The Audit and Risk Committee of Barking and Dagenham Council met on Wednesday 1 July 2026. The committee received updates and discussed findings related to the Local Government and Social Care Ombudsman, the external auditor's plans and strategies, the 2025/26 accounts and audit update, the draft Annual Governance Statement for 2025/26, and the Internal Audit Annual Report for 2025/26. The committee also reviewed its work programme for 2026/27.

Report of the Local Government and Social Care Ombudsman (LGO) and Action Plan

The committee received a report detailing the findings of the Local Government and Social Care Ombudsman (LGO) into a housing-related matter concerning a resident, Mr X. The LGO found fault causing injustice due to the Council's handling of Mr X's housing application and Occupational Therapy (OT) assessment. The Council accepted the LGO's findings in full, including paying £1,200 in compensation and implementing a series of remedial actions. These actions include issuing an apology, reviewing Mr X's housing options, and developing action plans to reduce the backlog of OT assessments and ensure homeless applications are taken appropriately. The Council confirmed that all immediate actions had been completed and that detailed action plans would be in place by the LGO's deadline of 3 September 2026. The committee noted this report.

External Auditor's Audit Plans 2025/26

Grant Thornton, the external auditors, presented their audit plans for both the Council and the London Borough of Barking and Dagenham Pension Fund for the financial year 2025/26. A significant focus of the plans is the Regaining Assurance Strategy, aimed at rebuilding audit assurance following several years of disclaimed audit opinions due to the statutory backstop arrangements. The auditors highlighted the complexity of the Council's financial statements, including its group structure and lease arrangements, as key challenges. For the Council's audit, the plan aims to complete work on in-year transactions and closing balances by 30 November 2026, with a disclaimer of opinion still expected due to the lack of audited opening balances. For the Pension Fund, the objective is to move away from a disclaimer of opinion, contingent on obtaining sufficient audit evidence over previously impacted areas, particularly cash confirmations. The auditors also outlined significant risks, including management override of controls, valuation of assets, IFRS 16 implementation, and group accounts consolidation. The proposed audit fee for the Council is £501,208, and for the Pension Fund is £96,182. The committee noted these reports.

External Auditor's Report Regaining Assurance Strategy

Grant Thornton presented their strategy for rebuilding audit assurance at the London Borough of Barking and Dagenham. This strategy is a response to the Ministry of Housing, Communities and Local Government's request for a plan to address disclaimed audit opinions. The report categorised the Council's audit as Category D, indicating that a fully ISA-compliant approach by 2027/28 is unlikely due to practical constraints, despite adequate systems in principle. The strategy outlines a three-year plan to rebuild assurance, focusing on achieving a qualified opinion by 2027/28. Key challenges identified include technical complexities in financial reporting, the Council's capacity to produce timely and high-quality accounts, and the significant risk associated with reserves balances due to historical audit gaps. The committee noted this report.

2025/26 Accounts and Audit Update

This report provided an update on the preparation of the 2025/26 Statement of Accounts for the Council and the Pension Fund. Officers confirmed that draft unaudited accounts were published on 30 June 2026, and the Council is working to meet the accelerated audit timetable set by Grant Thornton, targeting completion by 30 November 2026. Improvements implemented include earlier planning, strengthened engagement with subsidiary auditors, and additional interim resources. Key risks identified, such as property valuations, finance staff capacity, and group accounts dependencies, are being actively managed. The report also noted that the scale fee for the 2025/26 audit is £501,208. The committee noted this report.

2025/26 Draft Annual Governance Statement

The committee reviewed the draft Annual Governance Statement (AGS) for 2025/26. The statement assesses the effectiveness of the Council's governance, risk management, and internal control arrangements. It concluded that these arrangements are in place and generally effective, with a positive direction of travel, particularly in financial management and audit recovery. However, it also highlighted ongoing challenges, including staffing capacity in critical areas, the need to fully embed procurement and contract management, financial resilience, and the governance of subsidiary companies. Actions are in place to address these issues, and progress will be monitored. The committee noted the draft AGS, with the final version to be updated following external audit work.

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 conducted, noting that 91% of audits were at the report stage, exceeding the target. Three audits resulted in Limited Assurance opinions: Section 17 of the Crime and Disorder Act review, Parent Company Governance, and Loans & Investments. Management actions are in place to address the identified high-risk findings in these areas. The committee noted this report.

Work Programme 2026/27

The committee reviewed its work programme for 2026/27. It was noted that the programme is flexible and subject to change. A key inclusion is a review of company subsidiaries, reflecting recommendations from Grant Thornton and the LGA Peer Review. The committee also discussed the potential for greater dovetailing with the Scrutiny Committee's work. The work programme was noted by the committee.