The Audit and Risk Management Committee of the City of London Council met on Monday 14 September 2026. The meeting focused on the review and approval of the 2025-26 City Fund and Pension Fund Statements of Accounts and the associated Audit Findings Reports. Key discussions included the financial sustainability of the City Fund, governance arrangements, and the effectiveness of economy, efficiency, and effectiveness measures. The committee also reviewed the Pension Fund's financial position and audit findings, noting that while the fund is well-funded, there are ongoing considerations regarding investment strategies and potential future financial pressures.

City Fund and Pension Fund Statement of Accounts, and Audit Findings Report 2025-26

The committee received an update on the audit of the 2025-26 City Fund and Pension Fund Statements of Accounts. Grant Thornton UK LLP, the external auditors, presented their Audit Findings Reports, highlighting that their audit work was substantially complete and an unmodified audit opinion was anticipated for both the City Fund and the Pension Fund.

For the City Fund, the auditors noted that while the financial position remained strong with significant reserves, there was a projected cumulative deficit from 2027-28 onwards when transitional funding arrangements cease. This necessitates the identification and implementation of alternative solutions to close the medium-term financial gap and protect reserves. The auditors also identified a significant weakness in housing safety standards following an inspection by the Regulator of Social Housing, which resulted in a C3 rating. While the Authority has taken prompt action, improvements are needed to demonstrate sustained compliance. The auditors also raised an improvement recommendation regarding the timeliness of performance reporting to Members.

Regarding the Pension Fund, the auditors reported that the fund is well-funded, with a funding level of 96% as of the 31 March 2025 valuation. However, this represents a slight decrease from the previous year. The auditors noted that the Pension Fund is on track to meet legislative requirements for pooling of assets and the appointment of a Senior and Independent Person. The audit identified a minor disclosure amendment and a recommendation to strengthen bank reconciliation processes.

The committee was asked to recommend the approval of the 2025-26 City Fund Statement of Accounts to the Finance Committee, delegate authority for the approval of the 2025-26 Pension Fund Statement of Accounts to the Chamberlain, and consider the Audit Findings Reports and management representation letters for both funds. The auditors' Annual Audit Report, which includes commentary on the City Fund's Value for Money arrangements, was also presented for consideration.

Internal Audit Quarter 1 Update

The committee received an update on Internal Audit activity for the first quarter of 2026/27. Seven Internal Audit reviews were completed, resulting in two 'Substantial' assurance ratings and five 'Moderate' assurance ratings. The report highlighted that while core processes are operating effectively, there are opportunities for enhancement in procedural documentation and evidence of control application. Key areas for improvement included strengthening system access governance, improving the timeliness of maintenance completion and work order closure, and enhancing corporate oversight and performance management for complaints. Management has accepted all recommendations, with implementation targeted for completion by October 2026.

Outstanding Actions of the Committee and Committee Work Programme

The committee noted the Outstanding Actions List and the Committee's Work Programme, which outlines planned future agenda items and audit reviews.

Members' Declarations and Apologies

Apologies were received from several members, and no declarations of interest were made by members in respect of items on the agenda. The committee welcomed a new member, Jason Groves.

Exclusion of the Public

The committee resolved to exclude the public from the meeting for the remaining items of business, as they involved the likely disclosure of exempt information.