Document Pack - Audit Committee - 10 June 2026
West Dunbartonshire Council · 10 June 2026
Back to Audit Committee — 10 June 2026 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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Agenda Audit Committee Date: Wednesday, 10 June 2026 Time: 14:00 Venue: Civic Space, 16 Church Street, Dumbarton G82 1QL Contact: Lynn Straker, Committee Officer lynn.straker@west-dunbarton.gov.uk committee.admin@west-dunbarton.gov.uk Dear Member Please attend a meeting of the Audit Committee as detailed above. The business is shown on the attached agenda. Yours faithfully PETER HESSETT Chief Executive Page 1
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Distribution: Councillor Gordon Scanlan (Chair) Councillor Sophie Traynor (Vice Chair) Councillor Ian Dickson Councillor Michelle McGinty Councillor John Millar Councillor Lauren Oxley Councillor Martin Rooney Vacancy All other Councillors for information Chief Executive Chief Officers Date of Issue: 26 May 2026 Page 2
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AUDIT COMMITTEE WEDNESDAY, 10 JUNE 2026 1 APOLOGIES 2 DECLARATIONS OF INTEREST Members are invited to declare if they have an interest in any of the items of business on this agenda and the reasons for such declarations. 3 MINUTES OF PREVIOUS MEETING 5 - 6 Submit for approval, as a correct record, the Minutes of Meeting of the Audit Committee held on 18 February 2026. 4 OPEN FORUM The Committee is asked to note that no open forum questions have been submitted by members of the public. 5 INTERNAL AUDIT ANNUAL REPORT TO 31 MARCH 2026 7 - 23 Submit report by the Chief Officer – Resources advising of the work undertaken by Internal Audit in respect of the 2025/26 Annual Audit Plan and advising of the contents of the Assurance Statement given to Members of West Dunbartonshire Council, the Chief Executive and the Section 95 Officer (Chief Officer – Resources) in support of the Annual Governance Statement. This report outlines how audit assurances are obtained. 6 ANNUAL REPORT ON THE AUDIT COMMITTEE 2025-2026 25 - 31 Submit report by the Chief Officer – Resources providing the Audit Committee Chair’s 2025/26 Annual Report on the Audit Committee. 7 2026/2027 INTERNAL AUDIT PLANNING 33 - 41 Submit report by the Chief Officer – Resources advising of the approach to planning for the Internal Audit Section for the year 2026/2027. 8 INTERNAL AUDIT PLAN 2025/26 PROGRESS TO 30 APRIL 2026 43 - 59 Submit report by the Chief Officer – Resources advising of progress to 30 April 2026 against the Internal Audit Plan for 2025/26. 9/ Page 3
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9 TREASURY MANAGEMENT STRATEGY AND ANNUAL 61 - 97 INVESTMENT STRATEGY Submit report by the Chief Officer – Resources providing Members with the opportunity to further scrutinise the Treasury Management Strategy Statement and Annual Investment Strategy and the indicators contained within. ___________________________________________________________________ Page 4
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AUDIT COMMITTEE At a Meeting of the Audit Committee held in the Council Chamber, Clydebank Town Hall, 5 Hall Street, Clydebank on Wednesday, 18 February 2026 at 10.00 a.m. Present: Councillors Ian Dickson, Michelle McGinty, John Millar, Martin Rooney, Gordon Scanlan and Sophie Traynor. Attending: Peter Hessett, Chief Executive; Laurence Slavin, Chief Officer – Resources; Alan Douglas, Chief Officer – Regulatory and Regeneration, Andi Priestman, Shared Service Manager – Audit and Fraud; Victoria Rogers, Chief Officer – People and Technology; Amanda Graham, Chief Officer – Citizen, Culture and Facilities; Gail MacFarlane, Chief Officer – Roads and Neighbourhood; Craig Wilson, Building Services Manager; and Carly Chisholm and Lynn Straker, Committee Officers. Also Attending: Tom Reid, Audit Director, Forvis Mazars. Apologies: Apologies for absence were intimated on behalf of Councillors Lauren Oxley and Clare Steel. Councillor Gordon Scanlan in the Chair DECLARATIONS OF INTEREST It was noted that there were no declarations of interest in any of the items of business on the agenda. MINUTES OF PREVIOUS MEETING The Minutes of Meeting of the Audit Committee held on 10 December 2025 were submitted and approved as a correct record. OPEN FORUM The Committee noted that no open forum questions had been submitted by members of the public. ITEM 3 Page 5
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INTERNAL AUDIT PLAN 2025/26 PROGRESS TO 31 DECEMBER 2025 A report was submitted by the Chief Officer – Resources advising of progress to 31 December 2025 against the Internal Audit Plan for 2025/26. After discussion and having heard the Chief Officer – Roads and Neighbourhood in further explanation and in answer to Members’ questions, the Committee agreed to note the content of the report. BEST VALUE THEMATIC REPORT – TRANSFORMATION A report was submitted by the Chief Officer – Resources to advise Members of the outcome of the External Auditor’s Best Value Thematic Review for 2024/25 and to provide a summary of the key points arising. After discussion and having heard the External Auditor and the Chief Executive in further explanation and in answer to Members’ questions, the Committee agreed to note the content of the report and the External Audit report. STRATEGIC RISK 2022-2027 A report was submitted by the Chief Officer – People and Technology to provide an update on the strategic risks for 2022-27. After discussion and having heard the Chief Officer – People and Technology, the Chief Officer – Regulatory and Regeneration, the Chief Officer – Citizens, Culture and Facilities and the Building Services Manager, in further explanation and in answer to Members’ questions, the Committee agreed to note the strategic risks and to endorse the removal of risk SR005. The meeting closed at 10.30 a.m. Page 6
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – Resources Audit Committee – 10 June 2026 Subject: Internal Audit Annual Report to 31 March 2026 1. Purpose 1.1 The purpose of this report is to advise Members of the work undertaken by Internal Audit in respect of the 2025/26 Annual Audit Plan and to advise Members of the contents of the Assurance Statement given to Members of West Dunbartonshire Council, the Chief Executive and the Section 95 Officer (Chief Officer - Resources) in support of the Annual Governance Statement. This report outlines how audit assurances are obtained. 2. Recommendations 2.1 It is recommended that Members note the contents of this report. 3. Background 3.1 Global Internal Audit Standards in the UK Public Sector (GIAS-UKPS) requires that the Chief Internal Auditor makes an overall conclusion at the organisation level at least annually in support of wider governance reporting. 3.2 This overall independent conclusion must encompass governance, risk management and control. This report constitutes the required statement and covers the 2025/26 financial year. As required by GIAS-UKPS, this report presents the opinion of the overall adequacy and effectiveness of Inverclyde Council’s governance, risk management and control processes based on multiple engagements that Internal Audit has performed. The opinion is supported by relevant, reliable and sufficient information. The scope of internal audit work, the responsibilities of Internal Audit, and the assurance given on the adequacy and effectiveness of the Internal Control System of West Dunbartonshire Council (the Council) are explained further in Appendix 1 of this report. 4. Main Issues 4.1 The presence of an effective internal audit team contributes towards, but is not a substitute for, effective control. It is primarily the responsibility of line management to establish internal control so that the Council’s activities are conducted in an efficient and well-ordered manner, to ensure that ITEM 5 Page 7
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management policies and directives are adhered to and that assets and records are safeguarded. 4.2 Internal Audit activity is planned to enable an independent annual opinion to be provided by Council’s Chief Internal Auditor on the adequacy and effectiveness of internal controls governance and risk management systems within the Council. 4.3 The 2025/26 Internal Audit Annual Report and Assurance Statement is set out at Appendix 1. This provides the Chief Internal Auditor’s opinion of ‘Generally Satisfactory with some improvement needed’. This opinion is made with reference the Council’s internal control systems, governance and risk management systems in the year to 31 March 2026. 4.4 It has been concluded that the majority of the Council’s control procedures are operating as expected during the period under review, although it is recognised that work is ongoing with management to continue to make good progress in implementing agreed action plans arising from Internal Audit reviews. 4.5 In reaching this conclusion, I note risks raised by Internal Audit in the 2025/26 relating to Housing Repairs and Maintenance. Individually, these risks do not significantly impair the Council’s systems of internal control. Furthermore, management have reported progress and detailed plans to mitigating these risks. The remaining risks will continue to be kept under review, with auditors monitoring compliance with the agreed actions as part of regular follow-up updates which will be reported to the Audit Committee. 5. People Implications 5.1 There are no people implications. 6. Financial and Procurement Implications 6.1 There are no direct financial implications arising from this report. 6.2 There are no procurement implications arising from this report. 7. Risk Analysis 7.1 There is a risk that failure to deliver the Internal Audit Plan would result in an inability to provide a minimum level of assurance over the Council’s system of internal financial control to those charged with governance. 8. Equalities Impact Assessment (EIA) 8.1 There is no requirement for an EIA. 9. Consultation Page 8
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9.1 This report has been subject to consultation with appropriate Chief Officers. 10. Strategic Assessment 10.1 This report helps ensure strong governance and will help support delivery of the Council Plan, and in particular priority 4: Inclusive and Adaptable, with the Council seeking to provide high quality and adaptable services that deliver value for money. .................................... Laurence Slavin Chief Officer - Resources Date: 10 June 2026 Person to Contact: Gillian McConnachie, Chief Internal Auditor E-mail: gillian.mcconnachie@eastdunbarton.gov.uk Appendices: 1 – Internal Audit Annual Report and Assurance Statement for the year ended 31 March 2026 Background Papers: Audit Committee – 10 December 2025: Internal Audit Plan 2025/26 Wards Affected: All wards Page 9
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West Dunbartonshire Council Internal Audit Annual Report 2025/26 Gillian McConnachie Chief Internal Auditor ITEM 5 APPENDIX 1 Page 11
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Annual Internal Audit Report 2025/26 This Annual Internal Audit Report is a summary of the activities of West Dunbartonshire Council’s (the Council) Internal Audit Team for the financial year 2025/26 and includes the internal audit opinion at Appendix 1.1. The opinion concludes on the adequacy and effectiveness of the Council’s framework of governance, risk management and control. It supports the annual governance statement which will be included in the annual accounts and financial statements. It considers the expectations of senior management, the Audit Committee and other stakeholders. It is supported by sufficient, reliable, relevant and useful information, as referenced in the body of this report. Through utilising such information, Internal Audit demonstrates compliance with relevant Internal Audit Standards - Global Internal Audit Standards in the UK Public Sector (GIAS-UKPS). Internal Audit Opinion The full statement and opinion provided at Appendix 1.1, confirms my opinion that the adequacy and effectiveness of the Council’s internal control systems, governance and risk management systems in the year to 31 March 2026 are concluded as being Generally Satisfactory with some improvement needed. This means members can be assured proper processes are in place to enable the achievement of the Council’s strategic priorities. Key Areas for Improvement In reaching this conclusion, I note risks raised by Internal Audit in the current year relating to Housing Repairs and Maintenance. Individually, these risks do not significantly impair the Council’s systems of internal control. Furthermore, management have reported progress and detailed plans to mitigating these risks. The remaining risks will continue to be kept under review, with auditors monitoring compliance with the agreed actions as part of regular follow- up updates which will be reported to the Audit Committee. The opinion at Appendix 1.1 represents a consolidated view, informed by several sources and, in bringing these together, considers whether there is evidence key controls are absent, inadequate or ineffective. The work includes an assessment of any weaknesses identified and whether these, taken independently or with other findings, significantly impair the Council’s system of internal control. Wider considerations relating to the Council’s corporate governance framework and risk management arrangements have also been reflected on in providing the opinion. The level of assurance provided by the Internal Audit Team can never be absolute. This reflects the sample nature of the work carried out, the relative scope and objectives of audit assignments and those explanations offered, and evidence provided by officers. In addition, factors external to the audit process including human error, collusion or management overriding controls as a potential for systems, historically highlighted as being satisfactory, to become exposed to risk or loss. Page 12
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Summary of Work Supporting the Opinion The opinion is informed by several sources, including the internal audit work completed in the year. Each audit assignment addresses a specific area of risk. The risk of fraud is also considered in each assignment, together with any governance or risk management implications. This allows the Council’s Chief Internal Auditor, to draw sustainable conclusions based on a range of activities that reflect the diversity of work carried out by the Council. The team has had a challenging year, with vacancies impacting on completion of the Audit Plan (the Plan). Whilst sufficient resources have been allocated by the Council to Internal Audit in its budget, resource limitations as a result of vacancies have impacted on the timely completion of the Plan. There have been vacancies at the Shared Service Manager, Lead Internal Auditor, Internal Auditor, and Audit Assistant levels. Whilst progress has now been made towards filling these vacancies there has been a material impact on the results of the team for 2025/26. Nonetheless, the following has been completed by the team in the year: • Follow up work on previously raised issues, including on the Housing Repairs and Maintenance Report which included two red and eleven amber findings. • Payroll high earners – quarterly review (quarters 1 to 2 completed) The team has completed the following in the year, in support of the annual audit opinion: • Void Management Audit • Housing Repairs and Maintenance Audit • Procurement Compliance Audit (nearing completion) • Payroll High Earners – Review – Quarters 1 and 2 • Internal Audit Follow up reports • Review of governance arrangements • Corporate Fraud Activity Whilst the audit work has fallen short of expectations for 2025/26, the team completes audit work on an ongoing basis and the Chief Internal Auditor includes other sources of assurance in reaching her opinion including the work completed in previous years by Internal Audit. A detailed comparison of the work carried out against the Plan is provided at Appendix 1.3. The opinion is also informed by follow up work, which involves reviewing the extent to which those risks previously identified have been subsequently managed or mitigated. Updates are a standard agenda item at Audit Committee and are also reported to the Council’s Senior Management Team. An update on outstanding audit actions is included in the Internal Audit Progress Report. The consolidated follow up work has identified that five actions to address a Red risk relating to the Adequacy of Housing Client Function from the Housing Repairs and Maintenance audit remain outstanding, with a revised target date of 30 June 2026. These Page 13
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actions will be followed up on during 2026/27. Whilst acknowledging the significant and ongoing work and the continued pressures on services, auditors ask for prioritised focus in closing off the remaining outstanding Red issues relating to the Housing Repairs and Maintenance audit. Additionally, the Council’s Chief Internal Auditor provides representation to the Glasgow City Deal Audit Support Group. The Group is a key requirement of the City Deal assurance framework and is an important consideration in the overall governance arrangements. Representatives of the group are required to provide an Assurance Statement on behalf of their councils, highlighting any concerns or weaknesses that may need to be taken into consideration by the Glasgow City Region Cabinet. Having reviewed City Deal activities within West Dunbartonshire Council, the wider governance arrangements within the Council, there were no material issues that needed to be brought to the attention of the Glasgow City Region Cabinet; the statement was therefore prepared on this basis. Internal Audit Output Summary The 2025/26 annual audit plan included provision for a direct allocation of 285 audit days and planned completion of three risk based audits, in addition to regularity audits and other work. The plan to deliver the programme represents the commitment of the team to deliver an opinion based on the widest possible range of audit work. Full details on these audits have been provided in the internal audit updates to Committee. This work supports both this Annual Audit Report and opinion and the Annual Governance Statement in the accounts. Where internal audit has identified risks in the areas reviewed, action plans have been agreed. The agreed actions are logged on the Ideagen Pentana performance management system and will be followed up on and progress reported back to the Audit Committee. Consideration of the Council’s management of risk forms part of the overall internal opinion for the year. When reviewing arrangements in place, auditors have noted that the Strategic Risks are regularly reviewed and updates presented to the Audit Committee, with this occurring in the year on 24 September 2025 and 18 February 2026. Standard Committee templates also include a section for the consideration of risk and control measures for all reports, under the heading of ‘Risk Analysis’. This promotes a risk aware culture. A Risk Management Strategy is in place, with risks being considered in the preparation of service Delivery Plans. The team has a suite of KPIs in place and these will be reported on at the next committee. It is expected that these results will reflect the vacancies in the team during the year and will act as a benchmark for improvements in 2026/27 and beyond. Full detail of the audits completed and in progress is provided at Appendix 1.3. Such cut-off and completion challenges can be managed in support of the annual audit opinion, provided that there is sufficient evidence to support the annual audit opinion each year. When taken together with the audit history over the last three financial years, as outlined at Appendix 1.4, it is the opinion of the Chief Internal Auditor that sufficient evidence has been obtained to enable the provision of the year end audit opinion. Page 14
