The Audit Committee of Horsham Council met on 10 September 2025 to discuss internal and external audit reports, risk management, treasury management, and the accounts of subsidiary housing companies. The committee was also scheduled to review its work programme for 2025/26.

Risk Management

The committee was scheduled to receive an update on the council's risk management activities. The Corporate Risk Covering Report Month 5 included the corporate risk register, and an update on departmental risk register reviews for Quarter 1, as well as the council's Risk Management Impact Assessment Document. The corporate risk profile heat map showed eight high risks and ten medium risks. The high-risk areas included:

• The benefit subsidy claim potentially being qualified and/or bringing about financial losses.
• Lower levels of income in fees and loss of income due to the migration of Housing Benefit claims to Universal Credit¹, as well as increased costs from inflation and higher levels of homelessness making balancing the 2025/26 budget more difficult.
• Funding from Government being less than assumed in the Medium Term Financial Strategy from 2026.
• Adopting an up-to-date Local Plan² by the end of 2025 following the cancellation of the Local Plan examination and subsequent correspondence with the Inspector.
• The Capitol Refurbishment project.
• Local Government Reorganisation.
• Loss of income in Revenues and Benefits.

Two additional risks had been added to the register since its last publication:

• Loss of income in Revenues and Benefits, which was considered a red risk following an increase in applications and claims from new Supported Exempt Accommodation (SEA) where there is an expenditure cap subsidy threshold.
• An exempt risk.

One exempt risk had been removed from the register as it had been resolved without impact.

The risk rating for adopting an up-to-date Local Plan had been increased following the Community and Place Policy and Scrutiny Committee on 23 July 2025, which resulted in a letter being drafted to PINS requesting the matter be reconsidered.

The risk of funding from the Government being less than assumed in the Medium-Term Financial Strategy had increased in both likelihood and impact following the indications in the Fair Funding 2.0 consultation and MHCLG contacting the council directly to say it was likely to be one of forty authorities that suffer a 7% reduction in Government Funding next year.

The council's Risk Management Assessment Framework had been reviewed by senior officers and the Senior Leadership Team alongside the council's risk management framework.

Changes had been applied to the scoring criteria for financial losses and litigation claims. These adjustments reflect the impact of inflation over time and incorporate a reassessment of the council's financial reserves to ensure the framework remains proportionate and relevant. The Appendix B Risk Management Impact Assessment document showed the scoring criteria. For example, a critical impact on finances was defined as a financial loss of greater than £750,000, whereas a negligible impact was a financial loss of less than £100,000.

Internal Audit

The committee was scheduled to consider the HDC 2025-26 Q1 Progress Report Appx A_v1, the quarterly internal audit report from the Chief Internal Auditor. The report provided an update on all internal audit and counter-fraud activity completed during the quarter, including a summary of all key findings. It also included details of progress on delivery of the annual audit plan together with an update on the performance of the internal audit service during the period.

The report summarised key findings from final reports issued. Four audits were finalised during the quarter, all of which received an opinion of 'reasonable assurance'.

Formal follow-up reviews continue to be carried out for all audits where 'minimal assurance' opinions have been given and for higher risk areas receiving 'partial assurance'. In addition, the implementation of all actions agreed as a result of audits is tracked.

The report also noted that flexibility is built into the audit plan to allow resources to be directed to any new or emerging risks, and welcomed input from members.

The report included a summary of completed audits:

• Project Management: The review sought assurance that projects are approved based on realistic estimates of costs and benefits, effective stakeholder engagement results in projects that meet the needs of the council, projects are delivered to the required quality, on time, and to budget, and only changes that are necessary for the successful delivery of the project are made. The audit found that the council has in place a project management framework to support a consistent and proportionate approach to projects, and was therefore able to provide an opinion of reasonable assurance.
• IT Asset Management: The review sought assurance that appropriate governance arrangements are in place for the procurement and disposal of hardware assets, there are robust arrangements in place for the recording and monitoring of hardware assets, robust arrangements exist to record the transfer of hardware assets or submission into central IT stores when employees leave or move posts, and appropriate security arrangements are in place for the storage of hardware assets. Based on the testing undertaken, the auditors were satisfied with the controls in place to manage IT assets and were therefore able to provide an opinion of reasonable assurance.
• TechnologyOne Application Controls: The objective of this audit was to review all major input, processing, and output controls of the council's ERP system³, including system interfaces, ownership, and responsibilities. The auditors were pleased to find that expected application controls are in place and operating effectively and were therefore able to provide an opinion of reasonable assurance over the application controls in place for TechnologyOne.
• Taxi Licensing: The purpose of this audit was to seek assurance that checks are undertaken to ensure that the licence application process is conducted in line with regulatory requirements and to the required standard, documentation and information that supports the decision to grant or refuse a licence is retained and recorded, there are processes in place to ensure that data is handled, processed, and stored in compliance with GDPR regulations, and application fees are properly set and reviewed, and income is monitored and reported, to protect the council against debt and financial loss. The auditors were able to provide an opinion of reasonable assurance over the controls in place to manage taxi licensing.

