The Audit and Risk Committee met on Wednesday 25 March 2026 to discuss the progress of the 2025/26 audits for the Council and the Pension Fund, review the 2025/26 audit plan and accounting policies, and consider the draft internal audit charter, strategy, and audit plan for 2026/27. Key decisions included noting the progress reports, approving the accounting policies, and approving the internal audit charter, strategy, and plan for the upcoming financial year.

Progress with the 2025/26 Council and Pension Fund Accounts Audit

Grant Thornton, the Council's external auditors, presented a report on the progress of the 2025/26 audits for both the Council's Statement of Accounts and the London Borough of Barking and Dagenham Pension Fund. Paul Dossett, Key Audit Partner at Grant Thornton, introduced his colleagues Ellen Millington and Zargham Malik, who are new to the Council's audit this year.

The auditors confirmed that the financial statements for the Council have received disclaimed audit opinions for the last few years due to national backstop arrangements. While progress is being made to rebuild assurance, a disclaimer of opinion will still be necessary for the current year due to outstanding issues with opening balances and reserves from previous years. The focus for the 2025/26 audit will be on testing in-year income and expenditure, as well as closing balances. The auditors aim to complete the majority of the audit work by November 2026.

Regarding the Pension Fund audit, the opinion for the previous year was also disclaimed. However, due to the nature of pension fund accounts, there is less of a challenge with opening balances, and the auditors are hopeful of rebuilding assurance this year.

The report also highlighted that the governance of the Council's 15 subsidiary companies remains a complex area. While the Council has made progress in this area, further work is needed to audit the financial integration of these companies into the Council's accounts. This issue is not unique to Barking and Dagenham, with many London boroughs facing similar challenges due to complex delivery models.

The committee also discussed the government's recent announcement regarding local government reorganisation changes and the provision of £200 million for Farrack Council to pay down debt. While Barking and Dagenham is not in a similar financial position, the auditors noted that Section 78 of the Levelling Up and Regeneration Act could allow for more directive government intervention in councils' borrowing and financial arrangements.

Shabana Kausar, Director of Financial Services and Deputy Section 151 Officer, provided an update on the Special Educational Needs and Disabilities (SEND) plan. She noted that Barking and Dagenham does not have a significant SEND deficit compared to other boroughs, with a liability of around £2 million. However, she expressed concerns that the government's proposed deficit relief scheme primarily benefits those with the largest deficits and does not recognise councils that have already implemented efficiencies.

2025/26 Audit Plan and Accounting Policies

The Deputy Section 151 Officer presented the management report on the 2025/26 audit plan and accounting policies. It was noted that while audit opinions for previous years (2019/20 to 2024/25) have been issued, the formal audit certificates have not yet been issued by BDO, which is preventing the formal conclusion of these audits.

The Council is working with Grant Thornton to conclude the 2025/26 audit by November 2026, ahead of the statutory deadline of January 2027. This accelerated timeline presents a significant risk due to constrained staffing and specialist capacity within the Council's finance team. To mitigate this, the Council has commissioned external technical support and is recruiting additional interim staff.

Key improvements implemented for the 2025/26 accounts preparation include a lessons learned session with the finance team and Grant Thornton, quarterly balance sheet reviews, early liaison with subsidiaries, and enhanced training for staff.

The report also detailed updates to the 2025/26 Accounting Code of Practice, particularly concerning the valuation of non-investment property assets. The new code requires valuations every five years, with annual indexation in intervening years to reflect market conditions.

The committee was asked to approve the accounting policies for the 2025/26 Statement of Accounts and delegate authority to the Strategic Director of Resources to make necessary amendments during the accounts production and audit process.

Draft Internal Audit Charter, Strategy and Audit Plan for 2026/27

Bash Fowora, Interim Head of Audit, presented the draft Internal Audit Charter, Strategy, and Audit Plan for 2026/27 for approval. The Internal Audit Charter has been updated to align with the new Global Internal Audit Standards. The Internal Audit Strategy outlines how the service will be delivered, with a co-sourced model utilising an in-house team supplemented by external providers through the Cross Council Assurance Service (CCAS) framework. The Internal Audit Plan for 2026/27 is risk-based and includes a contingency to respond to evolving risks.

Councillor Channer raised concerns about the stability of the finance team and the reliance on interim staff. The Deputy Section 151 Officer acknowledged the recruitment challenges in finance, particularly for specialist technical roles, and outlined the Council's strategy to attract and retain staff, including internal development and competitive remuneration.

Councillor Gill questioned the Council's historical approach to internal growth and the high churn rate of staff. The Deputy Section 151 Officer explained the competitive market for finance professionals and the difficulties in retaining staff, noting that while the Council offers competitive salaries and development opportunities, it cannot guarantee staff retention.

The committee discussed the funding of the internal audit service, which is primarily funded from the General Fund with contributions from the Housing Revenue Account and schools. It was confirmed that there are no plans to seek external funding for this statutory function.

A discussion also took place regarding the Audit and Risk Committee's involvement in the recruitment of the Head of Assurance and Risk, as outlined in the Internal Audit Charter. It was agreed that the wording of the charter would be reviewed to ensure alignment with current practices and terms of reference.

The committee approved the Internal Audit Charter, Strategy, and Audit Plan for 2026/27, subject to the caveat regarding the committee's responsibilities in the charter.

Other Matters

The Chair noted that this was the last meeting of the municipal year and that the work programme for 2025/26 had concluded. He highlighted that the oversight of the accounts of company subsidiaries would be included in the work programme for 2026/27, reflecting recommendations from Grant Thornton and acknowledgements in the LGA peer review. A draft work programme will be shared with current committee members. The Chair also thanked members and officers for their support throughout the year.