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Annual Assurance - Several documents that collate the work of the Internal Audit team have been produced or are in progress as part of the team’s responsibility for annual assurance. These are: follow up reviews, the Annual Internal Audit Report (this document), the drafting of the Annual Governance Statements for inclusion in the Council, and, additionally, an Annual Audit Report on the Council’s audit work for the Integrated Joint Board and an assurance statement for City Deal. Audit Development Allocations of time to Audit Development represent resources dedicated to the development of quality processes, benchmarking and adherence to good practice requirements. An Internal Audit Satisfaction Survey has been developed for services to complete following the conclusion of each audit. The results of these surveys are monitored to identify opportunities for improvement within the service. Co-ordination with External Audit During the year under review, liaison has taken place with the Council’s External Auditors Forvis Mazars through joint attendance at the Audit Committee, meetings, ad hoc discussions and the sharing of audit plans and reports. Progress against improvement plans The Internal Audit service takes a ‘continuous improvement’ approach to our internal audit work. This is reflected in our reports and recommendations made to services and also in the approach to the internal audit work itself, with a focus in making incremental improvements to our work through efficiencies, and/or improved quality. This helps us to improve our quality and adherence to relevant Internal Audit Standards (GIAS-UKPS), and to focus on the areas of greatest risk and where we are able to add the most value. Impairments or Restriction of Scope There have been no impairments or restrictions of scope during the course of the year. Reliance on Other Assurance Providers The internal audit opinion also includes consideration of the work of other assurance providers. This includes those reports, where appropriate, issued by the Council’s external auditors, Forvis Mazars, and other scrutiny partners. Global Internal Audit Standards in the UK Public Sector – GIAS-UKPS The Internal Audit Team is required to work to a set of rules – GIAS-UKPIAS. These rules apply to all public sector internal auditor teams. It is a requirement of these standards that periodic self-assessments are conducted to evaluate conformance with the GIAS-UK. Under Section 7 (1) of the Local Authority Accounts (Scotland) Regulations 2014, the Council must operate a professional and objective internal auditing service in accordance with recognised standards and practices in relation to internal auditing. The Council defines such standards as those set out within the GIAS-UKPS. Page 15
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The Public Sector Internal Audit Standards (PSIAS) were the previous applicable standards that the Internal Audit team conformed with. From 1 April 2025 GIAS-UKPS became the applicable standards. To ensure compliance with prevailing standards the service works to quality methodology, as set out in the audit manual. The audit manual has been previously specified to comply with Public Sector Internal Audit Standards which were the previous applicable standards. The GIAS-UKPS are the new applicable standards and there has been an initial consideration of processes against the GIAS-UKPS. This assessment has identified the following areas as requiring further improvements to ensure full conformance: • Root cause analysis • Documentation of the evaluation of controls in working papers The above actions will be progressed in 2026/27. The transition plan to achieve full conformance with GIAS-UKPS has been extended into the year 2026/27 and will be carried out by the Chief Internal Auditor and the results reported to the Audit Committee. In addition, an external quality review will be required to be carried out against GIAS-UKPS. This will be arranged as a peer review via the Scottish Local Authority Chief Internal Auditors Group. Questionnaires have been made available to services to complete for each audit assignment and provide an opportunity for the auditee to provide feedback on the planning process, communication and the quality of the internal audit report. All audit files are reviewed by the Lead Auditor or the Chief Internal Auditor to ensure high standards are maintained and to encourage a continuous improvement approach by the team. Other Issues I am aware of no other material issues that require to be reported at this time. Page 16
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Appendix 1.1 STATEMENT ON THE ADEQUACY AND EFFECTIVENESS OF THE INTERNAL CONTROL ENVIRONMENT OF WEST DUNBRTONSHIRE COUNCIL FOR 2025/26. To the Elected Members of West Dunbartonshire Council, the Chief Executive, the Chief Officer – Resources (Section 95 Officer), and the Corporate Management Team As the Chief Internal Auditor of West Dunbartonshire Council, I am pleased to present my annual statement on the adequacy and effectiveness of the internal control system of the Council for the year ended 31 March 2026. Respective Responsibilities of Management and the Internal Audit Team in Relation to Governance, Risk Management and Internal Control It is the responsibility of the Council’s senior management to establish appropriate and sound systems of governance, risk management and internal control to monitor the continuing effectiveness of those systems. It is the responsibility of the Council’s Chief Internal Auditor to provide an annual overall assessment of the robustness of governance, risk management and internal control. The Council’s Framework of Governance, Risk Management and Internal Controls The main objectives of the Council's framework of governance, risk management and internal controls are to ensure that resources are directed in accordance with agreed plans, policies and priorities and to ensure that there is sound decision−making and clear accountability for the use of those resources in order to achieve the desired outcomes for service users and communities. This includes ensuring appropriate internal controls and risk management arrangements are in place in order to effectively manage issues which might impact on the delivery of Council services, the achievement of corporate and service priorities and public confidence in the Council. The Council also requires effective internal controls and risk management arrangements to safeguard its employees, protect its assets, maintain effective stewardship of public funds, ensure good corporate governance, ensure compliance with statutory requirements and ensure it continues to deliver best value. A system of control can only ever provide reasonable and so not absolute assurance that control weaknesses or irregularities do not exist. It cannot guarantee there is no risk of material errors, losses, fraud, or breaches of laws or regulations. Nonetheless, the Council is continually seeking to improve the effectiveness of its systems of governance, risk management and internal controls in order to minimise these risks. The Work of the Internal Audit Team Internal audit is an independent appraisal function, established by the Council in line with statutory requirements to review the internal control system. This function is provided as a service to the organisation as a whole. The Internal Audit Team objectively examines, Page 17
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evaluates and reports on the adequacy of internal controls in place to mitigate risks to achievement of the Council’s strategic priorities. The Internal Audit Team has undertaken a programme of work in the year, in line with the Audit Plan which was produced in consultation with Senior Management and key stakeholders, to understand the key risks facing the Council. All Internal Audit reports identifying system weaknesses, risks and/or non-compliance with expected controls are brought to the attention of senior management and significant findings presented to the Audit Committee. Audit reports and action plans provide insight into the risks identified and include an agreed narrative highlighting the Service’s intended course of action, including the timescales involved to mitigate and manage the risk. It is management’s responsibility to ensure proper consideration is given to internal audit reports and appropriate action is taken on those risks identified. The Internal Audit team is required to ensure appropriate arrangements are made to determine whether action has been taken on agreed reports or, where appropriate, that management has understood and assumed the risk of not taking action. Significant matters (including non-compliance with audit recommendations) arising from internal audit work are reported to the Audit Committee and Senior Officers. Auditors have noted that some risks previously highlighted by auditors remain ‘in progress’. Management have reported progress towards mitigation of these issues and Auditors will monitor compliance with the agreed actions as part of a regular follow-up cycle, and updates being reported to the Audit Committee. Impairments or Restriction of Scope There have been no impairments or restrictions of scope during the course of the year. Basis of Opinion My evaluation of the control environment is informed by a number of sources: • The audit work undertaken by Internal Audit during the year to 31 March 2026. • Internal audit work undertaken in previous years and the follow up work undertaken in 2025/26. • The assessment of risk completed during reviews of the annual audit plan. • The Code of Good Governance self-assessment process undertaken by the Chief Officers for the services for which they were responsible during the year to 31 March 2026. • The Council’s Annual Governance Statement for the year ended 31 March 2026. • Reports issued by the Council’s External Auditors, Forvis Mazars, and other review agencies. • My knowledge of the Council’s governance, risk management and performance management and monitoring arrangements. Page 18
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Opinion It is my opinion that the adequacy and effectiveness of the Council’s governance, risk and control framework is Generally Satisfactory with some improvement needed for the year to 31 March 2026. Gillian McConnachie CA Chief Internal Auditor 10 June 2026 Page 19
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Annual Opinion Types Satisfactory Controls evaluated are adequate, appropriate and effective to provide reasonable assurance that risks are being managed and objectives should be met. • A limited number of Amber rated issues may have been identified, but generally only green issues have been found in individual audit assignments. • None of the individual assignment reports have an overall opinion of Requires Improvement or Unsatisfactory. Generally Satisfactory with some improvement needed A few specific control weaknesses were noted: generally however, controls evaluated are adequate, appropriate and effective to provide reasonable assurance that risks are being managed and objectives should be met. • A number of Amber rated issues identified in individual audit assignments that collectively do not significantly impact the system of internal control. • Red rated issues that are isolated to specific systems or processes. • None of the individual assignment reports have an overall opinion of Unsatisfactory. Major improvement needed Numerous specific control weaknesses were noted. Controls evaluated are unlikely to provide reasonable assurance that risks are being managed and objectives should be met. • A high number of Amber rated issues that collectively have a significant impact on some parts of the system of internal control but are not widespread. • A number of Red rated issues that collectively have a significant impact on some parts of the system of internal control but are not widespread. • A small number of individual assignment reports have an overall opinion of Requires Improvement or Unsatisfactory. Unsatisfactory Controls evaluated are not adequate, appropriate or effective to provide reasonable assurance that risks are being managed and objectives should be met. • Amber and Red rated issues identified in individual assignments that collectively are widespread to the system of internal control. • A high number of individual assignment reports have an overall opinion of Requires Improvement or Unsatisfactory. Page 20
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Progress on the 2025-26 internal audit plan Planned audit coverage 2025/26 Status Risk Based Reviews Budgetary Control (c/f 24/25) In progress Care At Home - Delayed Discharge Arrangements Deferred to 26/27 Estates – Commercial and Industrial Property Rents and Leases Deferred to 26/27 Regularity Audits High Earners – Quarterly check In progress (complete for Quarters 1 to 2) Section Payments Not completed Education Control Self-Assessment Not completed Corporate Purchase Cards – quarterly check Not completed ALEO Review West Dunbartonshire Leisure Trust Not completed IJB Review West Dunbartonshire Integrated Joint Board In progress and nearing completion. VJB Review Valuation Joint Board Not completed The following audits from the 2024/25 plan were completed or are nearing completion: 24/25 Audit Plan Completion Status Risk Based Reviews Void Management Complete Housing Repairs and Maintenance Complete Procurement Compliance Nearing completion Page 21
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Audit History – Audits completed over last 3 years Report Title Status Findings Control Environment Opinion Red Amber Green Risk Based Reviews Completed in 2025/26 Housing Repairs and Maintenance Final Report 2 11 3 Requires Improvement Void Management Final Report 0 4 4 Satisfactory Procurement Compliance Substantially Complete TBC TBC TBC No significant issues identified to date Completed in 2024/25 Commercial Waste Income Billing and Collection Final Report 0 3 3 Satisfactory Debt Recovery Final Report 0 1 2 Satisfactory UK Shared Prosperity Fund Final Report 0 3 1 Satisfactory Completed in 2023/24 Corporate Complaints Complete 1 4 0 Requires Improvement Supporting Employee Attendance Complete 0 4 2 Satisfactory FM Cleaning – Stock Control Complete 0 5 1 Satisfactory Corporate Procurement – Procurement under £10k Complete 0 1 1 Satisfactory Non-Domestic Rates (Limited scope) Complete 0 3 4 Satisfactory Page 22
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Grading definitions: Grade Definition Strong In our opinion there is a sound system of internal controls designed to ensure that the organisation is able to achieve its objectives. Satisfactory In our opinion isolated areas of control weakness were identified which, whilst not systemic, put some organisation objectives at risk. Requires Improvement In our opinion systemic and/or material control weaknesses were identified such that some organisation objectives are put at significant risk. Unsatisfactory In our opinion the control environment was considered inadequate to ensure that the organisation is able to achieve its objectives. Report Title Status Findings Control Environment Opinion Red Amber Green Education Control Self- Assessment Complete 0 3 1 Satisfactory HSCP – Imprest Complete 0 2 2 Satisfactory Page 23
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – Resources Audit Committee – 10 June 2026 Subject: Annual Report on the Audit Committee – 2025/26 1. Purpose 1.1 The purpose of this report is to provide members with the Audit Committee Chair’s 2025/26 Annual Report on the Audit Committee. 2. Recommendations 2.1 It is recommended that members: i) Review and endorse the Chair’s Annual Report on the Audit Committee for 2025/26. ii) Agree that the report should be presented to a future meeting of the Council in line with best practice guidance. 3. Background 3.1 It is important that the Committee fully complies with best practice guidance on Audit Committees to ensure it can demonstrate its effectiveness as a foundation for sound corporate governance for the Council. The Chartered Institute of Public Finance and Accountancy (CIPFA) issued an updated guidance note Audit Committees Practical Guidance for Local Authorities and Police 2022 Edition which incorporates CIPFA’s Position Statement: Audit Committees in Local Authorities and Police. This sets out CIPFA’s view of the role and functions of an Audit Committee. The CIPFA Audit Committee Guidance includes the production of an annual report on the performance of the Audit Committee against its remit for submission to the Council. 3.2 The Audit Committee Chair’s 2025/26 Annual Report, attached at Appendix 1, provides assurance to the Council over the activity of the Audit Committee. 4. Main Issues 4.1 The Audit Committee Chair’s 2025/26 Annual Report is appended with the main issues identified being: • The Audit Committee has met four times during the financial year with every meeting being quorate. • The Audit Committee sought assurance on the adequacy and effectiveness of the Council’s systems of corporate governance and internal control for efficient operations and for the highest standards of ITEM 6 Page 25
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probity and accountability. This was achieved through reports received from internal audit, other Council functions and external audit with focus in particular on internal control and governance. • The Audit Committee has provided assurance to West Dunbartonshire Council (the Council) as detailed in the appendix. 5. People Implications 5.1 There are no personnel issues with this report. 6. Financial and Procurement Implications 6.1 There are neither financial nor procurement implications arising directly from this report. 7. Risk Analysis 7.1 There is a risk that the Audit Committee does not comply with best practice guidance in relation to demonstrating its effectiveness in providing a foundation for sound corporate governance. The annual report provides this assurance to the Council on the activity of the Committee. 8. Equalities Impact Assessment (EIA) 8.1 There is no requirement for an EIA. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. In addition, services have been consulted in the update of action plans. 10. Strategic Assessment 10.1 This report helps ensure strong governance and will help support delivery of the Council Plan, and in particular priority 4: Inclusive and Adaptable, with the Council seeking to provide high quality and adaptable services that deliver value for money. .................................... Laurence Slavin Chief Officer - Resources Date: 10 June 2026 ______________________________________________________________ Person to Contact: Gillian McConnachie, Shared Chief Internal Auditor E-mail: gillian.mcconnachie@eastdunbarton.gov.uk Appendix: 1 - Annual Report on the Audit Committee 2025/26 Page 26
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Background Papers: N/A Wards Affected: All Wards Page 27
