The Audit, Standards and Statutory Accounts Committee met on Thursday 2 July 2026 to review the council's financial accounts and governance arrangements. Key discussions included the external audit of the 2025/26 accounts, the council's governance framework, and an update on the strategic review of risk management. The committee noted the completion of the 2024/25 accounts and approved the proposed Annual Governance Statement for 2025/26.

Update on the Accounts and External Audit of 2025/26

The committee received an update on the external audit of the 2025/26 accounts. The draft accounts for 2025/26 had been published by the statutory deadline of 30 June 2026, and the external audit by Ernst & Young (EY) was commencing. The 2024/25 audit had been successfully completed, with EY issuing a 'qualified except for' opinion, which was considered a positive step forward.

Discussions highlighted the ongoing national issue of delays in local authority audits and the potential impact of central government funding reductions on the council's Medium Term Financial Strategy (MTFS). EY will continue to review the MTFS, and the council anticipates a significant reduction in central government funding, estimated at 55% for Richmond. The committee was reminded that external audit fees are determined by the Public Sector Audit Appointments Limited (PSAA), and any proposed fee increases by EY would be subject to arbitration with the council. Concerns were raised about entering into contracts without certainty of costs, but officers explained that the contract with PSAA was unique and designed for long-term economy of scale. Key financial statement risks, such as management override of controls, pension valuations, and the capitalisation of revenue expenditure, remain consistent year-on-year. The council is working to improve the timeliness and quality of information provided to auditors, and there is confidence that the council will regain a fully unqualified audit opinion by the 30 November target date, supported by strong working relationships between EY and the finance team.

The committee resolved to:

• Note the completion and publication of the 2024/25 Accounts.
• Note Ernst & Young's 2025/26 Audit Planning Report.
• Note the fees update in paragraphs 4.8 to 4.11.

Review of the Council's Governance Arrangements

The committee reviewed the council's governance arrangements, incorporating the proposed Annual Governance Statement (AGS) and the Chief Audit Executive's Annual Audit Report. The Assistant Director of Audit Shared Service presented the findings, noting that the council's governance, risk management, and internal control arrangements were generally sound and provided reasonable assurance.

The Annual Internal Audit Report indicated that 96% of the audit plan had been delivered, with 22 assurance audits completed. Two received substantial assurance opinions, and twenty received reasonable assurance opinions, with no limited or no assurance reports issued. A total of 113 recommendations were made, including five Priority 1 recommendations concerning billing and debt monitoring, service performance oversight, regulatory compliance, and cost recovery. All Priority 1 recommendations have been accepted by management. Recurring themes identified included the inconsistent implementation of existing controls, rather than their absence, and issues related to governance and oversight, contract management, and policy maintenance.

The AGS, which looks back at the 2025/26 financial year, identified six significant governance issues requiring continued oversight:

• Information & Cyber Security: The increasing sophistication of cyber threats and the council's reliance on digital systems pose a risk to service continuity and data protection.
• Organisational Capacity and Workforce Sustainability: While recruitment and retention pressures have eased, leadership stability and the capacity to deliver the transformation programme remain key challenges.
• Contract Management and Third-Party Assurance: The council's increasing reliance on external providers necessitates robust contract management and oversight, particularly given external factors like market volatility and geopolitical developments.
• Major Projects/Project Management: Significant capital and transformation programmes face inherent delivery risks, including cost pressures and external environmental factors.
• Financial Sustainability and Transformation: Challenging financial conditions, including demand pressures and potential reductions in central government funding, necessitate the effective governance and delivery of the transformation programme.
• Risk Management Framework: Improvements are needed to strengthen the consistent identification, assessment, and escalation of risks across the organisation, with a new digital platform and revised strategy being implemented.

Officers assured the committee that controls not being implemented 100% of the time is expected, and that Priority 1 recommendations are made when significant risks are identified. The committee noted that some audit reviews had been deferred to the 2026/27 plan due to service restructures and IT system implementations, but officers confirmed that Internal Audit actively participates in project governance to influence control design early on.

The committee resolved to:

• Note the council's statutory annual review of its governance arrangements.
• Note the Annual Internal Report incorporating the Chief Audit Executive's annual opinion on the council's governance, risk management, and internal control arrangements.
• Approve the proposed Annual Governance Statement for 2025/26 for signature and publication with the council's accounts.

Update Report on Strategic Review of Risk Management

The Director of Financial Services presented an update on the revised risk management framework, which has transitioned from a specialist-led approach to service ownership supported by a digital platform. This new framework distinguishes between inherent risk, mitigating controls, residual risk, and risk appetite, aiming for greater transparency and oversight. Thirteen corporate risks have been identified, including cyber security, financial sustainability, transformation delivery, and geopolitical developments.

Discussions highlighted the embedding of the new approach through Executive Director approvals, governance board reviews, and the digital platform's real-time updates. Workshops are being provided for staff. Members inquired about how councillors, particularly lead members and project sponsors, would interact with the framework, and were advised to challenge project governance and risk registers in relevant committees. Concerns about the aggregation of risks potentially obscuring significant threats were addressed by explaining that the corporate register provides a high-level overview, with future digital reporting offering more detailed service-level visibility. The scoring of risks, undertaken by risk owners and subject to moderation, uses a standard five-by-five matrix.

The committee noted that the transformation programme risks, political changes, and governance changes were acknowledged, with emphasis on regular challenges and iterative development. Officers confirmed that the annual governance review would include the impact of new legislation on the council's governance. Members would have input on the forward plan for proposed audits, flagging key risk areas or failures to implement Priority 1 recommendations. Officers stated that the revised risk management strategy would require a full cycle to evaluate its effectiveness, with a top-level review by the Executive Board in September.

The committee resolved to:

• Note and comment on the corporate risk register.
• Note progress with updating the council's Risk Management Approach and digital platform.

Committee Work Programme

Members were informed that audits of the Transformation Programme and Twickenham Riverside governance arrangements were underway. Officers stated that full reports would be presented to the committee if significant concerns or Priority 1 recommendations emerged; otherwise, findings would be incorporated into routine update reports. Members emphasised that Priority 1 findings should be explicitly reported.

The meeting concluded with the Chair thanking attendees for their contributions.