scotland Area Based Schemes (HEEPS ABS) and ECO4 schemes to help private homeowners improve the energy efficiency of their properties. • Although the number of public charging devices for public access increased in 2024/25 it fell below the target. A significant contributor to this has been delays in the provision of external funding and we expect a substantial increase in 2026, with the signing of a new contract for an additional 100 units over and above existing plans for increased installations in 2025/26. • In 2024/25 we planted 3,142 trees in our open spaces, an increase from 2,512 in 2023/24. Tree planting boosts carbon capture and contributes to climate resilience and flood mitigation. 16 Nature Restoration Fund grants were awarded, covering 199ha of land. These community-led projects focused on: controlling invasive species; riparian habitat restoration; wildflower meadow creation; and the provision of tools and training. • Construction of the Comrie Flood Protection Scheme continues, following Council approval in November 2023. It remains on track for completion anticipated in Q4 2026 and within budget. The South Kinross Flood Protection Scheme was formally notified to the Scottish Government, with a Local Authority Hearing in 2025. The Perth Surface Water Flood Study nears completion and additional studies commenced in Bridge of Earn, Scone and Comrie. Further study and planning work is also underway in Blairgowrie and Rattray, Dunkeld and Craigie. • We more than doubled our management of grassland areas included in Grow Wild, increasing from 49.16ha to 121.5ha. Early monitoring has shown noticeable increases in insect and flower populations in unmown areas. Key areas of improvement: Ensure we have a cleaner and greener Council fleet. Develop local public transport solutions which set the needs of residents and the environment as top priority. Improved energy efficiency and reduction in carbon emissions in the Council estate. Increase provision of biodiversity sites. 6 | Perth and Kinross Annual Accounts 2025/26 Page 25 of 314
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7 | Perth and Kinross Council Annual Accounts 2025/26 Developing a resilient, stronger and greener local economy • We supported 252 business start-ups through Business Gateway, exceeding last year’s figures and surpassing our New Start and Pre-Start Plus programme target with 22 businesses supported, in line with performance in Tayside as a whole. Perth and Kinross has led the Tayside region in Business Gateway Growth referrals, with 23 high-potential businesses projecting turnover increases of £200k+, highlighting strong entrepreneurial momentum. Tailored support was provided to 254 micro-enterprises and 231 businesses participated in learning and networking sessions to improve knowledge and highlight opportunities for joint working. • We launched a refreshed Invest in Perth website in October 2024, improving mobile responsiveness and accessibility, resulting in a 24% increase in traffic over six months. The Perth City and Towns platform grew to over 100,000 active users, supporting local businesses and events through a multi-platform marketing strategy and targeted campaigns. • The number of registered businesses in the energy sector grew from 140 to 145 and multiple enquiries are coming in from other companies. Land and accommodation constraints continue to limit our growth potential, but recently Perth was ranked the 5th most sustainable city in the UK for business and first for renewable energy capacity per 100,000 people. • Whilst additional heat pumps were installed in 2024/25, low carbon heat consumption fell due to operational issues with biomass boilers in 2 community campus facilities. Production of electricity increased significantly due to the installation of additional solar panels. Historically these two factors have been reported together, which shows a decrease in renewable energy generation. In future these two elements will be reported separately as they operate independently. • The percentage of businesses connected to gigabit broadband increased from 46% in 2023/24 to 55% in 2024/25, exceeding 50% target. We expect this to grow further, particularly in hard-to-reach premises through the Scottish Government partnership with GoFibre. • We continued to position Perth and Kinross as a vibrant and distinctive destination for business, investment, and tourism by leveraging our cultural identity, natural assets, and international recognition as a UNESCO City of Craft and Folk Art. We achieved a 25.1% increase in total visitor numbers, with day visitors up 21% and overnight stays up 21.6%, contributing to a 33% rise in direct visitor spend and a 37% increase in the sector’s overall economic impact. • Visitor numbers to key cultural sites increased significantly, largely driven by the opening of Perth Museum. Overall numbers increased from 484,000 in 2023/24 to 765,000 in 2024/25. • We supported 618 adults to achieve learning outcomes – more than double our target of 300 – through SQA- accredited courses and short programmes in communications, numeracy, digital skills employability, volunteering and English for Speakers of Other Languages (ESOL). • Our Youth Employability Team registered 140 new young people and 122 completed support – 94% of whom moved into a positive destination. Staff are based in every secondary school in Perth and Kinross delivering one-to-one and group support, and sector-based academies, and work closely with local employers. Key areas for improvement: Unlock new investment in employment and housing land to support business growth in foundational and key growth sectors. Make Perth and Kinross a more competitive inward investment destination and encourage investment for growth from existing businesses in foundational and key growth sectors. Unlock private investment 7 | Perth and Kinross Annual Accounts 2025/26 Page 26 of 314
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8 | Perth and Kinross Council Annual Accounts 2025/26 and expertise to support public and private energy projects. Continue to grow visitor numbers for holidays and day trips. Further enhance our employability tracking and outreach capacity, supporting individuals in community settings. Enabling children and young people to achieve their full potential • Our Early Learning and Childcare settings outperformed both national and comparator benchmarks in all Care Inspectorate Quality Indicators, reflecting the consistently high standards across Perth and Kinross. In 2023/24, 4 out of 5 of our primary school pupils met expected levels in numeracy and literacy. This has increased from 78% from last year and shows a steady increase each year since 2020/21. • We strengthened the use of data in school improvement planning. The majority of schools now include actions to reduce the Cost of the School Day in their Quality Improvement Plans for 2025/26 – ensuring equity is embedded in everyday decision-making. • A National Thematic Inspection by His Majesty’s Chief Inspector of Education reviewed how local authorities support schools to improve. The visit to Perth and Kinross found our advice and guidance to be clear and comprehensive, with strong expectations set around standards and planning. Our responsive, risk-based approach to providing support and challenge to schools along with formal Quality Improvement Reviews were highlighted as good practice. Key strengths included: positive climate and ethos; effective data use; targeted use of Pupil Equity Funding (PEF); and impactful programmes such as National Improving Writing and Numeracy Schools. • We continue to deliver on the Additional Support Needs (ASN) Transformation Programme. Examples of work include: the establishment of three additional Intensive Support Provisions (ISPs); consistent use of data (including PowerBI) to record needs accurately and provide appropriate support; and using Career Progression Pathway models to ensure staff are trained, skilled and confident. • 45 schools and 3 ELC settings now hold a Digital Schools Award, an increase of over 50% on 2023/24. Every school now has a named Digital Champion. Perth and Kinross had the second highest number of schools gaining Digital Schools Awards during 2024/25. • In 2023/24, 75.6% of P1 children met all expected developmental milestones – a decrease from 80.6% in the previous year. This is likely to be linked to the cohort being born during the COVID-19 pandemic, when early supports were not available to families. Public Health Scotland confirms a national increase in developmental concerns at age 4-5 reviews. • We’ve seen steady improvement in literacy attainment across P1, P4 and P7. The gap between the most and least deprived cohorts narrowed from 27% in 2020/21 to 21% in 2023/24. Numeracy attainment has improved in both cohorts, but at a slower rate for Scottish Index of Multiple Deprivation (SIMD) Q1 than for Q5. As a result, the poverty-related attainment gap widened slightly in 2023/24. However, the long-term trend still shows progress, with the gap narrowing from 24% in 2020/21 to 22% in 2023/24. • Senior phase leaver data also shows significant progress. The gap between SIMD Q1 and Q5 in achieving at least one Level 6 qualification has reduced from 41% in 2021/22 to 28% in 2023/24 and the gap for at least one Level 5 qualification over the same period has narrowed from 28% to 19%. • In 2023/24, 60% (12 out of 20) Looked After Children (LAC) pupils attained at least one SCQF Level 4 qualification, below the national average of 72%, and attainment remains below that of all school leavers. Care should be taken when comparing these figures across years and cohorts due to the small numbers involved. A sub-group of the Raising Attainment Board has been established to focus on further improvements. • Outcomes for our care-experienced learners are improving, with higher attainment in literacy and numeracy and more young people entering positive destinations on leaving school (up from 82% in 2022/23 to 95% in 2023/24) – though gaps remain compared to their peers. The Staged Intervention Framework was implemented across ELC settings 8 | Perth and Kinross Annual Accounts 2025/26 Page 27 of 314
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9 | Perth and Kinross Council Annual Accounts 2025/26 and schools, offering a clear structure to support learners who face barriers. In September 2024, 39% of pupils (6,973) were identified as having an Additional Support Need - up from 35% in 2022/23, and close to the national average of 40%. Key areas for improvement: Attainment at key milestones is raised for all children and young people. Attendance rates improve, particularly in the secondary sector. Increase the number of young people going into positive destinations such as work experience, further education, volunteering and employment. Improved understanding of causes of attainment gap so that effective interventions can be identified and implemented. Improve support to children and young people with additional support needs to realise their full potential. Provide Kinship Carers with a range of supports to enable them to meet the needs of children in their care. Protecting and caring for our most vulnerable people • In 2024/25 8,832 referrals were made to the Child Protection Duty Team – an increase of 9% from the previous year. This appears to be stabilising after increasing year on year post COVID-19. All referrals are triaged within 24 hours, with immediate action taken. The Scottish Child Interview Model (SCIM), introduced across Tayside in May 2024, is now well embedded in child protection processes. This trauma-informed approach was used in 85% of all interviews in 2024/25, ensuring children have the best possible opportunity to tell their story. Cross-boundary working with trained staff has strengthened consistency and access. • The Child Protection Committee (CPC) launched its updated CPC Improvement Plan 2025 to 2028, supported by a new strategy and schedule to guide self-evaluation activities. Audits led by the Child Protection Interagency Coordinator highlighted strong practices in relationship-based practice and rapid responses to risk. Areas for improvement include enhancing child and young people’s plans and better incorporating their views into decision- making. • 64% of people with intensive care needs received ‘care at home’, maintaining strong performance in line with the Scottish average of 65%. This reflects our continued commitment to helping people remain safely at home for as long as they wish to do so. 97.6% of adults were discharged from hospital without delay, consistently meeting the national target of fewer than 34.6 per 100,000 adults. This was supported by a number of interventions which have reduced unmet care needs by around 800 hours since August 2024. • A Youth Housing Panel was established to support care-experienced young people who are moving into independent living. Meeting monthly, the panel matches individuals to suitable accommodation based on skills and needs, working with partners including ROCK Trust and YMCA. Around 10 care leavers are expected to benefit annually, with consideration of extending this to other young people with complex needs. • In response to the National Housing Emergency, we reduced average re-let times from 37.8 days in 2023/24 to 24.87 days in 2024/25 and cut the number of void properties from 136 to 95. Improvements were achieved by deferring non-essential upgrades, simplifying compliance checks, and offering flexible decoration options. • Our Community Justice Service (CJS) participated in a Care Inspectorate self-evaluation focused on performance, quality, and outcomes for individuals on community-based sentences. Perth and Kinross received onsite validation for the strength of its self-evaluation approach. Keys strengths included a clear capacity for improvement, demonstrated through targeted Strategic Needs and Assessments and alignment with the National Strategy for Community Justice. Areas for development included creating a Performance Framework and Dashboard, and a Quality Assurance Framework. Key areas for improvement: Take a partnership approach to the assessment of risk of significant harm to a child and minimising and reducing risk through early support and assessment. Enhance our housing support offer by implementing an Intensive Housing Support Service for people with complex needs. Where children cannot remain living at home, every effort is made to keep them within their kin network. Maintain significant relationships for care experienced children to deliver on the principles of The Promise. 9 | Perth and Kinross Annual Accounts 2025/26 Page 28 of 314
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10 | Perth and Kinross Council Annual Accounts 2025/26 Supporting and promoting physical and mental wellbeing • The SCOPE Team has supported 367 people – an 8% increase since March 2024. The team helps prevent hospital admissions and there were no hospital admissions for people with Learning Disabilities since 2021. • We supported Live Active Leisure staff to deliver evidence-based falls prevention classes. These classes are based on later life training, postural stability instructor training, and have been shown to be highly effective in reducing falls among community dwelling older adults. Over 2,000 Wellbeing Community Classes were delivered, supporting more than 20,000 individual attendances. Activities included chair-based social classes, social circuits, aqua circuits/aerobics, and chair-based yoga. • The risk of falls increases with age and given the growing older population in Perth and Kinross, higher admission rates due to falls are to be expected. This is reflected in the rate of 25 admissions per 1,000 people aged 65 and over in Perth and Kinross, compared to 23 per 1,000 for Scotland. Despite this, performance against this indicator remains good, with a marginal improvement of 1.6% compared to last year. • Seven parks and play areas were enhanced- in Bridge of Earn, Luncarty, Blairgowrie, Scotlandwell, Greenloaning and Braco – with design development continuing for a further four in Perth and Crieff. Each project was shaped through community consultation to reflect local needs and aspirations. • Between April 2024 and February 2025, 113 people were supported by local integrated care services to remain at home and avoid crisis placements or hospital admissions service, helping shift the balance of care. In Perth city, the integrated hub is now fully established, enabling rapid, multi-disciplinary responses when health deteriorates. Urgent care Advanced Nurse Practitioners are working with locality teams to expand this model across the region. • Our Community Alarm service handled 260,911 calls in 2024/25, with 99.26% answered within 60 seconds - up from 98.83% the previous year. The service now supports over 3,900 clients and 12,000 devices, helping people stay safe and independent at home. • Waiting times for mental health services have increased from 39 weeks to 42. We are working with partners to improve access and reduce delays through better coordination and early intervention. • Carers have a higher risk of financial exclusion. In 2024/25, 847 unpaid carers were assisted by Citizens’ Advice, mainly with debt and energy advice -a 40% increase from the previous year. We’re working with partners and internal teams to identify those in need and ensure they are signposted to appropriate support. • Participation in extra-curricular sport activities has continued to rise, with 38% of secondary school pupils involved in extra-curricular clubs – placing Perth and Kinross in the top three local authorities in Scotland. Across the total school roll participation levels have increased again to 43%, compared to 39% in 2022/23. • Attendance at Live Active Leisure venues fluctuated due to the closure of Bells Sports Centre following flooding, although figures did begin to recover in Q4 of 2024/25, with an increase of 25%. Part of this will be due to the opening of the new gym at the Dewars Centre. Key areas for improvement: Improve health and wellbeing in Perth and Kinross by increasing overall participation in sport and physical activity and promoting the wellbeing benefits of time spent in our natural surroundings. Improve health and wellbeing in Perth and Kinross by ensuring that people have access to wellbeing support when they need it. 10 | Perth and Kinross Annual Accounts 2025/26 Page 29 of 314
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11 | Perth and Kinross Council Annual Accounts 2025/26 Working in partnership with communities • We secured Fairer Futures funding support to scale up our multidisciplinary approach, appointing a programme manager and recruiting a dedicated project team to lead delivery in new priority localities: Rattray, South Crieff, and Muirton, alongside existing pilots in Letham, Highland, and Coupar Angus. • We strengthened local coordination by consolidating Community Support and Enforcement services, with new leadership roles enabling more effective collaboration between specialist and locality-based teams. We also supported a record 65 community groups—exceeding our target of 60—to establish Community Resilience Groups using ringfenced Council funding, enhancing emergency preparedness and response, as demonstrated during recent severe weather events. • We acquired 20 residential properties in Dunkeld from the National Trust for Scotland (NTS), enabling 20 households to transition into secure Council tenancies and increasing access to affordable housing in the area. This involved working closely with NTS and tenants to ensure a smooth transition, providing responsive support throughout the handover process. As part of the process, we introduced a local lettings policy that prioritises future allocations for individuals with strong ties to the Dunkeld area, reinforcing our commitment to the principle of “local homes for local people.” • The development of new chalets at Double Dykes – phased occupation of which began in May 2025 - represents part of our wider investment in high-quality, culturally appropriate accommodation for Gypsy/Traveller communities. We introduced a resident-led engagement model shaped by direct feedback, including regular on-site sessions, digital participation via Microsoft Teams, tailored newsletters, and real-time updates through noticeboards - strengthening trust and empowering residents to play an active role in shaping their living environments. • We continue to invest in community-led projects which support local residents to tackle issues, deliver services and generally improve quality of life. £200k was invested through the Warm Welcome Initiative to more than 100 community groups in the winter of 2024/25 to create warm and welcoming spaces, with a 34% increase in overall participation. In addition, £100k was allocated through participatory budgeting in identified localities to tackle socio-economic inequality, with over 2,500 votes cast (23% increase from last year). A further round of Community Investment Fund saw over £326k invested in 115 different community-led projects across Perth and Kinross. • We supported 118 volunteer groups who contributed 40,000 hours to enhancing greenspace management. Despite reduced funding, we provided insurance, training, materials, and, in some cases, financial support, helping enhance local spaces and community pride. We also consulted communities on the design of 11 play areas, receiving 486 responses. Workshops with schools ensured children’s voices were heard, resulting in inclusive, multifunctional designs that reflect local aspirations. • We launched our Leadership Competency Framework, setting out the actions and behaviours expected of all our teams to help us deliver our organisational vision and strategic outcomes. At the same time, we revised our leadership model and introduced the Five Foundations of Leadership to support cultural change and improve how we engage with residents. • We adopted a new Performance and Development Discussion (PDD) Framework making it mandatory for all staff in early 2025. It includes structured prompts to encourage meaningful conversations about delivering better outcomes for people and communities. All annual PDDs are recorded in our HR system to support analysis and future organisational development planning. Key areas for improvement: Scale up and roll out of Fairer Futures programme to Rattray, South Crieff, Muirton and North Muirton. Develop updated locality profiles to support a needs-based approach. Support delivery of Business Improvement, Culture and Behaviours and Workforce Planning workstreams of the Leadership Development Phase 2 Transformation Project. Implement the newly developed Leadership and Managers Induction toolkit. For information about the Health and Social Care Partnership, please see the Perth and Kinross Integration Joint Board Annual Accounts 2025/26 which are available at Perth and Kinross Integration Joint Board. 11 | Perth and Kinross Annual Accounts 2025/26 Page 30 of 314
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12 | Perth and Kinross Council Annual Accounts 2025/26 6. Financial Performance Financial performance is part of the Council’s performance management culture with regular reporting during 2025/26 to elected members at the Finance and Resources Committee. This section summarises the main variances for 2025/26. The Expenditure and Funding Analysis brings local authority performance reporting based on expenditure measured under proper accounting practices, together with statutorily defined charges to the General Fund and Housing Revenue Account. Both the Comprehensive Income and Expenditure Statement and the Expenditure and Funding Analysis include a segmental analysis which requires Councils to report performance based on how they are structured and how they operate, monitor and manage financial performance. The 2025 Code requires that Councils present the segmental analysis based on the organisational structure under which they operate. Additionally, the Code requires that if a local authority changes the presentation or classification of items in its financial statements, the authority shall reclassify comparative amounts unless reclassification is impracticable. Although the Expenditure and Funding Analysis reflects the main variances, for operational reporting the Council’s Comprehensive Income and Expenditure reflect proper accounting practice. The Comprehensive Income and Expenditure Statement movements are not directly comparable with the movements in the Expenditure and Funding analysis. a) General Fund Revenue Expenditure for 2025/26 In 2025/26 the Council incurred actual net expenditure on Services of £528.344 million (which is the Cost of Services disclosed in the Comprehensive Income and Expenditure Statement on page 32). When Taxation and Non-Specific Grant Income, Financing and Investment Income and Expenditure and Other Operating Income and Expenditure are included there was a net Deficit on the Provision of Services of £42.572 million. The Expenditure and Funding Analysis information on pages 49 and 50 sets out adjustments between the net Deficit on the Provision of Services of £42.572 million, included in the Comprehensive Income and Expenditure Statement, and the Use of General Fund per CIES of £6.856 million in the table below. The adjustments of £37.335 million represent the difference between the net expenditure of the Council that is chargeable to taxation and rents and the figures reported in the Comprehensive Income and Expenditure Account. The deficit in the Expenditure and Funding Analysis is set out in the way in which the Council organises itself and manages and reports on financial performance. The following table sets out adjustments to the most recently approved Revenue Budget to ensure that budget and actual figures are comparable. These include the Public Finance Initiative, external income and capital accounting adjustments. On a comparable basis the table shows a net variance (under spend/additional income) of £13.022 million which is explained in further detail. 12 | Perth and Kinross Annual Accounts 2025/26 Page 31 of 314
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13 | Perth and Kinross Council Annual Accounts 2025/26 Updated Budget per Revenue Monitoring Report No.4 Virements Capital Accounting Adjustments Revised Budget Net Expend. Charged to the General Fund and HRA Balances per Expend. and Funding Analysis Variance £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 COUNCIL SERVICES Education and Learning 180,655 100 (346) 180,409 178,383 (2,026) Children, Families and Justice 24,936 56 0 24,992 24,855 (137) Economy, Development and Planning 15,709 882 0 16,591 15,766 (825) Environment and Infrastructure 32,976 450 (3,459) 29,967 27,941 (2,026) Housing and Communities 20,121 (1,144) (426) 18,551 17,709 (842) Property Services 67,028 (90) (15,866) 51,072 49,602 (1,470) Legal and Governance 4,176 14 0 4,190 3,960 (230) Customer and Digital Services 13,403 63 0 13,466 11,983 (1,483) Strategic Planning, People and Performance 5,821 20 0 5,841 5,218 (623) Projects and Programmes 333 1 0 334 324 (10) Finance and Business Support 11,623 (1,769) 0 9,854 9,074 (780) Directorate Core Costs 1,093 (521) 0 572 572 0 Health and Social Care 111,176 118 0 111,294 109,914 (1,380) Housing Revenue Account 0 (9,686) 0 (9,686) (9,686) 0 Valuation Joint Board 1,421 0 0 1,421 1,393 (28) Non Distributed Costs 1,711 0 0 1,711 1,680 (31) NET COST OF SERVICES 492,182 (11,506) (20,097) 460,579 448,688 (11,891) Taxation and Non-Specific Grant (492,096) 3,567 0 (488,529) (487,859) 670 Finance / Investment / Other 14,836 8,573 20,097 43,506 44,408 902 Use of/(Increase in) General Fund per CIES 14,922 634 0 15,556 5,237 (10,319) Contributions to/(from) other Reserves 4,956 (634) 0 4,322 1,619 (2,703) Use of/(Increase in) General Fund Balances 19,878 0 0 19,878 6,856 (13,022) The actual contribution from the General Fund was £6.856 million. This is £13.022 million less than planned and is made up of additional income and service under spends, as well as adjustments for revenue grants, and is comparable with the revenue monitoring positions that have been presented regularly to the Finance and Resources Committee throughout the financial year. The following section provides a summary of the significant variances. Education and Learning delivered net under spends / additional income of £2.026 million. The main reasons for this are: • In respect of the Devolved School Management (DSM) Scheme there was a net underspend / additional income of £542,000 reflecting savings on staff costs. With regards the Pupil Equity Fund there was a net underspend of £103,000 because expenditure is incurred by academic year rather than financial year. These resources will be carried forward by schools into 2025/26. 13 | Perth and Kinross Annual Accounts 2025/26 Page 32 of 314
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14 | Perth and Kinross Council Annual Accounts 2025/26 • Across the remaining non-devolved Education and Learning Services there was a net underspend / additional income of £1.381 million. This was achieved through a combination of additional staff slippage and home to school transport, partially offset by overspends on residential schools. In Children, Families and Justice there was a net underspend / additional income of £137,000. Across Economy, Development and Planning there was a net underspend / additional income of £825,000. The main reasons for this were staff slippage in excess of budget, additional income and revenue grants, partially offset by landscaping works. In Environment and Infrastructure there was a net underspend / additional income of £2.026 million. The main reasons for this variance were additional income and savings on waste disposal and revenue grants. In Housing and Communities there was a net underspend / additional income of £842,000 due to the receipt of revenue grants. In Property Services there was a net underspend / additional income of £1.470 million. This was primarily due to savings on energy and catering costs. In Legal and Governance there was a net underspend / additional income of £230,000. In Customer and Digital there was a net underspend / additional income of £1.483 million due to staff slippage, additional income and revenue grants. In Strategic Planning, People and Performance, there was a net underspend / additional income of £623,000 due primarily to the accelerated delivery of approved savings and additional income. In Finance and Business Support there was a net underspend / additional income of £780,000 due to staff slippage, the accelerated delivery of approved savings and additional income. In Taxation and Non-Specific Grant there was a reduction in net income of £670,000 due to reduced Council Tax receipts. In Finance / Investment / Other there was an overspend of £902,000 due to an increase in borrowing costs partially offset by additional income from Tayside Contracts. General Fund and Housing Revenue Account Balances reduced by £6.856 million to £63.686 million in line with the budget adjustments approved throughout the year by Council and the Finance and Resources Committee as well as recognising the implications of final outturns and the implementation of the Service Concession Scheme. When the Housing Revenue Account Balance of £2.753 million and the earmarked Reserves of £43.143 million, that are set out on page 52 are excluded, this leaves an uncommitted General Fund Balance of £17.790 million or 3.5% of the net 2025/26 Revenue Budget. b) Composite Capital Budget and Housing Revenue Account Investment Programme 2025/26 A summary of the Council’s capital expenditure in 2025/26 is reflected within Note 35 to the Core Financial Statements on page 78. Total gross capital expenditure was £137.527 million, comprising £44.349 million on the Council’s Housing Revenue Account (HRA) and £93.178 million on the Council’s Composite (General Fund) Programme. Several projects were completed in the last year, with others currently on-site and making good progress during 2025/26. The Council’s gross expenditure includes: • £17.327 million on various School Upgrades projects, including the replacement of Perth High School which opened during the year, and various school refurbishments, including at Perth Academy, Perth Grammar and Methven Primary School. • £32.851 million on Roads and Transport projects, including Structural Maintenance, Road Safety measures, bridges and the new link road at Bertha Park. • £43.000 million on other works, including Flood Protection measures (£15.247 million); Commercial Property estate (£2.325 million); Community and Greenspace projects (£1.171 million); and property, infrastructure and IT upgrades (£17.240 million). The balance of £7.017 million relates to expenditure on various waste initiatives, vehicles and other miscellaneous works. • £44.349 million on the HRA including Affordable Housing New Builds and Buy Backs (£20.768 million), upgrades to Multi-Storey blocks (£4.336 million), Heating, Windows and Rewiring works (£5.814 million), Kitchen and Bathroom Upgrades (£3.217 million) and Gypsy Site Improvements (£4.114 million). Capital expenditure is funded by borrowing, asset sales, grants, other capital receipts, and Revenue Budget contributions. The Capital Financing Requirement (CFR, i.e., the underlying requirement to borrow for capital purposes) as at 31 March 2026 was £1,027.153 million. Actual capital debt was £945.523 million, comprising long-term borrowing (£807.200 million) and a PPP liability (£138.323 million). The ratio of borrowing to the CFR for 2025/26 increased slightly to 92.1% (2024/25 92.0%). During the year the CFR increased by £94.370 million, reflecting the capital expenditure above, less capital receipts, grants and contributions and principal loan repayments. The CFR also includes a £2.746 million restatement adjustment at 31 March 2026 by applying the service concession flexibility scheme that was approved by the Council in February 2023. The ratio of borrowing to the CFR increased as a consequence of the new borrowing being undertaken, less amounts repaid in the year. 14 | Perth and Kinross Annual Accounts 2025/26 Page 33 of 314
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15 | Perth and Kinross Council Annual Accounts 2025/26 c) General Fund Reserves As at 31 March 2026 the Council had uncommitted General Fund balances of £17.790 million which represented 3.5% of the Council’s 2025/26 Revenue Budget approved in April 2025. Council policy, as set out in the Reserves Strategy approved by Council on 26 February 2025, is to retain uncommitted reserves of between 2% and 4% of net revenue expenditure over the medium term. The Council’s Reserves Strategy will continue to be reviewed, and updates will be considered by the Finance and Resources Committee and the Council as part of the revenue monitoring cycle. Full details of the Council’s General Fund Reserves are shown on page 31 and page 74 of the Financial Statements, along with information on future commitments. The Reserves position is summarised as follows: £m £m General Fund (60.933) Revaluation Reserve (377.955) Housing Revenue Account (2.753) Capital Adjustments Account (286.189) Capital Fund (39.469) Financial Instruments Adjustment Account 15.109 Insurance Fund (2.511) Pensions Reserve 17.753 Capital Receipts Reserve (1.506) Employee Statutory Adjustment Account 9.645 Capital Grants Unapplied (1.362) TOTAL USABLE RESERVES (108.534) TOTAL UNUSABLE RESERVES (621.637) TOTAL RESERVES (730.171) The Balance Sheet The Balance Sheet on page 33 summarises the Council’s assets and liabilities as at 31 March 2026 and explanatory notes are provided from page 36. Total net assets have increased by £474,000 to £730.171 million. Long Term Assets increased by £101.068 million, current assets reduced by £4.445 million, current liabilities increased by £80.484 million and long-term liabilities increased by £15.665 million. The major changes in the Council’s Balance Sheet between 31 March 2025 and 31 March 2026 are explained in more detail in the following paragraphs. Long Term Assets The value of long term assets increased by £101.068 million due to the continuation of the major capital investment being undertaken by the Council described above. Current Assets The level of Short-Term Investments increased by £5.014 million and Cash or Cash Equivalents reduced by £7.086 million. This was the result of planned reduction of investments in recent years to fund the capital programme. The reduction in cash and cash equivalents follows the reduction in short-term deposits in line with cash flow requirements. Current Liabilities Short Term Borrowing increased by £93.344 million as a result of more Public Works Loan Board (PWLB) and short term market borrowing falling due within 12 months of the balance sheet date compared to last year. Short Term Creditors reduced by £11.437 million primarily due to lower amounts payable to Scottish Government, Central Government, Other Local Authorities, NHS Bodies and Other Entities. Long Term Liabilities Long-Term Liabilities increased by £15.665 million due to an increase in Long Term Borrowing of £16.063 million from new borrowing throughout the year, partially offset by a reduction in Other Long Term Liabilities of £2.111 million due to movements in pension and public private partnership liabilities in line with the approved contract. The Council’s annual Treasury Management Strategy outlines the Council’s policy in relation to borrowing and investment. This is prepared in accordance with the Code of Practice on Treasury Management in Local Authorities. The majority of the Council’s borrowing comes from the Public Works Loan Board and market loans. Further details are provided at Note 39. Pensions Reserve International Accounting Standard 19 Revised (IAS19R) requires the disclosure of the Council’s share of Tayside Pension Fund’s assets and liabilities, both current and future. The information disclosed in the accounts is provided to the Council by the Pension Fund’s actuaries. The position at 31 March 2026 indicates a net liability of £17.753 million compared to £18.533 million on 31 March 2025 due to changes in assumptions. This liability is based on a snapshot valuation at 31 March 2026 and is a result of prevailing market conditions at that date. Triennial valuations of the Fund are carried out with the last valuation having taken place at 31 March 2023. Employer’s contributions were 17% of pensionable pay to 31 March 2024, reducing to 15.7% from 1 April 2024. For more information see Note 18. Provisions, Contingencies and Write Offs The Council made provision for a number of eventualities which may have an effect on the financial position of the Council. The reasons for the provisions are outlined in Note 30 on page 73. 15 | Perth and Kinross Annual Accounts 2025/26 Page 34 of 314
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16 | Perth and Kinross Council Annual Accounts 2025/26 There were a number of write-offs of debt and stock during the year which were approved by the Finance and Resources Committee on 24 June 2026 – Authority to Write Off Debts and Obsolete Stock. d) Accounting Ratios The following financial indicators have been developed to provide an indication of the sustainability and affordability of the Council’s financial plans. FINANCIAL INDICATOR 2025/26 2024/25 PURPOSE Uncommitted General Fund Reserve as a proportion of Annual Budgeted Net Expenditure 3.5% 4.0% Reflects the level of funding available to manage financial risk / unplanned expenditure. Movement in the Uncommitted General Fund Balance £(0.925)m £0.004m Reflects the movement in the level of Council’s has increased its Uncommitted General Fund Reserve. Council Tax – In Year Collection Rate 97.5% 97.3% Demonstrates the Council’s effectiveness in collecting council tax debt. Ratio of Council Tax Income to Overall Level of Funding 21.5% 20.1% This reflects the Council’s capacity to vary expenditure by raising Council Tax Income. Capital Financing Requirement £1,027.153m £932.783m Measurement of requirement to borrow for capital purposes. External Debt Levels £945.523m £858.559m Actual borrowing for capital investment purposes. Capital Financing Requirement Ratio 92.1% 92.0% Measurement of prudence in relation to borrowing levels – borrowing only to invest in capital. Ratio of Financing Costs to Net Revenue Stream 4.7% 3.9% Measurement of the Council’s ability to fund borrowing costs. e) Financial Statements The primary financial statements presented within the Annual Accounts are as follows: • The Movement in Reserves Statement reports movements on the different Reserves held by the Council analysed into Usable Reserves (i.e. those that can be applied to fund expenditure or reduce local taxation) and Unusable Reserves. • The Comprehensive Income and Expenditure Statement reports the accounting cost of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Councils raise taxation to cover expenditure in accordance with regulations which may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. • The Balance Sheet brings together all the assets and liabilities of the Council. It is a statement of the resources of the Council and how they have been financed. It is also a report on the Council’s financial position at a particular point in time and represents a snapshot of its financial affairs at the close of the year expressed in accounting terms. • The Cash Flow Statement summarises the inflows and outflows of cash and cash equivalents arising from transactions with third parties on both day to day revenue transactions and capital activities. Cash is defined for the purpose of this statement as cash in hand and deposits repayable on demand less overdrafts repayable on demand. Cash equivalents are investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with an insignificant risk of change in value. The Code also requires the following to be included within the Annual Accounts: • The Statement of Responsibilities for the Annual Accounts explains the responsibilities of the Council and of the Chief Finance Officer as they relate to the Annual Accounts. • The Notes to the Financial Statements provide further information on the above financial statements. • The Notes include an Expenditure and Funding Analysis which compares the net expenditure that is chargeable to taxation and rents and reconciles it to the Comprehensive Income and Expenditure Account. The service analysis for both the Expenditure and Funding Analysis and the Comprehensive Income and Expenditure Statement are now both provided in the way in which the Council organises itself and manages financial performance. • The Annual Governance Statement explains how the Council has complied with the Chartered Institute of Public Finance and Accountancy (CIPFA) / Society of Local Authority Chief Executives (SOLACE) standard for good corporate governance and meets the requirements of relevant legislation and current good practice. • The Remuneration Report provides details of the Council’s remuneration of its senior councillors and senior officers with regard to salary, taxable expenses and pension benefits and states how remuneration arrangements are managed. The report also provides information on exit packages agreed by the Council during the financial year. 16 | Perth and Kinross Annual Accounts 2025/26 Page 35 of 314
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17 | Perth and Kinross Council Annual Accounts 2025/26 Supplementary Financial Statements The supplementary financial statements are as follows: • The Housing Revenue Account shows the major elements of housing revenue account expenditure and how these are funded by rents and other income. • The Council Tax Income Account reports the gross and net income from Council Tax, together with details of the number of properties on which Council Tax is levied, and the charge per property. • The Non-Domestic Rates Income Account shows the gross and net income from non-domestic rates and details the amount payable to the national non-domestic pool and resulting net income for the financial year to the Council that is shown in the Comprehensive Income and Expenditure Statement. • The Charitable Trusts statement includes the summary Income and Expenditure Account and Balance Sheet of those Charitable Trusts and Endowments administered by the Council. • The Common Good statement includes the summary Income and Expenditure Account and Balance Sheet for the Common Good Funds administered by the Council. • The Group Accounts incorporate the share of the Council’s Managed Funds, Subsidiaries and Associates into the Group Movement in Reserves Statement, Group Comprehensive Income and Expenditure Statement, Group Balance Sheet, Group Cash Flow Statement and include the Reconciliation of the Single Entity (Council) Surplus or Deficit for the year to the Group Surplus or Deficit. 7. Financial Outlook, Risks and Plans for the Future The financial and operating environment for local government continues to be characterised by sustained uncertainty, increasing demand, and constrained resources. These pressures are structural rather than short-term and are expected to continue over the medium to long term. Communities across Perth and Kinross continue to experience the ongoing effects of the increased cost-of-living, with increasing levels of financial hardship and inequality. Demand for support remains high, particularly in areas such as social care, housing, and welfare advice. At the same time, population change is reshaping both the type and volume of demand placed on Council services. Perth and Kinross is experiencing a significant demographic shift, with a rapidly growing older population and a proportionately smaller working-age population. This trend is expected to accelerate over the coming years. The implications are profound: • increasing demand for health and social care services, including more complex and long-term care needs • rising costs associated with supporting vulnerable adults and maintaining independence at home • workforce pressures, as fewer working-age people are available to support service delivery • reduced growth in the local tax base relative to demand pressures These demographic changes are not unique to Perth and Kinross but are particularly acute in Scotland, where population ageing is more advanced than in many other parts of the UK. Alongside this, the Council continues to face significant financial challenges arising from the wider public sector funding environment. Real-terms reductions in core local government funding over a number of years, combined with increasing reliance on ring-fenced or directed funding, limits local flexibility and places additional pressure on core services. While recent settlements have provided some stability in the short term, they have not kept pace with demand growth, inflationary pressures, and policy commitments. Cost pressures remain significant. Although inflation has moderated from peak levels, the legacy impact continues to be felt across energy, construction, and contract costs. Pay settlements and workforce-related costs continue to represent a substantial and growing proportion of expenditure. In addition, national policy decisions—such as those relating to social care, education, and environmental commitments—continue to add to cost pressures without always being fully funded in the long term. The Council is also operating within an increasingly complex risk environment. The Corporate Risk Register highlights key strategic risks including: • the ability to meet statutory duties in protecting vulnerable children and adults • the financial sustainability of services in the face of rising demand and constrained funding • workforce capacity and resilience across key service areas 17 | Perth and Kinross Annual Accounts 2025/26 Page 36 of 314
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18 | Perth and Kinross Council Annual Accounts 2025/26 • the impact of climate change, both in terms of mitigation requirements and the need to respond to more frequent severe weather events • digital, cyber, and data-related risks as services become more dependent on technology Against this backdrop, the Council’s financial position remains extremely challenging. The Medium Term Financial Plan (MTFP), approved in December 2025, identified significant challenges over the planning period to 2031/32. This reflects the gap between projected available funding and the cost of maintaining current levels of service provision. To address this, the Council has adopted a clear strategic approach based on three interdependent principles: 1. Prioritisation of Resources - resources will be increasingly targeted towards statutory duties, the most vulnerable in our communities, and those areas that deliver the greatest impact against the Council’s strategic priorities. 2. Transformation and Service Redesign - the Council will accelerate its Transformation and Change Programme, fundamentally redesigning how services are delivered. This includes greater use of digital technology, including artificial intelligence, service integration, demand management, and a stronger focus on prevention and early intervention. 3. Financial Sustainability and Income Strategy - the Council Tax Strategy provides a degree of certainty over income in the short to medium term and supports investment in priority areas such as social care, education, and children and families services. The Council will continue to explore additional income generation opportunities and ensure full cost recovery where appropriate. Delivering a balanced and sustainable budget over the medium term will require difficult decisions. The scale of the financial gap means that the Council must continue to: • stop or reduce some non-essential activities • redesign services to operate at lower cost • increase productivity and efficiency through technology and new ways of working • work more closely with partners, communities, and the third sector to deliver outcomes differently. The Council’s Corporate Plan 2022–2027 continues to provide a clear strategic direction, with its vision of “a Perth and Kinross where everyone can live life well, free from poverty and inequality.” The Plan’s priorities remain highly relevant in the current environment, particularly in addressing poverty, improving wellbeing, supporting sustainable economic growth, and tackling climate change. The Financial Strategy supports this by linking long-term priorities with available financial resources, ensuring that decision- making is evidence-based and focused on need rather than demand alone. The integration of financial and service planning through the MTFP enables the Council to take a more strategic and transparent approach to managing risk and allocating resources. In the Housing Revenue Account, the five-year Business Plan and Rent Strategy to 2030/31 provide a framework to maintain and improve the Council’s housing stock while supporting the delivery of new homes. The approved rent increase for 2025/26 reflects the need to balance affordability for tenants with the requirement to sustain investment in housing infrastructure. Looking ahead, the Council will need to continue to strengthen its financial resilience. This will include maintaining appropriate reserve levels, further improving financial forecasting, and enhancing its ability to respond to changing circumstances. In summary, the financial outlook for Perth and Kinross Council remains challenging, with demand for services continuing to outstrip available resources. The combination of demographic change, constrained funding, and increasing costs requires a sustained and disciplined approach to financial management. Through clear prioritisation, transformation of services, and a continued focus on delivering outcomes that matter most to communities, the Council will seek to navigate these challenges and maintain its long-term financial sustainability. Transformation and Change Perth and Kinross Council’s Transformation and Change Strategy, approved in June 2022, provided the framework for reshaping how we deliver services so we can continue to improve outcomes for communities within increasingly constrained resources. Phase One of the programme was concluded in June 2024, with a new Phase Two (2024 – 26) establishing the new Programme Management Office responsible for delivery, including strengthened governance, the embedding of service design principles, and the initiation of major cross-cutting programmes. During 2025/26, the Council has progressed delivery through Phase Two while also preparing for the transition into Phase Three in June 2026. This shift reflects the need to intensify transformation activity at scale and pace in response to the wider national context of sustained financial pressures across local government, rising and more complex demand, and increasing expectations of public services. Our approach aligns with the Scottish Government’s direction by focusing transformation effort on the areas that will deliver the greatest impact for Perth and Kinross, underpinned by our key corporate priorities. 18 | Perth and Kinross Annual Accounts 2025/26 Page 37 of 314
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19 | Perth and Kinross Council Annual Accounts 2025/26 Phase Three will begin implementation in June 2026 and strengthens our operating model for transformation and continuous improvement. This includes streamlining and prioritising the programme to ensure that resources are focused on the most significant, outcome-driven change, and clarifying the distinction between large-scale transformation and proportionate business improvement activity. Governance arrangements will be reinforced to support clearer accountability, stronger oversight, and faster delivery. Audit Scotland’s Best Value thematic work on Transformation and Change in 2025 provided an external perspective on our progress. The audit recognised that the Council has a clear vision and plan for transformation, robust officer-led governance through the Transformation Board, and good examples of working with partners and communities, supported by our user- focused service design approach. It also highlighted a small number of improvement actions that we have implemented to strengthen delivery further, including: ensuring transformation plans are sufficiently ambitious to support long-term financial sustainability and that projected savings are clearly articulated; confirming future programme management arrangements; enhancing benefits realisation so we can demonstrate impact more consistently; and strengthening Equality and Fairness Impact Assessment practice so potential impacts on vulnerable or protected groups are evidenced throughout project delivery. These changes will help ensure that transformation continues to support financial sustainability, our key corporate priorities, cost reduction, and more efficient and effective ways of working—while maintaining a clear focus on outcomes for the people of Perth and Kinross. Capital The Council approved a revised 6-year Composite Capital Budget for 2026/27 – 2031/32 on 4 March 2026. The Housing and Social Wellbeing Committee approved the 5-year HRA Capital Budget for 2026/27 - 2030/31 on 21 January 2026. Both these Capital plans were subsequently updated by the Strategic Policy and Resources Committee on 22 April 2026. The Council’s Composite Capital Budget includes significant investment in improvements to roads and bridges infrastructure. Also included within the capital budget are major upgrades to schools and sports facilities in Perth, Kinross and Crieff, including the replacement of Perth Leisure Pool. In addition, there are ongoing works within the annual rolling programmes and road network improvements. Also included is a new primary school at Bertha Park, as well as various school refurbishments under the Investment in the Learning Estate programme. There is significant investment included in relation to new technologies, including the ongoing development of the new Social Work database (Mosaic) and investment in the Microsoft Estate, as well as the upgrading and replacement of School Audio Visual equipment and other Technology Upgrades. Expenditure is ongoing in relation to progressing various Flood Protection Schemes, with work on the construction of the Comrie Flood Protection expected to be completed in the autumn of 2026. There is also provision for economic development and planning initiatives, parks and public spaces improvements, waste reduction and recycling and property improvements. The HRA Investment Programme 2026/27 to 2030/31 continues to focus upon increasing the affordable housing stock with the provision of new affordable housing and Council house buy-backs, as well as the enhancement of the existing housing stock, with works on multi-storey blocks, energy efficiency and external fabric maintenance. The Capital Financing Requirement is estimated to peak at £1.357 billion in 2031/32 under current approved plans. The annual cost of servicing the borrowing and Public Private Partnership liabilities is being managed through the 1.25% annual increases in Council Tax and the Capital Fund Strategy within the Medium-Term Financial Plan. This ensures the Council’s plan remains affordable, prudent and sustainable. More detailed narrative on the Council’s capital investment plans, treasury management (borrowing and investments), prudential indicators and loans fund liabilities can be found in the Council's Treasury and Investment Strategy and Prudential Indicators 2026/27 to 2031/32 report presented to Council on 25 February 2026. Risk Management Effective risk management remains a key element of the Council’s governance and internal control arrangements. It supports informed decision-making, helps the Council respond to an increasingly complex operating environment and underpins delivery of sustainable outcomes for the communities of Perth and Kinross. The risk management framework has been developed based on best practice industry standards including the International Standard in Risk Management – ISO: 31000 and the Office of Governance and Commerce (OGC) Management of Risk Guidance (MoR[1]) and guidance from the Association of Local Authority Risk Managers (ALARM). Within the Council there is a cohort of trained risk practitioners who provide technical guidance and support to ensure that a consistent approach to risk management is taken across the whole organisation. During 2025/26, the Council continued to strengthen its risk management arrangements, with a focus on improving the quality, consistency and visibility of risk information. This was supported by collaborative working between Risk Owners, the Strategic Leadership Team and risk-trained officers, helping to strengthen oversight, challenge risk assessment and promote a more consistent corporate approach across services. PK Performs continued to be developed as the Council’s core risk management system, alongside the introduction of enhanced reporting through a Strategic Risk Power BI dashboard. The Council also benefited from collaborative working beyond the organisation through its involvement in the Tayside Risk Management Group, which supports shared learning, benchmarking and continuous improvement. [1] M_O_R® is an industry standard methodology for Management of Risk which helps an organisation identify, assess, and control risk at the strategic, programme, project and operational levels. 19 | Perth and Kinross Annual Accounts 2025/26 Page 38 of 314
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20 | Perth and Kinross Council Annual Accounts 2025/26 The latest annual report and Strategic Risk Register was considered by the Audit and Risk Committee on 29 June 2026. The Strategic Risk Register remains a live management tool and records the Council’s key strategic risks, the controls in place and any further mitigating actions required. Overall, the Council’s Risk Management Framework remains robust and effective and continues to support good governance and delivery of the Council’s strategic objectives. Workforce Management The Council values its employees, their skills, dedication, and passion to ensure it delivers essential services to the people, businesses and communities of Perth and Kinross. Our people continue to be our most important asset and remain at the heart of everything we do. The Council continues its journey of transformation and change, reshaping our organisation to ensure that we are prepared to deliver the best public services we can for the people of Perth and Kinross, focused on need and within available resources. Our workforce is fundamental to achieving this goal. We recognise the importance of creating an environment in which our people can be at their best. We have a clear vision, aims and aspirations for our workforce, and bringing our people on that journey remains essential to ensuring that our culture and ethos are future-ready to deliver public services. The Corporate Plan 2022-2027 sets out the key priorities and vision for the Council, including how we will approach the delivery of services. Our Transformation and Change Strategy recognises that, to achieve the Council’s ambitions, we need to reshape our organisation, including its size and shape. Our Financial Strategy recognises the unprecedented budget challenges and the need for responsible decision-making in the context in which we work. The People and Culture Strategy 2024-2028, approved in June 2024, continues to be the enabler that supports our workforce as we reshape our organisation and deliver the best public services we can. During 2025/26, this has continued through implementation of the strategy and action plan alongside the budget decisions agreed by Council in February 2025, providing an important context for workforce planning, service redesign and the sustainable delivery of frontline services. We continue to focus our efforts on what makes change a success – our people – and have created learning and engagement opportunities to support our ambition for growth and change. Our People and Culture Strategy is based on our values of Ambition, Compassion and Integrity, providing direction not only on what we need to do, but also why, where and how we should deliver now and in the future. Our action plan sets out how we will create a healthy and flexible workforce with the appropriate skills, values and behaviours to address current and future demands. This focus on workplace culture, performance, productivity, innovation, agility, digital technology, wellbeing, reward, recognition and resilience remains key. These commitments will enable the Council to match its ambition for transforming services, growing the economy, reducing inequalities, protecting vulnerable people and supporting young people to be all they can be. The Council is a diverse local authority, supporting both rural and urban communities. We are committed to enhancing quality of life, not just for the people we serve, but also for the people who make our achievements possible – our dedicated employees. We continue to operate within the context of changing service demand, financial pressures, an ageing population and the need for a range of highly specialist skills and services. Strong workforce planning, multi-disciplinary teams, integrated working, locality-based decision-making, sound governance and effective performance monitoring continue to support delivery of our ambition. We have implemented our executive leadership team, leadership competency framework and performance framework to focus our contributions against Corporate Priorities. This model embodies our vision and sets the cultural and leadership foundations for how we will engage and operate with our communities in future. During 2025/26, we have continued to embed these arrangements across the wider leadership cohort, with our Evolving Leaders in Practice programme supporting year 2 of the strategy and expanding key elements across the Council. This creates further leadership development opportunities for all leaders across the Council linking these to our established leadership competency framework. Our redesigned operating model continues to ensure that we work together to focus on positive outcomes for those we serve, implementing new ways of working, optimising existing and new technology and working collaboratively with partners, Arm’s Length External Organisations and other local authorities to create and adopt innovative approaches to service delivery. Our Corporate Delivery Improvement Plan continues to support improvement activity and, through annual performance reporting, Council approved the Annual Performance Report for 2024/25 in October 2025, reinforcing scrutiny, accountability and continuous improvement across the organisation. We continue to demonstrate the importance of inclusion by being a role model for initiatives such as Living Wage, Carer Positive, Disability Confident, Young Person’s Guarantee and the Armed Forces Covenant. These reflect the commitment we make as an employer to support the different groups within our workforce and our communities. Development and talent management also enable us to provide versatile people solutions to support the future strategic direction of the organisation. We continue to invest in training and development opportunities for young people through Apprenticeship, Graduate and Trainee programmes, helping to support skills development and future workforce capacity. A focus on health, wellbeing and resilience remains key to sustaining a healthy working environment and positive wellbeing culture, and we continue to review and refresh the wide range of support we offer to our workforce. The Council is proud to be a Fair Work employer and continues to apply Fair Work principles, consulting and engaging with employees and trade union representatives on improvements in our employment practices and arrangements. During 2025/26, this has been supported by continued progress on equality and inclusion, including publication of the Equality Mainstreaming Report 2025-2029, and by implementation of the updated Real Living Wage rate from November 2025 as part of our ongoing commitment as an accredited employer. Equalities and fairness continue to be core principles in our People and Culture Strategy, helping to ensure we have the right skills in the right place when we need them and contributing to our ambition of working together so everyone can live life well. 20 | Perth and Kinross Annual Accounts 2025/26 Page 39 of 314
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21 | Perth and Kinross Council Annual Accounts 2025/26 8. Supplementary Information a) Group Accounts The Code of Practice on Local Authority Accounting in the United Kingdom requires the Council to produce group financial statements where it has an interest in entities that meet the definition of a subsidiary, associate or joint venture. The Group results are presented alongside the results for the Council in the Annual Accounts. Further details of the associated entities that have been incorporated into the financial statements can be found on page 106. The Council has an interest in six organisations (detailed on page 106) that do not form part of the main Accounts. The Council includes the results of these organisations in its Group Accounts due to the significant influence it has over their financial and operating practices. The Council also includes Charitable Trusts administered and controlled by the Council and Common Good Funds as managed funds within the Group Accounts. In accordance with the Code, the 2025/26 Group Accounts Statements are included on pages 101 to 105. The basis for consolidation is set out in the Notes to the Group Accounts Statements on pages 106 to 108. The effect of consolidation is to increase the Council’s net assets by £34.513 million resulting in a Group Balance Sheet showing net assets of £764.684 million at 31 March 2026 as set out on page 103. b) Common Good and Charitable Trust Funds Common Good Funds are administered by the local authority for the general benefit of the relevant communities. Overall, the Common Good Funds recorded an in-year surplus of £26,000 which, when applied to the surplus brought forward, results in an accumulated revenue surplus as at 31 March 2026 of £2.551 million. Details of income and expenditure accounts and balance sheets can be found on pages 99 and 100 of the Annual Accounts. These funds are subject to similar accounting policies and procedures to those that are applied to the Council’s main accounts. The main source of income to Common Good Funds is rent. The Council also administers several Charitable Trust Funds. Details of income and expenditure accounts and balance sheets can be found on page 98 of these Annual Accounts. Overall, the Trust Funds recorded an in-year surplus of £276,000 which, when applied to the surplus brought forward, results in an accumulated surplus as at 31 March 2026 of £4.057 million. Perth and Kinross Council’s Trust Funds, for which the Council is the sole trustee, also have to prepare their own Trustees’ Annual Report and this is separately available on the Council website. c) Public Private Partnerships / Design Build Finance Maintain In September 2000 the Council entered into a 25-year PPP contract for the construction, maintenance and operation of office accommodation and a car park. In 2025/26 the Council paid £1.443 million up to September 2025 to the contractor under the terms of the contract. At the completion of the contract the Council purchased both assets. Between 2009 and 2012 six school campuses were also brought into operation at Blairgowrie, Glenearn, Loch Leven, Strathearn, North Inch and Breadalbane. The contractor’s obligation was to construct the schools and is to maintain them to a pre agreed standard. In 2025/26 the Council paid £23.612 million to the contractor under the terms of the contract. In addition, the Council paid £3.351 million in relation to Bertha Park High School in 2025/26. 9. Conclusion The Council has continued to demonstrate sound financial management in 2025/26 by continuing to deliver services during challenging times with the resources which are available to it. The pressures being experienced by Services in relation to demand are known and plans are in place to mitigate them. The Council is also facing significant inflationary pressures. These pressures have been reflected in budgets and the MTFP. The commitment to a Council Tax Strategy is a key component in addressing these challenges. The Council will continue to face many challenges in the future from the combined effect of reduced resources, increasing demands and expectations for our services. It is confident that by working more creatively with all its residents and partners, it will not only embrace these challenges but will maintain its performance and service delivery. Acknowledgements As in previous years, we would like to acknowledge the significant work of the finance teams in producing the Annual Accounts and thank colleagues across the Council and the wider Group for their continuing support. Thomas Glen Councillor Eric Drysdale Scott Walker Chief Executive Leader of the Council Chief Finance Officer Perth and Kinross Council Perth and Kinross Council Perth and Kinross Council 21 | Perth and Kinross Annual Accounts 2025/26 Page 40 of 314
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22 | Perth and Kinross Council Annual Accounts 2025/26 Annual Governance Statement 1 Purpose 1.1 The purpose of the Annual Governance Statement is to give assurance to the people of Perth and Kinross, our elected members, staff, partner agencies and other stakeholders that our governance arrangements are adequate and effective and that our system of internal control is robust. 2 Executive Summary 2.1 The Council has undertaken a comprehensive and evidence-based review of its governance arrangements and system of internal control for 2025/26. This confirms that the Council’s control environment is sound, well embedded and operating effectively in practice. The system of internal control provides reasonable assurance that risks are being appropriately identified, managed and mitigated in support of the delivery of the Council’s strategic objectives, recognising that absolute assurance cannot be achieved. 2.2 The governance framework is aligned with recognised good practice, including the CIPFA Delivering Good Governance principles, and is supported by clear leadership, effective decision-making and scrutiny, and robust financial and risk management arrangements. Taken together with the formal assurance processes in place, this provides a strong and consistent evidence base for overall assurance. While targeted improvement actions have been identified, these are being actively progressed through established service improvement, audit and transformation programmes. On that basis, the Council can provide clear assurance that its governance arrangements and system of internal control are robust, proportionate and fit for purpose. 2.3 The review of the effectiveness of the Council’s system of internal control and overall governance framework has been informed by different sources assessing risk and providing assurance: - • Executive Leadership Team / Strategic Leadership Team • Chief Finance Officer • Strategic Lead for Legal and Governance Services / Monitoring Officer • Chief Internal Auditor / Internal Audit • Data Protection Officer • Policy and Governance Group • External Audit • External agencies and inspectorates. 3. Scope of Responsibility 3.1 As well as providing assurance as to the effectiveness of the governance arrangements in place for the Council, this Annual Governance Statement also covers the six organisations that are included in the Council’s Group Accounts. • Live Active Leisure Limited (subsidiary) • Perth Theatre and Concert Hall Limited (subsidiary) • Culture Perth and Kinross Limited (subsidiary) • Tayside Valuation Joint Board (associate) • Tayside Contracts (associate) • Perth and Kinross Integration Joint Board (joint venture) 4 Our Governance Framework 4.1 Our governance framework comprises our culture, values, rules, resources, systems, tools and processes which we have in place to help us achieve our strategic objectives. We recognise that the following are fundamental elements of good governance within public sector organisations: - • Leadership, Culture and Values • Vision, Direction and Purpose • Stakeholder Engagement • Organisational Development • Effective Decision Making • Internal Controls • Scrutiny and Accountability 4.2 These fundamental elements of our governance framework reflect and seek to embed the principles of good governance within the 2016 CIPFA Framework for Delivering Good Governance in Local Government, and with its Addendum from May 2025, namely: • Behaving with integrity, demonstrating strong commitment to ethical values and respecting the rule of law • Defining outcomes in terms of sustainable economic, social and environmental benefits • Ensuring openness and comprehensive stakeholder engagement 22 | Perth and Kinross Annual Accounts 2025/26 Page 41 of 314
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23 | Perth and Kinross Council Annual Accounts 2025/26 • Developing the entity’s capacity, including the capability of its leadership and the individuals within it • Determining the interventions necessary to optimise the achievement of the intended outcomes • Managing risks and performance through robust internal control and strong public financial management • Implementing good practices in transparency, reporting and audit to deliver effective accountability. 4.3 A crucial part of the framework is the system of internal control which is designed to manage and mitigate risk in relation to the achievement of our intended outcomes. 4.4 The Council manages risk through a continuous process of identification, assessment, evaluation, prioritisation and mitigation. We evaluate risk based on likelihood and impact in both financial and non-financial terms. We do however need to mitigate and manage risk proportionately; recognising that risk can never be eliminated completely and that only reasonable assurance can ever be given. 5 Our Governance Arrangements 5.1 Our culture and values are reflected in our behaviour and our decision-making. Our policies, processes and procedures including Elected Member and Employee Codes of Conduct, Whistleblowing and Anti-fraud and Corruption policies, Elected Member Register of Interests, Gifts and Hospitality Policy and Conflicts of Interest procedures ensure that, as a Council, we respect the rule of law, behave with integrity, promote a culture of good governance and demonstrate a strong commitment to ethical values. 5.2 There are appropriate and effective arrangements in place for the discharge of the following statutory functions: • Head of Paid Service • Monitoring Officer • Chief Finance Officer • Chief Social Work Officer • Data Protection Officer 5.3 Following engagement with communities during the first year of the current political term, the Council has a Corporate Plan which reflects its strategic priorities. This has been supported by the Corporate Development Improvement Plan; developed in 2023/24 to ensure that we deliver on those objectives and continue to provide high quality operational services. The Annual Performance Report for 2024/25, identifying key improvement activity for 2025/26, was reported to Council in October 2025. 5.4 Strategic, operational and political leadership is an integral element of effective governance. A formal programme of induction for elected members is implemented following local government election – supported by learning and development throughout the political tenure. Similarly, an extensive leadership development programme is in place for officers, with an established leadership competency framework in place to enhance capacity and effectiveness, not only in senior leadership roles but across all levels of the organisation. 5.5 The operational leadership at a senior level is aligned to deliver on the strategic objectives and key priorities of the Council. As with many other public bodies, loss of skills and experiences across all portfolios and at senior leadership level presents a continuing risk which the organisation is managing through a programme of leadership development and service redesign. 5.6 Leadership within the organisation is effective with good communication between elected members and senior management through Leaders’ meetings, Convenors meetings, specific interest working groups and all-member briefings, where appropriate. There are also regular meetings with conveners and pre-agenda discussions in respect of each scheduled Council and Committee meeting. 5.7 Our Local Outcome Improvement Plan and Corporate Plan set out our vision and purpose and have been subject to consultation and approval. The Financial Strategy and approved Medium Term Financial Plan and Revenue and Capital budgets prioritise how our financial resources are to be deployed. The Transformation and Change Strategy highlights our ambition to better support the delivery of services to the people of Perth and Kinross, particularly those in the greatest need. Key strategic documents such as the Capital Investment Blueprint and Corporate Asset Management Strategy, Housing Investment Programme, Anti-Poverty Strategy, Economic Wellbeing Plan, Climate Change Strategy and Sustainable Procurement Strategy provide the necessary direction to the organisation to enable it to deliver on its vision and priorities and to achieve its purpose. 5.8 We recognise the importance of good stakeholder engagement and will continue to engage and work in partnership with our communities, partners, and other stakeholders to ensure that we design and deliver the public services that our communities need and value. Our approach to consultations is based on the National Standards for Community Engagement, and we have established a wide range of consultation processes and procedures. The Community Empowerment (Scotland) Act 2015 provides a framework for improving the quality of engagement and participation which is reflected in the Local Outcome Improvement Plan and our own Corporate Plan. 5.9 We are operating in an increasingly complex and financially challenging public sector landscape and must be able to adapt and evolve our services and workforce to continue delivering cost-efficient, high-quality services. Our people remain our most valuable assets and as an organisation we will secure the best outcomes for our communities by 23 | Perth and Kinross Annual Accounts 2025/26 Page 42 of 314