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West Dunbartonshire Council Audit Committee 2025/26 Annual Report from the Chair Introduction This annual report has been prepared to inform West Dunbartonshire Council of the work carried out by the Council’s Audit Committee during the financial year 2025/26. Meetings The Audit Committee met four times during 2025/26 comprising meetings on 11 June, 24 September, 10 December and 18 February to consider reports relevant to the Audit cycle and other matters as deemed appropriate. Pre-Agenda meetings were also held ahead of Committee involving the Chair and appropriate officers. The purpose and remit of Audit Committee as detailed in the Council’s Standing Orders is to: • Monitor and make recommendations on the development of the Audit activity of the Council. • Scrutinise the monitoring and review activity of the thematic and regulatory committees. To fulfil this remit, the Audit Committee sought assurance on the adequacy and effectiveness of the Council’s systems of governance, risk management and internal control to ensure efficient operations and the highest standards of probity and accountability. This was achieved through reports received from Internal Audit, other Council functions and External Audit with focus in particular on internal control and governance. At each meeting of the Audit Committee it considered significant findings from Internal Audit reports together with monitoring the progress made by management in completing agreed actions to improve the Council’s control environment. It also considered the external audit Annual Audit Plan for the 2024/25 audit from the external auditors (Forvis Mazars). The Audit Committee also received reports on: • External audit progress report • Global Internal Audit Standards • Review of Internal Audit Charter • Prudential Indicators and Treasury Management. • Risk Management. • National Fraud Initiative. ITEM 6 APPENDIX 1 Page 29
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• Public Interest Disclosures and other Internal Audit Investigations • Annual Complaints Report 2024/2025. • Code of Good Governance and the Annual Governance Statement. • Best Value Thematic Review – Transformation. The minutes of Audit Committee meetings are first confirmed as a correct record at the next Audit Committee before being remitted to Council for approval. Membership of the Audit Committee In accordance with West Dunbartonshire Council’s Standing Orders membership of the Audit Committee comprises eight Elected Members and one Lay Member who is not a member of any political party. The quorum of the Audit Committee is three Elected Members. The Chair of the Audit Committee is from the Opposition (as is the Vice Chair). Every meeting of the Audit Committee during 2025/26 was quorate. Attendance by Officers All meetings were attended by the Chief Executive and Chief Officer – Resources. Other senior officers also attended meetings as appropriate for items on the Agenda for which their presence was relevant. Representatives from the Council’s external auditors – Forvis Mazars - were present at relevant meetings. Assurance Statement to the Council The Audit Committee provides the following assurance to the Council: • The Council has received the Minutes of the Audit Committee meetings throughout the year. • The Audit Committee has operated in accordance with its agreed terms of reference, and accordingly with the audit committee principles in the CIPFA Position Statement relating to its Audit functions. • It did this through reports received from Internal Audit, External Audit, and assurances from Management. It focussed on matters of governance, risk management and internal control; giving advice to the Council on the value of the audit process; on the integrity of financial reporting; and on governance arrangements. • For all audit reports, the Audit Committee considered whether it was satisfied that an adequate management response was in place to ensure action would be taken to manage risk and address concerns on governance, risk management and internal control arrangements. The Committee acknowledges that all the audit recommendations are input to Ideagen Pentana, the Council’s performance management system, and that there is a system in place of ongoing follow-up by Internal Audit and reporting thereon. Page 30
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• The Audit Committee has received and considered material to fulfil its scrutiny role on treasury management activity. Conclusion Based on the reports received and reviewed by the Committee, the Committee is in agreement with the Chief Internal Auditor’s annual audit report which confirms that reasonable assurance can be placed upon the adequacy and effectiveness of the Council’s internal control system in 2025/26. I am satisfied that active monitoring and follow up of recommendations is in place in respect of agreed management action. Councillor Scanlan Chair of the Audit Committee 10 June 2026 Page 31
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – Resources Audit Committee – 10 June 2026 ___________________________________________________________________ Subject: 2026/27 Internal Audit Planning 1. Purpose 1.1 The purpose of this report is to advise members of the approach to planning for the Internal Audit Section for the year 2026/27. 2. Recommendations 2.1 It is recommended that Members approve the 2026/27 Internal Audit Planning document and proposed 2026/27 allocation of Internal Audit resources set out in the plan which is included as Appendix 1. 3. Background 3.1 The Global Internal Audit Standards include the requirement for the Chief Internal Auditor to prepare a risk-based plan to determine the priorities of the internal audit activity, consistent with the organisation’s goals. 4. Main Issues 4.1 Internal Audit is an assurance function that primarily provides an independent and objective opinion to the organisation on the control environment comprising governance, risk management and controls by evaluating its effectiveness in achieving West Dunbartonshire Council’s (the Council) objectives. It objectively examines, evaluates and reports on the adequacy of the control environment as a contribution to the achievement of the Council’s vision and priorities. 4.2 The Local Authority Accounts (Scotland) Regulations 2014 require a local authority to operate a professional and objective internal auditing service which is provided in accordance with recognised internal auditing standards and practices. These standards and practices are set out in the Global Internal Audit Standards (UK public sector), ‘GIAS-UKPS’ and require Internal Audit to have suitable operational independence from the Council. 4.3 The internal audit planning document for 2026/27 has been drafted and is included at Appendix 1. This outlines the planned approach and areas of focus for the year ahead. 5. Personnel Implications 5.1 There are no personnel issues with this report. ITEM 7 Page 33
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6. Financial and Procurement Implications 6.1 There are neither financial nor procurement implications arising directly from this report. 7. Risk Analysis 7.1 The Plan has been constructed taking cognisance of the risks associated with major systems. Consultation with relevant Chief Officers has been carried out to ensure that risks associated with delivering the Council’s objectives have been considered. 8. Equalities Impact Assessment (EIA) 8.1 There are no issues. 9. Consultation 9.1 Discussions will take place with senior management in relation to the detailed implementation of the proposed annual Internal Audit plan coverage. Further detail on the audit plan will be brought to a future Audit Committee. 10. Strategic Assessment 10.1 This report relates to all five of the Council’s Strategic Priorities. Laurence Slavin Chief Officer - Resources Date: 10 June 2026 Person to contact Gillian McConnachie, Chief Internal Auditor Email: gillian.mcconnachie@eastdunbarton.gov.uk Appendices: 1 - Internal Audit Planning 2026/27 Background Papers: None Wards Affected: All wards Page 34
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West Dunbartonshire Council Internal Audit Planning 2026/27 ITEM 7 APPENDIX 1 Page 35
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Internal Audit Planning 2026/27 Background The Annual Internal Audit Plan is prepared on an annual basis, detailing the work that the Council’s Internal Audit team plan to carry out in the year ahead. Planning the work is important to demonstrate that Internal Audit is proactive and that the activities are targeted to areas of risk and need. The Plan also must be flexible so that Internal Audit can react to events that might happen during the year. The Annual Internal Audit Plan is prepared by the Council’s Chief Internal Auditor and presented to the Audit Committee. Plan The plan for 2026/27 is specified to provide adequate evidence relating to the Council’s systems to enable the Council’s Chief Internal Auditor to provide a year-end opinion. This will be closely monitored and the Audit Committee will be kept informed of any change in the situation, with resources and expected outturn monitored as the year progresses. Planning Process The planning process begins with Internal Audit’s perspective included in a documented annual risk assessment. This is then compared to Senior Management’s expectations and assessment of risks. This includes not only our understanding of systems and controls but also the Council’s goals, external risks and current economic climate. The following alternative sources of assurance are also considered at the planning stage: external reports on the Council, the Council’s performance reports, reporting Risk Management, and where improvements are required. All auditors in the team have an accounting, risk management or internal audit qualification. When one of our stakeholders reads a Council Internal Audit Report they can be assured that is has been prepared with due recognition of the all the best practices, ethics and professional responsibilities, as is required. Having worked through all of the above, Internal Audit have a considerable amount of information and potential areas for review. Internal Audit cannot cover all areas of risk and we need to make sure what we plan to do is manageable and balanced against the abilities of the team. The Plan for 2026/27 includes a number of key areas of need to be reported on across the areas of Risk-based reviews, Regularity Audits and Other Work including for the Integrated Joint Board. The finalisation of the Plan will be delegated to the Chief Internal Auditor at the beginning of the 2026/27 financial year and further detail brought back to the Audit Committee. However, and consistent with prior years audit days will be assigned in the Plan to each assignment, based on an assessment of the relative risks of the audits planned and the expected complexities involved in undertaking the audit work. The work has been planned to enable us to draw conclusions on the Council as a whole. Future Reporting will determine the focus of the Internal Audit Team with the following principles continuing to apply: Page 36
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• The internal audit team will remain flexible and responsive to emerging risks and requests for assurance over new processes. This may lead to changes to the plan in the course of the year and ensures that the work remains risk focussed; and, • Service demands, audit resource availability, key officer availability and the skills mix of the individual members of the internal audit team will also be considered when scheduling audits. Key areas of Audit Focus Our ambitious plan of work continues to identify the following as key areas for review. These will be reviewed across the period to March 2027 subject to agreement with the Corporate Management Team and future reporting to the Audit Committee. • Key financial controls • Assets • Emerging areas of risk, for example new systems • Education Work will continue on the ‘in progress’ Budgetary Control and Procurement Compliance audits, carried forward from the 2025/26 audit plan into Q1 of 2026/27. Consideration has also been given as to how the Internal Audit plan aligns to the Council’s priorities. Audits will consider whether the controls in place are adequate to support the achievement of the system’s objectives. Although audits do not formally assess Best Value, the team seeks to identify ways in which processes can be improved and will highlight any areas where efficiencies can be achieved. Further detail on the audit plan will be brought back to the next committee meeting following the summer recess. Page 37
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Internal Audit Plan – Working to a Standard The Internal Audit Plan Planning for 2026/27 is based on a documented risk assessment process. The process uses the Council’s existing Risk Registers, the expectations of stakeholders, whilst considering the Council’s Strategic Plan and priorities. Planning takes into account the requirement to produce an annual audit opinion. This opinion is delivered through the statement on the adequacy and effectiveness of the Council’s framework of governance, risk management and internal controls. The statement is included within the ‘Internal Audit Annual Report’ presented to the first meeting of the Audit Committee following the end of the financial year and is used to inform the governance statement included in the annual accounts. Planning is linked to the Internal Audit Charter, ensuring that activities are consistent with existing direction, organisational objectives and priorities. The Internal Audit team also provides consultancy work on the basis that these assignments improve management of risks, add value and improve the Council’s operations. Provision for the completion of one consultancy note is included in the planned activities for the year. Audit Resources The Chief Internal Auditor plans to confirm that, in her opinion, their planned resources are appropriate and sufficient and will be effectively deployed to provide the required assurances to stakeholders. The provision of the internal audit service is through a directly employed in-house team. The Chief Internal Auditor is provided through a shared post arrangement with East Dunbartonshire and Inverclyde Councils. Planning is developed to ensure that staff availability, qualifications, experiences and skills are sufficient and appropriate. The process is supported by the Council’s ‘Be the Best Conversations’ framework, providing an ongoing mechanism to set personal objectives, development and training. In relation to the total staff days allocated to the 2026/2027 plan, a resource allocation spreadsheet is completed for each member of staff which is split between annual leave, public holidays, training days, general administration and operational plan days. The combined operational plan is 396 days which will be resourced as is shown in Table 1. Staff training and coaching are being used to good effect to aid in delivery of the Plan. In addition, the budgeted allocation for administrative time has been reviewed to ensure that the application of resources continues to be reasonable. The Chief Internal Auditor does not directly carry out the assignments included in the annual audit plan but provides the technical quality review and oversight of the delivery of the overall plan. Time is also set aside for overall audit planning, reporting on Internal Audit performance and attending Audit Committee. Where there are any resource issues which may impact on delivery of the plan, this will be reported to Audit Committee at the earliest opportunity. Given the range and complexity of areas to be reviewed it is important that suitable, qualified, experienced and trained individuals are appointed to internal audit positions. The Global Internal Audit Standards in the UK Public Sector (GIAS-UKPS) require that the Chief Page 38
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Internal Auditor must hold a professional qualification such as CMIIA (Chartered Internal Auditor), CCAB or equivalent and be suitably experienced. Internal audit staff members identify training needs as part of an appraisal process and are encouraged to undertake appropriate training, including in-house courses and external seminars as relevant to support their development. All training undertaken is recorded in a personal training record for CPD purposes. Internal audit staff members require to conform to the Code of Ethics of the professional body of which they are members and to the Code of Ethics included within the Global Internal Audit Standards. An annual declaration is undertaken by staff in relation to specific aspects of the Code. Following each review, audit reports are issued in draft format to agree the accuracy of findings and agree risk mitigations. Copies of final audit reports are issued to the relevant Chief Officer and Service Manager responsible for implementing the agreed action plan. A copy of each final audit report is also provided to External Audit. The overall opinion of each audit report feeds into the Internal Audit Annual Report and Assurance Statement which is presented to the Audit Committee and is used by the s95 Officer in the preparation of the Annual Governance Statement. Policies and Procedures The Internal Audit Manual serves as the Internal Audit Team’s policies and procedures. The Internal Audit Manual is aligned to the provisions of the Public Sector Internal Audit Standards and, in complying with the manual, the team is demonstrating compliance with the standards. The Public Sector Internal Audit Standards (PSIAS) were the previous applicable standards that the Internal Audit team conformed with. From 1 April 2025 GIAS- UKPS became the applicable standards. The Manual is reviewed on an ongoing basis with significant reviews taking place following changes in guidance, good practice or prevailing standards. A full review will be undertaken in 2026/27, to ensure full compliance with Global Internal Audit Standards in the UK Public Sector (GIAS-UKPS). Coordination with External Scrutiny Bodies The Chief internal Auditor is required to share information with other providers of assurance and consulting services to ensure proper coverage and minimise duplication of efforts. The External auditors, Forvis Mazars, audit plan for 2024/25 accounts includes a statement that they do not expect to use the work of the internal audit function for the purpose of their audit. Nonetheless, they will obtain the reports issued by internal audit relating to the financial period under audit to determine whether any findings will have an impact on our risk assessment and planned audit procedures. Reporting to Senior Management and the Board As part of this plan, the Chief Internal Auditor will prepare and present regular performance reports to the Audit Committee over the course of the financial year. The internal audit monitoring reports will review progress against the original plan in the interests of Page 39
