The Audit Committee of Havering Council met on Tuesday 30 June 2026 to review the council's financial plans and governance. The meeting's agenda focused on the external audit plans for the upcoming year, the annual treasury management report, and the head of assurance's annual opinion on the council's internal control environment.

External Audit Plans 2025-26

The committee was scheduled to consider the external audit plans for both the London Borough of Havering and the Havering Pension Fund for the financial year 2025-26. These plans, prepared by Ernst & Young (EY), outline the proposed audit approach, including the scope, key risks, and materiality thresholds for delivering the audits in line with statutory deadlines. The plans acknowledge the ongoing national audit backlog and the phased approach to rebuilding audit assurance for the council's accounts, which have previously received disclaimed opinions. In contrast, the Pension Fund accounts have consistently received unqualified audit opinions. The report highlighted key audit risks such as asset valuations, pensions, group accounts, leasing (IFRS 16), and bad debt provisions. Materiality thresholds were set for both the Council and Group audit (£8.0m planning materiality) and the Pension Fund (£10.08m planning materiality). The planned audit timetable indicated that Audit Results Reports would be presented in November 2026, with a statutory backstop date of 31 January 2027.

Annual Treasury Management Report 2025/26

This report provided a review of the treasury management function's activities and performance against targets for the financial year 2025/26. It detailed the council's borrowing and investment activities, highlighting that investment income was £4.4m and interest payable on debt was £22.2m. The report noted that the authority's long-term debt is fixed at an average rate of 3.49%. A significant portion of borrowing (£320m) was taken out between February and March 2026 as 1-2 year PWLB loans at an average rate of 4.07% to refinance maturing debt. The treasury activities exceeded their investment benchmark, delivering a yield of 4.48% against a SONIA benchmark of 4.01%. The report confirmed that treasury activities remained within the limits and prudential indicators set out in the Treasury Management Strategy Statement. The council maintained a prudent treasury position, but the report flagged potential future financing and affordability risks due to rising long-term interest rates and an increasing reliance on short-term borrowing.

Head of Assurance Annual Opinion 2025-26 & Internal Audit Plan Outturn

This report presented a summary of the outcomes of internal audit and counter fraud work completed during the 2025/26 financial year, along with the Head of Assurance's annual opinion on the internal control environment. The Head of Assurance issued a Reasonable Assurance opinion, indicating a generally sound and improving control environment. This was an improvement from the previous year's Limited Assurance opinion, which had highlighted weaknesses in budget management and financial oversight. The report noted that while some areas, such as Community Leasing, Garage Allocations, Procurement Processes, and Tenant Management Organisations, still received Limited Assurance, these were isolated and did not indicate systemic control failures. Management actions had been agreed and were being implemented to address these findings, with progress monitored by the Audit Committee. The report also included the draft Internal Audit Plan for 2026/27, which outlined proposed audit work based on risk assessment.

Annual Governance Statement 2025/26

The committee was presented with the draft Annual Governance Statement (AGS) for 2025/26. This statement, prepared in accordance with the CIPFA/SOLACE Delivering Good Governance in Local Government Framework, provides assurance on the effectiveness of the council's governance arrangements. The report detailed the sources of assurance relied upon, including the work of internal audit, directors, managers, external auditors, and other review agencies. It highlighted four significant governance issues identified for 2025/26: the delivery of a balanced budget for 2026/27, strengthening procurement governance, addressing inadequate judgement outcomes in the Social Care Department following an Ofsted inspection, and control failures identified in late 2024/25 across three service areas. The report also outlined actions taken during 2025/26 and planned actions for 2026/27 to address these issues. The Head of Assurance's opinion for 2025/26 provided Reasonable Assurance, an improvement from the previous year. The statement also covered information governance, data protection, complaints handling, and the council's role in tackling modern slavery.