An independent review of Kyndi Ltd found its governance arrangements broadly effective but identified weaknesses in board appraisals, financial controls and risk register maintenance, with six corrective actions recommended.

An independent audit of the governance arrangements at Kyndi Ltd, Medway Council’s wholly owned local authority trading company, found the company broadly aligned with recognised good practice but identified a small number of areas requiring strengthening, a Cabinet Sub Committee meeting on 5 October 2026 was told.

The review was carried out by Medway Council’s Internal Audit service, which validated a self-assessment completed by Kyndi Ltd against the Local Partnerships Local Authority Company Review Guidance (2023). The self-assessment was signed off by the company’s chair and completed by its chief financial officer in June 2025.

What the audit found

Internal Audit concluded that Kyndi had established a clear governance framework, including adopted Articles of Association, a Memorandum of Understanding, Schemes of Delegation, and defined decision-making responsibilities. Strengths identified included active engagement from Non-Executive Directors, regular financial reporting, a documented risk management framework, and an established performance management framework supported by key performance indicators.

However, the validation identified four categories of concern. First, the Memorandum of Understanding was found to be undated and lacking formal approval details. Second, there was no explicit requirement within governance documentation for Non-Executive Directors to adhere to the Nolan Principles of Public Life, and evidence of board member appraisals could not be consistently demonstrated for previous years. Third, certain financial controls could not be fully validated due to missing documentation, and External Audit had separately identified a weakness in invoice and payment approval arrangements; the report also noted that future appointments of external auditors should be presented to the Shareholder Board in line with the company’s own governance requirements. Fourth, the risk register had fields that were not consistently completed, and review of key governance documents was not always clearly evidenced in board minutes.

Progress on the six recommended actions

A total of six actions were recommended. According to the report, Kyndi provided updates indicating that four had already been completed by the time the paper was written. These included updating the Memorandum of Understanding to include a formal date of approval, formally recording the requirement for directors to act in accordance with the Nolan Principles, updating the risk register so all fields are fully completed, and ensuring that review of the risk register and key governance documents is evidenced in meeting minutes and made a fixed agenda item.

Two actions remained outstanding at the time of writing: ensuring board member performance appraisals are completed consistently, and implementing all recommendations raised by external audit. Both were described as due to be completed in the third quarter.

The report noted there were no direct financial or legal implications arising from the governance review itself, though it stated that improved governance arrangements contribute to better financial oversight and value for money from the council’s investment in its companies.

The council had not published the minutes of the meeting at the time of writing, so the committee’s decision is not yet on the public record.

Sources

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