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consistency and accountability. Performance reports will capture the activities of the Internal Audit Team relative to the original plan. Ongoing reporting will also highlight specific issues as they relate to risk exposures, control issues, fraud, governance or any other matters that the Chief Internal Auditor deems appropriate for consideration by the Committee. Significant issues will also be captured within the annual internal audit report. On an annual basis, the Chief Internal Auditor will provide a report that will include the purpose, authority and responsibilities relative to the plan but also any significant issues noted in the above. 2026/27 Audit Work The indicative planned number of days allocated to audit area is Table 1 and Table 2 provides a breakdown of the allocation of resources to Audit development. Internal Audit activity evaluates and contributes to the improvement of governance, risk management and control processes using a systematic and disciplined approach as outlined in the Internal Audit Charter. Planned audit work includes consideration of a number of different types of assignments including assurance audits, regularity and consultancy work. This varied application of audit resources ensures that different aspects of Council business have been subjected to testing, with assurances being sought over a range of activities. Overall Opinions Following the completion of the audit plan an overall opinion will be issued, taking into account the strategies, priorities and risks of the Council and the expectations of senior management, the Audit Committee and other stakeholders. The overall opinion must be supported by sufficient, reliable, relevant and useful information. Page 40
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Internal Audit Plan – Allocations and Activities TABLE 1 – Days Allocated by Audit Type Audit Type Days Audit 336 Regularity 30 Consultancy 30 Total 396 TABLE 2 – Days Allocated to Internal Audit Development Audit Development Days Training & Research 12 Supervision & Management of Staff 31 Administration 60 GIAS Review / Quality Assessment & Review 9 IA Performance Monitoring 18 Total 130 Page 41
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – Resources Audit Committee – 10 June 2026 Subject: Internal Audit Plan 2025/26 – Progress to 30 April 2026 1. Purpose 1.1 The purpose of this report is to advise Members of progress to 30 April 2026 against the Internal Audit Plan for 2025/26. 1.2 The report also advises Members of: • recently issued Internal Audit reports and action plans • the status of implementation progress relating to action plans from previously issued Internal Audit reports. 2. Recommendations 2.1 It is recommended that Members note the contents of this report. 3. Background 3.1 The annual audit plan for 2025/26 was approved by the Audit Committee on 10 December 2025. This report provides information on the progress in implementing the plan. 3.2 When audit reports are issued by Internal Audit, an action plan is agreed with management in relation to issues highlighted by the audit report. Progress on implementing the actions is monitored by Internal Audit on a monthly basis and reported to the Audit Committee. 4. Main Issues 4.1 The annual audit plan sets out the audit coverage for the year utilising available staff resources to enable the Chief Internal Auditor to provide the annual internal audit opinion regarding the adequacy and effectiveness of internal control within West Dunbartonshire Council (the Council). 4.2 In accordance with the risk-based audit methodology, for each audit, one of four audit opinions is expressed: Strong In our opinion there is a sound system of internal controls designed to ensure that the organisation is able to achieve its objectives. Satisfactory In our opinion isolated areas of control weakness were identified which, whilst not systemic, put some organisation objectives at risk. ITEM 8 Page 43
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Requires Improvement In our opinion systemic and/or material control weaknesses were identified such that some organisation objectives are put at significant risk. Unsatisfactory In our opinion the control environment was considered inadequate to ensure that the organisation is able to achieve its objectives. 4.3 Detailed findings and recommendations reported to management are graded using the following criteria: Red In our opinion the control environment is insufficient to address the risk and this could impact the Council as a whole. Corrective action must be taken and should start immediately. Overseen to completion by Corporate Management Team. Amber In our opinion there are areas of control weakness which we consider to be individually significant but which are unlikely to affect the Council as a whole. Corrective action must be taken (some exceptions may be agreed with Internal Audit) within reasonable timeframe. Overseen to completion by Chief Officer/Head of Service. Green In our opinion the risk area is well controlled or our audit highlighted areas for minor control improvement and/or areas of minor control weakness. Process improvements/efficiencies may be actioned at management discretion in consultation with Internal Audit. Managed by service owner. Not reported in Audit Committee papers. 4.4 There have been no audit reviews finalised since the February 2026 Audit Committee. This has been primarily due to vacancies within the team including the Shared Service Manager, a full time Auditor post and an Audit Assistant. Previously there has been a Shared Service Manager covering West Dunbartonshire and Inverclyde Councils. This arrangement has now been extended to include East Dunbartonshire Council from 1 April 2026, with a Chief Internal Auditor covering the three Councils. 4.5 Notwithstanding the above resource challenges, work has continued on Budgetary Control and on Investigatory work. In addition, work on Procurement Compliance is nearing completion, with no significant issues identified to date. 4.6 In relation to audit work for the Integration Joint Board, planning is now underway for the 2025-26 audit plan with regular reporting to the Integration Joint Board Audit & Performance Committee. This work is expected to be completed in May 2026. 4.7 In relation to the Valuation Joint Board, planning for the 2025-26 audit has not yet started. 4.8 In relation to the Leisure Trust, planning for the 2025-26 audit has not yet started. Page 44
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Internal Audit Action Plans 4.9 In relation to audit action plans, these are monitored by Internal Audit on a monthly basis. The status report at 30 April 2026 is provided at Appendix 2. Ongoing Corporate Fraud Team Work 4.10 The Corporate Fraud team’s day to day work continues to focus on referrals relating to council tax reduction/single person discounts, joint working with DWP in relation to housing benefit and council tax reduction, referrals relating to housing tenancies and investigating relevant national fraud initiative matches. 4.11 The Internal Audit Team and the Corporate Fraud Team continue to work together as appropriate in order to ensure a joined-up approach to fraud investigation and detection for example in relation to whistleblowing enquiries. National Fraud Initiative 4.12 The National Fraud Initiative is a series of biennial exercises run by the Cabinet Office and Audit Scotland to identify or prevent fraud and error by matching electronic data held by public bodies. Participating bodies are required to investigate data discrepancies within a set timescale and report back on any savings. 4.13 In relation to the 2024 exercise, a significant number of matches were received in relation to a range of datasets including Housing Benefit, Council Tax Reduction, Payroll, Business Rates, Creditors and Blue Badges. This work is substantially complete and a report will be brought back on the results to the next Audit Committee following the summer recess. Benchmarking 4.14 In accordance with the Council’s Strategic Improvement Framework, the Council’s Internal Audit service continues to be part of a benchmarking group which involves seven other Councils. 5. People Implications 5.1 There are no people implications. 6. Financial and Procurement Implications 6.1 The Corporate Fraud Team activity can result in actual recoveries, charges and re-billings. The total amount of actual recoveries, charges and re-billings identified from 1 April 2025 to 31 March 2026 is being calculated and an update will be provided to the next Committee. 6.2 There are no procurement implications arising from this report. 7. Risk Analysis 7.1 There is a risk that failure to deliver the Internal Audit Plan would result in an inability to provide a reasonable level of assurance over the Council’s system of internal financial control to those charged with governance. The main basis for providing assurance is coverage of the planned risk-based audits. Every Page 45
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endeavour is made to ensure that no material slippage occurs in risk-based audits by concentrating resources on these audits. 8. Equalities Impact Assessment (EIA) 8.1 There are no direct equalities impacts arising from the report however where an agreed action results in a change in process this will be considered for equalities impact by the relevant service. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. 10. Strategic Assessment 10.1 This report helps ensure strong governance and will help support delivery of the Council Plan, and in particular priority 4: Inclusive and Adaptable, with the Council seeking to provide high quality and adaptable services that deliver value for money. .................................... Laurence Slavin Chief Officer - Resources Date: 10 June 2026 Person to Contact: Gillian McConnachie, Chief Internal Auditor E-mail: gillian.mcconnachie@eastdunbarton.gov.uk Appendices: 2025/26 Annual Audit Plan – Progress to 30 April 2026 (Appendix 1) Status of Internal Audit Action Plans at 30 April 2026 (Appendix 2) Internal Audit Reports - Copies available on request Wards Affected: All wards Page 46
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2025-2026 Internal Audit Annual Audit Plan – Progress to 30 April 2026 Audit/Status Not Started Planning Fieldwork Fieldwork Complete Draft Report Final Report Date Reported to Audit Committee Risk-Based Reviews Budgetary Control ✓ ✓ Care at Home – Delayed Discharge Arrangements ✓ Estates – Commercial and Industrial Properties Rent and Leases ✓ Regularity Audits Payroll High Earners – Quarterly Review Q1-2 completed. Section Payments (HSCP) Not started. Not started. Education Control Self-Assessment Exercise Not started. Corporate Purchase Cards – Quarterly Checks Not started. Other Work Integration Joint Board – Internal Audit Service The 2025/26 audit plan is in progress and expected to be completed May 2026. Valuation Joint Board – Internal Audit Service Not started. Leisure Trust – Internal Audit Service Not started. National Fraud Initiative Matches for the 2024 Exercise is substantially complete. Completion of 24/25 Audit Plan Audits Completed: Void Management and Repairs and Maintenance. Procurement Compliance nearing completion (no significant issues identified to date). ITEM 8 APPENDIX 1 Page 47
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STATUS OF INTERNAL AUDIT ACTIONS AT 30 APRIL 2026 Summary: Section 1 Summary of Management Actions due for completion by 30/04/2026 There were no actions due for completion by 30 April 2026. Section 2 Summary of Current Management Actions at 30/04/2026 At 30 April 2026 there were no audit reports delayed due to management not finalising the action plan within agreed timescales. Section 3 Current Management Actions at 30/04/2026 At 30 April 2026 there were 14 current audit actions. Section 4 Analysis of Missed Deadlines At 30 April 2026 there were 8 audit actions where the original agreed deadline has been missed. Section 5 Summary of Actions by Audit Year ITEM 8 APPENDIX 2 Page 49
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTIONS SUMMARY OF ACTION PLANS DUE FOR COMPLETION BY 30.04.2026 SECTION 1 2 Strategic Area No. of Actions Due No. of Actions Completed Deadline missed Revised Date set* Revised Date required to be set* There were no audit actions due by 30 April 2026 Total * These actions are included in the Analysis of Missed Deadlines – Section 4 Page 50
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTIONS SUMMARY OF CURRENT ACTION PLANS AT 30.04.2026 SECTION 2 3 CURRENT ACTIONS BY STRATEGIC AREA Roads and Neighbourhood Due for completion September 2026 1 Total Actions 1 Education Due for completion June 2026 1 Total Actions 1 Housing & Employability Due for completion June 2026 7 Due for completion July 2026 3 Due for completion August 2026 1 Due for completion September 2026 1 Total Actions 12 Total current actions: 14 Page 51
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTIONS CURRENT ACTION PLANS AT 30.04.2026 SECTION 3 4 Status Key On track Complete Overdue – update required Missed original due date Current Internal Audit Action Plans CSA Education Procedures (Report Issued May 2024) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/231 Adequacy of School Fund Procedures A review of the procedures will be undertaken and updated to reflect up to date practice and provide sufficient guidance to staff involved in maintaining and managing school funds. A copy of the updated school fund procedures will be disseminated to Heads of establishments. 31-Mar-2025 30-Jun-2026 Senior Education Officer Chief Officer – Education, Learning and Attainment UK Shared Prosperity Fund Assurance Review (Report Issued June 2024) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/237 Inadequate policies and procedures to support closure of the fund (Amber) Confirmation has been received that there is a transition year for 26/27 with the council being allocated a budget of £400k. This will be advised to council in the city region update on 29th April. Planning is now underway to move to a new delivery model and determine the workforce impact. The Council is able to utilise UK Shared Prosperity Fund until September when we require to be operating the new model. WDC has a full set of HR policies relating to staff terms and conditions and processes for dealing with the loss of funding which will be implemented where required. 31-Dec-2024 30-Sep-2026 Chief Officer Roads and Neighbourhood Chief Executive Page 53
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTIONS CURRENT ACTION PLANS AT 30.04.2026 SECTION 3 5 Status Key On track Complete Overdue – update required Missed original due date Housing Repairs and Maintenance (Report Issued May 2025) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/263 /1 Adequacy of Housing Client Function (Red) Carry out a review of the Client Function to identify any areas that require improvement to ensure quality, value for money repair and maintenance services are provided. 31-Jul-2025 30-Jun-2026 Building Services Manager Chief Officer Housing and Employability IAAP/263 /2 Adequacy of Housing Client Function (Red) Implement any necessary Client Function changes identified. 31-Mar-2026 30-Jun-2026 Building Services Manager Chief Officer Housing and Employability IAAP/263 /3 Adequacy of Housing Client Function (Red) Develop Building Services 2025/2026 improvement action plan to include appropriate financial management, service costs recovery and budget management actions. 30-Jun-2025 30-Jun-2026 Building Services Manager Chief Officer Housing and Employability IAAP/263 /4 Adequacy of Housing Client Function (Red) Present Building Services 2025/2026 improvement action plan to the Building Service Board for approval. 30-Jun-2025 30-Jun-2026 Building Services Manager Chief Officer Housing and Employability IAAP/263 /5 Adequacy of Housing Client Function (Red) Complete actions within Building Services 2025/2026 action plan. 31-Mar-2026 30-Jun-2026 Building Services Manager Chief Officer Housing and Employability IAAP/265 /1 Adequacy of Stock Control Procedures (Amber) Complete the procurement of an appropriate barcoding hardware and software solution. 30-Jun-2025 30-Jun-2026 Contracts Manager Chief Officer Housing and Employability IAAP/265 /2 Adequacy of Stock Control Procedures (Amber) Implement the procurement of an appropriate barcoding hardware and software solution. 31-Jul-2026 31-Jul-2026 Contracts Co- ordinator Chief Officer Housing and Employability IAAP/265 /3 Adequacy of Stock Control Procedures (Amber) Present a decision paper to the IHMS Project Board to approve development of the automatic reordering module. 30-Jun-2025 30-Sep-2026 IHMS Change Officer Chief Officer Housing and Employability Page 54
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTIONS CURRENT ACTION PLANS AT 30.04.2026 SECTION 3 6 Status Key On track Complete Overdue – update required Missed original due date Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/265 /4 Adequacy of Stock Control Procedures (Amber) Following approval, complete necessary work implement, test and go live on QL system. 31-Aug-2026 31-Aug-2026 IHMS Change Officer Chief Officer Housing and Employability IAAP/269 /2 Inefficient Allocation of Resources (Amber) Develop alternative scheduling and appointment system to replace DRS. 31-Jul-2025 31-Jul-2026 IHMS Change Officer Chief Officer Housing and Employability IAAP/269 /4 Inefficient Allocation of Resources (Amber) Implement new scheduling and appointment system. 30-Sep-2025 31-Jul-2026 Building Services Manager/IHMS Change Officer Chief Officer Housing and Employability IAAP/274 /3 Compliance with HMRC Benefit in Kind Guidelines (Amber) Carry out a review of the homestart protocol with workforce, TUs and transport service ensuring this remains fit for purpose. 31-Jan-2026 30-Jun-2026 Maintenance Manager/Project s Manager Chief Officer Housing and Employability Page 55
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTIONS ANALYSIS OF MISSED DEADLINES AT 30.04.2026 SECTION 4 Status Key 7 On track Complete Overdue – update required Missed original due date –new date set Report Agreed Action Original Due Date Revised Date Management Comments CSA Education Procedures (May 2024) Adequacy of School Fund Procedures A review of the procedures will be undertaken and updated to reflect up to date practice and provide sufficient guidance to staff involved in maintaining and managing school funds. A copy of the updated school fund procedures will be disseminated to Heads of establishments. 31-Mar-2025 31-May-2025 30-Sep-2025 30-Jun-2026 The policy was initially drafted in June 2025, however, the policy requires to be updated to reflect updates to other education policies before disseminating to Heads of Establishment which will be done by the end of the school year. Housing Repairs and Maintenance (May 2025) Adequacy of Housing Client Function (Red) Carry out a review of the Client Function to identify any areas that require improvement to ensure quality, value for money repair and maintenance services are provided. 31-Jul-2025 31-Dec-2025 30-Jun-2026 Client function within building services discussed at BS Board but realistically will take another 3-6 months to embed. Housing Repairs and Maintenance (May 2025) Adequacy of Housing Client Function (Red) Develop Building Services 2025/2026 improvement action plan to include appropriate financial management, service costs recovery and budget management actions. 30-Jun-2025 31-Dec-2025 30-Jun-2026 Client function within building services discussed at BS Board but realistically will take another 3-6 months to embed. Housing Repairs and Maintenance (May 2025) Adequacy of Housing Client Function (Red) Present Building Services 2025/2026 improvement action plan to the Building Service Board for approval. 30-Jun-2025 31-Dec-2025 30-Jun-2026 Client function within building services discussed at BS Board but realistically will take another 3-6 months to embed. Housing Repairs and Maintenance (May 2025) Inefficient Allocation of Resources (Amber) Develop alternative scheduling and appointment system to replace DRS. 31-Jul-2025 31-Jul-2026 Go live date revised to July 2026. Agreed that this was required due to testing, training and implementation required Housing Repairs and Maintenance (May 2025) Inefficient Allocation of Resources (Amber) Implement new scheduling and appointment system. 30-Sep-2025 31-Jul-2026 Go live date revised to July 2026. Agreed that this was required due to testing, training and implementation required Housing Repairs and Maintenance (May 2025) Adequacy of Stock Control Procedures (Amber) Complete the procurement of an appropriate barcoding hardware and software solution. 30-Jun-2025 30-Jun-2026 In-house option being taken forward and target set for June 2026. Page 56
