The Audit, Finance & Performance Committee of Hillingdon Council met on Wednesday 15 July 2026 to review a range of financial and performance reports. Key discussions included the Counter Fraud Annual Report, updates on external audits, and the Council's budget outturn for the 2025/26 financial year. The committee also received an introduction to its overview and scrutiny role and reviewed the Council's risk management and internal audit reports.

Counter Fraud Annual Report 2025/26

The committee received the Counter Fraud Annual Report for 2025/26, presented by Alex Brown, Head of Counter Fraud. The report highlighted significant achievements, including approximately £12.7 million in financial benefits and the recovery of 113 council properties due to tenancy fraud, the highest number of property recoveries in a single year. The team also achieved £2.4 million in additional business rates billings and identified £380,000 in savings within Social Care, a 47% increase on the previous year. The report noted a 15% decrease in inspection visits due to a vacancy, but prioritisation in areas maximising revenue led to a 71% increase in additional business rates billings compared to the previous year. The committee was informed that the Counter Fraud Team (CFT) had won the Local Excellence award at the Public Sector Counter Fraud Awards 2026.

External Audit Update: Process for Auditing the 2025/26 Accounts

Pete Carpenter, Director – Pensions, Treasury & Statutory Accounts, provided an update on the process for auditing the 2025/26 Council and Pension Fund Accounts. The report highlighted the ongoing challenges in local government audits due to a backlog, with a significant number of councils receiving Disclaimer Opinions. Hillingdon Council had received disclaimer opinions for the past three years, while the Pension Fund had unqualified audits. The report detailed the audit planning for the 2025/26 accounts, identifying key risks such as management override of controls, fraud in revenue and expenditure recognition, and the valuation of assets and liabilities. The audit for the Council's 2025/26 draft accounts was expected to be completed by mid-November 2026, with the draft audit report issued by 30 November 2026. The Pension Fund accounts had met their deadlines. The scale fees for 2025/26 audits were noted to be £542,111 for the Council audit and £96,295 for the Pension Fund audit.

Risk Assurance Annual Report 2025/26

Claire Baker, Head of Risk Assurance, presented the Risk Management Annual Report for 2025/26. The report indicated a decrease in the total number of risks recorded on the system, from 242 at the end of 2024/25 to 222 at the end of 2025/26, suggesting services were taking mitigating actions. There were 26 red-rated risks on the register at year-end, forming the Corporate Risk Register. The report highlighted that 10.6% of risks had no actions allocated, a reduction from previous periods, and that 3% of allocated actions were overdue. Financial risks were the most prevalent category, with 65 risks identified. The forward plan for 2026/27 includes a move towards a 'Risk Managed' maturity level, with ongoing work to align risk information with corporate strategies and performance reporting.

Internal Audit Annual Report 2025/26

Claire Baker, Head of Internal Audit, presented the Internal Audit Annual Report and Opinion Statement for 2025/26. The report detailed that 40 pieces of Internal Audit work were delivered, including 24 assurance reviews, 11 advisory reviews, and 5 grant claim audits. This was a slight reduction from the previous year due to a decrease in team capacity. Importantly, 60% of assurance reviews resulted in a 'Substantial' or 'Reasonable' assurance opinion, an improvement from the previous year. A total of 75 recommendations were raised, a significant decrease attributed to a focus on root causes. The Head of Internal Audit provided a 'Limited' assurance opinion for 2025/26, noting that while steps had been taken to strengthen controls, risk management, and governance, much of this work was still evolving and not fully embedded. Areas for improvement in 2026/27 include developing oversight arrangements for cross-cutting controls and formalising strategic priorities post-election.

Audit Committee Annual Report 2025/26

This draft report summarised the Audit Committee's activities during the 2025/26 municipal year, highlighting its oversight of Internal Audit, External Audit, Counter Fraud, Risk Management, and the financial reporting process. The committee met five times and reviewed various reports, including the 2023/24 Statement of Accounts and the 2024/25 draft audit reports. The report expressed satisfaction with the Council's counter fraud arrangements, noting £12.7 million in financial benefits achieved by the Counter Fraud Team. The committee also expressed satisfaction with the Council's external audit arrangements and risk management processes. The report concluded that the Audit Committee had made an appropriate contribution to ensuring the governance framework was considered and challenged.

Budget Outturn 2025/26

The committee reviewed the Council's draft outturn financial position for 2025/26, presented by Councillor Eddie Lavery, Cabinet Member for Finance. The Council reported an overall overspend of £28.985 million, an improvement of £7.763 million from the previous forecast. This improvement was attributed to underspending in service departments and positive variances in corporate budgets, largely due to timing differences in Collection Fund transactions. The report detailed the use of £7.350 million to rebuild earmarked reserves. Significant financial challenges were noted, including inflation, increased service demands, and the impact of the National Insurance increase. The Council had successfully applied for Exceptional Financial Support (EFS) from the government. The Dedicated Schools Grant (DSG) outturn showed a reduced in-year deficit, but a cumulative deficit of £75.8 million remained. The Housing Revenue Account (HRA) reported a breakeven position. The Capital Programme Outturn was £252.9 million against a budget of £343.6 million, with significant rephasing of projects into 2026/27. The committee was asked to note the outturn positions and approve various carry-forwards and grant acceptances.

Annual Performance Report 2025/26

The committee received the Council's Annual Performance Report for 2025/26. The report highlighted challenges in housing, including increased demand for temporary accommodation and longer stays due to a shortage of affordable housing. However, it also noted improvements in the Repairs Service and strong performance in planning application determinations. Road maintenance was reported as better than average, with Hillingdon being one of only two London boroughs ranked 'green' on the Department for Transport Road Maintenance Ratings map. Electric vehicle charging infrastructure was noted as being behind London's average but with a credible expansion plan. In Children's Services, referrals remained high, and placement costs were a significant budget pressure, partly due to unaccompanied asylum-seeking children. Reoffending rates for young people were noted as being above the London average. Adult Social Care showed strengths in independent living and user satisfaction, but faced challenges with assessment speed and carer quality of life. Cyber threats remained a persistent concern, while counter fraud performance significantly exceeded its target, recovering £12.8 million.

Introduction to Overview & Scrutiny

Mark Braddock, Statutory Scrutiny Officer, provided an introduction to the overview and scrutiny function of the committee. He explained the role of overview and scrutiny committees in assisting policy development, improving services, and reviewing executive actions. The report outlined how overview and scrutiny in Hillingdon is arranged, with the Audit, Finance & Performance Committee acting as the lead body for finance and performance oversight council-wide. The committee's remit includes reviewing budget proposals, monitoring performance, and undertaking policy reviews. The report also detailed the scrutiny call-in procedure, rules for committee operation, and the committee's relationship with the Cabinet.

Forward Plan

The committee noted the Cabinet's latest Forward Plan, which outlines future key decisions. The report detailed how the committee could engage with the Forward Plan through pre-decision scrutiny, requesting further information, or identifying items for post-decision review.

Work Programme

The committee reviewed its work programme and requested that a report on digital transformation be added to its future agenda. The committee also noted the forthcoming meeting dates.