The Audit, Finance & Performance Committee of Hillingdon Council met on Tuesday 9 June 2026 to review the Council's financial performance, audit progress, and governance arrangements. Key discussions included the external audit update for the 2024/25 accounts, the Governance Review Improvement Plan, and the Council's budget outturn for 2025/26. The Committee also reviewed the Counter Fraud Annual Report and noted the progress made in improving risk management across the organisation.

External Audit Update: Process for Auditing the 2024/25 Accounts Main Accounts and Pension Fund Accounts

The Committee received an update on the external audit process for the 2024/25 Council and Pension Fund accounts. Councillor John Riley, Chair of the Pensions Committee, noted that the Pension Fund had continued to receive clean audit opinions, while the Council's accounts were still facing challenges in rebuilding assurance following previous disclaimed audit opinions. Ernst & Young LLP, the external auditors, presented their audit planning reports, highlighting key risks such as the valuation of property, plant, and equipment, and the presumptive risk of management override of controls. The auditors indicated that a disclaimed opinion was likely for the 2025/26 Council accounts due to ongoing assurance gaps. The Committee was informed that the audit fees for 2025/26 had increased, reflecting the complexity and ongoing work required.

Governance Review Improvement Plan Update

An update was provided on the Governance Review Improvement Plan (GRIP), which aims to address identified governance weaknesses. The plan is structured around three workstreams: financial governance, directorate governance, and constitutional/democratic governance. Progress was reported on the Finance Modernisation Programme (FMP), including the implementation of spend controls, the application for Exceptional Financial Support (EFS), and updates to the Oracle EPM solution for financial monitoring. The Committee was informed that the Council had met the statutory requirement for setting its 2025/26 budget, with recommendations made to commence the budget-setting process earlier in future years. Updates were also provided on directorate governance, with all recommendations implemented and a new balanced scorecard approach for 2026/27 agreed. Constitutional changes approved at the Council AGM were also noted.

Counter Fraud Annual Report 2025/26

The Committee reviewed the Counter Fraud Annual Report for 2025/26, which detailed significant financial benefits achieved through counter-fraud activities. It was reported that £12.7 million in financial benefits had been realised across housing, revenues, and adult social care. This included the recovery of 113 Council properties and the closure of 36 emergency accommodation units. Businesses identified as liable but unlisted for business rates were billed approximately £2.4 million. The Counter Fraud Team also received a Local Excellence Award for its data-led approach. Members commended the team's achievements and noted the focus on high-value investigations.

Risk Assurance Annual Report 2025/26

The Risk Management Annual Report for 2025/26 was presented, indicating a positive shift towards actively managing risks rather than just recording them. At year-end, 222 risks were recorded on the corporate risk register, with 16 rated as red. The Council's risk management maturity had improved from risk aware to risk defined. Key financial risks were discussed, with assurances provided on strengthened financial resilience due to EFS, reserve rebuilding, and anticipated Dedicated Schools Grant funding. Risk management training and guidance were being embedded across the organisation. The Committee welcomed the progress made.

Internal Audit Annual Report 2025/26

The Internal Audit Annual Report for 2025/26 was presented, highlighting that despite staffing vacancies, the audit plan had been successfully delivered, with 40 audits and reviews completed. Most reviews received substantial or reasonable assurance. However, a limited assurance opinion was issued for the Council's overall governance, risk management, and control framework, and a no assurance opinion was given for the Green Spaces review. Improvements in budget monitoring, performance reporting, risk management, and governance arrangements were noted, with further work planned. Recruitment was underway to strengthen the Internal Audit team.

Audit Committee Annual Report 2025/26

The Committee reviewed the draft Annual Report for 2025/26. Amendments were suggested to more accurately reflect the local and national factors contributing to delays in the Council's accounts preparation. Greater emphasis was also requested on the Committee's governance responsibilities, including oversight of constitutional arrangements, financial regulations, and the whistleblowing policy. Subject to these amendments, the report was approved.

Budget Outturn 2025/26

The draft Budget Outturn Report for 2025/26 was presented, showing a reduction in the Council's overspend to £29.0 million. Earmarked reserves had been rebuilt, and Exceptional Financial Support (EFS) was highlighted as crucial in balancing the budget and stabilising the financial position. The Dedicated Schools Grant deficit had reduced, and the Housing Revenue Account achieved a broadly balanced outturn. Capital expenditure was £252 million against a budget of £343 million, reflecting programme slippage. The Committee discussed technical aspects of the report and the costs and benefits of financial improvement programmes.

Annual Performance Report 2025/26

A performance update covering various Council services was provided. Progress was noted in stabilising homelessness services, strong performance in waste collection and recycling, and efforts to manage the increasing costs of care packages in Children's Services. Adult Social Care continued to face growing demand, with the voluntary sector playing a key role in preventative support. Discussions also covered fly-tipping, littering, and public realm services, with ongoing enforcement and clearance activities. The Committee requested future benchmarking information against statistical neighbours and additional performance data on road safety and crime trends.

Forward Plan and Work Programme

The Committee reviewed the Cabinet's Forward Plan and its own Work Programme. The Forward Plan outlines key decisions to be taken by the Cabinet over the coming year, and the Committee discussed its role in pre- and post-decision scrutiny. The Work Programme for the Audit, Finance & Performance Committee was also considered, with planned meeting dates and agenda items for the upcoming year outlined. The Committee noted the update on the recruitment for the Independent Chair of the Audit Committee.

Decisions Made:

• The minutes of the meeting held on 9 June 2026 were confirmed as an accurate record.
• The Committee noted the Counter Fraud Annual Report for 2025/26.
• The Committee noted the draft plan of the Audit of the 2025/26 Council Accounts and the audit of the 2025/26 Pension Fund Accounts.
• The Committee noted the Risk Management Annual Report for 2025/26 and the actions taken to improve risk management arrangements.
• The Committee noted the Internal Audit Annual Report for 2025/26 and the work undertaken by Internal Audit during the period.
• Authority was delegated to the Chair, in consultation with Democratic Services, to agree the final wording of amendments to the Audit Committee Annual Report 2025/26, and subject to this, the report was approved.
• The Committee noted the Risk Assurance report and considered the level of assurance received.
• The Committee noted the update on its overview and scrutiny role.
• The Committee reviewed and noted the attached Cabinet report on the Budget Outturn 2025/26 in line with its Council-wide financial overview and scrutiny role.
• The Forward Plan was noted.
• The Committee noted the update on the recruitment for the Independent Chair of the Audit Committee and work programme.