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTIONS ANALYSIS OF MISSED DEADLINES AT 30.04.2026 SECTION 4 8 Status Key On track Complete Overdue – update required Missed original due date Report Agreed Action Original Due Date Revised Date Management Comments Housing Repairs and Maintenance (May 2025) Adequacy of Stock Control Procedures (Amber) Present a decision paper to the IHMS Project Board to approve development of the automatic reordering module. 30-Jun-2025 31-Dec-2025 30-Sep-2026 The action requires to be re-evaluated and a review undertaken of available packages. Page 57
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTIONS SUMMARY OF ACTIONS BY AUDIT YEAR SECTION 5 9 Status at 30 April 2026 Audit Year No of Agreed Actions No of actions complete Current actions by Grade Red Amber Green* 2020/2021 25 25 0 0 0 2021/2022 51 50 0 0 1 2022/2023 51 51 0 0 0 2023/2024 62 60 0 2 0 2024/2025 80 67 5 7 1 Total 269 253 5 9 2 * Green actions are within the Council’s risk appetite and are therefore not included in Audit Committee reports. Page 59
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WEST DUNBARTONSHIRE COUNCIL Report by the Chief Officer – Resources Audit Committee – 10 June 2026 ___________________________________________________________________ Subject: Treasury Management Strategy and Annual Investment Strategy 1. Purpose 1.1 Following approval at Council on 25 March 2026, the purpose of this report is to provide Members with the opportunity to further scrutinise the Treasury Management Strategy Statement and Annual Investment Strategy and the indicators contained within. 2. Recommendations 2.1 Members are requested to consider the report and note that on the 25 March 2026 Council agreed: (a) to approve the proposed Treasury Management Strategy Statement and Annual Investment Strategy and the indicators contained within; (b) to approve the continued use of the Asset Life Method (using either annuity or equal instalment) for the repayment of loan fund advances with the exception of spend to save schemes where the funding/income profile method could be used; (c) to approve the ability to continue to use countries with a sovereign rating of AA- and above; (d) to note the removal of Lender Option Borrowing Option as an approved source of borrowing; and (e) to note the report will be referred to Audit Committee for further scrutiny. 3. Background 3.1 The Council has adopted the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management in Local Authorities. The Code requires an annual Treasury Management Strategy Statement and Investment Strategy to be approved by Council for the forthcoming financial year. This report seeks Member’s approval of the proposed Treasury Management Strategy Statement and Annual Investment Strategy. The report also sets out the policy for the repayment of loans fund advances for 2026/27. 3.2 The Council uses MUFG Corporate Markets Treasury Limited, formerly Link Treasury Services, as its external treasury management advisors. The Council recognises there is value in employing external providers of treasury management services in order to acquire access to specialist skills and resources. The Council will ensure that the terms of their appointment and the ITEM 9 Page 61
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methods by which their value will be assessed are properly agreed and documented, and subject to regular review. 3.3 Appendix 1 and 2 to this report outline the Council’s Capital Prudential and Treasury Indicators. Members are asked to approve these as required by the Local Government (Scotland) Act 1973 (extended via the Code on the Investments of Money by Scottish Local Authorities under section 40 of the Local Government in Scotland Act 2003. 3.4 In 2016 regulations were enacted by the Scottish Parliament, the Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016, They require the Council to set out its policy for the statutory repayment of loans fund advances prior to the start of the financial year. This is detailed in section 3 of Appendix 1 to this report. The policy on repayment of loans fund advances in respect of capital expenditure by the Council is to ensure the Council makes an annual prudent provision to pay off an element of the accumulated loans fund advances made in previous financial years. 3.5 The CIPFA Treasury Management Code of Practice requires greater Member scrutiny of the treasury polices, increased Member training and awareness and greater frequency of information. It also required the Council to ensure effective scrutiny of its treasury management strategy and polices. Within the Council the body identified to fulfil this role is the Audit Committee. Therefore, the proposed Treasury Management Strategy Statement and Annual Investment Strategy and the indicators contained within should be referred to the Audit Committee once approved by Council to ensure further scrutiny takes place. 4. Main Issues 4.1 The Local Government in Scotland Act 2003 requires Council to adopt the CIPFA Prudential Code and produce prudential indicators. Appendix 6 of this report details the Council’s expected year end indicators for 2025/26, revises the indicators for 2026/27 to 2028/29 and projects the indicators to 2035/36, with those for the period 2028/29 to 2035/36 being indicative at this time. 4.2 Within this overall prudential framework there is a clear impact on the Council’s treasury management activity, either through borrowing or investment activity. As a consequence, the treasury management strategy (which includes details of debt and investment) for 2025/26 to 2035/36 is included in Appendix 6 (with the period 2028/29 to 2035/36 being indicative at this time) to complement the prudential indicators relating to the treasury activity. 4.3 Other appendices to this report are Appendix 3 - Details of the risks, mitigating controls and limits associated with each of the permitted investment categories Appendix 4 - Credit rating type and definitions Appendix 5 - List of approved sovereign countries for investments . Changes to Financial Regulations – Leasing Page 62
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4.4 The Treasury Management Strategy report to Council in March 2021 reported a change to financial regulations regarding leasing. The change was postponed and will be reflected in the accounts effective 1 April 2024 (financial year 2024/25). 4.5 This change brings the assets and future liabilities for all leases onto the Council’s Balance Sheet from 1 April 2024, which will bring leased assets onto the balance sheet in the 2024/25 accounts. The effect of this change will increase the ‘level of debt’ identified by the Council; the Capital Financing Requirement; Operational Boundary; and Authorised Limit, by the future liability of the leased assets. Forecast and estimates of the ratio of financing costs to Net Revenue Stream may also be affected in future years. This change affects all councils, though this Council has a low number of leased assets. Capital Strategy 4.6 In December 2017, CIPFA issued a revised Prudential Code. As a result, from 2019/20, all local authorities were required to prepare a Capital Strategy report, and a revision to the Prudential Code 2021 confirmed that local authorities must produce an Annual Capital Strategy which is intended to provide: • a high-level overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of services • an overview of how the associated risk is managed • the implications for future financial sustainability. 4.6.1 The aim of the Capital Strategy is to ensure all elected members understand the overall strategy, governance procedures and risk appetite entailed by the Strategy. 4.6.2 The 2026/27 Capital Strategy (approved by Council on 4 March 2026) includes detail on capital expenditure, investments and liabilities and treasury management to allow Members to understand how stewardship, value for money, prudence, sustainability and affordability will be secured. 5. Option Appraisal 5.1 No option appraisal was required for this report. 6. People Implications 6.1 There are no people implications arising from this report. Page 63
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7. Financial and Procurement Implications 7.1 The prudential indicators in Appendix 6 show the Council’s likely and indicative capital financing for the period 2026/27 to 2035/36 while the treasury management indicators in Appendix 6 show the likely borrowing requirement for the same period. 7.2 Table E in Appendix 6 indicates that in each year the gross borrowing requirement (which includes short-term borrowing for cashflow purposes) is higher than the capital financing requirement (CFR) due to borrowing being undertaken prior to year end due to favourable interest rates. However, this does not exceed the total of the CFR in the preceding year plus the estimates of any additional CFR for 2026/27 and following two financial years (Appendix 2 – section 2.1 and 2.2). 7.3 As a key indicator of prudence this illustrates the Council only undertakes long-term borrowing for capital purposes 7.4 There are no procurement issues arising from this report. 8. Risk Analysis 8.1 There are four main risks associated with the formulation of prudential indicators and the treasury management strategy as detailed in Appendix 1 and 2: (a) Capital receipts which affect the capital financing and borrowing requirement may not materialise and if this occurs then additional borrowing will be required in order to fund the financing requirement. (b) The risk of Counterparties default (i.e. loss of principal sum invested) must also be taken into account; however the robust controls included within the investment strategy (Appendix 2 – section 6) will assist in mitigating this risk. (c) Capital inflation may increase capital expenditure levels, which in turn may affect the capital financing and borrowing requirement leading to an increase in borrowing, assuming no additional capital receipts are available. (d) Interest rates have increased significantly over the past 18 months and are subject to further uncertainty. It was highlighted to Council on the 4 March that while the plan is affordable in 2026/27 assuming a balanced revenue budget is agreed, it does create significant pressures on the revenue budget due to the cost of borrowing and that it will have revenue implications for future years which will require to be planned for in the normal manner through long-term financial strategies and budget planning processes. This may require the capital programme to be subject to further review in future years if it is deemed to be placing an excessive pressure on the revenue budget and the sustainability of the Housing Revenue Account (HRA). Page 64
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9. Equalities Impact Assessment 9.1 No equalities impact assessment was required in relation to this report. 10. Environmental Sustainability 10.1 No assessment of environmental sustainability was required in relation to this report. 11. Consultation 11.1 Legal and Resources have been consulted in relation to this report and appendices. 12. Strategic Assessment 12.1 Proper budgetary control and sound financial practice are cornerstones of good governance and support Council and officers to pursue the 5 strategic priorities of the Council’s Strategic Plan. This report forms part of the financial governance of the Council. Laurence Slavin Chief Officer - Resources Date: 12 May 2026 Person to Contact: Lynsey Dickson, Church Street, Dumbarton Email: Lynsey.Dickson@west-dunbarton.gov.uk Appendices: 1 Prudential Indicators 2026/27 to 2035/36 2 Treasury Management Strategy 2026/27 to 2035/36 3 West Dunbartonshire Council and Common Good Funds Permitted Investments, Associated Controls and Limits 4 Counterparty Rating Explanations 5 Approved Countries for Investment 6 Prudential and Treasury Indicators Background Papers: Treasury Management Strategy and Annual Investment Strategy Report-Council 25 March 2026 2026/27 Budget Report – Council 4 March 2026 Treasury Management Strategy – Council 26 March 2025 Treasury Mid-year update – Council 17 December 2025 Page 65
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Wards Affected: All wards affected. Page 66
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Capital Prudential Indicators 2026/27 to 2035/36 1. Capital Expenditure and Financing 1.1 This prudential indicator is a summary of the Council’s capital expenditure plans, both those agreed previously, and those forming part of the 2026/27 budget setting. The Council’s gross capital expenditure plans are summarised in Table A within Appendix 6. This forms the first of the prudential indicators. Total expenditure is partially funded by resources such as capital grants, etc. Any remaining expenditure which cannot be immediately funded from other resources will form a borrowing need. 1.2 A certain level of capital expenditure will be supported by the general capital grant provided by the Scottish Government, and also specific capital grants from the Scottish and UK Governments. Anything above this level will be funded from the Council’s own resources (e.g. other grants, capital receipts, prudential borrowing). 1.3 There are two main limiting factors which may impact on the Council’s ability to undertake unsupported capital expenditure: • Whether the revenue resource is available to support the implications of capital expenditure (borrowing costs and running costs). • The Government may use a control to limit either the total of all councils’ plans nationally, or in the event of an assessment by central government that local plans are unaffordable at a specific council, it may implement a local control. No such control has been implemented since the inception of the prudential code, however, HM Treasury keep this under review. 1.4 The summary of capital expenditure, as per the capital plan reported to Council on 4 March 2026 for both HRA and General Services, is shown in Table A in Appendix 6. The HRA capital plan refresh extends to 2030/31 with the period from 2030/31 to 2035/36 extracted from the HRA Business Plan for the purposes of Prudential Indicator calculations. 1.5 Under section 22 of Schedule 3 of the Local Government (Scotland) Act 1975 a local authority may establish a capital fund to be used for “defraying any expenditure of the authority to which capital is properly applicable, or in providing money for repayment of the principal of loans (but not any payment of interest on loans)”. Furthermore, Finance Circular 7/2018 confirms that capital receipts may also be used to “fund the cost of premiums, either as they are incurred, or as they are recharged back to the General Fund/HRA” 1.6 The budget update for General Services reported to Council assumes an element of capital receipts is used to fund the principal element of loan charges and annual premium costs between 2026/27 and 2029/30. This has been adjusted for within these indicators, where appropriate. A review was undertaken during 2025/26 and we will continue to utilise capital receipts to fund the principal element of loan charges. 2. The Council’s Borrowing Need (the Capital Financing Requirement) 2.1 The second prudential indicator is the Council’s Capital Financing Requirement (CFR). The CFR is simply the total outstanding capital expenditure which has not yet been paid for from either revenue or capital resources. It is a measure of the Council’s underlying borrowing ITEM 9 APPENDIX 1 Page 67
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need. The net capital financing need (as indicated in Table A in Appendix 6) impacts directly on the CFR. 2.2 Due to accounting requirements, the CFR currently includes any other long-term liabilities (i.e. PPP schemes, PPI schemes, finance leases) brought onto the Balance Sheet. Whilst this increases the CFR, and therefore the Council’s borrowing requirement, these types of schemes include a borrowing facility and so the Council is not required to separately borrow for these schemes. The Council currently has circa £86.0m for PPP schemes and leases within the CFR. 2.3 The CFR projections for both General Services and HRA are shown in Table B in Appendix 6 and show that the CFR for the HRA and the CFR for General Services is projected to increase each year from 2026/27 to 2035/36 2.4 The expected impact of the capital expenditure decisions above on the Council’s debt and investment position are shown in the treasury strategy (Appendix 2). 3. Liability Benchmark 3.1 The council is required to estimate and measure the Liability Benchmark for the forthcoming financial year and the following two financial years as a minimum. Based on the recommendations of CIPFA this has been produced for 10 years and shown within Graphs A & B. 3.2 There are four components to the liability benchmark: • Existing loan debt outstanding: the council’s existing loans that are still outstanding in future years. • Loans CFR: this is calculated in accordance with the loans CFR definition in the Prudential Code and projected into the future based on approved prudential borrowing and planned Loans Fund advances/Loans Fund principal repayments. • Net loans requirement: this will show the councils gross loan debt less treasury management investments at the last financial year-end, projected into the future and based on its approved prudential borrowing, planned Loans Fund principal repayments and any other major cash flows forecast. • Liability benchmark (or gross loans requirement): this equals net loans requirement plus short-term liquidity allowance. 3.3 The liability benchmarking projections presented are based on the assumption that the Council will maintain its current Treasury Management Strategy. Specifically, it has been assumed that all maturing debt will be refinanced in line with existing practice, primarily through a combination of new loans from the Public Works Loan Board (PWLB) and ongoing participation in the local authority lending market. Page 68
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Graph A Graph B Page 69
