The Audit and Risk Committee met on Tuesday 06 October 2026 to discuss a range of financial and operational matters. Key decisions included noting the annual counter-fraud update, which highlighted an increase in corporate fraud referrals and a successful year for property recoveries, and reviewing the committee's work programme for 2026/27, acknowledging the need for flexibility in scheduling detailed discussions on council companies.

Counter-Fraud Update and Annual Report 2025/26

Vanessa Bateman, Head of Assurance, presented the counter-fraud update, covering activity from October 2025 to June 2026. The report indicated an increase in corporate fraud referrals, while housing investigations saw a reduction in cases but an increase in successful property recoveries, reaching a record high of 42. The team also noted an increase in proactive fraud checks and data protection requests. For quarter one of 2026/27, there was a higher number of referrals but fewer cases accepted for investigation, suggesting improved fraud awareness and detection. The team is also working on a formal fraud risk assessment, due for completion in December 2026, which will inform future proactive work and training. A briefing note on the new 'Failure to Prevent Fraud' offence, introduced by the Economic Crime and Corporate Transparency Act 2023, was also provided. The Whistleblowing Policy was updated to reflect recent legislative changes.

Councillor Caleb van Ryneveld inquired about the progress of investigations into illegal subletting cases, noting that these often felt like a black box. Ms. Bateman assured the committee that outcomes were reported in appendices and that the team was exploring ways to split data more clearly between council housing and Reside cases to improve transparency. Councillor Phil Waker questioned the disparity in property recoveries between LBBD properties and those managed by Reside, to which Ms. Bateman explained that different legislation governed these cases and that Reside properties were often vacated by tenants, facilitating quicker recovery. Councillor van Ryneveld also raised concerns about alleged systemic abuse in housing allocations, potentially involving council employees. Ms. Bateman stated that the team was committed to maximum disruption in the fraud space and had a meeting scheduled with Reside to discuss their fraud strategy.

Committee Work Programme 2026/27

The committee reviewed its flexible work programme for 2026/27. Councillor Waker raised concerns about the potential for too many items to be squeezed into meetings, suggesting that some topics, like the Reside and BTTP reviews, might require separate meetings to ensure adequate justice. He noted that November's meeting was particularly full. Mr. Paul Dossett, representing Grant Thornton, acknowledged the point, stating that the options included considering an additional meeting. Councillor Josie Channer questioned if the Reside and BTTP reviews could be extended beyond May, but it was explained that these items were programmed due to requests from previous committee memberships over the last 18 months. The committee agreed to review the programme and consider adjustments as needed.

Council Companies Overview Report

David Harley, Strategic Director of Inclusive Growth and Place, presented an overview of the Council's subsidiary companies, including Be First, Reside, BD Energy, and BDTP. He explained the rationale behind their establishment, governance structures, and recent changes. Councillor Waker expressed concerns about the complexity of the system and the trade-off between benefits and risk, particularly regarding accountability. Mr. Harley assured the committee that the Council always took responsibility for the companies' actions. Councillor Waker also questioned the financial performance of BD Group, specifically the recoverable value of its debt and the trigger for further council intervention. Mr. Harley explained that much of the debt related to the LEUK site and that the Council was working on soft market testing to maximise offers for the site. Councillor Caleb van Ryneveld raised concerns about the timescales for independent audits of these companies and their consolidation into group accounts. Shabana Kausar, Deputy Section 151 Officer, confirmed that companies were changing auditors to facilitate this process and that work was underway to push these figures forward.

Interim Auditor's Annual Value for Money Report 2025/26

Paul Dossett and Guy Clifton from Grant Thornton presented their interim report, highlighting significant weaknesses in financial sustainability, governance, and economy, efficiency, and effectiveness. Key recommendations included strengthening transformation plans, improving risk reporting to the Audit and Risk Committee, and addressing housing standards and procurement oversight across group companies. The report also acknowledged positive developments, such as the Council's avoidance of Exceptional Financial Support and improvements in procurement arrangements. Councillor Mohammed Khan asked about operational changes to improve response times for complaints, and Ms. Kausar outlined plans focusing on accountability, system change, and technology. Councillor Caleb van Ryneveld questioned the progress on moving from a 'red' rating to 'amber' or 'green' on key metrics, to which Mr. Dossett responded that it was dangerous to prejudge audit findings but that progress was expected.