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24 | Perth and Kinross Council Annual Accounts 2025/26 investing in the development of our workforce and of our leaders to ensure that they have the right skills and have sufficient capacity to deliver. Our approach is outlined in our Corporate Workforce Plan – Resourcing PKC Everyone Has Something To Offer. This approach was reviewed in 2023/24 and a new refreshed People and Culture Strategy was approved in June 2024. 5.10 The Council’s Scheme of Administration sets out the Council’s decision-making structure in terms of roles, remits and responsibilities to ensure transparency and accountability. This reflects the priorities and objectives of the Council and the senior officer leadership structure. 5.11 We have a robust suite of policies, procedures and management processes to ensure that there are appropriate internal controls in place in respect of: - • Workforce Planning and Management • Financial Planning and Management • Risk and Performance Management • Transformation and Change Management • Procurement and Commissioning • Major Investment Project Management • Health and Safety • Information Management and Security • Civil Contingencies and Business Continuity • Anti- Fraud and Corruption • Conflicts of Interests • Gifts and Hospitality • Whistleblowing and Reporting Concerns • Complaints Handling • Officer and Elected Member Conduct 5.12 As a public body we must be open, transparent and accountable for our decisions, actions, and performance. Our management and democratic structures and processes are designed to facilitate effective decision making and the proper scrutiny of those decisions and their impact in terms of performance and the achievement of our intended outcomes. 5.13 The Council set a final revenue budget for the year 2026/27 in March 2026, along with provisional budgets for 2027/28 and 2028/29. These revenue budgets demonstrate clear linkages with the Transformation and Change strategy. Each budget is allocated to a named budget holder. Budgets are monitored regularly by Service Management Teams and overall financial performance is monitored regularly by the Executive Leadership Team. Council, through the Finance and Resources Committee, receives regular financial monitoring information as part of the budgetary control framework and provides the required political scrutiny of our financial management and performance. 5.14 A capital budget for 2026/27 to 2031/32 was approved in March 2026. Capital spend is monitored by Service Management Teams and the Executive Leadership Team and reported regularly to the Finance and Resources Committee as part of the budgetary control framework. 5.15 The Council publishes an Annual Performance Report on its performance against the objectives set out within the Corporate Plan and Local Outcome Improvement Plan. In order to improve transparency and clarity of these links, a Corporate Delivery and Improvement Plan has been developed. 5.16 The Corporate Delivery and Improvement Plan, which was approved by Council in May 2024, strengthens the alignment between the Corporate Plan priorities, improvement activity and budget and resource allocations, was developed and subject to consultation in year. It sets out detailed actions and outcomes for each priority and includes appropriate performance indicators. Performance is reported to the Executive Leadership Team and publicly through the Council’s Scrutiny and Performance Committee and relevant themed committees. Financial performance is publicly reported through the Finance and Resources Committee and relevant service committees. 5.17 The Council has a published process for dealing with the following and annually reports on performance in this respect of these areas: - • Complaints from members of the public • Requests for accessing information under the Freedom of Information legislation • Accessing information under the Data Protection legislation 6 Governance Assurance Process 6.1 The Council utilises a robust process of gathering assurance information from the Strategic Leadership Team, which concludes with Certificates of Assurance being signed. 6.2 Corporate assurance has also been provided as regards the adequacy of the internal controls from the following Officers: • Chief Finance Officer (S 95 Officer) • Strategic Lead for Legal and Governance Services /Monitoring Officer 24 | Perth and Kinross Annual Accounts 2025/26 Page 43 of 314
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25 | Perth and Kinross Council Annual Accounts 2025/26 • Chief Internal Auditor • Data Protection Officer • Records and Information Security Manager • Corporate Procurement • Corporate HR Manager 6.3 For Arm’s Length External Organisations, reliance has been placed upon: • Unaudited financial statements of the companies (audited accounts will be scrutinised when available) • Assurance self-assessment evaluations • Terms and conditions of Service Level Agreements • Contract monitoring meetings with Services • Performance information and financial monitoring reports to Services • Presentations and reports to the Scrutiny and Performance Committee 6.4 For Tayside Contracts Joint Committee, Tayside Valuation Joint Board and Perth and Kinross Integration Joint Board, reliance is placed upon each organisation’s own Annual Governance Statement. 6.5 The draft Annual Governance Statement is considered by the Strategic Leadership Team and the Council’s Scrutiny and Performance Committee prior to inclusion within the final unaudited 2025/26 Annual Accounts. 6.6 The Annual Governance Statement is considered by the Audit and Risk Committee as part of the unaudited 2025/26 Annual Accounts. 7 Effectiveness of Governance Arrangements for 2025/26 7.1 Based on the assurance process outlined above, in terms of effectiveness, the Council’s governance arrangements continue to be regarded as fit for purpose in accordance with the governance framework, subject to the areas identified for review or improvement set out in section 8 below. 7.2 Our financial management arrangements conform with the governance requirements of the CIPFA Statement on the Role of the Chief Financial Officer in Local Government (2015). 7.3 Our assurance arrangements conform with the governance requirements of the CIPFA Statement on the Role of the Head of Internal Audit (2010) and the External Quality Assessment of the Internal Audit function has been assessed as fully conforming with the Public Sector Internal Audit Standards in year March 2025, with the Global Internal Audit Standards in the UK Public Sector adopted in year, in line with professional requirements. 7.4 The Council has designated the Strategic Lead for Legal and Governance as the Senior Information Risk Owner, with the Strategic Lead for Customer and Digital Services as Depute. Our information security measures have been reviewed in 2025/26 to ensure continuing compliance with the Public Service Network (PSN) and other cyber security requirements. 7.5 The Scottish Information Commissioner issued a Practice Recommendation in respect of record-keeping on a specific matter. The Council has acknowledged that recommendation and is progressing relevant actions. This matter should be viewed however in the context of the Council’s wider records management framework, which was independently assessed by the Keeper of the Records of Scotland in April 2026 as setting out proper arrangements for the management of public records and as capable of ensuring compliance with the Public Records (Scotland) Act 2011. This distinction is important: the intervention related to a particular issue, whereas the Council’s wider records management framework has been subject to separate external assessment and assurance and deemed compliant. Through the Council’s Records Management Plan there are clear accountability, authority and oversight arrangements in place through the Senior Information Risk Owner and reporting to the Chief Executive and Executive Leadership Team. The Council continues to work constructively with the Keeper’s team to implement agreed improvement actions where required and, taken together, these arrangements provide assurance that the Council’s overall governance and records management framework remains sound and subject to active oversight and continuous improvement 7.6 Our counter-fraud and anti-corruption arrangements conform with CIPFA’s Code of Practice on Managing the Risks of Fraud and Corruption. 7.7 The Chief Internal Auditor is the Council’s nominated Money Laundering Reporting Officer. There has been no relevant activity in respect of Council and its group during the year. 7.8 The Council’s Audit and Risk Committee operates in line with CIPFA’s Audit Committees: Practical Guidance for Local Authorities. 7.9 We have structures in place which support constructive challenge and effective scrutiny to our system of internal control and our broader governance arrangements. In particular: - • Audit and Risk Committee • Scrutiny and Performance Committee • Finance and Resources Committee • Themed Committees • Executive Leadership Team / Strategic Leadership Team 25 | Perth and Kinross Annual Accounts 2025/26 Page 44 of 314
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26 | Perth and Kinross Council Annual Accounts 2025/26 • Policy and Governance Group • Transformation Board • Internal Audit • External Audit (currently Audit Scotland) 8 Opinion of the Chief Internal Auditor 8.1 Audit activity and performance is detailed in the Annual Report by the Chief Internal Auditor for the year 2025/26, which will be presented to the Council’s Audit and Risk Committee in June 2026. This report takes into consideration the requirements of the Global Internal Audit Standards in the UK Public Sector, which came into effect for the financial year 2025/26. The report contains the Chief Internal Auditor’s opinion in respect of the effectiveness of the governance arrangements in place, as follows: - “The Chief Internal Auditor concludes that reasonable reliance can be placed on the Council’s risk management and governance arrangements, and systems of internal control for 2025/26, subject to management implementation of the agreed actions detailed in Internal Audit reports.” 9 Areas for Review/Continued Improvement Action 9.1 We rely heavily on technology, and the way in which technology can shape and influence how we deliver services and work as an organisation in the future. We continue to review our cyber resilience and information governance arrangements to ensure that they are fit for purpose, robust, and continue to support new and innovative ways of working, such as the ethical and responsible use of Artificial Intelligence (AI). The AI Governance Group has been established to provide the necessary oversight and will continue to develop its role in governing the use of emergent technologies. 9.2 The Council’s financial management, governance and reporting arrangements have been assessed against the financial management standards set out within the CIPFA Financial Management Code (2019). The Code is based upon the standards set out elsewhere within the Annual Governance Statement and the Council is considered to be compliant with the Code. Improvement actions arising from the review include consideration of how the Council can build upon existing practice in its budget consultation with stakeholders and strengthening existing reporting arrangements. 9.3 In addition to these areas, there are some specific areas which will be held under review pending the outcome of current transformation and change activity or implemented through operational service redesign and business improvement activity: • Leadership culture and capacity • Capacity and resources to lead, develop and deliver ongoing and future programme of transformation and change • Ownership of and management of information assets • Strategic procurement and commissioning • Workforce planning and organisational development • Use of the Financial Strategy to address financial pressures • Our approach to community engagement and empowerment • Review of the delivery of services through Arms-Length External organisations through the Strategic Alliance 26 | Perth and Kinross Annual Accounts 2025/26 Page 45 of 314
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27 | Perth and Kinross Council Annual Accounts 2025/26 Conclusion and Opinion The Council is legally required to review the effectiveness of its governance arrangements and to publish an Annual Governance Statement, with its Annual Accounts. The governance framework and, in particular, the system of internal control, has been assessed in accordance with guidance from the Chartered Institute of Public Finance and Accountancy (CIPFA) and has been considered in light of the addendum published for 2025/26. The review of the effectiveness of the Council’s system of internal control and overall governance framework has been informed by different sources assessing risk and providing assurance: - • Executive Leadership Team/ Strategic Leadership Team • Chief Finance Officer • Strategic Lead for Legal and Governance Services /Monitoring Officer • Chief Internal Auditor/ Internal Audit • Data Protection Officer • Policy and Governance Group • External Audit • External agencies and inspectorates. The Council’s Governance Framework is considered robust and effective. Certificates of assurance have been received from Strategic Leads, each of whom is accountable for maintaining the system of internal control within their respective service area. Through this process, Strategic Leads have reviewed the governance arrangements and key internal controls operating within their services and have confirmed that these remain effective. The Chief Finance Officer has provided assurance that the financial arrangements in place conform to the relevant CIPFA requirements and that our expenditure is lawful. Similarly, the Monitoring Officer has provided assurance that our governance arrangements ensure compliance with relevant laws, regulations, internal policies, and procedures. The Chief Internal Auditor has provided assurance for the year 2025/26 and an Internal Audit plan will be developed for 2026/27 that will focus on areas which have been identified as corporate or service specific risks in relation to core business and the delivery of the Council’s agreed strategic priorities, in line with the requirements of the Global Internal Audit Standards in the UK Public Sector. We are satisfied that our governance arrangements and, in particular, our system of internal control, continue to be regarded as fit for purpose. Any identified improvement actions will continue to be delivered and monitored through service improvement plans, audit plans and change programmes to avoid duplication of effort. Our governance framework will continue to be reviewed and adapted where necessary to ensure that it remains robust and effective. Signed: Signed: Thomas Glen Councillor Eric Drysdale Chief Executive Leader of the Council Date Date 27 | Perth and Kinross Annual Accounts 2025/26 Page 46 of 314
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28 | Perth and Kinross Council Annual Accounts 2025/26 Independent auditor’s report to the members of Perth and Kinross Council and the Accounts Commission (to follow) 28 | Perth and Kinross Annual Accounts 2025/26 Page 47 of 314
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29 | Perth and Kinross Council Annual Accounts 2025/26 Independent auditor’s report to the members of Perth and Kinross Council and the Accounts Commission (to follow) 29 | Perth and Kinross Annual Accounts 2025/26 Page 48 of 314
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30 | Perth and Kinross Council Annual Accounts 2025/26 Independent auditor’s report to the members of Perth and Kinross Council and the Accounts Commission (to follow) 30 | Perth and Kinross Annual Accounts 2025/26 Page 49 of 314
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General Housing Capital Insurance Capital Capital Total Unusable Total Fund Revenue Fund Fund Receipts Grants Usable Reserves Authority Balance Account Reserve Unapplied Reserves (Note 32) Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2024 (83,794) (2,260) (31,026) (1,709) (2,102) (87) (120,978) (718,738) (839,716) Movement in reserves during 2024/25 Total Comprehensive Income and Expenditure 28,909 (2,749) 0 0 0 0 26,160 83,859 110,019 Adjustments to Usable Reserves permitted by accounting standards (6,187) 776 0 0 0 0 (5,411) 5,411 0 Adjustments from income and expenditure charged under the accounting basis to the funding basis (Note 5) (9,178) 1,975 0 0 770 (1,060) (7,493) 7,493 0 Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (2,914) 0 0 0 0 0 (2,914) 2,914 0 Decrease or (Increase) in 2024/25 10,630 2 0 0 770 (1,060) 10,342 99,677 110,019 Transfers to/(from) Other Statutory Reserves 4,880 0 (5,966) 1,086 0 0 0 0 0 Balance at 31 March 2025 carried forward (68,284) (2,258) (36,992) (623) (1,332) (1,147) (110,636) (619,061) (729,697) Movement in reserves during 2025/26 Total Comprehensive Income and Expenditure 41,231 1,341 0 0 0 0 42,572 (43,046) (474) Adjustments to Usable Reserves permitted by accounting standards (6,697) 2,312 0 0 0 0 (4,385) 4,385 0 Adjustments from income and expenditure charged under the accounting basis to the funding basis (Note 5) (28,802) (4,148) 0 0 (174) (215) (33,339) 33,339 0 Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (2,746) 0 0 0 0 (2,746) 2,746 0 (Increase) or Decrease in 2025/26 2,986 (495) 0 0 (174) (215) 2,102 (2,576) (474) Transfers to/(from) Other Statutory Reserves 4,365 (2,477) (1,888) 0 0 0 0 Balance at 31 March 2026 carried forward (60,933) (2,753) (39,469) (2,511) (1,506) (1,362) (108,534) (621,637) (730,171) MOVEMENT IN RESERVES STATEMENT 31 | Perth and Kinross Annual Accounts 2025/26 Page 50 of 314
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PKC - GENERAL# 2024/25 Gross Income Net Notes Gross Income Net Expenditure Expenditure Expenditure Expenditure £'000 £'000 £'000 £'000 £'000 £'000 COUNCIL SERVICES 173,520 (5,546) 167,974 Education and Learning 183,268 (5,914) 177,354 218,171 (120,943) 97,228 Health and Social Care 245,219 (134,949) 110,270 29,903 (5,896) 24,007 Children, Families and Justice 30,612 (5,946) 24,666 37,967 (11,270) 26,697 Economy, Development and Planning 34,543 (12,062) 22,481 55,798 (5,924) 49,874 Environment and Infrastructure 59,643 (12,429) 47,214 31,299 (12,273) 19,026 Housing and Communities 32,571 (13,884) 18,687 85,064 (6,098) 78,966 Property Services 95,206 (9,374) 85,832 5,637 (1,078) 4,559 Legal and Governance 5,335 (1,330) 4,005 36,545 (19,359) 17,186 Customer and Digital Services 32,959 (15,397) 17,562 6,304 (799) 5,505 Strategic Planning, People and Performance 5,524 (303) 5,221 283 0 283 Projects and Programmes 325 0 325 10,980 (2,691) 8,289 Finance and Business Support 11,189 (2,656) 8,533 1,327 0 1,327 Directorate Core Costs 578 (2) 576 38,239 (35,437) 2,802 Housing Revenue Account 42,747 (38,522) 4,225 1,434 0 1,434 Valuation Joint Board 1,393 0 1,393 732,471 (227,314) 505,157 COST OF SERVICES 781,112 (252,768) 528,344 138 (244) (106) Other Operating Income and Expenditure 8 1,728 (769) 959 25,079 (5,649) 19,430 Financing and Investment Income and Expenditure 9 28,506 (4,465) 24,041 0 (498,321) (498,321) Taxation and Non-Specific Grant Income 10 0 (510,772) (510,772) 757,688 (731,528) 26,160 Deficit on Provision of Services 811,346 (768,774) 42,572 83,518 (Surplus)/Deficit on revaluation of non current assets (46,752) 341 Remeasurement of the net defined benefit liability 3,706 83,859 Other Comprehensive Income and Expenditure (43,046) 110,019 Total Comprehensive Income and Expenditure (474) 2025/26 COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT 32 | Perth and Kinross Annual Accounts 2025/26 Page 51 of 314
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PKC - GENERAL# Notes £'000 £'000 1,580,002 Property, Plant and Equipment 21 1,681,371 52,099 Heritage Assets 22 52,099 16,184 Investment Property 23 17,029 2,189 Intangible Assets 24 1,216 530 Long Term Debtors 26 357 1,651,004 Long Term Assets 1,752,072 0 Short Term Investments 39 5,014 875 Assets Held for Sale 25 565 620 Inventories 27 593 50,007 Short Term Debtors 28 47,971 24,645 Cash and Cash Equivalents 44 17,559 76,147 Current Assets 71,702 (40,581) Short Term Borrowing 39 (133,925) (95,500) Short Term Creditors 29 (84,063) (2,814) Provisions 30 (1,391) (138,895) Current Liabilities (219,379) (1,951) Provisions 30 (3,664) (683,808) Long Term Borrowing 39 (699,871) (172,800) Other Long Term Liabilities 18, 20 and 36 (170,689) (858,559) Long Term Liabilities (874,224) 729,697 NET ASSETS 730,171 110,636 Usable Reserves 108,534 619,061 Unusable Reserves 32 621,637 729,697 TOTAL RESERVES 730,171 The Unaudited Annual Accounts were issued on 29 June 2026. The accompanying notes form an integral part of these financial statements. Scott Walker CPFA Chief Finance Officer Date: 31 March 202631 March 2025 BALANCE SHEET 33 | Perth and Kinross Annual Accounts 2025/26 Page 52 of 314
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PKC - GENERAL# 2024/25 Notes 2025/26 £'000 £'000 (26,160) Deficit on the provision of services (42,572) 73,936 Adjustments to net deficit on the provision of services for non cash movements 80,758 (43,242) Adjustments for items included in the net deficit on the provision of services that are investing and financing activities (24,813) 4,534 Net cash flows from Operating Activities 13,373 (91,070) Investing Activities 42 (121,928) 79,998 Financing Activities 43 101,469 (6,538) Net decrease in cash and cash equivalents (7,086) 31,183 Cash and cash equivalents at the beginning of the reporting period 24,645 24,645 Cash and cash equivalents at the end of the reporting period 44 17,559 CASH FLOW STATEMENT 34 | Perth and Kinross Annual Accounts 2025/26 Page 53 of 314
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35 | Perth and Kinross Council Annual Accounts 2025/26 Statement of Responsibilities for the Annual Accounts The Council’s Responsibilities The Council is required: - to make arrangements for the proper administration of its financial affairs and to ensure that one of its officers has the responsibility for those affairs under Section 95 of the Local Government (Scotland) Act 1973. In this Council that officer is the Chief Finance Officer. - to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets. - ensure the Annual Accounts are prepared in accordance with legislation (The Local Authority Accounts (Scotland) Regulations 2014), and so far as is compatible with that legislation, in accordance with proper accounting practices (section 12 of the Local Government in Scotland Act 2003). - approve the Annual Accounts for signature. I confirm that these Annual Accounts were approved for signature by the Audit and Risk Committee at its meeting in November 2026. Signed on behalf of Perth and Kinross Council Councillor Eric Drysdale Leader of the Council Date: The Responsibilities of the Chief Finance Officer The Chief Finance Officer is responsible for the preparation of the Council’s Annual Accounts in accordance with proper practices as required by legislation and as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Accounting Code). In preparing these Annual Accounts, the Chief Finance Officer has: • selected suitable accounting policies and applied them consistently; • made judgements and estimates that were reasonable and prudent; • complied with legislation; and • complied with the Local Authority Accounting Code (in so far as it is compatible with legislation). The Chief Finance Officer has also: - kept proper accounting records which were up to date; - taken reasonable steps for the prevention and detection of fraud and other irregularities; - used the going concern basis of accounting on the assumption that the Council will continue in operational existence for the twelve months following the approval of the Annual Accounts. I certify that the Annual Accounts give a true and fair view of the financial position of the Council and its group at the reporting date and the transactions of the Council and its Group for the year ended 31 March 2026. Scott Walker CPFA Chief Finance Officer Date: 35 | Perth and Kinross Annual Accounts 2025/26 Page 54 of 314
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36 | Perth and Kinross Council Annual Accounts 2025/26 Notes to the Financial Statements 1. Accounting Policies General The Annual Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) and adapted to the Code of Practice as required by the Local Authority Accounts (Scotland) Regulations 2014 and section 12 of the Local Government in Scotland Act 2003. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2025/26 and supported by International Financial Reporting Standards. The Annual Accounts are intended to present a true and fair view of the financial position and transactions of the authority and have been prepared in accordance with the fundamental accounting principles of relevance, reliability, comparability, understandability and materiality. The accounting convention adopted in the Annual Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments. Accruals of Income and Expenditure Activity is accounted for in the year that it takes place, or when the Council is entitled to the income, not simply when cash payments are made or received. In particular: • Revenue from contracts with service recipients, whether for services or the provision of goods, is recognised when (or as) the goods and services are transferred to the service recipient in accordance with the performance obligations in the contract. • Supplies are recorded as expenditure when they are consumed – where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet. • Expenses in relation to services received (including those rendered by the Council’s officers) are recorded as expenditure when the services are received, rather than when payments are made. • Interest payable on borrowings and receivable on investments is accounted for on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract. • Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where there is evidence that debts are unlikely to be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected. • Where the Council is acting as an agent for another party (e.g. in the collection of Non-Domestic Rates and Water and Wastewater), income and expenditure are recognised only to the extent that commission is receivable by the Council for the agency services rendered or the Council incurs expenses directly on its own behalf in rendering the services. Cash and Cash Equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Council’s cash management. Changes in Accounting Policies and Estimates and Errors Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events or conditions on the Council’s financial position or financial performance. Where a change is made, it is applied retrospectively by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Changes in accounting estimates are accounted for prospectively, i.e., in the current and future years affected by the change. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period. 36 | Perth and Kinross Annual Accounts 2025/26 Page 55 of 314
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37 | Perth and Kinross Council Annual Accounts 2025/26 Charges to Revenue for Non-Current Assets Services, support services and trading accounts are debited with the following amounts to record the cost of holding fixed assets during the year: • depreciation attributable to the assets used by the relevant service; • revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off; • amortisation of intangible fixed assets attributable to the service. The Council is not required to raise council tax to cover depreciation, revaluation and impairment losses or amortisations. However, it is required to make an annual provision from revenue to contribute towards the reduction in its overall borrowing requirement equal to an amount calculated on a prudent basis determined by the Council in accordance with the Statutory Repayment of Loans Fund Advances, depreciation, revaluation and impairment losses and amortisations are therefore replaced by revenue provision in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account (CAA) in the Movement in Reserves Statement (MiRS) for the difference between the two. Contingent Assets and Liabilities A contingent asset arises where an event has taken place that gives the Council a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. A contingent liability arises where an event has taken place that gives the Council a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required, or the amount of the obligation cannot be measured reliably. Contingent Assets and Liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Employee Benefits Benefits Payable During Employment Short-term employee benefits (those that fall due wholly within 12 months of the year-end), such as wages and salaries, paid annual leave and paid sick leave, bonuses and non-monetary benefits (e.g. cars) for current employees, are recognised as an expense in the year in which employees render service to the Council. An accrual is made against services in the Surplus or Deficit on the Provision of Services for the cost of holiday entitlements and other forms of leave earned by employees but not taken before the year-end and which employees can carry forward into the next financial year. Any accrual made is required under statute to be reversed out of the General Fund Balance by a credit to the Employee Statutory Adjustment Account in the MiRS. Termination Benefits Termination benefits are amounts payable as a result of a decision by the Council to terminate an officer’s employment before the normal retirement date, or an officer’s decision to accept voluntary redundancy, and are charged in the Comprehensive Income and Expenditure Statement (CIES) when the Council is demonstrably committed to terminate the employment of an officer. Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund Balance to be charged with the amount payable by the Council to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the MiRS, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for termination benefits related to pensions enhancements and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. Post-Employment Benefits Employees of the Council are members of two separate pension schemes: The Scottish Teachers’ Superannuation Scheme and the Local Government Pension Scheme. The Scottish Teachers’ Superannuation Scheme is a statutory unfunded defined final benefit salary scheme administered nationally by the Scottish Public Pensions Agency on behalf of the Scottish Government. There are no investment assets built up under the scheme to meet pension liabilities. The contributions paid into the scheme by the Council and teaching employees are determined nationally and member’s pension benefits are prescribed under the Teachers’ Superannuation (Scotland) Regulations 2005 with the Scottish Government being responsible for meeting the scheme’s liabilities. Other employees, subject to certain qualifying criteria, are eligible to join the Local Government Pension Scheme (LGPS). The LGPS is a statutory funded defined final benefit salary scheme operated through local pension funds. Perth and Kinross Council and its employees pay contributions into the Tayside Pension Fund administered by Dundee City Council calculated at a level to balance the pension liabilities with investment assets. The contributions paid into the scheme by employees and member pension benefits are prescribed, for the period to which the accounts relate, by the Local Government Pensions Scheme (Scotland) Regulations 1998 as amended. Perth and Kinross Council’s contributions, as employer, into the Tayside Pension Fund are subject to the advice of the Fund actuary. 37 | Perth and Kinross Annual Accounts 2025/26 Page 56 of 314
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38 | Perth and Kinross Council Annual Accounts 2025/26 Both schemes provide defined benefits to members (retirement lump sums and pensions), earned as employees worked for the Council. However, the arrangements for the teachers’ scheme mean that liabilities for these benefits cannot be attributed specifically to the Council. The scheme is therefore accounted for as if it were a defined contributions scheme – no liability for future payments of benefits is recognised in the Balance Sheet and the Education Service line in the CIES is charged with the employer’s contributions payable to Teachers’ Pensions in the year. The Local Government Scheme is accounted for as a defined benefits scheme. The liabilities of the Tayside Pension Fund attributable to the Council are included in the Balance Sheet on an actuarial basis using the projected unit method – i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc., and projected earnings for current employees. Liabilities are discounted to their value at current prices, using a discount rate which is based on the indicative rate of return on the high quality corporate bond index (i Boxx AA). The assets of the Tayside Pension Fund attributable to the Council are included in the Balance Sheet at their fair value: • quoted securities – current bid price; • unquoted securities – professional estimate; • unitised securities – current bid price; • property – market value. The change in the net pension’s asset / liability is analysed into the following components: • Service cost comprising: o Current service cost – the increase in liabilities as result of years of service earned this year – allocated in the CIES to the services for which the employees worked; o past service cost – the increase in liabilities as a result of a scheme amendment or curtailment whose effect relates to years of service earned in earlier years – debited to the Surplus/Deficit on the Provision of Services in the CIES as part of Non Distributed Costs; o net interest on the net defined liability / (asset), i.e. net interest expense for the authority – the change during the period in the net defined benefit liability / (asset) that arises from the passage of time charged to the Financing and Investment Income and Expenditure line of the CIES – this is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability / (asset) at the end of the period – taking into account any changes in the net defined benefit liability / (asset) during the period as a result of contribution and benefit payments. • Remeasurements comprising: o the return on plan assets - excluding amounts included in net interest on the net defined benefit liability / (asset) – charged to the Pensions Reserve as Other Comprehensive Income and Expenditure; o actuarial gains and losses – changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – charged to the Pensions Reserve as Other Comprehensive Income and Expenditure. • Contributions paid to the Tayside Pension Fund – cash paid as employer’s contributions to the pension fund in settlement of liabilities; not accounted for as an expense. In relation to retirement benefits, statutory provisions require the General Fund Balance to be charged with the amount payable by the Council to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the MiRS, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. The negative balance that arises on the Pensions Reserve thereby measures the beneficial impact on the General Fund of being required to account for retirement benefits on the basis of cash flows rather than as benefits are earned by employees. Discretionary Benefits The Council also has restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff (including teachers) are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the LGPS. 38 | Perth and Kinross Annual Accounts 2025/26 Page 57 of 314
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39 | Perth and Kinross Council Annual Accounts 2025/26 Events after the Reporting Period Events after the reporting period are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Annual Accounts are authorised for issue. Two types of events can be identified: • those that provide evidence of conditions that existed at the end of the reporting period – the Annual Accounts are adjusted to reflect such events; • those that are indicative of conditions that arose after the reporting period – the Annual Accounts are not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect. Events taking place after the date of authorisation for issue are not reflected in the Annual Accounts. Fair Value Measurement The Council measures some of its non-financial assets such as surplus assets and investment properties at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either: a) in the principal market for the asset or liability, or b) in the absence of a principal market, in the most advantageous market for the asset or liability. The Council measures the fair value of an asset or liability using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. When measuring the fair value of a non-financial asset, the Council takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Council uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Inputs to the valuation techniques in respect of assets and liabilities for which fair value is measured or disclosed in the Council’s financial statements are categorised within the fair value hierarchy, as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the authority can access at the measurement date Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: unobservable inputs for the asset or liability. Financial Liabilities Financial liabilities are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value and carried at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the CIES for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount at which it was originally recognised. For most of the borrowings that the Council has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the CIES is the amount payable for the year according to the loan agreement. Gains and losses on the repurchase or early settlement of borrowing are credited or debited to the Financing and Investment Income and Expenditure line in the CIES in the year of repurchase/settlement. However, where repurchase has taken place as part of a restructuring of the loan portfolio that involves the modification or exchange of existing instruments, the premium or discount respectively is deducted from or added to the amortised cost of the new or modified loan and the write-down to the CIES is spread over the life of the loan by an adjustment to the effective interest rate. Where premiums and discounts have been charged to the CIES, regulations allow the impact on the General Fund Balance to be spread over future years. The Council has a policy of spreading the gain/loss over the term of the replacement loan. The reconciliation of amounts charged to the CIES to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the MiRS. 39 | Perth and Kinross Annual Accounts 2025/26 Page 58 of 314
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40 | Perth and Kinross Council Annual Accounts 2025/26 Financial Assets Financial assets are classified based upon a classification and measurement approach that reflects the business model for holding the financial assets and their cashflow characteristics. There are three main classes of financial assets measured at:- • amortised cost • fair value through profit or loss (FVPL), and • fair value through other comprehensive income (FVOCI) The Council’s business model is to hold investments to collect contractual cash flows. Financial assets are therefore classified as amortised cost, except for those whose contractual payments are not solely payment of principal and interest (i.e. where cash flows do not take the form of a basic debt instrument). Loans and receivables are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value. They are subsequently measured at their amortised cost. Annual credits to the Financing and Investment Income and Expenditure line in the CIES for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For deposits that the Council has made, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the CIES is the amount receivable for the year in the agreement. However, the Council has made loans to various organisations at less than market rates (soft loans). When a soft loan is made, a loss is recorded in the CIES (debited to the appropriate service) for the present value of the interest that will be foregone over the life of the instrument, resulting in a lower amortised cost than the outstanding principal. In subsequent years interest is credited to the Financing and Investment Income and Expenditure line in the CIES at a higher effective rate of interest than the rate receivable from the voluntary organisations, with the difference serving to increase the amortised cost of the loan in the Balance Sheet. Where assets are identified as impaired because of a likelihood arising from a past event that payments due under the contract will not be made, the asset is written down and a charge made to the Financing and Investment Income and Expenditure line in the CIES. The impairment loss is measured as the difference between the carrying amount and the present value of the revised future cash flows discounted at the asset’s original effective interest rate. Any gains and losses that arise on the de-recognition of an asset are credited/debited to the Financing and Investment Income and Expenditure line in the year they incur in the CIES. Going Concern The Chief Finance Officer is responsible for making an annual assessment of whether it is appropriate to prepare the accounts on a going concern basis. In accordance with the Code of Practice on Local Authority Accounting in the United Kingdom, an authority’s financial statements shall be prepared on a going concern basis; that is, the accounts should be prepared on the assumption that the functions of the authority will continue in operational existence for at least twelve months from the date of approval of the financial statements and it can only be discontinued under statutory prescription. The Council has significant net assets, investments and cash and a track record of preparing a balanced budget which incorporates significant savings that are subsequently achieved. The Council has put in place robust measures to ensure the continuing strong financial management of its activities which demonstrates its ability to continue as a going concern. Taken together, the Chief Finance Officer has determined that it remains appropriate to prepare the financial statements on a going concern basis. Government Grants and Contributions Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Council when there is reasonable assurance that: • the Council will comply with the conditions attached to the payments; and • the grants or contributions will be received. Amounts recognised as due to the Council are not credited to the CIES until conditions attaching to the grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset acquired using the grant or contribution are required to be consumed by the recipient as specified or future economic benefits or service potential must be returned to the transferor. Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants/contributions) or Taxation and Non-Specific Grant Income (non-ring-fenced revenue grants and all capital grants) in the CIES. Where capital grants are credited to the CIES, they are reversed out of the General Fund Balance in the MiRS. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Account. Where it has been applied, it is posted to the CAA. Amounts in the Capital Grants Unapplied Account are transferred to the CAA once they have been applied to fund capital expenditure. 40 | Perth and Kinross Annual Accounts 2025/26 Page 59 of 314
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41 | Perth and Kinross Council Annual Accounts 2025/26 Heritage Assets Heritage Assets are those assets that are intended to be preserved in trust for future generations because of their cultural, environmental or historical associations. Heritage Assets include museum and gallery collections and works of art. These assets are held by the Council in pursuit of its overall objectives in relation to the maintenance of the heritage. Since 1 April 2016 Culture Perth and Kinross has responsibility for the delivery and development of museum and library services in Perth and Kinross. The Trust manages the museum and gallery collections on behalf of the Council; however, the Council will continue to be custodian of the collections. Tangible Heritage Assets The Council’s Heritage Assets are held in the Perth Museum, Perth Art Gallery and Alyth Museum. The collections include Art, History and Natural History and are held in support of Council objectives i.e. to increase knowledge, understanding and appreciation of the local area and its history. Heritage Assets are recognised and measured (including the treatment of revaluation gains and losses) in accordance with the Council’s accounting policies on property, plant and equipment. However, some of the measurement rules are relaxed in relation to heritage assets as detailed below. The Council has embarked upon a revaluation programme for all collection items deemed to have significant value, these being mainly items within Fine and Applied Art collections. In recognition of the key qualitative characteristics of the financial statements, i.e. understandability, relevance, reliability and comparability, the Council has chosen to apply a £10,000 de- minimus level for which items will be recognised within the Balance Sheet. The exclusion of individual items having a value of less than £10,000 does not impact upon the characteristics of the financial statements and a summary of the main collections and applicable accounting treatment is as follows. Art Collection The Fine Art collection includes paintings and sketches in various mediums, and although international in scope, its greatest strength is in the holding of Scottish pictures. The collection seeks to retain a balance between the historical and the contemporary whilst continuing to develop the holdings of works of specifically local interest. The Applied Art collection has been acquired since 1785 through purchase, gift or bequest. It covers a wide variety of objects and materials, within which the collections of Perth silver and Perthshire glass are unsurpassed in terms of national importance. Subject to the de-minimus noted above, items donated or acquired are valued by the curators at point of acquisition; in addition, there is a rolling programme of valuation to ensure all significant items in the Art collection are valued. All valuations are undertaken by the curators having relevant knowledge and experience and with reference to appropriate commercial markets. Art collection items are held in the Council balance sheet at market value and are tested annually for impairment, e.g. where an item has suffered physical deterioration or breakage or where doubts arise as to its authenticity. Any impairment is recognised and measured in accordance with the Council’s general policies on impairment. As the assets within the art collection are deemed to have indeterminate lives and a high residual value, the Council does not consider it appropriate to charge depreciation. History Collection The History collection includes social history, archaeology, arms and armour, costume, archives, coins, medals and stamps, photography and world cultures collections. These items cannot be readily and/or reliably valued due to their diverse nature. The cost of valuation would be disproportionate in terms of any benefit derived to the user of the financial statements and the History Collection is consequently excluded from the Council Balance Sheet. Natural History Collection The Natural History collection includes zoology, botany and geology collections. No market exists for these items and collections and there is no comparable data to form the basis of valuation. The cost of obtaining valuations would be disproportionate in terms of any benefit derived to the user of the financial statements and Natural History Collections are consequently excluded from the Council Balance Sheet. Heritage Assets – General The Council may dispose of heritage assets which have a doubtful provenance or are unsuitable for public display. The proceeds of such items are accounted for in accordance with the Council’s general provisions relating to the disposal of property, plant and equipment. Disposal proceeds are disclosed separately in the notes to the financial statements and are accounted for in accordance with statutory accounting requirements relating to capital expenditure and capital receipts. 41 | Perth and Kinross Annual Accounts 2025/26 Page 60 of 314
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42 | Perth and Kinross Council Annual Accounts 2025/26 The promotion of other cultural events and programmes during the year makes it difficult to reliably estimate the percentage of the Art Collection on display for public viewing. All items not on display are held in secure storage and access is permitted to scholars and others for research purposes. The Culture Perth and Kinross Collections Management Framework provides guidance on the collection, disposal or lending of heritage assets. Intangible Assets Expenditure on non-monetary assets that do not have physical substance but are controlled by the Council as a result of past events (e.g. software licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Council. Internally generated assets are capitalised where it is demonstrable that the project is technically feasible and is intended to be completed (with adequate resources being available) and the Council will be able to generate future economic benefits or deliver service potential by being able to sell or use the asset. Expenditure is capitalised where it can be measured reliably as attributable to the asset and restricted to that incurred during the development phase (research expenditure is not capitalised). Expenditure on the development of websites is not capitalised if the website is solely or primarily intended to promote or advertise the Council’s goods or services. Intangible assets are measured initially at cost. Amounts are only revalued where the fair value of the assets held by the Council can be determined by reference to an active market. The depreciable amount of an intangible asset is amortised over its useful life to the relevant service line(s) in the CIES. An asset is tested for impairment whenever there is an indication that the asset might be impaired – any losses recognised are posted to the relevant service line(s) in the CIES. Any gain or loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the CIES. Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation, impairment losses and disposal gains and losses are not permitted to have an impact on the General Fund Balance. To comply with these restrictions, the gain or loss on the derecognition of an intangible fixed asset shall be reversed out of the General Fund or Housing Revenue Account. The General Fund or Housing Revenue Account shall be debited (in the case of the gain) or credited (in the case of a loss) with an amount equal to the gain or loss on derecognition of the intangible asset. The gain or loss that is reversed out of the General Fund or Housing Revenue Account excludes any costs of disposal that either cannot be capitalised under regulation or statutory guidance or that the authority has chosen not to capitalise. The double entries are a credit to the capital receipts reserve or a capital grants and receipts unapplied account of an amount equal to the disposal proceeds and a debit to the capital adjustment account equal to the carrying amount of the intangible asset. Interests in Companies and Other Entities The Council has material interests in companies and other entities that have the nature of subsidiaries, associates and jointly controlled entities and require it to prepare group accounts. Inventories Inventories are included in the Balance Sheet at the lower of cost and net realisable value. Work in progress is valued at the cost of direct materials and labour plus attributable overheads based on the normal level of activity less any attributable losses. Investment Properties Investment properties are those that are used solely to earn rentals and/or for capital appreciation. The definition is not met if the property is used in any way to facilitate the delivery of services or production of goods or is held for sale. Investment properties are measured initially at cost and subsequently at fair value, being the price that would be received to sell such an asset in an orderly transaction between market participants at the measurement date. Properties are not depreciated but are revalued annually according to market conditions at the year-end. Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the CIES. The same treatment is applied to gains and losses on disposal. Rentals received in relation to investment properties are credited to the Financing and Investment Income line and result in a gain for the General Fund Balance. However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance. To comply with these restrictions, the gain or loss on derecognition of an investment property shall be reversed out of the General Fund. The General Fund shall be debited (in the case of a gain) or credited (in the case of a loss) with an amount equal to the gain or loss on derecognition of the investment property. The double entries are a credit to the capital receipts reserve or a statutory capital fund or capital grants and receipts unapplied account of an amount equal to the disposal proceeds and a debit to the CAA equal to the carrying amount of the investment property. 42 | Perth and Kinross Annual Accounts 2025/26 Page 61 of 314
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43 | Perth and Kinross Council Annual Accounts 2025/26 Leases Leases that are exempt from IFRS 16 (Right of Use Assets – see policy on page 46) are classified as operating leases. The Council as Lessee Operating Leases - Rentals paid under operating leases are charged to the CIES as an expense of the services benefitting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a rent-free period at the commencement of the lease). The Council as Lessor Operating Leases - Where the Council grants an operating lease over a property or an item of plant or equipment, the asset is retained in the Balance Sheet. Rental income is credited to the Other Operating Expenditure line in the CIES. Credits are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a premium paid at the commencement of the lease). Initial direct costs incurred in negotiating and arranging the lease are added to the carrying amount of the relevant asset and charged as an expense over the lease term on the same basis as rental income. Property, Plant and Equipment Assets that have physical substance and are held for use in the production or supply of goods or services, for rental to others or for administrative purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment. Recognition Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accrual’s basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably. Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential (e.g. repairs and maintenance) is charged as an expense when it is incurred. Measurement Assets are initially measured at cost, comprising: • the purchase price; • any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management; • the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located where there is a legal or constructive obligation to do so. The Council does not capitalise borrowing costs incurred whilst assets are under construction. The cost of assets acquired other than by purchase is deemed to be its fair value, unless the acquisition will not increase the cash flows of the Council. In the latter case, the cost of the acquisition is the carrying amount of the asset. Donated assets are measured initially at fair value. The difference between fair value and any consideration paid is credited to the Taxation and Non-Specific Grant Income line of the Comprehensive Income and Expenditure Statement, unless the donation has been made conditionally. Until conditions are satisfied, the gain is held in the Donated Assets Account. Where gains are credited to the CIES, they are reversed out of the General Fund Balance to the CAA in the MiRS. Assets are then carried in the Balance Sheet using the following measurement bases: • infrastructure and community assets – depreciated historical cost; • assets under construction – historical cost; • dwellings – current value, determined using the basis of existing use value for social housing (EUV-SH). The Council values these assets using the Beacon approach (Adjusted Vacant Possession); • other land and buildings – current value based on existing use value (EUV) for operational assets where there is an active market, or if there is no market based evidence of current value because of the specialist nature of the asset and/or the asset is rarely sold, depreciated replacement cost (DRC) using the instant build approach; • surplus assets – the current value measurement base is fair value, estimated at highest and best use from a market participant’s perspective; • all other assets – current value, determined by the amount that would be paid for the asset in its existing use (existing use value – EUV). Assets included in the Balance Sheet at current value are indexed annually to ensure that their carrying amount is adjusted to reflect market movements between the previous revaluation and the year-end, and are subject to formal revaluation as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to 43 | Perth and Kinross Annual Accounts 2025/26 Page 62 of 314
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44 | Perth and Kinross Council Annual Accounts 2025/26 recognise unrealised gains. Exceptionally, gains might be credited to the surplus or deficit on the provision of services where they arise from the reversal of a loss previously charged to a service. Where decreases in value are identified, the revaluation loss is accounted for as follows: • where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains); • where there is no balance in the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account. Impairment Assets are assessed at each year-end as to whether there is any indication that an asset may be impaired. Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall. Where impairment losses are identified, they are accounted for: • where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains); • where there is no balance in the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the CIES. Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service line(s) in the CIES, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised. Disposals and Assets Held for Sale When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing use, it is reclassified as an Asset Held for Sale. The asset is revalued immediately before reclassification and then carried at the lower of this amount and fair value less costs to sell. Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any previously recognised losses. Depreciation is not charged on Assets Held for Sale. Assets that are to be abandoned or scrapped are not reclassified as Assets Held for Sale. When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or Assets Held for Sale) is written off to the Other Operating Expenditure line in the CIES as part of the gain or loss on disposal. Receipts from disposals (if any) are credited to the same line in the CIES also as part of the gain or loss on disposal (i.e. netted off against the carrying value of the asset at the time of disposal). Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the CAA. Amounts received for a disposal are categorised as capital receipts. The balance of receipts is required to be credited to the Capital Receipts Reserve and can then only be used for new capital investment or set aside to reduce the Council’s underlying need to borrow (the capital financing requirement). Receipts are appropriated to the Reserve from the General Fund Balance in the MiRS. The written-off value of disposals is not a charge against council tax, as the cost of fixed assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the CAA from the General Fund Balance in the MiRS. 44 | Perth and Kinross Annual Accounts 2025/26 Page 63 of 314
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45 | Perth and Kinross Council Annual Accounts 2025/26 Depreciation Depreciation is provided for on all Property, Plant and Equipment assets by the systematic allocation of their depreciable amounts over their useful lives. An exception is made for assets without a determinable finite useful life (i.e. freehold land and certain Community Assets) and assets that are not yet available for use (i.e. assets under construction). Leasehold Properties over period of lease Roads and Bridges 15-30 years Other Infrastructure Assets 10-30 years Vehicles, Plant and Equipment 3-15 years Council Buildings up to 50 years Council Dwellings 10-30 years Intangible Fixed Assets 3-5 years Where an item of Property, Plant and Equipment asset has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately. Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the General Fund. Private Finance Initiative (PFI) and Similar Contracts PFI and similar contracts are agreements to receive services, where the responsibility for making available the property, plant and equipment needed to provide the services passes to the PFI contractor. As the Council is deemed to control the services that are provided under its PFI schemes the Council carries the assets used under the contracts on its Balance Sheet as part of Property, Plant and Equipment. The original recognition of these assets at fair value (based on the cost to purchase the property, plant and equipment) was balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment. Non-current assets recognised on the Balance Sheet are revalued and depreciated in the same way as property, plant and equipment owned by the Council. The amounts payable to the PFI operators each year are analysed into five elements: • fair value of the services received during the year – debited to the relevant service in the CIES; • finance cost – an interest charge on the outstanding Balance Sheet liability, debited to the Financing and Investment Income and Expenditure line in the CIES; • contingent rent – increases in the amount to be paid for the property arising during the contract, debited to the Financing and Investment Income and Expenditure line in the CIES; • payment towards liability – applied to write down the Balance Sheet liability towards the PFI operator (the profile of write-downs is calculated using the same principles as for a finance lease); • lifecycle replacement costs – debited to the relevant service in the CIES. Provisions The Council is required to make provisions where an event has taken place that gives the Council a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation. Provision has been made for bad and doubtful debts in respect of Council Tax, Housing Rents and other items of income, where appropriate. In all cases the level of provision is based on experience and an assessment of the prospects of recovering the related debt. Provisions are charged as an expense to the appropriate service line in the CIES in the year that the council becomes aware of the obligation and measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet. Estimated settlements are reviewed at the end of each financial year – where it becomes less than probable that a transfer of economic benefits will now be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service. Where some or all of the payment required to settle a provision is expected to be recovered from another party (e.g. from an insurance claim), this is only recognised as income for the relevant service if it is virtually certain that reimbursement will be received if the council settles the obligation. Reserves Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service in that year against the Surplus/Deficit on the Provision of Services in the CIES. The reserve is then appropriated back into the General Fund Balance in the MiRS so that there is no net charge against council tax for the expenditure. Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments and retirement benefits and that do not represent usable resources for the Council – these reserves are explained in the relevant notes. 45 | Perth and Kinross Annual Accounts 2025/26 Page 64 of 314
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46 | Perth and Kinross Council Annual Accounts 2025/26 Revenue Expenditure Funded from Capital under Statute Expenditure incurred during the year that may be capitalised under statutory provisions but does not result in the creation of a non-current asset is charged as expenditure to the relevant Service in the CIES in the year. Where the Council has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer in the MiRS from the General Fund Balance to the CAA then reverses out the amounts charged so that there is no impact on the level of council tax. Right of Use Assets The Council has adopted IFRS 16 (Leases) with effect from 1 April 2024. The adoption of the new standard resulted in the balance sheet recognition of a right-of-use asset and related lease liability in relation to former operating leases. The Council has elected to apply recognition exemptions to low value assets (below £10,000 when new) and to short-term leases i.e. existing leases that expire on or before 31 March 2027, and new leases with a duration of less than 12 months. A contract is, or contains a lease, if the contract conveys the right to control the use of an identified asset for a period of time, including arrangements for nil consideration. VAT VAT payable is included as an expense only to the extent that it is not recoverable from His Majesty’s Revenue and Customs. VAT receivable is excluded from income. 2. Accounting Standards that have been issued but have not been adopted At the balance sheet date, the following new standards and amendments to existing standards have been published but not yet adopted by The Code: • Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (Amendments to Heritage assets) issued in March 2024 • Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) issued in May 2024 • Annual improvements to IFRS accounting standards – Volume 11 issued in July 2024 • Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7) issued in December 2024. These standards apply to Perth and Kinross Council from 1 April 2026 and are not expected to have a significant impact on the financial statements. 3. Critical Judgements in Applying Accounting Policies In applying the accounting policies set out in Note 1, the Council has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Annual Accounts are: Group Entities The Council has an interest in a number of subsidiary and associate companies and trusts. The most significant of these companies in terms of the size of trading operations, shareholding and board representation and other factors have been assessed and where deemed material to the Council, are included in the Group Accounts. Full details of these interests are shown in Note 1 to the Group Accounts. Public Sector Funding There is a high degree of uncertainty about future levels of funding for local government. However, the Council has determined that this uncertainty is not yet sufficient to provide an indication that the assets of the Council might be impaired as a result of a need to close facilities and reduce levels of service provision. Public Private Partnership (PPP) The Council is deemed to control the services provided under the agreement for the provision of educational establishments. The accounting policies for PPP schemes and similar arrangements have been applied and the assets under the contract are included within Property, Plant and Equipment on the Council’s Balance Sheet. Note 36 provides further details. 46 | Perth and Kinross Annual Accounts 2025/26 Page 65 of 314
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47 | Perth and Kinross Council Annual Accounts 2025/26 4. Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty The Annual Accounts contain estimated figures that are based on assumptions made by the Council about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the Council’s Balance Sheet at 31 March 2026 for which there is a significant risk of material adjustment in the forthcoming financial year are in respect of the Council’s Net Pensions Asset / Liability and valuation of Property, Plant and Equipment. Net Pension Liability Uncertainty Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. This is further detailed in Note 18 to the Accounts which includes a table setting out the potential sensitivity of change in assumptions on the Pension Liability. A firm of consulting actuaries is engaged to provide the Council with expert advice about the assumptions to be applied. Effect if Actual Results Differ from Assumptions The effects on the net pension asset / liability of changes in individual assumptions can be measured. For instance, a 0.1% increase in the discount rate assumption would result in a reduction in the pension liability of £11.333 million. However, the assumptions interact in complex ways, and the pension asset had increased from £442.944 million in 2024/25 to £585.068 million in 2025/26. However, by applying IAS 19 and the asset ceiling provision contained therein, the Council has actually recognised a pension liability of £17.753 million in 2025/26 (£18.533 million in 2024/25). Property, Plant and Equipment - Valuations Uncertainty Although markets are functioning and transaction volumes are at levels where there is sufficient evidence on which to base opinions on value, there remain uncertainties due to worldwide events which continue to influence pricing. A combination of valuation reports provided by Royal Institution of Chartered Surveyors (RICS) registered valuers in the current year, and indexation applied to previous professional valuations, have been used to inform the measurement of non-current assets in these financial statements. Specialised assets such as educational buildings are valued on the basis of depreciated replacement cost. Here the valuer bases their assessment on the cost to the Council of replacing the service potential of the assets; the uncertainty relates to the estimated costs of, rather than the extent of, service potential to be replaced. The indexation of assets utilises the index considered as most suitable for the type of asset, as provided by the internal RICS registered valuers. Uncertainty relates to the potential for an alternative index that may be considered more suitable, and which may provide for a different indexed movement in asset value. The valuer has provided estimates for the range of uncertainty attached to the valuation of Council dwellings. The valuation of Council dwellings requires the use of an Adjustment Factor which is applied to the vacant possession value of the housing stock to arrive at the reported Existing Use Value – Social Housing (EUV-SH). The Adjustment Factor is based on the ratio of private and public sector rents and yields. Rental ratios are established from data provided by the Council and from Local Housing Allowances, HM Rent Service, RICS, and using information on private sector rents from research including local letting agents. Information on yields is derived from the RICS, Building Society and Chartered Surveyor firm publications, and government publications. Effect if Actual Results Differ from Assumptions A sensitivity analysis has been undertaken in respect of all properties revalued using indexation to determine the potential movement in value had an alternative index been utilised. For this purpose, alternative indices were not identified and applied as there are a number of possibilities. As a proxy, an increase and decrease of 1% has been applied to reflect the potential movement, had an alternative index been adopted, which indicated an alternative indexation adjustment. Indexation calculations and the sensitivity analysis include assumptions that the Gross Internal Area (GIA) and Land Area of each site remains unchanged, and the building use and condition remains in line with the previous valuation. The gross book value decrease when applying the selected indices is £12.542 million. A 1% decrease in index rates would result in a gross book value decrease of £19.680 million. A sensitivity analysis on the Council housing revaluation has been undertaken by the valuer to examine the potential impact if the Adjustment Factor was increased or decreased by 5%, this being the tolerance listed within the valuation guidance published by the Ministry for Housing Communities and Local Government (MHCLG). The EUV–SH for the Council housing stock at 31 March 2026 is £339.583 million. A 5% increase or decrease to the Adjustment Factor would result in an increase or decrease of £44.227 million (13.02%) to the value of the Council housing stock. 47 | Perth and Kinross Annual Accounts 2025/26 Page 66 of 314
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48 | Perth and Kinross Council Annual Accounts 2025/26 5. Adjustments between Accounting Basis and Funding Basis under Regulations General Housing Capital Capital Total 2024/25 Fund Revenue Receipts Grants Balance Account Reserve Unapplied £'000 £'000 £'000 £'000 £'000 £'000 Adjustments involving the Capital Adjustment Account Depreciation and impairment on non-current assets (49,997) (17,082) 0 0 (67,079) (59,925) Revaluation Losses on Property, Plant and Equipment (18,570) (1,544) 0 0 (20,114) (11,888) Reversal revaluation gains 4,737 247 0 0 4,984 1,301 Movements in Fair Value of Investment Properties 1,518 (85) 0 0 1,433 1,480 Amortisation of Intangible Assets (1,191) 0 0 0 (1,191) (1,232) Capital grants and contributions credited to the Comprehensive Income and Expenditure Statement 15,476 8,722 0 0 24,198 42,079 Amounts of non current assets written off on disposal as part of the gain/loss (2,089) (217) 0 0 (2,306) (1,040) Revenue Expenditure Funded by Capital Under Statute (202) 0 0 0 (202) (2,618) Donated Assets 80 0 0 0 80 285 Items not debited or credited to the Comprehensive Income and Expenditure Statement Statutory provision for repayment of debt 14,313 3,503 0 0 17,816 16,321 Capital expenditure charged to the General Fund and HRA balances 2,136 1,881 0 0 4,017 5,136 Adjustments involving the Capital Receipts Reserve Transfer of sale proceeds credited as part of the gain/loss on disposal 560 18 (578) 0 0 0 Use of the Capital Receipts Reserve to finance new capital expenditure 0 0 404 0 404 1,672 Adjustments involving the Financial Instruments Adjustment Account 487 136 0 0 623 626 Adjustments involving the Capital Grants unapplied Application of grants unapplied 0 0 0 (215) (215) (1,060) Adjustments involving the Pensions Reserve Employer's pensions contributions and direct payments to pensioners payable in the year 21,622 1,801 0 0 23,423 23,294 Reversal of items relating to retirement benefits debited or credited to the Comprehensive Income and Expenditure Statement (17,455) (1,482) 0 0 (18,937) (20,738) Adjustments involving Short Term Accumulated Absences Account Amount by which officer remuneration charged to the Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements (227) (46) 0 0 (273) (1,186) Total Adjustments (28,802) (4,148) (174) (215) (33,339) (7,493) Usable Reserves 48 | Perth and Kinross Annual Accounts 2025/26 Page 67 of 314
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PKC - GENERAL# 6. Expenditure and Funding Analysis - 2025/26 Net Net Expenditure Expenditure Adjustments in the charged to between the Comprehensive the General Funding and Income and Fund and HRA Accounting Expenditure Balances Basis Statement £000 £000 £000 Education and Learning 178,383 (1,029) 177,354 Health and Social Care 109,914 356 110,270 Children, Families and Justice 24,855 (189) 24,666 Economy, Development and Planning 15,766 6,715 22,481 Environment and Infrastructure 27,941 19,273 47,214 Housing and Communities 17,709 978 18,687 Property Services 49,602 36,230 85,832 Legal and Governance 3,960 45 4,005 Customer and Digital Services 11,983 5,579 17,562 Strategic Planning, People and Performance 5,218 3 5,221 Projects and Programmes 324 1 325 Finance and Business Support 9,074 (541) 8,533 Directorate Core Costs 572 4 576 Housing Revenue Account (9,686) 13,911 4,225 Valuation Joint Board 1,393 0 1,393 Non Distributed Costs 1,680 (1,680) 0 Cost of Services 448,688 79,656 528,344 Other Income and Expenditure (443,451) (42,321) (485,772) Deficit on Provision of Services 5,237 37,335 42,572 Opening General Fund and HRA Balance (70,542) Surplus on General Fund and HRA Balance in Year 5,237 Transfers from other Statutory Reserves 4,365 Service concession flexibility (2,746) Closing General Fund and HRA Balance at 31 March 2026 (63,686) This note provides a reconciliation of the main adjustments to Net Expenditure Chargeable to the General Fund and HRA Balances to arrive at the amounts in the Comprehensive Income and Expenditure Statement. The relevant transfers between Reserves are explained in the Movement in Reserves Statement. The split of the General Fund and HRA Balance is in the Movement in Reserves Statement. Notes to the Expenditure and Funding Analysis - adjustments between funding and accounting basis Note A Note B Note C £ '000 £ '000 £ '000 £ '000 COUNCIL SERVICES Education and Learning (178) (734) (117) (1,029) Health and Social Care 714 (441) 83 356 Children, Families and Justice 0 (253) 64 (189) Economy, Development and Planning 6,803 (123) 35 6,715 Environment and Infrastructure 19,474 (267) 66 19,273 Housing and Communities 1,109 (133) 2 978 Property Services 36,195 0 35 36,230 Legal and Governance 0 0 45 45 Customer and Digital Services 5,578 0 1 5,579 Strategic Planning, People and Performance 0 0 3 3 Projects and Programmes 0 0 1 1 Finance and Business Support 9 (555) 5 (541) Directorate Core Costs 0 0 4 4 Housing Revenue Account 14,186 (321) 46 13,911 Valuation Joint Board 0 0 0 0 Non Distributed Costs 0 (1,680) 0 (1,680) Cost of Services 83,890 (4,507) 273 79,656 Other Operating Expenditure and Income 1,728 0 0 1,728 Financing and Investment Income and Expenditure (19,249) 21 (623) (19,851) Taxation and Non-Specific Grant Income (24,198) 0 0 (24,198) Other income and expenditure from the Expenditure and Funding Analysis (41,719) 21 (623) (42,321) Difference between General Fund surplus or deficit and Comprehensive Income and Expenditure Statement Surplus or Deficit on the Provision of Services 42,171 (4,486) (350) 37,335 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts Adjustments for Capital Purposes Net change for the Pensions Adjustments Other Differences Total Adjustments 49 | Perth and Kinross Annual Accounts 2025/26 Page 68 of 314
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PKC - GENERAL# Net Net Expenditure Expenditure Adjustments in the charged to between the Comprehensive the General Funding and Income and Fund and HRA Accounting Expenditure Balances Basis Statement £000 £000 £000 Education and Learning 166,361 1,613 167,974 Health and Social Care 96,045 1,183 97,228 Children, Families and Justice 23,770 237 24,007 Economy, Development and Planning 17,742 8,955 26,697 Environment and Infrastructure 31,860 18,014 49,874 Housing and Communities 18,544 482 19,026 Property Services 49,147 29,819 78,966 Legal and Governance 4,539 20 4,559 Customer and Digital Services 12,104 5,082 17,186 Strategic Planning, People and Performance 5,483 22 5,505 Projects and Programmes 282 1 283 Finance and Business Support 7,851 438 8,289 Directorate Core Costs 1,325 2 1,327 Housing Revenue Account (8,237) 11,039 2,802 Valuation Joint Board 1,434 0 1,434 Non Distributed Costs 1,689 (1,689) 0 Cost of Services 429,939 75,218 505,157 Other Income and Expenditure (416,393) (62,604) (478,997) Deficit on Provision of Services 13,546 12,614 26,160 Opening General Fund and HRA Balance (86,054) Surplus on General Fund and HRA Balance in Year 13,546 Transfers to other Statutory Reserves 4,880 Service concession flexibility (2,914) Closing General Fund and HRA Balance at 31 March 2025 (70,542) This note provides a reconciliation of the main adjustments to Net Expenditure Chargeable to the General Fund and HRA Balances to arrive at the amounts in the Comprehensive Income and Expenditure Statement. The relevant transfers between Reserves are explained in the Movement in Reserves Statement. The split of the General Fund and HRA Balance is in the Movement in Reserves Statement. Notes to the Expenditure and Funding Analysis - adjustments between funding and accounting basis Note A Note B Note C £ '000 £ '000 £ '000 £ '000 COUNCIL SERVICES Education and Learning 751 199 663 1,613 Health and Social Care 791 287 105 1,183 Children, Families and Justice (5) 159 83 237 Economy, Development and Planning 8,838 82 35 8,955 Environment and Infrastructure 17,795 161 58 18,014 Housing and Communities 346 90 46 482 Property Services 29,785 0 34 29,819 Legal and Governance 2 0 18 20 Customer and Digital Services 5,037 0 45 5,082 Strategic Planning, People and Performance 0 0 22 22 Projects and Programmes 0 0 1 1 Finance and Business Support 14 387 37 438 Directorate Core Costs 0 0 2 2 Housing Revenue Account 10,998 4 37 11,039 Valuation Joint Board 0 0 0 0 Non Distributed Costs 0 (1,689) 0 (1,689) Cost of Services 74,352 (320) 1,186 75,218 Other Operating Expenditure and Income 138 0 0 138 Financing and Investment Income and Expenditure (17,801) (2,236) (626) (20,663) Taxation and Non-Specific Grant Income (42,079) 0 0 (42,079) Other income and expenditure from the Expenditure and Funding Analysis (59,742) (2,236) (626) (62,604) Difference between General Fund surplus or deficit and Comprehensive Income and Expenditure Statement Surplus or Deficit on the Provision of Services 14,610 (2,556) 560 12,614 Total Adjustments Expenditure and Funding Analysis - 2024/25 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts Adjustments for Capital Purposes Net change for the Pensions Adjustments Other Differences 50 | Perth and Kinross Annual Accounts 2025/26 Page 69 of 314