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4. Statutory repayment of loans fund advances 4.1 The Council is required to set out its policy for the statutory repayment of loans fund advances prior to the start of the financial year. The repayment of loans fund advances ensures the Council makes a prudent provision each year to pay off an element of the accumulated loans fund advances made in previous financial years. 4.2 A variety of options are provided to councils so long as a prudent provision is made each year as detailed below: Option Method Detail 1 Statutory Loans fund advances will be repaid by the annuity method. The Council was permitted to use this option for a transitional period only, of five years until 31 March 2021, at which time it was required to change its policy to use alternative approaches based on depreciation, asset life periods or a funding/income profile as detailed below. 2 Depreciation Annual repayment of loans fund advances will follow standard depreciation accounting procedures. 3 Asset Life Loans fund advances will be repaid with reference to the life of an asset using either the equal instalment or annuity method. 4 Funding/ Income Profile Loans fund advances will be repaid by reference to an associated income stream 4.3 Council is recommended to approve the following policy for loans fund advances: • For loans fund advances made before 1 April 2016, advances will be repaid by the annuity method, by the appropriate write off period (based upon useful asset lives, following the agreed Council policy). • Recognising that the Council had forward capital expenditure plans and was already committed to that plan and the revenue implications of that plan, the policy for loans fund advances made from 1 April 2016 to 31 March 2021 was to mainly repay loans fund advances by the annuity method (with a write off period based upon useful asset lives) unless an alternative method is more appropriate. • For loans fund advances made after 1 April 2021 (i.e. commencing 2021/22), the policy for the repayment of loans advances is to apply the following options, selecting the most suitable method for each individual advance. o Asset life method – loans fund advances will be repaid with reference to the life of an asset using either the equal instalment or annuity method. It is likely that the equal instalment method will be used. o Funding / Income profile method – loans fund advances will be repaid by reference to an associated income stream. 4.4 The pooled interest rate applied to the loans fund repayments is based on historic interest rates and is currently 4.30%. Page 70
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4.5 Table C in Appendix 6 details the loans fund repayment profile for 2026/27 onwards based on the balance outstanding at 1 April 2026 and capital expenditure plans 2026/27 to 2035/36 as per Table A. 5. Affordability Prudential Indicators 5.1 The previous sections cover the overall capital and control of borrowing, but within this framework prudential indicators are required to assess the affordability of the capital investment plans. These indicate the impact of the capital investment plans on the overall Council’s finances. The Council is asked to approve the following indicators: 5.2 Actual and estimates of the ratio of financing costs to net revenue stream. This indicator is detailed in Table D in Appendix 6 and identifies the trend in financing cost of capital (loan charges and long-term liability financing) against the net revenue stream (funding sources e.g. Scottish Government revenue support grant, council tax and HRA rental income). 5.3 The estimates of financing costs include current commitments and the impact of capital expenditure as per Table A and this indicator shows the percentage of total council revenue expenditure that is spent on repayment of loan charges and long-term liability capital and interest repayments. 6. Financial reporting changes in relation to leases 6.1 From 1 April 2024 there is a significant change to the Accounting Code of Practice which the Council follows for their Financial Statements, which will impact on debt levels and prudential indicators in the future. This change is in relation to assets the Council leases. 6.2 Currently there are two types of leases which are treated differently through the Financial Statements. From April 2024, all leases (where the Council is lessee and with a few exceptions) will require to be accounted for on the Council Balance Sheet as assets. For illustrative purposes, leases currently held by the Council (but not owned and therefore not currently on the Council’s Balance Sheet) include leases for properties (such as Aurora/ Clydebank Town Centre Office/ Bridge Street), photocopiers, and vehicles. The treatment of these leases will become similar to the current accounting reporting for PPP assets. 6.3 Accounting for these leases on the Balance Sheet will result in increases to assets and long- term liabilities, affecting a number of the prudential and treasury management indicators – increasing: the ‘level of debt’ identified by the Council; the Capital Financing Requirement; Operational Boundary; and Authorised Limit, by the value of the leases. Forecast and estimates of the ratio of financing costs to Net Revenue Stream may also be affected. Page 71
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Treasury Management Strategy 2026/27 – 2035/36 1. Background 1.1 The treasury management service is an important part of the overall financial management of the Council’s affairs. Whilst the prudential indicators in Appendix 1 consider the affordability and impact of capital expenditure decisions, the treasury service covers the effective funding of these decisions. There are specific treasury prudential indicators included in this strategy which need approval. 1.2 The Council’s treasury activities are strictly regulated by statutory requirements and a professional code of practice (the CIPFA Code of Practice on Treasury Management). 1.3 As a requirement of the Code the Council is required to adopt a Treasury Management Policy Statement and four Treasury Management clauses. These form part of the Council’s financial regulations, and the following documents were adopted on 5 March 2018: • Treasury Management Policy Statement • Treasury Management Clauses • The Treasury Management Role of the Section 95 Officer 1.4 The policy requires an annual strategy to be reported to Council outlining the expected treasury activity for the forthcoming three years, however in line with the longer capital planning process treasury management indicators have been provided (where appropriate) covering the period to 2035/36. A key requirement of this report is to explain both the risks, and the management of the risks, associated with the treasury service. Further reports are issued as follows: • Mid-year monitoring report on actual activity during the year including revised indicators where appropriate. • Quarterly report to monitor and report performance against all forward-looking prudential indicators • Year-end report on actual activity for the previous year. • Updates as part of the capital BCR. 1.5 This strategy covers: • The Council’s debt and investment projections • Limits to the Council’s borrowing activity • The economic climate and expected movement in interest rates • The Council’s borrowing, debt and investment strategies • Treasury performance indicators • Specific limits on treasury activities • Policy on ethical investments. 2. The Council’s debt and investment projections 2.1 The Council’s forecast treasury portfolio position at 31 March 2026 with forward projections are summarised in Table E in Appendix 6 and shows the gross debt (the treasury management operations), against the underlying capital borrowing need (the Capital Financing Requirement - CFR), highlighting any under or over borrowing. ITEM 9 APPENDIX 2 Page 73
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2.2 Within the prudential indicators there are a number of key indicators to ensure the Council operates its activities within well-defined limits. One of these is that the Council needs to ensure that its gross debt does not, except in the short term, exceed the total of the CFR in the preceding year plus the estimates of any additional CFR within the following two financial years. This allows some flexibility for limited early borrowing for future years, but ensures that borrowing is not undertaken for revenue purposes. This is illustrated by comparing the estimated gross debt as at 31 March 2026 with the CFR as at 31 March 2029. 2.3 The Section 95 Officer (Chief Officer - Resources) reports that the Council has complied with this prudential indicator, and no difficulties are envisaged for the current or future years. This view takes into account the capital plan refresh reports for General Services and HRA. 3. Limits to Borrowing Activity 3.1 The Operational Boundary is detailed in Table F in Appendix 6 and is the limit beyond which external debt is not normally expected to exceed. In most cases, this would be a similar figure to the CFR, but may be lower or higher depending on the levels of actual debt. 3.2 The Authorised Limit for External Borrowing – This is a key prudential indicator and represents a control on the maximum level of borrowing. This represents a legal limit beyond which external debt is not allowed to exceed. This needs to be set or revised by Members. It reflects the level of external debt which, while not desired, could be afforded in the short term, but is not sustainable in the longer term. This is the statutory limit (Affordable Capital Expenditure Limit) determined under section 35(1) of the Local Government in Scotland Act 2003. The Government retains an option to control either the total of all councils’ plans, or those of a specific council, although this power has not yet been exercised. The committee is asked to approve the authorised limit detailed in Table G in Appendix 6. 3.3 Policy on borrowing in advance of need - This Council will not borrow more than or earlier than required purely in order to profit from the investment return of the extra sums borrowed. Any decision to borrow in advance will be within forward approved Capital Financing Requirement estimates and will be considered carefully to ensure that value for money can be demonstrated and that the Council can ensure the security of such funds. Risks associated with any borrowing in advance activity will be subject to prior appraisal and subsequent reporting through the mid-year or annual reporting mechanism. 4. UK, World and Scottish Economy Update – Extraction from MUFG Corporate Markets Treasury Limited, formerly Link Treasury Advisor, Reports (January 2025) and the Scottish Fiscal Commission Forecast (January 2026). 4.1 UK In the UK, soft overseas demand, past interest rate hikes and higher taxes mean the GDP is projected to grow by 1.0% in 2026. The weakening in the labour market should continue to bear down on wage growth which along with similar rises in regulated prices this year heading into 2026, mean CPI inflation could fall below the 2% target during the year and stay there. For some forecasters, this increases the possibility that the Bank of England choose to cut interest rates from 3.75% now to 3.00% by the end of 2026, rather than the consensus view of 3.25-3.50%. Page 74
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4.2 US In the US, investors believe that the recent strength in AI-related investment marks the start of a multi-year capex boom. With this boost, GDP growth is expected to be 2.5% in both 2026 and 2027. Elsewhere, where labour demand remains soft, the immigration crackdown should hold back labour supply growth, and economists expect the unemployment rate to peak at 4.7% in early 2026. With core inflation set to remain above the 2% target for some time, the consensus is that the Fed will cut its policy rate only once more in 2026. 4.3 EU In the Eurozone, forecasters expect GDP to increase at a moderate pace this year and next. Germany’s fiscal stimulus is likely to be slower and less effective than many expect, while growth is anticipated to be stronger in the smaller economies. Meanwhile, inflation is forecast to undershoot the 2.0% target in 2026 as energy prices fall and wage growth eases further. On balance, analyst believe the ECB is likely to cut interest rates before the end of 2026, bringing the deposit rate down to 1.5% by December 2026. 4.4 China While Chinas growth picked up in November on the back of stronger export growth, the economy looks set to have expanded by less than 3.5% in 2025. Exports should continue growing in 2026, despite tariff barriers as well as the impact of expansionary fiscal measures, although these are likely to provide a smaller prop to the economy. With the property downturn set to drag on and overcapacity likely to remain entrenched, growth forecasts have been downgraded to just 3.0% in 2026. 4.5 Japan In Japan, the economy is expected to grow at a healthy pace, which should ensure that the labour market remains tight. While energy subsidies and falling crude oil prices will weigh on headline inflation, measures of underlying inflation should hold up well. Accordingly, some forecasters expect the Bank of Japan will likely lift rates to 1.75% by 2027 compared to the broader analyst consensus of just 1.00% 5 Scotland Specific Our view of economic conditions remains largely unchanged compared with our expectations in December 2024. We continue to see a picture of global instability and uncertainty, which is weighing on household and business confidence. This includes the US Government introducing a range of new import tariffs and, more recently, events in Venezuela. Domestically, the labour market has continued to slow across the UK. Some of the changes we have made since our December 2024 forecast are to our projections of trend economic growth. This includes a revised judgement on productivity growth and updates for the latest population and labour force participation data. Overall, these updates have led to small changes to our GDP and labour market forecasts. Page 75
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The lower outturn GDP data we now observe relative to our December 2024 forecast was because factors such as global instability and higher consumer and business costs had a greater impact on outturn data towards the end of 2024 than we anticipated. In the coming years, GDP growth is consistent with our previous forecast. 5. Prospect for Interest Rates 5.1 The Council has appointed MUFG Corporate Markets Treasury Limited, formerly Link Asset Services, as its treasury advisor and part of their service is to assist the Council to formulate a view on interest rates. Table H in Appendix 6 gives the current MUFG Corporate Markets Treasury Limited central view. 6. Borrowing and Debt Strategy 2026/27 – 2035/36 6.1 Table E in Appendix 6 forecasts that the capital borrowing need (the Capital Financing Requirement) will be almost fully funded with external borrowing which is a mixture of short term and long term debt. 6.2 Against this background and the risk within the economic forecast, caution will be adopted with the 2026/27 treasury operations. The Section 95 Officer will monitor interest rates in financial markets and adopt a pragmatic approach to changing circumstances. 6.3 If it was felt that there was a significant risk of fall in long and short term rates, e.g. due to a marked increase of risks around recession or of risks of deflation, then long term borrowing will be postponed, and potential rescheduling from fixed rate funding into short term borrowing will be considered. 6.4 If it was felt that there was a significant risk of a much sharper rise in long and short term rates than that currently forecast, perhaps arising from a greater than expected increase in world economic activity or further increases in inflation risks, then the portfolio position will be re-appraised with the likely action that fixed rate funding will be drawn whilst interest rates were still relatively cheap. 6.5 Any decisions will be reported to Members via the Members Bulletin at the next available opportunity. 6.6 Approved sources of long and short term borrowing include: Fixed Variable PWLB X X Local Authorities X X Banks X X Pension Funds X X Insurance Companies X X Market – long term X X Market – short term X X Overdraft X X Internal (capital receipts / revenue balances) X X Finance Leases X X Page 76
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Following the Council meeting on the 26 March 2024 and further agreement with the Audit Committee of 12 June 2024 the use of Markets (Lender option Borrowing Options (LOBO’s) have been removed as an approved use of short term and long-term borrowing for the Council. 7. Investment Strategy 7.1 The Council’s investment policy has regard to the Local Government Investment (Scotland) Regulations (and accompanying finance circular). Council has also adopted both the Treasury Management Code of Practice and the Prudential Code and is required to adopt revised editions. The day-to-day investment policies and practices are contained in the Council’s Treasury Management Practices, which reflect the requirements of these codes. 7.2 Key Objectives – Following the economic background above, the current investment climate has one over-riding risk consideration - counterparty security risk. As a result of these underlying concerns, officers have implemented an operational investment strategy which prioritises security first, liquidity second and then return. 7.2.1 The Council has adopted a prudent approach to managing risk and defines its risk appetite by the following means: • Minimum acceptable credit criteria are applied in order to generate a list of highly creditworthy counterparties. This also enables diversification and thus avoidance of concentration risk. The key ratings used to monitor counterparties are the short term and long-term ratings. • Other information: ratings will not be the sole determinant of the quality of an institution; it is important to continually assess and monitor the financial sector on both a micro and macro basis and in relation to the economic and political environments in which institutions operate. The assessment will also take account of information that reflects the opinion of the markets. To achieve this consideration the Council will engage with its advisors to maintain a monitor on market pricing such as “credit default swaps” and overlay that information on top of the credit ratings. • Other information sources used will include the financial press, share price and other such information pertaining to the financial sector in order to establish the most robust scrutiny process on the suitability of potential investment counterparties. • The Council has defined the list of types of investment instruments that the treasury management team are authorised to use. • Transaction limits are set for each type of investment. • All investments will be denominated in sterling. 7.2.2 The aim of the strategy is to generate a list of highly creditworthy counterparties which will enable diversification, and thus avoidance of concentration, with the prime intention of providing security of investment and minimisation of risk. 7.3 Investment Strategy – The process for investment strategy under the regulations covers a wide range of Council investments and will be broadly managed in the following way: Page 77
