The Audit Committee of Havering Council was scheduled to discuss the council's Statements of Accounts for the 2024/25 financial year, alongside the external audit reports. The committee was also set to review the Treasury Management Strategy Statement and Annual Investment Strategy for 2026/27, as well as receive an update on the progress of internal audits for 2025/26.

Statements of Accounts 2024/25 and External Audit Reports

The committee was scheduled to review the council's Statements of Accounts for the financial year 2024/25. This included the external auditor's¹ Accounts and the reports to those charged with governance. The report presented the external auditor's findings for the 2024/25 financial year and detailed a disclaimer of audit opinion².

The report indicated that due to a lack of assurance over opening balances from previous years' disclaimed opinions, it had not been possible to complete the audit of the council's accounts before the legislative backstop date of 27 February 2026. Consequently, Ernst & Young LLP (EY), the external auditor, was expected to issue a disclaimed audit opinion³ for the 2024/25 financial year, and likely for 2025/26 as well. The council stated it would work with its external auditor to develop a recovery plan.

Key audit adjustments noted included corrections for understated depreciation, reclassifications between debtors and creditors, and adjustments to National Non-Domestic Rates (NNDR) income. The report also highlighted a significant weakness in value for money (VfM) arrangements concerning internal control matters, including potential fraudulent activity, as reported by the Head of Internal Audit.

The committee was asked to note the Audit Results Report for the Authority and the disclaimer of audit opinion for 2024/25. It was also asked to note the Audit Results Report for the Pension Fund, which was expected to receive an unmodified opinion for 2024/25. The committee was also to approve the Statement of Accounts for the financial year ended 31st March 2025, delegating authority to the Section 151 Officer⁴ and the Chair of the Audit Committee to sign them. Approval was also sought for the draft Letters of Representation and the 2024/25 Annual Governance Statement⁵.

Treasury Management Strategy Statement and Annual Investment Strategy 2026/27

The committee was scheduled to consider the Treasury Management Strategy Statement (TMSS) and the Annual Investment Strategy for 2026/27. The TMSS forms part of the Authority's overall budget setting strategy and financial management framework, covering borrowing and investment strategies, treasury management and prudential indicators⁶.

The report highlighted the macroeconomic outlook, including forecasts for bank rates and Public Works Loans Board (PWLB) rates, which indicated a general trend of falling interest rates. The borrowing strategy outlined plans to manage cash flow variability and fund capital expenditure, with a preference for shorter-duration borrowing to minimise immediate interest rate costs. The report also detailed the approved sources and types of borrowing, including PWLB, municipal bonds, local authorities, banks, and the UK Infrastructure Bank.

The investment strategy emphasised the priority of security and liquidity over yield, with investments to be made with organisations of high credit quality. Counterparty credit criteria were outlined, including minimum credit ratings and limits on exposure to single counterparties. The report also detailed the Authority's counterparty credit policy and minimum credit ratings criteria for various investment types.

Internal Audit Report

The committee was scheduled to receive the Head of Assurance Progress Report for 2025/26, summarising the outcomes of internal audit and counter fraud work. The report indicated that several audits had been deferred to the 2026/27 Internal Audit Plan due to emerging high-risk issues requiring in-depth review. The rationale for deferring specific audits, such as Asset Management and Contracts, was provided, often due to capacity constraints or the need to address higher-risk areas.

The report also detailed the progress of audits within the 2025/26 plan, categorised by Systems and Schools. Several system audits, including Budget Management (Parking) and Procurement Processes Follow Up, were marked as completed with limited or reasonable assurance ratings. However, audits such as Asset Data, Highways, and Mercury Land Holdings were listed as underway. For schools, audits such as Budget Management and Contracts were also underway.

The counter fraud service reported on proactive investigations and reactive cases reviewed. This included data protection requests, National Fraud Initiative (NFI) matches, and investigations into housing fraud and right to buy (RTB) applications. The report highlighted a significant increase in notional savings from detected housing fraud in 2024/25 compared to previous years, attributed partly to a reduction in the RTB discount.

Limited assurance reports were summarised, including findings on Garage Allocations, Temporary Accommodation Additional Overspend Follow Up, and Petra Tenant Management Organisations (TMO) Follow Up. For Garage Allocations, weaknesses in compliance, oversight, and record management were identified, leading to financial loss and data integrity issues. The Temporary Accommodation audit confirmed progress but noted remaining weaknesses in data management and forecasting. The Petra TMO follow-up highlighted a lack of progress, leading to the decision to bring the service back in-house.