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51 | Perth and Kinross Council Annual Accounts 2025/26 Note 6 cont’d Explanation to the Expenditure and Funding Analysis Adjustments for Capital Purposes Note A Adjustments for Capital Purposes adds in depreciation and impairment and revaluation gains and losses in the services line, and for: • Other operating expenditure – adjusts for capital disposals with a transfer of income on disposal of assets and the amounts written off for those assets. • Financing and investment income and expenditure – the statutory charges for capital financing and other revenue contributions are deducted from other income and expenditure as these are not chargeable under generally accepted accounting practices. • Taxation and non-specific grant income and expenditure – capital grants are adjusted for income not chargeable under generally accepted accounting practices. Revenue grants are adjusted from that receivable in the year to that receivable without conditions or for which conditions were satisfied throughout the year. The Taxation and Non Specific Grant Income and Expenditure line is credited with capital grants receivable in the year without conditions or for conditions which were satisfied in the year. Net Change for the Pensions Adjustments Note B Net change for the removal of pension contributions and the addition of IAS 19 Employee Benefits pension related expenditure and income: • For services – this represents the removal of the employer pension contributions made by the authority as allowed by statute and the replacement with current service costs and past service costs. • For Financing and investment income and expenditure – the net interest on the defined benefit liability is charged to the Comprehensive Income and Expenditure Statement. Other Differences Note C Other differences between the amounts debited/credited to the Comprehensive Income and Expenditure Statement and amounts payable/receivable to be recognised under statute: • For services – this represents the removal of the increase or decrease in the employee statutory adjustment account. • For Financing and investment income and expenditure – the other differences column recognises adjustments to the General Fund for the timing differences for premiums and discounts and stepped interest rate loans. 51 | Perth and Kinross Annual Accounts 2025/26 Page 70 of 314
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52 | Perth and Kinross Council Annual Accounts 2025/26 7. Transfer (to)/from Earmarked Reserves The Reserves Strategy that the Council approved in February 2026 earmarked funding towards specific or known future commitments. The following table sets out the updated balances as at 31 March 2026 for these Earmarked Reserves taking cognisance of the final year-end position. Balance as at Transfers Balance as at 1 April 2025 (In)/Out 31 March 2026 £'000 £'000 £'000 Revenue Grants (13,355) 1,269 (12,086) Affordable Housing (Resources accrued from reduced Council Tax Discounts) (4,796) (1,452) (6,248) Developer Contributions: Commuted Sums and Infrastructure and Affordable Housing (5,829) 350 (5,479) Transformation and Workforce Management (4,837) 305 (4,532) Service concession flexibility (13,262) 10,262 (3,000) Waste Initiatives 0 (1,894) (1,894) Non-Recurring Pressures b/f from previous years (1,483) (178) (1,661) Anti-Poverty Measures (1,313) (107) (1,420) Car Parking (977) (101) (1,078) Social Care 0 (1,000) (1,000) Future Legal Claims 0 (1,000) (1,000) Community Resilience 0 (800) (800) Communities (1,003) 280 (723) Devolved School Management (DSM) (527) (15) (542) Culture (499) 105 (394) School Estate (311) 58 (253) Climate Change (295) 49 (246) Works Maintenance (200) 0 (200) Local Government Elections (106) (53) (159) Modern Apprentices/Graduate Trainees (186) 72 (114) Salix Fund (75) (3) (78) Financial Assistance (40) (20) (60) Community Investment Fund (61) 15 (46) Child Abuse (50) 11 (39) Local Action Partnerships (36) 6 (30) Pullar House Lifecycle 0 (30) (30) School Counsellors (151) 124 (27) Property Maintenance (80) 76 (4) Events (97) 97 0 Earmarked Balances (49,569) 6,426 (43,143) Purpose of Earmarked General Fund Balances The application and monitoring of the following reserves is part of the remit of the Finance and Resources Committee. Revenue Grants – these grants are being carried forward in reserves as the grant conditions have been met but the expenditure has not been fully incurred. Affordable Housing (Resources accrued from reduced Council Tax Discounts) – these reserves have been generated as a result of the Council’s policy on varying the level of council tax charged for long term empty properties and second homes. These resources can only be used for the provision of affordable housing. Developer Contributions: Commuted Sums and Infrastructure and Affordable Housing – the Environment, Infrastructure and Economic Development Committee approved supplementary guidance on 20 September 2023 for developer contributions covering community greenspace, primary education, Auchterarder A9 junction improvements, affordable housing and transport infrastructure. These sums are held in the Council’s Reserves until they are applied to relevant schemes. Transformation and Workforce Management – the Council has resources earmarked to enable the Transformation and Change Strategy and workforce management in future years. Service Concession flexibility – these resources are earmarked to be phased over a number of years to contribute to the funding of the Revenue Budget. Waste Initiatives – the Finance and Resources Committee has approved earmarking resources to support waste initiatives in 2026/27 and 2027/28. Non-Recurring Pressures b/f from previous years - the 2026/27 Revenue Budget includes non-recurring expenditure proposals which have been approved during the year at Finance and Resources Committee and as part of the year end process. 52 | Perth and Kinross Annual Accounts 2025/26 Page 71 of 314
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53 | Perth and Kinross Council Annual Accounts 2025/26 Anti-Poverty measures – The Council approved the creation of a COVID-19 Reserve on 27 January 2021 (Report 21/8 refers) to assist with addressing the ongoing impact of Covid-19 in future years. This has now been redirected towards Anti- Poverty measures. Car Parking – this balance is the accumulated surplus at 31 March 2026 which is restricted in its application under the Road Traffic Regulation Act 1984. Any proposals to utilise these resources will require approval by the Finance and Resources Committee. Social Care – The 2026/27 revenue budget approved earmarking £1 million towards the future costs of social care. Future Legal Claims – the Finance and Resources Committee in June 2026 approved earmarking £1 million for any potential future legal claims if they arise. Community Resilience – the 2025/26 revenue budget created a reserve for future community resilience expenditure. Communities – the Finance and Resources Committee in April 2025 approved the allocation of any resources above 4% of unearmarked reserves at year end towards a reserve for Communities. Devolved School Management (DSM) – the amount shown is the accumulated sum available to be carried forward at 31 March 2026 under the approved scheme for managing these budgets. The purposes for which the earmarked amount can be used and the procedures for its management and control are detailed in the Council’s approved DSM scheme. Culture – these resources continue to be earmarked for cultural initiatives across the Council. School Estate – These resources include amounts previously approved by the Council for the primary and secondary school estate including maintenance works and resources for new schools. Climate Change – the Finance and Resources Committee in April 2023 approved the earmarking of resources for climate change activities due to a rephasing between years. Works Maintenance – The Council continues to earmark resources for future works maintenance. Local Government Elections – These resources are earmarked in reserves as a contribution to local elections. Modern Apprentices/Graduate Trainees – the Strategic Policy and Resources Committee approved the transfer of any final under spend on modern apprentices and graduate trainees. The remaining resources will be utilised in future years. Financial Assistance – There is a recurring annual contribution from reserves to fund any future Mods and other events across Perth and Kinross. Salix Fund – Salix Finance Ltd is a Government owned non-departmental public body which provides interest free loan funding for energy efficiency works. The loan is re-paid to the fund over a number of years and re-invested in future energy efficiency works. Community Investment Fund – The Council continues to earmark the resources remaining from the fund for future investment. Child Abuse – the 2025/26 revenue budget approved the earmarking of resources in respect of future costs incurred in preparing for public hearings in respect of investigations into Child Abuse arising from residential care claims. Local Action Partnership – these resources are earmarked and utilised by an application process for payment to groups in one of the seven local action partnerships. Pullar House Lifecycle – the Finance and Resources Committee in June 2026 earmarked lifecycle costs for future expenditure to be incurred within the Pullar House building. School Counsellors – Revenue Budget 2020/21 Update No 2 to the Strategic Policy and Resources Committee approved the earmarking of resources received from the Scottish Government in respect of counselling in schools which are anticipated to be spent during 2026/27 (Report 20/225). Property Maintenance – Revenue Budget Report No 3 to the Strategic Policy and Resources Committee on 21 November 2021 approved the earmarking of £250,000 resources in respect of property maintenance to be utilised in future years. This was increased by a further £55,000 in 2021/22. The remaining earmarked reserve detailed in the table were fully utilised or un-earmarked during 2025/26. Events- the Finance and Resources Committee in April 2025 approved earmarking £97,000 for future events from resources received in respect of an insurance claim in respect of the Christmas Light switch on. 8. Other Operating Expenditure / Income 2025/26 2024/25 £'000 £'000 Losses and (Gains) on the Disposal of Non Current Assets 1,728 138 Share of Tayside Contracts Surplus (769) (244) Total 959 (106) 53 | Perth and Kinross Annual Accounts 2025/26 Page 72 of 314
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54 | Perth and Kinross Council Annual Accounts 2025/26 9. Financing and Investment Income and Expenditure 2025/26 2024/25 £'000 £'000 Interest payable and similar charges 27,531 25,029 Pensions interest cost and expected return on pensions assets 21 (2,236) Interest receivable and similar income (1,172) (994) Income in relation to investment properties and changes in their fair value (2,339) (2,369) Total 24,041 19,430 10. Taxation and Non Specific Grant Income Restated 2025/26 2024/25 £'000 £'000 Council Tax Income (109,802) (100,379) Non Domestic Rates (63,537) (64,717) Non Ring-fenced Government Grants (313,235) (291,146) Capital Grants and Contributions (24,198) (42,079) Total (510,772) (498,321) Non-Domestic Rates Income in 2024/25 was restated for the costs of discretionary relief which are included within Finance and Business Support rather than netted off Non-Domestic Rate Income. 11. Material Items of Income and Expense In 2025/26 the Council did not receive any material items of income or expenditure not otherwise disclosed in the financial statements and notes. There were no material items of income or expenditure in 2025/26 not otherwise disclosed. 12. Premiums and Discounts on Debt Rescheduling Written Down The Code requires that any premiums or discounts arising from debt rescheduling should be written off in the year they were incurred, except in limited circumstances where they would qualify as a ‘modification’ of debt. During 2025/26 there were no such debt modifications, however a total of £2.901 million of premiums were incurred and £5.945 million of discounts received, following the early repayment of debt and charged in full in 2025/26. The net amount of premium and discount debited to the General Fund and HRA, including for transactions prior to 1 April 2007 (as permitted by statutory guidance), from the Financial Instruments Adjustment Account was £492,000 (2024/25 £604,000). 13. General Grants, Bequests and Donations Perth and Kinross Council is represented on, exercises influence over and provides grants to a large number of outside bodies which provide services to the public, consistent with the Council’s statutory responsibilities. During 2025/26 a total of £22.542 million (2024/25 £21.984 million) was paid out in support of these organisations ranging from remission of hall rents of a few pounds to the contribution towards the operational and other costs of Live Active Leisure Limited of £4.963 million (2024/25 £4.894 million). Details of grants are shown below. 54 | Perth and Kinross Annual Accounts 2025/26 Page 73 of 314
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55 | Perth and Kinross Council Annual Accounts 2025/26 2025/26 2024/25 £'000 £'000 Service Level Agreements with Outside Organisations 8,833 8,674 Live Active Leisure Limited 4,963 4,894 Culture Perth and Kinross 3,925 3,919 Perth Theatre and Concert Hall Ltd 1,068 1,056 Green Capital Recovery Fund 254 547 Perth Money Advice Service 413 413 Community Investment Fund 0 326 Churches Action for the Homeless 304 290 Pitlochry Festival Theatre 220 220 Commercial Property Regeneration Grants 311 210 Warm Spaces Grant 150 191 Local Action Partnerships 0 114 Perthshire Women's Aid 110 108 Perth and Kinross Heritage Trust 80 100 Perth and Kinross Countryside Trust 30 100 Other Miscellaneous Grants 1,881 822 Total 22,542 21,984 14. Expenditure and Income Analysed by Nature The Council’s expenditure and income is analysed as follows: 2025/26 2024/25 Expenditure / Income £'000 £'000 Expenditure Employee benefits expenses 283,152 270,615 Other services expenses 297,636 287,763 Contribution to Integrated Joint Board 105,639 92,223 Support service recharges 6,900 4,715 Depreciation, amortisation, impairment 87,785 77,155 Interest payments 28,506 25,079 Loss on the disposal of assets 1,728 138 Total Expenditure 811,346 757,688 Income Fees, charges and other service income 212,254 188,246 Interest and investment income 4,465 5,649 Taxation and Non-Specific Grant income 510,772 498,321 Grants and contributions 41,283 39,312 Total Income 768,774 731,528 Deficit on the Provision of Services 42,572 26,160 15. Agency Services Agency arrangements operate in some Services where the Council undertakes work on behalf of other local authorities; Scottish Water; government; and other public bodies. The Council received £561,000 in 2025/26 (£554,000 in 2024/25) in relation to the administration of collecting Scottish Water income on their behalf. This has been recognised in the Comprehensive Income and Expenditure Statement. 55 | Perth and Kinross Annual Accounts 2025/26 Page 74 of 314
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56 | Perth and Kinross Council Annual Accounts 2025/26 16. External Audit Costs 2025/26 2024/25 £'000 £'000 External Audit Fees 372 358 17. Termination Benefits The Council terminated the contracts of nine employees in 2025/26, incurring costs of £172,000 (nineteen employees in 2024/25, incurring costs of £601,000). 18. Post-Employment Benefits International Accounting Standard 19 ‘Employee Benefits’ (IAS 19) prescribes how pension costs and liabilities are to be disclosed in the financial statements. The standard requires employing organisations to account for post-employment benefits in the period in which they are committed to give them, even if the actual payment of these benefits will be many years in the future. The following notes are prepared in accordance with the code guidance on disclosure requirements in respect of IAS 19. Perth and Kinross Council participates in two different pension schemes, one for teaching staff and a separate scheme for all other employees. Pensions Schemes Accounted for as Defined Contribution Schemes Teachers Teachers employed by the Council are members of the Teachers’ Pension Scheme, administered by the Scottish Government. The Scheme provides teachers with specified benefits upon their retirement, and the Council contributes towards the costs by making contributions based on a percentage of members’ pensionable salaries. The scheme is technically a defined benefit scheme. However, the Scheme is unfunded, and the Scottish Government uses a notional fund as the basis for calculating the employers’ contribution rate paid by local authorities. The Council is not able to identify its share of the underlying financial position and performance of the scheme with sufficient reliability for accounting purposes. For the purposes of the Annual Accounts, it is therefore accounted for on the same basis as a defined contribution scheme. In 2025/26, the Council paid £20.609 million to the Teachers’ Pensions scheme in respect of teachers’ retirement benefits, representing 26% of pensionable pay. The figures for 2024/25 were £19.608 million and 26%. There were no contributions remaining payable at the year-end. Additional payments relating to added year’s benefits, which the Council has inherited from predecessor authorities or awarded itself, together with related increases, amounted to £158,056 (2024/25 £172,461). Pension Schemes Accounted for as Defined Benefit Pension Schemes Local Government Pension Scheme The post-employment scheme for other employees, subject to certain qualifying criteria, is the Local Government Pension Scheme (LGPS) which is administered in this area by Dundee City Council in respect of all local authorities and admitted bodies in the former Tayside area. This is a multi-employer scheme in which it is possible for an employer to identify its share of the assets and liabilities on a consistent and reasonable basis. Employer’s liabilities can be evaluated directly by the Actuary at any time on membership data. Benefits • It is a Career Average Revalued Earnings scheme, meaning that the Council and employees pay contributions into a fund, calculated at a level to balance the pension’s liability with investment assets. • The pension’s accrual rate guarantees a pension based on 1/49th of career average revalued earnings and years of pensionable service. There is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for lump sum up to the limit set by the Finance Act 2004. Pensions are increased annually in line with changes to the Pensions (Increases) Act 1971 and Section 59 of the Social Security Pensions Act 1975. Governance • The Tayside Pension Fund is operated under the regulatory framework for the LGPS in Scotland and the governance of the scheme is the responsibility of the Tayside Pension Fund Committee. This Committee is comprised solely of elected members of Dundee City Council. Employing authorities (including Perth and Kinross Council) are represented at the Tayside Pension Board. • Policy is determined in accordance with the Local Government Pension Scheme (Scotland) Regulations. Management of the Fund’s investments is carried out by the Fund’s Investment Advisory Panel which selects and appoints a number of external investment managers/partners and monitors their investment performance. 56 | Perth and Kinross Annual Accounts 2025/26 Page 75 of 314
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57 | Perth and Kinross Council Annual Accounts 2025/26 • Under the Regulations, employers fall into three categories, scheme employers (also known as scheduled bodies) such as Perth and Kinross Council, community admission bodies and transferee admission bodies. Admission agreements are generally assumed to be open-ended. However, either party can voluntarily terminate the admission agreement by giving an appropriate period of notice to the other parties. Any deficit arising from the cessation valuation will usually be levied on the departing admission body as a capital payment. Principal Risks • The principal risks to the scheme are the longevity assumptions, statutory changes to the scheme, changes to inflation, bond yields and the performance of the investments held by the scheme. These are mitigated to a certain extent by the statutory requirements to charge the General Fund the amount due by statute as described in the accounting policy note. Discretionary Post-employment Benefits • Discretionary post-retirement benefits on early retirements are an unfunded defined benefit arrangement, under which liabilities are recognised when an award is made. There are no plan assets built up to meet these pension liabilities. The contributions paid into the scheme by employees and member pension benefits are prescribed, for the period to which the accounts relate, by the Local Government Pensions Scheme (Scotland) Regulations 1998 as amended. Perth and Kinross Council’s contributions, as an employer, into the Tayside Pension Fund are subject to the advice of the Fund actuary. The Local Government Pension Scheme allows for the award of discretionary post-employment benefits upon early retirement. This is an unfunded defined benefit final arrangement, under which liabilities are recognised when awards are made. However, there are no investment assets built up to meet the pension’s liabilities, and cash has to be generated to meet actual pension’s payments as they eventually fall due. Guaranteed Minimum Pension (GMP) Equalisation As a result of the High Court’s Lloyds ruling on the equalisation of GMPs between genders, a number of pension schemes have made adjustments to accounting disclosures to reflect the effect this ruling has on the value of pension liabilities. It is our understanding that HM Treasury has confirmed that the judgement "does not impact on the current method used to achieve equalisation and indexation in public service pension schemes". On 23 March 2021, the Government published the outcome to its Guaranteed Minimum Pension Indexation consultation, concluding that all public service pension schemes, including the LGPS, will be directed to provide full indexation to members with a GMP reaching State Pension Age (SPA) beyond 5 April 2021. This is a permanent extension of the existing ‘interim solution’ that has applied to members with a GMP reaching SPA on or after 6 April 2016. The Council’s valuation assumption for GMP is that the Fund will pay limited increases for members that have reached SPA by 6 April 2016, with the Government providing the remainder of the inflationary increase. For members that reach SPA after this date, the Council has assumed that the Fund will be required to pay the entire inflationary increase. This assumption is consistent with the consultation outcome and the actuaries do not believe that it is necessary to make any adjustments to the value placed on the liabilities as a result of the above outcome. Career Average Revalued Earnings Scheme (CARE) The Local Government Pension Scheme changed from Final Salary to Career Average Revalued Earnings (CARE) on 1 April 2015, with a change of accrual rate from 1/60th to 1/49th. Employees who were previously paying into the Final Salary scheme were automatically transferred into the new CARE scheme on 1 April 2015. Transactions Relating to Post-Employment Benefits The Council recognises the cost of retirement benefits in the reported cost of services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge the Council is required to make against Council Tax is based on the cash payable in the year, so the real cost of post-employment/retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement. The following transactions have been made in the Comprehensive Income and Expenditure Statement and the General Fund Balance via the Movement in Reserves Statement during the year. 57 | Perth and Kinross Annual Accounts 2025/26 Page 76 of 314
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58 | Perth and Kinross Council Annual Accounts 2025/26 Local Government Pension Scheme 2025/26 2024/25 £'000 £'000 Comprehensive Income and Expenditure Statement Cost of Services - Service Cost 18,916 22,974 Financing and Investment Income and Expenditure - Net Interest on the Defined Liability (429) (2,599) Administration Expenses 450 363 Total Post Employment Benefit Charged to the Deficit on the Provision of Services 18,937 20,738 Remeasurement of the net defined benefit liability comprising: Expected return on pension fund assets in excess of interest (87,874) 24,909 Changes in demographic assumptions 7,240 (2,446) Changes in financial assumptions (34,786) (124,687) Experience (gain)/loss on defined benefit obligation 2,582 (2,282) Changes in effect of asset ceiling 116,544 104,847 Total Post Employment Benefit Credited to the Comprehensive Income and Expenditure Statement 3,706 341 Movement in Reserves Statement Reversal of Net Charges made to the surplus or deficit on the provision of Services for post- employment benefits in accordance with the Code (18,937) (20,738) IAS 19 limits the measurement of a net defined benefit asset to the lower of the surplus in the defined benefit plan and the asset ceiling. IAS 19 defines the asset ceiling as the present value of any economic benefits available in the form of reductions in future contributions to the plan. In accordance with International Financial Reporting Interpretations Committee - Interpretation 14 (IFRIC 14), the actuary has calculated the impact of the asset ceiling as £585.068 million (2024/25 £442.994 million). Therefore, a corresponding reduction has been applied to the defined benefit plan asset which results in a pension net liability of £17.753 million (2024/25 £18.533 million). Pensions Assets and Liabilities Recognised in the Balance Sheet The amount included in the Balance Sheet arising from the Council’s obligation in respect of its defined benefit scheme is as follows: 31 March 31 March 2026 2025 £'000 £'000 Present Value of the Defined Benefit Obligation 771,014 764,472 Present Value of Unfunded Obligation 17,753 18,533 Closing Defined Benefit Obligation 788,767 783,005 Impact of Asset Ceiling 585,068 442,994 Fair Value of Pension Fund Assets (Bid Value) (1,356,082) (1,207,466) Net Liability in Balance Sheet 17,753 18,533 58 | Perth and Kinross Annual Accounts 2025/26 Page 77 of 314
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59 | Perth and Kinross Council Annual Accounts 2025/26 A reconciliation of Perth and Kinross Council’s share of the present value of Tayside Pension Fund’s defined benefit obligation (liabilities) is as follows: 31 March 31 March 2026 2025 £'000 £'000 Opening Defined Benefit Obligation 783,005 875,216 Current Service Cost 18,522 22,308 Interest Cost 43,398 43,135 Change in Financial Assumptions (34,786) (124,687) Change in demographic assumptions 7,240 (2,446) Experience Gain on Defined Benefit Obligation 2,582 (2,282) Estimated Benefits Paid Net of Transfers In (37,949) (35,398) Past Service Costs (including Curtailments) 394 666 Contributions by Scheme Participants 8,162 8,197 Unfunded Pensions Payments (1,801) (1,704) Closing Defined Benefit Obligation 788,767 783,005 A reconciliation of the movements in Perth and Kinross Council’s share of the fair value of Tayside Pension Fund’s assets is as follows: 31 March 31 March 2026 2025 £'000 £'000 Opening Fair Value of Scheme Assets 1,207,466 1,175,381 Interest on Assets 69,357 62,968 Return on Assets Less Interest 87,874 (24,909) Administration Expenses (450) (363) Contributions by Employer Including Unfunded 23,423 23,294 Contributions by Scheme Participants 8,162 8,197 Estimated Benefits Paid Plus Unfunded Net of Transfers (Out)/In (39,750) (37,102) Closing Fair Value of Scheme Assets 1,356,082 1,207,466 31 March 31 March 2026 2025 £'000 £'000 Opening Impact of Asset Ceiling 442,994 320,913 Interest on impact of Asset Ceiling 25,530 17,234 Actuarial Losses 116,544 104,847 Closing Impact of Asset Ceiling 585,068 442,994 Perth and Kinross Council’s share of Tayside Pension Fund’s assets at 31 March 2026 comprised: £'000 % £'000 % Equities 1,016,841 75% 801,957 66% Gilts 82,155 6% 77,015 6% Other Bonds 83,931 6% 79,510 7% Property 135,688 10% 183,216 15% Cash 36,656 2% 65,449 5% Alternatives 811 1% 319 1% Total 1,356,082 100% 1,207,466 100% 31 March 2026 31 March 2025 59 | Perth and Kinross Annual Accounts 2025/26 Page 78 of 314
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60 | Perth and Kinross Council Annual Accounts 2025/26 A further breakdown of the assets is as follows: Equities Consumer 6% 8% Manufacturing 7% 7% Energy and Utilities 3% 2% Financial Institutions 7% 8% Health and Care 4% 5% Information Technology 13% 10% Others 0% 0% 40% 40% Debt Securities Corporate Bonds 4% 4% UK Government Bonds 0% 0% Others 0% 1% 4% 5% Private Equity 2% 2% Property UK Property 10% 10% 10% 10% Investment Fund Unit Trusts Equities 29% 27% Bonds 6% 6% Infrastructure 6% 5% 41% 38% Cash and Cash Equivalents 3% 5% Total 100% 100% 31 March 2026 28 February 2025 Basis for Estimating Assets and Liabilities Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. Both the Local Government Pension Scheme and Discretionary Benefits liabilities have been assessed by Barnett Waddingham Public Sector Consulting, an independent firm of actuaries. Estimates for the Tayside Pension Fund are based on the latest full valuation of the scheme as at 31 March 2023. The principal assumptions used by the actuary have been: 2025/26 2024/25 Mortality Assumptions Longevity at 65 for Current Pensioners: - Men 19.4 18.8 - Women 21.9 21.7 Longevity at 65 for Future Pensioners: - Men 20.7 20.2 - Women 23.4 23.2 Rate of Increase in Salaries 3.9% 3.9% Rate of Increase in Pensions 2.9% 2.9% Rate for Discounting Scheme Liabilities 6.1% 5.8% The liabilities show the underlying commitments that the Council has in the long run to pay post-employment (retirement) benefits. The net liability of £17.753 million has a substantial impact on the net worth of the Council as recorded in the Balance Sheet. However, statutory arrangements for funding the deficit mean that the financial position of the Council remains sound: - Finance is only required to be raised to cover discretionary benefits when the pensions are actually paid. The total contribution expected to be made to the Local Government Pension Scheme by the Council in the year to 31 March 2027 is £21.061 million. 60 | Perth and Kinross Annual Accounts 2025/26 Page 79 of 314
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61 | Perth and Kinross Council Annual Accounts 2025/26 Sensitivity Analysis The estimation of the defined benefit obligations is sensitive to the actuarial assumptions set out in the tables above. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period and assumes for each change that the assumption analysed changes while all the other assumptions remain constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be interrelated. The estimations in the sensitivity analysis have followed the accounting policies for the scheme, i.e. on an actuarial basis using the projected unit credit method. The methods and types of assumptions used in preparing the sensitivity analysis below did not change from those used in the previous period. £m £m £m £m £m Adjustment to discount rate +0.5% +0.1% 0% -0.1% -0.5% - Present value of total obligation 734.695 777.434 788.767 800.377 849.755 - Projected Service cost 15.164 17.031 17.878 18.472 21.044 Adjustment to long term salary increase +0.5% +0.1% 0% -0.1% -0.5% - Present value of total obligation 794.450 789.888 788.767 787.655 783.283 - Projected Service cost 17.878 17.878 17.878 17.878 17.878 Adjustment to pension increases and deferred revaluation +0.5% +0.1% 0% -0.1% -0.5% - Present value of total obligation 843.891 799.269 788.767 778.513 739.826 - Projected Service cost 21.084 18.481 17.878 17.291 15.111 £m £m £m Adjustment to mortality age rating assumption + 1 year None -1 year Present value of total obligation 816.213 788.767 762.387 Projected Service cost 18.494 17.878 17.276 19. Related Parties The Council is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Council or to be controlled or influenced by the Council. Disclosure of these transactions allows readers to assess the extent to which the Council might have been constrained in its ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the Council. Scottish Government The Scottish Government has effective control over the general operations of the Council – it is responsible for providing the statutory framework within which the Council operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Council has with other parties (e.g. Council Tax bills). Grants received from government departments are set out in the subjective analysis in Note 14 on expenditure and income analysed by nature. Tayside Valuation Joint Board The Tayside Valuation Joint Board provides services on behalf of Perth and Kinross, Angus and Dundee Councils. The Council does not have any direct control or influence over the board and the amount payable to this body for valuation services and electoral registration services was £1.712 million (2024/25 £1.762 million). £1.393 million is disclosed in the Comprehensive Income and Expenditure Statement under Valuation Joint Board and £319,000 under Chief Executive for electoral and registration services. Members Members of the Council have direct control over the Council’s financial and operating policies. The total of members’ allowances paid in 2025/26 is shown in the Remuneration Report. During 2025/26, three councillors had an interest in businesses from which the Council commissioned works and services to the value of £2,346, £1,438 and £49 respectively. Contracts were entered into in full compliance with the Council’s standing orders and the Councillors’ Code of Conduct. In addition the Council makes revenue and capital payments to a large number of organisations on which Council members are represented. Chief Officers Chief Officers of the Council have control over the Council’s financial and operating policies. The total of Chief Officers’ remuneration is shown in the Remuneration Report. Officers have a responsibility to adhere to a Code of Conduct which requires them to declare any interests in matters that directly or indirectly influence, or be thought to influence, their judgement or decisions taken during their work. During 2024/25 the Chief Executive was appointed as a Trustee and Company Director for Enable Scotland, Enable Scotland (Leading the Way), Crossroads Caring Scotland and the Mungo Foundation. During 2025/26 the Council made payments of £1.170 million with Enable Scotland (2024/25 £1.1 million) and £610,000 with Crossroads (2024/25 £572,000). Contracts were entered into in full compliance with procurement rules. 61 | Perth and Kinross Annual Accounts 2025/26 Page 80 of 314
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62 | Perth and Kinross Council Annual Accounts 2025/26 Live Active Leisure Ltd This organisation provides leisure services within the area served by the Council. A grant was provided in 2025/26 amounting to £4.963 million (2024/25 £4.894 million). It is a sole member Company with the Council as that member. Perth Theatre and Concert Hall Ltd This organisation operates Perth Concert Hall and Perth Theatre. A grant was provided in 2025/26 amounting to £1.068 million (2024/25 £1.056 million). It is a sole member Company with the Council as that member. Culture Perth and Kinross Ltd This organisation has operated libraries, museums and arts galleries in Perth and Kinross since 1 April 2016. A grant was provided in 2025/26 amounting to £3.965 million (2024/25 £3.919 million). It is a sole member Company with the Council as that member. Tayside Contracts Joint Committee This organisation provides roads maintenance; catering and cleaning services to the Council. Payments to Tayside Contracts in 2025/26 amounted to £37.972 million (2024/25 £39.037 million). The Joint Committee is administered and controlled by Dundee City, Angus and Perth and Kinross Councils. Health and Social Care Partnership This organisation is a joint venture between Perth and Kinross Council and Tayside Health Board and has since 1 April 2016 provided an integrated Health and Social Care service. Contributions to the Health and Social Care Partnership in 2025/26 amounted to £105.639 million (2024/25 £92.223 million) and income received from the Partnership for commissioned services £127.006 million (2024/25 £115.844 million). The Council has a Creditor of £11,000 due to the Health and Social Care Partnership as at 31 March 2026 (2024/25 £232,000). 20. Leases Council as Lessee The Council has adopted IFRS 16 Leases with effect from 1 April 2024. Properties and other vehicles, plant and equipment which fall within scope for IFRS 16 have been captured as right of use assets on the Council’s Balance Sheet. The following disclosures relate to low value assets having an individual value of less than £10,000, agreements with less than 12 months to run, and agreements which fail IFRS 16 tests. The Council operates a Lease Car Scheme which is available to eligible employees and lease rental payments are recovered from employees. The Council also leases in some fleet vehicles for use in the Council's operations. All current leasing agreements for cars and operational vehicles are due to expire during the financial years 2026/27 to 2028/29. The Council has also acquired the use of a number of properties by entering into leasing arrangements. The majority of such properties are used for office accommodation and any capital works undertaken within these premises is written down over the shorter of the lease term or the useful life of the property. The future minimum lease payments due under non-cancellable leases in future years are: 2025/26 2024/25 £'000 £'000 Not later than one year 108 182 Later than one year and not later than five years 197 253 Later than five years 33 33 338 468 The expenditure charged to the Services lines in the Comprehensive Income and Expenditure Statement during the year in relation to these leases was: 2025/26 2024/25 £'000 £'000 Minimum lease payments 115 153 Sublease payments receivable (26) (25) 89 128 62 | Perth and Kinross Annual Accounts 2025/26 Page 81 of 314
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63 | Perth and Kinross Council Annual Accounts 2025/26 Council as Lessor The Council leases out property under operating leases at normal market rents with the following purpose: Land for the generation of rental income arising from its use; land and buildings, which include offices and shops, for the supply of suitable business accommodation to promote economic development or satisfy social needs, or to solely generate rental income for the Council. The total future minimum lease payments receivable under non-cancellable leases in future years are: 2025/26 2024/25 £'000 £'000 Not later than one year 1,292 1,348 Later than one year and not later than five years 4,626 4,161 Later than five years 54,868 51,282 60,786 56,791 The minimum lease payments receivable do not include rents that are contingent on events taking place after the lease was entered into, such as adjustments following rent reviews. There were no material adjustments in respect of contingent rents during the years 2024/25 and 2025/26. Right of Use Assets As a lessee, the Council has previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Council. The CIPFA Code mandated the adoption of IFRS 16 Leases from 1 April 2024. The main impact of the accounting requirement is that a right of use asset and a corresponding lease liability are now included on the balance sheet. The CIPFA Code does include recognition exemptions to short-term leases and low value assets, and the Council has applied these. Right of use assets and the lease liabilities for short term leases that have a term of 12 months or less from the Balance Sheet date, and leases of low value assets, are not recognised on the balance sheet. The Council recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. Right-of-use assets and lease liabilities have been calculated as if IFRS 16 had always applied but are recognised in the year of adoption and not by adjusting prior year figures. The Council has applied PWLB interest rates, at the date of lease inception, to the outstanding lease rentals. The weighted average incremental borrowing rate equates to 4.81%. IFRS 16 also applies to service concession arrangements i.e. Public Private Partnerships (PPP) and similar schemes, and the contractual arrangements continue to be disclosed in Note 36. Right of Use (IFRS 16) liabilities: 2025/26 2024/25 £'000 £'000 Value at 1 April 376 443 Initial Measurement Additions 87 0 Principal repaid in the year (108) (67) Value at 31 March 355 376 Other land and buildings 301 291 Vehicles, plant and equipment 54 85 355 376 Liability analysed by: Current 113 69 Non-current 242 307 355 376 Lease liabilities Within 1 year 113 69 Between 2 and 5 years 79 130 Over 5 years 163 177 Total liabilities 355 376 The Interest expense charged to the Comprehensive Income and Expenditure Statement during 2025/26 is £20,000 (£19,000 in 2024/25), and the expense relating to short term leases is £38,000 (£54,000 in 2024/25). 63 | Perth and Kinross Annual Accounts 2025/26 Page 82 of 314
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21. Property, Plant and Equipment Movements on Fixed Assets 2025/26 in respect of Property, Plant and Equipment are shown below: Movements in 2025/26 Other Vehicles Assets PFI and DBFM Council Land and Plant and Community Surplus Under Total Assets Dwellings Buildings Equipment Assets Assets Construction PPE included in PPE £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gross Book Value As at 1 April 2025 306,940 800,626 82,214 28,149 1,677 98,691 1,318,297 221,419 Additions 34,088 37,839 11,729 1,177 0 8,508 93,341 5,235 Revaluation increases recognised in the Revaluation Reserve 1,941 16,825 0 0 1,063 0 19,829 (2,831) Revaluation decreases recognised in the Revaluation Reserve 0 (20,924) 0 0 (225) 0 (21,149) (7,737) Revaluation increases recognised in the Surplus / Deficit on the Provision of Services 0 763 0 0 22 0 785 (161) Revaluation decreases recognised in the Surplus / Deficit on the Provision of Services 0 (23,521) 0 0 (49) 0 (23,570) (4,867) Derecognition - Disposals (7,291) (1,982) (18,275) (2,399) (35) (216) (30,198) 0 Asset reclassifications 4,901 94,200 0 879 461 (99,648) 793 (4,016) Other movements 0 (1) 0 1 1 (1) 0 0 As at 31 March 2026 340,579 903,825 75,668 27,807 2,915 7,334 1,358,128 207,042 Depreciation As at 1 April 2025 (34) (54,519) (50,615) (17,663) 0 0 (122,831) (14,674) Depreciation charge for 2025/26 (14,151) (24,426) (10,415) (1,166) 0 0 (50,158) (5,334) Depreciation written out to the Revaluation Reserve - Revaluation Gain 6,827 32,337 0 0 0 0 39,164 9,185 Depreciation written out to the Revaluation Reserve - Revaluation Loss 0 8,908 0 0 0 0 8,908 3,332 Depreciation written out to the Surplus / Deficit on the Provision of Services - Revaluation Gain 0 4,139 0 0 0 0 4,139 1,794 Depreciation written out to the Surplus / Deficit on the Provision of Services - Revaluation Loss 0 3,456 0 0 0 0 3,456 363 Derecognition - Disposals 7,291 241 18,126 2,399 0 0 28,057 0 Derecognition - Other 0 0 23 0 0 0 23 0 Asset reclassifications 0 0 0 0 0 0 0 0 Other movements 0 1 0 0 0 0 1 (2) As at 31 March 2026 (67) (29,863) (42,881) (16,430) 0 0 (89,241) (5,336) Net Book Value at 31 March 2026 340,512 873,962 32,787 11,377 2,915 7,334 1,268,887 201,706 64 | Perth and Kinross Annual Accounts 2025/26 Page 83 of 314
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The gross book value above includes £17.791 million of fully depreciated assets which may still be in use (2024/25 £29.585 million). A review has resulted in a derecognition policy for assets that are highly likely to no longer be providing a benefit to the Council, to be disposed of from the fixed asset register. The initial reduction from 2024/25 reflects the implementation of the policy and continued reductions in the value is anticipated for 2026/27. The reporting of book values for Infrastructure Assets is amended following the issue of the Local Government Finance Circular 09/2022. The Finance Circular outlines historic issues for the consistent accounting treatment of derecognised infrastructure components and the reporting of book values by local authorities. A CIPFA task group is progressing a remedy and the CIPFA Code will be updated in due course. To satisfy the audit of the 2025/26 accounts, the following statutory overrides are provided in the Circular: - Statutory Override 1: For accounting periods commencing from 1 April 2021 until 31 March 2027 a local authority is not required to report the gross cost and accumulated depreciation for infrastructure assets. Statutory Override 2: For accounting periods commencing from 1 April 2010 until 31 March 2027 the carrying amount to be derecognised in respect of a replaced part of an infrastructure asset is to be taken to be and accounted for as a nil amount. No subsequent adjustment shall be made to the carrying amount of the asset with respect to that part. The Council has elected to adopt both statutory overrides. The Net Book Value above excludes Infrastructure Assets, when these assets are included the NBV is as follows: Infrastructure Assets £'000 Net Book Value at 1 April 2025 384,536 Additions 49,253 Depreciation (21,305) Net Book Value at 31 March 2026 412,484 The total for all PPE, when Infrastructure Assets are included, is set out below: Total PPE £'000 Total PPE (above) 1,268,887 Net Book Value of Infrastructure Assets 412,484 Total PPE Net Book Value at 31 March 2026 (including Infrastructure Assets) 1,681,371 65 | Perth and Kinross Annual Accounts 2025/26 Page 84 of 314
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Property, Plant and Equipment cont’d £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gross Book Value As at 1 April 2024 319,682 805,561 76,554 26,465 691 36,447 1,265,400 221,776 Additions 29,708 16,159 13,490 1,456 4 54,967 115,784 45 Revaluation increases recognised in the Revaluation Reserve 0 1,252 0 0 126 0 1,378 0 Revaluation decreases recognised in the Revaluation Reserve (45,488) (49,933) 0 0 (40) 0 (95,461) (49,399) Revaluation increases recognised in the Surplus / Deficit on the Provision of Services 0 940 0 0 211 0 1,151 0 Revaluation decreases recognised in the Surplus / Deficit on the Provision of Services 0 (13,426) 0 0 (194) 0 (13,620) (6,358) Derecognition - Disposals (3,249) (508) (7,830) 0 (204) 0 (11,791) 0 Asset reclassifications 6,287 (14,771) 0 228 1,084 7,276 104 0 Other movements 0 55,352 0 0 (1) 1 55,352 55,353 As at 31 March 2025 306,940 800,626 82,214 28,149 1,677 98,691 1,318,297 221,417 Depreciation As at 1 April 2024 0 (35,595) (48,354) (16,383) 0 0 (100,332) (8,467) Depreciation charge for 2023/24 (13,188) (21,219) (9,908) (1,240) 0 0 (45,555) (6,207) Depreciation written out to the Revaluation Reserve - Revaluation Gain 0 495 0 0 0 0 495 0 Depreciation written out to the Revaluation Reserve - Revaluation Loss 10,058 12 0 0 0 0 10,070 0 Depreciation written out to the Surplus / Deficit on the Provision of Services - Revaluation Gain 0 8 0 0 0 0 8 0 Depreciation written out to the Surplus / Deficit on the Provision of Services - Revaluation Loss 0 1,732 0 0 0 0 1,732 0 Derecognition - Dispoals 3,096 8 7,647 0 0 0 10,751 0 Other movements 0 40 0 (40) 0 0 0 0 As at 31 March 2025 (34) (54,519) (50,615) (17,663) 0 0 (122,831) (14,674) Net Book Value at 31 March 2025 306,906 746,107 31,599 10,486 1,677 98,691 1,195,466 206,743 66 | Perth and Kinross Annual Accounts 2025/26 Page 85 of 314
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The reporting of book values for Infrastructure Assets is amended following the issue of the Local Government Finance Circular 09/2022. The Net Book Value above excludes Infrastructure Assets, when these assets are included the NBV is as follows: Infrastructure Assets £'000 Net Book Value at 1 April 2024 347,765 Additions 56,551 Depreciation (19,780) Net Book Value at 31 March 2025 384,536 The total for all PPE, when Infrastructure Assets are included, is set out below: Total PPE £'000 Total PPE (above) 1,195,466 Net Book Value of Infrastructure Assets 384,536 Total PPE Net Book Value at 31 March 2025 (including Infrastructure Assets) 1,580,002 67 | Perth and Kinross Annual Accounts 2025/26 Page 86 of 314
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68 | Perth and Kinross Council Annual Accounts 2025/26 Property, Plant and Equipment cont’d Capital Commitments At 31 March 2026, the Council has entered into a number of contracts for the construction or enhancement of Property, Plant and Equipment in 2025/26 and future years budgeted to cost £41.080 million (31 March 2025 £74.720 million). The total commitment is made up of the following: 2025/26 2024/25 £'000 £'000 Education Projects 10,334 22,045 Roads and Bridges Improvement Schemes 7,929 12,634 Flood Protection 16,196 30,823 Fleet Vehicles 285 779 Council Dwellings 1,985 4,546 Other Capital Projects 4,351 3,893 41,080 74,720 Education projects include Perth High School and Blairgowrie Recreation Centre. Roads and Bridges Improvement Schemes includes the Bertha Park Link Road. Flood Protection includes the Comrie Flood Protection Scheme. Valuation of Assets Revaluations The Council carries out a rolling programme that ensures all Property, Plant and Equipment required to be measured at its current value is revalued by a registered valuer at least every five years. In the intervening years, the Council applies indexation to the previous valuations to reflect the potential inflationary change in the carrying value. Professional Revaluations The Council commissioned a potential movement review of the full 2023/24 valuation for Council Dwellings as at 31 March 2026; and an external valuation for a further selection of assets which was performed during the last quarter of financial year 2025/26. In addition, the Council’s internal valuers performed valuations for a number of assets, including investment properties, and properties requiring revaluation due to redevelopment or a change of use, during the last quarter of financial year 2025/26. In applying the Royal Institution of Chartered Surveyors (RICS) Valuation Global Standards (‘Red Book’), the valuation reports include an explanatory note which provides an update on market conditions and confirms there is adequate evidence on which to base an opinion of value. However, uncertainties do remain and there is the potential for markets to move rapidly in response to the effects of conflict in Eastern Europe and the Middle East. The valuation reports have been used to inform the measurement of non-current assets in these financial statements. The valuers have continued to exercise professional judgment in preparing the valuations and, therefore, this is the best information available to the Council as at 31 March 2026 and can be relied upon. Indexed Revaluations From 1 April 2025, the Code of Practice on Local Authority Accounting in the United Kingdom (the Code) requirements changed in respect of revelations of Property, Plant and Equipment. Where authorities have a rolling programme of revaluations in place and/or the assets are non-property assets subject to indexation, authorities revalue their assets on a rolling basis every five years, with annual indexation applied to assets during the four intervening years. Where authorities cannot obtain indices without undue cost or effort, authorities revalue those assets using a quinquennial revaluation with a desktop revaluation in year three. To meet the requirement, the Council’s internal valuers have researched potential indices and provided a recommendation for those that should be adopted for the calculation of movements in asset values, in the intervening years within the five- year cycle of professional valuations. Indices will be kept under review to ensure they remain relevant for the associated asset types; if a more appropriate index is identified the Council may elect to adopt this in place of the previously utilised index. For 2025/26 the adopted indices are as follows: - BCIS Reference Rates for assets revalued using the DRC methodology; - Consumer Price Index for assets revalued using EUV where a Building is in situ, with Land indexed similarly where it is intrinsically linked to that building (this includes Car Parks); - Savills Scotland Greenfield Land Index for assets revalued using EUV, where the asset only comprises Land (this includes Land based elements of DRC assets). 68 | Perth and Kinross Annual Accounts 2025/26 Page 87 of 314
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69 | Perth and Kinross Council Annual Accounts 2025/26 The movements on indices as set out above for 2025/26 are: Average Valuation Change Movement % £'000 BCIS Reference Rates* 2.5% (15,634) Consumer Price Index 3.3% 487 Savills Scotland Greenfield Land Index 4.2% 2,605 Total Indexation Applied 2025/26 3.3% (12,542) *The BCIS movement in the table above is an average of the rates that are applicable to Perth and Kinross Council assets. The greatest increase was 15.5% and the greatest reduction was 18.0%. Professional revaluations are carried out in accordance with RICS Red Book requirements, while indexation reflects market- based movements applied in intervening period. Although the valuation approaches differ, both are treated equally for accounting purposes under the revaluation model. Note 4 – Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty provides additional information on revaluations. Surplus Assets are valued annually on a fair value basis. In terms of the fair value hierarchy, all Surplus Assets are valued at Level 2 and there were no transfers between Levels during the year. The table below sets out the Gross Book Value of asset categories carried at historic cost and current value at 31 March 2026. This includes assets that have been revalued using indices, introduced for accounting periods commencing from 1 April 2025. Other Council Land and Surplus Dwellings Buildings Assets Total £'000 £'000 £'000 £'000 Carried at historical cost 0 9,726 0 9,726 Values at current value as at: 31 March 2026 339,583 886,813 2,915 1,229,311 31 March 2025 0 140 0 140 31 March 2024 996 0 0 996 31 March 2023 0 7,146 0 7,146 31 March 2022 0 0 0 0 Total Cost or Valuation 340,579 903,825 2,915 1,247,319 Changes in Estimates The Council has made no material changes to accounting estimates for Property, Plant and Equipment in 2025/26 or 2024/25. 22. Heritage Assets Reconciliation of the carrying value of Heritage Assets held by the Council Art War Other Total Collection Memorials £'000 £'000 £'000 £'000 Cost or Valuation Balance at 1 April 2024 51,740 48 26 51,814 Additions 285 0 0 285 Balance at 31 March 2025 52,025 48 26 52,099 Cost or Valuation Balance at 1 April 2025 52,025 48 26 52,099 Additions 0 0 0 0 Balance at 31 March 2026 52,025 48 26 52,099 Art Collection The collection of Fine Art maintained and preserved by Culture Perth and Kinross, on behalf of Perth and Kinross Council, is varied and includes oil paintings (approximately 1,225 items), watercolours (900), drawings (4,000), prints (1,500) and 69 | Perth and Kinross Annual Accounts 2025/26 Page 88 of 314
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70 | Perth and Kinross Council Annual Accounts 2025/26 sculptures (150). The Fine Art collection also includes J D Fergusson and Margaret Morris archives which number approximately 30,000 items and include a number of significant works. The Art Collection also includes silver, glass, ceramics, furniture, Oriental materials, horology, metalwork and jewellery; these are collectively identified as Applied Art. Curators within Culture Perth and Kinross continually monitor the sales values of works by artists within the collection and will revalue similar items if there is evidence of a movement in value. A significant pearl jewellery collection was recognised as donated to Heritage Assets in 2024/25. There were no significant additions in 2025/26. Additions and Disposals of Heritage Assets There has been no significant addition, other than the pearl jewellery collection, either by purchase or donation, to the Fine and Applied Art collection during the current or previous five financial years. The majority of the collections are held in perpetuity, or have disposal conditions attached, and consequently no Fine and Applied Art disposals have occurred during the current and previous five financial years. Fine and Applied Art The Fine Art collection owes its existence largely to the 1,926 bequests of local patrons Robert Hay Robertson and Robert Brough, although the first painting entered the collection as early as 1785. The collection is international in its scope and numbers over 4,000 items. It includes an interesting group of Italian ‘Old Masters’, a small but important group of 19th Century French works, a good group of 17th century Dutch and Flemish paintings and work by English artists including a small but highly important collection of natural history watercolours by Beatrix Potter. Its greatest strength however lies in its holding of Scottish pictures. These span the 16th to the 21st century and include such important works as Loch Katrine by Horatio McCulloch and D Y Cameron’s The Wilds of Assynt, as well as pictures with strong local connections. Amongst these are pictures by local artists, local topographical views and portraits of local individuals. The collection seeks to retain a balance between the historical and the contemporary aspects whilst continuing to develop the holdings of works of specifically local interest. In 1991 the collection was effectively doubled in size with the gifting of the J D Fergusson Art Foundation’s collection of artworks by the Scottish ‘Colourist’ John Duncan Fergusson (1874-1961) and its associated archive. The Applied Art collection has been acquired since 1785 through purchase, gift or bequest. It covers a wide variety of objects and materials, within which the collections of Perth silver and Perthshire glass are unsurpassed in terms of national importance. The ceramics collection contains significant collections of Staffordshire flat-back figures and Martinware studio pottery as well as a collection of studio pottery produced by potter’s native to or resident in the Perth and Kinross area. Other smaller collections include furniture, timepieces, Oriental and other items. The promotion of other cultural events and programmes during the year makes it difficult to reliably estimate the percentage of the Art Collection on display for public viewing. However, all items are held in secure storage and access is permitted to scholars and others for research purposes. The museum collection also includes History and Natural History collections for which an amount of insurance cover has been obtained. These objects and collections, in most instances, are rare and irreplaceable and there is insufficient evidence on which to place a reliable estimate of value. There are in excess of 289,000 items within the History and Natural History collections and the cost of obtaining valuations would be disproportionate in terms of any benefit derived to the user of the financial statements. On this basis, the History and Natural History collections are, therefore, excluded from the carrying value of Heritage Assets held by the Council. The Culture Perth and Kinross Limited Collections Management Framework provides guidance on the collection, disposal or lending of heritage assets. 23. Investment Properties 2025/26 2024/25 £'000 £'000 Rental income from investment property (954) (939) Direct operating expenses arising from investment property 48 50 Balance at end of year (906) (889) 70 | Perth and Kinross Annual Accounts 2025/26 Page 89 of 314
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71 | Perth and Kinross Council Annual Accounts 2025/26 The following table summarises the movement in the fair value of investment properties over the year: 2025/26 2024/25 £'000 £'000 Balance at start of year 16,184 14,715 Additions - Purchases 0 150 Net gain / (loss) from fair value adjustments 1,433 1,480 Transfer to Property, Plant and Equipment (588) (161) Balance at end of year 17,029 16,184 All of the Authority's investment properties are valued at Level 2 on the fair value hierarchy. Values as at 31 March 2026 and 31 March 2025 are as follows: 2025/26 2024/25 £'000 £'000 Recurring fair value measurements using: Industrial and Commercial Land 15,484 14,658 Shops and Offices 1,000 971 Other Investment Properties 545 555 Total Fair Value 17,029 16,184 Valuation Techniques used to Determine Level 2 Fair Values for Investment Properties Significant Observable Inputs – Level 2 The majority of the value of Industrial and Commercial Land relates to sites leased out on ground leases. Market data is available at national and local levels from sector specialists to provide the valuers with information, such as trends and rent yields, for the commercial and industrial markets. Local market activity for ground leases tends to follow national trends and valuations are undertaken using a discounted income approach. Ground leases are longer term arrangements and sites of this nature enjoy 100% occupancy levels; the rental income stream is known and market data for rent yields is available, all of which are observable input. As a result of the conditions of the ground lease agreement, there is no unobservable input. The valuation of investment land leased out on a ground lease therefore requires the use of observable market data and minimal, if any, unobservable data and is regarded as Level 2. Market data providing information on trends and rent yield is available from sector specialists for leased Shops and Offices. Local market data is used to assist the valuation process, and valuations are undertaken using the income approach, discounted using market rates to arrive at a net present value for the income stream. The valuer will also consider other factors, such as the age and condition of the property, when arriving at the final valuation. This requires judgement; however, any unobservable input is not considered to be significant in terms of any adjustment to the fair value of the property. The valuation of the shops and offices is mainly representative of the available market data, and the valuation input is primarily based on observable data. Therefore, the properties are categorised as Level 2. Other Investment Properties primarily relate to land held for development by the private sector, which will generate a receipt to the Council on disposal. Sites held for redevelopment are valued on the basis of the highest and best use of the site, taking into account adjacent and surrounding property, recent market activity, and development plan restrictions. The valuation of these sites is therefore based upon observable input, i.e. local market data, and as such will be regarded as Level 2. Highest and Best Use of Investment Properties In estimating the fair value of the authority’s investment properties, the highest and best use of the properties is their current use. Valuation Techniques There has been no change in the valuation techniques used during the year for investment properties. Valuation Process for Investment Properties The fair value of the Council’s investment property is measured annually at each reporting date. The majority of valuations are carried out internally, in accordance with the methodologies and bases for estimation set out in the professional standards of the Royal Institution of Chartered Surveyors. The Council’s valuation experts work closely with finance officers reporting directly to the Chief Finance Officer on a regular basis regarding all valuation matters. The valuation reports have been used to inform the measurement of Investment properties in these financial statements. The valuers have continued to exercise professional judgement in preparing the valuation and, therefore, this is the best information available to Council as at 31 March 2026 and can be relied upon. 71 | Perth and Kinross Annual Accounts 2025/26 Page 90 of 314
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72 | Perth and Kinross Council Annual Accounts 2025/26 24. Intangible Assets The movement on Intangible Asset balances during the year is as follows: 2025/26 2024/25 Assets Assets £'000 £'000 Balance at start of year Gross carrying amount 5,151 4,292 Accumulated amortisation (2,962) (3,944) Net carrying amount at start of year 2,189 348 Additions: Purchases 240 3,073 Other disposals: Gross Carrying Amount (1,380) (2,214) Accumulated amortisation 1,358 2,214 Amortisation for the period (1,191) (1,232) Net carrying amount at end of year 1,216 2,189 Comprising: Gross carrying amounts 4,011 5,151 Accumulated amortisation (2,795) (2,962) 1,216 2,189 Intangible Assets include the cost of software licences and bespoke software solutions deemed to provide future benefit to the Council. These items have been included and amortised over their perceived useful life. 25. Assets Held for Sale 2025/26 2024/25 £'000 £'000 Balance outstanding at start of year 875 676 Assets newly classified as held for sale 0 205 Revaluation gains 60 142 Assets declassified as held for sale (205) (148) Assets sold (165) 0 Balance outstanding at year end 565 875 Current 26. Long Term Debtors 2025/26 2024/25 £'000 £'000 Other Entities and Individuals 357 530 Total 357 530 27. Inventories 2025/26 2024/25 £'000 £'000 Balance outstanding at start of year 620 632 Purchases 3,715 3,621 Recognised as an expense in the year (3,741) (3,604) Written off balances (4) (32) Reversal of write-offs previous years 3 3 Balance outstanding at end of year 593 620 Consumables and Maintenance Materials 72 | Perth and Kinross Annual Accounts 2025/26 Page 91 of 314
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73 | Perth and Kinross Council Annual Accounts 2025/26 28. Debtors 2025/25 2025/26 2024/25 2024/25 £'000 £'000 £'000 £'000 Gross Net Gross Net Scottish Government 15,341 12,969 Central Government 8,064 10,418 Other Local Authorities 387 184 NHS Bodies 1,088 704 Public Corporations 53 6 Other Entities and Individuals: Housing Rent 4,008 3,471 less: Impairment (2,126) (1,923) 1,882 1,548 Statutory Additions 7,003 6,649 less: Impairment (7,003) (6,649) 0 0 Other 9,194 10,497 less: Impairment (1,669) (1,915) 7,525 8,582 Trade 12,168 12,467 less: Impairment (3,217) (1,488) 8,951 10,979 Council Tax 22,698 22,812 less: Impairment (18,018) (18,195) 4,680 4,617 Total 47,971 50,007 29. Creditors 2025/26 2025/26 2024/25 2024/25 £'000 £'000 £'000 £'000 Gross Net Gross Net Scottish Government (914) (446) Central Government (8,509) (8,005) Other Local Authorities (333) (1,292) NHS Bodies (139) (241) Public Corporations and Trading Funds 0 0 Other Entities and Individuals: Current Right of Use Liabiltiy (6,244) (9,129) Employee Statutory Adjustment Account (9,645) (9,372) Prepaid Council Tax (2,169) (2,712) Other (29,215) (28,734) (47,273) (49,947) Trade Creditors (26,895) (35,569) Total (84,063) (95,500) 30. Provisions Other than Bad and Doubtful Debts Self-Insured/Uninsured Losses The Insurance Fund makes provision for losses arising from Property, Employers’ Liability, Public Liability, Motor, Fidelity Guarantee, Computer, Engineering and Travel/Personal Accident claims. The provision provides for an estimate of all liabilities likely to be incurred by the Council in respect of self-insured and uninsured losses in respect of incidents that have arisen prior to 1 April 2026. Payments to 3rd parties The Council has made provision for a number of potential compensation claims arising from significant capital projects within the Council’s capital programme. 73 | Perth and Kinross Annual Accounts 2025/26 Page 92 of 314
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74 | Perth and Kinross Council Annual Accounts 2025/26 Commercial Rent The Council manages the rental leases for a number of commercial properties. The Council had previously made provision for rent refunds due to the downturn in the economic climate affecting retail trading performance which are no longer required. Contractor disputes/legal cases The Council manages disputes and legal claims. Provision has been made for an ongoing legal appeal which may result in additional costs to the Council. Self Insured/ Payments Commercial Contractor Total Uninsured to 3rd parties Rent disputes/ Losses legal cases £'000 £'000 £'000 £'000 £'000 Balance as at 1 April 2025 2,014 2,577 40 134 4,765 Additional provisions made in 2025/26 935 954 0 1,000 2,889 Amounts used in 2025/26 (1,097) (763) (134) (1,994) Unused amounts reversed in 2025/26 0 (565) (40) 0 (605) Balance as at 31 March 2026 1,852 2,203 0 1,000 5,055 Balance Sheet Disclosure: Less than 12 months 391 0 0 1,000 1,391 Over 12 months 1,461 2,203 0 0 3,664 1,852 2,203 0 1,000 5,055 31. Usable Reserves Movements in the Council’s Usable Reserves are detailed in the Movement in Reserves Statement and notes 5 and 6. 32. Unusable Reserves 2025/26 2024/25 £'000 £'000 Revaluation Reserve (377,955) (336,851) Capital Adjustments Account (286,189) (325,847) Financial Instruments Adjustment Account 15,109 15,732 Pensions Reserve 17,753 18,533 Employee Statutory Adjustment Account 9,645 9,372 Total Unusable Reserves (621,637) (619,061) Revaluation Reserve The Revaluation Reserve contains the gains made by the Council arising from increases in the value of its Property, Plant and Equipment. The balance is reduced when assets with accumulated gains are: - re-valued downwards or impaired and the gains are lost; - used in the provision of services and the gains are consumed through depreciation; or - disposed of and the gains are realised. The Reserve contains only revaluation gains accumulated since 1 April 2007, the date that the Reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account. 74 | Perth and Kinross Annual Accounts 2025/26 Page 93 of 314
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75 | Perth and Kinross Council Annual Accounts 2025/26 2025/26 2024/25 £'000 £'000 Balance at 1 April (336,851) (425,931) Upward revaluation of assets (58,993) (1,873) Downward revaluation of assets and impairment losses not charged to the (Surplus)/ Deficit on the Provision of Services 12,241 85,391 Sub-Total (383,603) (342,413) Difference between fair value depreciation and historical cost depreciation 4,385 5,411 Accumulated gains on assets sold or scrapped written out to the Capital Adjustment Account 1,263 151 Balance at 31 March (377,955) (336,851) Capital Adjustment Account The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The Account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement. The Account is credited with the amounts set aside by the Council as finance for the costs of acquisition, construction and enhancement. The Account contains accumulated gains and losses on Investment Properties and gains recognised on donated assets that have yet to be consumed by the Council. The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date that the Revaluation Reserve was created to hold such gains. Note 5 provides details of the source of all the transactions posted to the Account, apart from those involving the Revaluation Reserve. 2025/26 2024/25 £'000 £'000 Balance at 1 April (325,847) (338,099) Reversal of items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement Charges for depreciation and impairment of non current assets 67,079 59,923 Revaluation (gains)/losses on Property, Plant and Equipment 15,130 10,587 Amortisation of intangible assets 1,191 1,232 Revenue expenditure funded from capital under statute 202 2,619 Amounts of non current assets written off on disposal as part of the gain/loss 2,306 1,040 (239,939) (262,698) Adjusting amounts written out of the Revaluation Reserve (1,263) (151) (241,202) (262,849) Capital financing applied in the year: Use of the Capital Receipts Reserve to finance new capital expenditure (404) (1,672) Donated assets (80) (285) Capital grants and contributions credited to the Comprehensive Income and Expenditure Statement (24,198) (42,079) Application of grants to capital financing from the Capital Grants Unapplied Account 215 1,060 Statutory provision for the financing of capital investment charged against the General Fund and HRA balances (17,707) (16,387) Statutory adjustment for Financial Flexibilities applied to Service Concession Arrangements (see note 36) 2,746 2,914 Capital expenditure charged against the general fund and HRA balances (4,017) (5,136) (284,647) (324,434) Movements in the fair value of the Investment Properties (1,433) (1,480) Movements in value of finance leases (109) 67 Balance at 31 March (286,189) (325,847) 75 | Perth and Kinross Annual Accounts 2025/26 Page 94 of 314
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76 | Perth and Kinross Council Annual Accounts 2025/26 Financial Instruments Adjustment Account The Financial Instruments Adjustment Account (FIAA) is used to hold the losses or gains arising on the early redemption of loans per statutory provisions, as well as the historic timing differences arising from the different arrangements for accounting for income and expenses relating to certain financial instruments. These statutory provisions allow for annual charges to be made in accordance with the original amortisation schedules which existed at the time the provisions were introduced. The Council uses the Account to manage the balance of premiums and discounts which existed at 31 March 2007 which arose on the early redemption of loans. Any premiums or discounts incurred or received after this date may also be held in this Account. These are subsequently charged to the General Fund and Housing Revenue Account (HRA) in accordance with statutory provisions and so spreading the burden on Council Tax and Housing Rents. The Council also uses the FIAA to hold the difference in interest charges which arose on stepped interest rate loans. These had low interest rates in the early years before “stepping up” to a higher interest rate. Interest on such loans is now required to be charged consistently over the life of the loan using the Effective Interest Rate Method. The difference in the cumulative charges to 31 March 2007 under this new method was debited to the FIAA and will be charged to the General Fund and the HRA over the life of the loans under the statutory provisions. Accordingly, the balance on the FIAA as at 31 March 2026 in respect of the above provisions will be charged to the General Fund and HRA over the next 42 years. The movements on the FIAA during the year are shown below: 2025/26 2024/25 £'000 £'000 Balance at 1 April 15,732 16,358 Proportion of discounts incurred in previous financial years credited against the General Fund and HRA Balance in accordance with statutory requirements in the year 4 4 Proportion of premiums incurred in previous financial years charged against the General Fund and HRA Balance in accordance with statutory requirements in the year (495) (608) Difference on restatement of Stepped Interest Rate Loans charged against the General Fund and HRA Balance in accordance with statutory requirements in the year (21) (22) Adjustment on the extinguishment of stepped interest rate loans charged against the General Fund and HRA Balance in accordance with statutory requirements in the year (111) 0 Balance at 31 March 15,109 15,732 Pensions Reserve The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post- employment benefits and for funding benefits in accordance with statutory provisions. The Council accounts for post- employment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed as the Council makes employer’s contributions to pensions funds or eventually pays any pensions for which it is directly responsible. The debit balance on the Pensions Reserve therefore shows a substantial shortfall between the benefits earned by past and current employees and the resources the Council has set aside to meet them. 2025/26 2024/25 £'000 £'000 Balance at 1 April 18,533 20,748 Actuarial Loss on Pensions Assets and Liabilities 3,706 341 Reversal of Items Relating to Retirement Benefits Debited or Credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement 18,937 20,738 Employer's Pensions Contributions and Direct Payments to Pensioners Payable in the Year (23,423) (23,294) Balance at 31 March 17,753 18,533 76 | Perth and Kinross Annual Accounts 2025/26 Page 95 of 314
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77 | Perth and Kinross Council Annual Accounts 2025/26 Employee Statutory Adjustment Account The Employee Statutory Adjustment Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year. e.g. annual leave entitlement carried forward at 31 March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account. 2025/26 2024/25 £'000 £'000 Balance at 1 April 9,372 8,186 Cancellation of accrual made at the end of the preceding year (9,372) (8,186) Amounts accrued at the end of the current year 9,645 9,372 Balance at 31 March 9,645 9,372 33. Impairment Losses Movements in the value of properties during the year were mainly due to the revaluation of Council Dwellings and the revaluation, including indexation, of various other individual operational buildings such as Schools (including IIL Community Campuses), Offices, Depots, Industrial Units and Shops. Investment properties were also revalued during 2025/26. One impairment loss of £216,463 is recognised in 2025/26 because of changes to an HRA New Build scheme at Balhousie. The value impaired has been calculated as an apportionment of the addition recognised in 2024/25 that is no longer included in the updated plans for this site. All other losses arising have been assessed as a revaluation loss rather than a loss attributed to deterioration in the anticipated level of the performance of the properties. 34. Grants The Council credited the following grants, contributions and donations to the Comprehensive Income and Expenditure Statement in 2025/26. 2025/26 2024/25 £'000 £'000 Credited to Taxation and Non Specific Grant Income Scottish Government - General Capital Grant 12,438 27,564 Scottish Government - Council Dwellings 7,941 9,615 Scottish Government - Specific Capital Grant 1,601 480 Developer Contributions 824 2,401 Other Third Party Contributions 1,179 2,019 23,983 42,079 Credited to Services Scottish Government - Bertha Park 2,529 2,525 Scottish Government - Riverside Primary 2,088 681 Scottish Government - Bail Supervision 3,062 791 Scottish Government - Pupil Equity Funding 1,864 1,864 Scottish Government - Scottish Attainment 997 748 Scottish Government - Community Led Local Development 739 691 Scottish Government - No One Left Behind 2,037 1,826 Scottish Government - Criminal Justice 1,922 1,834 Scottish Government - Other 7,449 5,371 Scottish Government Directorates & Bodies 241 245 Sport Scotland 405 423 Ukraine funding 357 1,087 Department for Levelling Up, Housing and Communities - Shared Prosperity 1,877 2,664 Other Third Party Contributions 3,877 820 29,444 21,570 77 | Perth and Kinross Annual Accounts 2025/26 Page 96 of 314
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78 | Perth and Kinross Council Annual Accounts 2025/26 The Council has received a number of grants, contributions and donations that have yet to be recognised as income as they have conditions attached to them that will require the monies or property to be returned. The balance at the year-end is as follows: 2025/26 2024/25 £'000 £'000 Revenue Grants - Received in Advance Scottish Government 779 619 Other grants and contributions 340 493 Balance at 31 March 1,119 1,112 35. Capital Expenditure and Capital Financing The total amount of capital expenditure incurred in the year is shown in the table below (including the value of assets acquired under PFI/PPP/DBFM contracts), together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the Council, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the Council that has yet to be financed. The CFR is analysed below. 2025/26 2024/25 £'000 £'000 Capital Financing Requirements b/fwd 932,783 816,351 Capital Expenditure Property, Plant and Equipment 137,287 173,884 Intangible Assets 240 3,073 Revenue Expenditure funded from Capital 202 775 137,729 177,732 1,070,512 994,083 Sources of Finance Capital Receipts (403) (1,672) Government Grants and Contributions (23,983) (41,019) Revenue Contributions (4,017) (5,135) Service concession flexibility 2,746 2,914 Loans Fund Principal Repayments (17,702) (16,388) (43,359) (61,300) Closing Capital Financing Requirement c/fwd 1,027,153 932,783 Movement 94,370 116,432 Analysed as: Increase in need to borrow 99,406 122,375 Net assets acquired under PPP contract (5,036) (5,943) 94,370 116,432 36. Public Finance Initiatives and Similar Contracts The Council has an obligation for 25 years commencing September 2000 in respect of a unitary charge payment to be made for office accommodation and a car park. The unitary charge for 2025/26 for the office accommodation was £1.257 million until September 2025 (2024/25 £2.657 million). The unitary charge for 2025/26 for the car park was £186,000 (2024/25 £408,000). The contract payments ended in September 2025 and the Council purchased both Pullar House office accommodation and the car park at that point. The project agreement for provision of the facilities included the transfer of four Council properties to the operator in exchange for reduced annual payments over the life of the agreement. At the end of this project these assets did not revert back to the Council. The Council has an obligation for six school campuses in a Public Private Partnership with Axiom Education (Perth and Kinross) Ltd. North Inch Primary was brought into operation in 2011/12. Breadalbane Campus at Aberfeldy was completed 78 | Perth and Kinross Annual Accounts 2025/26 Page 97 of 314
