The Audit Committee of Hertfordshire Council met on Friday 2 October 2026 to discuss the progress of external audits, the shared internal audit service, and the council's risk management framework. Key decisions included noting the progress of the 2025-26 audits, approving amendments to the internal audit plan, and noting the annual report of the Shared Internal Audit Service.

External Audit Progress

Scott Walker provided a verbal update on the 2025-26 external audits for both the county council and the pension funds. He reported that progress was good, and the council was confident of meeting statutory deadlines for signing off the accounts, with the aim of removing a disclaimer from the accounts. This was considered a positive outcome, marginally ahead of the national timeline. While there were a couple of recommendations and control areas being reviewed, overall, the process was described as smooth. Looking ahead to next year, when statutory deadlines will be shorter, the council felt confident in its ability to meet them.

Shared Internal Audit Service (SIAS) Progress Report

Darren Williams, Head of Shared Internal Audit Service, presented the SIAS progress report, detailing the delivery of the council's internal audit plan up to 11 September 2026. Four out of five assurance reviews had received a reasonable assurance opinion, with the fifth being a consultancy review. One audit from the 2025-26 plan, concerning the professional services contract within growth and environment, was at the final draft report stage. For the schools' internal audit plan, all 15 visits related to the school's financial value standard theme were complete, with 12 final reports issued. Preparations for the cybersecurity theme were underway.

Two proposed changes to the audit plan were reported: the introduction of a new audit for Herts Full Stop's time recording systems and an increase in the budget for school's theme reviews. No new limited assurance opinions or high-priority recommendations had been issued since the last update. Of the medium-priority recommendations, 18 out of 22 due for follow-up within the reporting period were implemented, an 82% completion rate. The report also noted that the council was 4% behind on the delivery of audit days and 6% behind on projects against the approved audit plan, but no concerns were raised about the overall delivery of the plan.

Councillor Mark Pope raised questions about the selection process for school audits, the differing sample sizes, and the council's approach to cyber security in schools. Darren Williams explained that schools were selected based on discussions with children's services and finance, with a focus on schools not visited for the longest time, and also those identified as potentially benefiting from a specific audit theme. Regarding cyber security, he noted that many schools contract out their IT services, and the audit theme would assess the outcomes, with potential for increased focus in the future if significant issues were identified.

The committee noted the progress report and approved the proposed year-end amendments to the plan.

SIAS Annual Report 2025/26

Chris Wood, Head of Assurance Services, presented the SIAS annual report for 2025/26, which covered the work of the entire shared service. Key statistics highlighted included the delivery of 94% of planned audit days and 89% of audits to draft report stage. The service made 616 recommendations across the partnership, including 17 high-priority and 216 medium-priority ones. Client satisfaction was reported at 98%. The report also detailed the service's grow your own strategy for staff development, the adoption of root cause analysis in audits, and preparations for an upcoming external quality assessment.

Councillor Mark Pope inquired about previous external quality assessment issues. Chris Wood and Darren Williams explained that the previous assessment in 2021 had raised concerns about the clarity of the audit charter regarding the chief audit executive role, which had since been rectified.

The committee noted the SIAS annual report.

Risk Management Update

Chris Wood provided an update on the risk register, noting that 12 out of 15 corporate risks were operating at target, with three below target: climate change, the impact of the cost of living and global economic instability, and business continuity failure. Discussions focused on the risk of Impact of Cost of Living and Global Economic Instability on Council Resilience, with Councillor Pope questioning its low score. Scott Walker explained that while the risk was significant, mitigation efforts were in place to reduce its impact. The committee also discussed the need to consider contingency planning for risks and identified internal workforce and climate change as potential topics for future risk focus reports.

Risk Focus Report: Local Government Reorganisation and Devolution in Hertfordshire

Scott Walker presented an update on Local Government Reorganisation (LGR). He explained that the Government's decision to form four new unitary councils for Hertfordshire had been paused pending a review. This pause meant that work on implementation had ceased, with further guidance expected in October. The uncertainty surrounding LGR was noted as a risk to workforce retention and stability, although it also freed up officer time to focus on other challenges, such as balancing the budget. The report outlined five potential outcomes of the Government's review, ranging from proceeding as planned to shelving the plans completely. Hertfordshire County Council had also issued a pre-action protocol letter to the Ministry of Housing, Communities and Local Government to protect its position.

Councillor Miriam Swainston asked about the impact of this uncertainty on staff recruitment and retention. Scott Walker stated that while overall turnover remained at a normal level, the uncertainty was having a morale impact. Councillor John Graham raised concerns about the costs associated with LGR and potential reimbursement from the government. Scott Walker indicated that the council would seek reimbursement for incurred costs, estimated at £150,000 per month, through government grants.

The committee noted the report.

Risk Focus Report: Governance and Policy Framework for Managing In-Year Financial Pressures and Medium-Term Financial Sustainability

Scott Walker and Clive Heafy presented a report on the council's financial governance framework. They highlighted the significant financial challenges faced by the council, including increasing demand, inflation, social care market pressures, and the impact of LGR. The report detailed the robust budget monitoring arrangements, escalation procedures, and the use of contingency and reserves. The council's track record of managing financial pressures over the last ten years was noted, with only one year requiring the use of reserves beyond the annual contingency. The committee was assured that appropriate governance, monitoring, and escalation arrangements were in place.

Councillor Liz Needham inquired about the Finance Focused Assurance Board, which was explained as a new governance structure with directors from each department, chaired by an executive director, with the Section 151 officer providing strategic advice. Councillor Mark Pope asked about the council's reserves position, noting it was among the lowest for county councils, and the target to strengthen this resilience.

The committee noted the report and the governance arrangements.

Annual Whistleblowing Report 2025/26

Chris Wood presented the annual whistleblowing report, highlighting a near doubling of whistleblowing reports compared to the previous year, with 61% relating to employment matters. Of the 31 reports received, 15 were directed to HR, and three were investigated under the whistleblowing policy, none of which were upheld. An update to the whistleblowing policy now explicitly includes sexual harassment as a qualifying disclosure. The committee noted the report.

Future Work Programme

The committee agreed on its future work programme, which included updates on the Annual Governance Statement, the SAFS progress report, internal audit updates, risk management, and treasury management services. The next meeting was scheduled for 9 December.