The Audit and Risk Committee of Barking and Dagenham Council met on Wednesday 1 July 2026 to discuss findings from the Local Government and Social Care Ombudsman, review external auditor plans, and consider internal audit reports. Key decisions included noting the Ombudsman's findings on a housing-related matter and approving the external auditor's plans for the 2025/26 financial year.

Ombudsman's Findings on Housing Matter

The committee received a report detailing the findings of the Local Government and Social Care Ombudsman (LGO) into a housing-related matter concerning Mr X. The LGO found fault causing injustice due to the Council's handling of Mr X's housing application and an Occupational Therapy (OT) assessment. Specifically, the Council failed to properly explain its decisions regarding Mr X's priority banding, inform him of his right to a review, and delayed reconsidering its decision. Furthermore, the Council was at fault for not conducting homelessness inquiries when informed Mr X's property was unsuitable and for delaying an OT assessment.

Councillor Maureen Worby, Cabinet Member for Housing, Adult Social Care and Health, and John Knight, Director of Housing, presented the report. The Council accepted the LGO's findings in full, paid £1,200 in compensation to Mr X, and has implemented or is in the process of completing the recommended actions. These include issuing an apology, reviewing housing options, and developing action plans to reduce the backlog of OT assessments and ensure homeless applications are taken appropriately. The Council acknowledged that while the family did not wish to be placed in temporary accommodation, the findings highlighted a failure to follow homelessness legislation. An action plan is to be produced by September 2026 to address these issues.

External Auditor's Audit Plans for 2025/26

Representatives from Grant Thornton, including Ellen Millington (Senior Audit Manager), Zargham Malik, and Terence Bershu, presented the external auditor's audit plans for the Council and the London Borough of Barking and Dagenham Pension Fund for the 2025/26 financial year.

A significant challenge highlighted was the ongoing impact of the backstop arrangements, which have led to disclaimed audit opinions for several years. Grant Thornton aims to complete all local authority audits within a shorter timeframe, with an objective to issue audit opinions by 30 November 2026. This is a crucial step towards developing a sustainable process to move away from disclaimed audit opinions.

Key risks identified for the Council's audit include management override of controls, valuation of property assets (including council dwellings and investment properties), pension fund net liability, and the implementation of IFRS 16. For the Pension Fund, significant risks include management override of controls, valuation of level three investments, and the disclosure of actuarial valuation under IAS 26.

The auditors noted that while they had identified five significant weaknesses related to the Council's financial sustainability and improving economy, efficiency, and effectiveness, these arose from prior-year recommendations. Further work will be undertaken to assess progress. The proposed audit fees were also presented, with a scale fee of £501,208 for the Council and £96,882 for the Pension Fund.

Regaining Assurance Strategy

Grant Thornton also presented a proposed strategy for regaining assurance over the Council's audits, in response to a request from the Ministry of Housing, Communities and Local Government (MHCLG). This strategy outlines a three-year plan to rebuild assurance, focusing on achieving a qualified opinion by 2027/28. The Authority was provisionally assessed as Category D under the MHCLG capacity assessment framework, indicating practical constraints to achieving a fully ISA-compliant approach by 2027/28. Technical challenges, including complex group structures and lease arrangements, alongside capacity issues within the Authority, were identified as key factors. The strategy prioritises gaining assurance over in-year transactions and closing balances for 2025/26, with a target sign-off by 30 November 2026.

2025/26 Accounts and Audit Update

Nurul Alom, Head of Corporate Finance, provided an update on the preparation of the 2025/26 Statement of Accounts. He noted that the report was drafted prior to the publication of the draft statements of accounts, which occurred the previous day. Officers were working on uploading working papers to meet the agreed timeline with Grant Thornton. The report highlighted the accelerated audit timetable, with a target completion by 30 November 2026, ahead of the statutory backstop date of 31 January 2027. Improvements implemented include earlier planning, strengthened engagement with subsidiary auditors, enhanced training, and the use of additional specialist and interim resources. The report also detailed the audit timelines and key focus areas, aligning with the significant risks identified by Grant Thornton.

Draft Annual Governance Statement 2025/26

Nurul Alom also presented the draft Annual Governance Statement (AGS) for 2025/26. The statement assesses the Council's governance, risk management, and internal control arrangements, concluding that they are generally in place and operating effectively, with a positive direction of travel. However, it also identified key governance challenges, including staffing, the Statement of Accounts process, value for money assessment, financial resilience, subsidiary company governance, the lack of a standalone Local Code of Corporate Governance, and building safety and regulatory compliance. Actions are in place to address these issues and are monitored through the Council's governance framework. The AGS will be updated following external audit work before final approval.

Internal Audit Annual Report 2025/26

Vanessa Bateman, Head of Assurance, presented the Internal Audit Annual Report for 2025/26. The Head of Internal Audit provided an overall opinion of generally satisfactory with some improvements required, indicating that the Council's framework of governance, risk management, and internal control is broadly effective, with some areas needing further strengthening. The report detailed the work completed, noting that 91% of the audit plan was delivered. Three audits resulted in limited assurance opinions: Section 17 compliance, governance of council and companies, and loans and investment arrangements. These highlighted areas require improvement in governance, oversight, and strategic requirements, with management action plans in place. Positively, no critical findings were raised.

Work Programme 2026/27

The committee reviewed its work programme for 2026/27, noting that it is a flexible document subject to change. It was agreed that the programme would include a review of group accounts and invitations for client representatives from subsidiary companies to attend future meetings. Members also discussed the potential for better dovetailing with the scrutiny committee's work.

The meeting concluded with the Chair declaring it closed at 9:01 pm.