The report also provided an update on counter fraud and investigation activities, including the National Fraud Initiative (NFI). Internal Audit coordinated the submission of the council's data sets for the 2024/25 NFI exercise, the results from which were received in early 2025. The report stated that the council is continuing to liaise with relevant departments to ensure matches are being investigated and actioned appropriately, and there have been no instances of fraud identified to date.

The HDC 2025-26 Q1 Progress Report Appx A_v1 also included details of action tracking and amendments to the audit plan.

Global Internal Audit Standards

The committee was scheduled to consider a report on the self-assessment against the new Global Internal Audit Standards (GIAS) along with details of any actions arising, as set out within the service's ongoing Quality Assurance and Improvement Plan (QAIP). The HDC GIAS and QAIP Cover Report_v1 also presented the updated Internal Audit Charter.

The self-assessment found extremely high levels of conformance, with none of the identified actions considered significant. A summary of all of the actions included within the service's QAIP was attached as Appendix B to the HDC GIAS and QAIP Appx A and B_v1.

The updated Internal Audit Charter had been reviewed to ensure that it correctly reflects and references the new GIAS. None of the amendments were material, with the main changes relating to:

• Referencing the GIAS and Local Government Application Note, to replace PSIAS throughout.
• Section 2 'Internal Audit Purpose' updated to include specific references to the GIAS.
• Section 4 heading updated to 'Internal Audit Mandate' in order to make it consistent with the language in GIAS.
• Section 7 'Reporting' has slightly more detail included on administrative reporting and functional reporting.
• Section 11 'Due Professional Care' updated to reference the GIAS' Ethics and Professionalism domain.

Treasury Management

The committee was scheduled to receive the Final Treasury management and prudential indicators Q1 2526 report, which covered treasury activity and prudential indicators for the first quarter of 2025/26. During the period the council complied with its legislative and regulatory requirements and the statutory borrowing limit, the Authorised Limit, was not breached.

Actual values were within or in line with the indicators set in the annual strategy.

At 30 June 2025, the council had no external debt and its investments totalled £79.7m (£69.8m at 31 March 2025). During the first quarter of 2025/26, the council's cash balances were invested in accordance with the council's treasury management strategy. In the year to date, interest of £629k was earned on investments; slightly above the budget of £593k.

Treasury investment income for the full year is forecast to be £50k above the budget. Commercial property income is forecast to be on budget for the year.

Subsidiary Housing Company Accounts

The committee was scheduled to consider the accounts for the subsidiary housing companies. The DB review - Audit committee - company accounts September 2025 report provided background information to the financial statements.

The council incorporated two subsidiary housing companies in 2019: Horsham District Homes Ltd (HDH), the development company, and Horsham District Homes (Holdings) Ltd (HDHH). Company law requires the directors of the companies to prepare financial statements for each financial period.

The council has considered the preparation of group accounts for 2024/25 and concluded that the value of transactions in the companies' accounts are immaterial. The council will continue to assess whether group accounts are required. The accounts for the companies have been audited, by an independent auditor.

The HDH draft accounts for the year ended 31 March 2025 were included within the report. Work on preparing Dukes Square and London Road sites continued during the year. Following planning recommendations, the original Dukes Square development of 10 affordable homes has been resubmitted as a development of nine affordable homes and will be included on the planning committee agenda in September 2025. An architect has been appointed to prepare plans for London Road development with instructions to optimise the use of space. General operational running costs were incurred during the year, resulting in a reported loss of £12k for the year.

The HDHH draft accounts for the year ended 31 March 2025 were also included. The company continued receiving rental income for the eight affordable homes in Slinfold and Billingshurst. The company also continued to lease affordable homes through the Local Authority Housing Fund scheme (LAHF). Agreements with the council continued to enable the letting of 21 homes for Ukrainian and Afghan refugees in the year. This income, along with the income from existing stock have contributed towards the operating profit of £62k for the year.

The accounts for both companies have been prepared on a going concern basis, and for the first time, they report a combined distributable profit of £37k.

Work Programme

The committee was scheduled to review the current Audit Committee work programme for 2025/26, as detailed in the Copy of Work Plan 25-26 Updated document.