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• Short Term Cash – Cash relating to day to day cash flow will be maintained on a shorter term basis in cash type products with consideration to liquidity requirements. • Longer Term Cash – Cash relating to reserves, provisions and balances on the balance sheet may be held for longer periods of time in cash type products or in longer term bonds or funds depending on: ▪ cash flow requirements ▪ the underlying expectation for interest rates ▪ the economic background of these investments may be held longer term. • Service Type Investments – These will predominantly be policy driven and approved by Members. Shareholdings, development opportunities, loans to third parties, equity instruments and investment properties held for rental returns will be regularly reviewed to judge the investment performance. • Non-Service Type Investments – Investments such as Joint venture delivery companies such as Hub West Scotland and investments in regeneration partnerships and development opportunities. 7.4 Benchmarking and Monitoring Security, Liquidity and Yield in the Investment Service A development for Member reporting is the consideration and approval of security, liquidity and discreet benchmarks. Yield benchmarks are currently widely used to assess investment performance. 7.4.1 These benchmarks are targets (not limits) and so may be breached from time to time, depending on movements in interest rates and counterparty criteria. The purpose of the benchmark is that officers will monitor the current and trend position and amend the operational strategy depending on any changes. Any breach of the benchmarks will be reported, with supporting reasons in the Mid-Year or Annual Report. 7.4.2 In the context of benchmarking, assessing security is a very subjective area to assess. Security is currently evidenced by the application of minimum quality criteria to investment counterparties, primarily through the use of credit ratings supplied by the three main credit rating agencies (Fitch/ Moody’s and Standard and Poors). Whilst this approach embodies security considerations, benchmarking levels of risk is more problematic. One method to benchmark security risk is to assess the historic level of default against the minimum criteria used in the Council’s investment strategy. Table I in Appendix 6 shows average defaults for differing periods of investment grade products for each Fitch/ Moody’s Standard and Poors long term rating category. 7.4.3 The Council’s minimum long term rating criteria is currently “A-”, meaning the average expectation of default for a one-year investment in a counterparty with a “A” long term rating would be 0.05% of the total investment (e.g. for a £1m investment the average loss would be £500). This is only an average - any specific counterparty loss is likely to be higher - but these figures do act as a proxy benchmark for risk across the portfolio. 7.4.4 As required by the CIPFA Treasury Management Code of Practice The Council will “ensure that it has adequate, though not excessive, cash resources, borrowing arrangements, overdrafts or standby facilities to enable it at all times to have the level of funds available to it which are necessary for the achievement of its business/service objectives”. In respect to liquidity as defined above the Council seeks to maintain: Page 78
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• Bank overdraft - £1m • Liquid short term deposits of at least £5m available on an overnight basis. 7.4.5 Local measures of yield investment benchmarks that will be used to assess returns are: Benchmark Benchmark Return Average Return Compound 12 month SONIA* 4.25% 4.04% Council’s Instant Access Account 3.81% 4.04% * SONIA is Sterling Overnight Index Average and has replaced LIBOR & LIBID 7.5 Council Permitted Investments – The Investments Regulations (Code on the Investment of Money by Scottish Local Authorities) requires Council approval of all the types of investment to be used and set appropriate limits for the amount that can be held for each investment type. These types of investment are termed permitted investments and any investments used which have not been approved as a permitted investment will be considered ultra vires. 7.5.1 The permitted investments which may be used in the forthcoming year are noted below. Details of the risks, mitigating controls and limits associated with each of these permitted categories are shown in Appendix 3. • Cash Type Instruments ▪ Deposits with the Debt Management Account Facility (UK Government) ▪ Deposits with other local authorities or public bodies ▪ Money Market Funds ▪ Call accounts, deposit accounts with financial institutions (banks and building societies ▪ Term deposits with financial institutions (banks and building societies) ▪ UK Government Gilts and Treasury Bills ▪ Certificates of deposits with financial institutions (banks and building societies) ▪ Structured deposit facilities with banks and building societies (escalating rates, de-escalating rates, etc). • Other Investments ▪ Investment properties ▪ Loans to third parties, including soft loans ▪ Loans to a local authority company ▪ Shareholding in a local authority company ▪ Non-local authority shareholdings ▪ Joint venture delivery companies such as Hub West Scotland ▪ Regeneration partnerships and development opportunities ▪ District Heating Schemes ▪ Local Authority Mortgage Scheme (LAMS). 7.5.2 Permitted investments related to the Common Good are also shown in Appendix 3, and where applicable the same counterparty selection criteria as noted in 6.6 above will be applied. Page 79
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7.6 Investment Counterparty Selection Criteria The primary principle governing the Council’s investment criteria is the security of its investments, although the yield or return on the investment is also a key consideration. After this main principle the Council will ensure: • It maintains a policy covering both the categories of investment types it will invest in, criteria for choosing investment counterparties with adequate security, and monitoring their security. • It has sufficient liquidity in its investments. For this purpose it will set out procedures for determining the maximum periods for which funds may prudently be committed. These procedures also apply to the Council’s prudential indicators covering the maximum principal sums invested. 7.6.1 The Section 95 Officer will maintain a counterparty list in compliance with the following criteria and will revise the criteria and submit them to Council for approval as necessary. This criteria selects which counterparties the Council will choose from, rather than defining what its investments are. 7.6.2 Credit rating type and definitions are attached within Appendices 4 and 6. 7.6.3 Credit rating information is supplied by our treasury consultants on all active counterparties that comply with the criteria below. Any counterparty failing to meet the criteria would be omitted from the counterparty (dealing) list. Any rating changes, rating watches (notification of a likely change), rating outlooks (notification of a possible longer term change) are provided to officers almost immediately after they occur and this information is considered before dealing. For instance, a negative rating watch applying to any counterparty at the minimum Council criteria will be suspended from use, with all others being reviewed in light of market conditions. 7.6.4 The criteria for providing a pool of high quality cash type investment counterparties is: • Category 1 - Good Credit Quality – the Council will only use financial institutions (including certificates of deposit and corporate bonds) which: ▪ Are UK banks; and/or ▪ Are non-UK and domiciled in a country which has a minimum Sovereign long term rating of AA; The UK will be excluded from any Sovereign rating criteria. ▪ And have, as a minimum, the following Fitch, Moody’s and Standard and Poors (S&P) credit ratings (where rated): o Short Term – F1 (or equivalent from Fitch, Moody’s and S&P) o Long Term – A- (or equivalent from Fitch, Moody’s and S&P) The difference between the ratings will be reflected in the money limits as noted in Table J in Appendix 6. • Category 2 – Part nationalised UK banks –Royal Bank of Scotland Group. These banks can be included if they continue to be part nationalised or they meet the ratings in Category 1 above. Page 80
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• Category 3 - The Council’s own banker for transactional purposes if the bank falls below the above criteria specified in category 1, although in this case balances will be minimised in both monetary size and time. • Category 4 - Bank Subsidiary and Treasury Operations – the Council will use these where the parent bank has the necessary ratings outlined in category 1. • Category 5 - Building Societies – the Council will use all Societies which meet the ratings for banks outlined in category 1. • Category 6 - Money Market Funds – the Council will use either Constant Net Asset Value (CNAV) or Low Volatility Net Asset Value (LVNAV) money market funds that are AAA rated (by at least one of the 3 rating agencies) • Category 7 - UK Government (including gilts, treasury bills and the Debt Management Account Deposit Facility (DMADF/HM Treasury) • Category 8 - Local Authorities, etc 7.6.5 Due to the uncertainty in the financial markets it is recommended that the Investment Strategy is approved which will provide officers with the flexibility to deal with any unexpected occurrences. Officers can restrict the pool of available counterparties from these criteria to safer instruments and institutions. 7.6.6 The time limits for institutions on the Council’s cash type counterparty list are as noted in Table J in Appendix 6. 7.6.7 The Council’s bankers are currently Virgin Money (previously known as the Clydesdale Bank Plc) which falls within Category 3. It is recognised that the money limit of £5million may be breached for purely operational purposes on a temporary overnight basis only. The Chief Officer - Resources will endeavour to avoid this scenario but this allows for circumstances that are out with the Council’s control where funds may be deposited unexpectedly or at short notice into the Council’s accounts after the dealing deadline for the day has passed. In such a circumstance the funds will require to be kept on an overnight basis in the Council’s bank account until appropriate arrangements can be made for investment. 7.6.8 Table J does not include a monetary limit for category 7 which are funds deposited with the UK Government namely the DMADF. This facility allows local authorities to deposit surplus cash on flexible terms and receive a market related rate of interest. Funds are held by the Bank of England and the scheme carried the Government’s own sovereign credit rating offering the highest available security and therefore no maximum monetary limit has been set. 7.6.9 Country and sector considerations - Due care will be taken to consider the country, group and sector exposure of the Council’s investments. In part the country selection will be chosen by the credit rating of the Sovereign state in Banks 1 above and the list of approved countries for investments are detailed in Appendix 5. In addition: • No more than 25% will be placed with any country outside of the UK at any time • Limits in place above will apply to Group companies • Sector limits will be monitored regularly for appropriateness. 7.6.10 Use of additional information other than credit ratings – Additional requirements under the Code of Practice now requires the Council to supplement credit rating information. Whilst Page 81
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the above criteria rely primarily on the application of credit ratings to provide a pool of appropriate counterparties for officers to use, additional operational market information will be applied before making any specific investment decision from the agreed pool of counterparties. This additional market information (for example Credit Default Swaps, negative rating watches/outlooks) will be applied to compare the relative security of differing investment counterparties. 7.6.11 Economic Investment Considerations – Current forecasts on shorter-term interest rates, on which investment decisions are based, show a potential for the current 3.75% Bank Rate to continue to slowly decrease. The Council’s investment decisions are based on comparisons between the rises priced into market rates against the Council’s and advisers own forecasts. 7.6.12 There is an operational difficulty arising from the current economic situation. There is currently little value investing longer term unless credit quality is reduced. Whilst some selective options do provide additional yield uncertainty over counterparty creditworthiness suggests shorter dated investments would provide better security. 7.6.13 The criteria for choosing counterparties set out above provide a sound approach to investment in “normal” market circumstances. Whilst Members are asked to approve this base criteria above, under the exceptional current market conditions the Section 95 Officer (Chief Officer - Resources) may temporarily restrict further investment activity to those counterparties considered of higher credit quality than the minimum criteria set out for approval. These restrictions will remain in place until the banking system returns to “normal” conditions. Similarly, the time periods for investments will be restricted. 7.7 Sensitivity to Interest Rate Movements - Whilst most of the risks facing the treasury management service are addressed elsewhere in this report (credit risk, liquidity risk, market risk, maturity profile risk), the impact of interest rate risk is discussed but not quantified. Table K in Appendix 6 highlights the estimated impact of a 1% increase/decrease in all interest rates to the estimated treasury management costs/income for next year. That element of the debt and investment portfolios which are of a longer term, fixed interest rate nature will not be affected by interest rate changes. 7.8 Ethical Investments - This is the placing of funds and selecting investments in a manner that reflects an authority’s ethical values. Generally, two sets of criteria are drawn up – negative and positive values whereby investments are to be avoided or encouraged. 7.8.1 The following policy statement was approved on 25 October 2017: 7.8.2 The Council will not knowingly invest directly in organisations (including financial institutions and money market funds) whose activities and practices pose a risk of serious harm to individuals and/or groups, or whose activities are inconsistent with the Council’s vision, values and priorities. This could include avoiding direct investment in organisations with material links to: • Human rights abuse (e.g. child labour) • Environmentally harmful activities (e.g. destruction of habitat) • Socially harmful activities (e.g. gambling). 7.8.3 In order to give effect to its commitment to this policy the Chief Officer - Resources contacted all investment counterparties on 9 January 2018 advising of our policy. Page 82
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7.8.4 In accordance with the further commitments that were given in October 2017 it is considered that this policy statement remains relevant and does not require to be amended at this time. 8. Treasury Management Limits on Activity 8.1 There are four further treasury activity limits, which were previously prudential indicators. The purpose of these prudential indicators is to contain the activity of the treasury function within certain limits, thereby managing risk and reducing the impact of an adverse movement in interest rates. However, if these are set to be too restrictive they will impair the opportunities to reduce costs. • Upper limits on variable interest rate exposure – This indicator identifies a maximum limit for variable interest rates based upon the debt position net of investments • Upper limits on fixed interest rate exposure – Similar to the previous indicator this covers a maximum limit on fixed interest rates. • Maturity structures of borrowing – These limits are set to reduce the Council’s exposure to large fixed rate sums falling due for refinancing, and are required for upper and lower limits. • Total principal funds invested for greater than 364 & 365 days - These limits are set with regard to the Council’s liquidity requirements and to reduce the need for early sale of an investment, and are based on the availability of funds after each year-end. The proposed indicators are shown within Table L in Appendix 6. 9. Performance Indicators 9.1 The Code of Practice on Treasury Management requires the Council to set performance indicators to assess the adequacy of the treasury function over the year. These are distinct historic indicators, as opposed to the prudential indicators, which are predominantly forward looking. Examples of performance indicators often used for the treasury function are: • Debt – Borrowing - Average rate of borrowing for the year compared to average available • Debt – Average rate movement year on year • Investments – Internal returns above the 7 day SONIA rate. 9.2 The results of these indicators will be reported in the Treasury Annual Report for 2026/27. 10. Treasury Management Advisors 10.1 The Council uses MUFG Corporate Markets Treasury Limited, formerly Link Asset Services, as its treasury management advisors. The company provides a range of services which include: • Technical support on treasury matters, capital finance issues and the drafting of Member reports • Economic and interest rate analysis • Debt services which includes advice on the timing of borrowing • Debt rescheduling advice surrounding the existing portfolio Page 83
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• Generic investment advice on interest rates, timing and investment instruments • Credit ratings/market information service comprising the three main credit rating agencies. 10.2 The current treasury advisor contract was awarded to Link Asset Services, now MUFG Corporate Markets Treasury Limited, following the process/guidance of a quick quote by utilising a framework. This commenced on 1 May 2024 until 30 April 2026, with an option to extend for one year. 10.3 The Council recognises that responsibility for treasury management decisions remains with the Council at all times and will ensure that undue reliance is not place upon external service providers. 10.4 The Council also recognises there is value in employing external providers of treasury management services in order to acquire access to specialist skills and resources. The Council will ensure the terms of their appointment and the methods by which their value is assessed are properly agreed and documented, and subjected to regular review. 10.5 Whilst the advisers provide support to the internal treasury function the final decision on treasury matters remains with the Council. 11. The Monitoring of Investment Counterparties 11.1 The credit rating of counterparties will be monitored regularly. The Council receives credit rating information (changes, rating watches and rating outlooks) from MUFG Corporate Markets Treasury Limited as and when ratings change, and counterparties are checked promptly. On occasion ratings may be downgraded when an investment has already been made. The criteria used are such that a minor downgrading should not affect the full receipt of the principal and interest. Any counterparty failing to meet the criteria will be removed from the list immediately by the Chief Officer - Resources and, if required, new counterparties which meet the criteria will be added to the list. Page 84