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79 | Perth and Kinross Council Annual Accounts 2025/26 in 2010/11 and the campuses at Blairgowrie, Perth South, Kinross, Crieff and the Roman Catholic School Campus were brought into operation during 2009/10. The Council will make unitary charge payments until the contract ends in 2042, at which time the campuses will be handed back to the Council at no cost. The estimated capital value of the scheme is £127.687 million. The unitary charge for 2025/26 for the campuses operating in the year was £23.612 million (2024/25 £22.404 million). Future agreed payments will increase in line with inflation. The unitary charge payments for 2026/27 for all school campuses will be £24.475 million. During 2019/20 the Council incurred an obligation for Bertha Park High School with the asset and liability recognised in the Annual Accounts. The unitary charge for 2025/26 was £3.351 million (2024/25 £3.311 million). Future agreed payments will increase in line with inflation. The unitary charge for 2026/27 for Bertha Park will be £3.369 million. With effect from 1 April 2024, IFRS 16 Leases applies to service concession arrangements. IFRS 16 requires the lease liability to be remeasured whenever there is a change in indexation, or other changes in a rate, which impacts upon future unitary charge payments. Under IAS17 Leases, the additional cost relating to the financing of the asset was expensed as Contingent Rent. Under IFRS 16, the net present value of future payments that comprise the liability is recalculated based on the revised level of payments. This has resulted in an increase in Balance Sheet assets of £5.142 million in 2025/26 (opening adjustment £54.476 million in 2024/25 with £876,000 in respect of the annual recalculation) this is subsequently reduced through the revaluation process. The increase in the Balance Sheet assets is met with a corresponding increase in the Balance Sheet liabilities. Movements in Fixed Assets under Public Private Partnerships during the year were: 2025/26 2024/25 £'000 £'000 Net Book Value at 1 April 206,743 213,309 IFRS16 Transition Restatement 0 54,476 IFRS16 Annual Revaluation 5,142 876 Additions 5,235 795 Reclassification (4,016) 0 Revaluations (20,738) (56,506) Depreciation (5,334) (6,207) Depreciation write back 14,674 0 Net Book Value at 31 March 201,706 206,743 Movements in Public Private Partnership Liabilities during the year were: 2025/26 2024/25 £'000 £'000 Liabilities at 1 April 161,535 115,040 IFRS16 Transition Restatement 0 54,476 IFRS16 Annual Revaluation 5,142 876 Amounts repaid in year (7,782) (8,857) Liabilities at 31 March 158,895 161,535 Disclosed in the Balance Sheet as: Long Term Liabilities 152,694 153,960 Creditors 6,201 7,575 Liabilities at 31 March 158,895 161,535 79 | Perth and Kinross Annual Accounts 2025/26 Page 98 of 314
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80 | Perth and Kinross Council Annual Accounts 2025/26 Future Public Private Partnership liabilities due to be met: Repayment Interest Service Lifecycle TOTAL of Liability Charges Maintenance £'000 £'000 £'000 £'000 £'000 Due within one year 6,201 7,367 8,672 4,883 27,123 Due in 2 to 5 years 28,766 26,427 37,058 19,543 111,794 Due in 6 to 10 years 49,180 24,460 52,159 20,807 146,606 Due in 11 to 5 years 61,218 11,834 59,504 23,207 155,763 Due in 16 to 20 years 13,530 1,096 8,442 3,297 26,365 Total 158,895 71,184 165,835 71,737 467,651 These figures are based on the actual cash amount estimated to be payable and not on prices at 31 March 2026. The estimates for Service Charges and Lifecycle Maintenance include an assumed 2.5% inflationary uplift in future years. The future inflationary uplift is not applied to the estimates for the Repayment of Liability and Interest costs. IFRS 16 requires that these reflect only the actual RPI movement to date. In September 2022, the Scottish Government issued statutory guidance (Local Government Finance Circular 10-2022) which allowed Councils temporary flexibility in accounting for Service Concession Arrangements entered into prior to April 2022. The guidance sets out the accounting requirements and options for recognising the capital repayment element of these arrangements and permits Councils to undertake internal accounting changes to reprofile the repayment charged to General Fund over an extended period of time. The Service Concession Arrangements for which the revised accounting treatment has been adopted include the Council's PPP arrangement for the six school campuses, and the Design, Build, Finance, Maintain (DBFM) scheme for the Bertha Park Secondary School. The Council has applied the permitted flexibility in financial year 2023/24 on a retrospective annuity basis over 50 years. This approach is consistent with current Council Loans Fund policy and is considered prudent, sustainable, and affordable over the useful life of the asset. The 50 year annuity period replicates the useful asset life of other similar type assets held on the Council’s balance sheet i.e. schools. The current unitary charge repayments to contractors will continue until the end of the PPP and DBFM contracts, however, the use of this flexibility results in a one-off credit to the General Fund and ongoing annual savings for a period of time. At the end of the PPP and DBFM contracts, the unitary charge is no longer paid but reprofiled debt repayments continue to be charged to the General Fund until the debt liability has been extinguished. The calculation of the repayment charges, using the asset life annuity basis, is compared to the current charges which are made over the contract period. By applying the flexibility, savings pre 2025/26 are £37.175 million (as detailed in the table below). Comparison of current and revised debt repayments Current Repayment Revised Repayment (Reduction) / Cost £’000 £’000 £’000 Pre 2025/26 53,069 15,894 (37,175) Paid in 2025/26 4,320 1,574 (2,746) Payable in 2026/27 3,943 1,647 (2,296) Payable within 2 to 5 years 18,143 7,378 (10,765) Payable within 6 to 10 years 31,033 11,299 (19,734) Payable within 11 to 15 years 39,070 14,150 (24,920) Payable within 16 to 20 years 11,156 17,726 6,570 Payable within 21 to 25 years 0 22,212 22,212 Payable within 26 to 30 years 0 27,842 27,842 Payable within 31 to 35 years 0 27,996 27,996 Payable within 36 to 40 years 0 7,259 7,259 Payable within 41 to 45 years 0 5,757 5,757 160,734 160,734 0 In addition, an in-year saving occurs in scheduled debt repayments in 2025/26 of £2.746 million (2024/25 £2.914 million). This will be followed by a reduction in the annual charges for a further 17 years and then the statutory charges will continue until the end of the reprofiled debt repayment period. Over the full asset lives the total repayment for the debt liability remains the same. 80 | Perth and Kinross Annual Accounts 2025/26 Page 99 of 314
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81 | Perth and Kinross Council Annual Accounts 2025/26 The statutory adjustment for 2025/26 has the following impact on the 2025/26 Balance sheet (Capital Adjustment Account) and Movement in Reserves statement: Impact on Balance Sheet and Movement in Reserves Statement 2025/26 2024/25 £’000 £’000 Capital Adjustment Account 2,746 2,914 Movement in Reserves Statement (2,746) (2,914) 37. Authorisation of Annual Accounts The unaudited Annual Accounts were authorised for issue by the Chief Finance Officer on 29 June 2026. Events taking place after this date are not reflected in the financial statements or notes. Where events taking place before this date provided information about conditions existing at 31 March 2026, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information. 38. Contingent Liabilities The Council has made provision for insurance claims where appropriate and has an Insurance Fund to manage insurable risks. There is also a contingent liability in respect of potential insurance claims incurred but not reported which cannot be forecast with any certainty. There is a contingent liability relating to Municipal Mutual Insurance (MMI), who were the insurers for Tayside Regional Council (TRC). Following a Supreme Court judgement in November 2012 a scheme of arrangement has been put in place where MMI will seek to recover, from the scheme members or successors, 25% (and increase from 15% applied after April 2016) of all claims paid out since 1993 on policies taken out by TRC (less an overall total reduction of £50,000). Perth and Kinross Council is one of the successor bodies of TRC. The remaining assets of the TRC Insurance Fund will not be sufficient to meet all future liabilities due to the long-time horizon for certain types of claims. The Limitation (Childhood Abuse) (Scotland) Act 2017 came into force on 4 October 2017 and removed the time limit on raising civil court actions relating to childhood abuse. The Council continues to receive claims; these claims continue to be assessed. In addition, it is not possible to estimate the potential financial effect in respect of future claims the Council may receive due to a number of uncertainties. This includes the number of claims which may arise and the extent of compensation which could arise. Additionally, the extent of re-imbursement which might arise from historic or current insurance policies cannot currently be assessed. The Council may also receive claims in respect of educational provision. Previous land tribunal and adjudication claims are now settled. The Council operates services from a number of properties as a tenant. In the future there may be a liability in respect of property costs to reinstate buildings to their original specification and design. The Council has a potential liability in respect of financial guarantees for the Tayside Pension Fund in respect of Scheduled Bodies and Admitted Bodies should they cease to exist, withdraw from the Pension Scheme or otherwise become unable to continue covering any unfunded liabilities. These bodies include Tayside and Central Scotland Transport Partnership, Live Active Leisure Ltd, Perth Theatre and Concert Hall Limited, Perth and Kinross Countryside Trust, Perth and Kinross Society for the Blind, Perth Citizens’ Advice Bureau and Culture Perth and Kinross. In addition, the Council has a potential liability in respect of pensions for the Convention of Scottish Local Authorities (COSLA) should the organisation cease to exist. The Council may have a pay liability pertaining to changes in legislation which could impact on calculation of pay. Following the issue of the Reinforced Autoclaved Aerated Concrete (RAAC) safety alert in 2019, the Council previously carried out a review of existing building condition information which was followed up with non-invasive visual inspections where required. A subsequent inspection identified two sites with RAAC, one of which has been remediated. A RAAC Management Plan is in place for the remaining site and regular inspections are undertaken to monitor the condition of RAAC for any signs of deterioration. No significant changes have been recorded to date. The Council has a robust Building Condition Survey programme in place which comprises a 5-year rolling survey programme and also includes an annual review of survey data to monitor any changes in asset condition. 81 | Perth and Kinross Annual Accounts 2025/26 Page 100 of 314
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82 | Perth and Kinross Council Annual Accounts 2025/26 39. Financial Instruments Accounting regulations require the ‘financial instruments’ (investment, lending and borrowing) of the Council shown on the balance sheet to be further analysed into various defined categories. The investments, lending and borrowing disclosed in the balance sheet are made up of the following categories of ‘financial instruments’. 31 March 31 March 31 March 31 March 31 March 31 March 2026 2025 2026 2025 2026 2025 £'000 £'000 £'000 £'000 £'000 £'000 Financial Liabilities at amortised cost Public works Loan Board (PWLB) 645,695 619,500 112,000 35,697 757,695 655,197 Market Loans 54,176 64,308 515 515 54,691 64,823 Short Term Borrowing 0 0 21,410 4,369 21,410 4,369 Creditors 0 0 52,878 61,852 52,878 61,852 Total borrowings 699,871 683,808 186,803 102,433 886,674 786,241 Financial Assets at amortised cost Cash and Cash Equivalents 0 0 17,559 24,645 17,559 24,645 Investment Deposits 0 0 5,014 0 5,014 0 Mortgages / Loans to Others 357 530 253 185 610 715 Debtors 0 0 7,941 8,333 7,941 8,333 Total investments 357 530 30,767 33,163 31,124 33,693 Long-Term Current Total Lender Option Borrower Option (LOBO) borrowings of £34.176 million have been included in long term borrowing as at 31 March 2026 but have a call date in the next 12 months. The above long term figures are based on the 2016 Code which requires that in undertaking Effective Interest Rate (EIR) calculations, the maturity period for a LOBO is taken as being the contractual period to maturity. Financial Instruments Gains / Losses The gains and losses recognised in the Comprehensive Income and Expenditure Account in relation to financial instruments are as follows: Financial Financial Liabilities Assets Liabilities measured at Loans and Total Total amortised cost receivables 2025/26 2024/25 £'000 £'000 £'000 £'000 Interest expense 29,325 0 29,325 25,519 Losses on derecognition 2,901 0 2,901 0 Interest payable and similar charges 32,226 0 32,226 25,519 Interest income 0 (1,207) (1,207) (2,551) Gains on derecognition (6,056) 0 (6,056) 0 Interest and investment income (6,056) (1,207) (7,263) (2,551) (Gains)/losses on revaluation (21) (5) (26) (2) Surplus arising on revaluation of financial assets (21) (5) (26) (2) Net loss/(gain) for the year 26,149 (1,212) 24,937 22,966 Fair Value of Liabilities Carried at Amortised Cost The fair value of each class of financial assets and liabilities which are carried in the balance sheet as at 31 March 2026 at amortised cost is disclosed below. 82 | Perth and Kinross Annual Accounts 2025/26 Page 101 of 314
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83 | Perth and Kinross Council Annual Accounts 2025/26 Methods and Assumptions in valuation technique: The fair value of an instrument is determined by calculating the Net Present Value (NPV) of future cash flows, which provides an estimate of the value of payments in the future in today’s terms. The discount rate used in the NPV calculation is the rate applicable in the market on the date of valuation for an instrument with the same structure, terms and remaining duration. For debt, this will be the new borrowing rate since premature repayment rates include a margin which represents the lender's profit as a result of rescheduling the loan; this is not included in the fair value calculation since any motivation other than securing a fair price should be ignored. In addition, lenders do not have the ability to force the Council to repay debt early. The rates quoted in this valuation were obtained by the Council’s treasury management consultants from the market on 31 March 2026, using bid prices where applicable. The calculations are made with the following assumptions: • For Public Works Loans Board (PWLB) debt, the discount rates used are the rates for new borrowing as per rate sheet number 126/26 on 31 March 2026 (pm). • For other market debt and investments, the discount rates used are the rates available for an instrument with the same terms from a comparable lender. • Interpolation techniques have been used between available rates where the exact maturity period was not available. • No early repayment or impairment is recognised. • Fair values have been calculated for all instruments in the portfolio. The fair values are calculated as follows: Fair Value of Financial Liabilities Carried at Amortised Cost Carrying Amount Fair Value Carrying amount Fair value £'000 £'000 £'000 £'000 Public Works Loans Board (PWLB) 757,695 479,344 655,197 379,618 Market Loans (including LOBOs) 54,691 46,562 64,823 54,785 Short-term Borrowing 18,605 18,605 1,648 1,648 Other (Special Loans) 2,805 2,805 2,721 2,721 Creditors 52,878 52,878 61,852 61,852 Total Financial Liabilties 886,674 600,194 786,241 500,624 31 March 2026 31 March 2025 The Fair value is significantly less than the carrying amount because the majority of the Council’s long-term portfolio of loans are fixed rate loans where the interest rate payable is lower than the rates available for similar loans at the balance sheet date. The difference between the carrying amount and the fair value therefore represents the discount the Council would receive from the lender in the event these loans were to be repaid at that date. For comparison, if the Council were to have repaid all the loans to the PWLB on the balance sheet date, a total of £515 million would have been payable after applying the PWLB’s premature redemption rates applicable on that date. This is higher than the Fair Value shown in the table above, as the PWLB premature redemption rates include an additional profit margin over their comparative new borrowing rates. Fair Value of Financial Assets Carried at Amortised Cost Carrying Amount Fair Value Carrying amount Fair value £'000 £'000 £'000 £'000 Cash and Cash Equivalents 17,559 17,559 24,645 24,645 Deposits with Banks and Building Societies 5,014 5,014 0 0 Mortgages 215 215 230 230 Loans to Others 395 395 485 485 Debtors (Long and short term) 7,941 7,941 8,333 8,333 Total Financial Assets 31,124 31,124 33,693 33,693 31 March 2026 31 March 2025 83 | Perth and Kinross Annual Accounts 2025/26 Page 102 of 314
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84 | Perth and Kinross Council Annual Accounts 2025/26 Where the fair value is higher than the carrying amount it’s because the Council’s portfolio of investments includes fixed rate deposits where the interest rate receivable is higher than rates available for similar deposits at the balance sheet date. Where the fair value is the same or lower than the carrying value, it’s because the interest receivable is the same or lower than the rates on the balance sheet date, or there is only a very short time left to maturity. For 2025/26, the fair value has been taken as the principal amount outstanding together with accrued interest, given the short-term nature of the instruments. Nature and Extent of Risks Arising from Financial Instruments The Council’s management of treasury risks is intended to minimise the Council’s exposure to the unpredictability of financial markets and to protect the financial resources available to fund services. The Council has fully adopted CIPFA’s Code of Treasury Management Practices and has written principles for overall risk management as well as written policies and procedures covering specific areas such as credit risk, liquidity risk and market risk. (i) Credit Risk Credit risk arises from the short-term lending of surplus funds to banks, building societies, Money Market Funds and other local authorities as well as credit exposures to the Council’s customers. It is the policy of the Council to place deposits only with a limited number of high quality banks, building societies and other financial institutions whose credit rating, together with other market information, is independently assessed as sufficiently secure by the Council’s treasury advisers and to restrict lending to a prudent maximum amount and duration for each institution. The Council’s policy also includes lending to other local authorities in the UK. Under the terms of the Council’s approved Treasury policy, only the highest rated banks and financial institutions are used. Accordingly, the expected credit loss on such deposits is deemed negligible, and no expected credit loss provision has been provided in the Income and Expenditure account for 2025/26 (2024/25 nil) on the grounds of immateriality. Applying historic default rates for the counterparties used by the Council as at 31 March 2026 shows the expected credit loss to be less than 0.02% to 0.03% of the principal sums deposited, whilst the actual historic default experienced by the Council is nil. Further, there is no information to indicate that this position has changed since the balance sheet date. The following analysis summarises the Council’s potential maximum exposure to credit risk, based on past experience and current market conditions. Historical Historical experience Estimated Amounts at 31 experience adjusted for maximum exposure March 2026 of default market conditions to default and as at 31 March 2026 uncollectability £'000 % % £'000 Deposits with banks and other financial institutions 22,000 0 0 0 Loans to Others 610 0 0 0 Customers 7,941 16.1 16.1 1,278 Total 30,551 - - 1,278 The Council’s overall exposure to credit risk in relation to its deposits in banks and other financial institutions of £22 million above cannot be assessed generally, as the risk of non-payment of the principal sums or interest is specific to each individual institution. Experience indicates that any such non-payment is rare, and there is no evidence that any risk of default existed at 31 March 2026. The repayment profile of these deposits, including loans to others, is shown below: 31 March 31 March 2026 2025 £'000 £'000 Less than three months 16,986 24,182 Three to six months 5,014 0 Total 22,000 24,182 84 | Perth and Kinross Annual Accounts 2025/26 Page 103 of 314
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85 | Perth and Kinross Council Annual Accounts 2025/26 Loans to Others The Council initiates a legal charge on property where, for example, clients require assistance with payment of care fees, but cannot pay immediately until such time as their property is sold. The carrying value of the total amount outstanding as at 31 March 2026 in this category is £395,000 and experience of default is minimal. The Council has granted mortgages for essential property repairs in shared ownership properties, as well as secured loans to property owners to bring their properties back into use for affordable rent under the Empty Home Loans Fund (EHLF) scheme. The total amount outstanding as at 31 March 2026 is £215,000 with no experience of default. The total amount of Loans to Others of £610,000 can be analysed as follows: 31 March 31 March 2026 2025 £'000 £'000 Less than three months 63 81 Three to six months 63 77 Six months to one year 127 145 More than one year 357 412 Total 610 715 Debtors The Council does not generally allow credit for customers, such that £3.141 million of the £7.941 million balance is past its due date for payment. 31 March 31 March 2026 2025 £'000 £'000 Less than three months 48 1,901 Three to six months 232 1,085 Six months to one year 910 884 More than one year 1,951 1,523 Total 3,141 5,393 (ii) Liquidity Risk The Council has access to borrowings from the money markets to cover day to day cashflow needs, as well as borrowing from the Public Works Loans Board or money markets for longer term funding requirements. As a result, there is no significant risk that the Council will be unable to raise finance to meet its commitments under financial instruments. The Council manages its portfolio in conjunction with interest rate forecasts to reduce the risk of a large proportion of its borrowing maturing at a time of higher interest rates, and so reduce the financial impact of re-financing at an unfavourable time. In addition, the monitoring of interest rate movements for the identification of debt rescheduling opportunities to amend the maturity profile, as well as achieving savings in interest charges, is undertaken on a continuous basis to further mitigate any refinancing risks. 85 | Perth and Kinross Annual Accounts 2025/26 Page 104 of 314
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86 | Perth and Kinross Council Annual Accounts 2025/26 The maturity structure of financial liabilities is as follows (at nominal value): Loans outstanding 31 March 31 March 2026 2025 £'000 £'000 Public Works Loans Board 754,000 652,000 Market debt 53,200 63,200 Temporary borrowing 18,287 1,599 Local bonds 2,796 2,711 Total 828,283 719,510 Less than 1 year 129,389 36,810 Between 1 and 2 years 125,805 27,500 Between 2 and 5 years 97,139 87,500 Between 5 and 10 years 3,750 20,000 Between 10 to 15 years 5,000 5,000 More than 15 years 467,200 542,700 Total 828,283 719,510 In the more than 15 years category there are £33.2 million of LOBO borrowings which have a call date in the next 12 months. (iii) Market Risk Interest rate risk The Council is exposed to interest rate risk in two different ways: the first being the uncertainty of interest paid/received on variable rate instruments and the second being the effect of fluctuations in interest rates on the fair value of an instrument. The current interest rate risk for the Council is summarised below: • Reductions in interest rates will affect interest earned on variable rate investments, and reduces income credited to the Comprehensive Income and Expenditure Statement. There would only be a small reduction in the interest payable on variable rate borrowing. • Increases in interest rates will affect interest paid on variable rate borrowings, and increases the interest expense charged to the Comprehensive Income and Expenditure Statement, but is offset by increased investment returns. • The fair value of fixed rate financial assets will fall if interest rates rise. This will not impact the balance sheet for assets held at amortised cost, but will impact the disclosure note for fair value. It would have a negative effect on the balance sheet for any assets held at fair value in the balance sheet, which would also be reflected in the Comprehensive Income and Expenditure Statement. However, no such assets at fair value were held by the Council as at 31 March 2026. • The fair value of fixed rate financial liabilities will rise if interest rates fall. This will not impact the balance sheet for liabilities held at amortised cost, but will impact the disclosure note for fair value. The Council has a number of strategies for managing interest rate risk. The policy is to keep a maximum of 35% of its borrowings in variable rate loans. During periods of falling interest rates, and where economic circumstances make it favourable, fixed rate loans may be repaid early to limit exposure to higher costs, whilst fixed deposits may be undertaken for longer periods (within policy and counterparty limits). The treasury management team has an active strategy for assessing interest rate exposure that feeds into the setting of the annual budget and which is used to update the budget throughout the year. This allows any favourable or adverse changes to be accommodated. The analysis will also advise whether new borrowing taken out is fixed or variable. According to this assessment strategy, at 31 March 2026, if interest rates had been 1% higher with all other variables held constant, the financial effect would be: £'000 Increase in interest payable on variable rate borrowings 543 Increase in interest receivable on variable rate investments (845) Impact on Comprehensive Income and Expenditure Statement (302) Share of overall impact credited to the HRA (66) 86 | Perth and Kinross Annual Accounts 2025/26 Page 105 of 314
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87 | Perth and Kinross Council Annual Accounts 2025/26 The impact of a 1% fall in interest rates would have been an estimated cost of £845,000 to the Council as a result of a reduction in investment income, whilst it would be unlikely that the lenders of the market loans borrowed would pass on the reduction in rates payable. However, there would be a reduction of £211,000 payable on other loans. Therefore, the net cost of a 1% fall in interest rates would be £634,000 of which £139,000 would be debited to the HRA. Foreign Exchange Risk The Council has no financial assets or liabilities denominated in foreign currencies and thus has no exposure to losses arising from movements in exchange rates. Price Risk The Council does not invest in equities, however, does invest in other tradable instruments but with the intention of holding them until their maturity date. Therefore, the Council does not actively trade in such instruments, and is therefore not exposed to gains or losses on movements in their price. The Council held no such financial instruments at 31 March 2026. 40. Devolved School Management (DSM) Schools The accumulated balance on the General Fund at 31 March 2026 includes net surplus funds of £542,000 (31 March 2025 £527,000) in respect of schools participating in the Devolved School Management scheme. There are a small number of schools carrying forward deficits of £27,000 with the remaining schools having surpluses of £554.000. These balances are earmarked in 2025/26 for the individual schools concerned. There is Pupil Equity Funding from the Scottish Government of £103,000 (31 March 2025 £195,000) which is being carried forward to 2026/27 for schools within the Council’s earmarked general fund balances. 41. Operating Activities The cash flows for operating activities include the following items: 2025/26 2024/25 £'000 £'000 Interest received (1,226) (994) Interest paid 33,286 29,035 32,060 28,041 42. Investing Activities 2025/26 2024/25 £'000 £'000 Purchase of property, plant and equipment, investment property and intangible assets (141,690) (170,611) Purchase of short-term and long-term investments (5,014) (6,000) Proceeds from the sale of property, plant and equipment, investment property and intangible assets 578 902 Proceeds of short-term and long-term investments 0 42,560 Other receipts for investing activities 24,198 42,079 (121,928) (91,070) 43. Financing Activities 2025/26 2024/25 £'000 £'000 Cash receipts of short and long-term borrowing 425,353 162,659 Cash payments for the reduction of the outstanding liabilities relating to fiannce leases and on balance sheet PFI contracts (7,787) (8,857) Repayments of short and long-term borrowing (316,097) (73,804) 101,469 79,998 87 | Perth and Kinross Annual Accounts 2025/26 Page 106 of 314
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88 | Perth and Kinross Council Annual Accounts 2025/26 44. Cash and Cash Equivalents The balance of cash and cash equivalents is made up of the following elements: 2025/26 2024/25 £'000 £'000 Petty Cash held 31 25 Bank current accounts 543 438 Short-term deposits with banks and building societies 216 42 Short-term deposits with Local Authorities 11,019 15,025 Short-term deposits with other organisations 5,750 9,115 Total cash and cash equivalents 17,559 24,645 45. Trust Funds Perth and Kinross Council administers a number of Charitable Funds of varying sizes. The Income and Expenditure Account and Balance Sheet are detailed on page 98. These funds include Educational Trusts and other trusts which are primarily for the residents of Perth and Kinross. An exercise has been undertaken to reorganise many of the non-educational trusts in order for the funds to be more readily accessible. The Perth and Kinross Educational Trust gives financial assistance towards scholarships, second or subsequent degrees, mature students and further education. Assistance is also provided to schools for sports facilities and special equipment, promoting visual arts and education in music and drama. There are also preferences for certain beneficiaries usually named schools for prizes etc. Also, within the Perth and Kinross Educational Trust there are eight individual endowments for maintaining, furnishing and equipping school buildings. The other charitable trusts purposes include providing financial assistance in different areas of Perth and Kinross. 31 March 31 March 2026 2025 £'000 £'000 Educational Trust - Financial Assistance Net Assets 1,150 1,068 Net Incoming/(Outgoing) Resources before other recognised gains and losses 6 7 Educational Trust - Endowments Net Assets 53 50 Other Charitable Trusts Net Assets 2,854 2,663 Net Incoming Resources before other recognised gains and losses 20 39 Total Net Assets 4,057 3,781 Total Net Incoming Resources before other recognised gains and losses 26 46 Detailed Accounts for the Charities are available from the Chief Finance Officer, 2 High Street, Perth, PH1 5PH by contacting chxfinance@pkc.gov.uk or phoning 01738 475000. 88 | Perth and Kinross Annual Accounts 2025/26 Page 107 of 314
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89 | Perth and Kinross Council Annual Accounts 2025/26 46. The Statutory Loans Fund Loans Fund accounting is governed by The Local Authority (Capital Financing and Accounting) (Scotland) Regulations 2016, which came into force on 1 April 2016, and amended by the Local Authority (Capital Finance and Accounting) (Scotland) Amendment Regulations 2024 (the 2024 Amendment Regulations) which came into force on 1 April 2024. These regulations outline the way the Loans Fund is operated in relation to the repayment period and method that capital advances (capital expenditure funded by borrowing) are repaid (charged) on an annual basis. The Loans Fund is an internal fund operated by the Council to manage the amortisation of capital expenditure (capital advances) over the life of the various assets being funded by borrowing, and also to manage the external borrowing raised to finance the capital expenditure. Whilst both elements of the Loans Fund operate independently of each other, because they are based on the same capital plans, they will broadly be consistent to each other over the long term. However, significant differences may arise over the short-term. This may include, for example, delaying external borrowing due to unfavourable prevailing interest rates, where the Council’s daily cashflow remains positive, or where the Council has significant levels of Reserves. The annuity repayment method is used for all internal capital advances through the Loans Fund. For advances made from 2024/25, the Council applies a 4.0% annuity rate as an appropriate rate to calculate the annual repayment of the loans fund advances, whilst advances from previous years continue to calculate the annual repayments using a 6.25% annuity rate. The Council repays (amortises) the capital advances over the life of the asset being funded, up to a maximum of 50 years. The Council also defers the repayment of Loans Fund advances until the asset being funded is completed and operational. Therefore, the total number of years may exceed 50 years from the year the capital expenditure was incurred where the total expenditure on an asset is spread over two or more years before the asset becomes operational. The value of Loans Fund advances outstanding at 31 March 2026 is £888.9 million. This is made up as follows: Advances Debt Repaid Net Advances Advances 1 April 2025 Transferred 2025/26 2025/26 31 March 2026 £'000 £'000 £'000 £'000 £'000 General Fund 569,907 0 (3,228) 61,773 628,452 Prudential Borrowing 50,705 0 (3,190) 14,113 61,628 Sub Total 620,612 0 (6,418) 75,886 690,080 HRA 168,883 0 (3,502) 33,439 198,820 Total 789,495 0 (9,920) 109,325 888,900 The estimated future repayments of these advances is summarised in the table below: General Fund Prudential Sub Total: HRA Total Borrowing General Fund 31 March 2026 £'000 £'000 £'000 £'000 £'000 Within 1 year 3,915 4,010 7,925 3,013 10,938 Between 1 and 2 years 4,317 3,670 7,987 3,187 11,174 Between 2 and 5 years 14,264 10,143 24,407 10,390 34,797 Between 5 and 10 years 27,922 7,758 35,680 20,573 56,253 Between 10 and 15 years 37,666 5,396 43,062 22,697 65,759 between 15 and 20 years 50,004 4,867 54,871 22,702 77,573 Between 20 and 25 years 66,457 5,501 71,958 21,012 92,970 More than 25 years 423,907 20,283 444,190 95,246 539,436 Total 628,452 61,628 690,080 198,820 888,900 Comparison of the outstanding capital advances above with the Council’s long-term external debt demonstrates that actual capital expenditure funded by borrowing is higher than the actual borrowing undertaken to date by around £81.7 million. This “under-borrowed” position has increased from £74.3 million at the start of the year. This reflects the strategy adopted in recent years of deferring new borrowing whilst rates were at high levels and applying maturing investment balances to meet immediate cashflow requirements. New borrowing would only be undertaken when there were insufficient available balances, or where rates dropped below current forecasts. It should also be noted that the Council has approved a significant borrowing requirement over the next 6 years on its Capital programmes. The Council approved its new Composite Capital Budget to 2031/32 on 4 March 2026 (Report No. 26/55 refers), whilst the Housing and Social Wellbeing Committee approved the HRA Capital Investment Programme to 2030/31 on 21 January 2026 (Report No. 26/21 refers). The last report to the Finance and Resources Committee on 22 April 2026 (Report No. 26/111 refers) approved adjustments to these Programmes. 89 | Perth and Kinross Annual Accounts 2025/26 Page 108 of 314
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90 | Perth and Kinross Council Annual Accounts 2025/26 The latest approved General Fund (Composite) Capital Budget and Housing Investment (HRA) Programme includes the amount of capital expenditure to be funded by borrowing (i.e. new Loans Fund advances) in each of the next 6 years as follows: General Housing Total Fund Investment Programme £'000 £'000 £'000 2026/27 107,840 32,605 140,445 2027/28 79,904 16,874 96,778 2028/29 64,581 9,196 73,777 2029/30 54,825 7,432 62,257 2030/31 57,362 18,735 76,097 2031/32 31,063 0 31,063 Total 395,575 84,842 480,417 All the above Loans Fund repayments have been included in the Loan Charge estimates within the approved Medium-Term Financial Plan and therefore remain affordable under the current Loan Charge Budget strategy. This also includes estimates of new borrowing for the years beyond 2031/32. 90 | Perth and Kinross Annual Accounts 2025/26 Page 109 of 314
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PKC - GENERAL# 2024/25 £'000 £'000 £'000 £'000 Income (33,613) Dwelling Rents (36,414) 519 less Voids 495 (35,919) (619) Non-Dwelling Rents (653) 38 less Voids 42 (611) (1,762) Other Income (1,992) (35,437) Total Income (38,522) Expenditure 8,878 Repairs and Maintenance 9,605 16,174 Supervision and Management 16,567 12,831 Depreciation, impairment and revaluation losses on non current assets 16,068 77 Movement in the Impairment of Debtors 203 279 Other expenditure 304 38,239 Total Expenditure 42,747 2,802 Net Expenditure for HRA Services as included in the Comprehensive Income and Expenditure Statement 4,225 269 HRA services' share of Corporate and Democratic Core 225 3,071 Net Expenditure for HRA Services 4,450 HRA share of the operating income and expenditure included in the Comprehensive Income and Expenditure Statement: (39) (Gain) / Loss on sale of HRA Non-Current Assets 199 4,998 Interest payable and similar charges 5,455 (247) Interest and investment income (128) (167) Net Interest on the net defined benefit liability 2 0 Market value investment properties 85 (10,365) Capital Grants and Contributions Receivable (8,722) (2,749) Deficit/(surplus) for the year on HRA services 1,341 HOUSING REVENUE ACCOUNT INCOME AND EXPENDITURE STATEMENT 2025/26 The Housing Revenue Account (HRA) Income and Expenditure Statement shows the economic cost in the year of providing housing services in accordance with generally accepted accounting practices, rather than the amount to be funded from rents and government grants. Councils charge rents to cover expenditure in accordance with the legislative framework which may be different from the accounting cost. The increase or decrease in the year, on the basis on which rents are raised, is shown in the Statement of Movements on the Housing Revenue Account Balance. 91 | Perth and Kinross Annual Accounts 2025/26 Page 110 of 314
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PKC - GENERAL# 2024/25 £'000 £'000 £'000 (2,260) Balance on the HRA at the end of the Previous Year (2,258) (2,749) Deficit/(Surplus) for the year on the HRA Income and Expenditure Account 1,341 1,975 Adjustments to Usable reserves permitted by Statute (4,148) 776 2,312 2 Net Decrease before Transfers to or from Reserves (495) 0 Transfer from Reserves 0 2 Movement in Year on the HRA (495) (2,258) Balance on the HRA at the end of the Current Year (2,753) Note to the Statement of Movement on the HRA Balance 2024/25 £'000 £'000 £'000 39 (Gain)/Loss on sale of HRA Non-current assets (199) (14,194) Depreciation and impairment of non current assets (17,082) 587 Revaluation Loss/(gain) (1,297) Capital Grants and Contributions credited to the Comprehensive Income and Expenditure 10,365 Statement 8,722 0 Movements in Fair Value of Investment properties (85) (37) Adjustments involving Short Term Accumulated Absences Account (46) Reversal of items relating to retirement benefits credited to the Comprehensive Income (1,544) and Expenditure Statement (1,482) (4,784) (11,469) 1,707 1,801 year 136 Adjustments involving the Financial Instruments Adjustment Account 136 3,083 Statutory provision for the repayment of debt 3,503 1,833 Capital expenditure charged to the HRA balances 1,881 6,759 7,321 1,975 (4,148) STATEMENT OF MOVEMENTS ON THE HOUSING REVENUE ACCOUNT BALANCE Net additional amount required by statute to be (credited)/debited to the HRA Balance for the year Employer's pension contributions and direct payments to pensioners payable in the Adjustments between Accounting Basis and Funding Basis Under Statute Items included in the HRA Income and Expenditure Account but excluded from the movement on HRA Balance for the year Items not included in the HRA Income and Expenditure Account but included in the movement on HRA Balance for the year 2025/26 2025/26 The Statement of Movement on the Housing Revenue Account balance reconciles the Housing Revenue Account to the HRA balance, an earmarked element of the Council’s General Fund Balance. 92 | Perth and Kinross Annual Accounts 2025/26 Page 111 of 314
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PKC - GENERAL# THE ACCOMPANYING NOTES TO THE HOUSING REVENUE ACCOUNT INCOME AND EXPENDITURE STATEMENT 1. Housing Stock at 31 March 2026 No. of Dwellings No. of Dwellings 31 March 2026 31 March 2025 Sheltered accommodation 284 284 Detached/Semi-Detached/Terraced 4,019 3,965 High Rise Flats 194 152 Tenement Flats/Other Flats/Maisonettes 3,871 3,825 Total 8,368 8,226 2. Rent Arrears at 31 March 2026 Gross Arrears Gross Arrears 31 March 2026 31 March 2025 £'000 % of Income £'000 % of Income Houses 3,361 9.2 3,281 9.8 Other Subjects 118 18.1 73 11.8 Totals 3,479 10.2 3,354 9.8 3. Impairment of Debtors impairment in 2024/25. In 2025/26 an impairment of £2.126 million has been provided in the Balance Sheet, an increase of £203,000 from the 93 | Perth and Kinross Annual Accounts 2025/26 Page 112 of 314
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PKC - GENERAL# 2024/25 2025/26 £'000 £'000 £'000 120,432 Gross Charge 132,876 Deduct - (3,716) Exemptions (3,976) (204) Disabled Relief (229) (6,763) Discounts and Reductions (7,723) (7,590) Council Tax Reduction Scheme (8,426) 102,159 Net Council Tax 112,522 Deduct - (7) Ministry of Defence Properties (8) 7 Contribution Received 8 0 (1,765) Provision for Bad and Doubtful Debts (1,881) 100,394 Total Council Tax Income 110,641 (15) Adjustments for prior years for Council Tax (839) 100,379 Total Council Tax Income to Comprehensive Income and Expenditure Statement 109,802 COUNCIL TAX INCOME ACCOUNT The Council Tax Income Account shows the gross income raised from Council Taxes levied and deductions made under statute. The resultant net income is transferred to the Comprehensive Income and Expenditure Statement of the Council. 94 | Perth and Kinross Annual Accounts 2025/26 Page 113 of 314
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PKC - GENERAL# THE ACCOMPANYING NOTES TO THE COUNCIL TAX INCOME ACCOUNT 1. CALCULATION OF THE COUNCIL TAX BASE AT 31 MARCH 2026 2025/26 2024/25 A B C D E F G H TOTAL TOTAL No. of Properties 8,725 15,056 13,101 12,094 12,469 8,495 6,877 721 77,538 77,100 Exemptions (671) (636) (474) (282) (250) (122) (96) (23) (2,554) (2,720) Disabled Relief 66 48 (2) 35 (52) (5) (85) (5) 0 0 Discounts (1,400) (1,971) (1,436) (1,106) (861) (454) (277) (28) (7,533) (7,400) Effective No. of Properties 6,720 12,497 11,189 10,741 11,306 7,914 6,419 665 67,451 66,980 Ratio 240/360 280/360 320/360 360/360 473/360 585/360 705/360 882/360 Band D Equivalents 4,477 9,720 9,946 10,741 14,855 12,860 12,570 1,629 76,798 76,162 Contributions in lieu 7 7 TOTAL 76,805 76,169 Provision for non-payment at 1.75% (1,344) (1,333) COUNCIL TAX BASE 75,461 74,836 2. THE COUNCIL TAX CHARGE Fraction 2025/26 2024/25 Valuation of Actual Actual Band band D Charge Charge A 240/360 £1,024.69 £935.79 B 280/360 £1,195.47 £1,091.75 C 320/360 £1,366.25 £1,247.72 D 360/360 £1,537.04 £1,403.69 E 473/360 £2,019.49 £1,844.29 F 585/360 £2,497.69 £2,280.99 G 705/360 £3,010.03 £2,748.89 H 882/360 £3,765.74 £3,439.04Over £212,000 £0 - £27,000 £27,001 - £35,000 £45,001 - £58,000 £35,001 - £45,000 £106,001 - £212,000 £80,001 - £106,000 £58,001 - £80,000 Range The valuation bands, the fractions used in calculating the Council Tax payable for each valuation band and the actual charges determined for 2025/26 are set out below: Each property is placed in one of eight valuation bands (A-H) in accordance with their value as at 1 April 1991. The Council Tax charge levied for each property is calculated in proportion to the Council Tax charge for a band D property by applying fractions. A discount of 25% is given where there is only one adult resident in a property or where all others are disregarded for Council Tax purposes; those disregarded include persons in detention, students, and those with a severe metal impairment. Where a dwelling is occupied only by disregarded persons a full exemption may apply. A 200% charge is payable on long term empty dwellings and most second homes. Second homes that are job- related or purpose-built holiday homes can receive a 50% discount. Reductions in Council Tax are also granted for dwellings adapted to meet the needs of persons with a disability. The Council Tax is based on the value of a domestic property together with a personal element which takes into account the number and circumstances of that property's occupants. Property Valuation 95 | Perth and Kinross Annual Accounts 2025/26 Page 114 of 314
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PKC - GENERAL# 2024/25 £'000 £'000 £'000 90,104 Gross Rate Levied 91,019 738 Discretionary Relief funded by the Council 747 (1,218) Transitional Relief (731) 91,035 Deduct: (3,138) Rate Rebates (3,212) (10) Interest on Overpaid Rates (1) (19,446) Reliefs, Charities etc. (21,199) (369) Provision for Bad and Doubtful Debts (456) (24,868) Adjustments to Previous Years: (1,319) Gross Rate Levied (1,557) 56 Transitional Surcharge/Relief (355) (1,002) Reliefs, Charities etc. (1,018) (156) Impairment for Bad and Doubtful Debts and Abatements (724) (3,654) 64,240 Net Non-Domestic Rate Income- 62,513 (64,240) Contribution to National Non-Domestic Rate Pool (62,513) 64,717 Contribution from National Non-Domestic Rate Pool 63,537 477 Net contribution (to) / from National Non-Domestic Rate Pool 1,024 64,717 Total Non-Domestic Rate Income to Comprehensive Income 63,537 and Expenditure Statement 2025/26 NON-DOMESTIC RATE INCOME ACCOUNT The Non-Domestic Rate Account is an agent's statement that reflects the statutory obligation for billing authorities to maintain a separate Non-Domestic Rate Account. The statement shows the gross income from the rates and deductions made under statute. The net income is paid to the Scottish Government as a contribution to the national Non-Domestic Rate pool. 96 | Perth and Kinross Annual Accounts 2025/26 Page 115 of 314
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PKC - GENERAL# THE ACCOMPANYING NOTES TO THE NON-DOMESTIC RATE INCOME ACCOUNT 1. NON-DOMESTIC RATES 2. RATEABLE SUBJECTS AND VALUES Rateable Rateable No. of Value No. of Value Subjects £'000 Subjects £'000 at 1 April 2024 at 1 April 2024 at 1 April 2025 at 1 April 2025 1,689 34,446 Shops 1,690 33,614 78 1,645 Public Houses 78 1,607 1,043 13,401 Offices (including banks) 1,040 13,110 204 14,672 Hotels etc. 202 14,443 1,781 26,142 Industrial Subjects etc. 1,813 26,394 1,824 13,876 Leisure, Entertainment, Caravans etc. 1,857 13,895 150 5,007 Garages and Petrol Stations 151 5,047 59 1,471 Cultural 60 1,699 1,405 3,256 Sporting Subjects 1,403 3,151 119 16,697 Education and Training 119 16,750 421 8,677 Public Service Subjects 417 8,670 1 0 Communications 1 0 23 535 Quarries, Mines etc. 23 535 2 4,165 Petrochemical 2 3,876 238 1,914 Religious 237 1,917 114 6,296 Health, Medical 113 6,292 750 2,363 Other 721 2,072 60 3,556 Care Facilities 59 3,777 28 89 Advertising 22 103 96 12,883 Undertaking 97 12,975 10,085 171,091 Total 10,105 169,927 Non-Domestic Rates Income is set and pooled nationally but generated and collected locally by Scottish Local Authorities. It is distributed back to those local authorities through a distribution formula agreed with COSLA as part of the local government finance settlement, therefore it bears no direct relationship to the amounts collected by those authorities. The rate poundage set by the Scottish Government for 2025/26 was 49.8p (unchanged from 2024/25). The Small Business Bonus Scheme, introduced from 1 April 2008, provides relief to businesses based on their combined rateable value. Significant changes were made from 1 April 2023; the combined rateable value threshold remained at £35,000 with relief now available on all individual properties with a rateable value of £20,000 or less. Subject to eligibility, this provides 100% relief where the rateable value is £12,000 or less and a tapered award where the rateable value is greater than £12,000. Awards totalling around £10 million were provided to businesses within the Perth and Kinross area in 2025/26. A supplement of 4.7p was charged on properties with a rateable value of between £51,001 and £100,000 and a supplement of 6.1p was charged on properties with a rateable value exceeding £100,000 to contribute towards the additional cost of the Small Business Bonus scheme (4.7p and 6.1p respectively in 2024/25). 97 | Perth and Kinross Annual Accounts 2025/26 Page 116 of 314
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98 | Perth and Kinross Council Annual Accounts 2025/26 Charitable Trusts The Council administers Perth and Kinross Educational Trust and various other Charitable Trusts and Endowments. The figures below summarise the aggregate income and expenditure for the year and the assets and liabilities at 31 March 2026. 2025/26 2025/26 2024/25 £'000 £'000 £'000 Incoming Resources Income resources from generated funds: Income from donations and legacies 0 96 Investment income 172 158 Total Incoming Resources 172 254 Resources Expended Costs of generating funds: Investment management costs 18 17 Charitable activities 115 159 Governance costs 13 12 Reorganisation of trusts 0 20 Total Resources Expended 146 208 26 46 Other Recognised Gains: Gains on revaluation of fixed assets for charity's own use 4 0 Gain/(losses) on Investment Assets 246 12 Net Movement in Funds for the Year 276 58 Reconciliation of Funds Total Funds Brought Forward 3,781 3,723 Total Funds Carried Forward 4,057 3,781 INCOME AND EXPENDITURE ACCOUNT FOR YEAR TO 31 MARCH 2026 Net Incoming Resources before other Recognised Gains and Losses 2025/26 2025/26 2024/25 £'000 £'000 £'000 Fixed Assets Tangible Assets 84 80 Investments 3,427 3,210 3,511 3,290 Current Assets Debtors 3 26 Investments - Amounts due by Perth and Kinross Council Loans Fund 562 474 565 500 Liabilities Creditors: amounts falling due within one year (19) (9) Net Current Assets 546 491 Net Assets 4,057 3,781 Total Funds 4,057 3,781 BALANCE SHEET AS AT 31 MARCH 2026 Notes to Charitable Trusts 1. The market value of Investments at 31 March 2026 was £3.427 million (31 March 2025 £3.210 million). 2. The unaudited accounts were issued on 29 June 2026. Scott Walker CPFA Chief Finance Officer Date: 98 | Perth and Kinross Annual Accounts 2025/26 Page 117 of 314
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99 | Perth and Kinross Council Annual Accounts 2025/26 Common Good The Council administers the Common Good Accounts for ten former burghs within Perth and Kinross. The figures below summarise the aggregate income and expenditure for the year and detail the Assets and Liabilities at 31 March 2026. 2025/26 2025/26 2024/25 £'000 £'000 £'000 Expenditure Grants to Voluntary Organisations 233 161 Christmas Lighting 30 39 Property Costs 95 60 Supplies and Services 15 15 373 275 Income Rents, Fees, Charges etc. 288 285 Interest on Loans 111 130 Other 0 15 399 430 Operating Surplus for the Year 26 155 Surplus Brought Forward 2,525 2,370 Accumulated Surplus at 31 March 2,551 2,525 INCOME AND EXPENDITURE STATEMENT FOR YEAR TO 31 MARCH 2026 2025/26 2025/26 2024/25 £'000 £'000 £'000 Fixed Assets Property, Plant and Equipment 5,480 5,363 Right of Use Asset 10 20 Current Assets Debtors 27 22 Investments 2,803 2,693 Cash and Cash Equivalents 147 168 2,977 2,883 Current Liabilities Creditors and Accruals (146) (78) Net Current Assets / (Liabilities) 2,831 2,805 Long Term Liability - Right of Use 0 (10) Total Net Assets 8,321 8,178 Reserves Revenue 2,551 2,525 Capital 477 477 Revaluation Reserve 5,293 5,176 8,321 8,178 BALANCE SHEET AS AT 31 MARCH 2026 The unaudited accounts were issued on 29 June 2026. Scott Walker CPFA Chief Finance Officer Date: 99 | Perth and Kinross Annual Accounts 2025/26 Page 118 of 314
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100 | Perth and Kinross Council Annual Accounts 2025/26 The Accompanying Notes to the Common Good Accounts 1. The use of common good assets is accounted for on a risk and rewards based approach. The Council General Fund or Housing Revenue Account will meet the day-to-day operating costs of the property, and any repairs or improvement works required to the property, in return for the use of the common good asset for the delivery of Council services. No rent for the use of the property is payable to the Common Good Fund on the basis that the Fund benefits from the Council expenditure incurred in maintaining and upgrading the sites. No expenditure is charged to the Common Good Fund for the Council expertise in managing the assets. In respect of common good sites that are leased out to a party external to the Council, the tenant will bear the responsibility for the upkeep of the property. The Common Good Fund is, therefore, credited with the annual rental income arising from the lease agreement. 2. Depreciation Depreciation on Common Good Funds is charged on buildings, based on current value less residual value over the remaining useful life of the property. The buildings have a life expectancy of over 50 years and depreciation has been charged on a straight line basis over that period. 3. Common Good Reserve Funds Surplus / Balance at (Deficit) Balance at 1 April 2025 2025/26 31 March 2026 Fund: £'000 £'000 £'000 Perth City 1,820 6 1,826 Aberfeldy 132 4 136 Abernethy 3 0 3 Alyth 22 0 22 Auchterarder 327 9 336 Blairgowrie 22 1 23 Crieff 16 1 17 Kinross 171 2 173 Pitlochry 12 3 15 Total 2,525 26 2,551 Coupar Angus Common Good Fund has a nil balance for both years. 4. Common Good Fixed Assets The Community Empowerment (Scotland) Act 2015 requires the Council to establish and maintain a list of property which is held as part of the Common Good. The review of property titles to facilitate the publication of the list has been completed, and following a period of public consultation, the findings are now available on the Common Good Land Register page of the Perth and Kinross Council website. The review of moveable Common Good property has continued in 2025/26 and is expected to complete in 2026/27. 5. Right of Use Assets IFRS 16 Leases has been applied to the Perth site leased in for the storage of Christmas lighting. It is therefore considered a Right of Use asset, and results in a Balance Sheet asset in respect of the site with a corresponding liability for the remaining lease payments. The opening balance of the asset and liability is £20,000, the principal repaid during the year is £10,000, and the liability at 31 March 2026 is £10,000. The PWLB rate used for the calculation of the liability at 1 April 2025 is 5.24%, and the Interest expense charged to the Income and Expenditure Statement during the year is £1,000 (2024/25 £1,500). 100 | Perth and Kinross Annual Accounts 2025/26 Page 119 of 314
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Restated Restated Authority's Authority's General Housing Capital Insurance Capital Capital Total Unusable TOTAL share of share of TOTAL Fund Revenue Fund Fund Receipts Grants Usable Reserves Authority subsidiaries associates Reserves Balance Account Reserve Unapplied Reserves Reserves and managed and joint funds ventures £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2024 (83,794) (2,260) (31,026) (1,709) (2,102) (87) (120,978) (718,738) (839,716) (29,576) (5,441) (874,733) Movement in reserves during 2024/25 Adjustment on transition to new accounting arrangements for leases 0 0 0 0 0 0 0 0 0 0 (4,195) (4,195) (83,794) (2,260) (31,026) (1,709) (2,102) (87) (120,978) (718,738) (839,716) (29,576) (9,636) (878,928) Movement in reserves during 2024/25 Total Comprehensive Income and Expenditure 28,909 (2,749) 0 0 0 0 26,160 83,859 110,019 3,757 (3,097) 110,679 Adjustments to Usable Reserves permitted by accounting standards (6,187) 776 0 0 0 0 (5,411) 5,411 0 0 0 0 Adjustments from income and expenditure charged under the accounting basis to the funding basis (9,178) 1,975 0 0 770 (1,060) (7,493) 7,493 0 0 0 0 Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (2,914) 0 0 0 0 0 (2,914) 2,914 0 0 0 0 (Increase)/Decrease in 2024/25 10,630 2 0 0 770 (1,060) 10,342 99,677 110,019 3,757 (3,097) 110,679 Transfers to/(from) Other Statutory Reserves 4,880 0 (5,966) 1,086 0 0 0 0 0 0 0 0 Balance at 31 March 2025 carried forward (68,284) (2,258) (36,992) (623) (1,332) (1,147) (110,636) (619,061) (729,697) (25,819) (8,538) (768,248) Total Comprehensive Income and Expenditure 41,231 1,341 0 0 0 0 42,572 (43,046) (474) 202 3,836 3,564 Adjustments to Usable Reserves permitted by accounting standards (6,697) 2,312 0 0 0 0 (4,385) 4,385 0 0 0 0 Adjustments from income and expenditure charged under the accounting basis to the funding basis (28,802) (4,148) 0 0 (174) (215) (33,339) 33,339 0 0 0 0 Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (2,746) 0 0 0 0 0 (2,746) 2,746 0 0 0 0 (Increase) or Decrease in 2025/26 2,986 (495) 0 0 (174) (215) 2,102 (2,576) (474) 202 3,836 3,564 Transfers to/(from) Other Statutory Reserves 4,365 0 (2,477) (1,888) 0 0 0 0 0 0 0 0 Balance at 31 March 2026 carried forward (60,933) (2,753) (39,469) (2,511) (1,506) (1,362) (108,534) (621,637) (730,171) (25,617) (4,702) (764,684) GROUP MOVEMENT IN RESERVES STATEMENT 101 | Perth and Kinross Annual Accounts 2025/26 Page 120 of 314
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2024/25 Net Note Gross Income Net Expenditure Expenditure Expenditure £'000 £'000 £'000 £'000 SERVICES 167,974 Education and Learning 183,268 (5,914) 177,354 97,228 Health and Social Care 245,219 (134,949) 110,270 24,007 Children, Families and Justice 30,612 (5,946) 24,666 29,203 Economy, Development and Planning 44,949 (23,028) 21,921 49,874 Environment and Infrastructure 59,643 (12,429) 47,214 19,026 Housing and Communities 32,571 (13,884) 18,687 78,966 Property Services 95,206 (9,374) 85,832 4,559 Legal and Governance 5,335 (1,330) 4,005 17,186 Customer and Digital Services 32,959 (15,397) 17,562 5,505 Strategic Planning, People and Performance 5,524 (303) 5,221 283 Projects and Programmes 325 0 325 8,289 Finance and Business Support 11,189 (2,656) 8,533 1,327 Directorate Core Costs 578 (2) 576 2,802 Housing Revenue Account 42,747 (38,522) 4,225 1,434 Valuation Joint Board 1,393 0 1,393 112 Charitable Trusts 146 0 146 (25) Common Good 373 (288) 85 507,750 COST OF SERVICES 792,037 (264,022) 528,015 (106) Other Operating Expenditure / Income 1,728 (769) 959 18,832 Financing and Investment Income and Expendtiure 4 28,506 (5,227) 23,279 (498,321) Taxation and Non-Specific Grant Income 0 (510,772) (510,772) 28,155 Deficit on Provision of Services 822,271 (780,790) 41,481 2,473 Share of the (Surplus)/Deficit on the provision of services by Associates and Joint Ventures (1,566) 30,628 Group Deficit 39,915 83,470 (Surplus)/Deficit on revaluation of non current assets (46,869) 1,002 Remeasurement of the net defined benefit liability 5,044 1,148 Other gains and losses 72 (5,202) Share of the other comprehensive income and expenditure of Associates and Joint Ventures 5,402 80,418 Other Comprehensive Income and Expenditure (36,351) 111,046 Total Comprehensive Income and Expenditure 3,564 2025/26 GROUP COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT 102 | Perth and Kinross Annual Accounts 2025/26 Page 121 of 314
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31 March 2025 Notes 31 March 2026 £'000 £'000 1,593,666 Property, Plant and Equipment 1,694,595 52,099 Heritage Assets 52,099 16,184 Investment Property 17,029 2,189 Intangible Assets 1,216 4,298 Long Term Investments 5 7,484 12,732 Investment in Joint Venture 8,895 530 Long Term Debtors 357 1,681,698 Long Term Assets 1,781,675 2,693 Short Term Investments 5 7,817 875 Assets Held for Sale 565 747 Inventories 726 51,617 Short Term Debtors 6 49,572 31,259 Cash and Cash Equivalents 21,156 87,191 Current Assets 79,836 Cash and Cash Equivalents (40,581) Short Term Borrowing (133,925) (98,660) Short Term Creditors 7 (87,282) (2,814) Provisions (1,391) (142,055) Current Liabilities (222,598) (1,951) Provisions (3,664) (683,808) Long Term Borrowing (699,871) (172,827) Other Long Term Liabilities (170,694) (858,586) Long Term Liabilities (874,229) 768,248 NET ASSETS 764,684 110,636 Usable Reserves 108,534 619,061 Unusable Reserves 621,637 26,592 Group Reserves 22,135 11,959 Charitable and Common Good Reserves 12,378 768,248 TOTAL RESERVES 764,684 The accompanying notes form an integral part of these financial statements. Scott Walker CPFA Chief Finance Officer Date: GROUP BALANCE SHEET The Unaudited Annual Accounts were issued on 29 June 2026. 103 | Perth and Kinross Annual Accounts 2025/26 Page 122 of 314
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2024/25 Notes 2025/26 £'000 £'000 (28,155) Deficit on the provision of services (41,181) 72,585 Adjustments to net surplus or deficit on the provision of services for non cash movements 79,014 (43,242) Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities (24,813) 1,188 Net cash flows from Operating Activities 13,020 (86,402) Investing Activities 10 (124,417) 80,017 Financing Activities 11 101,294 (5,197) Net increase/(decrease) in cash and cash equivalents (10,103) 36,456 Cash and cash equivalents at the beginning of the reporting period 31,259 31,259 Cash and cash equivalents at the end of the reporting period 21,156 GROUP CASH FLOW STATEMENT 104 | Perth and Kinross Annual Accounts 2025/26 Page 123 of 314
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2024/25 2025/26 £'000 £'000 26,160 Deficit on the single entity Comprehensive Income and Expenditure Statement 42,572 for the year Add: (213) ● Managed Funds - Charitable Trusts and Common Good (302) 2,373 ● Joint Venture (1,687) 100 ● Associates 121 2,208 ● Subsidiaries (789) 30,628 Deficit for the year on the Group Comprehensive Income and Expenditure Statement 39,915 RECONCILIATION OF THE SINGLE ENTITY DEFICIT FOR THE YEAR TO THE GROUP DEFICIT 105 | Perth and Kinross Annual Accounts 2025/26 Page 124 of 314
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106 | Perth and Kinross Council Annual Accounts 2025/26 Notes to the Group Accounts 1. Combining Entities The results of Tayside Valuation Joint Board which is jointly administered with Dundee City and Angus Councils have been included in the Group Accounts. The Council is exempt from including the Board as a subsidiary as the Scottish Government exercises a dominant influence on the Board evidenced particularly by its ability to reconstitute or abolish statutory bodies or otherwise influence their operating and financial policies. A number of Councillors have voting rights on the Board. The Council has an obligation to contribute to the Joint Board losses or deficits and the ability to exercise significant influence over it. The Joint Board has therefore been incorporated in the Group Accounts under the equity method of Accounting for Associates. For the purpose of consolidation and incorporation within the Group Accounts, recognition has been made of the Council’s interest which is based on its share of the contributions made to the Tayside Valuation Joint Board, which in 2025/26 was 39.42% (2024/25 42.46%). The accounting period for the Board is the year to 31 March 2026 and the Board Statements of Accounts presents fairly its individual financial position. The individual accounts relating to Tayside Valuation Joint Board are published separately and can be obtained from the Director of Corporate Services, Dundee City Council, Dundee House, 50 North Lindsay Street, Dundee, DD1 1QE. In addition, the Council has also included Live Active Leisure Ltd., Perth Theatre and Concert Hall Ltd. and Culture Perth and Kinross Ltd. as subsidiaries within its Group Accounts in accordance with IAS 27 Consolidated and Separate Financial Statements, and in particular SIC 12 Consolidation – Special Purpose Entities. These organisations deliver services on behalf of the Council, and the Council therefore obtains benefit from their operations. In addition, service delivery is managed through Service Level Agreements specific to the service provision required from the organisations by the Council. Live Active Leisure Ltd., Perth Theatre and Concert Hall Ltd. and Culture Perth and Kinross Ltd. are governed by company and charitable trust regulations. For the purpose of consolidation and incorporation within the Group Accounts it has been assumed that the Council’s interest in these organisations is 100% due to the nature of Council control and direction over their operations. Live Active Leisure Ltd., Perth Theatre and Concert Hall Ltd. and Culture Perth and Kinross Ltd. are arm’s length companies with sole member status with the Council being the sole member in each company. The individual accounts relating to these organisations are published separately, and can be obtained from the following addresses:- Live Active Leisure Ltd. Caledonia House, Hay Street, Perth, PH1 5HS Perth Theatre and Concert Hall Ltd. Perth Concert Hall, Mill Street, Perth, PH1 5HZ Culture Perth and Kinross Ltd. A K Bell Library, 2-8 York Place, Perth, PH2 8EP The income, expenditure, assets and liabilities of the Charitable Trusts which are administered and controlled by the Council have also been included as a managed fund. The nature of the assets of the managed fund are heritable property, investments and debtors. The assets are not the property of Perth and Kinross Council and are subject to charitable trust regulations. The Income and Expenditure Account of the Charitable Trusts is detailed on page 98 of the Annual Accounts. The income, expenditure, assets and liabilities of the Common Good Accounts which are administered and controlled by the Council have also been included as a managed fund. The nature of the assets of the managed fund are heritable property, investments and debtors. The assets are the property of Perth and Kinross Council and are subject to the Accounting Code of Practice. The Income and Expenditure Account of the Common Good is detailed on page 99 of the Annual Accounts. Perth and Kinross Council’s share of the assets and liabilities of Tayside Contracts Joint Committee, which is jointly administered and controlled with Dundee City Council and Angus Council, has been included in the Group Accounts using the equity method for an associate due to the Council having significant influence, rather than joint control over the entity. The Council’s investment in Tayside Contracts for 2025/26 is 41% (2024/25 41%). Copies of Tayside Contracts Joint Committee’s individual accounts are published separately, and can be obtained from Tayside Contracts, 1 Soutar Street, Dundee, DD3 8SS. Perth and Kinross Integration Joint Board (IJB) is the statutory body established to integrate health and social care services between the Council and NHS Tayside. The IJB Board consists of eight voting members, four of whom are Perth and Kinross councillors. The Council can therefore exercise joint control over the arrangement and the IJB has been consolidated into the Council Group accounts as a joint venture using the equity method and a percentage share of 50%. Copies of the Perth and Kinross Integration Joint Board individual accounts are published separately and can be obtained from the Chief Financial Officer, Perth and Kinross Integration Joint Board, 2 High Street, Perth, PH1 5PH. Tayside and Central Scotland Transport Partnership (TACTRAN) is a statutory body established under the Transport (Scotland) Act 2005. The partnership covers Angus, Dundee City, Perth and Kinross and Stirling Council areas. The results of TACTRAN have been excluded from Perth and Kinross Council’s Group accounts on the grounds of materiality. 106 | Perth and Kinross Annual Accounts 2025/26 Page 125 of 314
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107 | Perth and Kinross Council Annual Accounts 2025/26 2. Nature of Combination The Council inherited its interest in the Tayside Valuation Joint Board following the reorganisation of local government in 1996. It is considered that the Council’s interest was obtained on an acquisition basis. However, as no consideration was given, no goodwill requires to be accounted for. 3. Financial Impact of Consolidation and Going Concern The effect of inclusion of the Subsidiaries and Associates listed above in the Group Balance Sheet is to increase both reserves and net assets by £34.513 million (2024/25 £38.551 million increase). All Subsidiaries and the Associate have prepared their accounts on a ‘going concern’ basis. The Council’s Group Accounts have been prepared on a ‘going concern’ basis as there is no reason to suggest that future funding will not continue. Apart from the disclosures made in the Notes to the Group Accounts there were no material amounts or details in relation to associates or managed funds. 4. Group Comprehensive Income and Expenditure Statement – Financing and Investment Income and Expenditure 2025/26 2024/25 £'000 £'000 Council Financing and Investment Income and Expenditure 24,041 19,430 Subsidiaries (229) (298) Charitable Trusts (422) (170) Common Good (111) (130) Total Group CIES Financing and Investment Income and Expenditure 23,279 18,832 5. Group Balance Sheet – Investments 2025/26 2024/25 £'000 £'000 Council Investments 5,014 0 Charitable Trusts Investments 3,427 3,210 Common Good Investments 2,803 2,693 Subsidiaries 4,057 1,088 Total Group Investments 15,301 6,991 6. Group Balance Sheet – Short Term Debtors (net of provisions) 2025/26 2024/25 £'000 £'000 Net Debtors Balance - Note 28 to the Financial Statements 47,971 50,007 Subsidiary Debtors 1,571 1,562 Charitable Trust Debtors 565 500 Inter-company elimination (562) (474) Common Good Debtors 174 190 Inter-company elimination (147) (168) Total Group Debtors 49,572 51,617 107 | Perth and Kinross Annual Accounts 2025/26 Page 126 of 314
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108 | Perth and Kinross Council Annual Accounts 2025/26 7. Group Balance Sheet – Short Term Creditors 2025/26 2024/25 £'000 £'000 Net Creditors Balance - Note 29 to the Financial Statements (84,063) (95,500) Charitable Trust Creditors (146) (9) Inter-company elimination 147 474 Common Good Creditors (19) (68) Inter-company elimination 562 168 (83,519) (94,935) Subsidiary Creditors (3,763) (3,725) Total Group Creditors (87,282) (98,660) 8. Group Balance Sheet – Pension Liability 2025/26 2024/25 £'000 £'000 Net Pensions Liability at 31 March - Note 18 to the Financial Statements (17,753) (18,533) Subsidiaries (5) (7) Group Pension Liability at 31 March (17,758) (18,540) 9. Group Cash Flow Statement There has been no impact on the Group Cash Flow Statement from the inclusion of the Tayside Valuation Joint Board, Tayside Contracts Joint Committee, or the Perth and Kinross Integration Joint Board. Cash transactions between the Joint Boards and the Council are already included within the Council’s Cash Flow Statement and there were no dividend transactions. The impact of the inclusion of Live Active Leisure Ltd., Perth Theatre and Concert Hall Ltd. and Culture Perth and Kinross Ltd. within the Group Cash Flow Statement is to increase the movement in the net cash position by £3.597 million (2024/25 increase of £6.614 million). A cash increase of £1.683 million represents the Council’s 100% share of Live Active Leisure Ltd., a cash increase of £1.057 million represents the Council’s 100% share of Perth Theatre and Concert Hall Ltd. and a cash increase of £0.857 million represents the Council’s 100% share of Culture Perth and Kinross Ltd. 10. Group Cash Flow – Investment Activities 2025/26 2024/25 £'000 £'000 Council Investing Activities (121,928) (91,070) Subsidiaries (2,489) 4,668 (124,417) (86,402) 11. Group Cash Flow – Financing Activities 2025/26 2024/25 £'000 £'000 Council Financing Activities 101,469 79,998 Subsidiaries (175) 19 101,294 80,017 108 | Perth and Kinross Annual Accounts 2025/26 Page 127 of 314
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109 | Perth and Kinross Council Annual Accounts 2025/26 Remuneration Report 1. Introduction The Local Authority Accounts (Scotland) Amendment Regulations 2011 (SSI No. 2011/64) require local authorities in Scotland to prepare a Remuneration Report as part of their annual statutory accounts. The disclosures within this report have been prepared in accordance with guidance issued by the Scottish Government on 13 May 2011 in Local Government Finance Circular No 8/2011 (subsequently updated). This guidance prescribes the content and format of the information presented within the Remuneration Report and specifies that remuneration disclosures are to be based upon taxable expenses and benefits. The disclosures are set out in accordance with proper accounting practice as prescribed by the Code of Practice on Local Authority Accounting in the UK and include prior year comparative figures. 2. Audit of Remuneration Report The Remuneration Report is a statement in its own right rather than a note to the accounts and certain disclosures within the report are subject to audit. All information disclosed in Tables 1 to 7 in this Remuneration Report will be audited by the Council’s appointed auditor, Audit Scotland. The other sections of the Remuneration Report will be reviewed by Audit Scotland to ensure that they are consistent with the financial statements. 3. Remuneration of Senior Councillors 3.1 The remuneration of Councillors is regulated by the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 (SSI No. 2007/183). The Regulations provide for the grading of Councillors for the purposes of remuneration arrangements, as either, the Leader of the Council, the Civic Head (Provost), Senior Councillors or Councillors. The Leader of the Council and the Civic Head cannot be the same person for the purposes of payment of remuneration. A Senior Councillor is a Councillor who holds a significant position of responsibility in the Council’s political management structure. 3.2 When determining the level of remuneration for Councillors, the Scottish Ministers considered the recommendations of the former Scottish Local Authority Remuneration Committee (SLARC). SLARC was an advisory Non-Departmental Public Body set up in 2005 to advise Scottish Ministers on the remuneration, allowances and expenses incurred by local authority councillors. The Committee was stood down in February 2013 however reconvened in April 2023 to undertake a one-off independent review of Councillor Remuneration to ensure terms and conditions continue to reflect the responsibilities of a modern-day Councillor. The recommendations in relation to pay and banding changes were accepted by the Scottish Government and implemented from 1 April 2025. 3.3 The Regulations set out the salary that is to be paid to the Leader of the Council in accordance with bandings also set out in the Regulations. The Regulations also permit the Council to remunerate one Civic Head, which in the case of Perth and Kinross Council is the Provost, and sets out the maximum salary that may be paid to that Civic Head. For 2025/26 the maximum salary for the Leader of Perth and Kinross Council is £50,063 and the Council has agreed that the Civic Head be paid 75% of the salary of the Leader, which for 2025/26 is a maximum of £37,548. Please refer to Table 1. 3.4 In addition to the Leader of the Council and Civic Head, Regulations also set out the maximum number of senior councillors the Council may have; the maximum yearly amount that may be paid to a senior councillor (75% of the total yearly amount payable to the Leader of the Council) and the maximum yearly amount payable by the Council for all senior councillors. Perth and Kinross Council may have a maximum of 14 senior councillors with a maximum salary of £37,548 and a maximum yearly amount payable for all senior councillors of £444,710 in 2025/26 (excluding the Council Leader, Civic Head, Conveners and Vice Conveners of Joint Boards). The Council is able to exercise local flexibility in the determination of the precise number of senior councillors and their salary within these maximum limits. 3.5 The Regulations also set out the remuneration payable to councillors with the responsibility of a Convener or a Vice- Convener of a Joint Board such as Tayside Valuation Joint Board. The Regulations require the remuneration to be paid by the Council of which the Convener or Vice-Convener is a member. Joint Board Conveners and Vice-Conveners are considered to be senior councillors for remuneration disclosure purposes. In financial year 2025/26, one councillor from Perth and Kinross Council served as Convener or Vice-Convener of a Joint Board. 3.6 During 2025/26 Perth and Kinross Council had 13 Senior Councillors and a Vice-Convener of a Joint Board. Details are provided in Table 1. Together with the Leader of the Council and the Provost, the total remuneration including taxable expenses paid to these Councillors was £541,040. The individual amounts payable to the Leader of the Council, the Provost, Senior Councillors of Perth and Kinross Council and the Vice-Convener of a Joint Board in 2025/26 are set out in Table 1. The Regulations also permit the Council to pay contributions or other payments as required to the Local Government Pension Scheme in respect of those Councillors who elect to become councillor members of the pension scheme. 109 | Perth and Kinross Annual Accounts 2025/26 Page 128 of 314
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110 | Perth and Kinross Council Annual Accounts 2025/26 Table 1: Remuneration of Senior Councillors, Conveners and Vice-Conveners of Joint Boards for Financial Year 2025/26 Name and Post Title Salary, Fees and Allowances 2025/26 £ Total Remuneration 2025/26 £ Total Remuneration 2024/25 £ Eric Drysdale Council Leader (from 25/09/2025) Depute Leader (until 24/09/2025) (Note 2) 42,511 42,511 29,448 Xander McDade Provost (Civic Head) 37,548 37,548 32,024 Peter Barrett Convener Licensing Board (Note 3) 34,190 34,190 26,176 Bob Brawn Convener Local Review Body (Note 3) 34,190 34,190 26,176 Dave Cuthbert Vice-Convener Tayside Valuation Joint Board and Vice-Convener Tayside Contracts Joint Committee (Note 4) 28,926 28,926 25,352 Stewart Donaldson Convener Finance and Resources Committee 34,528 34,528 29,448 John Duff Leader of Largest Opposition Party 34,528 34,528 29,448 David Illingworth Convener Audit and Risk Committee 34,528 34,528 29,448 Grant Laing Convener Economy and Infrastructure Committee (from 25/02/2026) Council Leader (until 22/09/2025) (Note 5) 26,073 26,073 42,698 Ian Massie Convener Planning and Placemaking Committee 34,528 34,528 29,448 Tom McEwan Convener Housing and Social Wellbeing Committee 34,528 34,528 29,448 Andrew Parrott Depute Provost 30,689 30,689 26,176 John Rebbeck Convener Learning and Families Committee 34,528 34,528 29,448 Colin Stewart Convener Scrutiny and Performance Committee 34,528 34,528 29,448 Richard Watters Convener Climate Change and Sustainability Committee 34,528 34,528 29,448 Michael Williamson Convener Licensing Committee 30,689 30,689 26,176 TOTAL 541,040 541,040 469,810 Notes: (1) After adjusting for the salaries of the Leader of the Council, the Civic Head (Provost) and the Vice-Convener of Tayside Valuation Joint Board and Tayside Contracts Joint Committee, the total salaries paid to Senior Councillors in 2025/26 was £425,800 which compares with the maximum under Regulations of £444,710. (2) Appointed to Council Leader from 25/09/2025 (FTE Allowance £50,063). Allowance from 01/04/2025 to 24/09/2025 was £34,528. (3) Increase in Senior Allowance from £30,689 to £34,528 from 8 May 2025 following Council decision on 7 May 2025. (4) Increase in Allowance from £26,797 to £30,689 from 11 September 2025 following Council decision on 10 September 2025. (5) Councillor Laing held the position of Council Leader until 22/09/2025 (FTE Allowance £50,063) and was subsequently appointed as a Senior Councillor from 25/02/2026 (FTE Allowance £34,528). The remuneration disclosed above relates solely to the periods 01/04/2025 to 22/09/2025 and 25/02/2026 to 31/03/2026, when senior responsibilities were held. For the intervening period, Councillor Laing received basic councillor remuneration, which is disclosed in the Councillors’ Remuneration Report. 110 | Perth and Kinross Annual Accounts 2025/26 Page 129 of 314
