The Audit and Risk Committee meeting on 15 September 2025 addressed significant delays in the external audit of the Council's Statement of Accounts, with auditors Grant Thornton expressing concerns about the lack of progress from BDO, the previous auditor, and the Council's own finance team's capacity. The committee also reviewed the Council's Annual Governance Statement, which identified staffing, the preparation of accounts, financial resilience, subsidiary company governance, and procurement as key governance challenges.

External Audit Delays and Concerns

A major focus of the meeting was the ongoing delays in the external audit of the Council's Statement of Accounts for the years 2019/20 to 2022/23. Grant Thornton, the current external auditor, reported that BDO, the previous auditor, had made no progress on the value for money reports and annual reports for these years. This lack of progress is impacting Grant Thornton's ability to complete the audits for subsequent years. Councillor Rocky Gill expressed strong dissatisfaction, stating that the situation was totally unacceptable and that the Council was bottom of the pile for audit completion. The Strategic Director for Resources, Richard Harbord, assured the committee that BDO would be present at the next meeting to provide answers.

Grant Thornton's interim auditor's annual report for the year ending 31 March 2025 also highlighted concerns regarding the Council's finance team's capacity and capability in financial reporting, leading to delays in the preparation of financial statements. Grant Thornton stated they were unable to have confidence in the accounts as reported to Audit and Risk Committee. Key recommendations included urgently filling vacancies, addressing knowledge gaps (particularly regarding IFRS16), and establishing clear succession planning for key finance roles.

Annual Governance Statement Highlights Significant Challenges

The 2024/25 Annual Governance Statement identified five headline governance challenges:

• Staffing: Recruitment and retention of specialised staff remain an issue, impacting the Council's ability to fill hard-to-fill roles. Despite this, the Council retained its Investors in People Gold accreditation.
• Statement of Accounts: The 2018/19 Statement of Accounts remains the most recently signed off, with significant delays in audits for subsequent years due to BDO's outstanding work and the Council's finance team's capacity issues.
• Financial Resilience: The Council faces significant financial challenges with limited flexibility, although the Medium-Term Financial Strategy (MTFS) shows an improved, albeit still challenging, position.
• Subsidiary Company Governance: Grant Thornton's Value for Money audit highlighted financial and governance risks related to the Council's companies, with recommendations for improved oversight and performance management.
• Local Code of Corporate Governance: While not a statutory requirement, the Council is in the process of formalising a Local Code of Corporate Governance, which is considered best practice.

Internal Audit Findings

The Internal Audit Annual Report for 2024/25 concluded that the Council's control framework is generally satisfactory with some improvements required. However, one audit on Contract Management received a No Assurance opinion, identifying a lack of clear understanding of existing contracts, who is responsible for them, and ineffective oversight, leading to a heightened risk of financial loss. Thirteen reviews received a Limited Assurance opinion, including audits on the Building Safety Act, Housing Repairs & Maintenance, Highways Maintenance, and Strategic Procurement. The report noted that the Council is currently non-compliant with several areas of the Procurement Act 2023 and lacks a procurement strategy.

Customer Feedback and Ombudsman Reports

The Customer Feedback Team's Annual Report for 2024/25 indicated a 3% drop in overall complaint volumes, but timeliness remains a challenge, with only 70% of complaints responded to within the target timeframe. Housing, Environment and Communities (HEC) generated the highest volume of complaints, particularly concerning Public Realm services like Parking and Refuse.

Reports from the Local Government and Social Care Ombudsman (LGSCO) and the Housing Ombudsman showed a downward trend in maladministration findings and compensation awards for the Council, indicating improved complaint handling and service delivery. However, the LGSCO highlighted national trends of increased complaints in Special Educational Needs (SEN) and Housing, which also reflect in LBBD's data. Recommendations for SEND include auditing casework, improving co-production, and strengthening multi-agency coordination. For Housing, recommendations focus on early resolution, improved record-keeping, and enhanced staff training.

Pension Fund Audit

Grant Thornton's update on the 2024/25 Pension Fund Draft Accounts indicated that fieldwork would commence in October 2025. They noted that the Pension Fund audit is in a different place to the Council's accounts, with an opportunity to regain assurance more quickly due to the absence of reserves issues. However, a disclaimed opinion is still expected for the 2023/24 accounts.

Work Programme

The committee noted the work programme for 2025/26 and requested a timeline of statutory documents due to be published by the Council in relation to Audit and Risk to enable their review before publication.

The meeting concluded with thanks to Christopher Martin, Head of Assurance, who was departing after six years with the Council.