The Hackney Council Audit Committee met on Wednesday 17 June 2026 to review various reports concerning the council's financial health, risk management, and internal audit performance. Key decisions included noting the external audit plan for 2025/26, approving an updated Internal Audit Charter and Strategy, and noting updates on treasury management and the corporate risk register.

External Audit Plan 2025/26

The Audit Committee considered and noted the contents of the 2025/26 Audit Strategy Memorandums from Forvis Mazars LLP, the Council's external auditor. Suresh Patel from Forvis Mazars presented the plan, highlighting a materiality threshold of £25 million. Two significant audit risks relating to Value for Money were identified, stemming from external inspections by Ofsted and the CQC. These risks are in addition to two ongoing concerns from the previous year: the council's financial sustainability and health and safety standards. The Council has managed to avoid audit backlogs that have affected other local authorities, which was attributed to stable financial reporting and experienced finance teams.

Councillor Izzy Castello-Cortes inquired about the potential use of artificial intelligence (AI) in accounting and auditing, particularly for fraud detection through data analytics. Mr. Patel explained that while AI is not currently used for account preparation and external auditors are prohibited by the Financial Reporting Council from using it in audit work, data analytics are employed to review large volumes of transactions and identify anomalies. He noted that the use of AI in auditing is expected to develop in the future. Councillor George Sheldon Grün asked about the management of Value for Money (VFM) risks. Mr. Patel clarified that when a VFM risk is identified, further assessment is conducted on how the Council manages it. If arrangements are deemed inappropriate, recommendations are made, reported to the Council, and followed up in subsequent years.

Treasury Management Update Report

Pradeep Waddon, Head of Treasury, Banking and Accounts Payable, presented the first quarterly report for 2026-27, covering April and May. Treasury investment balances were £22 million, with borrowing at approximately £343 million.

Councillor Charlie Lawrie raised concerns regarding lending to Lancashire County Council. Officers confirmed that lending adheres to the Treasury Management Strategy and advice from the Council's treasury advisors, who assess creditworthiness and appropriate counterparties. Further details on specific lending arrangements would be provided separately. A question was also raised about future investment in cybersecurity. Officers stated this was outside the scope of the Treasury Management report but confirmed cybersecurity is a priority and investments are considered through the Council's standard budget-setting processes. The financial benefits of the Council's invest to save programme were also discussed, with officers confirming that investments in temporary accommodation have generated savings and that such initiatives are a key part of the Council's financial sustainability strategy. Updates on the Britannia Phase 2 project were noted to be available through future financial monitoring reports.

Corporate Risk Register

Matthew Powell, the Corporate Risk Manager, presented the current Corporate Risk Register. The council's financial position was identified as the primary overarching risk affecting multiple service areas. Other significant risks highlighted included the corporate transformation programme, cybersecurity, unregistered schools and settings, pressures on temporary accommodation, climate change commitments, adult social care budgets, and housing property repairs. The risk rating for the corporate transformation programme had increased due to challenging circumstances, although no new risks were added. Financial improvement boards have been established for the Housing Revenue Account and Adult Social Care, replacing a more general budget recovery board.

Members discussed the council's financial position, including the utilisation of reserves and the oversight of budget recovery. Officers explained that financial pressures remain significant and that service-specific financial improvement boards offer more focused oversight of high-risk areas like Housing and Adult Social Care. The Corporate Risk Register had not seen significant changes since the last review, apart from the increased risk rating for the corporate transformation programme. Regarding the council's capital borrowing programme, officers confirmed it is managed in line with the approved Capital Strategy and Medium Term Financial Strategy, remains at a relatively low level compared to the council's assets, and supports approved capital investments. The transformation programme's governance, savings targets, and the Star Chamber budget review process were explained, with savings proposals subject to member oversight and detailed business cases. Officers acknowledged that while government funding is more predictable due to a multi-year settlement, uncertainty persists regarding demand-led services and inflationary pressures, making robust financial forecasting and planned savings crucial for maintaining a balanced budget.

Internal Audit Annual Report 2025/26

Michael Sheffield, Corporate Head of Audit, Anti-Fraud & Risk Management, presented the Internal Audit Annual Report. The report indicated that 46 audits were completed, with 8 still in draft. While most audits resulted in positive opinions, six received limited assurance and two received no assurance, an increase from the previous year. Implementation rates for recommendations were below target, particularly within housing tenant management organisations and schools. The annual internal audit opinion concluded that the council's framework for governance, risk management, and internal control provides reasonable assurance that corporate objectives can be met.

Members inquired about the management of outstanding audit recommendations for schools and Tenant Management Organisations (TMOs). Officers explained that Internal Audit is collaborating with relevant service teams, utilising existing governance structures and targeted follow-up activities to improve implementation. A review of common themes from TMO audits is also planned. Questions were also raised about the relationship between the Corporate Risk Register and the Internal Audit Plan, including whether risk management processes had been audited. Officers confirmed that risk management processes had previously been audited and received reasonable assurance, and that cybersecurity remains a specific focus for internal audit. The report noted that corporate and directorate risk registers are presented to the Audit Committee, while more detailed service-level registers are internal documents. Most outstanding recommendations were linked to TMOs, with implementation delays partly attributed to management changes. Members were informed that future committee reports would offer more detailed examination of service-specific risks.

The committee commented upon and noted the report on Internal Audit's performance and opinion, and approved the updated Internal Audit Charter and Strategy.

Annual Fraud & Irregularity Report 2025/26

The committee noted the content of the Annual Fraud & Irregularity Report 2025/26. The report detailed that the investigation team recovered over £3 million during the year. Tenancy fraud investigations led to the recovery of 38 tenancies for the housing waiting list, with 10 housing applications and 3 right to buy applications cancelled. Blue Badge and parking permit misuse was addressed through enforcement. The Migrant Children and Families Team, working with social services, verified eligibility and generated £20,000 in weekly savings. The Proceeds of Crime Act resulted in £143,000 recovered from an unauthorised residential flat development. The team is rebuilding its Proceeds of Crime Act capabilities and implementing controls aligned with the Criminal Procedures and Investigation Act.

Audit Committee Work Programme

The Audit Committee noted its Work Programme.

The meeting was chaired by Councillor Zoe Holman and lasted from 6:30 pm to 8:20 pm.