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111 | Perth and Kinross Council Annual Accounts 2025/26 3.7 The arrangements for political decision-making structures within Perth and Kinross Council as at 31 March 2026, which encompassed the salaries of all elected members including the Council Leader, Civic Head and Senior Councillors, were agreed at the meeting of the Council on 25 May 2022 (Report No. 22/110 refers) and are available on the Council’s website. 3.8 The Council paid the following salaries and expenses to all Councillors (including those listed in Table 1 above) in financial year 2025/26: Table 2: Remuneration Paid to Councillors 1 April 2025 to 31 March 2026 2025/26 2024/25 Type of Remuneration £ £ Salaries 1,175,790 974,424 Allowances & Expenses 27,743 32,253 Total 1,203,533 1,006,677 3.9 The annual return of Councillors’ salaries and expenses for 2025/26 is available for any member of the public to view at Culture Perth and Kinross Ltd. libraries and Council local area offices during normal working hours and is also available on the Council’s website at Councillors Expenses. 4. Remuneration of Senior Employees 4.1 The Council is required to publish the remuneration of senior employees as defined by the disclosure regulations. Senior employees are defined with reference to their management authority; to the political restriction placed upon their post under section 2(1) (a), (b) or (c) of the Local Government Housing Act 1989 and with reference to their reporting relationship to the Council’s ‘Head of Paid Service’ or Chief Executive. The disclosure requirements also include any employee whose annual remuneration is £150,000 or more. One employee of Perth and Kinross Council was remunerated at this level in 2025/26 (Chief Executive). 4.2 The application of the disclosure regulations in relation to the management structure of Perth and Kinross Council defines the following post-holders as senior employees in 2025/26: • The Chief Executive as statutory head of paid service. • The Strategic Lead of Education and Learning as the Council’s chief education officer, the Strategic Lead of Legal and Governance Services as the Council’s statutory monitoring officer; the Strategic Lead of Finance and Business Support as the Council’s proper officer for financial administration and the Council’s statutory chief social work officer. • The following officers are directly accountable to the Council’s head of paid service and/or are directly accountable to the Council or any committee or sub-committee: o Depute Chief Executive o Director/Chief Officer of the Perth and Kinross Health and Social Care Partnership o Strategic Lead - Education and Learning and Chief Education Officer o Strategic Lead – Children, Families and Justice o Strategic Lead - Finance and Business Support and Chief Finance Officer o Strategic Lead – Legal and Governance and Statutory Monitoring Officer o Strategic Lead – Strategic Planning, People and Performance o Strategic Lead – Projects and Programmes o Strategic Lead – Economy, Development and Planning o Strategic Lead – Environment and Infrastructure o Strategic Lead – Customer and Digital Services o Strategic Lead – Housing and Communities o Strategic Lead – Property Services o Head of Integrated Health and Care - Adults o Head of Integrated Health and Care – Older People o Chief Finance Officer and Head of Governance/Performance, Health and Social Care 111 | Perth and Kinross Annual Accounts 2025/26 Page 130 of 314
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112 | Perth and Kinross Council Annual Accounts 2025/26 4.3 The Scottish Joint Negotiating Committee (SJNC) for Local Authority Services sets the salaries for the Chief Executives of Scottish local authorities. 4.4 The remuneration of senior employees of Perth and Kinross Council for 2025/26 is detailed in Table 3 below: Table 3: Remuneration of Senior Employees of the Council for Financial Year 2025/26 (Job titles as at 31 March 2026) Name and Post Title Salary, Fees and Allowances 2025/26 £ Termination Payments 2025/26 £ Total Remuneration 2025/26 £ Total Remuneration 2024/25 (Note 4) £ Thomas Glen Chief Executive (Note 1) 171,287 n/a 171,287 163,305 Clare Mailer Depute Chief Executive 146,043 n/a 146,043 141,133 Jacqueline Pepper Director/Chief Officer of the Health and Social Care Partnership 146,012 n/a 146,012 140,396 David Macluskey Strategic Lead – Education and Learning 113,656 n/a 113,656 24,154 Arun Singh Strategic Lead – Children, Families and Justice 113,656 n/a 113,656 109,285 Scott Walker Strategic Lead – Finance and Business Support 113,690 n/a 113,690 110,477 Lisa Simpson Strategic Lead – Legal and Governance 113,656 n/a 113,656 110,132 Greg Boland Strategic Lead – Strategic Planning, People and Performance 106,735 n/a 106,735 102,630 Charlene Guild Strategic Lead – Projects and Programmes 106,735 n/a 106,735 93,721 Serge Merone Strategic Lead – Economy, Development and Planning 113,656 n/a 113,656 26,133 Fraser Crofts Strategic Lead – Environment and Infrastructure 106,735 n/a 106,735 102,630 Stephen Crawford Strategic Lead – Property Services (up to 10/10/25) (Note 2) 56,473 533 57,006 102,968 John Beveridge Strategic Lead – Property Services (from 06/10/2025) (Note 3) 52,207 n/a 52,207 n/a Alan Taylor Strategic Lead – Customer and Digital Services 106,747 n/a 106,747 103,071 Elaine Ritchie Strategic Lead – Housing and Communities 106,735 n/a 106,735 102,630 Jane Menzies Head of Integrated Health and Care – Adults 106,735 n/a 106,735 47,906 Zoe Robertson Head of Integrated Health and Care – Older People 106,735 n/a 106,735 98,967 Donna Mitchell Chief Finance Officer and Head of Governance/Performance, Health and Social Care 106,735 n/a 106,735 102,630 TOTAL 1,994,228 533 1,994,761 1,682,168 (see notes) 112 | Perth and Kinross Annual Accounts 2025/26 Page 131 of 314
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113 | Perth and Kinross Council Annual Accounts 2025/26 Notes: (1) The substantive salary for the Chief Executive is laid down in COSLA Circular CO-155 and IR 11-25. (2) The substantive salary for Strategic Lead – Property Services is £106,735. Postholder retired 10/10/2025. Termination payment relates to Pay In Lieu of Holidays. (3) The substantive salary for Strategic Lead – Property Services is £106,735. Postholder appointed on 06/10/2025. (4) Total Remuneration for 2024/25 was £1,996,636. The reduction of £314,468 relates to leavers Devlin, Littlejohn, Scott and Williams, who ceased employment during that year and are therefore not included in the 2025/26 disclosure. 4.5 Election fees (where applicable) are included with senior employee salaries. No other taxable benefits or bonuses were received by the above-named senior employees of Perth and Kinross Council in 2025/26. 4.6 The remuneration paid to the Chief Executive of each of the Council’s subsidiary bodies for 2025/26 is detailed in Table 3A below: Table 3A: Remuneration of Council’s Subsidiary Bodies Senior Employees for Financial Year 2025/26 5. General Disclosure of Remuneration by Pay Band 5.1 In accordance with the disclosure regulations, Table 4 below details the number of Perth and Kinross Council employees (including teachers) whose annual remuneration in 2025/26 was £50,000 or more, including senior employees subject to individual disclosure in section 4 of this report. The information is presented, as required, in bandings of £5,000. Table 4: Remuneration of Employees by Pay Band for 2025/26 Remuneration Bands Number of Employees 2025/26 2024/25 £50,000-£54,999 613 212 £55,000-£59,999 199 195 £60,000-£64,999 144 139 £65,000-£69,999 78 78 £70,000-£74,999 63 52 £75,000-£79,999 41 17 £80,000-£84,999 25 18 £85,000-£89,999 5 5 £90,000-£94,999 2 3 £95,000-£99,999 1 4 £100,000-£104,999 3 7 £105,000-£109,999 12 6 £110,000-£114,999 5 0 £115,000-£119,999 0 0 £120,000-£124,999 0 0 £125,000-£129,999 0 0 £130,000-£134,999 0 0 £135,000-£139,999 0 1 £140,000-£144,999 0 2 £145,000-£149,999 2 0 £150,000-£154,999 0 0 £155,000-£159,999 0 0 £160,000-£164,999 0 1 £165,000-£169,999 0 0 £170,000-£174,999 1 0 Total 1,194 740 Name and Post Title Salary, Fees and Allowances 2025/26 £ Total Remuneration 2025/26 £ Total Remuneration 2024/25 £ Paul Cromwell Live Active Leisure – Chief Executive 92,120 92,120 89,437 Helen Smout Culture Perth and Kinross Limited – Chief Executive 76,602 76,602 73,730 Christopher Glasgow Perth Theatre and Concert Hall Limited – Chief Executive 72,842 72,842 73,281 TOTAL 241,564 241,564 236,448 113 | Perth and Kinross Annual Accounts 2025/26 Page 132 of 314
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114 | Perth and Kinross Council Annual Accounts 2025/26 Notes: For 2025/26, the £50,000 - £54,999, £55,000 - £59,999 and £60,000 - £64,999 pay bands include 508, 76 and 115 teaching staff respectively. For 2025/26 1,194 employees fell into the bandings above; 872 were teaching staff. For context, the top of the main grade teacher scale is £52,614 effective from 1 August 2025. Table 5: The number of Exit Packages with Total Cost per band and Total Cost of Compulsory and Other Redundancies (a) Exit package cost band (including special payments) (b) Number of compulsory redundancies (c) Number of other departures agreed (d) Total number of exit packages by cost band (b) + (c) (e) Total cost of exit packages in each band 2025/26 2024/25 2025/26 2024/25 2025/26 2024/25 2025/26 £’000 2024/25 £’000 £0 - £20,000 2 2 4 6 6 8 28 39 £20,001 - £40,000 1 0 0 3 1 3 34 73 £40,001 - £60,000 0 1 1 4 1 5 44 239 £60,001 - £80,000 0 0 1 1 1 1 66 75 £80,001 - £100,000 0 0 0 2 0 2 0 175 Over £100,000 0 0 0 0 0 0 0 0 Total 3 3 6 16 9 19 172 601 5.2 The costs included within Table 5 are all non-recurring and include payments to individual officers and to the relevant Pension Fund. 5.3 All of the individual exit packages included within Table 5 have been subject to a full business case or legal agreement where appropriate outlining the implications for the Council or are related to officers who have temporary contracts, and their contract has ceased but they are entitled to a redundancy payment due to their length of employment. In terms of the financial assessment for each business case, the maximum payback period is up to five years. The departure of individuals has delivered significant recurring savings to the Council in the past and also facilitated the delivery of an ambitious and challenging transformation / modernisation programme. 6. Remuneration by Subsidiary Bodies of Perth and Kinross Council 6.1 Councillors and senior employees of Perth and Kinross Council serve as board members, officials and technical advisors to subsidiary bodies of the Council. In 2025/26, the Strategic Lead of Legal and Governance and Strategic Lead of Finance and Business Support served as a proper officers to the Tayside and Central Scotland Transport Partnership (TACTRAN). No remuneration was paid to councillors or senior employees of Perth and Kinross Council by subsidiary bodies of the Council in 2025/26. 7. Disclosure of Pension Benefits 7.1 The disclosure regulations require the separate disclosure of accrued pension benefits for senior councillors and senior employees of Perth and Kinross Council. Pension Benefits for councillors and local government employees are provided through the Local Government Pension Scheme (LGPS). Councillors have only been eligible to join this scheme since May 2007. 7.2 Councillor’s pension benefits are based on career average pay. The councillor’s pay for each year or part year ending 31 March (other than the pay in the final year commencing 1 April) is increased by the increase in the cost of living as measured by the appropriate index between the end of that year and the last day of the month in which their membership of the scheme ends. The total of the revalued pay is then divided by the period of membership to calculate the career average pay. This is the value used to calculate the pension benefits. 7.3 From 1 April 2015 a career average scheme was implemented for local government employees. This means that pension is built up based on the pensionable pay for each year. The benefit is added to the employee’s pension account plus inflation increases. The scheme’s normal retirement age for both councillors and employees will vary dependant on age and length of pensionable service. 7.4 From 1 April 2009 a tiered contribution scheme was introduced with contributions from scheme members being based on how much pay falls into each tier. Prior to 2009 contribution rates were set at 6% for all non-manual employees. 114 | Perth and Kinross Annual Accounts 2025/26 Page 133 of 314
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115 | Perth and Kinross Council Annual Accounts 2025/26 Tiered Pension Contribution Rates for Local Government Pension Scheme Members in 2025/26 Actual Pensionable pay Contribution Rate 2025/26 On earnings up to and including £27,500 5.5% On earnings above £27,501 and up to £33,600 7.25% On earnings above £33,601 and up to £46,100 8.5% On earnings above £46,101 and up to £61,400 9.5% On earnings of £61,401 and above 12% 7.5 Pensionable Pay includes salary, plus any contractual elements of pay such as shift payment, night working payment, standby and the monetary value of any accommodation or other allowances in kind pertaining to employment. 7.6 Under the scheme there is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for lump sum up to the limit set by the Finance Act 2004. The pension is built up based on pensionable pay in the year with an accrual rate of 1/49th added to the pension account. (Prior to 2015 the accrual rate was 1/60th of final pensionable salary and years of pensionable service. Prior to 2009 the accrual rate guaranteed a pension based on 1/80th and a lump sum based on 3/80th of final pensionable salary and years of pensionable service). 7.7 The value of accrued benefits has been calculated on the basis of the age at which the person will first become entitled to receive a pension on their retirement without reduction on account of its payment at that age; without exercising any option to commute pension entitlement into a lump sum; and without any adjustment for the effects of future inflation. The pension figures shown relate to the benefits that the person has accrued as a consequence of their local government service, and not just their current appointment. 7.8 Pension Entitlements of Senior Councillors The pension entitlements of senior councillors of Perth and Kinross Council for the year to 31 March 2026 are shown in Table 6 below, together with the contribution made by the Council to each senior councillor’s pension during the year. Table 6: Pension Entitlements of Senior Councillors for Financial Year 2025/26 Name and Post Title In-year pension contributions (Note 1) Accrued Pension Benefits (Note 2) 2025/26 £ 2024/25 £ as at 31/03/2026 £’000 as at 31/03/2025 £’000 Difference £’000 Eric Drysdale Council Leader (from 25/09/2025) Depute Leader (up to 24/09/2025) 6,674 4,623 Pension Lump Sum 6 0 5 0 1 0 Xander McDade Provost (Civic Head) 5,895 5,028 Pension Lump Sum 5 0 4 0 1 0 Peter Barrett Convener Licensing Board 5,368 4,110 Pension Lump Sum 10 2 9 2 1 0 Bob Brawn Convener Local Review Board 5,368 4,110 Pension Lump Sum 6 0 5 0 1 0 Dave Cuthbert Vice-Convener Tayside Valuation Joint Board and Vice-Convener Tayside Contracts Joint Committee 4,541 3,980 Pension Lump Sum 5 0 2 0 3 0 Stewart Donaldson Convener Finance and Resources Committee 5,421 4,623 Pension Lump Sum 7 0 5 0 2 0 John Duff Leader of Largest Opposition Party 5,421 4,623 Pension Lump Sum 5 0 4 0 1 0 David Illingworth Convener Audit and Risk Committee 5,421 4,623 Pension Lump Sum 5 0 4 0 1 0 Grant Laing Convener Economy and Infrastructure Committee (from 25/02/2026) Council Leader (to 22/09/25) 5,849 6,704 Pension Lump Sum 9 0 8 0 1 0 Ian Massie Convener Planning and Placemaking Committee 5,421 4,623 Pension Lump Sum 3 0 2 0 1 0 Tom McEwan Convener Housing and Social Wellbeing Committee 5,421 4,623 Pension Lump Sum 5 0 4 0 1 0 115 | Perth and Kinross Annual Accounts 2025/26 Page 134 of 314
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116 | Perth and Kinross Council Annual Accounts 2025/26 Name and Post Title In-year pension contributions (Note 1) Accrued Pension Benefits (Note 2) 2025/26 £ 2024/25 £ as at 31/03/2026 £’000 as at 31/03/2025 £’000 Difference £’000 Andrew Parrott Depute Provost 4,818 4,110 Pension Lump Sum 6 0 5 0 1 0 John Rebbeck Convener Learning and Families Committee 5,421 4,623 Pension Lump Sum 5 0 4 0 1 0 Colin Stewart Convener Scrutiny and Performance Committee 5,421 4,623 Pension Lump Sum 5 0 4 0 1 0 Richard Watters Convener Climate Change and Sustainability Committee 5,421 4,623 Pension Lump Sum 5 0 4 0 1 0 Michael Williamson Convener Licensing Committee 4,818 4,110 Pension Lump Sum 7 0 6 0 1 0 TOTAL 86,699 73,759 Notes: (1) The in-year employer pension contributions shown are based on all pensionable earnings for financial year 2025/26, not just current appointments. (2) The pension benefits shown relate to the benefits that the individual has accrued as a consequence of their total local government service, including any service with a Council subsidiary body, and not just their current appointment. Councillors have only been eligible to join the Local Government Pension Scheme since May 2007. 7.9 The pension entitlements of senior employees of Perth and Kinross for the year to 31 March 2026 are shown in Table 7 below, together with the contribution made by the Council to each senior employee’s pension during the year. Table 7: Pension Entitlements of Senior Employees of the Council for Financial Year 2025/26 (Post titles as at 31 March 2026) Name and Post Title In-year pension contributions (Note 1) Accrued Pension Benefits (Note 2) 2025/26 £ 2024/25 £ as at 31/03/2026 £’000 as at 31/03/2025 £’000 Difference £’000 Thomas Glen Chief Executive 26,892 25,639 Pension Lump Sum 92 0 84 0 8 0 Clare Mailer Depute Chief Executive 22,924 22,043 Pension Lump Sum 66 78 61 75 5 3 Jacqueline Pepper Director/Chief Officer, Perth and Kinross Health and Social Care Partnership 22,924 22,042 Pension Lump Sum 65 38 60 37 5 1 David Macluskey Strategic Lead – Education and Learning 17,773 13,592 Pension Lump Sum 10 0 7 0 3 0 Arun Singh Strategic Lead – Children, Families and Justice 17,840 17,158 Pension Lump Sum 5 0 3 0 2 0 Scott Walker Strategic Lead – Finance and Business Support 17,844 17,159 Pension Lump Sum 55 71 51 69 4 2 Lisa Simpson Strategic Lead – Legal and Governance 17,844 17,161 Pension Lump Sum 26 0 23 0 3 0 Greg Boland Strategic Lead – Strategic Planning, People and Performance 16,757 16,113 Pension Lump Sum 53 63 49 61 4 2 116 | Perth and Kinross Annual Accounts 2025/26 Page 135 of 314
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117 | Perth and Kinross Council Annual Accounts 2025/26 Name and Post Title In-year pension contributions (Note 1) Accrued Pension Benefits (Note 2) 2025/26 £ 2024/25 £ as at 31/03/2026 £’000 as at 31/03/2025 £’000 Difference £’000 Charlene Guild Strategic Lead – Projects and Programmes 16,757 14,714 Pension Lump Sum 39 27 36 26 3 1 Serge Merone Strategic Lead – Economy, Development and Planning 17,844 12,159 Pension Lump Sum 44 49 33 33 11 16 Fraser Crofts Strategic Lead – Environment and Infrastructure 16,757 16,113 Pension Lump Sum 51 54 47 52 4 2 Stephen Crawford Strategic Lead – Property Services (up to 10/10/2025) 8,864 16,113 Pension Lump Sum 47 41 45 40 2 1 John Beveridge Strategic Lead - Property Services (from 06/10/2025) 13,388 n/a Pension Lump Sum 47 66 n/a n/a n/a n/a Alan Taylor Strategic Lead – Customer and Digital Services 16,757 16,113 Pension Lump Sum 55 60 51 57 4 3 Elaine Ritchie Strategic Lead – Housing and Communities 16,757 16,113 Pension Lump Sum 39 27 35 26 4 1 Jane Menzies Head of Integrated Health and Care – Adults 16,757 7,805 Pension Lump Sum 3 0 1 0 2 0 Zoe Robertson Head of Integrated Health and Care – Older People 16,757 15,538 Pension Lump Sum 17 0 15 0 2 0 Donna Mitchell Chief Finance Officer and Head of Governance/Performance, Health and Social Care 16,701 16,061 Pension Lump Sum 29 14 26 13 3 1 TOTAL 318,137 281,636 Notes: (1) The in-year employer pension contributions shown are based on all pensionable earnings for financial year 2025/26, not just the current appointment. (2) Accrued pension benefits include total benefits accumulated during all membership of the Local Government Pension Scheme and not just service in their current role. 7.10 Pension Entitlements – Council’s Subsidiary Bodies The pension entitlements of the Chief Executives of each of the Council’s subsidiary bodies for the year to 31 March 2026 are shown in Table 7A below, together with the contribution made to each Senior Employees’ pension during the year. 117 | Perth and Kinross Annual Accounts 2025/26 Page 136 of 314
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118 | Perth and Kinross Council Annual Accounts 2025/26 Table 7A: Pension Entitlements of Senior Employees of each of the Council’s Subsidiary Bodies for Financial Year 2025/26 Name and Post Title In-year pension contributions (Note 1) Accrued Pension Benefits (Note 2) 2025/26 £ 2024/25 £ as at 31/03/2026 £’000 as at 31/03/2025 £’000 Difference £’000 Paul Cromwell Live Active Leisure – Chief Executive 14,463 14,042 Pension Lump Sum 33 14 31 13 2 1 Helen Smout Culture Perth and Kinross Limited - Chief Executive 12,027 11,577 Pension Lump Sum 34 27 32 26 2 1 Christopher Glasgow Perth Theatre and Concert Hall Limited – Chief Executive 11,436 11,103 Pension Lump Sum 6 0 4 0 2 0 TOTAL 37,926 36,722 Notes: (1) The in-year employer pension contributions shown are based on all pensionable earnings for financial year 2025/26, not just the current appointment. (2) Accrued pension benefits include total benefits accumulated during all membership of the Local Government Pension Scheme and not just service in their current role. 8. Trade Union (Facility Time Publication Requirements) Regulations 2017 8.1 The Trade Union (Facility Time Publication Requirements) Regulations 2017 were repealed with effect from 18 February 2026. As a result, Perth and Kinross Council is no longer required to publish facility time information for the 2025/26 reporting period. The Council however has chosen to publish this information for transparency. The return for 2025/26 is available via the following link: Trade Unions Statutory Return 2025/26. Signed: Thomas Glen Councillor Eric Drysdale Chief Executive Leader of the Council Perth and Kinross Council Date: Perth and Kinross Council Date: 118 | Perth and Kinross Annual Accounts 2025/26 Page 137 of 314
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119 | Perth and Kinross Council Annual Accounts 2025/26 Glossary ACCOUNTING PERIOD The period of time covered by the accounts, normally a period of twelve months commencing on 1 April. The end of the accounting period is the Balance Sheet date. ACCRUALS Sums included in the final accounts to recognise revenue and capital income and expenditure earned or incurred in the financial year, but for which actual payment had not been received or made as at 31 March. BEACON METHOD (ADJUSTED VACANT POSSESSION METHOD) Based on the (vacant possession) market value of the asset which is the adjusted to reflect the assets’ use for social housing with a sitting tenant. CAA Capital Adjustment Account CAPITAL EXPENDITURE Expenditure on the acquisition of a fixed asset, which will be used in providing services beyond the current accounting period, or expenditure which adds to and not merely maintains the value of an existing fixed asset. CAPITAL FINANCING Funds raised to pay for capital expenditure. There are various methods of financing capital expenditure including borrowing. Leasing, direct revenue financing, usable capital receipts, capital grants, capital contributions, revenue reserves and earmarked reserves. CAPITAL RECEIPT The proceeds from the disposal of land or other fixed assets. Proportions of capital receipts can be used to finance new capital expenditure, within rules set down by the Government but they cannot be used to finance revenue expenditure. CONTINGENT LIABILITY A contingent liability is either: • A possible obligation arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the Council’s control; or • A present obligation arising from past events where it is not probable that a transfer of economic benefits will be required, or the amount of the obligation cannot be measured with sufficient reliability. CORPORATE and DEMOCRATIC CORE The corporate and democratic core comprises all the activities that local authorities engage in specifically because they are elected, multi-purpose authorities. The cost of these activities are thus over and above those which would be incurred by a series of independent single purpose, nominated bodies managing the same services. There is therefore no logical basis for apportioning these costs to services. CREDITOR Amount owed by the Council for work done, goods received or services rendered within the accounting period, but for which payment has not been made by the Council by the end of that accounting period. CRR Capital Receipts Reserve CURRENT VALUE The measurement of operational assets used for the delivery of Council services. Property, plant and equipment is measured on the basis of service potential using existing use value for assets where an active market exists, existing use value-social housing for operational Council dwellings or depreciated replacement cost for assets where there is no market and/or the asset is specialised. DBFM Design Build Finance Maintain - A Non-Profit Distribution (NPD) model to Design, Build, Finance, and Maintain infrastructure which requires the private sector to take a fixed rate of return. The DBFM agreement provides the Council with the right to receive services in return for an annual payment (unitary charge) which comprises the costs of construction, finance, and maintenance, and for the provision of any agreed additional services, for the duration of the agreement. DEBTOR Amount owed to the Council for works done, goods received or services rendered within the accounting period, but for which payment has not been received by the Council by the end of that period. 119 | Perth and Kinross Annual Accounts 2025/26 Page 138 of 314
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120 | Perth and Kinross Council Annual Accounts 2025/26 EXISTING USE VALUE FOR SOCIAL HOUSING (EUV-SH) Is the estimated amount for which a property should exchange on the date of valuation, between a willing buyer and a willing seller in an arm’s length transaction. FAIR VALUE Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FIAA Financial Instruments Adjustment Account IMPAIRMENT A reduction in the value of a fixed asset to below its carrying amount on the Balance Sheet. MATERIALITY The concept that the Annual Accounts should include all amounts which, if omitted, or mis-stated, could be expected to lead to a distortion of the financial statements and ultimately mislead a user of the accounts. NET BOOK VALUE The amount at which fixed assets are included in the Balance Sheet. i.e. their historical costs or current value less the cumulative amounts provided for depreciation. NON-DISTRIBUTED COSTS These are overheads which cannot be directly allocated to a specific area of activity and as such are not apportioned to services. PPE Property, Plant and Equipment PRIOR YEAR ADJUSTMENT Material adjustments applicable to previous years arising from changes in accounting policies or from the correction of fundamental errors. This does not include normal recurring corrections or adjustments of accounting estimates made in prior years. PROVISION An amount put aside in the accounts for future liabilities or losses which are certain or very likely to occur but the amounts or dates of when they will arise are uncertain. PUBLIC WORKS LOAN BOARD (PWLB) An agency of HM Treasury, which provides loans mainly for capital purposes of one year or more to authorities at interest rates of up to 2% above those at which the UK Government can itself borrow at. REVENUE EXPENDITURE The day-to-day expenses of providing services. SERVICE CONCESSION ARRANGEMENTS Service concession (PPP and PFI) arrangements involve the operator undertaking an obligation to provide assets (and related services) that are used to provide services to the public (irrespective of who provides those services to the public). 120 | Perth and Kinross Annual Accounts 2025/26 Page 139 of 314
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Best Value thematic work: Perth and Kinross Council | 1 Best Value thematic work – Asset management Perth and Kinross Council How well councils are managing assets to achieve their corporate objectives and respond to challenges around financial sustainability and climate change DRAFT Prepared by Audit Scotland June 2026 6 Page 141 of 314
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Contents Contents 2 Key messages 3 Introduction 4 1. Asset management planning 6 2. Governance and performance 15 3. Partnership working and community engagement 19 Appendix 25 Accessibility You can find out more and read this report using assistive technology on our website Page 142 of 314
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Key messages | 3 Key messages 1 Perth and Kinross council has an up-to-date Corporate Asset Management Framework that aligns with the council’s corporate objectives and a long-term (30 year) capital plan in place. The council has clear asset management plans in place, but these do not always include sufficient detail about how progress will be monitored and reported. The council’s asset challenge process provides a good model to inform decision making. Data to fully implement this process for property assets is lacking, limiting its effectiveness. 2 The council has effective governance arrangements in place for its capital programme, including regular reporting on its capital budget which enables elected member oversight and scrutiny. Performance monitoring and reporting on asset management strategies and plans could be improved by including timescales, targets and asset related key performance indicators. This would provide a coherent, comprehensive view of progress. 3 The council has an established approach to annual reporting on the condition, suitability and utilisation of each type of asset through its status reports to the Corporate Investment Group. This provides the group with a clear understanding of the council’s asset portfolio to support decision making. 4 The council’s performance against Local Government Benchmarking Framework (LGBF) indicators is mixed. In 2024/25, the council performed better than its family group and nationally in the two relevant asset LGBF indicators for operational property. The council’s performance in the proportion of council dwellings meeting the Scottish Housing Quality standards is yet to meet pre-Covid-19 pandemic levels. 5 The council has a clear ambition to work collaboratively with partners and has good examples of managing assets with other organisations. The council also has robust and transparent arrangements in place for Community Asset Transfers. Whilst there are good examples of community engagement in practice, there is limited evidence that the council has used the community’s views in developing its strategic priorities for asset management. Page 143 of 314
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Introduction | 4 Introduction 1. Asset management directly impacts how councils provide services and achieve their own corporate priorities and longer-term financial sustainability. Limited capital budgets make it challenging for councils to maintain their existing assets and estates, invest in new assets and achieve net zero targets. Exhibit 1 sets out some principles for effective asset management, informed by CIPFA guidance and the Infrastructure Investment Plan for Scotland. Exhibit 1 Principles for effective asset management Principle What this looks like in practice Strategic alignment Councils’ asset management strategies align with their corporate objectives, financial plans, new ways of working, population needs and net zero commitments. Investment hierarchy To support sustainability and cost-effectiveness, asset management strategies prioritise: 1. maintaining and optimising existing assets 2. repurposing or upgrading existing assets to meet the needs of the community 3. new investment only when necessary Monitoring condition and performance Councils regularly assess the condition, suitability and performance of their assets, to help inform investment priorities and support continuous improvement. Governance and accountability Councils have clear roles and responsibilities for asset management, with regular, transparent reporting and senior oversight. Community asset transfers Councils have transparent and robust processes in place to assess and support requests for community asset transfers. Place-based approaches Councils collaborate across services and other public and third sector organisations to manage assets as a collective resource across their local area. This has the potential to achieve savings, better align service provision and create opportunities for joint working. Source: Audit Scotland Page 144 of 314
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Introduction | 5 2. The Code of Audit Practice sets out the requirements for Best Value audit work. This report covers the thematic aspect of the Best Value audit requirements. The Accounts Commission has directed auditors to report on how well councils are managing their assets. In carrying out the work, auditors have considered the following questions: • Part 1 – To what extent does the council have a clear asset management strategy and plans that are affordable, align with its corporate objectives, the changing needs of its population, and net zero commitments? • Part 2 –To what extent do the council’s governance and accountability arrangements support effective asset management? • Part 3 – To what extent does the council have a robust approach to working with partners and communities in managing its assets? 3. An improvement action plan is included in the Appendix of this report. This sets out audit recommendations in key areas, and the council’s planned response including responsible officers and dates for implementation. 4. The coverage of the work is in line with the expectations for council’s arrangements for the seven Best Value themes in the Local Government in Scotland Act 2003, Best Value Statutory Guidance 2020. Page 145 of 314
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1. Asset management planning | 6 1. Asset management planning 5. Councils’ capital programmes are a necessary component of modernising services to improve outcomes for local communities. Doing this successfully requires good strategic medium- to long-term asset management and planning. The Accounts Commission’s Local government budgets 2025/26 briefing reported that capital funding for 2025/26 had increased but remained lower than in 2023/24 and that investing in new buildings and assets is increasingly expensive. Councils are relying on borrowing as the main source of funding for capital projects. In 2025/26, councils intend to borrow £3.13 billion, an increase from £2.67 billion in 2024/25. Findings and evidence relating to the council’s asset management strategic planning arrangements Judgements Evidence 1. The council has an up- to-date corporate asset management policy, strategy and plan that set out its approach and priorities for managing and developing its assets at a high level. The Corporate Asset Management Framework (CAMF) covers a sufficient period of three years enabling strategic planning. 1. The council approved its Corporate Asset Management Policy, Strategy and Plan, making up the Corporate Asset Management Framework (CAMF), in January 2024. It sets out that the policy will be reviewed every three years or sooner if required in response to legislative, regulatory or policy changes. The Policy and Governance Group is to oversee the review, and any material changes will be referred to the Finance and Resources Committee for approval, as required. 2. Management has advised that the council intends to keep the content of the CAMF up to date through regular updates to its supporting components, rather than undertaking full rewrites. As the council plans to update the Corporate Plan next year, it should review its CAMF and supporting strategies and plans to determine whether it also needs to update these to reflect the new strategic ambitions of the council. 3. The Corporate Asset Management Policy outlines the key policy objectives and principles for the council. For example: Objectives Page 146 of 314
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1. Asset management planning | 7 Judgements Evidence • ‘Physical assets support efficient and effective service delivery and achievement of the council’s strategic priorities’ • ‘Physical assets are economically and environmentally sustainable’ • ‘Risk is managed in line with our approved strategic risk management framework’ Principles • ‘We maximise the public value of our physical assets’ • ‘We only have/keep and invest in the physical assets that we need to support effective service delivery’ • ‘Our approach to asset management helps mitigate the impact of climate change’. 4. The council’s CAMF is supported by asset management strategies and plans for each asset category comprising Property; Fleet; Greenspace; Housing (HRA); IT; and Roads. 5. The Corporate Asset Management Policy sets out the governance arrangements at a high level but only covers the structures in place. For example: • it states that the governance framework for corporate asset management aligns with the investment decision- making framework set out in the council’s approved Strategic Capital Investment Planning Framework • it sets out that the council will establish a new Strategic Investment Advisory Group (SIAG). 6. The current governance arrangements for asset management are covered in Part 2. 7. The policy lacks details of the council’s approach to monitoring and reporting on progress. The governance structure diagram includes details that the asset workstreams feed into the Officer Board or the SIAG and then into the Finance and Resources Committee or the full Council. However, the governance information included does not specify what type of information will be monitored at each level, or the frequency of reporting. 2. The CAMF aligns with the council’s corporate objectives and its commitment to achieving net zero commitments. The council’s asset challenge process also outlines how the council 1. There is good alignment between the CAMF and the council’s corporate objectives. For example: • one of the key principles of the Corporate Plan is to make best use of available assets including transferring or otherwise disposing of those which can best serve the community in a different way Page 147 of 314
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1. Asset management planning | 8 Judgements Evidence aims to prioritise decision-making, including by considering whether assets are fit for purpose and adaptable to meeting future needs. But data to fully implement this for property assets is lacking. • the Corporate Asset Management Plan’s mission is ‘To maximise the value of our physical assets and infrastructure and use them effectively, to realise our vision and deliver our strategic priorities’. 2. Management has advised that the Investment Blueprint, which was published in 2021, is the main driver for the council’s capital investment plans. The Investment Blueprint sets out how the council can invest to help meet the Community Planning Partnership’s (CPP) objectives. Examples include: • mitigating the impact of climate change – decarbonising its assets, maximising the efficiency of its property estate and encouraging and facilitating sustainable transport and active travel • promoting inclusive economic growth and a vibrant economy – maximising Community Wealth Building • promoting equality and fairness – providing access to affordable housing and optimising the use of its physical and digital assets to improve access to services. 3. These objectives are also in line with the council’s own corporate objectives, as the council is a key partner in the CPP. 4. The CAMF details a number of principles including that the council’s approach to asset management helps to mitigate the impact of climate change. However, it acknowledges that the council will not achieve its net zero targets without additional funding. 5. The CAMF explains that the council’s approach to asset management will be aligned with its Investment Blueprint and Financial Strategy. The CAMF also sets out the council’s asset challenge model to help inform decision- making. This process includes considering the following factors as part of decision-making: • condition – agreed condition and current asset condition • suitability – is the asset fit for purpose and is it adaptable to future needs • utilisation – agreed utilisation, current utilisation and opportunities to share assets • value for money – revenue and capital costs, and cost benchmarking • climate change – contribution to net zero and climate adaptation goals. 6. This model provides the council with clear and consistent criteria for informing decision-making and prioritising Page 148 of 314
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1. Asset management planning | 9 Judgements Evidence investment. However, implementing this approach relies on adequate data to inform the asset challenge criteria. The Property Asset Management Plan highlights gaps in data to inform the asset challenge process. 7. Each asset management plan for each class of assets has its own defined strategic priorities. The Property Asset Management Plan (PAMP) clearly aligns to the Corporate Plan’s and CAMF’s priorities. The PAMP sets out the following priorities: • To manage sites corporately, supporting the council’s strategic priorities and principles. • Commitment to decarbonising the property estate through proactive decision making and investment. • Establish a baseline property estate that is affordable, safe, and fit for purpose. • Review assets with a locality approach to placemaking, enabling community and service provision led decision making. • Work effectively with partners to maximise shared opportunities. • Promote inclusive economic growth and a vibrant economy. 8. Individual asset category plans set out how the council has considered changing demographic needs and service provision. For example, the PAMP includes the following: • Demographic projections indicate an increase in population within Perth and Kinross, with the age profile becoming older and that the council’s long-term property requirements may change as a result. • Service modernisation and new ways of working mean that existing properties all need to evolve and be flexible in use. 9. Each of the individual asset management strategies and plans note that there is a ‘golden thread’ from the Community Plan. However, there is no specific reference to the council’s Corporate Plan despite one of its key principles focusing on asset management. Making this link explicit would enable the council to more clearly demonstrate how its asset management priorities contribute to achieving its priorities in the Corporate Plan. 3. The council has clear asset management plans and that align with its 1. The council has a number of asset management strategies and plans in place as set out above. As part of the audit, we reviewed the Property Asset Management Strategy and Plan and the Roads Strategy and Plan because these Page 149 of 314
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1. Asset management planning | 10 Judgements Evidence corporate and asset priorities. Asset management plans do not always include sufficient detail about how progress will be monitored and reported. categories of assets are consistently large areas of capital investment. In addition, property most closely supports the asset management principle in the Corporate Plan ‘to make best use of available assets including transferring or otherwise disposing of those which can best serve the community in a different way’. 2. Asset management strategies and plans are presented in a consistent format and support the approach set out in the CAMF. They consider the status of assets, strategic priorities for the type of asset and the asset challenge considerations for the type of assets discussed. The Property Asset Management Strategy 2023-29 and Property Asset Management Plan 3. The Property Asset Management Strategy sets out the vision for corporate property “To establish an affordable, sustainable and fit for purpose property portfolio, via locality-based asset challenge, that safely delivers council services and community outcomes” and the priorities which sit underneath this vision (as discussed in the section above). The vision and priorities support the council’s current corporate objectives. For example, one of the six priorities of the Property Asset Management Strategy focuses on decarbonising the estate. This aligns with the corporate priority to tackle climate change and support sustainable places. 4. The PAMP sets out at a high level the planned investment in property over the 30 Year Investment Plan. This position is updated through a 30 Year Investment Plan spreadsheet that the council maintains. 5. The PAMP does not go into detail about specific projects. Instead, the PAMP focusses on high level actions the council will undertake such as “Complete a review of all property assets to collect condition, suitability, utilisation, value for money and climate change data for each asset, to enable effective asset challenge”. However, the PAMP does not outline timescales for completion or how progress will be measured or reported. This makes it difficult to assess progress with achieving these actions. The Roads Asset Management Strategy 2023-29 and Roads Asset Management Plan 6. The Roads Asset Management Strategy sets out its vision “To have affordable, sustainable and well-maintained Roads assets within Perth & Kinross” which aligns to the council’s corporate and asset management priorities. The Page 150 of 314
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1. Asset management planning | 11 Judgements Evidence Strategy also sets out four strategic priorities which support this vision: • Work collaboratively to maximise shared opportunities. • Utilise life-cycle management and proactively conduct preventative maintenance. • To reduce the council’s carbon footprint providing more sustainable procurement options whilst also improving infrastructure resilience and biodiversity. • The Roads Asset operates in a safe manner. 7. The Roads Asset Management Plan includes a set of performance indicators against each type of asset covered (carriageways, footways, street lighting etc). For example: • percentage of carriageway length treated • percentage of repairs within 7 days • percentage of faults rectified within target time. 8. The council has set targets against some, but not all the indicators, and has not detailed its current performance against these measures. In addition, the council has not detailed where, or how often, these measures will be reported. 4. The council has clearly considered affordability in its capital programme and asset management plans. 1. There is evidence that the council has sufficiently considered affordability of its capital programme and asset management plans through its Investment Blueprint,30 Year Investment Plan and Medium-Term Financial Plan. For example: • the paper presented to the council in 2021 with the Investment Blueprint states that capital investments should be prudent, affordable, sustainable and provide value for money taking into account associated revenue implications • the 30 Year Plan considers the whole-life costs of assets • as part of the Medium-Term Financial Plan 2026-32, the council has carried out scenario analysis such as considering the impact of inflationary cost pressures and interest rates as well as the impact of changes in demographics on affordability. 2. The Property Asset Management Strategy says that the Strategy is supported by the Scottish Government Investment Hierarchy but does not detail how the council will adhere to these principles in practice. 3. The council uses a gateway process to assess capital investment proposals – this considers the following questions: Page 151 of 314
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1. Asset management planning | 12 Judgements Evidence • Why the council needs to undertake the investment? • How will the investment deliver best value? • How commercially viable is the investment proposal? • Is the investment proposal affordable? • Is the investment proposal achievable? 4. In some asset management plans, the council has estimated the cost of addressing the maintenance backlog. Management has advised that this is not reported for all asset types. For example, Fleet and IT assets are on a replacement programme because they have a relatively short lifespan and therefore do not have a maintenance backlog. 5. The most recent Roads Status report, for 2024/25, set out that spending on structures (such as bridges) continued to be shaped by a reactive approach to maintenance. It reported that the condition of bridges had deteriorated over the last ten years, with approximately 30 per cent of the bridge stock in poor or very poor condition. It stated that without significantly more recurring investment, this was likely to result in a significant increase in the number of ‘at risk’ bridges. 6. Management has advised that the structures team is adopting a proactive, evidence-based approach to bridge asset management through lifecycle modelling, using detailed condition data, deterioration rates, and whole-life cost assumptions to predict asset performance. This approach supports better informed decisions about investment. 7. The council sets an operational borrowing limit each year which helps to ensure that it remains within its authorised limit. The council does this by creating headroom between its authorised limit and its operational boundary. This helps it to monitor whether its level of borrowing remains at an affordable level. Borrowing is expected to reduce over the next six years of the capital programme. 8. In 2025/26, the council made the decision to apply 1.25 per cent of council tax income to the loan charges each year to support the capital budget by alleviating the costs of borrowing. 5. The council has taken a proactive approach to managing and mitigating significant building safety risks. 1. Management advised that Heads of Establishment are responsible for monitoring building safety. This is confirmed in the PAMP ‘Every building within the Property Estate requires an assigned Head of Establishment, tasked with ensuring the availability of all health and safety information Page 152 of 314
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1. Asset management planning | 13 Judgements Evidence relating to the building. They are also responsible for notifying line managers of any premises management concerns, and for ensuring the completion of obligatory statutory tests, such as the weekly fire alarm testing’. 2. The council has developed a risk profile for each type of asset which outlines the inherent risk and residual risk. Risk scores for each type of asset were included in the budget papers for the 2026/27 budget which were presented to the full Council on 4 March 2026. However, the papers did not set out mitigating actions to reduce the inherent scores to the residual scores. The council provided examples of two risk profiles to the audit team which include mitigating actions. Management advised that individual risks identified as part of these profiles will be managed at a service level, discussed at the Corporate Investment Group (CIG) when appropriate, and that the risk profiles are being uploaded into the internal risk management system, PK Performs. 3. The risk profiles highlighted that structures are at high risk. Management advised that because of this, the council included additional investment in structures in the 2026/27 capital budget. 4. The council’s asset management system (Concerto) allows for specific information to be captured relating to building safety, such as a register of buildings containing asbestos. This should help the council to identify which buildings are affected if any materials are deemed as a building safety risk in the future. 5. The council advised that there is a five-year rolling condition survey programme which feeds into the 30 Year Investment Plan. The council provided an example to the audit team which shows that the surveys consider areas such as condition and maintenance requirements for buildings. 6. The council has taken a proactive approach to managing the risks associated with Reinforced Autoclaved Aerated Concrete (RAAC): • In an elected member briefing note from September 2023, the council reported that it was aware of RAAC since May 2019 when this was highlighted by its Corporate Health and Safety Team. The council had conducted an initial review of existing building condition information which was followed up by visual inspections when required and reported that no buildings were identified as containing RAAC. • Since the initial review and visual inspections in 2019, the council identified RAAC in Perth Grammar School and Page 153 of 314
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1. Asset management planning | 14 Recommendation 1 After the Corporate Plan has been updated, the council should review its CAMF (and supporting asset management strategies and plans) to ensure that: - strategic priorities in the CAMF align to the council’s corporate priorities and net zero targets - governance arrangements for monitoring and reporting progress are clearly set out, including the type of information that will be reported and frequency of reporting. Recommendation 2 The council should create clear performance measures to track progress on its asset management strategy, including targets, timelines, and where and how often results will be reported. Judgements Evidence Bell’s Sports Centre following condition surveys. The council’s webpage reports that RAAC was identified in Perth Grammar School in late February 2023. It states that immediate safety measures and a programme of works were put in place to remove RAAC materials. The council states that all RAAC has now been removed from the building and replaced with a steel profile roof. A recent elected member briefing (March 2026) outlines an update on RAAC at Bell’s Sports Centre. It explains that in June 2025, the council approved a project to remove RAAC from the sports centre. • The council has reported that it has carried out a desktop assessment of council dwellings and based on the age of the property and the house types, it is confident that none of the housing stock will have been constructed from this cement. There is a risk that the presence of RAAC could be missed in a desktop assessment, as RAAC in other buildings was only found through detailed condition surveys. Page 154 of 314
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2. Governance and performance | 15 2. Governance and performance 6. It is essential that the council has effective governance arrangements in place to enable transparency, oversight and scrutiny of progress with implementing its capital programme and asset management strategy. This enables better-informed decision making and corrective action where needed. Findings and evidence relating to the council’s governance arrangements and performance Judgements Evidence 6. The council’s reporting and monitoring arrangements for the capital plan are clear and enable good scrutiny and oversight of progress. However, the reporting and monitoring arrangements for actions within asset management plans could be improved. The council produces annual reports on the status of each of the asset types which help to inform strategic decision making. 1. The council has a clear governance structure in place to oversee progress towards its capital programme and asset management plans. The council established the CIG to manage and monitor the CAMF including the 30 Year Investment Plan. 2. The CIG meets monthly and has appropriate senior leadership in place. The membership of the group includes relevant Strategic Leads, and its remit includes: • reviewing the progress of the priorities in the CAMF through annual asset stream status reports • managing and monitoring the council’s capital programme by challenging, scrutinising and supporting projects which are reported as being out with agreed scope and tolerances • incorporating existing investment commitments and new corporate initiatives into the 30 Year Investment Plan. 3. The council has also established the SIAG which consists of one representative from each political group within the council. It is chaired by the Leader of the Council and is supported by council officers consisting of the executive team and relevant strategic leads. 4. Management advised that Strategic Leadership Team (SLT) oversight of asset management is primarily through the CIG and SIAG as members of the SLT sit on these groups. 5. A report presented to the full Council in January 2024 setting out the CAMF detailed that asset status reports Page 155 of 314
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2. Governance and performance | 16 Judgements Evidence would be prepared annually. These provide information on the capital and revenue investment in the year alongside an update on the condition, suitability and utilisation of assets to support decision making. 6. As part of this audit, we have reviewed the most recent asset status report for Property and Roads. As described above, these reports provide a comprehensive update of the asset base. However, these do not provide a clear update on performance against the ambitions of the respective strategies and plans. For example, they do not include long-term trends against corporate asset management targets/ key performance indicators, including timescales for achieving these. In addition, data on, for example the suitability and utilisation of assets is not reported for all property, or for roads assets. 7. The council reports progress on the capital budget to the Finance and Resources Committee on a quarterly basis. 8. The council also presents annual performance reports to the full Council which include some examples of measures relating to asset management. For example: • number of attendances at pools, indoor and outdoor sports and leisure facilities and programmes (thousands) • total number of houses built in rural areas of Perth and Kinross • number of community groups supported in the asset transfer process. 9. As the measures in the annual performance report do not cover all asset categories, it is not possible to establish an overall view of the council’s performance in relation to asset management from this information alone. 7. The council regularly reports progress on its capital spending. The ‘significant capital projects’ update report produced by the council shows that in most cases, the projects are expected to be completed on time. However, the council does not define what is significant which may lead to inconsistent reporting. 1. The most recent capital monitoring report which covers the period up to 31 December 2025 notes that 53 per cent of the projected outturn for capital expenditure for 2025/26 had been spent. In 2024/25, the council spent £161.4 million in capital expenditure, of which £133.5 million related to the composite capital (general fund) programme and £27.9 million to the HRA. This spend was against final net capital budgets of £149.0 million and £28.1 million respectively. 2. The council reports updates for ‘significant capital projects’ alongside the capital monitoring reports. However, management has advised that there is no fixed definition of a major project. It is based on factors such as the size Page 156 of 314
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2. Governance and performance | 17 Judgements Evidence Performance against Local Government Benchmarking Framework indicators is mixed. In 2024/25 the council is performing better than its Family Group and national average in the Local Government Benchmarking Framework indicators for operational buildings however it is not performing as well in relation to council dwellings. and scale of the project, complexity, strategic importance and associated risks. 3. The council would benefit from defining significant capital projects to ensure consistency and enhance reporting as it is currently unclear why certain projects meet the criteria and others do not. For example: • the Pitlochry High School Extension Project is not deemed to be significant despite the total approved budget from 2025/26 to 2030/31 being £8.5 million • the Kinross Community Campus Sports Facilities and Crieff Community Campus Sports Facilities projects have been deemed significant despite the total approved budgets for 2025/26 to 2030/31 being £6.9 million and £6.3 million respectively. 4. The council has not clearly set out completion dates for all projects within the capital budget therefore it is difficult to establish how well the council is progressing with its plans in terms of timescales. 5. The council’s performance across four asset management Local Government Benchmarking Framework indicators is detailed in Exhibit 2 below: • In 2024/25, the proportion of operational buildings suitable for current use was 96.1 per cent, this is above its family group and the national average (90.5 per cent and 85.7 per cent respectively). • In 2024/25, the internal floor area of operational buildings in satisfactory condition was 92.6 per cent which is also above its family group and the national average (88.4 per cent and 90.3 per cent respectively). • The ‘council dwellings meeting Scottish Housing Quality Standards’ indicator displayed a steep decline during the Covid-19 pandemic and a quick recovery the following year. Despite improvement in recent years, it is yet to return to pre-pandemic levels. In 2024/25, 80.3 per cent of council dwellings met Scottish Housing Quality Standards which is slightly below the family group and the national average (80.6 per cent and 82.9 per cent respectively). • In 2021/22 (the last time data was collected as set out below Exhibit 2), the proportion of council dwellings that are energy efficient was 82 per cent which is slightly below the family group and national average. Page 157 of 314
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2. Governance and performance | 18 Exhibit 2 Trend in performance against Local Government Benchmarking Framework indicators Perth and Kinross Council has demonstrated mixed performance Note: Data for the Proportion of council dwellings that are energy efficient (%) indicator has not been collected since 2021/22. Energy efficiency targets for social housing are temporarily on hold pending the development of a new standard that aligns with Scotland's net zero target. Source: Audit Scotland using Local Government Benchmarking Framework Recommendation 3 The council should clearly define what a significant capital project is, to ensure consistency in which projects are included in its ‘Significant capital projects’ reports. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage (%) Year Operational buildings suitable for current use (%) Internal floor area of operational buildings in satisfactory condition (%) Council dwellings meeting Scottish Housing Quality Standards (%) Proportion of council dwellings that are energy efficient (%) Page 158 of 314
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3. Partnership working and community engagement | 19 3. Partnership working and community engagement 7. It is essential that councils consider how they can collaborate across services and with other public and third sector organisations to manage assets. This has the potential to achieve savings, better align service provision and create opportunities for joint working. Councils should also have transparent and robust processes in place for supporting and assessing community asset transfer requests and engaging with their communities on asset management plans and priorities. Findings and evidence relating to the council’s partnership working and community engagement arrangements Judgements Evidence 8. The council has clearly set out its ambition to work collaboratively with partners in managing assets in its Property and Roads Asset Management Strategies and Plans. These include actions but do not set out timescales so it is difficult to assess whether the council is on track to achieving its ambition. There are good examples of the council working with partners to collaboratively manage assets. Property 1. The council sets out its ambition to work with partners to maximise shared opportunities in its Property Asset Management Strategy and corresponding plan. One of the strategy’s six strategic principles is ‘Work effectively with Partners to maximise shared opportunities’. The strategy details actions the council will undertake, such as: • continue to work with Community Planning and Third Sector partners to establish public service delivery hubs across Perth and Kinross; contributing to a reduction in the overall public service estate • continue to explore co-location opportunities and optimisation of assets to deliver services • continue to explore opportunities for collaborative working with new and existing partners and external bodies. 2. The plan includes details of various projects the council is involved in. For example: • One Public Estate Programme – a collective review of all public property estates seeking to reduce gross internal area and ongoing revenue costs • Police Scotland Co-location Localities – building on the success of the co-location with Police Scotland in the Page 159 of 314
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3. Partnership working and community engagement | 20 Judgements Evidence Crieff Area Office, the council are investigating opportunities for further collaboration with Police Scotland across its localities • Working Smarter – review of office working across localities as part of the transformation programme. 3. While the council has set out some key actions and associated projects, it does not set out timescales for delivering these or how progress will be reported. This makes it difficult to assess whether the council is on track to achieve its ambitions. 4. There is evidence that the council has worked with partners in managing its assets. For example, the council: • shares its Pullar House office in Perth with NHS • shares its Crieff Area Office with Police Scotland • co-locates with Live Active Leisure and Culture Perth and Kinross in a Pitlochry school • shares premises with the Health and Social Care Partnership in Blairgowrie. Roads 5. The council also sets out its ambition to work collaboratively in its Roads Asset Management Strategy and corresponding plan. One of the strategy’s four strategic principles is ‘Work collaboratively to maximise shared opportunities’. The Roads Asset Management Strategy and Plan also includes actions the council will undertake, for example: • Continue to work with the Tri-Council Roads Maintenance Strategy Group in collaboration with Dundee City Council, Angus Council & Tayside Contracts - This group is part of the overarching Roads Maintenance Partnership (RMP) which has been in place since 1996. The RMP will continue to participate in this group to facilitate Best Value and collaboratively approach roads maintenance. • Explore opportunities for collaborative working with external bodies – the council will approach collaboration with relevant external bodies to promote research, identify common objectives and discover areas where joint projects, shared resources and expertise could lead to mutual benefits and improve service delivery. • Collaborate with developers/community groups to facilitate development – the council will work with Transport Planning and communities to ensure projects Page 160 of 314
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3. Partnership working and community engagement | 21 Judgements Evidence that impact the road assets are aligned with corporate objectives and, where appropriate, future-proofed. 6. Similar to the property actions, the council does not detail when these actions are to be completed by and how success will be measured and reported. 9. It is not clear how the council has considered the views of its community when developing the priorities in its CAMF but there is evidence that the council has considered the views of communities when carrying out locality reviews. 1. The council lacks a co-ordinated and strategic approach to engaging with communities on setting asset management priorities in its CAMF. However, one of six strategic principles set out in the Property Asset Management Strategy is reviewing assets with a locality approach to placemaking, enabling community and service provision led decision making with communities. 2. The PAMP outlines some actions to achieve this principle but does not set out timescales for these. For example, ‘We will continue to engage with the community, we are involved in The Big Place Conversation, which forms part of the Local Development Plan (LDP). This is a conversation between the Council and the communities of the Perth & Kinross area that seeks to find out how residents use their locality and what is important to them. Outcomes of this, and the related LDP, will be used to guide investment decision making and asset planning’. 3. Management advised that community views are also fed in through elected members and CPP discussions which enable communities to speak directly to senior council officers, elected members and partner organisations. However, it is difficult to see evidence of this. 4. The council has provided some examples of community opinions being taken into consideration when conducting Locality Asset Reviews: Pitlochry Locality Asset Review 5. The council has demonstrated that it used community feedback to inform decisions about assets in Pitlochry. In 2023, the council sought feedback through a ‘Big Place Conversation’ which comprised three workshops and various meetings. The council received approximately 800 comments from this process around the proposals. 6. Despite the feedback not being consistent, the council identified the following themes: • Lack of current and historic investment in Pitlochry facilities. • School not considered /perceived as a community asset. Page 161 of 314
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3. Partnership working and community engagement | 22 Judgements Evidence • Leisure facilities were poor, not open at weekends, threatened with closure. • Public library does not open enough. • Local interest in community asset transfer. • Potential for housing on vacant sites. 7. The council notes that this feedback helped shape the options and it determined that the best option was to relocate services within a single community hub at the school premises. The council determined that this offered better and more sustainable services for the community. In June 2024, the Finance and Resources Committee approved £8.7 million in funding for this project. Coupar Angus Locality Property Challenge 8. As the council believed that the Pitlochry Locality Asset Review process worked well, the council has taken a similar approach for assets in Coupar Angus, starting with community consultations. This work has not yet concluded. 10. The council has a clear and transparent approach to supporting and assessing community asset transfer (CAT) requests against its set criteria which includes assessing community benefits, sustainability and impact on council services. The council often supports community groups into alternative solutions to the full CAT process and reports on these in its Community Empowerment Annual report. 1. In line with the Community Empowerment (Scotland) Act 2015, the council approved its Community Asset Transfer (CAT) policy in April 2017. The policy references guidance, which is available on the council’s website, however the policy is not accessible on the council’s website except through committee papers for the Strategic Policy and Resources Committee on 19 April 2017. 2. The policy details the two stages of the CAT process – the first stage is an expression of interest, and the second stage is a detailed application form which constitutes the legal start of the CAT request. The policy also sets out the rationale for encouraging the transfer of council assets to community bodies, including: • devolving power to neighbourhoods encouraging citizen involvement and community action • generating long term sustainable revenue streams for Community Bodies, making them more sustainable • providing opportunities for long-term working between public and voluntary sectors. 3. To date, one CAT request has been approved – the Kinloch Rannoch Outdoor Centre has been transferred to the Rannoch Community Trust. The most recent annual Community Empowerment Report, which will be presented to the Housing and Social Wellbeing Committee in June 2026 reports that since April 2025 it has supported 19 Page 162 of 314
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3. Partnership working and community engagement | 23 Judgements Evidence groups interested in the CAT process (which consists of seven new enquiries and 12 ongoing from previous years). 4. The council sets out clear guidance on the CAT process and the council uses a scoring matrix when assessing requests which can be accessed on the CAT section of the council’s website. The scoring matrix considers criteria such as community benefit, sustainability and the impact on council services. For the approved CAT request, the council reported its assessment transparently by presenting the respective scores against each of the criteria to the full Council to inform its decision. 5. The council has a clear approach to engaging with community groups to support them to develop viable proposals. This includes allocating a Community Empowerment Officer so that groups have a single point of contact with the council, and support from a Community Learning and Development Team. The groups can also be introduced to representatives from key funding organisations such as the Scottish Land Fund when appropriate. 6. The council launched an ‘Advancing Community Asset Fund’ in February 2025, with the first award made in May 2025. The fund was established as a way of allocating council budget funding to groups to help them with their community ownership goals. Management has advised that this is currently a one-off fund. The most recent community empowerment report details that for the 2025/26 financial year, £0.075 million of capital and £0.104 million of revenue funding was made available. To date £0.050 million of capital and £0.077 million of revenue funding has been committed. The council has reported that the following projects had received support: • Pitlochry Town Hall • Dunning Town Hall • Coupar Angus Town Hall • Dunkeld North Garages • Alyth Museum • Cloichard Depot (Pitlochry) • Blairingone School and Schoolhouse. 7. CATs are well promoted by the council. Information on CAT requests is available on its website, and it has held joint information sharing evenings with the Community Ownership Support Service about the CAT process. The council website includes a list of council owned properties Page 163 of 314
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3. Partnership working and community engagement | 24 Recommendation 4 The council should publish its Community Asset Transfer Policy on the website alongside the guidance to enhance transparency of the Community Asset Transfer process. Judgements Evidence and a case library which contains details of CAT requests that have reached Stage 2 (currently this consists of one approved CAT and one pending CAT request). 8. The council has clear governance arrangements in place around CATs and how and where these will be subject to review and approval. Stage 1 applications are assessed by the CAT team and stage 2 applications are presented to the relevant council committee for the decision to be made. 9. The Community Empowerment annual report is published on the CAT section of the website and is presented to the Housing and Social Wellbeing Committee. 10. In February 2025, the council launched the Community Minibus Transfer Scheme which applies similar principles of CATs to transfer former council minibuses to community groups. Community groups are required to apply and demonstrate need, benefit, and ability to sustain a bus. Page 164 of 314
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Appendix | 25 Appendix Improvement action plan Issue/risk Recommendation Agreed management action/timing 1. Alignment between the priorities in the Corporate Plan and the Corporate Asset Management Framework The council plans to update its Corporate Plan in 2027. It is clear that the current Corporate Plan aligns with the Corporate Asset Management Framework and supporting strategies and plans despite the wording of objectives and priorities not always being consistent. Following the update of the Corporate Plan, there is a risk that investment decisions do not align to the council’s updated corporate objectives. After the Corporate Plan has been updated, the council should review its CAMF (and supporting asset management strategies and plans) to ensure that: • strategic priorities in the CAMF align to the council’s corporate priorities and net zero targets • governance arrangements for monitoring and reporting progress are clearly set out, including the type of information that will be reported and frequency of reporting. Review of CAMF & supporting asset management strategies and plans will be carried out after the Corporate Plan has been updated. Capital Investment & Asset Management Team Leader Dec 2027 2. Asset Management Performance Information The council sets out planned actions in its asset management strategies and plans, but it does not include timelines or measures to assess success. This creates a risk that it is more difficult to effectively oversee and scrutinise performance and progress towards achieving asset management priorities. The council should create clear performance measures to track progress on its asset management strategy, including targets, timelines, and where and how often results will be reported. Clear Performance measures will be created and reported annually. Capital Investment & Asset Management Team Leader November 2026 Page 165 of 314
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Appendix | 26 Issue/risk Recommendation Agreed management action/timing 3. Tracking progress of capital projects As part of the capital monitoring updates to the Finance and Resources Committee the council reports on significant capital projects, including expected completion dates and whether they are on track. However, it does not clearly define what counts as a “significant” project. This creates a risk of inconsistency in deciding which projects should receive closer oversight and scrutiny. The council should clearly define what a significant capital project is, to ensure consistency in which projects are included in its ‘Significant capital projects’ reports. Agreed this will be reported to Finance and Resource Committee Chief Finance Officer 30 September 2026 4. Community Asset Transfer Policy The Strategic Policy and Resources Committee approved the Community Asset Transfer Policy on 19 April 2017. The council has dedicated a part of its website to Community Asset Transfers, including guidance on the Community Asset Transfer process, but has not published the policy on the website. There is a risk that community groups are not fully aware of the council’s policy on Community Asset Transfers. The council should publish its Community Asset Transfer Policy on the website alongside the guidance to enhance transparency of the Community Asset Transfer process. Agreed a new policy has been drafted and will be uploaded once approved. Communities Team Leader 30 September 2026 Page 166 of 314