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West Dunbartonshire Council and Common Good Funds Permitted Investments, Associated Controls and Limits Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Cash Type Instruments Deposits with the Debt Management Account Facility (UK Government) (Very low risk) This is a deposit with the UK Government and as such counterparty and liquidity risk is very low, and there is no risk to value. Deposits can be between overnight and 6 months. Little mitigating controls required. As this is a UK Government investment the monetary limit is unlimited to allow for a safe haven for investments. As shown in Table J. Deposits with other local authorities or public bodies (Very low risk) These are considered quasi UK Government debt and as such counterparty risk is very low, and there is no risk to value. Liquidity may present a problem as deposits can only be broken with the agreement of the counterparty, and penalties can apply. Deposits with other non- local authority bodies will be restricted to the overall credit rating criteria. Little mitigating controls required for local authority deposits, as this is a quasi UK Government investment. Non- local authority deposits will follow the approved credit rating criteria. As shown in Table J. Money Market Funds (MMFs) (Very low risk) Pooled cash investment vehicle which provides very low counterparty, liquidity and market risk. These will primarily be used as liquidity instruments. Funds will only be used where the MMFs has an “AAA” rated status from either Fitch, Moody’s or Standard and Poor’s. As shown in Table J. Call account deposit accounts with financial institutions (banks and building societies) (Low risk depending on credit rating) These tend to be low risk investments, but will exhibit higher risks than the first three categories above. Whilst there is no risk to value with these types of investments, liquidity is high and investments can be returned at short notice. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. ITEM 9 APPENDIX 3 Page 85
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Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Term deposits with financial institutions (banks and building societies) (Low to medium risk depending on period & credit rating) These tend to be low risk investments, but will exhibit higher risks than the first three categories above. Whilst there is no risk to value with these types of investments, liquidity is low and term deposits can only be broken with the agreement of the counterparty, and penalties may apply. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. Government Gilts and Treasury Bills (Very low risk) These are marketable securities issued by the UK Government and as such counterparty and liquidity risk is very low, although there is potential risk to value arising from an adverse movement in interest rates (no loss if these are held to maturity. Little counterparty mitigating controls are required, as this is a UK Government investment. The potential for capital loss will be reduced by limiting the maximum monetary and time exposures. As shown in Table J. Certificates of deposits with financial institutions (Low risk) These are short dated marketable securities issued by financial institutions and as such counterparty risk is low, but will exhibit higher risks than the first three categories above. There is risk to value of capital loss arising from selling ahead of maturity if combined with an adverse movement in interest rates. Liquidity risk will normally be low. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. Page 86
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Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Structured deposit facilities with banks and building societies (escalating / de- escalating rates, etc.) (Low to medium risk depending on period & credit rating) These tend to be medium to low risk investments, but will exhibit higher risks than the first three categories above. Whilst there is no risk to value with these types of investments, liquidity is very low and investments can only be broken with the agreement of the counterparty (penalties may apply). The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. Corporate Bonds (Medium to high risk depending on period & credit rating) These are marketable securities issued by financial and corporate institutions. Counterparty risk will vary and there is risk to value of capital loss arising from selling ahead of maturity if combined with an adverse movement in interest rates. Liquidity risk will be low The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. Corporate bonds will be restricted to those meeting the base criteria. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. Other Types of Investments Investment properties These are properties that are not used to facilitate service delivery but are held solely to earn rentals or for capital appreciation or both. These are highly illiquid assets with high risk to value (the potential for property prices to fall or for rental voids). In larger investment portfolios some small allocation of property based investment may counterbalance/compliment the wider cash portfolio. Property holding will be re- valued regularly and reported annually with gross and net rental streams. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Page 87
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Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Loans to third parties, including soft loans These are service investments either at market rates of interest or below market rates (soft loans). These types of investments may exhibit credit risk and are likely to be highly illiquid. Each third party loan requires Member approval and each application is supported by the service rational behind the loan and the likelihood of partial or full default. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Loans to a local authority company These are service investments either at market rates of interest or below market rates (soft loans). These types of investments may exhibit credit risk and are likely to be highly illiquid. Each loan to a local authority company requires Member approval and each application is supported by the service rational behind the loan and the likelihood of partial or full default. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Shareholdings in a local authority company These are service investments which may exhibit market risk and are likely to be highly illiquid. Each equity investment in a local authority company requires Member approval and each application will be supported by the service rational behind the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Non-local authority shareholdings These are non-service investments which may exhibit market risk, be only considered for longer term investments, likely to be liquid. Any non-service equity investment will require separate Member approval and each application will be supported by rational behind the service the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Page 88
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Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Joint venture delivery companies such as hub West Scotland Public sector organisations across a hub territory will work in partnership with each other, and a private sector delivery partner, in a joint venture delivery company called hub West Scotland. . Any investment in hub West Scotland requires approval from the Section 95 Officer (Chief Officer - Resources) and the Chief Executive in consultation with the Leader of the Council and the Leader of the Opposition and each application will be supported by the service rational behind the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Regeneration partnerships and development opportunities Investments undertaken with the prime intention of local area regeneration. Any investment in a regeneration partnership / development opportunity requires Member approval with each application supported by rational behind the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Investment in Projects procured and managed by third parties e.g. District Heating Schemes Investments undertaken to assist in facilitating third party projects where the Council has an interest in the successful outcome of the project. Expectation of a financial return for the Council. Any investment in such projects requires Member approval and each application will be supported by a business case for the investment and the expectation of a financial benefit to the Council. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Local Authority Mortgage Scheme (LAMS) These are service investments at market rates of interest. Under this scheme the Council is required to place funds for a number of years with the bank which is participating in this scheme Any investment in the LAMS requires Member approval and each application will be supported by the service rational behind the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Page 89
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Type of Rating Rating Explanation Fitch -Short Term F1+ Indicates exceptionally strong capacity for timely payment of financial commitments F1 Indicates the strongest capacity for timely payment of financial commitments Fitch - Long Term AA- Denote expectations of a very low level of default risk relative to other issuers or obligations in the same country or monetary union. The default risk inherent differs only slightly from that of the country's highest rated issuers or obligations. A- Indicates strong capacity for timely payment of financial commitments. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings Moody’s - Short Term P-1 Banks based Prime-1 for deposits offer superior credit quality and a very strong capacity for timely payment of short term deposit obligations Moody’s - Long Term Aa Offer excellent credit quality, with susceptibility to long term risks with a vulnerability to greater fluctuations within protective elements A Offer excellent credit quality, but elements suggest a Susceptibility to impairment over the long term Standard & Poors - Short Term A-1 Indicates a strong capacity to meet institutions financial commitments. Within this category, certain obligors are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitments is EXTREMELY STRONG Standard & Poors - Long Term AA- Indicates strong capacity for timely payment of financial commitments A- Indicates strong capacity for timely payment of financial commitments. This capacity may, nevertheless, be more susceptible to the adverse effects of changes in circumstances or in economic conditions than is the case for higher rated category ITEM 9 APPENDIX 4 Page 90
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West Dunbartonshire Council and Common Good Funds Permitted Investments, Approved Countries for Investments Based on lowest available rating AAA • Australia • Denmark • Germany • Netherlands • Norway • Singapore • Sweden • Switzerland • Luxembourg AA+ • Canada • Finland • U.S.A. AA • Abu Dhabi (UAE) • Qatar AA- • U.K. Please note that this is the list will be updated as required on an ongoing basis ITEM 9 APPENDIX 5 Page 91
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West Dunbartonshire Council Prudential and Treasury Indicators General Services 59,015 56,181 26,203 43,082 11,665 11,600 11,600 11,317 11,667 11,560 11,560 Financed by: Capital grants 41,183 26,469 8,829 6,436 6,436 6,436 6,436 6,436 6,436 6,436 6,436 Revenue 0 796 496 496 496 496 496 496 496 496 496 Other funding 0 0 0 0 0 0 0 0 0 0 0 Net financing need for the year 17,832 28,916 16,878 36,150 4,733 4,668 4,668 4,385 4,735 4,628 4,628 HRA 50,896 63,685 60,250 44,550 47,650 45,650 0 0 0 0 0 Financed by: Capital grants 10,707 15,601 8,151 6,301 9,001 7,101 0 0 0 0 0 Revenue 0 0 0 0 0 0 0 0 0 0 0 Other funding 0 0 0 0 0 0 0 0 0 0 0 Net financing need for the year 40,189 48,084 52,099 38,249 38,649 38,549 0 0 0 0 0 General Services 59,015 56,181 26,203 43,082 11,665 11,600 11,600 11,317 11,667 11,560 11,560 HRA 50,896 63,685 60,250 44,550 47,650 45,650 0 0 0 0 0 Capital Expenditure 109,911 119,866 86,453 87,632 59,315 57,250 11,600 11,317 11,667 11,560 11,560 Capital grants 51,890 42,070 16,980 12,737 15,437 13,537 6,436 6,436 6,436 6,436 6,436 Revenue 0 796 496 496 496 496 496 496 496 496 496 Other funding 0 0 0 0 0 0 0 0 0 0 0 Net financing need for the year 58,021 77,000 68,977 74,399 43,382 43,217 4,668 4,385 4,735 4,628 4,628 Capital Financing Requirement CFR – General Services 481,094 521,085 546,564 562,132 570,619 578,996 566,917 554,663 542,566 530,383 518,177 CFR – HRA 426,630 462,094 484,689 498,495 506,021 513,449 502,738 491,871 481,143 470,339 459,516 Total CFR 907,724 983,180 1,031,253 1,060,627 1,076,640 1,092,445 1,069,656 1,046,533 1,023,709 1,000,722 977,693 Movement in CFR 31,206 75,456 48,073 29,374 16,013 15,805 (22,790) (23,122) (22,824) (22,987) (23,029) Movement in CFR represented by Net financing need for the year (above) 58,021 77,000 68,977 74,399 43,382 43,217 4,668 4,385 4,735 4,628 4,628 Loans Fund Review - - - - - - - - - - - Less scheduled debt amortisation and other financing movements (26,815) (1,544) (20,904) (45,025) (27,369) (27,412) (27,458) (27,507) (27,559) (27,615) (27,657) Movement in CFR 31,206 75,456 48,073 29,374 16,013 15,805 (22,790) (23,122) (22,824) (22,987) (23,029) Forecast 2035/36 Forecast 2035/36 Forecast 2035/36 Forecast 2035/36 Forecast 2030/31 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Table A - Net Capital Financing Need General Services and HRA Shown Separately £000 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 Forecast 2031/32£000 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2031/32 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2032/33 Forecast 2032/33 Forecast 2032/33 Forecast 2032/33 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 Table B - Capital Financing Requirement General Services and HRA Combined £000 Forecast 2033/34 Forecast 2025/26 Forecast 2026/27 Forecast 2031/32 Forecast 2033/34 £000 Forecast 2034/35 Forecast 2034/35 Forecast 2034/35 Forecast 2034/35 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2031/32 Forecast 2033/34 Forecast 2033/34 ITEM 9 APPENDIX 6 Page 93
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West Dunbartonshire Council Prudential and Treasury Indicators Table C - Internal Loan Fund Repayment Profile (excluding PPP repayments) General Services (Exc PPP) 7.16% 7.70% 8.11% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% General Services 9.80% 10.28% 10.62% 2.44% 2.40% 2.35% 2.29% 2.22% 2.15% 2.08% 0.00% HRA 51.06% 66.47% 70.56% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% External Debt Debt at 1 April 802,513 843,576 901,654 948,482 996,724 1,013,812 1,030,735 1,009,109 987,200 965,641 943,975 New Borrowing - CFR 41,063 58,078 46,828 48,243 17,088 16,923 (21,626) (21,909) (21,559) (21,666) (21,666) Debt at 31 March 843,576 901,654 948,482 996,724 1,013,812 1,030,735 1,009,109 987,200 965,641 943,975 922,309 Long Term Liabilities at 1 April 90,121 89,514 88,920 88,288 87,616 86,964 86,268 85,526 84,735 83,892 82,993 Change in Long Term Liabilities (607) (594) (631) (672) (653) (696) (742) (791) (843) (899) (941) Long Term Liabilities at 31 March 89,514 88,920 88,288 87,616 86,964 86,268 85,526 84,735 83,892 82,993 82,052 Gross Debt at 31 March 933,090 990,574 1,036,770 1,084,341 1,100,776 1,117,003 1,094,636 1,071,935 1,049,533 1,026,968 1,004,361 Capital Financing Requirement 907,724 983,180 1,031,253 1,060,627 1,076,640 1,092,445 1,069,656 1,046,533 1,023,709 1,000,722 977,693 Under / (Over) Borrowing (25,366) (7,394) (5,517) (23,714) (24,136) (24,558) (24,980) (25,402) (25,824) (26,246) (26,668) Forecast 2035/36 Forecast 2035/36 Forecast 2034/35 Forecast 2034/35 Forecast 2032/33 Forecast 2032/33 Table E - Gross External Debt compared to the Underlying Need to Borrow (CFR) £000 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2031/32 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2033/34 Table D - Ratio of Financing Costs to Net Revenue Stream Forecast 2031/32 Forecast 2033/34 Page 94
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West Dunbartonshire Council Prudential and Treasury Indicators External Debt 927,933 991,819 1,043,330 1,096,397 1,115,194 1,133,809 1,110,020 1,085,920 1,062,205 1,038,373 1,014,540 Long Term Liability 98,465 97,812 97,117 96,378 95,660 94,895 94,079 93,209 92,281 91,292 90,257 Total 1,026,399 1,089,631 1,140,447 1,192,775 1,210,854 1,228,704 1,204,099 1,179,129 1,154,487 1,129,665 1,104,797 External Debt 1,012,291 1,081,985 1,138,178 1,196,069 1,216,575 1,236,882 1,210,931 1,184,640 1,158,770 1,132,770 1,106,771 Long Term Liability 107,417 106,704 105,946 105,140 104,356 103,522 102,631 101,682 100,670 99,591 98,462 Total 1,119,708 1,188,688 1,244,124 1,301,209 1,320,931 1,340,404 1,313,563 1,286,322 1,259,440 1,232,362 1,205,233 Bank Rate 3.75% 3.50% 3.50% 3.25% 3.25% 3.25% 3.25% 3.25% 5yr PWLB Rate 4.60% 4.50% 4.30% 4.20% 4.10% 4.10% 4.10% 4.10% 10yr PWLB Rate 5.20% 5.00% 4.90% 4.80% 4.80% 4.70% 4.70% 4.70% 25yr PWLB Rate 5.80% 5.70% 5.60% 5.50% 5.50% 5,40% 5.30% 5.30% 50yr PWLB Rate 5.60% 5.50% 5.40% 5.30% 5.30% 5.20% 5.10% 5.10% Long term rating 1 year 2 years 3 years 4 years 5 years AAA 0.04% 0.09% 0.16% 0.24% 0.33% AA 0.02% 0.04% 0.09% 0.15% 0.21% A 0.05% 0.13% 0.23% 0.34% 0.47% BBB 0.14% 0.36% 0.62% 0.92% 1.22% BB 0.62% 1.77% 3.06% 4.36% 5.59% B 2.61% 6.45% 9.95% 12.99% 15.54% CCC 18.94% 26.83% 32.22% 35.69% 38.63% Note - The AAA default risk is actually higher than the AA default risk due the number of AAA rated institutions left Forecast 2035/36 Forecast 2035/36 Forecast 2025/26 Forecast 2034/35 Forecast 2034/35 Sep-27 Dec-27 Table I - Historic Risk of Default Mar-26 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2031/32 Table F - Operational Boundary £000 Forecast 2025/26 Forecast 2026/27 Forecast 2031/32 Sep-26 Dec-26 Table H - Interest Rate Forecast Table G - Authorised Limit Jun-26 Mar-27 Jun-27Link Asset Services Interest Rate View Forecast 2026/27 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31£000 Forecast 2032/33 Forecast 2032/33 Forecast 2033/34 Forecast 2033/34 Page 95
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West Dunbartonshire Council Prudential and Treasury Indicators Investment Fitch Category (or equivalent) Money Limit Time Limit F1+ / AA- £10million 364 days F1 / A- £5 million 2 F1/A- £10 million (per group) 364 days 3 £5 million Overnight 4 £5 million 364 days 5 As in 1 above £10million and £5million 364 days Sector Limit £25 million Fund Limit £5 million 7 No limit 6 months Sector Limit £25 million 364 days Fund Limit £5 million £000 1% -1% Variable Rate Debt Payments N/A N/A N/A Variable Rate Investment income 26,310 263 -263 Very liquid no time limit applies Table K - Sensitivity to Interest Rate Movements 8 6 1 Table J - Counterparty Limits Page 96
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West Dunbartonshire Council Prudential and Treasury Indicators 2025/26 2026/27 2027/28 Upper Upper Upper Limits on fixed interest rates Limits on variable interest rates Lower Upper Lower Upper Lower Upper Under 12 months 0% 50% 0% 50% 0% 50% 12 months to 2 years 0% 50% 0% 50% 0% 50% 2 years to 5 years 0% 50% 0% 50% 0% 50% 5 years to 10 years 0% 50% 0% 50% 0% 50% 10 years to 20 years 0% 50% 0% 50% 0% 50% 20 years to 30 years 0% 50% 0% 50% 0% 50% 30 years to 40 years 0% 50% 0% 50% 0% 50% 40 years to 50 years 0% 100% 0% 100% 0% 100% 50 years to 60 years 0% 100% 0% 100% 0% 100% 60 years to 70 years 0% 100% 0% 100% 0% 100% Principal sums invested > 364 & 365 days Maturity Structure of fixed interest rate borrowing Table L - Treasury Management Limits on Activity £nil £7m £nil £7m 100% 100% 50% 50% £nil £7m 50% 100% Page 97
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