Council and LBBD Pension Fund Statements of Accounts 2025/26

Shabana Kausar presented an update on the progress of the 2025/26 external audit. She highlighted considerable improvements compared to the previous year, with the draft accounts published in line with the statutory deadline. Mr. Dossett confirmed good progress on the council audit, with transactional work going well, and noted that the pension fund audit was also underway with the aim of moving towards a qualified opinion. Councillor Caleb van Ryneveld expressed surprise at the seven-year delay in producing consolidated accounts, and Ms. Kausar explained the historical challenges, including open BDO audits and staff turnover, but assured the committee that a new process was being embedded.

Annual Complaints Report 2025/26

Natalia Monvoisin, Director of Customer Experience, and Danielle Bridge, Customer Feedback Manager, presented the annual complaints report. Corporate complaints increased by 18% to 3,394, with 79% answered within the target timescale, falling short of the 90% corporate target. Housing, environment, and communities accounted for the largest share of complaints. Recurring themes included communication issues, timeliness, service ownership, and managing expectations. Separate reports for Adult Social Care and Children's Social Care were also presented, showing strong timelines for these services. Councillor Mohammed Khan asked about operational changes to improve response times, and Ms. Kausar detailed plans for accountability, system change, and technology. Councillor Phil Waker raised concerns about the definition of response targets and the exclusion of councillors from corporate complaint processes, to which Ms. Kausar clarified the process and committed to ensuring councillors were kept informed. Councillor Caleb van Ryneveld sought clarification on how complaints were considered resolved, and Ms. Kausar explained that resolution was based on the resident's satisfaction and the completion of agreed actions.

Internal Audit Update 2026

Vanessa Bateman, Head of Assurance, provided an update on the Internal Audit team's work between April and August 2026. She noted that four of the five team members were new to the council, requiring significant induction. The team had focused on follow-up work from previous audits, with actions from prior years now closed. The approach to follow-up had been reviewed and updated for more timely data. Councillor van Ryneveld questioned the council's adherence to legal requirements for internal control, and Ms. Bateman stated that her professional opinion would be included in the Head of Internal Audit's report. Councillor Waker inquired about progress on procurement governance, which had previously received no assurance. Ms. Bateman indicated that assurance had moved to limited and that the governance framework had been strengthened. She also confirmed that the audit plan was being reviewed and would be reapproved, with potential additions based on new risks.

Risk Management Update

The committee received an update on the Council's risk management strategy and the corporate risk register. The strategy, approved in 2025, is due for refresh in early 2027. A part-time risk resource has been appointed to support the review. The corporate risk register, which currently lists thirteen risks (three 'Very High', seven 'High', and three 'Moderate'), was updated in September 2026. Councillor Josie Channer expressed concern about cybersecurity being rated as 'moderate', given the rapid developments in this area. Ms. Bateman explained that the 'moderate' rating reflected the level of controls in place, but acknowledged the inherent risk was high and that the rating could shift with new data.

Committee Work Programme 2026/27

The committee noted the flexible work programme for 2026/27. Discussions highlighted the challenge of fitting in detailed reviews of council companies, such as Reside and BTTP, within existing meeting schedules. The committee agreed to consider the possibility of additional meetings or adjustments to the programme to ensure adequate scrutiny. Councillor van Ryneveld expressed support for further meetings to review the counter-fraud strategy, suggesting it could be moved to coincide with meetings where fewer reports were scheduled.

The meeting concluded with the noting of the work programme and the declaration of any other urgent public or private items, of which there were none. The meeting closed at 21:20.