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Best Value thematic work – Asset management Perth and Kinross Council How well councils are managing assets to achieve their corporate objectives and respond to challenges around financial sustainability and climate change Audit Scotland, 4th Floor, 102 West Port, Edinburgh EH3 9DN Phone: 0131 625 1500 Email: info@audit.scot www.audit.scot AS.5.0 Page 167 of 314
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit & Risk Committee Date of Meeting: 29 June 2026 Report Title: Internal Audit Follow Up Report Number: 26/192 Report Author: Jackie Clark, Chief Internal Auditor Organisational Lead: Strategic Lead – Legal and Governance 1. Purpose 1.1 The purpose of this Report is to present current summary of Internal Audit’s ‘follow up’ work relating to actions due for completion up to April 2026. 1.2 Sections 1. Purpose 2. Recommendations 3. Background/Context 4. Follow Up Outcomes 5. Conclusion 6. Impact Value Assessment 7. Appendices 2. Recommendation It is recommended that the Committee: 2.1 notes the current position in respect of the agreed actions arising from Internal Audit’s work. 3. Background/Context 3.1 The Global Internal Audit Standards in the UK Public Sector (GIAS (UKPS)) and the Code of Practice for the Governance of Internal Audit in UK Local Government require that the Audit Committee should oversee the tracking and implementation of actions agreed following audits. 3.2 Internal Audit request evidence from Services which confirms that actions have been implemented and, therefore, controls have been improved. 7 Page 169 of 314
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4. Progress Update 4.1 There were 26 actions due to be completed up to April 2026. 15 actions have been verified by Internal Audit as having been satisfactorily completed. The remaining actions have revised completion dates, as detailed in Appendix 1 and 2. Appendix 2 contains details of actions which were previously considered in private session of the Audit & Risk Committee. 5 Conclusion 5.1 Not applicable. 6. Impact Value Assessment 6.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 7. Appendices 7.1 Appendix 1 – Actions with a completion date of up to September 2025 which have yet to be completed 7.2 Appendix 2 - Actions with a completion date up to April 2026 which have yet to be completed Page 170 of 314
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Appendix 1 Actions with a completion date up to April 2026 which have yet to be completed Finding Action Action owner & Service Date(s) Current status Internal Audit Opinion 25-05 - Housing Regulator Submission Action Point : 5 - Interim target 2026 Importance: Medium Audit Committee Date: 23 Mar 2026 The Energy Efficiency Standard for Social Housing (EESSH) was introduced to improve the energy efficiency of social housing in Scotland, with the aim of reducing energy consumption, fuel poverty and greenhouse gas emissions. As part of our review, it was identified that a significant number of properties failed to meet EESSH requirements. Specifically, 1055 properties did not comply with the standard in 2024/25; 451 of Targeted plan to address EESSH failures, taking into account budgetary pressures (N Lennon, Service Manager, Housing Capital Improvements & New Build) Mar 2026 Aug 2026 The service has reported a net improvement of 267 properties meeting EESSH, based on 469 properties brought up to standard offset by 202 that are now failing; however, these figures remain provisional. Validation is currently limited due to the absence of detailed address level data from the consultant, which has been requested but not yet received. The reported changes are partly attributed to updates in SAP calculation methodology and the replacement of cloned EPC data with actual EPC assessments, Satisfactory 7 Page 171 of 314
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these properties are under exemption (due to technical or economic reasons) or an abeyance (tenant issues, for example, opting out of the improvements required or not allowing access). resulting in some properties now failing where they previously passed. Initial internal checks have also identified discrepancies in recorded outcomes. Consequently, the service is not yet able to confirm whether the target of 114 properties as at March 2026 has been achieved, pending receipt and review of the full dataset. 25-05 - Housing Regulator Submission Action Point: 7 Importance: Medium Audit Committee Date: 23 Mar 2026 Whilst it is appreciated that the current reports and quality assurance processes for the compilation of the submission to the Scottish Housing Regulator ensure that the information is accurate, there A comprehensive contract strategy has been completed to tender for a new system. This strategy acknowledges the limitations and sets out a clear pathway for procuring a new housing asset management solution that meets both current and future operational and regulatory needs. This process has taken significant time given the complexities involved. Market testing has been (N Lennon, Service Manager Housing Capital Improvements & New Build J McColl, Service Manager (Housing) Repairs & Improvements) Mar 2026 Aug 2026 The work remains incomplete. The service has informed that the supplier delayed initial options and pricing by nearly four months, and subsequent cost revisions have required further updates to the Housing Management Team. A phased, more cost-effective approach is now proposed to implement a replacement database, Satisfactory Page 172 of 314
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is scope for considering some improvement in that the audit identified the Council does not maintain a centralised asset database accessible across all departments. conducted to ensure the proposed system will deliver improved functionality, integration, and data reliability. However, the costs have been passed to our Finance colleagues for review and comment, as the quotation received far exceeds the anticipated costs, therefore it is unclear at this stage whether we will have a budget to meet the full requirements. with scope to expand functionality later. Core components would support data migration and replicate current capabilities while reducing reliance on the existing system. Additional resourcing options are included. Stakeholder feedback is still pending, after which the final report will be submitted to Housing Management Team on 9 June 2026. 25-05 - Housing Regulator Submission Action Point : 9 - Phased go- live Importance: Low We have observed positive progress in rent collection, accompanied by a significant reduction in gross rent arrears. However, it has been identified that there is currently no utilisation of advanced technologies to We are currently testing NEC Analytics, which is a form of AI, to help with the identification of trends and forecasting to target our work and free up staff to focus on those more complex and challenging cases. (A McCallum, Service Manager (Housing) Mar 2026 Aug 2026 NEC Analytics system is now live. Initially a small number of staff from operational team were given access to use the system, but from mid of May, access was rolled out to the whole Central Arrears Team. They will be using the tool twice a week initially for a set range of arrears-focused tasks. This will then allow Satisfactory Page 173 of 314
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proactively detect potential rent arrears at the tenant level. Several other councils have successfully implemented predictive analytics to identify early indicators of financial distress among tenants, and this may be a route for PKC to consider. them to see the effectiveness of the system and feedback any improvements or enhancements that need to be made to the system. The managers from Central Arrears Team are working very closely with Housing Systems Support Team to ensure that they get the best out of this tool. However, the service is of the opinion that it is too early to evaluate the system. 25-05 - Housing Regulator Submission Action Point: 10 Importance: Medium Housing Regulator mentioned both Gypsy/Travellers sites are in failures in meeting several Social Housing Charter Outcomes such as Equalities (outcome 1), Communication (outcome 2), Tenant satisfaction surveys are embedded within our programme and scheduled in accordance with both statutory requirements and resident feedback. Review the findings of the Satisfaction Survey for 2025/26. Consider the potential to extend the current contract or alternative means of A McCallum, Service Manager (Housing) Apr 2026 Aug 2026 In terms of Gypsy/Traveller satisfaction levels, a survey was carried out in December 2025. The results showed a 67% satisfaction level amongst Gypsy/Traveller residents. This is a drop in satisfaction levels from previous surveys and is mainly Satisfactory Page 174 of 314
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Participation (outcome 3), Repairs, maintenance and improvement (outcome 5), Gypsy/ Travellers (outcome 16). There is an ongoing replacement of the chalets and general upgrades in both sites. However, on the completion day of this audit, the Comprehensive Satisfaction Survey has not been carried out. collecting the satisfaction levels. The regulator only requires updates every 3 years for these indicators. due to the ongoing refurbishment at Double Dykes. Whilst all residents have been residing in their new chalets for some months, there are still extensive external works ongoing on the site. Service will be looking to complete another survey when the works have been fully completed, and residents have had the chance to settle more into their new chalets. The Knowledge Partnership contract has been extended until end of March 2027. A24-01 - Business Continuity Management (BCM) Planning Action Point : 1.3 Importance: High Audit Committee Date: June 2025 Our observation highlighted Ensure all BCP are signed. Strategic Leads, supported by S Terras, Emergency Planning & Business Continuity Officer Jun 2025 Nov 2025 Mar 2026 Sep 2026 Evidence has been provided to support that 8 out of 10 BCPs signed off, with a further one being at final draft stage, with training and exercise to follow. The Service will continue to support the Accepted Page 175 of 314
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the need for Business Continuity Plans (BCPs) to be regularly updated, particularly regarding contact details and emergency actions. Despite the introduction of a new template, up to-date BCPs were not found across all services. The audit concluded without verifying signed BCPs for all services. remaining Strategic Lead to complete this. A24-01 - Business Continuity Management (BCM) Planning Action Point : 2.1 Importance: High Audit Committee Date: June 2025 Our observations revealed that the previous versions of the BCPs had not routinely been subject to adequate testing and communication (training and exercise) since prior to the Covid-19 pandemic. Furthermore, the latest Business Continuity Management (BCM) procedure has not been finalised, preventing us from Arrange training and exercising of all plans once approved and as per the BCP tracker. S Terras, Emergency Planning & Business Continuity Officer Jun 2025 Nov 2025 Mar 2026 Sep 2026 As highlighted above, 8 out of 10 BCPs exercised and trained, with this to be undertaken for one shortly. The Service will continue to support the remaining Strategic Lead to complete this. Accepted Page 176 of 314
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providing any comments on its effectiveness at this stage. Page 177 of 314
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit & Risk Committee Date of Meeting: 29 June 2026 Report Title: Internal Audit Update Report Number: 26/193 Report Author: Jackie Clark, Chief Internal Auditor Organisational Lead: Strategic Lead – Legal and Governance 1. Purpose 1.1 The purpose of this Report is to present a summary of Internal Audit’s work undertaken as part of the Internal Audit Plans for 2024/25 and 2025/26. 1.2 Sections 1. Purpose 2. Recommendations 3. Background/Context 4. Progress Update 5. Outcome from Consultancy Work 6. Conclusion 7. Impact Value Assessment 8. Appendices 2. Recommendation It is recommended that the Committee: 2.1 notes progress with Internal Audit activity. 3. Background/Context 3.1 The Global Internal Audit Standards in the UK Public Sector (GIAS (UKPS)) and the Code of Practice for the Governance of Internal Audit in UK Local Government require that the Audit Committee should receive regular engagement reporting for internal audit activity and on performance relative to the approved plan. 8 Page 179 of 314
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3.2 Work has continued on assignments from Perth & Kinross Council’s Internal Audit Plans. In addition, work has continued to be undertaken in connection with the Internal Audit provision for Perth & Kinross’ Integration Joint Board. 3.3 Internal Audit continues to support Services to investigate matches for the National Fraud Initiative in line with the timeline as laid down by Audit Scotland. 4. Progress Update 4.1 Appendix 1 shows the status of audits arising from the Internal Audit Plans. 4.2 Internal Audit is currently involved with further areas of unplanned work. There has been significant activity in relation to unplanned work in year. Where any control issues arise as a result of these, reports will be presented to the Audit & Risk Committee. 4.3 The Internal Audit Plan for 2025/26 included two assignments for Strategic Partnering within both Education & Learning and Environment & Infrastructure. The latter has involved Internal Audit contributing to a working group to support a review of Operations. This will continue into 2026/27 audit plan as the working group continues to complete its objectives. 4.4 The audit of Risk Maturity, which has not been completed due to operational resourcing reasons, will be transferred into the Internal Audit Plan for 2026/27. 5 Conclusion 5.1 Not applicable. 6. Impact Value Assessment 6.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 7. Appendices 7.1 Appendix 1 – Internal Audit Activity Page 180 of 314
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Appendix 1 INTERNAL AUDIT UPDATE Internal Audit Activity Audit No. Title Lead Service(s) Status as at October 2025 Audit Committee 2024/25 A24-04 Affordable Housing Housing & Communities Completed June 2026 2025/26 C25-01 Strategic Partnering – Education & Learning Education & Learning Complete June 2026 C25-02 Strategic Partnering – Environment & Infrastructure Environment & Infrastructure Continuing to 2026/27 June 2026 A25-03 External Funding Multiple Services Ongoing September 2026 A25-04 Health & Safety Strategic Planning, People & Performance Completed June 2026 A25-05 Housing Regulator Submission Housing & Communities Completed March 2026 A25-06 Risk Maturity Strategic Planning, People & Performance September 2026 A25-07 Insurance Finance & Business Support Completed June 2026 A25-08 Administration of a social care establishment Adult Social Work Completed December 2025 A25-09 Petty Cash All Services Completed March 2026 A25-10 Payroll Strategic Planning, People & Performance Ongoing September 2026 A25-11 Assessment & Charging Finance & Business Support Ongoing September 2026 8 Page 181 of 314
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1 Internal Audit Report Strategic Planning, People and Performance 25-04 Health & Safety June 2026 Final Report (Report No. 26/194) Legal and Governance Perth & Kinross Council Council Offices 2 High Street Perth PH1 5PH 9 Page 183 of 314
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2 25-04 Health & Safety Contents by Section 1. Introduction 2. Audit Background Information 3. Scope and Limitations 4. Assessment of the Control Environment 5. Summary of Findings 6. Conclusions 7. Acknowledgement 8. Action Implementation & Follow Up 9. Management Action Plan 10. Authorisation 11. Distribution 12. Assessment Definitions Page 184 of 314
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3 1. Introduction 1.1 This assignment forms part of the Internal Audit plan for 2025/26, approved by the Audit Committee on 25 June 2025. The period under review for the purposes of the audit exercise was financial years 2024/25 and 2025/26. 1.2 The indicative scope for the audit was to review arrangements in place for the corporate oversight of health and safety within the Council. 1.3 This audit is linked to the Strategic Risk Register SR011 – The health and safety of staff and the public is not adequately protected which was reported to be Priority 1, High in May 2025. 2. Executive Summary 2.1 The audit has found that reasonable assurance can be placed on the Council’s internal controls in relation to the review arrangements in place for the corporate oversight of Health and Safety within the Council. 2.2 There are twenty-three actions arising from the findings in Section 6. An action plan is included in Section 10. Once these actions are completed, Internal Audit should be able to place substantial assurance on the arrangements in place. 3. Audit Background Information 3.1 Local authorities have a fundamental responsibility to ensure the health, safety and welfare of their employees, service users, contractors, and members of the public who may be affected by council activities. This duty is underpinned by a comprehensive framework of UK Health & Safety legislation, primarily the Health and Safety at Work etc. Act 1974 (HASWA) and associated legislation, which places a statutory obligation on employers to provide a safe working environment and manage risks effectively. 3.2 The section 2(2) of the Act, states that without prejudice to the generality of an employer’s duty under the subsection 1, the matters to which that duty extends include in particular (a) the provision and maintenance of plant and systems of work that are, so far as is reasonably practicable, safe and without risks to health; (b) arrangements for ensuring, so far as is reasonably practicable, safety and absence of risks to health in connection with the use, handling, storage and transport of articles and substances; (c) the provision of such information, instruction, training and supervision as is necessary to ensure, so far as is reasonably practicable, the health and safety at work of his employees; (d) so far as is reasonably practicable as regards any place of work under the employer’s control, the maintenance of it in a condition that is safe and without Page 185 of 314
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4 risks to health and the provision and maintenance of means of access to and egress from it that are safe and without such risks; (e) the provision and maintenance of a working environment for his employees that is, so far as is reasonably practicable, safe, without risks to health, and adequate as regards facilities and arrangements for their welfare at work. 3.3 In the local council context, compliance is especially important due to the diverse nature of services delivered such as housing, social care, waste management, roads, education, parks, and public spaces. Each service area carries unique operational risks, requiring tailored controls, risk assessments, training, and monitoring arrangements. Councils must also comply with supporting regulations such as the Management of Health and Safety at Work Regulations 1999, Control of Substances Hazardous to Health (COSHH), Manual Handling Operations Regulations, and Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR). 3.4 According to the Health and Safety Executive (HSE), any organisation as a minimum has a duty to have the processes and procedures required to meet the legal requirements, including: • a written health and safety policy; if they employ 5 or more people • assessments of the risks to employees, contractors, customers, partners, and any other people who could be affected by your activities and record the significant findings in writing. Any risk assessment must be ‘suitable and sufficient’, • arrangements for the effective planning, organisation, control, monitoring and review of the preventive and protective measures that come from risk assessment; • access to competent health and safety advice; • providing employees with information about the risks in their workplace and how they are protected; • instruction and training for employees in how to deal with the risks; • ensuring there is adequate and appropriate supervision in place; • consulting with employees about their risks at work and current preventive and protective measures. 4. Scope and Limitations 4.1 The audit has reviewed the relevant legislation and governance requirements in fulfilling corporate health and safety (H&S) of the Council. 4.2 To arrive at an opinion on the achievement of the control objective, the review included, • Document reviews concerning H&S policies and procedures, • Interviews with key staff who are responsible for the H&S of the different services, • Reviews of any third-party documents, audit reports and arrangements with independent audits. Page 186 of 314
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5 • Ensuring lessons learned from previous non-compliance and reported incidents/accidents are incorporated into future planning. 4.3 There were no limitations identified that would impact the Audit. 4.4 The details of the control objectives reviewed and the Internal Audit’s assessment of their strength of control in each area are contained within Section 5 of this report. 5. Assessment of the Control Environment 5.1 The table below contains a summary of the number of findings and their ratings, as detailed in Section 12, against each control objective, along with Internal Audit’s assessment of the adequacy and effectiveness of the controls in place to meet each of the objectives agreed for this audit. Further details, including any improvement actions, are set out in the Management Action Plan. No. Control Objective Action Rating Control Objective Assessment 5 4 3 2 1 1 To ensure that the Council complies with all H&S legislation and statutory requirements. 2 4 Reasonable Assurance 2 To ensure that adequate steps are taken to protect employees, service users, contractors, and the public from harm. 2 4 1 1 Reasonable Assurance 3 To ensure H&S training, incident reporting, and risk assessments are robust and effective. 4 3 2 Reasonable Assurance 5.2 The auditor has assessed that reasonable assurance can be placed on controls overall in relation to the arrangements in place for the corporate oversight of Health and Safety within the Council. Meaning: “There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited.” 5.2 A summary of the key findings and actions is provided in section 6. Please note, however, the following areas of good practice which have been highlighted during the audit: 5.2.1 The Chief Executive and the Executive Leadership Team providing leadership on Health and Safety matters at Council, and this is discharged by setting a policy, ensuring that business plans are in place, that regular consultation with employees and trade unions take place, and that the Council’s overall approach is thoroughly monitored and reviewed. We have noticed a clear organisation structure for reporting and managing H&S in place. Council website has details Page 187 of 314
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6 of the recognised Trade Unions with names and contact details of their representatives and those who cooperatively work with the Council. 5.2.2 The Strategic Health and Safety Consultative Committee has approved the Occupational Health and Safety Policy on 21 January 2026, signed by the Chief Executive and the Strategic Lead of Strategic Planning, People and Performance. This has replaced the old policy prepared and approved in 2018 and is readily available on ERIC, uploaded on 9 February 2026. 5.2.3 The strategic objective of the new policy is in line with the legal requirements and HSE guidance (HSG65) provided. The guidance explains the Plan, Do, Check, Act approach and shows how it can help to achieve a balance between the systems and behavioural aspects of management. The Policy provides clarity on Health and Safety responsibilities of both the employer and the employees. 5.2.4 As per Section 7 of the Management of Health & Safety at Work Regulations 1999, Council has appointed a dedicated H&S Team within the Council, and the Team comprises highly competent and qualified professionals to meet the legal requirement for competent advice. In addition, they provide consistent training, advice and support to managers and staff, to ensure they meet their legal obligations in relation to Health and Safety at work. Also, there are various groups of stakeholders and committees, such as Trade unions, Employee Joint Consultative Committee and Strategic H&S Consultative Committee that input their feedback for the planning, doing and monitoring of H&S within the Council. 5.2.5 In accordance with the Occupational Health & Safety Policy, where specialist technical advice cannot be provided internally within the Council, competent external specialist advice must be obtained. We noted that technical specialists have been engaged in certain areas to support preventive maintenance activities. These services remain subject to third-party audit requirements and the instructions of external agencies and regulators such as the Health and Safety Executive (HSE), Scottish Fire and Rescue Service (SFRS), Scottish Environmental Protection Agency (SEPA), and the Care Inspectorate etc. In most of the cases their advice and instructions have been followed to ensure full statutory compliance. 5.2.6 The auditor attended the Strategic Health and Safety Consultative Committee meetings held on 12 March 2026 and 01 June 2026 and was satisfied that there was evidence of employee representative participation and active involvement of service managers and team leaders on the H&S matters considered and discussed. 5.2.7 Audit has reviewed last year’s Employee Joint Consultative Committee (EJCC) minutes and is satisfied with the content of the recorded minutes, participation and decision making. During these meetings, H&S and Fire safety performance has been discussed. This includes details of incident reporting and training figures. Page 188 of 314
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7 5.2.8 Audit has observed the certificate of employers’ liability insurance which is a compulsory insurance required under the Employers’ Liability (Compulsory Insurance) Act 1969 and associated regulations, which mandates employers to obtain insurance to cover liability for employee injury or illness arising from work. This has been obtained and renewed for the current year (until 30 September 2026) from Zurich Insurance Company Ltd. All fleet vehicles have been insured under Motor insurance and other relevant insurances have been obtained by Council including public liability insurance. 5.2.9 We appreciate the efforts taken by the H&S Team to move from an expensive external system for the incident reporting to an in-house system. Currently, all the incidents are reported through the MyPKC platform and those are monitored by H&S Team. Most of the services have confirmed that they use the current system. The auditor participated in a pilot training session on incident investigation conducted by the H&S Team on 29April 2026 and satisfied with the content and delivery. 5.2.10 The auditor has checked the arrangement of H&S of the fleet employees and is satisfied with overall risk assessment procedures, vehicle maintenance, drivers’ assessments (based on the point system), incident reporting, follow up with insurance team and performance monitoring. Specially, recent implementation of random eye test of the drivers is welcomed. 5.2.11 The auditor has checked the arrangements for H&S of the HART team and observed that clearly defined H&S responsibilities, including the completion and adherence to risk assessments, infection control measures, safe systems of work, and established reporting procedures are in place. All the risk assessments have been reviewed on 18 March 2026, are maintained, up to date, and are subject to annual review. 5.2.12 Justice services operate across multiple sites in Perth within a higher risk environment and demonstrate good practice, through clear identification and management of key risks to the employees. As per the team leader, all risk assessments are up to date and mandatory H&S training is in place for all staff. Incidents are formally reported and reviewed, lone working is supported by policy and personal alert systems, and staff wellbeing is promoted through regular supervision, absence management, and access to counselling, with overall compliance overseen by the Justice Services Health & Safety Meetings. 5.2.13 In Communities Repair & Improvement Services, a strong and proactive approach to H&S through comprehensive risk assessments, regular mandatory training, and consistent communication is in place. Safety is embedded into daily operations through toolbox talks, monthly meetings, standing H&S agenda items, and unannounced site checks carried out by both compliance officers and trade coordinators. The use of corporate systems for incident reporting, lone-working monitoring, and job management ensures risks are tracked effectively, while quarterly meetings with the Health & Safety Team help the service stay aligned with legislative updates and best practice. Staff wellbeing is also prioritised through one-to-one meetings, an open-door policy, and proactive support via Occupational Health. Page 189 of 314
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8 5.2.14 H&S of Direct Services is clearly positioned as providing a foundation to all operational activities, with responsibilities embedded through training, supervision, and monitoring. This takes place across refuse collection, waste management, grounds maintenance, and Burials. There is statutory training for all staff (in Key2 system), and specialist training needs (e.g. machinery use, manual handling, driver competence) are clearly identified and delivered as per Lifting Operations and Lifting Equipment Regulations 1998 (LOLER) and Provision and Use of Work Equipment Regulations 1998 (PUWER). Incidents and near misses are effectively managed through a learning-focused investigation framework, while controls for lone working, wellbeing support, and clear communication channels further strengthen safety culture. Ongoing monitoring, engagement with the Health & Safety Team, and external reviews provide assurance of compliance and continuous improvement. 5.2.15 Based on the Local Government Benchmarking Framework (LGBF) data and internal information, sickness absence has shown a slight year on year reduction from 2023/24 to 2024/25, with the overall time lost for all employees decreasing from 5.38% to 5.31% at the Council. However, some areas continue to experience high levels of sickness absence, particularly Integrated Healthcare for Older People and Environment & Infrastructure, both of which remain high risk service areas. People & Culture have introduced several supportive measures to help reduce H&S related sickness absence. For example, new managers can access direct case handling support from the Employee Relations & Wellbeing team, and the Erica chatbot enables managers to book appointments for advice. In addition, targeted work in Education & Learning, including a dedicated resource reviewing absence trends and a working group focused on reducing challenging behaviour in schools, aims to reduce Violence and Aggression(V&A) incidents related sickness levels. All managers also have access to a Power BI dashboard, allowing them to monitor sickness absence trends within their teams. 6. Summary of Findings 6.1 Below is a summary of key findings and actions, which are reflected in the Management Action Plan, detailed in section 10. 6.2 To ensure that the Council complies with all Health & Safety legislation and statutory requirements 6.2.1 As per HSG65, all large public and private sector organisations are required to maintain formal procedures for auditing and reporting health and safety performance. As per the Corporate Occupational Health & Safety Policy section 4.1.4 on Auditing “Strategic Lead areas will be required to audit their own practices and record these details (inspection etc) in line with their own Action Plan. In conjunction, the H&S Team will also audit following a H&S audit plan which will identify compliance and good practice. Audit reports will be reported into the Employee Joint Consultative Committee and Executive Leadership Team for discussion and comment.” Page 190 of 314
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9 6.2.2 Our review identified that the H&S Team does not currently have an established audit plan in place, despite this being a policy requirement. Although this issue has been acknowledged within the Corporate Risk Register (with an initial completion target of 31 December 2025), the deadline has since been deferred. During our discussions, the Team Leader confirmed that the audit process is expected to be implemented in the Team Plan 2026/27. [Action point 01] 6.2.3 Our review noted that, in relation to Risk Register entry SR011, “the implementation of a robust corporate Health and Safety policy and the associated topic-specific arrangements” has not yet been fully completed. However, we found that no formal approval had been granted for the following guidance documents: • Alcohol and Drug Use Guidance (HR Guides) • First Aid Guidance • Infection Control Guidance • General Risk Assessment Guidelines In addition, no guidance has yet been developed for the Provision and Use of Work Equipment (PUWER). [Action point 02] 6.2.4 Our review of H&S practices within Fleet Management identified that there is currently no comprehensive policy in place to prevent drivers from operating vehicles while under the influence of Alcohol or Drugs. Although a memo referencing an Alcohol and Drug Policy was issued to all staff by the Direct Service Manager on 14 March 2025, this communication alone is insufficient to ensure consistent understanding and enforcement. Internal audit opinion’s is that there should be a robust, council wide Drug and Alcohol policy. [Action point 03] 6.2.5 Section 2.3 in the Occupational Health and Safety Policy, clearly states that H&S Team (under People & Culture) must work in synergy with a range of other services including, IT, Insurance, Facilities Management, Estates, Property Services, Housing Repairs, Education & Learning, and Direct Services to ensure an integrated and cohesive approach to risk management. 6.2.6 During our review we have noticed many insurance claims due to various reasons including fire at properties, trip/ fall and driver errors. However, there is a lack of effective coordination between the H&S Team and the Insurance Team, despite the clear importance of this collaboration and explicit requirement within organisational policies. [Action point 04] 6.2.7 Audit acknowledges that employees working directly with the public may face increasing risks of Violence and Aggression (V&A), stemming from the nature of certain frontline services and interactions. As part of its commitment to safeguarding staff, the Council identifies these behaviours ranging from verbal abuse to physical assault as significant organisational risks requiring proactive management and continuous improvement. We observed that established Page 191 of 314
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10 systems including MOSAIC, Northgate (Housing management information system’ person alerts) facilitate the sharing specific information among Housing and Social Work Teams. These systems support staff and contractors’ awareness of potential risks and enable informed decision-making when engaging with service users. 6.2.8 Despite recognising the seriousness of the V&A, there are gaps in adequacy of planning, monitoring, and control measures in place by management to protect a minority of staff. These gaps are especially evident for teams such as Licensing, Environmental Health, and Food Health and Safety, where staff may attend locations or interact with individuals without full visibility of potential risks. The absence of consistent and accessible risk information limits the ability of manager and staff to undertake appropriate precautionary measures, such as conducting visits in pairs rather than individually. [Action point 05] 6.2.9 The Employment Right Act 2025, effective from April 2026, increases employer’s responsibility and liability for preventing harassment, including sexual harassment. Employers now need to take “all reasonable steps” to prevent sexual harassment in the workplace. In our inquiry from the service manager, it was highlighted challenges in managing this duty due to third party involvement such as parents, contractors, agency workers etc. In our observation, it indicates that appropriate preventive arrangements to address these risks have not yet been fully established. [Action point 06] 6.3 To ensure that adequate steps are taken to protect employees, service users, contractors, and the public from harm 6.3.1 Several external contractors have been engaged by the Council to deliver a range of property related services, including janitorial support, cleaning services, school catering, school crossing patrols, and facilities management to various Heads of Establishment (HoE). With respect to H&S, each contractor is fully responsible for ensuring the safety of their own employees as well as any other individuals present within the premises while carrying out the contracted activities. The extracts from the relevant parts from the sample contracts have been reviewed during the audit. 6.3.2 Although the services are provided directly to HoE, overall oversight and performance monitoring of all contracted services should be carried out by the Property Services Team. The responsible person for the management of HoE Property Services has been appointed recently, and monitoring activities are still under development stage. It is recognised this as key role since monitoring is essential in parallel with external audit actions to be implemented. [Action point 07] Page 192 of 314
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11 6.3.3 A new Head of Establishment Premises Handbook was published in May 2025, replacing the old handbook from June 2015, following the consultation with representative Service Managers, Heads of Establishment and Head of Establishment Steering Group. The new handbook has not yet been uploaded to ERIC, meaning Heads of Establishment do not have access to the current version, specifically the new Summary of Tasks is required to be accessed by everyone. At present, only the previous version remains available on the system. [Action point 08] 6.3.4 Training on the newly issued Head of Establishment Premises Handbook has not yet been fully completed at the time of the audit. Our inquiries confirmed that several school HoE and non-school HoE have to be trained, indicating that the rollout remains incomplete. [Action point 09] 6.3.5 In Property Services, multiple suppliers have been appointed based on their respective areas of expertise to undertake Planned Preventive Maintenance (PPM) activities across different sites. When upcoming maintenance is identified, the Property Team raises the relevant work orders within the Concerto system. All work orders are subject to authorisation by the appropriate manager through the system. Suppliers are also granted access to the Concerto system, enabling them to view and manage upcoming maintenance tasks assigned to them. Notifications are generated through the system to ensure suppliers are aware of scheduled PPM activities. 6.3.6 During the Concerto walkthrough testing, a significant number of overdue PPM tasks were identified. These included statutory, non-statutory, and asset register based maintenance tasks. Among the overdue statutory tasks, primary and secondary school properties were included. In our inquiry, management advised that the backlog was primarily attributable to a single supplier experiencing resourcing pressures. In addition, the KPI of the supplier reported for the period October to December 2025 indicates an overall downward trend in performance. October November December Statutory completion rate 61.54% 17.39% 28.07% Non-statutory completion rate 42.7% 41.38% 29.63% Overall completion rate 46.96% 36.36% 28.83% [Action point 10] 6.3.7 In the Concerto system, HoE module is newly embedded to check the duties done by relevant Business Managers (HoE) and it only includes the schools. Since there are many other establishments that require proper maintenance and Compliance Team or Business Manager’s attention, those should be included in the module soon. Our inquiry has not provided any targeted date on completion of this. [Action point 11] Page 193 of 314
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12 6.3.8 The Properties Team confirmed that electrical and mechanical inspections have been carried out in some of the buildings. However, Structural Survey has not been carried out along with that. In our inquiry, it was mentioned to us Building Condition Surveys operate on a five-year rolling programme, managed by a dedicated Condition Survey Team. These surveys are not recorded within the PPM system, and the schedule of upcoming surveys must be obtained directly from the team. We have not yet received this schedule for our review. [Action point 12] 6.3.9 In our discussion with the Service Manager Corporate Landlord, it was mentioned that Council is following SFG20 (the industry standard for building maintenance). However, this SFG20 system is still in development stage and not yet fully integrated to the Concerto system. In our opinion for the compliance this integration is highly important. [Action point 13] 6.3.10 Regarding suggested remedial action in the Concerto Remedial Action Bar, it appears quick actions have not been taken and followed up by the Compliance Team. For example, regarding Perth Grammar Schools Sports Grammar pitch servicing have been highlighted as high priority in November 2025 which require structural engineers work due to movement on column base. However, it has not yet been completed on our audit date. This section should be cleared by a responsible person in timely manner. [Action point 14] 6.4 To ensure H&S training, incident reporting, and risk assessments are robust and effective 6.4.1 There is currently no formal mechanism in place to ensure that all required training is completed by all employees. Although all mandatory modules are available through the e-learning platform, there is no effective cross-checking or oversight. Managers can request a report of their staff to check the training completions and there is no current direct access for managers to do this via the PKC Learn system. [Action point 15] 6.4.1 During our review on HART team’s H&S, it was notified to us that the staff of the HART team have been unable to complete e-learning due to lack of protected time. [Action point 16] 6.4.2 In our inquiry in relation to mandatory H&S training of HART teams it was noticed that provided mandatory training compliance has significant gaps. Several training courses are well below expected compliance levels: • Violence & Aggression Awareness – 25% • DSE Training – 45% • Infection Control e-learning – 28% (though the workshop is higher at 87%) Page 194 of 314
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13 • Moving with Dignity – 75% Out of the 40 mandatory training categories, only 14 have achieved a completion rate above 50%, which is a significant concern given the high number of medication errors recorded in Q2 25–26. The auditor is of the opinion that training compliance must be monitored more rigorously to ensure staff are equipped with the necessary knowledge and skills to reduce errors and maintain safe service delivery. [Action point 17] 6.4.3 In accordance with the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR), the Council must ensure that all reportable incidents are notified to the HSE within the statutory timeframes. Serious incidents (including fatalities, specified major injuries, hospital treatment of non-workers, and dangerous occurrences) must be reported immediately and without delay, reflecting the requirement for urgent regulatory notification. All other reportable events must be followed by a full written submission to the HSE within 10 days, ensuring timely and accurate compliance with the regulatory process. In cases where an employee is incapacitated for more than seven consecutive days, the incident must be formally reported within 15 days of the accident date, consistent with the statutory reporting thresholds for over 7-day injuries. The H&S Team is responsible for determining RIDDOR applicability. 6.4.4 We noted that, on several occasions, RIDDOR reportable incidents were not submitted within the statutory timelines required by the HSE. In certain cases, reports were submitted several months after the incident occurred. However, adherence to these timeframes is essential to maintain compliance and support effective oversight of workplace health and safety. [Action point 18] 6.4.5 The H&S Team has made renewed efforts to address incidents, however, the lack of reduction in reportable incidents observed by the auditor has highlighted the need for stronger support and understanding from all managers. Without proper safety measures in place, employees remain at risk, insurance costs may rise due to increased claims, and the Council faces potential harm to the public as well as reputational damage. It is therefore essential that managers actively contribute to targeted actions aimed at reducing reportable incidents across the organisation. [Action point 19] 6.4.6 The manager of Direct Services confirmed that approximately 300 Risk Assessments and Safe Systems of Work are currently in place in his service. We identified that the volume and complexity of these documents present challenges in terms of effective management and oversight of H&S. However, efforts are underway to reduce this complexity, and a substantial review has been conducted by the H&S Team. A designated responsible officer has been appointed to oversee and follow up on the review outcomes. Several improvement actions have been identified within the action plan, and work is underway to implement them. Page 195 of 314
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14 6.4.7 In accordance with section 53 of the Fire (Scotland) Act 2005 and regulation 9 of the Fire Safety (Scotland) Regulations 2006, fire risk assessments must be carried out and kept under review regularly. In general practice, this includes annual review (as adopted across councils, schools, offices and care environments) and review following any significant change or where the assessment is no longer valid. 6.4.8 Scottish Fire and Rescue Service (SFRS) carried out 4 audits at Council premises during 2025/26. The SFRS also carried out 21 operational visits to domestic high-rise properties. In our inquiry, it is mentioned that H&S Team does not monitor outstanding actions from SFRS audit. They mentioned that this information will be available to the Head of Establishment from each audited property or to the Housing and Repairs Team for domestic premises. With the development of Concerto these outstanding actions will be signed off when the task is completed. However, there is no evidence on the completion of any actions just now and there is no one responsible person from the H&S Team to follow up. [Action point 20] 6.4.9 The auditor was informed that the H&S Team carry out an annual FRA review of all buildings with sleeping accommodation such as care homes and other buildings with significant fire risks such as Friarton Depot. And re-assess existing FRAs at 24 months, 36 months, 48 months or 60 months frequencies depending on many factors. However, the fire risk assessment schedule provided is not completed and the re assessment frequencies have not been set up properly for the many of the properties. [Action point 21] 6.4.10 In relation to the Council Headquarters at 2 High Street, a new FRA was completed on 27 May 2026 following the significant changes in layout and occupancy during 2025. However, the assessment identified that although the overall fire risk is considered tolerable, few high-priority actions remain and several recommendations from the previous FRA (August 2023) have still not been implemented. Although fire drills were carried out in March and May 2026, the existence of outstanding and newly identified issues indicates that fire safety arrangements require further strengthening to ensure full compliance and effective risk management. [Action point 22] 6.4.11 Regarding the Pullar house building, the ownership has changed in September 2025, and the last FRA was dated 24 July 2024. In the FRA schedule it has mentioned that the next FRA is due in July 2026 and in our inquiry, it is mentioned that there is ongoing discussion with other users of the building regarding next FRA. However, the FRA is yet to be done. [Action point 23] Page 196 of 314
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15 7. Conclusion 7.1 The Internal Audit review is able to place reasonable assurance on the overall control environment for arrangements for the compilation of the annual submissions to the Housing Regulator. The agreed actions, once implemented, should enable the Internal Audit to place substantial assurance on these. 8. Acknowledgements 8.1 Internal Audit would like to thank all officers who were involved in this audit, G Boland, Strategic Lead – Strategic Planning, People & Performance P Johnstone, People & Culture Manager L Hamilton, Team Leader- Health & Safety M Young, Fire Safety Advisor F Gamlen, Systems Officer G Key, Principal Officer – Energy & Engineering A Cook, Service Manager – Contracts & Facilities L Peoples, Team Leader -Contracts & Facilities A Brown, Assistant Fleet Manager C Shepherd, Team Leader Communities - Repairs & Improvements N Gibson, Team Leader (HART) R Ross, Team Leader – Justice N Taylor, Direct Services Manager E Bayne, HR Team Leader S Burke, PA to Strategic Lead Strategic Planning, People & Performance 9. Action Implementation & Follow up 9.1 Responsibility for the maintenance of adequate and effective controls rests with management. Where the audit has identified areas for management action, these are identified in the Management Action Plan. Where a decision is taken by management not to act in response to findings from this review, it is the responsibility of management to assess and accept the risk arising from non- implementation. 9.2 Achievement of the agreed actions is monitored through Internal Audit’s ‘follow up’ arrangements. Page 197 of 314
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16 10. Management Action Plan Action Point Para. No Finding Risk Rating Agreed Action & Evidence Action Owner Target Completion Date 1 6.2.2 Our review identified that the H&S Team does not currently have an established audit plan in place, despite this being a statutory requirement. Although this issue has been acknowledged within the Corporate Risk Register (with an initial completion target of 31 December 2025), the deadline has since been deferred. During our discussions, the Team Leader confirmed that the audit process is expected to be implemented in the Team Plan 2026/27. 4 Agreed action: An audit process and programme for Health and Safety performance will be piloted and subsequently implemented as part of Team Plan 26/27. Agreed evidence: Approved audit plan L Hamilton Team Leader- Health & Safety March 2027 2 6.2.3 Our review noted that, in relation to Risk Register entry SR011, “the implementation of a robust corporate Health and Safety policy and the associated topic-specific arrangements” has not yet been fully completed. However, we found that no formal approval had been granted for the following guidance documents: 3 Agreed action: Continue review of supporting documentation, to align with updated Corporate Health and Safety Policy. This is part of Team Plan 26/27. Agreed evidence: Approved guidance documents L Hamilton Team Leader- Health & Safety March 2027 Page 198 of 314
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17 • Alcohol and Drug Use Guidance (HR Guides) • First Aid Guidance • Infection Control Guidance • General Risk Assessment Guidelines In addition, no guidance has yet been developed for the Provision and Use of Work Equipment (PUWER). 3 6.2.4 Our review of H&S practices within Fleet Management identified that there is currently no comprehensive policy in place to prevent drivers from operating vehicles while under the influence of Alcohol or Drugs. Although a memo referencing an Alcohol and Drug Policy was issued to all staff by the Direct Service Manager on 14 March 2025, this communication alone is insufficient. Internal audit opinion’s is that there should be a robust, council wide Drug and Alcohol policy. 3 Agreed action: There are a Management Arrangement and Guidance in place. Even though there is no control sheet on documents, they have all been through Employee Joint Consultative Committee (EJCC). Managers should identify this and put in place suitable and sufficient control measures to address risks from drugs and alcohol. The People & Culture Manager will explore approaches adopted by other local authorities to understand potential options available and agreed to take further discussions with trade unions. Agreed evidence: P Johnstone People & Culture Manager January 2027 Page 199 of 314
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18 • Board minutes • Approved new drug and Alcohol policy 4 6.2.6 During our review we have noticed many insurances claimed due to various reason including fire at properties, trip/ fall, driver errors etc. However, there is a lack of effective coordination between the H&S Team and the Insurance Team, despite the clear importance of this collaboration and explicit requirement within organisational policies. 3 Agreed action: • Agree with Insurance Team on quarterly updates. • Ask for Insurance Team input into Committee quarterly reporting. • Feedback on claims and legal rulings from Insurance Team to Health and Safety Team. • Incorporation of insurance team information in reporting and planning carried out by the Health and Safety Team. Agreed evidence: • Quarterly update reports from Insurance Team • Communication with Insurance Team L Hamilton Team Leader- Health & Safety G Walker Corporate Asset Management Officer December 2026 5 6.2.8 Despite recognising the seriousness of the V&A, there are gaps in adequacy of planning, monitoring, and control measures in place by management to protect a minority of staff. These gaps are especially evident for teams such 4 Agreed action: Develop and implement enhanced processes to enable appropriate access to existing risk information and systems, in compliance with relevant legal and data protection G Boland Strategic Lead – Strategic Planning, People & Performance June 2027 Page 200 of 314
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19 as Licensing, Environmental Health, and Food Health and Safety, where staff may attend locations or interact with individuals without full visibility of potential risks. The absence of consistent and accessible risk information limits the ability of managers and staff to undertake appropriate precautionary measures, such as conducting visits in pairs rather than individually. requirements. This should include establishing a more coordinated and consistent approach to sharing V&A risk information across services. Agreed evidence: Documented procedures on new or revised processes for accessing and sharing V&A risk information. 6 6.2.9 The Employment Right Act 2025, effective from April 2026, increases employer’s responsibility and liability for preventing harassment, including sexual harassment. Employers now need to take “all reasonable steps” to prevent sexual harassment in the workplace. In our inquiry from the service manager, it was highlighted challenges in managing this duty due to third party involvement such as parents, contractors, agency workers etc. In our observation, it indicates that appropriate preventive arrangements to address these risks have not yet been fully established. 3 Agreed action: There are no final guidelines provided by the government yet specifically defining “all reasonable steps”. However, Sexual Harassment has been added to the General Risk Assessment for consideration. Further arrangements are under the development stage such as whistleblowing guidance for managers and employees and processes for complaints and grievances etc. Agreed evidence: Approved whistleblower guidance P Johnstone People & Culture Manager October 2026 Page 201 of 314
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20 Approved new processes developed on Sexual Harassment 7 6.3.2 Although the services are provided directly to HoE, overall oversight and performance monitoring of specific contracted services should be carried out by the Property Services Team. The responsible person for the management of HoE Property Services has been appointed recently, and monitoring activities are still under development stage. It is recognised this as key role since monitoring is essential in parallel with external audit actions to be implemented. 4 Agreed action: All outsourced HoE tasks to be logged on the HoE Concerto system, and random sampling to be provided to support completion of these checks. All H&S issues in relation to relevant outsourced services to be discussed as part of relevant operational monitoring meetings as required, and all H&S incident reports to be provided upon request. Agreed evidence: HoE records on Concerto. Minutes of operational meetings. Copies of any relevant inspections and observations. Any relevant H&S incident reports and follow on actions A Cook Service Manager – Contracts & Facilities September 2026 8 6.3.3 A new Head of Establishment Premises Handbook was published in May 2025, replacing the previous version from June 2015, following consultation with representative 1 Agreed action: SharePoint site to be signed off, with updated Handbook available. Heads of Establishment who have been L Hamilton Team Leader - Health & Safety Completed Page 202 of 314
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21 Service Managers, Heads of Establishment and Head of Establishment Steering Group. The new handbook has not yet been uploaded to ERIC, meaning Head of Establishment do not have access to the current version, specifically the new Summary of Task is required to be access by everyone. At present, only the previous version remains available on the system. trained have been linked to the updated Handbook already. Agreed evidence: Link to the updated document 9 6.3.4 Training on the newly issued Head of Establishment Premises Handbook has not yet been fully completed at the time of the audit. Our inquiries confirmed that several school HoEs and non-school HoEs are still awaiting training, indicating that the rollout remains incomplete. 3 Agreed action: Final training session is on 2 June 2026 Agreed evidence: Updated training completion list L Hamilton Team Leader- Health & Safety Completed 10 6.3.6 During the Concerto walkthrough testing, a significant number of overdue PPM tasks were identified. These included statutory, non- statutory, and asset register based maintenance tasks. Among the overdue statutory tasks, primary and secondary school properties were included. In our inquiry, management advised that the 3 Agreed action: • To work with current supplier to improve performance during current contract which is due to expire in Apr 2027. • Contractor performance also improved during first quarter of 2026 and continues to improve. New contract will also be in place from Apr G Key Principal Officer – Energy & Engineering April 2027 Page 203 of 314
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22 backlog was primarily attributable to a single supplier experiencing resourcing pressures. In addition, the KPI of the supplier reported for the period October to December 2025 indicates an overall downward trend in performance. 2027, and contractor may not be successful in winning new contract. Agreed evidence: • KPI for the first quarter 2026 • Contractor award document 2027 11 6.3.7 In the Concerto system, HoE module is newly embedded to check the duties done by relevant Business Managers (HoE) and it only includes the schools. Since there are so many other establishments that require proper maintenance and Compliance Team or Business Manager’s attention, those should be included in the module soon. Our inquiry has not provided any targeted date on completion of this. 3 Agreed action: All other relevant premises to be added to HoE Concerto Database. HoE to be identified and relevant records to be updated. Agreed evidence: Data base updated with all relevant HoE information. A Cook Service Manager – Contracts & Facilities October 2026 12 6.3.8 The Properties Team confirmed that electrical and mechanical inspections have been carried out some of the buildings. However, Structural Survey has not been carried out along with that. In our inquiry it was mentioned to us Building Condition Surveys operate 3 Agreed action: A programme for Building condition surveys for 2026/27 are currently being reviewed manually by the in-house building surveyor and will be issued to the supplier to undertake these. Further, development is also G Key Principal Officer – Energy & Engineering July 2026 Page 204 of 314
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23 on a five-year rolling programme, managed by a dedicated Condition Survey Team. These surveys are not recorded within the PPM system, and the schedule of upcoming surveys must be obtained directly from the team. We have not yet received this schedule for our review. required with Concerto to automate the programme for Building condition surveys which is currently being explored at present. Structural surveys are not carried out as standard only where identified by the building surveyors in accordance with Scottish Government core facts methodology. Agreed evidence: Programme of surveys 13 6.3.9 In our discussion with the Service Manager Corporate Landlord, it has mentioned that the Council is following SFG20 (the industry standard for building maintenance). However, this SFG20 system is still in development stage and not yet fully integrated to the Concerto system. In our opinion for the compliance this integration is highly important. 2 Agreed action: SFG20 is to be integrated into concerto for future contract. It is not required at present for current contract as robust and compliant specifications are in place already but for improvement and efficiency for the new contract this is to be automated using SFG20. Agreed evidence: Systems will be integrated in advance of new contract being awarded in Apr 2027. G Key Principal Officer – Energy & Engineering November 2026 Page 205 of 314
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24 14 6.3.10 Regarding the suggested remedial actions recorded in the Concerto Remedial Action Bar, it appears that timely actions and follow-ups have not been carried out by the Compliance Team. However, it has been explained to us that the required work has in fact been completed, but the system has not been updated accordingly. This kind of outdated system information may result in inaccurate reporting, misrepresentation of compliance status, and the perception that critical actions are delayed or not performed. 4 Agreed action: Work is currently progressing with Concerto team and IT colleagues to investigate automating of some of the functions which will free up time for members of staff to review remedial tasks. A re-structure in Property services will also provide additional resources to dedicate to this function. Agreed evidence: • Confirmation from IT/Concerto team on fully automation • Reports run on remedial actions G Key Principal Officer – Energy & Engineering December 2026 15 6.4.1 There is currently no formal mechanism in place to ensure that all required training is completed by all employees. Although all mandatory modules are available through the e-learning platform, there is no effective cross-checking or oversight. Managers can request a report of their staff to check the training completions and there is no current direct access for managers to do this via the PKC Learn system. 4 Agreed action: • Training records will be part of the new audit process. • Ongoing discussion with the supplier of the platform and PKC IT to develop an API (Application Programming Interface) and potentially develop a dashboard to ensure effective tracking and completion of mandatory training. L Hamilton Team Leader- Health & Safety J Cassidy Employee Engagement Officer March 2027 Page 206 of 314
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25 Agreed evidence: • Training completion records • New platform to track he is training completion 16 6.4.2 During our review on HART team’s H&S, it was notified to us that the staff of the HART team have been unable to complete e-learning due to lack of protected time. 3 Agreed action: Allocate protected time for staff to complete outstanding mandatory e-learning and monitor progress through locality co-ordinators. Agreed evidence: Training records showing completion rates, list of outstanding training, and periodic monitoring reports. N Gibson Team Leader - HART August 2026 17 6.4.3 Out of the 40 mandatory training categories, only 14 have achieved a completion rate above 50%, which is a significant concern given the high number of medication errors recorded in Q2 25–26. The audit is of the opinion that training compliance must be monitored more rigorously to ensure staff are equipped with the necessary knowledge and skills to reduce errors and maintain safe service delivery. 4 Agreed action: Continue to ensure all staff complete medication training and competency assessments and implement the medication checklist to reduce errors. Agreed evidence: Medication training and competency records, checklist implementation evidence, and reports demonstrating reduction in medication errors. N Gibson Team Leader - HART August 2026 Page 207 of 314
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26 18 6.4.5 We noted that, on several occasions, RIDDOR reportable incidents were not submitted within the statutory timelines required by the HSE. In certain cases, reports were submitted several months after the incident occurred. However, adherence to these timeframes is essential to maintain compliance and support effective oversight of workplace health and safety. 4 Agreed action: • Reinforcement on Incident Reporting training • SHSCC reminded of importance • Health and Safety Team now check absence dates, as over 7-day absences have been the most problematic. Agreed evidence: • Summary of incident reports to HSE L Hamilton Team Leader - Health & Safety December 2026 19 6.4.6 Despite the continued efforts of the H&S Team, in the consistent level of reportable incidents observed has highlighted the need for stronger support and understanding from all managers. Without proper safety measures in place, employees remain at risk, insurance costs may rise due to increased claims, and the council faces potential harm to the public as well as reputational damage. It is therefore essential that managers actively contribute to targeted actions aimed at reducing reportable incidents across the organisation. 3 Agreed action: Reinforce through the Strategic Health and Safety Consultative Committee (SHSCC) framework and obtain active support from all Service Managers to reduce the number of reportable incidents. Agreed evidence: Quarterly reports on incidents G Boland Strategic Lead – Strategic Planning, People & Performance L Hamilton Team Leader - Health & Safety August 2026 Page 208 of 314
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27 20 6.4.9 Scottish Fire and Rescue Service (SFRS) carried out 4 audits at Council premises during 2025/26. The SFRS also carried out 21 operational visits to domestic high- rise properties. In our inquiry, it is mentioned that H&S Team does not monitor outstanding actions from SFRS audit. They mentioned that this information will be available to the Head of Establishment from each audited property or to the Housing and Repairs Team for domestic premises. With the development of Concerto these outstanding actions will be signed off when the task is completed. However, there is no evidence on the completion of any actions just now and there is no one responsible person from the H&S Team to follow up. 4 Agreed action: Write to all Heads of Establishment to remind them to let the Health and Safety Team know if they are being visited by SFRS, and to share actions with the Fire Safety Adviser. Email Heads of Establishment and ask them to update their action plans and report when actions are completed. Agreed evidence: • Email correspondence • Evidence on action completion L Hamilton Team Leader - Health & Safety December 2026 21 6.4.10 The auditor was informed that the H&S Team carry out an annual FRA review of all buildings with sleeping accommodation such as care homes and other buildings with significant fire risks such as Friarton Depot. Other premises have their FRAs re-assessed at 24 months, 36 months, 48 months or 3 Agreed action: Check the work schedule to ensure it is up to date. Agreed evidence: Updated work schedule L Hamilton Team Leader - Health & Safety August 2026 Page 209 of 314
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28 60 months frequencies depending on many factors. However, the fire risk assessment schedule provided is not completed and the re- assessment frequencies have not been set up properly for the many of the properties. 22 6.4.11 In relation to the Council Headquarters at 2 High Street, a new FRA was completed on 27 May 2026 following the significant changes in layout and occupancy during 2025. However, the assessment identified that although the overall fire risk is considered tolerable, few high-priority actions remain and several recommendations from the previous FRA (August 2023) have still not been implemented. Although fire drills were carried out in March and May 2026, the existence of outstanding and newly identified issues indicates that fire safety arrangements require further strengthening to ensure full compliance and effective risk management. 2 Agreed action: Property action: • Awaiting costs from supplier to undertake surveys for fire doors throughout the building. It should be noted the building was fully refurbished and all fire doors were replaced as part of refurbishment. • Other outstanding actions which relate to fire stopping will be reviewed by internal architectural resources following meeting on 8 June 2026 and a contractor will be engaged in due course to carry out necessary remedial works. HoE action: • Coordinate with Property Service Team to ensure all fire safety matters are addressed collaboratively. G Key Principal Officer – Energy & Engineering S Walker HoE, 2 High Street, Perth December 2026 January 2027 Page 210 of 314
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29 • Complete the mandatory fire safety self-assessment • Remove fire hazards such as portable heaters, insecure storage and poor housekeeping practices within the building. • Strengthening the fire safety management through frequent checks, training and record keeping • Ensure high-risk areas are secured and enforcing safe working practices Agreed evidence: • Completed Annual Self- Assessment and schedule • Next FRA to ensure previous actions have been fully completed 23 6.4.12 Regarding the Pullar house building, the ownership has changed in September 2025, and the last FRA was dated 24 July 2024. In the FRA schedule it has mentioned that the next FRA is due in July 2026 and in our inquiry, it is mentioned that there is ongoing discussion with other users of the building regarding next FRA. 2 Agreed action: On completion of the revised Fire Strategy an updated FRA will be put in place. Any actions arising from the revised FRA will be addressed by the HoE for Pullar House. Agreed evidence: Updated FRA in place L Hamilton Team Leader - Health & Safety A Cook Service Manager – Contracts & Facilities August 2026 Page 211 of 314
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30 However, the FRA is yet to be done. Page 212 of 314
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31 11. Authorisation 11.1 The auditor for this assignment was D. Arachchilage. The supervising auditor was J Clark. This report is authorised for issue: 12. Distribution 12.1 This report has been distributed to: T Glen, Chief Executive C Mailer, Depute Chief Executive Z Robertson, Director/Chief Officer Perth & Kinross Health & Social care Partnership L Simpson, Strategic Lead - Legal & Governance S Walker, Strategic Lead - Finance and Business Support E Ritchie, Strategic Lead - Housing & Communities F Crofts, Strategic Lead - Environment and Infrastructure A Singh, Strategic Lead - Children, Families and Justice J Beveridge, Strategic Lead - Property Services A Taylor, Strategic Lead - Customer and Digital Services S Merone, Strategic Lead - Economy, Development and Planning D Macluskey, Strategic Lead - Education and Learning C Guild, Strategic Lead - Projects and Programmes G Boland, Strategic Lead – Strategic Planning, People & Performance P Johnstone, People & Culture Manager L Hamilton, Team Leader- Health & Safety G Key, Principal Officer – Energy & Engineering A Cook, Service Manager – Contracts & Facilities A Brown, Assistant Fleet Manager N Gibson, Team Leader - HART J McColl, Service Manager - Repairs & Improvements N Taylor, Direct Services Manager J Cassidy, Employee Engagement Officer G Walker, Corporate Asset Management Officer Committee Services External Audit Page 213 of 314
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32 13. Assessment Definitions 13.1 The following table contains the definitions of the control objective assessment. Control Objective Assessment Level of assurance Definition Substantial Assurance A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non- compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. 13.2 The following table contains the definitions applied by Internal Audit in rating audit findings/actions. Risk Rating for Individual Findings Rating Rating description Definition 5 Critical Significant observations / major concerns which require immediate action. Management will need to add these to the appropriate Service risk register Issue represents a control weakness which could cause, or is causing, severe disruption of the process or severe adverse effect on the ability to achieve process objectives 4 High Significant observations regarding the absence / failure of key controls requiring urgent action. Management should consider adding these to the appropriate Service / divisional risk register Issue represents a control weakness which could have, or is having, major adverse effect on the ability to achieve process objectives 3 Medium Observations regarding the effectiveness of key controls requiring reasonably urgent action. Management should consider these when updating any divisional / team risk registers Issue represents a control weakness which could have, or is having, significant adverse effect on the ability to achieve process objectives Page 214 of 314
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33 2 Low Minor observations regarding the adequacy of controls which require action to improve the efficiency, effectiveness, or economy of operations or which otherwise require to be brought to the attention of Senior Management Issue represents a minor control weakness with minimal but reportable impact on the ability to achieve process objectives 1 Trivial / Minor Very minor observations which will be raised during the audit and may not be included within the final report Issue represents a very minor control weakness with negligible impact on the ability to achieve process objectives. The issue will be raised during the audit and may not be included within the final report. Page 215 of 314
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1 Internal Audit Report All Services 25-07 Insurance June 2026 Final Report (Report No. 26/195) Legal and Governance Perth & Kinross Council Council Offices 2 High Street Perth PH1 5PH 10 Page 217 of 314
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2 Contents by Section 1. Introduction 2. Executive Summary 3. Audit Background Information 4. Scope and Limitations 5. Assessment of the Control Environment 6. Summary of Findings 7. Conclusions 8. Acknowledgement 9. Action Implementation & Follow Up 10. Management Action Plan 11. Authorisation 12. Distribution 13. Assessment Definitions Page 218 of 314
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3 1. Introduction 1.1 The audit of Insurance was undertaken as part of the Internal Audit Plan for 25/26, which was approved by the Audit & Performance Committee on 25 June 2025. The period under review for the purposes of the audit exercise was financial years 2024/25 and 2025/26, however we used some data since 2022 for trend analyses and wider claims overview. 1.2 The indicative scope for the audit was to ensure the effectiveness and compliance of insurance within the council. 1.3 This audit is not linked to any particular risk on the Strategic Risk Register, however, forms the basis for internal assurance in accordance with the Global Internal Audit Standards in the UK Public Sector. 2. Executive Summary 2.1 The audit has found that Substantial Assurance can be placed on the Council’s internal controls in relation to the review of Councils’ Insurance arrangements. Areas of good practice have been highlighted within Section 5 of this report. 2.2 There are 6 actions arising from the findings in Section 6. We note that the service was aware of these and were taking action to address the issues, where possible. These actions are suggested areas for improvement, where collaboration with other services may further strengthen the insurance arrangements. The action plan in Section 10 includes these actions which are currently on-going to address the issues raised. 3. Audit Background Information 3.1 Insurance is required as part of the Council’s statutory responsibility to safeguard public funds and ensure continuity of services. Under the Local Government (Scotland) Act 1973, Councils are entrusted with managing assets, employees, and public services, which exposes them to financial and operational risks. To meet these obligations and comply with sound financial governance, Councils must maintain adequate insurance to protect against liabilities such as property damage, employee injury, and third-party claims. The Local Government (Scotland) Act 1973 requires the Council to have proper arrangements in place for the administration of its financial affairs. 3.2 Council have the authority to plan the need for statutory and additional insurance protection based on the legal requirements, the risk exposures and the level of insurance required to cover those risks that the Council cannot self-finance. 3.3 The Council’s insurance service is managed by Zurich Municipal PLC. The Council must ensure that it has appropriate insurance in place to cover key risks associated with its activities and responsibilities. Insurance is one of the Page 219 of 314
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4 main methods of transferring financial risk and is therefore likely to play a significant role in the Council’s risk mitigation. If there is an inadequate insurance coverage it can lead to significant losses and therefore highlights the requirement to be included in the Annual Audit Plan. 3.4 Insurance premiums are unlike any other item of Council expenditure, in that they are governed by the state of the insurance market which, in turn, is governed by the effects of claims, national events and natural activities. Council has statutory obligation as part of its internal activities to take Public Liability (PL), Employer’s Liability (EL) Insurance and Motor insurance. Furthermore, as part of additional services, provided by Council there are Property, Travel (cover for schools and teachers for UK and abroad), Community Insurance and Fidelity Guarantee Insurance cover. 3.5 As per our review, the Council has chosen to manage the risk by obtaining insurance protection, where possible, with variable insurance excess policies, depending on type of policy and risk. Additionally, and often seen as a widespread practice among other authorities, Council manages an internal insurance fund. The insurance fund still pays the excess amounts and covers smaller claims, which overall, creates a balanced, cost-efficient risk strategy. The total value of the insurance premiums payable for policies held for the period 24/25 was £1,837,026 and for 25/26 is £2,179,332. 3.6 Assessing insurance risk and market conditions is complex and, in most cases, requires specialist expertise to enable the Council to form an opinion. As a result, this activity is outsourced to an external insurance broker, arranging tailored insurance cover and act as a liaison between the Council and insurers. The Council’s current broker is Gallagher. Gallagher also provides claims handling support, which is a fee-based service charged in addition to the insurance premiums. The appointment of the broker and insurance provider is undertaken through a joint procurement exercise, with contracts awarded for a three-year period and subject to annual review. The current contract period covers 2024 – 2027. 3.7 Furthermore, the internal insurance team in Council is a team of two officers and a management leadership team, which manage all transactional affairs, communications between brokers and insurance providers. The team has recently adopted a small transformation, aligning more closely operationally with corporate asset management, which lays more closely with insurance team’s tasks and work responsibilities. The team, monitors and coordinates all claims, inputs the details to internal Figtree system (claims software) and communicates between Council, Brokers and has full access to Zurich Municipal PLC Council claims database. 3.8 The strategy for Internal Audit is to deliver a risk based Internal Audit service by designing planned activity around the key risks to the Insurance Management and Operational Controls. Page 220 of 314
