The Audit Committee of Hinckley and Bosworth Council met on Wednesday 5 August 2026 to review internal audit reports on licensing and corporate governance, receive an update on the progress of internal audits, and discuss the unaudited statement of accounts for 2025/26. The committee received a moderate assurance opinion on the licensing function, highlighting areas for improvement in process formalisation and reliance on key individuals. A substantial assurance opinion was given for corporate governance, with two low-priority recommendations concerning the employee code of conduct and member training. The committee also noted significant progress in the delivery of the internal audit plan for both 2025/26 and 2026/27.

Licensing Internal Audit Report

Charles Black, from the internal auditors Forvis Mazars LLP, presented the final report on the licensing function for 2025/26. The audit aimed to assess whether licences were being issued, monitored, and enforced in accordance with statutory requirements and council policies. The report concluded with a moderate assurance opinion, indicating that while the general control framework was operating robustly, there were several areas for improvement.

Seven recommendations were raised, comprising five medium and two low-priority actions. Key findings included:

• Suspension of licences for non-payment: The current process relies on a single officer, creating a risk of a single point of failure. Delays in issuing suspension notices were identified in three out of six cases tested.
• Inspection arrangements: While inspections were taking place, their frequencies, risk ratings, and monitoring arrangements were not formally documented, making it difficult to demonstrate completion within appropriate timescales. There was also a reliance on key individuals in this area.
• Complaint and breach management: No current documented procedure exists for managing and escalating complaints and breaches, and supporting evidence was not consistently held centrally. This made it difficult to obtain a complete audit trail for complaint cases.

Management responses indicated that actions are underway to address these recommendations, including reviewing automation options for escalations, training business support staff, and introducing a documented policy for inspections. The management comments on the complaint procedure were partially agreed, with explanations that compensating controls were in place, though the audit trail was not always evident at the time of the audit.

Councillor C Lambert questioned whether the management's partially agreed response to recommendations meant full implementation would not occur, expressing a desire for full agreement. Ashley Wilson, Director of Resources, Audit and Monitoring Officer, clarified that partially agreed often means some aspects are already in place or in progress, or that management believes compensating controls mitigate the risk, even if not fully adopting the recommendation.

The committee also discussed the use of the Uniform IDocs software package for licensing, noting it is one of the most widely used packages, and that further work would be undertaken to assess future software needs.

Corporate Governance - Decision Making

Charles Black also presented the internal audit report on corporate governance and decision-making for 2025/26, which resulted in a substantial assurance opinion, the highest level of assurance. The audit found that the council's constitution clearly defined decision-making responsibilities, committee terms of reference, and that registers of interest and declarations of gifts and hospitality were maintained and publicly available. The Audit Committee's self-assessment scores had significantly improved over the past two years.

Two low-priority recommendations were raised:

• Employee Code of Conduct: The document had not been formally reviewed since 2021, and refresher training had not been delivered. Management confirmed that a review had taken place in May 2026 with no changes, and an e-learning module would be launched in September 2026.
• Member training: Poor attendance levels had been identified as an area for improvement through the Audit Committee's self-assessment. A formal training programme for the Audit Committee is currently being drafted.

Councillor Chris Lambert raised concerns about the need to review corporate governance when the audit report indicated substantial assurance, particularly in light of a pending review of corporate governance and the constitution on the Overview and Scrutiny Committee's agenda. Ashley Wilson clarified that the internal audit was an external, independent assurance piece, distinct from internal scrutiny. It was also noted that the audit scope did not cover the specific issue of the constitution not reflecting recent management structure changes, as this was outside the fieldwork for this particular audit.

Internal Audit Progress Report

Charles Black provided an update on the internal audit progress for 2025/26 and the plan for 2026/27. He reported significant improvement in the delivery of the 2025/26 plan, which was now assessed as on track. Final reports for licensing and corporate governance had been issued, and draft reports for enforcement action and follow-up were also completed. For the 2025/26 plan, four substantial and two moderate assurance opinions had been issued, with no limited or unsatisfactory opinions.

Looking ahead to 2026/27, delivery was progressing as planned, with draft reports for the car parks review written and awaiting quality assurance. Electoral registration fieldwork was well underway, and planning had commenced for IT audits and food inspections.

Councillor Lambert inquired about refunds for incomplete audits, and Charles Black explained that billing is based on delivered work, so no refunds are necessary. He also suggested having a reserve list of audits that could be pulled in if needed, which was noted.

Regarding the ten medium audit recommendations in 2025/26, Charles Black stated this was consistent with previous years, with the most common recommendation type being medium risk. He clarified that the IT audit was not required due to an IT partnership arrangement where another internal audit group was providing assurance for the partnership. Ashley Wilson confirmed that they would check if sight of that audit would be provided.

Councillor Lambert also asked about the role of audit in the Local Government Review (LGR), and it was noted that this would be considered during the planning for the 2027/28 audit plan. Andrew McCann, Assistant Manager at Forvis Mazars, added that as LGR approaches, audit plans would naturally factor in the impact on delivering recommendations.

Unaudited Statement of Accounts 2025/26

Ashley Wilson, Assistant Director Finance & Audit (Section 151 Officer), presented the unaudited statement of accounts for 2025/26. He explained the various financial statements, including the Comprehensive Income and Expenditure Statement, Movement in Reserves Statement, Balance Sheet, and Cash Flow Statement.

Key financial information highlighted included:

• A surplus on services of £6.34 million before considering revaluation of fixed assets, pension liabilities, and other comprehensive income, resulting in a deficit of £6.9 million after these adjustments.
• An increase in the general fund balance of £2.3 million, while overall usable reserves were down by £202,000.
• Long-term assets of £348.3 million, with the majority being housing stock valued below market value.
• Current liabilities (£22.5 million) being higher than current assets (£16.8 million), which would typically indicate a weaker balance sheet, but was mitigated by a strong cash flow position.
• Long-term liabilities of £106 million, largely due to debt related to social housing.
• Net assets of £235 million.

Ashley Wilson also discussed the audit backlog, explaining that due to previous disclaimed opinions from Ernst & Young, Azets, the current auditors, had to issue a disclaimed opinion for 2024/25 and would likely do so for 2025/26. An unmodified opinion was potentially achievable in 2027/28, subject to the Local Government Reorganisation (LGR) progressing as expected. He noted the complexity of auditing councils that no longer exist and the keenness to clear the backlog before the LGR.

Councillor Richard Welch sought clarification on general receivables and the maturity of debts, which Ashley Wilson explained was largely due to capital programmes and a strategic decision to borrow short-term due to current interest rates.

Councillor Chris Lambert raised concerns about the population figures in the tables and the increase in pension liabilities. Ashley Wilson explained that pension valuations are tri-annual and based on actuarial assumptions, leading to significant adjustments. He also clarified that population and housing need are separate considerations.

Councillor Lambert also expressed concerns about earmarked reserves and the increase in debt, suggesting that these could be areas for future audit. Ashley Wilson explained that debt primarily relates to capital projects and that the council cannot stop investing in its assets.

The committee agreed to the recommendations for the unaudited statement of accounts to be approved, and for the Chair of the Audit Committee to be given delegated authority to approve the final accounts.

The meeting concluded with the Chair thanking the officers for their work.