The Audit Committee of Hinckley and Bosworth Council met on Wednesday 27 May 2026, reviewing internal and external audit reports, the council's fraud management strategy, risk management policy, and the annual governance statement. Key decisions included the endorsement of the updated Fraud Management Strategy and Action Plan, and the approval of the Annual Governance Statement for 2025/26.

Internal Audit Progress Report

Charles Black, the new Internal Audit Manager from Forbes Mazars, presented the internal audit progress report for May 2026. He noted that while the audit plan was slightly behind schedule, all audits were in progress, with most at draft report stage and all expected to be finalised before the next committee meeting. Assurance levels were generally positive, with a mix of moderate and substantial assurance and no fundamental control weaknesses identified. Councillor R Webber-Jones inquired about the deferral of certain audits, and it was explained that this was to allow for more comprehensive reviews once ongoing council work in those areas was further developed. The committee also discussed the use of Artificial Intelligence (AI) in local government, with Charles Black noting that its widespread organised use was currently limited, with most applications focused on administrative tasks.

Council Tax Support and NNDR 2025/26 - Internal Audit Final Report

The committee received the final internal audit report on Council Tax Support and Non-Domestic Rates (NNDR) for 2025/26, which received an overall opinion of substantial assurance. Three low-risk recommendations were raised, relating to a reconciliation issue that had already been resolved, the absence of a routine review process for discounts and reliefs, and the need to formalise internal procedures. Sally O'Hanlon, Head of Revenues and Benefits Partnership, confirmed that the recommendations were not problematic and that work was already underway to address them, particularly in preparation for Local Government Reorganisation (LGR).

Internal Audit Partnership Governance 2025/26

Charles Black presented the internal audit report on partnership governance for 2025/26, which resulted in a moderate assurance opinion. Two medium-risk recommendations were identified concerning partnership agreements for the ICT partnership and the revenues and benefits partnership. For the ICT partnership, there was no signed and enforceable agreement in place following the expiry of the previous one. For the revenues and benefits partnership, the agreement was still in place but was out of date and had not been formally reviewed for several years. Management accepted these recommendations, with actions to be implemented by September. Julie Kenny, Director (Resources, Audit and Monitoring Officer), confirmed that these issues would be addressed.

Internal Audit Strategy Update – Operational Plan 2026/27 & Charter

Charles Black presented the internal audit strategy update, operational plan for 2026/27, and the internal audit charter. The plan, developed using a risk-based approach, outlines 110 audit days covering key areas such as core systems, operational services, and strategic risks. The internal audit charter, which sets out the function's role, authority, and independence, is reviewed annually to ensure compliance with global internal audit standards. Councillor R Webber-Jones raised a question about how previously identified limited assurance areas were revisited, and Andrew McCann, who supports Charles Black, explained that follow-up reports would capture outstanding recommendations.

External Audit Plan 2025/26 Summary

Ashley Wilson, Assistant Director Finance & Audit, provided an overview of the external audit plan for 2025/26, prepared by Azets. He highlighted that due to ongoing build back work, a disclaimed opinion was likely for the 2025/26 financial year. He explained the concept of materiality, with an overall materiality of £1.9 million for the financial statements. Helen Parks from Azets detailed the audit approach, significant risks, and the audit timeline. Key risks identified included management override of controls, valuations of land and buildings, council dwellings, and the pension liability, as well as the implementation of IFRS 16 and the completeness of Housing Revenue Account (HRA) land. The audit plan also included work on Value for Money (VFM) arrangements, with no significant weaknesses identified at this stage. The committee noted the ongoing challenges with disclaimed opinions and discussed the capacity of the finance team to support the required audit work.

Annual Governance Statement 2025/26

Ashley Wilson presented the Annual Governance Statement (AGS) for 2025/26, which demonstrates a continuous review of the effectiveness of internal control, performance, and risk management. The statement included enhanced disclosures following updates to the CIPFA framework, with a new Governance Action Plan (G1-G7) detailing actions, lead officers, and timescales. The draft internal audit opinion indicated moderate assurance, with no significant weaknesses to disclose. The committee discussed the timing of the governance action plan, with Councillor P Williams expressing a preference for seeing the plan for the upcoming year rather than just reporting on the past year. Ashley Wilson clarified that the action plan in the AGS is a report of the past year's actions, but that future plans would be reviewed.

Fraud Management Strategy & Action Plan

Ashley Wilson presented the Fraud Management Strategy and Action Plan, developed with assistance from Grant Thornton. This strategy aims to safeguard public funds, promote a culture of integrity, and ensure compliance with legislation, including the Economic Crime and Corporate Transparency Act 2023 (ECCTA). The strategy aligns with a Fraud Risk Maturity Model, with the aim of achieving Level 3 by March 2027 and Level 4 by March 2028. The committee was asked to recommend the strategy for approval by the Executive. Councillor P Williams raised questions about the terminology used in the strategy and the relationship between different levels and stages. The Chair noted that the strategy was a robust piece of work that stood up well against other organisations.

Risk Management Policy

Julie Kenny presented the revised Risk Management Policy for consideration and endorsement. The policy outlines the council's approach to identifying, assessing, and managing risks, including its risk appetite, which accepts higher risks for innovation and service improvement but maintains a lower appetite for safeguarding residents and public funds. The policy details the steps of risk management: identification, assessment, management, and review, along with clear roles and responsibilities for the Executive, Audit Committee, officers, and employees. Councillor R Webber-Jones inquired about the process for identifying opportunities, and Julie Kenny confirmed that this would be addressed in future training. Councillor P Williams suggested that the policy should more explicitly detail mitigation in its risk assessment scoring. Julie Kenny agreed to take this away for consideration.

Audit Committee's Self-Assessment Action Plan 2026/27 Update

Ashley Wilson presented an update on the Audit Committee's self-assessment action plan. The average score for the committee's effectiveness had increased from 0.9 to 3.9 since the initial assessment in September 2024. Key areas for continued focus included training needs, the relationship between the Audit Committee and Scrutiny, Local Government Reorganisation (LGR), and risk management. The committee also discussed the reporting of its minutes to the full council and the link between the Ethical Governance Committee and the Audit Committee's responsibilities. Councillor CM Allen asked for clarification on the scoring system used in the self-assessment, and Ashley Wilson explained the scale from 0 (no coverage) to 5 (everything covered). The committee also discussed the potential for exploring AI risks further, with Charles Black confirming that AI governance reviews would be included in future internal audit plans.

Items to be Referred to Council

It was noted that the Audit Committee's annual report would be referred to the next full council meeting in June.

The meeting concluded at 7:58 pm.