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5 4. Scope and Limitations 4.1 The Audit has reviewed the appropriate use of the insurance policy and its renewal, including the adequacy of the cover, managing and recording of claims, prevention and monitoring, as well as third party cover. 4.2 To arrive at an opinion on the achievement of the control objectives, the review included: • Gathering information from published regulations and governance guidelines. • Validated the operational process against the published standard operating policy and internal procedures. • Interviews and review of documentary evidence. 4.3 There were no limitations identified that would impact the Audit, which concentrated on the control environment for managing insurance risk. We did not verify the accuracy of the detailed records of claims and the journal entries logged in the Figtree system, used for internal claims records management. 4.4 Furthermore, we have not duplicated work undertaken by External Audit as part of their annual audit. 4.5 The details of the control objectives reviewed and Internal Audit’s assessment of their strength of control in each area is contained within Section 5 of this report. 5. Assessment of the Control Environment 5.1 The table below contains a summary of the number of findings and their ratings, as detailed in Section 12, against each control objective, along with Internal Audit’s assessment of the adequacy and effectiveness of the controls in place to meet each of the objectives agreed for this audit. Further details, including any improvement actions, are set out in the Management Action Plan in Section 10. No. Control Objective Action Rating Control Objective Assessment 5 4 3 2 1 1 To ensure that there is adequate insurance in place for the council to cover its governance requirements. 1 3 Substantial Assurance 2 To ensure that the effectiveness and efficiency of the insurance process and that claims processes are dealt with promptly; including Trend analysis, improvement and preventative measures applied, where applicable 1 1 Substantial Assurance 3 To ensure that there is a sound coordination of services, guaranteeing 1 Substantial Assurance Page 221 of 314
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6 immediate risk areas are evaluated, covered and minimising the duplication of efforts. 5.2 The auditor has assessed that Substantial Assurance can be placed on controls overall in relation to the arrangements for Insurance Cover for Perth and Kinross Council. Meaning: “A sound system of governance, risk management and control exists, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited”. 5.3 A summary of the key findings and actions is provided in section 6. Please note, however, the following areas of good practice which have been highlighted during the audit: 5.3.1 As part of the assurance process within the insurance team, we reviewed the team’s tasks and potential risk of claims being delayed, unpaid and unadministered, which could potentially cause not only reputational damage but also risk of financial losses. The auditor would like to highlight the positive collaboration and immediate response from the insurance team, during the review process. The officers were not only, fast and supportive in their areas of work but also shown full knowledge and awareness of each other’s responsibilities. 5.3.2 The Insurance team promptly and efficiently supports other Council functions, such as preparing detailed monthly reports to fleet for management review and regularly scheduled reports for Executive Leadership Teams (ELT) and responding swiftly to information requested under Freedom of Information (FOI) legislation. 5.3.3 All Policies (Public Liability, Employers Liability, Motor, Property, Business, School Travel and Fidelity) are in place and updated from July each year, to be active for 31 October. Auditors have reviewed that there is sufficient information gathered at the end of each financial year, to support all required decisions regarding any update to the renewal of policies. We can confirm that all Policies run concurrently ensuring no gaps in insurance. 5.3.4 It is a requirement for local authorities to take security against the infidelity of officers whose duties involve the custody and control of money. The Local Government Act from 2003 and Local Government Act 1973 reaffirms this, as part of the framework of duty to secure Best Value; this is the modern insurance equivalent of “security” and covers losses caused by employee fraud or dishonesty, which Policy runs and is in place at the same times as the rest of the Insurance covers. 5.3.5 The auditor has verified that monthly claims reviews, meetings, and communications between Council insurance team, brokers, and insurers have taken place. During the audit period (Nov’ 25- March ‘26) we took samples of public liability, motor, and employers’ liability claims, which represents a 10% from the annual volume. Each claim was processed, validated, and Page 222 of 314
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7 acknowledged in line with established procedures before being passed to the insurer. Insurance officers presented extremely detailed information being held on each claim throughout its lifecycle. During the timeframe validation, the auditor randomly selected examples of 3 claims from each policy and all were closed and completed within 3-4 months from the receiving date. 5.3.6 Council Insurance officers use Figtree system to record and manage all claim details. Figtree is a procured software that contributes to efficient claims management, as seen with recent improvements introduced to GDPR functionality designed to protect claimant data, improve the control environment and demonstrate wider compliance. The use of the Figtree system strengthens Councils Insurance Team arrangements and provides effective support and maximises data control over claims management. 5.3.7 Gallagher is an external insurance broker providing specialist expertise, access to wider insurance markets and competitive premiums. The broker provides recommendation to Council on insurance risks and current market trends. Brokers support tendering, gives independent advice on cover gaps, and supports the Council with claims handling and risk analysis. The externally outsourced broker is visibly beneficial for the Council Insurance team’s workload and not only reduces claims process pressure, it also helps to ensure the Council has appropriate, proportionate, good value insurance cover. Gallaghers position is advisory and does not carry the risk, this lays completely over the insurance provider Zurich. 5.3.8 Whilst Gallagher provides a brokerage cover, the auditor confirmed that the firm’s services has been tendered prior to contracting, to do Actuarial Valuation report. The report supports to reevaluate and affirm the size of Council Insurance’s Fund, using the Council’s data for the last 10 years. Obtaining the report prior to tendering for the 2024 insurance contract, improves the accuracy of premium calculations and strengthens data driven analysis. Additionally, our observations confirm that Gallagher have used two of the most used methodologies: chain ladder and Bornhuetter-Ferguson actuarial methods for assessment and provide Council leadership with accurate information in support their budget and risk management. 5.3.9 Property has the highest value of assets and therefore risks are highest in Premiums and excess cover. Our observations confirmed that Insurance officers add newly acquired properties promptly onto a monthly monitoring sheet, which is communicated directly with the insurer, Zurich M. The Auditor reviewed the inventory records across Motor, Property and IT and confirmed the total value cover held in each service corresponds to the information held from insurance team. Council officers have up to date information and there is no gap or misalignment between value of assets and insurance cover. A noticeable improvement was evidenced in ongoing work, where insurance officers can now directly access the database system of the property services, which saves time, improves accuracy and miscommunication between different departments. Page 223 of 314
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8 5.3.10 Moreover, during the audit, it was noted that the realignment of functions between strategic portfolios, with the Corporate Asset Management Officer having overall responsibility for the Insurance team, has been beneficial for the team. This change in position will enhance the development of asset management knowledge within the Insurance team’s operations. The role has already brought wider knowledge of internal asset management systems and improved understanding of data flows and communication across services. Overall, this development will support more streamlined control environment and contribute to improved operational efficiency within the Insurance function. 5.3.11 To affirm the up-to-date value of Council properties, the Central Service Manager completes an annual review of Index Linking the value of the properties in line with inflation. A positive observation was seen in addition to this; in 2024 the Insurance team has assigned a specific request to an in- house surveyor. A report was created for a specialist Valuation exercise to all Council buildings, to affirm the most accurate valuation, reflecting local market value of housing as well as tailored cost per building (Concert Halls, Schools etc.), to create a detailed knowledge and form the most accurate insurance cover. 5.3.12 During auditor’s assessment we included a sample test, against failure of service of areas or delay in informing the insurance office of new assets requiring insurance. Instead of insuring individual items for damage and accidental cover, 10% of the building’s insurance is allocated to contents. Our samples included a higher claim, with material value (over £5000), caused by a storm damage on Coupar Angus Primary School in January 2024. The review of documents and settlement of the claim confirmed that the insurance has been efficient to cover all the contents. 5.3.13 As part of the wider scope on high value dispute claims, such as the fire at the former Balhousie Primary School, we confirmed the involvement of loss adjustors in overseeing such claims. Loss adjusters are appointed by insurers for high‑value or complex claims to provide an independent, expert assessment that ensures accurate, fair, and efficient claim resolution. 5.3.14 Council insurance manual, forms and related policies are populated on the Council’s intranet widely and easily accessible from the employees, when necessary. Auditors have confirmed efficient flow of information and Fleet Management receives a monthly summary of driver reported claims. In addition to validating insurance requirements for fleet and leased vehicles, a monthly claim analysis is conducted to strengthen responsibility and reduce recurring incidents. Where necessary, this is reflected on disciplinary action log. 5.3.15 Accountability and monthly analysis are additionally evident in the ongoing work between Property Services and other departments. A shared monitoring project sheet is used to track actions aimed at preventing future claims, particularly through improved property maintenance feedback and their link to public liability claims. Page 224 of 314
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9 5.3.16 An analysis of the highest monthly claims is considered by Council Chief Finance Officer on regular basis, which additionally affirms control over future expenditure and awareness over Strategic Leadership Teams. 6. Summary of Findings 6.1 Below is a summary of key findings and actions, which are reflected in the Management Action Plan, detailed in section 10. 6.2 Inadequate Insurance Policies to cover Council’s requirements. 6.2.1 Although all Insurance policies run continuously, the review of the Internal Council documents shows that the new policies cover and excess cover are not reflected on the Insurance manual, and the contact’s name is not updated reflecting the newly assigned insurance team leader. There are out-of-date contact names on the internal procedure document. Additionally, publication and future review date is missing whatsoever. [Action Point 1] 6.2.2 Further to our review, there was a mismatch of the excess cover on the Zurich Insurance Certificate of £157,500 to the actual figure of £150,000, on the internal Council systems. [Action Point 2] 6.2.3 Council Strategic Risks are covered and considered, where possible to apply insurance cover, ensuring that management is responsible for insurance as part of Senior Leadership Team/ management budget meetings. As part of reviewing process and overall management understanding, it could be beneficial to have an up-to-date Risk mapping. Furthermore, including insurance as a control within the strategic and operational risk registers would provide clearer assurance on how the Council mitigates the financial impacts of key strategic risks, supporting a more accurate view of overall risk mitigation. As the Council already oversees these risks through existing insurance arrangements, incorporating insurance under the control section of the risk register would strengthen the completeness of the risk assessment documentation. [Action Point 3] 6.2.4 From our review of the insurance documents, we observed that assets are continuously updated throughout the year, where insurance team receives home report valuations from Housing Team, as additional properties come to Council ownership. However, for insurance purposes there is a requirement to have the reinstated value for each property, which is usually higher than the Page 225 of 314
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10 home report. Missing that detail of information, may affect the insurance protection and potential dispute on claims. Although, this observation has already been already highlighted from the broker, Gallagher to Council, we have not seen consistent incoming records, ensuring reinstated value for all properties is added from start. [Action Point 4] 6.3 To ensure that the effectiveness and efficiency of the insurance process and that claims processes are dealt with promptly; including Trend analysis, improvement and preventative measures applied, where applicable. 6.3.3 Internal software Figtree is an effective database system used to collect, manage and monitor claims. While all information is up to date, we have noticed that the new change and restructuring of services in the Council in 2024 has not been reflected. (E.g. Education and Children Services is now Education & Learning and Children, Families & Justice), could lead to incorrect future internal service analyses. [Action Point 5] 6.3.4 During the assessment process, we identified that Insurance team, prepares monthly and annual reports on high value claims, including high- cost open unsettled claims, which get submitted to Service Leaders, as well as Council Financial Officer. However, there was no evidence on trend analyses and oversight of how claims evolve over a period. Having a longer period analysis over claims graph-based patterns, values and root cases graphs can provide valuable overview that supports management to take stronger evidence-based decisions, implement actions plans and strengthen financial resilience. Page 226 of 314
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11 £0.00 £50,000.00 £100,000.00 £150,000.00 £200,000.00 £250,000.00 0 100 200 300 400 22/23 23/24 24/25 PL & El Trend Analysis 22-25 Council Insurace Financial Years Number of Claims received Number of claims paid 0 10000 20000 30000 40000 22/23 PL & El Settled Claims 0 5000 10000 15000 20000 25000 30000 35000 23/24 PL & El Settled Claims Page 227 of 314
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12 Above is a sample of visual graph suggestions, prepared by the auditor, representing the volume of incoming claims (Public and Employers Liability). By having a visual information, we can clearly monitor to number of claims coming to the team over the last 3 years, against the actual settled and closed claims. Although, insurance claims are inherently volatile and often event‑driven, trend analyses remain strategically valuable, providing support for informed governance, financial resilience and risk-based decision. Even where claims volumes can vary from year to year, we can highlight systematic exposure rather than isolated events. [Action Point 6] 6.4 To ensure that there is a sound coordination of services, guaranteeing immediate risk areas are evaluated, covered and minimising the duplication of efforts. 6.4.3 Even though, quarterly meetings take place between teams, there is scope for further improvement. The insurance team still requires access and training to use Housing Asset Management software. Having direct access and knowledge would reduce delays in response, confirm the improvements are made and what actions are currently being taken. [Action Point 7] 7. Conclusion 7.1 The Internal Audit review is able to place Substantial Assurance on the overall control environment for the Insurance arrangements in place. The agreed actions, once implemented, should enable Internal Audit to place Substantial assurance on these. 0 5000 10000 15000 20000 25000 30000 24/25 PL & El Settled Claims Page 228 of 314
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13 8. Acknowledgements 8.1 Internal Audit would like to thank all officers who were involved in this audit, particularly officers within the Insurance team in Asset management. 9. Action Implementation & Follow up 9.1 Responsibility for the maintenance of adequate and effective controls rests with management. Where the audit has identified areas for management action, these are identified in the Management Action Plan. Where a decision is taken by management not to act in response to finding from this review, it is the responsibility of management to assess and accept the risk arising from non-implementation. 9.2 Achievement of the agreed actions is monitored through Internal Audit’s ‘follow up’ arrangements. Page 229 of 314
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14 10. Management Action Plan Action Point Para. No Finding Risk Rating Agreed Action & Evidence Action Owner Completion Date 1 6.2.1 Although all Insurance policies run continuously, the review of the Internal Council documents shows that the new Policies cover and excess cover are not reflected on the Insurance manual, and the contact’s name is not updated reflecting the newly assigned insurance team leader. There are out-of-date contact names on the internal procedure document. Additionally, publication and future review date is missing whatsoever 1 Agreed action: Update designations and names on Council Insurance Manual Agreed evidence: Updated Insurance Manual G Walker Corporate Asset Management Officer Completed 2 6.2.2 Further to our review, there was a mismatch of the excess cover on the Zurich Insurance Certificate of £157,500 to the actual figure of £150,000, on the internal Council systems. 1 Agreed action: Update Zurich PLC to amend policy certificate accordingly. Agreed evidence: Updated Policy reflecting excess cover D McRobbie Insurance Officer L Hay Insurance Officer Completed. Page 230 of 314
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15 3 6.2.3 Furthermore, including insurance as a control within the strategic and operational risk registers would provide clearer assurance on how the Council mitigates the financial impacts of key strategic risks, supporting a more accurate view of overall risk mitigation. As the Council already oversees these risks through existing insurance arrangements, incorporating insurance under the control section of the risk register would strengthen the completeness of the risk assessment documentation. 2 Agreed action: Include Insurance in Internal Controls for Annual Strategic Heatmap Report. Agreed evidence: 1. Meeting Minutes 2. Heatmap Report G Walker Corporate Asset Management Officer Service Managers S Walker Chief Financial Officer December 2026 4 6.2.4 However, for insurance purposes there is a requirement to have the reinstated value for each property, which is usually higher than the home report. Missing that detail of information, may affect the insurance protection and potential dispute on claims. Although, this observation has already been already highlighted from the broker, Gallagher to Council, we have not seen consistent incoming 1 Agreed action: Include reinstated value of properties at the time of purchase. Agreed evidence: Council Insurance team Property sheets completed with reinstated value at time of purchase. Property Services Buyback Team H Hatfield Project Officer Communities N Sworowski Place Strategies Completed Page 231 of 314
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16 records, ensuring reinstated value for all properties is added from start. Manager & Chief Planning Officer 5 6.3.3 While all information is up to date, we have noticed that the new change and restructuring of services in the Council in 2024 has not been reflected. (E.g. Education and Children Services is now Education & Learning and Children, Families & Justice), could lead to incorrect future internal service analyses. 1 Agreed action: Populate Figtree software with the up-to-date names of services accordingly. Agreed evidence: Reports, showing current department names D McRobbie Insurance Officer L Hay Insurance Officer G Walker Corporate Asset Management Officer April 2027 6 6.3.4 There was no evidence of trend analyses and oversight of how claims evolve over a period. Having a longer period analysis over claims graph-based patterns, values and root cases graphs can provide valuable overview that supports management to take stronger evidence-based decisions, implement actions plans and strengthen financial resilience. 3 Agreed action: Consider monthly/ annual trend analyses reports submitted to ELT & SLT. Agreed evidence: D McRobbie Insurance Officer L Hay Insurance Officer July 2026 Page 232 of 314
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17 7 6.4.3 Even though, quarterly meetings take place between teams, there is scope for further improvement. The insurance team still requires access and training to use asset management software. Having direct access and knowledge would reduce delays in response, confirm the improvements are made and what actions are currently being taken. 1 Agreed action: • Training of Housing System (NEC). • Allow Access of Insurance Team for visibility of Property Software. Agreed evidence: • Insurance Team access and knowledge of accessing NEC Housing System. • New member agreed training. A Magee Systems Development Officer September 2026 Page 233 of 314
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18 11. Authorisation 11.1 The auditor for this assignment was T Philip. The supervising auditor was D Arachchilage. This report is authorised for issue: 12. Distribution 12.1 This report has been distributed to: T Glen, Chief Executive C Mailer, Depute Chief Executive E Ritchie, Strategic Lead – Housing & Communities S Marone, Strategic Lead – Economy, Development & Planning S Walker, Strategic Lead – Finance & Business Support J Beveridge, Strategic Lead – Property Services A O'Brien, Finance Manager/Business Partner G Walker, Corporate Asset Management Officer, Communities - Capital Investment & Asset Management L Hay, Corporate Insurance & Claims Officer D McRobbie, Corporate Insurance & Claims Officer Committee Services External Audit Page 234 of 314
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19 13. Assessment Definitions 13.1 The following table contains the definitions of the control objective assessment Control Objective Assessment Level of assurance Definition Substantial Assurance A sound system of governance, risk management and control exist, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. 13.2 The following table contains the definitions applied by Internal Audit in rating audit findings/actions. Risk Rating for Individual Findings Rating Rating description Definition 5 Critical Significant observations/ major concerns which require immediate action. Management will need to add these to the appropriate Service risk register. Issue represents a control weakness which could cause, or is causing, severe disruption of the process or severe adverse effect on the ability to achieve process objectives 4 High Significant observations regarding the absence / failure of key controls requiring urgent action. Management should consider adding these to the appropriate Service/ divisional risk register Issue represents a control weakness which could have, or is having, major adverse effect on the ability to achieve process objectives 3 Medium Observations regarding the effectiveness of key controls requiring reasonably urgent action. Management should consider these when updating any divisional / team risk registers Page 235 of 314
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20 Issue represents a control weakness which could have, or is having, significant adverse effect on the ability to achieve process objectives 2 Low Minor observations regarding the adequacy of controls which require action to improve the efficiency, effectiveness, or economy of operations or which otherwise require to be brought to the attention of Senior Management Issue represents a minor control weakness with minimal but reportable impact on the ability to achieve process objectives 1 Trivial / Minor Very minor observations which will be raised during the audit and may not be included within the final report Issue represents a very minor control weakness with negligible impact on the ability to achieve process objectives. The issue will be raised during the audit and may not be included within the final report. Page 236 of 314
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1 Internal Audit Report Housing & Communities 24-04 Affordable Housing June 2026 Final Report (Report No. 26/196) Legal and Governance Perth & Kinross Council Council Offices 2 High Street Perth PH1 5PH 11 Page 237 of 314
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2 PK 24-04 Affordable Housing Contents by Section 1. Introduction 2. Executive Summary 3. Audit Background Information 4. Scope and Limitations 5. Assessment of the Control Environment 6. Summary of Findings 7. Conclusions 8. Acknowledgement 9. Action Implementation & Follow Up 10. Management Action Plan 11. Authorisation 12. Distribution 13. Assessment Definitions Page 238 of 314
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3 1. Introduction 1.1 The audit of PK 24-04 Affordable Housing was undertaken as part of the Internal Audit Plan for 2024/2025, which was approved by the Audit & Performance Committee on 24 June 2024. The period under review for the purposes of the audit exercise was financial years 2024/2025. 1.2 The indicative scope for the audit was to review the arrangements in place for the Affordable Housing Strategy included in the Internal Audit Plan for 2024/25. 1.3 This audit is linked to the Strategic Risk Register SRCP-004 and SRCP-010, SRCP-004 states that ‘Our actions to tackle poverty and address the inequalities gap within Perth & Kinross are ineffective’ and this is rated as Very High Risk, priority 1. SRCP-010 refers to ‘Council buildings and other assets that are not safe, fit for purpose or providing the best value’ and it was reported to be priority 2, as High risk for both. 2. Executive Summary 2.1 The audit has found that reasonable assurance can be placed on the Council’s internal controls in relation to the arrangements in place to support delivering the Affordable Housing plans of the Council. 2.2 There are nine actions arising from the findings in Section 6. An action plan is included in Section 10. Once these actions are completed, Internal Audit should be able to place substantial assurance on the arrangements in place. 3. Audit Background Information 3.1 Affordable housing delivery refers to the strategic process of planning, constructing, and providing housing options that are financially accessible to individuals and families with low to moderate incomes. The Scottish Government has several initiatives and fundings for affordable housing, which have a direct impact on Perth and Kinross Council. Each local authority has a responsibility to develop and implement strategic housing plans that outline their priorities and targets for delivery. 3.2 Based on the requirement, Perth and Kinross Council’s Strategic Housing Investment Plan (SHIP) 25-30 is developed to align with the priorities and outcomes set out in the Local Housing Strategy (LHS) 22-27. This ensures that the investment in affordable housing supports the broader housing goals of the local authority. The SHIP provides a detailed plan for the delivery of affordable housing projects, including timelines, funding allocations, and resource planning. 3.3 The SHIP 25-30 aims to deliver 1,152 affordable homes over the five-year period committed 210 per year according to LHS. Affordable housing within the SHIP includes variety of initiatives such as new build projects, refurbishment Page 239 of 314
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4 and renovation projects, regeneration projects, off the shelf acquisitions and buybacks. Responsibility for Affordable Housing spreads across three Strategic Lead Areas Economy, Development & Planning; Housing & Communities; and Property. 3.4 The PKC Corporate Plan 22-27 explains our vision and priorities. As part of the strategic approach, Appendix 1 contains a list of priorities and the Local Housing Strategy is one of them, which is designed in alignment with Scottish Government strategy Housing to 2040. PKC Risk Register lists the PKC Local Housing Strategy (LHS) 2022-27 as a control to mitigate the risk, however, it states that the ‘control effectiveness’ as ‘improvement required’. 4. Scope and Limitations 4.1 The review consisted of identifying measures are in place to ensure the efficient and effective key controls operating around delivering against all aspects of affordable housing targets according to the LHS and Strategic Housing Improvement Plan (SHIP). It is acknowledged that responsibility in this area spans 3 Strategic Lead areas, namely Economy, Development & Planning; Housing & Communities; and Property. To arrive at an opinion on the achievement and transparency of the control objective, the review included: • Document review in relation to the LHS and SHIP. • Interviews with key staff who are responsible for LHS and SHIP • Analysis and review of the effective delivery of Monitoring and Progress and implementation of the LHS and SHIP. • Review of any third-party arrangements (financial, process and communication) 4.2 The focus of the Internal Audit has been on ensuring that the overall plans of PKC for affordable housing delivery are in place and of the arrangements in place for the monitoring and reporting of performance for all partners in delivering affordable housing. However, the audit did not assess the status of individual projects assigned to RSL housing providers, as the delivery of their building projects is the responsibility of the relevant Housing Associations. 4.3 Internal Audit recognised that a big part of the Action Plan for delivering the LHS target will be out with the control of the Council and that funding for the future planning period within the LHS required from Scottish and/or UK Government may not be forthcoming. 4.4 The details of the control objectives reviewed and Internal Audit’s assessment of their strength of control in each area is contained within Section 5 of this report. Page 240 of 314
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5 5. Assessment of the Control Environment 5.1 The table below contains a summary of the number of findings and their ratings, as detailed in Section 12, against each control objective, along with Internal Audit’s assessment of the adequacy and effectiveness of the controls in place to meet each of the objectives agreed for this audit. Further details, including any improvement actions, are set out in the Management Action Plan. No. Control Objective Action Rating Control Objective Assessment 5 4 3 2 1 1 To ensure that the LHS delivered through SHIP is achievable, there is no risk of failing delivery of the plan of providing more affordable homes to support liveable places of average 210 homes per year over 5- year period. 2 4 3 Reasonable assurance 5.2 The auditor has assessed that reasonable assurance can be placed on controls overall in relation to Affordable Housing plans of the PKC. Meaning: ‘There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited.’ 5.3 A summary of the key findings and actions are provided in section 6, please note however, the following areas of good practice which have been highlighted during the audit: 5.4 The Council has created a dedicated Strategic Affordable Housing Strategy Board (SAHB) where meetings are recorded and discussions cover all aspects of the PKC SHIP, including newbuild projects through Housing Associations. There is an average of 5 meetings per year, which are focused as per the group remit objectives. Topics cover project progress, planning updates, current and potential future opportunities with well monitored financial and timeline structure. SHIP and LHS projects have clearly set targets allocated in the LHS Action Plan 2022-2027, where in addition to the yearly updates, there are additional quarterly performance updates, accessible to the public on Council’s webpage. 5.5 SAHB consists of proactive members and considers utilising flexible housing funding options to deliver the SHIP. From the reviewed resources there was visible spend in the following areas: £1.5 million from Developer Contributions to assist in delivering affordable housing initiatives throughout Perth and Kinross including new build houses in Kinross; delivery of £4m in funding from Scottish Government’s Gypsy/Traveller Accommodation Fund at the Double Dykes site to replace 20 chalets, utilising £700,000 from the second home Council tax income towards purchasing twenty National Trust buildings in Page 241 of 314
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6 Dunkeld; as well as utilising the major funding through prudential borrowing via the Housing Revenue Account (HRA) as evidenced in the delivery of the last phase of 5 modern homes in Methven and few more as per SAHB plan. 5.6 The assigned Team Leader, Affordable Housing Strategy and connected team members, have in depth and broad knowledge of the government requirements of delivery of affordable housing. This was visible, through well organised delivery plans and implemented communication flow, internally between departments and externally, through Housing Associations, including to the Housing Regulator and Scottish Government. PKC Affordable Housing Strategy Team updates the yearly plan (SHIP), which is annually approved and continuously reviewed between PKC and Scottish Government, as observed on the received Resource Planning Allocation letter (RPA), September 2024. The RPA confirms the allocated funding for 2025-26. It should be noted that while the overall SHIP covers a five-year period, the specific funding allocations within the RPA can be adjusted and confirmed only for that year. 5.7 Considering the limited confirmation of future government funding, which is out of the audit scope, it is observed through compelling evidence that PKC is committed to the delivery of the SHIP. As a result, if a delay in new builds occurs, PKC can react promptly and fulfil the annual affordable housing target quantities, through quick response with the well- established Affordable Housing Strategy Team. 5.8 The latest Strategic Housing Investment Plan (SHIP) for 2025/26 forms the basis of the plan to deliver the affordable housing of overall £87 million investment. It includes the delivery of 1,152 homes, which has a significantly higher investment than the previous SHIP 2024-29 with a target of delivering 1,435 homes. The latest SHIP 2025-30 has an increased target with already incorporated modern design standards, focusing on higher quality and more complex projects with expanded scope, such as sustainability and energy efficiency. 5.9 The reviewed evidence presents a greater programme performance in 2024/25 than the previous year’s delivery, due to exceeding the target of buybacks; as of March 2025, the data showed that there was a total of 238 additional affordable housing units against a projection of 223, compared to a total of 170 additional affordable housing units against a target of 210 in 2023/24. 5.10 The associated finance team members within SAHB, demonstrate well- established practices through the overall Capital Financial Monitoring Plan; this confirms projects match the SAHB plan. Capital planning includes close monitoring of all undergoing RSL projects with PKC involvement as well as additional future projects. The SAHB Monitoring Projects Plan indicates a clear view of how current or future projects could potentially affect the budget plan. During the interview with the Finance Team Leader, we observed lessons learnt over the years in adapting the capital budget and expenditure. Current monitoring sheets reflect more accurately this adaptability in relation to additional affordable housing projects, as shown in the approach to progressing buybacks. Before reaching for PKC prudential borrowing to purchase buybacks over the agreed target, there is communication with the Scottish Government Page 242 of 314
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7 to consider the potential of using the SHIP’s funding. The agreement to proceed with additional buybacks subsequently supports the meeting of the overall yearly SHIP targets. In March 2025, the buybacks properties totalled 116, in comparison to the previously expected 40 properties; this has maximised the use of the available budget and has supported the overall annual additional affordable housing units set out in the SHIP for 2024/25. 5.11 All updates regarding acquiring any property as part of the PKC stock is communicated between Economy, Development & Planning; Housing & Communities; and Property, which is then subsequently reflected on their databases. Approval to proceed above the agreed target of 40 is also discussed and agreed at regular SAHB meetings and at regular Housing Management Team meetings. 5.12 An initiative-taking approach to identifying and addressing additional potential projects, which are suitable for the Council needs and where the Council can increase housing quantities to meet the housing needs and reach the annual PKC target, has been observed. Team officers are working with external agencies and housing associations to find more flexible and creative options to obtain additional stock. We can evidence that through the variety of projects discussed in the SAHB meetings. 5.13 PKC demonstrates strong tenant and community involvement, following a consultation with over 3000 responses with the latest tenancy increase proposals. The latest approved Housing Revenue Account (HRA) Strategic Financial Plan 2025-2030 presented at the Housing and Social Wellbeing Committee on 22 January 2025, agreed a 6% increase on the rent-setting for Council social housing tenants. The income from the rent increase will continue to support the buyback funding of £20m over 5 years and addresses the Council’s active approach of addressing funding options for financial sustainability of the affordable housing projects. 5.14 We have observed that PKC manages the above Affordable Housing projects accurately. An effective method for implementing a strong plan is to create focused responsibilities. This group’s focus is on detailed review on new build projects, matching latest standards and housing requirements, reflecting good practices. This has been reflected in the formation of the PKC New Builds Team meetings in autumn 2023, which collaborates closely with related parties Finance, Legal, Procurement, Property and Economy, Development & Planning. 6. Summary of Findings 6.1 Below is a summary of key findings and actions, which are reflected in the Management Action Plan, detailed in section 10. 6.2 Strategic Affordable Housing Board (SAHB) 6.2.1 The SAHB oversees the implementation of the Strategic Housing Investment Plan (SHIP). During document review, it was noticed that the buyback Page 243 of 314
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8 quantities for September 2024 of the legal team were much higher than listed on the SAHB plan (40 against the actual 90). The total estimated expenditure figure on buybacks was not reflected as the number of properties increased. Although not all buyback properties are funded through the SHIP, all the purchased quantities can be reflected in the planning sheet to increase the total number of affordable housing units against the target for PKC. At each SAHB meeting the total buyback quantity increased from 40, to 64, then to 90, however this change was not reflected in the total projected spend column in the SAHB spreadsheet. [Action Point 1] 6.2.2 In our observation of the SAHB meetings minutes are recorded, however the discussions blend in with the action points. There is no further clear outcome and separate follow up Action Plan. This could result in some action points remaining unaddressed. Clearly defined actions with designated responsible persons and timelines would assist in leading to clearer responsibilities. [Action Point 2] 6.2.3. We acknowledge that although there is strong control of affordable housing delivery through SAHB, a clear flow outlining each delivery group and its responsibilities within and exactly which areas are being covered in the delivery plan, is not evident. The responsibilities between Property, Economy, Development & Planning and Housing & Communities are very closely related. There is a risk of misalignment between the groups, which may result in conflicting information and inefficiencies during decision-making processes, and ultimately delivery of outcomes, especially during acquiring new build properties. [Action Point 3] 6.2.4 While we recognize the importance of evaluating the PKC New Build Delivery Group’s performance, we believe it is too soon to draw definitive conclusions at this stage. 6.3 Processing Buyback Properties 6.3.1 Affordable housing, particularly the buybacks programme, is delivered through plans with specified quantities of properties. The buybacks process of acquiring each property includes different departments, before it becomes part of PKC stock. It was observed lack of transparency of upcoming plans between buybacks in Property Team and paralegal team. Each team had their own stand-alone records with no shared access of other team’s progress. Shared detailed information or access to upcoming work can improve on wider team’s planning schedule. [Action Point 4] 6.3.2 It was noted that the meetings between Property buybacks team and paralegals were not regular and not recorded. Structured plan with feedback from both departments working in collaboration, can improve efficiency in delivery of the Page 244 of 314
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9 Affordable Housing Plan and reduce potential delays during conveyancing process. [Action Point 5] 6.3.3 Currently, the property criteria of buybacks are quite generic when submitting to paralegals for an offer letter to be sent out. We understand that detailed information for each property can be added during the assessment process from the initial viewing. All the unique applicable information can be reflected to its acquisition form for use of the paralegal team. All additional information can expedite the conveyancing process by reducing the need for feedback at a later point. [Action Point 6] 6.3.4 The buyback policy for processing properties will need to be optimized and further developed. This should include purpose, scope, responsibilities, procedures, and compliance measures, approved by, date of issue and last revision. Strong and clear instructions, formalised within the PKC template, will ensure quality assurance in the process. [Action Point 7] 6.3.5 Conveyancing process can be lengthy with various bottleneck points occurring during legal work. We acknowledge the experience of the paralegal team, however lessons learned practises during conveyancing are not captured. A database of past issues serves as a valuable information resource for future training and educating of the wider paralegal team. [Action Point 8] 6.3.6 The paralegal team involved in the buyback process is experienced and efficient, using well-established work routine and process. However, the steps of the conveyancing process are not captured and reflected directly on a process-based sheet or work instruction. [Action Point 9] 7. Conclusion 7.1 The Internal Audit review can place reasonable assurance on the overall control environment for the delivery for the affordable housing plans of the Council. The agreed actions, once implemented, should enable Internal Audit to place Substantial assurance on these. 8. Acknowledgements 8.1 Internal Audit would like to thank all officers who were involved in this audit: N Sworowski, Place Strategies Manager & Chief Planning Officer Page 245 of 314
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10 N Lennon, Service Manager - Capital Projects & New Build H Hatfield, Project Officer B Mitchell, Paralegal A Smith, Paralegal W O’Connor, Paralegal S Coyle, Team Leader - Finance & Governance 9. Action Implementation & Follow up 9.1 Responsibility for the maintenance of adequate and effective controls rests with management. Where the audit has identified areas for management action, these are identified in the Management Action Plan. Where a decision is taken by management not to act in response to finding from this review, it is the responsibility of management to assess and accept the risk arising from non- implementation. 9.2 Achievement of the agreed actions is monitored through Internal Audit’s ‘follow up’ arrangements. Page 246 of 314
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11 10. Management Action Plan Action Point Para. No Finding Risk Ratin g Agreed Action & Evidence Suggested Action Owner Target Completion Date 1 6.2.1 During document review, it was noticed that the buyback quantities for September 2024 of the legal team were much higher than listed on the SAHB plan (40 against the actual 90). The total estimated expenditure figure on buybacks was not reflected as the number of properties increased. Although not all buyback properties are funded through the SHIP, all the purchased quantities can be reflected in the planning sheet to increase the total number of affordable housing units against the target for PKC. At each SAHB meeting the total buyback quantity increased from 40, to 64, then to 90, however this change was not reflected in the total projected spend column in the SAHB spreadsheet. 3 Agreed action: • Add a column on the SAHB Monitoring Sheet reflecting the current spend amount on Buyback Properties, based on the increased number of properties. Agreed evidence: • Updated SAHB Monitoring sheet N. Sworowski, Place Strategies Manager & Chief Planning Officer June 2026 2 6.2.2 In our observation of the SAHB meetings minutes are recorded, however the discussions blend in with the action points. There is no further clear outcome and separate follow up Action Plan. 3 Agreed action: • Create an Action Plan table as part of the meeting minutes outcomes. Agreed evidence: • Action Plan Appendix E. Ritchie Strategic Lead - Housing & Communities Completed Page 247 of 314
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12 3 6.2.3 We acknowledge that although there is strong control of affordable housing delivery through SAHB, a clear flow outlining each delivery group and its responsibilities within and exactly which areas are being covered in the delivery plan, is not evident. The responsibilities between Property, Economy, Development & Planning and Housing & Communities are very closely related. 2 Agreed action: • To create Process Flow Map covering each department within Affordable Housing Delivery. • Communicate the outlined Responsibilities and keep within shared folder Agreed evidence: • Flow Map N.Sworowski, Place Strategies Manager & Chief Planning Officer N.Lennon, Service Manager - Capital Projects & New Build J Beveridge, Strategic Lead - Property Services September 2026 4 6.3.1 It was observed lack of transparency of upcoming plans between buybacks in Property Team and paralegal team. Each team had their own stand-alone records with no shared access of other team’s progress. Shared detailed information or access to upcoming work can improve on wider team’s planning schedule. 2 Agreed action: • Access to paralegal team of spreadsheets with upcoming property volumes Agreed evidence: • Buybacks Master Spreadsheet Access Granted N. Lennon, Service Manager - Capital Projects & New Build Completed Page 248 of 314
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13 5 6.3.2 It was noted that the meetings between property buybacks team and paralegals were not regular and not recorded. Structured plan with feedback from both departments working in collaboration, can improve efficiency in delivery of the Affordable Housing Plan and reduce potential delays during conveyancing process. 1 Agreed action: • Biannual, suitable for both teams (buybacks officer and paralegal team) reviewing current position, process improvement and feedback. • Record and Email outcomes from each meeting. Agreed evidence: • Email outcomes from each meeting N. Lennon, Service Manager - Capital Projects & New Build G. Fogg, Legal Manager Legal and Governance September 2026 6 6.3.3 Currently, the property criteria of buybacks are quite generic when submitting to paralegals for an offer letter to be sent out. We understand that detailed information for each property can be added during the assessment process from the initial viewing. All the unique applicable information can be reflected to its acquisition form for use of the paralegal team. All additional information can expedite the conveyancing process by reducing the need for feedback at a later point. 1 Agreed action: • The covering email from the buyback officer will include a standard separate paragraph with specific instructions on what paperwork/permissions are to be requested in the formal offer to purchase & what works, if any, that have been carried out. • Attach all related property documents to the acquisition form for paralegal use. Agreed evidence: • Covering emails with detailed information N. Lennon, Service Manager - Capital Projects & New Build September 2026 Page 249 of 314
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14 7 6.3.4 The buyback policy for processing properties will need to be optimized and further developed. This should include purpose, scope, responsibilities, procedures, and compliance measures, approved by, date of issue and last revision. Strong and clear instructions, formalised within the PKC template, will ensure quality assurance in the process. 1 Agreed action: • To revise the Policy • To create a Procedure for Buyback properties Agreed evidence: • Finalised Policy and Procedure N Lennon, Service Manager - Capital Projects & New Build September 2026 8 6.3.5 Conveyancing process can be lengthy with various bottleneck points occurring during legal work. We acknowledge the experience of the paralegal team, however lessons learned practises during conveyancing are not captured. A database of past issues serves as a valuable information resource for future training and educating of the wider paralegal team. 2 Agreed action: • Introducing Lessons Learnt Register/ Database • Share lessons learnt database with Buybacks team for process improvement Agreed evidence: • Guidance Notes G Fogg, Legal Manager, Legal & Governance Services August 2026 9 6.3.6 The paralegal team involved in the buyback process is experienced and efficient, using well-established work routine and process. However, the steps of the conveyancing process are not captured and reflected directly on a process-based sheet or work instruction. 2 Agreed action: • Creating a work instruction of conveyancing steps within paralegal team. • Checklist. Agreed evidence: • Work Instructions/ Procedure G. Fogg, Legal Manager, Legal & Governance Services Completed Page 250 of 314
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15 11. Authorisation 11.1 The auditor for this assignment was T Philip. The supervising auditor was D Arachchilage. This report is authorised for issue: ............. 12. Distribution 12.1 This report has been distributed to: T Glen, Chief Executive C Mailer, Depute Chief Executive E Ritchie, Strategic Lead – Housing & Communities S Marone, Strategic Lead – Economy, Development & Planning S Walker, Strategic Lead – Finance & Business Support L Simpson, Strategic Lead - Legal & Governance J Beveridge, Strategic Lead – Property Services N Lennon, Service Manager - Capital Projects & New Build N Sworowski, Place Strategies Manager & Chief Planning Officer Geoff Fogg, Legal and Governance Manager, Legal & Governance Services Steven Coyle, Team Leader – Finance & Governance Committee Services External Audit Page 251 of 314
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16 13. Assessment Definitions 13.1 The following table contains the definitions of the control objective assessment. Control Objective Assessment Level of assurance Definition Substantial Assurance A sound system of governance, risk management and control exist, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control are inadequate to effectively manage risks to the achievement of objectives in the area audited. 13.2 The following table contains the definitions applied by Internal Audit in rating audit findings/actions. Risk Rating for Individual Findings Rating Rating description Definition 5 Critical Significant observations/ major concerns which require immediate action. Management will need to add these to the appropriate Service risk register. Issue represents a control weakness which could cause, or is causing, severe disruption of the process or severe adverse effect on the ability to achieve process objectives 4 High Significant observations regarding the absence / failure of key controls requiring urgent action. Management should consider adding these to the appropriate Service/ divisional risk register. Issue represents a control weakness which could have, or is having, major adverse effect on the ability to achieve process objectives 3 Medium Observations regarding the effectiveness of key controls requiring reasonably urgent action. Management should consider these when updating any divisional / team risk registers. Page 252 of 314
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17 Issue represents a control weakness which could have, or is having, significant adverse effect on the ability to achieve process objectives 2 Low Minor observations regarding the adequacy of controls which require action to improve the efficiency, effectiveness, or economy of operations or which otherwise require to be brought to the attention of Senior Management Issue represents a minor control weakness with minimal but reportable impact on the ability to achieve process objectives 1 Trivial / Minor Very minor observations which will be raised during the audit and may not be included within the final report. Issue represents a very minor control weakness with negligible impact on the ability to achieve process objectives. The issue will be raised during the audit and may not be included within the final report. Page 253 of 314
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit & Risk Committee Date of Meeting: 29 June 2026 Report Title: Internal Audit Annual Report & Internal Audit Opinion 2025/26 Report Number: 26/197 Report Author: Jackie Clark, Chief Internal Auditor Organisational Lead: strategic Lead – Legal and Governance ___________________________________________________________________ 1. Purpose 1.1 The purpose of this Report is to present the year-end report and audit opinion of the Chief Internal Auditor for 2025/26, as set out in Section 11. 1.2 Sections 1. Purpose 2. Recommendations 3. Background/Context 4. Internal Control Framework 5. Internal Audit Planning 6. Internal Audit Outcomes 2025/26 7. Follow Up Arrangements 8. Audit & Risk Committee 9. Compliance with Internal Audit Standards 10. Counter-Fraud & Corruption Activity 11. Audit Opinion 2025/26 12. Impact Value Assessment 2. Recommendation It is recommended that the Committee: 2.1 notes the content of this report and specifically the conclusion of the Chief Internal Auditor, at Section 11, which states that reasonable reliance can be placed on the Council’s risk management and governance arrangements, and systems of internal control for 2025/26. 12 Page 255 of 314
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3. Background/Context 3.1 The Global Internal Audit Standards in the UK Public Sector (GIAS (UKPS)) became effective from 1 April 2026 and are the professional standards for Internal Audit in the UK Public Sector. GIAS (UKPS) requires that the Chief Audit Executive must prepare an overall conclusion at least annually, which encompasses governance, risk management and control. This report fulfils that requirement. 3.2 Internal Audit is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. In accordance with the GIAS (UKPS), it helps the IJB accomplish its objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control and governance processes. 4. Internal Control Framework 4.1 Perth & Kinross Council’s internal controls include the full range of policies, procedures and practices intended to ensure the proper conduct of its operations and the achievement of its objectives. They include processes and procedures, organisational structures, job descriptions, authorisation limits, management supervision, risk management processes, reports and decisions. 4.2 It is the responsibility of management to devise, implement and maintain appropriate controls over the activities for which they are responsible. The role of Internal Audit is to provide an opinion to the Council as to the effectiveness of the controls that have been put in place by management in order to ensure that the organisation achieves its objectives. Internal Audit is thus a key part of the process by which the Council ensures the management of the risks that threaten the achievement of its objectives. 4.3 Internal Audit’s work is planned in such a way as to take account of these risks. Prioritising work towards the areas of highest assessed risk enables the Council to identify and remedy the most material weaknesses in its framework of internal controls. 5. Internal Audit Planning 5.1 In line with the GIAS (UKPS), Internal Audit undertakes a process of planning resulting in an annual plan. This plan was presented partly in themes, with many themes cutting across Services. This approach targeted the key risks identified as part of the Council’s Risk Management processes. In this respect, the Internal Audit Plan for 2025/26 was able to closely align with the Council’s risk management arrangements. 5.2 For 2025/26, the report containing Internal Audit’s Strategy & Plan was considered and approved in June 2025 (report 25/169). All Perth & Kinross Council’s activities are reviewed as part of the planning process. Page 256 of 314
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The plan for 25/26 aimed to cover the most significant areas of risk within the anticipated resources available whilst ensuring that there was a balance of coverage for all Service areas during the year. 5.3 In order to comply with GIAS (UKPS), there was a need identified for further assessment by Internal Audit of the assurances provided by internal and external sources, and the degree that reliance can be placed on these activities. This formed part of the Internal Audit Plan for 2025/26. 6. Internal Audit Outcome 2025/26 6.1 Of the 12 planned Internal Audit assignments for 2025/26, one was removed from the Internal Audit Plan to ensure audit effort was not duplicated with our External Audit colleagues, two are being carried forward into 2026/27, with the remaining assignments being complete or substantially complete and the outcomes have been taken into consideration in arriving at the conclusion. 6.2 Of those reports provided to Audit & Risk Committee within the year 2025/26, Internal Audit was able to provide substantial assurance for one area over the risk management, governance and internal controls in their areas, reasonable assurance for 3 areas and limited assurance for 4 areas. 6.3 Of the 113 individual actions included within reports considered by the Audit & Risk Committee in 2025/26, 30 were rated of critical importance to the business area, 25 were rated as of high-importance, 41 as medium- importance, 10 as low-importance, with a further 7 identified as minor actions for completion. Of the 30 critical actions, 24 were completed by the service prior to the report being finalised. 7. Follow Up Arrangements 7.1 The responsibility for considering (and accepting or rejecting) Internal Audit’s findings rests with management. Final audit reports record the agreed plan of action, including the individual(s) responsible; the planned timescales for completion; and the evidence required by Internal Audit to verify completion of the action. The audit process is of little value unless action is taken to remedy deficiencies in internal control where these are identified. Hence, a significant part of Internal Audit’s role is the following-up of progress with these action plans in line with the requirements of the Public Sector Internal Audit Standards. 7.2 A database for recording agreed actions is maintained for this purpose. Services are routinely requested to provide the agreed evidence of completion for actions which are due to have been completed. Where actions have not been completed, an update on progress is requested along with the reason for non-completion and a revised date for completion. The Audit & Risk Committee is informed of all actions which have not been completed, along with an Internal Audit opinion on the acceptability or otherwise of the response received from management. Page 257 of 314
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7.3 The support of the Chief Executive, Depute Chief Executive and the Strategic Leadership Team in ensuring that agreed actions are completed continued during the year. 7.4 In the Chief Internal Auditor’s opinion, the procedures in place provide a sound basis for ensuring that progress against the agreed plans is exposed to the proper level of scrutiny. 8. The Audit & Risk Committee 8.1 The Audit & Risk Committee operates within an approved ‘Role and Remit’ and as a formally constituted Committee of the Council. The Committee has conducted its meetings as hybrid, with all meetings routinely recorded and available to view via a link from the Committee’s webpage, thus ensuring a high degree of accountability for its activities. 9. Compliance with Internal Audit Standards 9.1 The GIAS (UKPS) have been adopted by Perth & Kinross Council as the relevant professional standards for 2025/26. 9.2 The GIAS (UKPS) came into effect in April 2025. Preparations, in terms of reporting their requirements to the Audit & Risk Committee and the Strategic Leadership of the Council, were undertaken before and during the year, with development sessions being help within the Internal Audit team. 9.3 There is a requirement under these Standards for an external review of compliance (External Quality Assessment – EQA) to be undertaken every 5 years. The EQA for Parth & Kinross Council was undertaken as a validated self assessment in 2024/25 (report 25/60), therefore the next EQA will be required in 2029/30. This report verified that Perth & Kinross Council’s Internal Audit function fully conformed with the Public Sector Internal Audit Standards (PSIAS), which were the relevant standards at that time. 9.4 The GIAS (UKPS) requires that internal auditors must be independent, namely free from conditions that threaten the ability to carry out their responsibilities in an unbiased manner. The Chief Internal Auditor has additional duties within Legal & Governance, specifically functional responsibility for Information Governance, which may be perceived to compromise this organisational independence. In order to manage these risks, any internal audit activity in these areas are undertaken by, and reported in the name of, the Senior Internal Auditor. 9.5 The Chief Internal Auditor has undertaken a self-assessment of compliance with the GIAS (UKPS) for 2025/26 and has concluded that the function generally conforms, with some areas identified for further development in terms of evidencing conformance. A Quality Assurance & Improvement programme is being developed arising from this and reflects the transition between PSIAS and GIAS (UKPS). Page 258 of 314
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9.6 A quality assurance system was in place in Internal Audit throughout 2025/26 which ensured the quality of Internal Audit work was of a consistent and professional standard. 9.7 Internal Auditors must conform to the Code of Ethics included within the Standards. This Code incorporates the principles and rules of conduct for Internal Auditors’ integrity, objectivity, confidentiality and competency. 10. Counter-Fraud & Corruption Activity 10.1 The responsibility for preventing and detecting fraud and corruption rests with management; it is the responsibility of management to take into account the risks arising from fraud and corruption and to devise and maintain the appropriate internal controls to provide a reasonable level of assurance that the Council’s resources are being protected from loss and misappropriation. 10.2 Nevertheless, Internal Audit has a number of responsibilities regarding the Council’s anti-fraud and anti-corruption arrangements, including whistleblowing. The year 2025/26 saw an steady level of audit activity in this area as described below compared with previous years. 10.3 The National Fraud Initiative (NFI) is a large-scale ‘data-matching’ exercise that takes place every two years and takes place over two financial years. Perth & Kinross Council has participated in the 2024/25 exercise. The NFI involves the comparison of personal data held by public authorities in order to identify anomalies that may indicate fraud or error. This output then forms the basis for a process of investigation within each authority, to ensure that errors are recognised and corrected and that, where cases of possible fraud are identified, they are pursued appropriately. 10.4 This investigative process, which is driven by Audit Scotland, is co-ordinated by Internal Audit and includes overseeing Services’ arrangements for uploading the data securely and the checking of a sample of identified anomalies within the period of the exercise, on the basis of an assessment of risk. Internal Audit facilitates the reporting of progress to our External Auditors, Audit Scotland. 10.5 In order to ensure that the Council meets the standards set out in its counter- fraud and corruption arrangements, some aspects of the Council’s ‘whistle- blowing’ arrangements are managed by Internal Audit. This includes the maintenance of a dedicated e-mail address and telephone line for employees with concerns at work, which is routed to Internal Audit. The Council also supports the national charity Protect that upholds the rights of those who raise concerns about wrongdoing at their place of work and which operates a free legal advice ‘hotline’. Whistleblowing arrangements have been in place throughout 2025/26 and are supported by a Whistle-blowing Policy, which is included within the Counter- Fraud and Corruption Strategy. Page 259 of 314
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10.6 Where control risks are highlighted as a result of these disclosures, these will be reported to the Audit & Risk Committee. Where no control issues are identified, detailed reports are not provided. The outcomes from all whistleblowing disclosures feed into the planning exercise for the future Internal Audit Plans. 10.7 The Chief Internal Auditor is the Council’s nominated Money Laundering Reporting Officer. There has been no activity in this area during the year. 11. Audit Opinion 2025/26 11.1 The Chief Internal Auditor concludes that reasonable reliance can be placed on the Council’s risk management and governance arrangements, and systems of internal control for 2025/26, subject to management implementation of the agreed actions detailed in Internal Audit reports. 12. Impact and Value Assessment 12.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 13. Appendices 13.1 Not applicable. Page 260 of 314
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit & Risk Committee Date of Meeting: 29 June 2026 Report Title: Internal Audit Mandate & Charter Report Number: 26/198 Report Author: Jackie Clark, Chief Internal Auditor Organisational Lead: Strategic Lead – Legal and Governance 1. Purpose 1.1 The purpose of this report is to present Internal Audit’s Mandate and Charter, in accordance with the Global Internal Audit Standards in the UK Public Sector (GIAS (UKPS)). 1.2 Sections 1. Purpose 2. Recommendations 3. Background/Context 4. Conclusion 5. Impact Value Assessment 6. Appendix – Internal Audit Mandate & Charter 2. Recommendation It is recommended that the Committee: 2.1 approves the Internal Audit Mandate & Charter which is aligned to the requirements of the Global Internal Audit Standards (GIAS) and their application in the UK Public Sector and the CIPFA Code of Practice for the Governance of Internal Audit in Local Government and confirms it accurately reflects their understanding and expectations of the IA function. 3. Background/Context 3.1 The Global Internal Audit Standards require that an organisation formally established its internal audit function by setting out its mandate and agreeing a Charter, in line with the GIAS, the application note for the UK Public Sector, and CIPFA’s Code of Practice for the Governance of Internal Audit in Local Government. 13 Page 261 of 314
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3.2 The attached has been reviewed and takes account of the requirement for the application of Topical Requirements published by the Institute of Internal Auditors (where applicable). This Charter enables Internal Audit and the organisation to demonstrate conformance with the GIAS (UKPS). 4 Conclusion 4.1 The approval of the Internal Audit Mandate & Charter enables compliance with the GIAS (UKPS). 5. Impact and Value Assessment 5.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 6. Appendices 6.1 Appendix 1 – Internal Audit Mandate & Charter Page 262 of 314
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1 Appendix 1 Internal Audit Mandate & Charter 2026-27 13 Page 263 of 314
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2 Contents: 1. Executive Summary…………………………………………………………3 2. Purpose of Internal Audit…………………………………………………..3 3. Internal Audit Mandate……………………………………………………...4 4. Definitions……………………………………………………………………..5 5. Independence, Organisational Position and Reporting Relationships…………………………………………………………………….5 6. IA Authority and Audit & Risk Committee Oversight………………….6 7. CAE Roles and Responsibilities…………………………………………..7 8. Management Responsibilities……………………………………………10 9. Scope and Types of Internal Audit Services ………………………….10 10. Topical Requirements……………………………………………………11 11. Annual Reporting and Overall Conclusion………………………..…11 Page 264 of 314
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3 Internal Audit Mandate & Charter for Perth & Kinross Council 1. Executive Summary In line with section 7(1) of The Local Authority Accounts (Scotland) Regulations 2014, local authorities must operate a professional and objective internal auditing service in accordance with recognised standards and practices in relation to internal auditing. The Global Internal Audit Standards (GIAS) came into effect in January 2025 and guide the worldwide professional practice of internal auditing and serve as a basis for evaluating and elevating the quality of the Internal Audit function. The Application Note: GIAS in the UK Public Sector effective from 1 April 2025, provides a framework for the practice of IA in the UK Public Sector when taken together with the GIAS. The GIAS (UK Public Sector) (GIAS (UKPS) sets out interpretations and requirements which need to be applied to the GIAS, to form a suitable basis for IA practice in the UK Public Sector. In addition, CIPFA have released a new Code of Practice for the Governance of IA in Local Government to support compliance with the principles and standards in Domain III (Governing the IA Function) of the GIAS (UK Public Sector). Compliance with the Code must be included in the IA annual internal quality assessment with outcomes reported to committee from 2025/26 onwards and the external quality assessment, due every five years. Standard 6.2 in Domain III of the GIAS (Governing the IA Function) requires the Chief Audit Executive (CAE) to implement and maintain an Internal Audit Charter with sets out the purpose of Internal Audit, the Internal Audit mandate, organisational position, essential conditions, reporting relationships, scope of work, types of services, and other specifications in accordance with the GIAS. The Internal Audit Charter for Perth & Kinross Council sets out these requirements and is based on the Institute of Internal Auditor’s 2024 Model Charter. 2. Purpose of Internal Audit In line with the GIAS, the purpose of the Internal Audit (IA) function is to strengthen the Council’s ability to create, protect, and sustain value by providing the Audit & Risk Committee and management with independent, risk-based, and objective assurance, advice, insight, and foresight. The IA function enhances the Council’s: • successful achievement of its objectives • governance, risk management, and control processes • decision-making and oversight • reputation and credibility with its stakeholders • ability to serve the public interest. The Council’s IA function is most effective when: • internal auditing is performed by competent professionals in conformance with the GIAS (UK Public Sector), which are set in the public interest Page 265 of 314
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4 • the IA function is independently positioned with direct accountability to the Audit & Risk Committee • internal auditors are free from undue influence and committed to making objective assessments. IA assurance is provided by delivering an annual programme of audit work that independently and objectively assesses the design and effectiveness of the controls established to manage the Council’s most significant risks. The IA scope covers all Council activities. Commitment to Adhering to the Global Internal Audit Standards The Council’s internal audit function will adhere to the mandatory elements of The Institute of Internal Auditors' International Professional Practices Framework, which are the GIAS and Topical Requirements as well as the Application Note: Global Internal Audit Standards in the UK Public Sector. When expressing conformance with standards, the Council’s IA function will be clear that they are conforming with Global Internal Audit Standards in the UK Public Sector. The CAE will report annually to the Audit & Risk Committee and senior management regarding the internal audit function’s conformance with the Standards, which will be assessed through a quality assurance and improvement program. In addition to their primary role, the CAE will also: • support the Strategic Leadership Team in discharging their duties • advise on the internal control implications of system or process changes within the Council • assist management in their duties to prevent and detect fraud and corruption • aim to add value to the Council in all its undertakings. 3. Internal Audit Mandate In line with the GIAS, the Council’s IA function receives its mandate from the Audit & Risk Committee. The mandate sets out the authority, roles and responsibilities, and empowers the IA function to provide the Audit & Risk Committee and senior management with independent, risk- based, and objective assurance, advice, insight, and foresight. The IA function’s authority is created by its direct reporting relationship to the Audit & Risk Committee. Such authority allows for unrestricted access to the Audit & Risk Committee. The Audit & Risk Committee authorises the IA function to: • have full and unrestricted access to all functions, data, records, information, physical property, and personnel pertinent to carrying out IA audit responsibilities. Internal auditors are accountable for confidentiality and safeguarding records and information • allocate resources, set frequencies, select subjects, determine scopes of work, apply techniques, and issue communications to accomplish the function’s objectives Page 266 of 314
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5 • obtain assistance from the necessary personnel of the Council to complete internal audit services. 4. Definitions The Council has adopted the following definitions set out in the GIAS 2024 Glossary: Internal Audit An independent, objective assurance and advisory service designed to add value and improve an organisation’s operations. It helps an organisation establish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Assurance Services Services through which internal auditors perform objective assessments to provide assurance. The nature and scope of assurance services are determined by Internal Audit. Advisory Services Services through which internal auditors provide advice to an organisation’s stakeholders without providing assurance or taking on management responsibilities. The nature and scope of advisory services are subject to agreement with relevant stakeholders. Independence Freedom from conditions that threaten the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner. 5. Independence, Organisational Position, and Reporting Relationships The CAE will be positioned at a level in the organisation that enables internal audit services and responsibilities to be performed without interference from management, thereby establishing the independence of the internal audit function. (See “Mandate” section.) The CAE report functionally to the Audit & Risk Committee and administratively (for example, day-to-day operations) to the Strategic Lead, Legal & Governance. This positioning provides the organisational authority and status to bring matters directly to senior management and escalate matters to the Audit & Risk Committee, when necessary, without interference and supports the internal auditors’ ability to maintain objectivity. The CAE will confirm to the Audit & Risk Committee, at least annually, the organisational independence of the internal audit function. If the governance structure does not support organisational independence, the CAE will document the characteristics of the governance structure limiting independence and any safeguards employed to achieve the principle of independence. The CAE will disclose to the Audit & Risk Committee any interference internal auditors encounter related to the scope, performance, or communication of internal audit work and results. The disclosure will include communicating the implications of such interference on the internal audit function’s effectiveness and ability to fulfill its mandate. To ensure that IA independence and objectivity is maintained for assurance services, IA will remain free from interference from anyone within the Council in relation to audit selection, scope, procedures, frequency, timing, and report content. Page 267 of 314
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6 Where IA also has responsibility for non-audit activities, the GIAS require that appropriate arrangements are established to avoid conflicts of interest. Additionally, IA will not be permitted to audit any activities for which they have previously been responsible within a period of one year and will not engage in any other activity that may impair judgment or independence. For advisory services, the IA role will be specifically restricted to providing guidance, views, and opinions. To comply with independence requirements, IA will not be involved in any aspects of operational decisions subsequently taken by management. Changes to the Mandate and Charter Circumstances may justify a follow-up discussion between the CAE, the Audit & Risk Committee, and senior management on the internal audit mandate or other aspects of the internal audit charter. Such circumstances may include but are not limited to: • A significant change in the Global Internal Audit Standards. • A significant reorganisation within the organisation. • Significant changes in the CAE, Audit & Risk Committee, and/or senior management. • Significant changes to the organisation’s strategies, objectives, risk profile, or the environment in which the organisation operates. • New laws or regulations that may affect the nature and/or scope of internal audit services. 6. IA Authority and Audit & Risk Committee Oversight To establish, maintain, and ensure that the Council’s internal audit function has sufficient authority to fulfill its duties, the Audit & Risk Committee will: • Discuss with the CAE and senior management the appropriate authority, role, responsibilities, scope, and services (assurance and/or advisory) of the internal audit function. • Ensure the CAE has unrestricted access to and communicates and interacts directly with the Audit & Risk Committee, including in private meetings without senior management present. • Discuss with the CAE and senior management other topics that should be included in the internal audit charter. • Participate in discussions with the CAE and senior management about the “essential conditions,” described in the GIAS, which establish the foundation that enables an effective internal audit function. • Approve the internal audit function’s charter, which includes the internal audit mandate and the scope and types of internal audit services. • Review the internal audit charter annually with the CAE to consider changes affecting the organisation, such as the employment of a new CAE or changes in the type, severity, and interdependencies of risks to the organisation; and approve the internal audit charter annually. • Approve the risk-based internal audit plan. Page 268 of 314
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7 • Provide input to the internal audit function’s human resources. • Provide input to senior management on the appointment and removal of the CAE, ensuring adequate competencies and qualifications and conformance with the GIAS (UKPS). • Review and provide input to senior management on the CAE’s performance. • Receive communications from the CAE about the internal audit function including its performance relative to its plan. • Ensure a quality assurance and improvement program has been established and review the results annually. • Make appropriate inquiries of senior management and the CAE to determine whether scope or resource limitations are inappropriate. 7. CAE Roles and Responsibilities Ethics and Professionalism The CAE will ensure that internal auditors: • Conform with the Global Internal Audit Standards, including the principles of Ethics and Professionalism: integrity, objectivity, competency, due professional care, and confidentiality. • Understand, respect, meet, and contribute to the legitimate and ethical expectations of the organisation and be able to recognise conduct that is contrary to those expectations. • Encourage and promote an ethics-based culture in the organisation. •Report organisational behavior that is inconsistent with the organisation’s ethical expectations, as described in applicable policies and procedures. Objectivity The CAE will ensure that the internal audit function remains free from all conditions that threaten the ability of internal auditors to carry out their responsibilities in an unbiased manner, including matters of engagement selection, scope, procedures, frequency, timing, and communication. If the CAE determines that objectivity may be impaired in fact or appearance, the details of the impairment will be disclosed to appropriate parties. Internal auditors will maintain an unbiased mental attitude that allows them to perform engagements objectively such that they believe in their work product, do not compromise quality, and do not subordinate their judgment on audit matters to others, either in fact or appearance. Internal auditors will have no direct operational responsibility or authority over any of the activities they review. Accordingly, internal auditors will not implement internal controls, develop procedures, install systems, or engage in other activities that may impair their judgment, including: • Assessing specific operations for which they had responsibility within the previous year. • Performing operational duties for the Council or its affiliates. Page 269 of 314
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8 • Initiating or approving transactions external to the internal audit function. • Directing the activities of any Council employee that is not employed by the internal audit function, except to the extent that such employees have been appropriately assigned to internal audit teams or to assist internal auditors. Internal auditors will: • Disclose impairments of independence or objectivity, in fact or appearance, to appropriate parties and at least annually, such as the CAE, The Audit & Risk Committee, management, or others. • Exhibit professional objectivity in gathering, evaluating, and communicating information. • Make balanced assessments of all available and relevant facts and circumstances. • Take necessary precautions to avoid conflicts of interest, bias, and undue influence. Managing the Internal Audit Function The CAE has the responsibility to: • At least annually, develop a risk-based internal audit plan that considers the input of the Audit & Risk Committee and senior management. Discuss the plan with the Audit & Risk Committee and senior management and submit the plan to the Audit & Risk Committee for review and approval. • Communicate the impact of resource limitations on the internal audit plan to the Audit & Risk and senior management. • Review and adjust the internal audit plan, as necessary, in response to changes in the Council’s business, risks, operations, programs, systems, and controls. • Communicate with the Audit & Risk Committee and senior management if there are significant interim changes to the internal audit plan. • Ensure internal audit engagements are performed, documented, and communicated in accordance with the GIAS (UKPS). • Follow up on engagement findings and confirm the implementation of recommendations or action plans and communicate the results of internal audit services to the Audit & Risk Committee and senior management for each engagement as appropriate. • Ensure the internal audit function collectively possesses or obtains the knowledge, skills, and other competencies and qualifications needed to meet the requirements of the GIAS (UKPS) and fulfill the internal audit mandate. • Identify and consider trends and emerging issues that could impact the Council and communicate to the Audit & Risk Committee and senior management as appropriate. • Consider emerging trends and successful practices in internal auditing. • Establish and ensure adherence to methodologies designed to guide the internal audit function. Page 270 of 314
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9 • Ensure adherence to the Council’s relevant policies and procedures unless such policies and procedures conflict with the internal audit charter or the GIAS (UKPS). Any such conflicts will be resolved or documented and communicated to the Audit & Risk Committee and senior management. • Coordinate activities and consider relying upon the work of other internal and external providers of assurance and advisory services. If the CAE cannot achieve an appropriate level of coordination, the issue must be communicated to senior management and if necessary escalated to the Audit & Risk Committee. Communication with the Audit & Risk Committee and Senior Management The CAE will report to the Audit & Risk Committee and senior management regarding: • The internal audit function’s mandate. • The internal audit plan and performance relative to its plan. • Significant revisions to the internal audit plan and budget. • Potential impairments to independence, including relevant disclosures as applicable. • Results from the quality assurance and improvement program, which include the internal audit function’s conformance with GIAS (UKPS) and action plans to address the internal audit function’s deficiencies and opportunities for improvement. • Significant risk exposures and control issues, including fraud risks, governance issues, and other areas of focus for the Audit & Risk Committee that could interfere with the achievement of Council’s strategic objectives. • Outcomes from assurance and advisory services. • Resource requirements. • Management’s responses to risk that the internal audit function determines may be unacceptable or acceptance of a risk that is beyond the Council’s risk appetite. Quality Assurance and Improvement Program The CAE will develop, implement, and maintain a quality assurance and improvement program that covers all aspects of the internal audit function. The program will include external and internal assessments of the internal audit function’s conformance with the GIAS (UKPS), as well as performance measurement to assess the internal audit function’s progress toward the achievement of its objectives and promotion of continuous improvement. The program also will assess, if applicable, compliance with laws and/or regulations relevant to internal auditing. Also, if applicable, the assessment will include plans to address the internal audit function’s deficiencies and opportunities for improvement. Annually, the CAE will communicate with the Audit & Risk Committee and senior management about the internal audit function’s quality assurance and improvement program, including the results of internal assessments (ongoing monitoring and periodic self-assessments) and external assessments. External assessments will be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the Council. Page 271 of 314
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10 8. Management Responsibilities Management will cooperate with IA on audits and provide access to records, systems and personnel as required within a reasonable timeframe following the request. Assurance engagements will be subject to a written terms of reference (Audit Brief) and report. Advisory engagements will be agreed in writing (for example via email or written terms of reference) and a relevant output agreed (for example full report/summary findings, focused feedback or an action plan). Draft reports will be shared with management for agreement as to the factual accuracy of draft findings raised. Management are to consider appropriate actions to mitigate the risks arising from the control weaknesses identified. It is management’s responsibility to agree to either: • accept and fully implement actions at address the weaknesses identified or • accept the risk associated with not implementing improvements with supporting rationale. When a draft audit report is delivered, management are required to provide agreed management actions to all IA findings raised, including specifying responsibility and anticipated dates for the implementation of these actions. Management is also responsible for ensuring that agreed management actions are implemented and effectively sustained. The GIAS also require the CAE to report to both senior management and the Audit & Risk Committee, details of management’s response to risk that (based on the CAE’s judgement) may be unacceptable to the Council. Consequently, any IA findings where management has accepted the risk will be highlighted in IA reports. 9. Scope and Types of Internal Audit Services The scope of internal audit services covers the entire breadth of the organisation, including all of the Council’s activities, assets, and personnel. The scope of internal audit activities also encompasses but is not limited to objective examinations of evidence to provide independent assurance and advisory services to the Audit & Risk Committee and management on the adequacy and effectiveness of governance, risk management, and control processes for the Council. The nature and scope of advisory services may be agreed with the party requesting the service, provided the internal audit function does not assume management responsibility. Opportunities for improving the efficiency of governance, risk management, and control processes may be identified during advisory engagements. These opportunities will be communicated to the appropriate level of management. Internal audit engagements may include evaluating whether: Risks relating to the achievement of the Council’s strategic objectives are appropriately identified and managed. Page 272 of 314
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11 • The actions of the Council’s officers, management, employees, and contractors or other relevant parties comply with the Council’s policies, procedures, and applicable laws, regulations, and governance standards. • The results of operations and programs are consistent with established goals and objectives. • Operations and programs are being carried out effectively, efficiently, ethically, and equitably. • Established processes and systems enable compliance with the policies, procedures, laws, and regulations that could significantly impact the Council. • The integrity of information and the means used to identify, measure, analyse, classify, and report such information is reliable. • Resources and assets are acquired economically, used efficiently and sustainably, and protected adequately. 10. Topical Requirements Topical Requirements are a mandatory component of the International Professional Practices Framework and GlAS. Topical Requirements enhance the consistency and quality of Internal Audit services related to specific audit subjects. Each Topical Requirement supports internal auditors performing engagements in a specific risk area. All Internal Audit functions must apply the relevant Topical Requirement in conformance with the GlAS (UKPS) when providing assurance services on that topic. A checklist for assessing applicability of the Topical Requirements will be used by the Internal Audit team. Internal Audit Assignment Briefs will advise management where a Topical Requirement may apply, and further information will be obtained via scoping and fieldwork meetings. 11. Annual Reporting and Overall Conclusion In line with the GIAS (UK Public Sector) the CAE must, at least annually: • conclude on the overall adequacy and effectiveness of the Council’s framework of governance, risk management and control (annual conclusion) • include a statement on conformance with the GIAS (UKPS) and the results of the Quality Assurance Improvement Plan. The annual conclusion for the Council is based on the outcomes of the audits included in the IA work programme, progress with implementation of agreed management actions, the result of any other IA activities that have identified control gaps that are exposing the Council to risk, and the professional judgement of the CAE. The Council has adopted the standard CIPFA standard engagement definitions for all engagement conclusions and the overall annual audit conclusion.. Page 273 of 314
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit & Risk Committee Date of Meeting: 29 June 2026 Report Title: Internal Audit Strategy & Plan 2026/27 Report Number: 26/199 Report Author: Jackie Clark, Chief Internal Auditor Organisational Lead: Strategic Lead – Legal and Governance ___________________________________________________________________ 1. Purpose 1.1 The purpose of this report is to present the Strategy for the delivery of Internal Audit services for Perth and Kinross Council, and the proposed approach for the direction of planned Internal Audit work for 2026/27 1.2 Sections 1. Purpose 2. Recommendation(s) 3. Background/Context 4. Main Issues 5. Proposals 6. Conclusion 7. Impact Value Assessment 8. Appendices 2. Recommendation(s) It is recommended that the Committee: 2.1 approves the strategy and plan for 2026/27. 3. Background/Context 3.1 The Global Internal Audit Standards in the UK Public Sector (GIAS (UKPS)) requires that the Chief Audit Executive should create an internal audit plan at least annually, which considers all areas of the organisation’s business and its governance, risk management and control processes. The Plan should be regularly reviewed and dynamic in terms of being responsive to organisational need. 14 Page 275 of 314
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3.2 The Council’s strategic delivery of internal audit services is through a directly employed team, with the option to bring in specialties as required to ensure an adequate service delivery. 3.3 Internal Audit’s strategy is to deliver a risk-based Internal Audit service by designing planned activity around the Council’s key risks to achieving its objectives. Internal Audit also aims to add value to the organisation by ensuring that there is appropriate and enabling risk management, governance and controls in place. 3.4 In order to comply with GIAS (UKPS), there is a need for the further assessment by Internal Audit of the assurances provided by internal and external sources, and the degree that reliance can be placed on these activities. This forms part of the Internal Audit Plan for 2026/27. 3.5 In addition, evidence provided to support the Annual Governance Statement has been examined. Information in relation to external inspections by regulators and other bodies has also been taken into account, where available, along with the outcomes from previous Internal Audit reviews. 3.6 As in previous years, the Internal Audit Plan proposes a thematic approach to elements of Council activity and risks assessed. The detailed scope of each assignment will be agreed prior to the commencement of each thematic review. 3.7 Cumulative audit knowledge and experience has been drawn upon, from our knowledge of the organisation, awareness of significant changes in systems processes and personnel, previous Internal Audit involvement in areas of activity and from our analysis of the risks faced by individual functions in delivering their objectives. This has resulted in the identification of some specific areas for Internal Audit activity in 2026/27. 3.8 Reports arising from Internal Audit activity will be presented to the Audit & Risk Committee except where the assignments are consultative in nature. A summary of the work undertaken will be provided as part of the routine Update reports, as agreed in in June 2016 (Report 16/306 refers). The outcomes from these assignments will be taken into consideration in arriving at future Internal Audit Plans. 4. Main Issues Internal Audit resources 4.1 Resources for Internal Audit activity in year is 3.6 full time equivalent posts available plus the Chief Internal Auditor. These resources will be available to undertake the Perth & Kinross Council and Integration Joint Board Internal Audit Plans; ad-hoc advice and consultancy; investigations into fraud and corruption; facilitate the National Fraud Initiative and overseeing the whistleblowing arrangements. Page 276 of 314
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4.2 An allocation of resources is made annually for tasks relating to counter-fraud and corruption activity, including the oversight and facilitation of the National Fraud Initiative. 4.3 An important part of the Internal Audit process is the verifying of the implementation of agreed actions arising from Internal Audit reports. An allocation of resources is made to support this process and to ensure that Elected Members are informed of the status of actions arising from previous audit reports. 4.4 The Internal Audit service for the Integration Joint Board is provided jointly by officers from Perth & Kinross Council and NHS, with the role of Chief Internal Auditor being held by Perth & Kinross Council. Resources are set aside for the provision of this Service. 4.5 2026/27 represents the second year of the GIAS (UKPS) being in place, and some additional resources will be directed to ensuring that the Internal Audit Service is able to demonstrate further conformance with these Standards. Furthermore, resources are released to ensure that appropriate professional development is undertaken within the team. 4.6 The leaves approximately 60% of audit time to be dedicated to planned internal audit activity. 5 Proposals 5.1 The Strategic Risk Register is being presented for consideration at this meeting of the Audit & Risk Committee. Internal Audit has an overview of the arrangements for its development and have placed reliance on its content. The key themes identified for inclusion within the Internal Audit Plan for 2026/27 are taken from the Strategic Risk Register, in consultation with the Strategic Leadership Team. 5.2 In addition, the requirements of GIAS (UKPS) have influenced some areas of focus around internal assurances for 2026/27, which require to be validated to enable formal assurance to be placed on their effectiveness. 5.3 Additional work arising from past advisory work and whistleblowing disclosures have also informed the focus for some assignments within the proposed plan. 5.4 Two assignments from the 2025/26 Plan appear on the table below, these being Strategic Partnering within Environment & Infrastructure and Risk Maturity. The former is a consultancy assignment, where Internal Audit is represented on a working group which continues into 2026/27. The latter is an assignment which is still required but has not yet been undertaken in year. Page 277 of 314
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5.5 A blended model of assurance and advisory/consultancy activity is proposed within the table below. The table also highlights where audits are directly linked to the risk register, enable assurance to be placed on internal processes going forward, or arising out of other work, such as previous advisory or whistleblowing disclosures. 5.6 In line with the requirements of GIAS (UKPS), the Internal Audit Plan should be dynamic. Therefore the Committee should note that there may be in-year changes to adapt to circumstances not yet appreciated. Audit Theme Strategic risk / audit type Strategic Lead Portfolio Brief description Strategic Partnering (continuing) 05 Advisory Environment & Infrastructure Carried forward. To provide advice / support for service redesign and transformation Risk Maturity (from 2025/26) Internal assurance Strategic Planning, People & Performance Carried forward. To review the Council’s risk maturity in line with best practice. Forward Planning Advisory Strategic Planning, People & Performance To support the review of corporate priorities Assurance Mapping Internal Assurance Whole Council To work with Strategic Leads to complete an assurance mapping exercise Throughcare & Aftercare 01 Assurance Children, Families & Justice To ensure that the Council meets current requirements for care experienced young people. Organisational Behaviour All risks Assurance Whole Council To apply the IIA’s Topical Requirement for the review of the design and implementation of governance, risk management and control processes related to organisational behaviour. Complex Needs Project 01 Assurance Children, Families & Justice To ensure the effectiveness of the project in delivering outcomes Treasury Management 08 Assurance Finance & Business Support To ensure controls are in place for treasury management. Page 278 of 314
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Customer Insights Assurance Customer & Digital/ Finance & Business Support To review the arrangements in place for identifying improvements from customer interactions. IT Incident Management 06, 07 Assurance Customer & Digital To ensure that arrangements in place for managing IT incidents are effective. School Estate Management 10 Assurance Property Services To review arrangements for ensuring the school estate remains fit for purpose. Tay Cities Deal 03 Assurance Economy, Development & Planning To review local governance, risk and delivery arrangements Planning Applications Assurance Economy, Development & Planning To ensure that the arrangements in place for processing planning applications and the decision making process is robust and effective. Public Accessibility Regulations Assurance Strategic Planning, People & Performance To review the arrangements in place to ensure that the Council conforms to the Public Accessibility Regulations. Transformation Delivery & Outcomes 05 Assurance Programmes & Projects To ensure that transformation continues to deliver the desired outcomes in terms of benefits realisation and governance, including reporting. 5.7 Furthermore, GIAS (UKPS) requires the Chief Internal Auditor to consider assignments which would be included within the Internal Audit Plan if additional resources were available and for these to be reported to the relevant Committee. The following table includes such assignments, which form part of the “reserve” list in the event that they can be accommodated within year. Page 279 of 314
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Audit Theme Strategic risk / audit type Strategic Lead Portfolio Brief description Family Group Decision Making 01 Assurance Children, Families & Justice To ensure the effectiveness of arrangements in place. Unpaid Work 01; 04 Assurance Children, Families & Justice To ensure that National Standards are being achieved Housing Applications Assurance Housing & Communities To ensure that applications for housing are appropriately managed. Anti-poverty 04 Assurance Strategic Planning, People & Performance To ensure maximum benefit is being achieved through the use of allocated funding. To ensure that governance arrangements support the anti-poverty agenda. 6 Conclusion 6.1 In addition to fulfilling the GIAS (UKPS) requirement to provide a risk-based Internal Audit Plan for 2026/27, this proposed Plan also assists in demonstrating the degree to which reliance can be placed on internal sources of assurance, which is also required by GIAS (UKPS). 6.2 There will be an ongoing review of the emerging risks faced by the Council to ensure that these themes cover the areas of highest risk in achieving the Council’s objectives. 6.3 The Plan is designed to be dynamic and proportionate. Any changes to the Plan in-year, and the rationale, will be reported to the Audit & Risk Committee. 7. Impact and Value Assessment 7.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 8. Appendices 8.1 Not applicable Page 280 of 314
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit & Risk Committee Date of Meeting: 29 June 2026 Report Title: National Fraud Initiative 2024/25 Outcomes Report Number: 26/200 Report Author: Jackie Clark, Chief Internal Auditor Organisational Lead: Strategic Lead – Legal and Governance ___________________________________________________________________ 1. Purpose 1.1 The purpose of this Report is to outline the action that has been taken by Perth & Kinross Council in response to the requirements of the National Fraud Initiative for 2024/25. 1.2 Sections 1. Purpose 2. Recommendations 3. Background/Context 4. Progress Update 5. Outcome from Consultancy Work 6. Conclusion 7. Impact Value Assessment 8. Appendices 2. Recommendation It is recommended that the Committee notes that: 2.1 Perth & Kinross Council takes seriously its obligations for taking part in the NFI exercise; 2.2 The actions taken by Perth & Kinross Council in response to the requirements of the NFI; and 2.3 The 2024/25 exercise is now complete, with financial outcomes for Perth & Kinross recorded as £131,236.42. 15 Page 281 of 314
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3. Background/Context 3.1 The National Fraud Initiative constitutes a sophisticated data matching exercise matching electronic data within and between participating public bodies to assist in the prevention and detection of fraud. The NFI exercise in Scotland is Audit Scotland’s data matching exercise that runs every two years in line with the published timetable. The Cabinet Office administers the NFI and processes the data on behalf of Audit Scotland. This 2024/25 exercise represents the nineth NFI data matching to be undertaken in Scotland. 3.2 The overall aims of the NFI are to serve the public interest by safeguarding public money against losses from fraud or misappropriation and to contribute towards the fight against fraud. It improves the use made of public resources by identifying anomalies in the data held by different authorities and by ensuring that these are highlighted for further investigation. Whilst it is designed to detect fraud, it may also identify instances of administration error or inaccurate data. 3.3 The NFI exercise helps participating bodies (such as Local Authorities, Police Scotland, Scottish Fire and Rescue and the other public sector bodies) to identify possible cases of fraud and detect and correct any consequential under or overpayments. The NFI also helps Auditors in assessing the Council’s arrangements for preventing, deterring and detecting fraud. 3.4 There are broadly three stages in the NFI process: 1 the submission of the required datasets by public authorities and other organisations; 2 the processing of the data (data matching) in order to identify anomalies; and 3 the investigation of the highlighted and reported anomalies 3.5 The Council is responsible for stages 1 and 3; processing of the data (stage 2) is carried out under arrangements put in place by the Cabinet Office. The reported findings of the 2022/23 exercise was presented to Audit Committee in June 2024 (report 24/199). 3.6 Internal Audit acts as a facilitator within the Council and maintains regular contact with Services and external audit to ensure that the former are progressing investigations in accordance with the NFI timetable and guidance. 3.7 The Audit Committee is aware that Perth & Kinross Council is one of two local authorities which did not provide the Electoral Roll for the NFI. Legislation to allow Audit Scotland to require Councils to provide information for NFI purposes was introduced after the 2008/09 exercise, subject to any sharing being compliant with data protection legislation. However, the advice from Legal Services was that this does not permit the Council to submit the Electoral Register as there are specific legal restrictions in place which limit the Council’s ability to share the Electoral Register. Audit Scotland is aware of the Council’s position. Page 282 of 314
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3.8 Consequently, Perth & Kinross Council does not use the NFI model for checking eligibility to Council Tax’s single occupancy discount. This position is being reviewed in advance of the forthcoming 2026/27 exercise. 3.9 This report presents a summary of progress and the outcomes of the Perth and Kinross Council NFI 2024/25 exercise. 4. 2024/25 Outcomes for Perth & Kinross 4.1 A total of 70 reports detailing different data matches were received in respect of Perth and Kinross Council. As at 31 March 2026, these reports contained 5.665 matches, of which 126 matches were regarded as high risk. In addition to investigating these matches, Services have reviewed the remaining matches and investigated a proportion of these using a risk-based approach. In total, 2,135 matches have been investigated, which represents 38% of all matches. The exercise is now concluded. 4.2 Of the 2,135 fully investigated matches, one error has been identified relating to a match between the Council Tax Reduction Scheme and HMRS Property Ownership records, with £3,441.22 currently being recovered. In terms of NFI outcomes, a further estimated saving of £1,549.20 is attributed to the error, therefore the NFI recorded outcome for this match is £4,990.42. In the 2022/23 exercise, there were no such errors or overpayments identified. 4.3 A further 159 errors were identified, all of which related to matches associated with blue badges. A notional value is placed on the value of blue badges and has therefore been applied in terms of financial outcomes for Perth & Kinross, which amounts to a further £126,246. 4.4 Therefore, the total outcomes attributable to Perth & Kinross Council as a result of the NFI exercise is £131,236.42. 4.5 Information relating to the national outcomes will be made available later in the year by Audit Scotland. 6 Conclusion 6.1 Perth & Kinross Council takes seriously its obligations for taking part in the NFI and the 2024/25 exercise is now completed. 7. Impact and Value Assessment 7.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 8. Appendices 8.1 None Page 283 of 314
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit & Risk Committee Date of Meeting: 29 June 2026 Report Title: Strategic Risk Annual Report Report Number: 26/201 Report Author: L Dott, Team Leader Organisational Lead: L Simpson – Strategic Lead- Legal and Governance ______________________________________________________________ 1. Purpose 1.1 The purpose of this Report is to provide assurance that the Council’s Risk Management Framework is adequate and effective and to advise the Committee of the current key strategic risks facing the organisation and how these risks are being mitigated and managed. 1.2 Sections 1. Purpose 2. Recommendation(s) 3. Background/Context 4. Strategic Risk Review Process 5. Risk Activity 2025/26 6. Next Steps 7. Conclusion 8. Impact Value Assessment 9. Appendices 2. Recommendation(s) It is recommended that the Committee: 2.1 Considers the content of the report and provides appropriate and constructive challenge and comment. 2.2 Notes the current key strategic risks which have been identified through the application of the approved risk management process. 16 Page 285 of 314
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2.3 Accepts the assurance as to adequacy and effectiveness of the risk management framework 3. Background/Context 3.1 Sound risk management is central to good governance. It helps the Council make informed decisions, respond to a changing operating environment and maintain focus on delivering sustainable outcomes for the communities of Perth and Kinross. In local government, risks are wide-ranging and often interconnected, shaped by financial pressure, rising demand, legislative change, partnership working and wider economic and social factors. That makes it essential that risk is managed in a systematic, proportionate and continuous way. 3.2 The Council’s Risk Management Framework provides the structure through which risks are identified, assessed, monitored and kept under review. The framework was approved in 2017 and has continued to be reviewed and refined to ensure that it remains relevant, practical and capable of supporting effective decision-making in an increasingly complex environment. Risk management is now embedded as part of the Council’s wider system of internal control, with strategic and operational risks managed through an ongoing cycle of evaluation, prioritisation and mitigation 3.3 The framework is informed by recognised good practice, including ISO 31000, Management of Risk (MoR) and guidance from the Association of Local Authority Risk Managers (ALARM). Together, these provide the basis for a consistent corporate approach to risk across the organisation. The framework comprises: • Risk Management Policy, setting out the Council’s commitment to effective risk management. • Risk Management Strategy, describing the Council’s overall approach and risk hierarchy. • Risk Appetite Statement, explaining the level of risk the Council is prepared to tolerate in pursuit of its objectives. • Risk Management Process Guide, providing practical tools and guidance to support a consistent approach across the organisation. 3.4 Risk is assessed by considering both the likelihood of it materialising and its potential impact, including financial and non-financial consequences. Risk cannot be eliminated entirely, so the Council applies proportionate controls and mitigation measures to manage exposure to an acceptable level. 3.5 The Strategic Risk Register, attached at Appendix 1, sets out the key strategic risks facing the Council at the time of reporting, together with the controls in place to manage them. By its nature, risk is dynamic and subject to change as circumstances evolve. For that reason, risks, scores, controls and mitigating actions are kept under continuous review. While the Register provides a snapshot at a particular point in time, it is operated as a live management document and is routinely reviewed by the Senior Leadership Team. Page 286 of 314
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4 Strategic Risk Review Process 4.1 The Strategic Risk Review Process is designed to ensure that the Council’s most significant risks are identified, assessed, prioritised and kept under regular review in a consistent and structured way. It supports a clear corporate understanding of strategic risk, the adequacy of existing controls and where further mitigation may be required. Taken together, the strategic risks provide an overview of the Council’s wider risk landscape and support informed governance and decision-making. 4.2 The Strategic Risk Register opens with a summary of the overall corporate strategic risk position and then sets out each risk in more detail. For each strategic risk, the register records the key causes and consequences, the controls currently in place, an assessment of their effectiveness, and any further actions considered necessary and proportionate to manage exposure. References to risk appetite within the system should be disregarded at this stage, as this remains an area for further development. 4.3 Each strategic risk is expressed in terms of cause and effect. This helps ensure there is a clear understanding of the factors that could lead to the risk materialising and the range of consequences that could arise across the Council. 4.4 Risks are assessed by reference to likelihood and impact. The inherent risk score reflects the level of risk before controls are applied, while the residual risk score reflects the position after existing controls and mitigation are taken into account. In some cases, risks cannot be materially reduced through Council action alone, particularly where outcomes depend on external factors or the actions of partner bodies. Risks are prioritised using the residual risk score as follows: • Priority 1: residual risk score 16–25 • Priority 2: residual risk score 10–15 • Priority 3: residual risk score 6–9 • Priority 4: residual risk score 1–5. 4.6 Based on the current evaluation, the highest priority risks include the protection of vulnerable children and adults, growing the local economy, and addressing poverty and the inequalities gap 4.7 A high residual score does not in itself indicate weak mitigation. In many cases, substantial control and mitigation activity is already in place and is having a positive effect. Risks may remain in the highest priority category because of their scale and complexity, because effective mitigation depends in part on action by other organisations, or because wider external conditions continue to drive uncertainty. Page 287 of 314
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4.8 Equally, a lower score does not mean that a risk is of lesser importance. It may instead reflect the relative scope and effectiveness of controls that are already in place and within the Council’s direct influence. Other significant risks may sit within operational risk registers in accordance with the Risk Management Strategy and are monitored and managed by the relevant Strategic Leads and management teams, subject to the escalation and accountability arrangements set out in the wider Risk Management Framework 5. Risk Activity 2025/26 5.1 During 2025/26, the Council continued to strengthen its risk management arrangements, with a particular focus on improving the quality, consistency and visibility of risk information. Risk-trained officers worked closely with Risk Owners and the Strategic Leadership Team to review the strategic risk profile, support changes in risk ownership following service restructure, and provide constructive challenge on risk scoring and assessment. This included focused engagement and follow-up work to test the impact of new and emerging risks within an increasingly complex operating environment. 5.2 Progress also continued in embedding PK Performs as the Council’s core risk management system. A Power BI dashboard for strategic risk has been developed and is being tested with Strategic Leads ahead of wider consultation and roll-out. This is intended to improve the visibility of strategic risk information and strengthen reporting and oversight arrangements. 5.3 During the year, work also began in terms of reviewing corporate risk appetite. The initial exercise was look at strategic risks emerging from operational portfolios and transformation and change activity. A workshop was held with the Strategic Leadership Team in March 2026 and it was agreed that a revised approach should be taken forward, aligned to the development of the new Corporate Plan so that risk appetite and strategic direction are properly connected. The next phase of development will consider political risk appetite and will require engagement with elected members. 5.4 Following the SLT workshop, work commenced with the PK Performs supplier to develop the risk appetite indicator field. The intention is to improve how risk appetite is reflected within the system and to support a clearer and more meaningful relationship between appetite, impact and risk reporting. 5.5 We are working collaboratively as part of the Tayside Risk Management Group to learn and share information and best practice with colleagues and to benchmark to drive improvement. 6 Next Steps 6.1 The next phase of work will focus on further embedding and maturing the Council’s risk management arrangements. Page 288 of 314
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This will include responding to the planned internal audit of risk management arrangements and implementing any recommendations arising from that work to strengthen the control environment further. 6.2 The Council will also continue to roll out and embed the Strategic Risk Power BI dashboard as part of its wider approach to improving risk visibility, oversight and reporting. 6.3 Work will continue with the Transformation Programme and Council services to ensure that risk management remains embedded both in project delivery and in business-as-usual activity. At the same time, further improvements will be made to PK Performs to ensure that the system continues to meet organisational needs. 6.4 A revised Risk Appetite Statement will be developed through engagement with Elected Members and officers following development of the new Corporate Plan. This will help ensure that the Council’s approach to risk is aligned with its strategic priorities and decision-making framework. 7. Conclusion 7.1 The Council's Risk Management Framework remains robust and effective. It provides and appropriate basis for identifying, assessing and managing key strategic risks facing the organisation. It will continue to be reviewed throughout 2026/27 to ensure that it remains fit for purpose and responsive to the Council’s changing operating environment. 7.2 A clear programme of work is in place to further strengthen the framework, improve the quality of risk information and support the Council in achieving its strategic objectives. On that basis, assurance can be given that risk is being actively monitored and managed in accordance with the Council’s approved Risk Management framework. 8. Impact and Value Assessment 8.1 This report does not qualify for Impact and Value Assessment. 9. Appendices 9.1 Appendix 1 - Strategic Risk Register Page 289 of 314
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Heatmap Report PKC Print Date: 15-Jun-2026 16 Page 291 of 314
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PKC Heatmap Report HEATMAP Probability Very High High Medium Low Very Low Insignificant Minor Moderate Major Critical Impact Priority 1 Priority 2 Priority 3 Priority 4 Inherent Residual 15-Jun-2026 Page 2 of 24Page 292 of 314
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PKC Heatmap Report RISK SUMMARY Strategic Risk No. Risk Event Inherent Residual Trend 1 SR-01 - We fail to protect children and vulnerable adults from harm Priority 1 Priority 1 Comments: SMT workshop held to review the risk and other elements such as impact, controls and actions. Risk has now been updated. Updated actions and included additional work around Public Protection Strategy and added new control appointment of CSWO. Scoring revised following review. 2 SR-02 - We fail to mitigate or reduce the impact of climate change in Perth and Kinross within the scope of our control and resources Priority 1 Priority 1 Comments: Circular Economy Strategy added as a control, andl causes and consequences added. 3 SR-03 - The economy in Perth & Kinross does not grow in an inclusive and sustainable way Priority 1 Priority 1 Comments: 1 control upgraded from improvement required to effective and 2 controls from adequate to effective following progress of actions taken to strengthen control environment in 2025/26. 4 SR-04 - Our actions to tackle poverty and address the inequalities gap within Perth & Kinross are ineffective Priority 1 Priority 1 Comments: Anti-Poverty Strategy endorsed by Council and approved by Anti-Poverty Task Force. Action Plan has been developed from the strategy and thematic sub groups established. Council Poverty Board has met regularly this year providing stronger internal Governance. New action added to reflect the development of the Fairer Futures programme, funded by SG to develop an place based and evidence led approach to tackling child poverty. Probability of overall risk remains the same despite positive downturn in Child Poverty figures as external factors around energy prices and cost of living are still a major influence. Risk actions also reviewed 5 SR-05 - The Transformation and Change programme does not meet expected outcomes and deliver the future, sustainable public services that our communities need within available resources Priority 1 Priority 2 Comments: Risk is now changing slightly to take into consideration the move from phase 2 to phase 3 and the possible consolidation of business improvement / programme management office teams. There has been a very slight delay in implementation due to the need for some structural change in terms of SL portfolios. 6 SR-07 - Our operational response (in a non-public health related emergency situation) is inadequate or ineffective Priority 1 Priority 3 Comments: Full review of controls and overall residual scores carried out. 7 SR-08 - There are insufficient financial resources to provide the services that our communities need. Priority 1 Priority 1 Comments: Reviewed post budget approval. New control added around no purchase, no pay in line with updated financial regulations and safeguarding policy. 8 SR-09 - We have insufficient capacity and skills within the workforce to deliver the services that our communities need Priority 1 Priority 2 Comments: Reviewed. Delivery actions and performance updates are provided cyclically through the People and Culture Strategy and continue to be monitored closely by SLT and the Workforce Planning Board. 9 SR-010 - Council buildings and other assets are not safe, fit for purpose or providing best value Priority 1 Priority 2 Comments: Reviewed - 30 Year Plan & Status Reports In Progress Awaiting BV Audit Outcome 15-Jun-2026 Page 3 of 24Page 293 of 314
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PKC Heatmap Report No. Risk Event Inherent Residual Trend 10 SR-011 - The health and safety of staff and the public is not adequately protected Priority 1 Priority 3 Comments: No changes to scoring, actions updated. 15-Jun-2026 Page 4 of 24Page 294 of 314
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PKC Heatmap Report RISK OVERVIEW Strategic Risk SR-01 We fail to protect children and vulnerable adults from harm Risk Categories: People / Human Resource, Audit, Legislation and Compliance Risk Owner: Arun Singh Secondary Responsible Person(s): Sharon Cooper Last Reviewed Date: 08 May, 2026 Next Review Date: 31 Aug, 2026 Organisation > Perth and Kinross Health and Social Care Partnership > Integrated Health and Care - Adults Organisation > Perth and Kinross Health and Social Care Partnership > Children, Families & Justice Organisation > Chief Executive > Education & Learning I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Effective Risk Appetite OUT OF APPETITE The appetite benchmark score is 5.00 for this category Causes • Lack of continuous improvement activity to provide assurance (i.e. self evaluation, lived experience) • Failure to learn from learning reviews undertaken in other areas across the UK • Ensuring staff have an active PVG membership in place • Lack of training and development opportunities to identify and assess risk • High/increased workload and/or limited staff capacity affecting quality of recording • Organisational and operational functional changes that impact staffing, systems and time • Evolving and complex legislative landscape • Failure to align and prioritise budgets and resources • Failure to develop a sense of collective responsibility (both within and out-with the Council) • Inadequate/ poor quality data and business intelligence (e.g. AI transcriptive tools) • Incohesive partnership working (eg ineffective communication and data sharing) • Increasing vulnerabilities and complexities in terms of need across our communities Consequences • Incomplete or inaccurate case records affecting decision-making • Increased safeguarding risk due to missed or unidentified concerns • Ineffective or delayed interventions resulting in unresolved or escalating risk • Increased pressure on council services and other parts of the public sector • Increasing failure demand and resources wasted on ineffective interventions • Legal /financial claims and penalties for breach of duties and/or injury • Poorer health and social wellbeing outcomes for communities • Reputational damage/loss of public confidence • Significant harm to individuals Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-74.1 PKC Child Protection Processes/Policies/Procedures Arun Singh Effective 04 May, 2027 CTL-01.1 Multi-agency public protection Chief Officers Group Arun Singh Effective 04 May, 2027 CTL-02.1 PKC Adult Support Protection Processes/Policies/Procedures Arun Singh Effective 04 May, 2027 CTL-03.1 Multi-agency Adult Protection Committee Arun Singh Effective 04 May, 2027 CTL-04.1 Multi-agency Child Protection Committee Arun Singh Effective 04 May, 2027 15-Jun-2026 Page 5 of 24Page 295 of 314
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PKC Heatmap Report Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-06.1 Robust internal governance and assurance systems Arun Singh Effective 04 May, 2027 CTL-435.1 Multi Agency Public Protection Arrangements (MAPPA) Arun Singh Effective 04 May, 2027 CTL-436.1 MARAC - Multi-Agency Risk Assessment Conference Arun Singh Effective 04 May, 2027 CTL-437.1 Social Work Governance and Assurance Group Arun Singh Effective 04 May, 2027 CTL-438.1 Learning and Development Offer to Workforce Arun Singh Effective 04 May, 2027 Residual Solutions Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Compile Adult Protection Annual Report 2024/25 and Improvement Plan 2025/26 and present to the Adult Protection Committee, Chief Officers Group, Council and Integrated Joint Board Arun Singh Completed 100 31 Dec, 2025 Compile Adult Protection Annual Report 2025/26 and Improvement Plan 2026/27 and present to the Adult Protection Committee, Chief Officers Group, Council and Integrated Joint Board Arun Singh Not Started 0 31 Dec, 2026 Compile the Child Protection Standards and Quality Assurance Report 2024/25 and present to the Child Protection Committee, Chief Officers Group and Council Arun Singh Completed 100 31 Dec, 2025 Compile the Child Protection Standards and Quality Assurance Report 2025/26 and present to the Child Protection Committee, Chief Officers Group and Council Arun Singh Not Started 0 31 Dec, 2026 Develop a Public Protection Strategy based on priorities identified at Public Protection Evaluation session across all public protection areas Arun Singh Completed 100 31 Mar, 2026 Develop Children, Families & Justice Service Plan Arun Singh In Progress 50 30 Sep, 2026 15-Jun-2026 Page 6 of 24Page 296 of 314
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PKC Heatmap Report SR-02 We fail to mitigate or reduce the impact of climate change in Perth and Kinross within the scope of our control and resources Risk Categories: Environment, Audit, Legislation and Compliance Risk Owner: Fraser Crofts Last Reviewed Date: 09 Apr, 2026 Next Review Date: 09 Jul, 2026 Organisation > Depute Chief Executive > Environment & Infrastructure I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Effective Risk Appetite OUT OF APPETITE The appetite benchmark score is 9.00 for this category Causes • A lack of leadership and accountability • Energy inefficiency • Failure to develop a sense of collective responsibility (both within and out-with the Council) • Failure to influence culture and behaviour • Failure to respond appropriately to evolving statutory duties & responsibilities • Inadequate planning/ failure to prioritise and align appropriate resource • Inadequate resources and capacity • Ineffective /inefficient asset management • The current economic climate Consequences • Detrimental impact on environmental, health and wellbeing outcomes across our community • Failure to meet our climate reduction Futures and responsibilities, with potential legislative penalties • Failure to reduce carbon footprint • Increased inequalities across communities • Increase in occurence of adverse weather events • Inflated investment requirements due to not taking early action • Reputational damage/loss of public confidence Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-62.1 Climate Change Strategy and Action Plan Fraser Crofts Effective 31 May, 2027 CTL-07.1 Climate Change and Sustainability Committee and Convenor's meeting Fraser Crofts Effective 31 May, 2027 CTL-08.1 Climate Change & Sustainability Group Fraser Crofts Effective 31 May, 2027 CTL-250.1 Impact and Value Assessment Tool Divindy Grant Adequate 31 May, 2027 CTL-406.1 Circular Economy Strategy Fraser Crofts Adequate 31 May, 2027 CTL-78.2 Corporate Plan 2022-27 Greg Boland Adequate 31 May, 2027 Residual Solutions Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Carbon Literacy Training for Elected Members and Senior Officers Divindy Grant In Progress 62 30 Sep, 2026 Develop Cumulative Climate Impact Assessment of Budget to be taken to Climate Change and Sustainability Committee Divindy Grant In Progress 65 31 Dec, 2026 15-Jun-2026 Page 7 of 24Page 297 of 314
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PKC Heatmap Report Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Engage and develop strategy development processes to ensure climate change is considered and embedded in these Louisa Dott Completed 100 31 Mar, 2026 Review of membership and participation in Climate Change Commission Pete Leonard Completed 100 30 Sep, 2025 15-Jun-2026 Page 8 of 24Page 298 of 314
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PKC Heatmap Report SR-03 The economy in Perth & Kinross does not grow in an inclusive and sustainable way Risk Categories: Finance, People / Human Resource Risk Owner: Serge Merone Last Reviewed Date: 28 May, 2026 Next Review Date: 28 Nov, 2026 Organisation > Depute Chief Executive > Economy, Development & Planning I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Effective Risk Appetite OUT OF APPETITE The appetite benchmark score is 9.00 for this category Causes • A change in policy direction and potential funding impacts • Failure to resource interventions to support economic development • Failure to identify relevant factors impacting local economic resilience and develop strategies to support local economy • Failure to maximise on opportunities presented through the Tay Cities Deal and other UK/SG funds • The current economic climate, including the fallout from the Russia-Ukraine war, global supply chain issues and the Cost of Living Crisis Consequences • Stagnation in wage growth • A lack of positive destinations for school leavers • Increased business failures • Decline in housebuilding, business expansion and investment • Increased failure demand and resources being wasted on ineffective interventions • Increased poverty/inequalities across our communities • Population and economic decline • Rising unemployment Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-91.1 Perth & Kinross Economic Partnership Serge Merone Effective 30 Apr, 2027 CTL-14.1 Regional Economy Strategy Serge Merone Effective 30 Apr, 2027 CTL-16.1 UK Shared Prosperity Fund Serge Merone Adequate 30 Apr, 2027 CTL-17.1 Scottish Local Authorities’ Economic Development (SLAED) Group Serge Merone Effective 30 Apr, 2027 CTL-18.1 Local Employability Partnership Serge Merone Effective 30 Apr, 2027 CTL-19.1 Tay Cities Deal and Partnership Serge Merone Effective 30 Apr, 2027 CTL-86.1 Ongoing monitoring of local economy through relevant data Serge Merone Effective 30 Apr, 2027 Residual Solutions Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Accelerated delivery of step change projects Serge Merone Completed 100 31 Mar, 2026 Deliver key impact projects Serge Merone In Progress 10 30 Mar, 2030 Develop place-based targeted skills and employability interventions Steven MacDonald In Progress 10 31 Mar, 2027 15-Jun-2026 Page 9 of 24Page 299 of 314
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PKC Heatmap Report Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Review of external employability activities (following internal transformation review) including Local Employability Partnership Serge Merone Completed 100 31 Mar, 2026 15-Jun-2026 Page 10 of 24Page 300 of 314
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PKC Heatmap Report SR-04 Our actions to tackle poverty and address the inequalities gap within Perth & Kinross are ineffective Risk Categories: People / Human Resource, Finance Risk Owner: Greg Boland Secondary Responsible Person(s): Alan Taylor,David MacLuskey,Serge Merone Last Reviewed Date: 05 May, 2026 Next Review Date: 28 Aug, 2026 Organisation > Depute Chief Executive > Economy, Development & Planning Organisation > Depute Chief Executive > Environment & Infrastructure Organisation > Chief Executive > Education & Learning Organisation > Chief Executive > Strategic Planning, People & Performance Organisation > Depute Chief Executive > Customer & Digital Services I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Adequate Risk Appetite OUT OF APPETITE The appetite benchmark score is 5.00 for this category Causes • Failure to align and prioritise budgets with locality and local demographic needs • Failure to plan and resource effective interventions to address needs • Incohesive partnership working • Low wage and in work poverty • Rising costs (including food, fuel, housing) • The current economic climate and cost of living crisis Consequences • An increasing demand for services, which the Council may be unable to meet • A widening of the inequalities gap within Perth and Kinross • Poor or reduced health, social and economic wellbeing outcomes within our communities • Pressure on statutory services • Reduction in Council income Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-18.2 Local Employability Partnership Serge Merone Effective 31 May, 2027 CTL-92.1 Future for Families Project Steven MacDonald Effective 31 May, 2027 CTL-253.1 Transformation and Change Projects governed by SPP&P Greg Boland Adequate 01 May, 2027 CTL-21.1 Joint Welfare Reform Steering Group Alan Taylor Adequate 31 May, 2027 CTL-22.1 Governance and internal control arrangements Greg Boland Adequate 30 Apr, 2027 CTL-25.1 Local Child Poverty Action Plan Greg Boland Effective 30 Apr, 2027 CTL-24.1 Welfare Rights - income maximisation Alan Taylor Effective 01 May, 2027 CTL-20.1 Local Outcomes Improvement Plan Greg Boland Adequate 30 Apr, 2027 CTL-246.1 Poverty Theme Board Greg Boland Adequate 01 May, 2027 CTL-76.1 Anti-Poverty Task Force Greg Boland Improvement Required 30 Apr, 2027 CTL-77.1 Poverty Working Group Greg Boland Adequate 01 Apr, 2027 15-Jun-2026 Page 11 of 24Page 301 of 314
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PKC Heatmap Report Residual Solutions Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Developing and testing a Wellbeing Budgeting approach around the Poverty priority Paul Smith In Progress 70 30 Sep, 2026 Development of a cash-first approach Paul Smith Completed 100 31 Dec, 2025 Development of an Anti-Poverty Task Force Action Plan Paul Smith In Progress 70 30 Sep, 2026 Development of Good Food Strategy in relation to Food Insecurity Pete Leonard In Progress 10 01 Apr, 2028 Fairer Futures Programme Paul Smith In Progress 55 30 Mar, 2027 Further refine and expand upon PK insights proof of concept Paul Smith Completed 100 26 Sep, 2025 15-Jun-2026 Page 12 of 24Page 302 of 314
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PKC Heatmap Report SR-05 The Transformation and Change programme does not meet expected outcomes and deliver the future, sustainable public services that our communities need within available resources Risk Categories: Transformational, Audit, Legislation and Compliance, Finance, People / Human Resource Risk Owner: Charlene Guild Last Reviewed Date: 14 May, 2026 Next Review Date: 31 Aug, 2026 Organisation > Chief Executive > Projects & Programmes I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Effective Risk Appetite WITHIN APPETITE The appetite benchmark score is 15.00 for this category Causes • Failure to develop and expand community connections and relationships • Failure to effect the necessary cultural change within the organisation to implement new ways of working • Failure to engage effectively local communities to better identify need • Failure to prioritise/align financial resources to need • Inadequate local population data and business intelligence • Incohesive partnership working (eg ineffective communication and data sharing) • Insufficient resources and capacity Consequences • A widening of the inequalities gap within Perth and Kinross • Inability to sustain current service delivery within future resource allocation • Failure to comply with statutory duties • Increased failure demand and resources being wasted on ineffective interventions • Lack of confidence in Council / reputational loss • Poor or reduced health, social and economic wellbeing outcomes within our communities Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-251.1 Transformation & Change Communications and Engagement Plan Charlene Guild Adequate 03 May, 2027 CTL-252.1 Programme Management Office Project Monitoring Process Charlene Guild Effective 02 May, 2027 CTL-84.1 Transformation and Change governance structures Charlene Guild Adequate 03 May, 2027 CTL-29.1 Transformation and Change Strategy and Implementation Plan Charlene Guild Adequate 03 May, 2027 CTL-78.1 Corporate Plan 2022-27 Greg Boland Adequate 03 May, 2027 CTL-79.1 Equalities Mainstreaming Report Elaine Ritchie Effective 03 May, 2027 CTL-82.1 Financial Management and internal control Scott Walker Effective 14 May, 2027 Residual Solutions Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Development and roll out of locality based, multi- disciplinary working groups Paul Smith In Progress 60 31 Mar, 2027 Further development activity with CPP Louisa Dott In Progress 75 30 Dec, 2026 Implementation of Phase 3 Transformation & Improvement Team Charlene Guild In Progress 50 30 Sep, 2026 15-Jun-2026 Page 13 of 24Page 303 of 314
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PKC Heatmap Report Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Introduction of a universal service design approach across PKC in relation to Transformation & Change activity Charlene Guild In Progress 80 31 Mar, 2027 Mapping of interdependencies across the Transformation & Change Programme Charlene Guild Completed 100 31 Dec, 2025 Review of T&C Strategy (2022 - 27) to align with Corporate Plan key priorities Charlene Guild Completed 100 31 Oct, 2025 15-Jun-2026 Page 14 of 24Page 304 of 314
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PKC Heatmap Report SR-07 Our operational response (in a non-public health related emergency situation) is inadequate or ineffective Risk Categories: Property and Assets, People / Human Resource Risk Owner: Greg Boland Secondary Responsible Person(s): Elaine Ritchie Last Reviewed Date: 12 Nov, 2025 Next Review Date: 31 Aug, 2026 Organisation > Chief Executive > Strategic Planning, People & Performance Organisation > Depute Chief Executive > Housing & Communities I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Effective Risk Appetite OUT OF APPETITE The appetite benchmark score is 5.00 for this category Causes • A lack of leadership and accountability • Lack of preparedness to severe weather/emergencies • • A lack of resources (people) to properly plan, co-ordinate implement an appropriate response as per action plan • Failure to test civil contingency/business continuity plans and processes • Inadequate civil contingency/business continuity plans to cover relevant emergency situations • Inadequate local population data and business intelligence • Incohesive partnership working • Insufficient resources and capacity Consequences • Poor staff well-being (stress, burnout etc) leading to Retention challenges & reduced productivity • Damage to property and infrastructure • Damage to the environment • Detrimental impact on local economy • Harm to health and wellbeing • Legal claims and/or financial costs and penalties • Potential injury/fatality • Reputational damage/loss of public confidence • Unable to deliver essential services Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-33.1 Tayside Local Resilience Partnership Thomas Glen Effective 30 Apr, 2027 CTL-34.1 Effective network of community support/response Elaine Ritchie Effective 30 Apr, 2027 CTL-35.1 Cohesive partnership working in place to identify and support vulnerable people Sue Terras Adequate 30 Apr, 2027 CTL-31.1 Business Continuity / Contingency plans Sue Terras Effective 30 Apr, 2027 CTL-32.1 Appropriately skilled staff at Strategic, Tactical and Operational levels Sue Terras Effective 23 Apr, 2027 CTL-94.1 Emergency response structure Thomas Glen Effective 30 Apr, 2027 CTL-247.1 North of Scotland Resilience Partnership Thomas Glen Effective 30 Apr, 2027 CTL-248.1 Annual Programme of Training for Elected Members, ELT and SLT and others Sue Terras Effective 23 Apr, 2027 CTL-87.1 Concurrent Events document Sue Terras Effective 30 Apr, 2027 Residual Solutions 15-Jun-2026 Page 15 of 24Page 305 of 314
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PKC Heatmap Report Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Implement recommendations arising from Internal Audit Sue Terras In Progress 90 30 Jun, 2026 Maintain currency of plans for foreseeable incidents Greg Boland In Progress 80 31 Dec, 2026 Updating of Concurrent Events Document Greg Boland Completed 100 28 Feb, 2026 Work with IT and HSCP to design and implement Persons at Risk Database (PARD) Greg Boland In Progress 70 31 Dec, 2026 15-Jun-2026 Page 16 of 24Page 306 of 314
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PKC Heatmap Report SR-08 There are insufficient financial resources to provide the services that our communities need. Risk Categories: Finance, Audit, Legislation and Compliance, Contract and Procurement, Environment, Information Technology and Security, People / Human Resource, Property and Assets, Reputation and Public Image, Transformational Risk Owner: Scott Walker Last Reviewed Date: 18 May, 2026 Next Review Date: 01 Aug, 2026 Organisation > Chief Executive > Finance & Business Support I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Effective Risk Appetite OUT OF APPETITE The appetite benchmark score is 9.00 for this category Causes • Poor decision making • Inappropriate use of resources • Change in political direction • Changing demographics • Structural deficit in current revenue budget • High level of construction inflation impacting capital budget • Cyber defences being breached • Failure to deliver planned savings due to a reduction in local government funding/financial settlement • Failure to prioritise/align financial resources to need • Failure to transform Council services • High levels of inflation • Increased ring-fencing of funding • Increasing and/or more complex needs • Increase in expenditure • Movements in financial settlement • Movements in income • Reduction in local government funding • The current economic climate and cost of living crisis Consequences • Increased pressure on staff • Failure to achieve best value • Deterioration in quality and safety of assets • Failure to deliver a balanced budget • Increased costs through failure demand • Increased pressures on other parts of public sector or 3rd sector • Increase in future savings and significant reduction in the Council's reserves • Lack of confidence in Council / reputational loss • Legal /financial claims and penalties for breach of duties and/or injury • Poor outcomes - economic, environmental and social wellbeing • Reduction in availability/quality of services Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-63.1 Medium Term Financial Plan Scott Walker Adequate 31 May, 2027 CTL-64.1 Annual Accounts and Statutory Audit Processes Scott Walker Effective 31 May, 2027 CTL-95.1 Three Year Revenue Budget Scott Walker Effective 31 May, 2027 CTL-52.2 Strategic Investment Advisory Group Scott Walker Effective 31 May, 2027 CTL-36.1 Financial Strategy and Principles Scott Walker Effective 31 May, 2027 CTL-37.1 Transformation and Change Programme Charlene Guild Adequate 31 May, 2027 15-Jun-2026 Page 17 of 24Page 307 of 314
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PKC Heatmap Report Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-38.1 Capital Budget Scott Walker Effective 31 May, 2027 CTL-39.1 Treasury Management Scott Walker Adequate 31 May, 2027 CTL-40.1 Revenue and Capital monitoring Scott Walker Adequate 31 May, 2027 CTL-41.1 Continuous engagement with management and elected members, e.g. Executive Leadership Group, Conveners, BRGs. Scott Walker Effective 31 May, 2027 CTL-443.1 No Purchase Order /No Payment Scott Walker Effective 18 May, 2027 CTL-204.1 Reserves Strategy Scott Walker Adequate 31 May, 2027 CTL-447.1 Proactive asset management - Corporate Strategy and plans Scott Walker Improvement Required 11 Dec, 2026 CTL-88.1 Financial Regulations and Supplementary Guidance Scott Walker Effective 31 May, 2027 CTL-211.1 Annual Governance & Assurance Statement Jacqueline Clark Effective 18 May, 2027 CTL-212.1 Investment Blueprint Scott Walker Effective 18 May, 2027 CTL-213.1 Budget Briefing Communications Scott Walker Effective 18 May, 2027 Residual Solutions Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Consolidation of finance function to transformation the finance service Scott Walker In Progress 75 31 Mar, 2027 Develop generational ( 25+ year) strategic plan Greg Boland Not Started 0 31 Aug, 2027 Improved analysis of financial data (heatmap project) Scott Walker In Progress 70 31 Dec, 2026 No Purchase Order /No Payment Project Scott Walker Completed 100 31 Mar, 2026 Review and rationalisation of operational estate John Beveridge In Progress 5 30 Jun, 2036 Review and rationalisation of school estate David MacLuskey In Progress 1 30 Jun, 2036 Whistleblowing Communications plan Jacqueline Clark Completed 100 30 Jun, 2025 15-Jun-2026 Page 18 of 24Page 308 of 314
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PKC Heatmap Report SR-09 We have insufficient capacity and skills within the workforce to deliver the services that our communities need Risk Categories: People / Human Resource, Reputation and Public Image Risk Owner: Greg Boland Secondary Responsible Person(s): Pauline Johnstone Last Reviewed Date: 28 May, 2026 Next Review Date: 31 Aug, 2026 Organisation > Chief Executive > Strategic Planning, People & Performance I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Effective Risk Appetite OUT OF APPETITE The appetite benchmark score is 5.00 for this category Causes • Difficulties with recruitment, shortages in the labour market • Difficulties with retention, pay and grade, impact of hybrid working on existing workforce • Inadequate financial resources • Inadequate workforce planning (including succession planning, policies & strategies, vacancies management, wage analysis) • Increase in sickness absence, reduced wellbeing • Lack of knowledge and expertise in particular areas • Workforce reduction through restructuring/consolidation as part of transformation and change programme Consequences • Detrimental impact on environmental, economic and health and wellbeing outcomes across Perth and Kinross • Failure to deliver strategic objectives • Failure to deliver the services that communities need / poor quality services • Legal /financial claims and penalties for breach of duties and/or injury • Poor staff morale, health and wellbeing/ increased staff absence • Reputational damage/Council being seen as an unattractive employer Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-42.1 People and Culture Strategy 2024-2028 Pauline Johnstone Effective 31 May, 2027 CTL-43.1 Hybrid/new ways of working: guidance and operating models established Pauline Johnstone Effective 31 May, 2027 CTL-44.1 Workforce planning procedures and guidance Pauline Johnstone Adequate 31 May, 2027 CTL-45.1 Modern Apprentice & Graduate trainee schemes Pauline Johnstone Effective 31 May, 2027 CTL-46.1 Leadership skills training Pauline Johnstone Adequate 31 May, 2027 CTL-47.1 Organisational development plan Pauline Johnstone Adequate 31 May, 2027 CTL-48.1 Wellbeing/resilience/support (including links to partner organisation support resources for care workers) Pauline Johnstone Effective 31 May, 2027 CTL-49.1 Leadership Development Programme Pauline Johnstone Adequate 31 May, 2027 CTL-50.1 Employees Joint Consultative Committee Pauline Johnstone Effective 31 May, 2027 CTL-51.1 Joint Negotiating Committee for Teaching Staff Pauline Johnstone Effective 31 May, 2027 CTL-393.1 Leadership Development Strategy Pauline Johnstone Adequate 01 May, 2027 15-Jun-2026 Page 19 of 24Page 309 of 314
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PKC Heatmap Report Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-126.1 Employee Relations & Wellbeing Team Pauline Johnstone Adequate 31 May, 2027 CTL-127.1 Workforce Planning Themed Board Greg Boland Adequate 31 May, 2027 CTL-89.1 Health and Wellbeing Plan Pauline Johnstone Improvement Required 31 May, 2027 CTL-249.1 People Analytics Dashboard Pauline Johnstone Adequate 31 May, 2027 Residual Solutions Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Create a health and wellbeing pathway for change across PKC and the P&K HSCP which identifies the elements of a healthy workforce. Pauline Johnstone In Progress 70 31 Dec, 2026 Deliver the People and Culture Strategy Action Plan which is due for approval at Finance and Resources Committee Pauline Johnstone In Progress 90 30 Jun, 2026 15-Jun-2026 Page 20 of 24Page 310 of 314
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PKC Heatmap Report SR-010 Council buildings and other assets are not safe, fit for purpose or providing best value Risk Categories: Property and Assets, People / Human Resource Risk Owner: Scott Walker Secondary Responsible Person(s): Alan Taylor,Elaine Ritchie,Fraser Crofts,John Beveridge Last Reviewed Date: 14 May, 2026 Next Review Date: 29 Aug, 2027 Organisation > Depute Chief Executive > Environment & Infrastructure Organisation > Chief Executive > Finance & Business Support Organisation > Depute Chief Executive > Property Services I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Adequate Risk Appetite OUT OF APPETITE The appetite benchmark score is 5.00 for this category Causes • Climate change and increase in extreme weather events • Failure to respond appropriately to H&S concerns raised through national enquiries/reports • Failure to identify future investment where needed • Inadequate maintenance and repair • Ineffective asset management and planning • insufficient resource and capacity Consequences • Detrimental impact upon ability to deliver or quality of services • Increased costs due to insurance claims and maintenance • Injuries/fatalities • Legal /financial claims and penalties for breach of duties and/or injury • Reputational damage/loss of public confidence Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-90.1 Condition and suitability surveys Scott Walker Effective 14 May, 2027 CTL-441.1 30 Year Rolling Investment Plan Scott Walker Adequate 14 May, 2027 CTL-442.1 Annual Status Report Gregor Walker Effective 14 May, 2027 CTL-55.1 Corporate Asset Management Framework Scott Walker Effective 14 May, 2027 CTL-52.1 Strategic Investment Advisory Group Scott Walker Effective 14 May, 2027 CTL-75.1 Asset Maintenance programmes Gregor Walker Adequate 14 May, 2027 CTL-54.1 Asset strategies, plans and performance information Scott Walker Effective 14 May, 2027 CTL-53.1 Asset Management Boards Scott Walker Adequate 14 May, 2027 Residual Solutions Action Title Responsible Officer Action Status % Completed Target Completion Date Performance 30 year investment plan - Revision for 2025/26 Scott Walker Completed 100 31 Jan, 2026 Progress any actions from BV Audit (Awaiting Outcomes) Gregor Walker Not Started 0 31 Mar, 2027 15-Jun-2026 Page 21 of 24Page 311 of 314
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PKC Heatmap Report Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Revision of 30 Year Investment Plan & Asset Status Reports Gregor Walker In Progress 10 31 Jan, 2027 Status reports for 2024/25 for key assets and report to appropriate Boards and/or Committees Scott Walker Completed 100 30 Oct, 2025 15-Jun-2026 Page 22 of 24Page 312 of 314
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PKC Heatmap Report SR-011 The health and safety of staff and the public is not adequately protected Risk Categories: Audit, Legislation and Compliance, People / Human Resource Risk Owner: Greg Boland Secondary Responsible Person(s): Pauline Johnstone Last Reviewed Date: 28 Apr, 2026 Next Review Date: 31 Jul, 2026 Organisation > Chief Executive > Strategic Planning, People & Performance I Inherent Risk Assessment R Residual Risk Assessment Probability I R Impact Individual Heatmap Effectiveness of control R Effective Risk Appetite OUT OF APPETITE The appetite benchmark score is 5.00 for this category Causes • Health & safety implications of new ways of working (e.g. hybrid / remote) not fully known/understood • Inadequate resources and capacity • Ineffective monitoring, reporting and response • Lack of understanding /failure to apply legislation • Under-investment in training and controls Consequences • Detrimental impact on health and wellbeing • Legal /financial claims and penalties for breach of duties and/or injury or death • Poor working environment and work life balance • Potential injury/fatality • Reputational damage/loss of confidence Residual Controls Control Code Control Title Risk Control Owner Control Effectiveness Next Review Date CTL-56.1 Health & Safety training and communication Lorna Hamilton Effective 01 May, 2027 CTL-57.1 Robust Corporate Occupational Health & Safety Policy with supporting arrangement and guidance documents Lorna Hamilton Adequate 01 May, 2027 CTL-58.1 Corporate Health & Safety Team Lorna Hamilton Effective 01 May, 2027 CTL-59.1 Employees Joint Consultative Committee and Service based Health and Safety Committees Pauline Johnstone Effective 01 May, 2027 CTL-60.1 Safe Systems of Work Lorna Hamilton Effective 01 May, 2027 CTL-61.1 Partnership working with Director of Public Health ongoing Pauline Johnstone Effective 01 May, 2027 Residual Solutions Action Title Responsible Officer Action Status % Completed Target Completion Date Performance Develop an approach to replace Service Consultative Committees with one Strategic Committee Pauline Johnstone Completed 100 30 Nov, 2025 Implementation of Occupational Health and Safety policy and supporting topic specific arrangements Lorna Hamilton In Progress 90 31 Mar, 2027 Monitoring and auditing of health and safety practices and procedures both by Management and Corporate Health & Safety Team Lorna Hamilton Deferred 25 31 Mar, 2027 15-Jun-2026 Page 23 of 24Page 313 of 314
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