The Audit Committee of Tower Hamlets Council met on Thursday 12 March 2026 to review the annual report and audit results, discuss the mobilisation plan, and consider the internal audit and anti-fraud plan. Key decisions included noting the final audit report and agreeing to a revised corporate code of governance, subject to potential future directions from the Secretary of State.

Annual Report and Audit Results

The committee received the annual report and audit results for the year-ended 2024-25. Richard Ennis, the interim Section 151 Officer, and Stephen Reid, UK partner of EY, the external auditors, presented the findings. While acknowledging previous improvements, the report highlighted areas requiring further attention. A key point of discussion was the assurance matrix, with some items flagged as red or no assurance due to completion delays. Specifically, the collection fund was noted as having partial assurance due to issues with opening balances from previous years where audit opinions had been disclaimed. The committee noted the final report, with recommendations 1 and 2 agreed.

Mobilisation Plan

The committee reviewed the mobilisation plan, with Abdel Razak presenting an update on progress. Councillors acknowledged the positive response from officers to previous feedback, noting a shift in the presentation of progress and a return to the language used in EY's reports. However, concerns were raised regarding the effectiveness of the committee itself, particularly the continued membership of a cabinet member. EY's report highlighted this as a concern regarding the committee's independence, noting that the appointment of an independent chair in May 2025 did not fully resolve the issue. The committee discussed the council's constitutional position, which allows for executive members to sit on the committee, and agreed that statutory officers would investigate this issue further and report back.

Further discussion focused on the golden triangle – the relationship between the Section 151 Officer, Monitoring Officer, and Chief Executive. EY's report identified significant weaknesses in this area, linked to instability and delays in appointing a permanent Section 151 Officer. Richard Ennis, the new interim Section 151 Officer, expressed his commitment to strengthening these arrangements. Councillors also questioned the balance of effort and resource allocation within the mobilisation plan, seeking more clarity on the person-days or effort involved in each workstream. The report's language, particularly the use of showcase, was also debated, with some councillors preferring more direct evidence.

Internal Audit and Anti-Fraud Plan

David Robbs, Head of Internal Audit, presented the internal audit and anti-fraud plan for 2026-27. The plan, developed using a risk-based approach and global internal audit standards, is designed to be flexible to accommodate evolving risks. The committee was informed that internal audit would now follow up on all management actions, a change made possible by securing two additional posts. The report also included the audit charter, which outlines the terms of reference for internal audit, including its approach to independence and objectivity.

Several suggestions were made for future audit work, including audits on secondary school places, the council's interaction with registered social landlords, and the management of members' inquiries. Questions were raised about the scope of the Mayor's accelerated housing programme and the process for acting up and honouraria payments. The committee discussed the potential for a deep dive into housing options, including homelessness, and the possibility of moving this up the schedule due to its urgency.

Risk Management

The committee reviewed the council's updated corporate risk register and the introduction of the concept of risk appetite. The register currently lists 13 corporate risks, with one having been escalated and one relegated, both relating to the housing regeneration directorate. The report explained the council's varying risk appetite for different types of risk, with a lower appetite for safeguarding risks and a higher appetite for change and transformation. For example, financial risks are to be managed to a cautious level. The integration of this new approach into risk reporting software was noted, with live examples expected in future meetings.

A significant discussion point was the risk associated with homelessness and the cost of temporary accommodation. Councillors expressed concern about the impact of budgetary risks on homeless households, particularly children, and the lack of focus on safeguarding aspects. The committee also discussed the risk of government intervention, with the potential for envoys to be replaced by commissioners. An update was requested on the ministerial statement regarding the council and the potential appointment of a financial envoy. The committee agreed to note the report, incorporating suggestions made regarding the homelessness risk and the management of cross-directorate risks.

Corporate Code of Governance

The committee considered the Corporate Code of Governance for 2025-26, which will form part of the Annual Governance Statement. The updated code is more explicit regarding the CIPFA Solace framework and incorporates changes in governance policies. The report noted that the code is reviewed annually to reflect evolving governance arrangements.

A discussion ensued regarding the wording of the code, particularly the phrase robust and well-tested continuous improvement plan, in light of potential government directions. Councillors debated whether the language was sufficiently candid and whether it accurately reflected the council's position. The committee agreed to approve the code, subject to any further directions issued by the Secretary of State, with revisions to be delegated to a named officer, likely the Section 151 Officer. Concerns were also raised about the presentation of statements of fact versus aspirations within the code, with one councillor abstaining from the vote due to a perceived lack of realism in certain statements.

Audit Committee's Annual Report

The committee reviewed the draft annual report of the Audit Committee. The report, prepared in accordance with best practice and CIPFA guidance, includes a statement on compliance with the CIPFA position statement, how the committee has discharged its responsibilities, and a proxy performance assessment based on EY's findings. Councillors suggested expanding certain sections to better demonstrate the committee's work over the past year, including discussions on internal audit reports and corporate risk registers. The issue of cabinet member membership on the committee was again raised, with a suggestion to update the evidence of compliance. The report is scheduled to be presented to full council in March.

Internal Audit Progress Report

David Robbs presented the internal audit progress report, detailing the work undertaken since the last meeting. Three reasonable assurance audit opinions had been issued, bringing the year-to-date total to 52% of audits achieving reasonable or substantial assurance (55% including schools). The number of outstanding management actions continued to decline, with completion rates of 97% for 2023-24, 85% for 2024-25, and 62% for 2025-26. The report highlighted that 23 management actions remained outstanding, 16 of which were high priority. The materiality of a capital payments issue and the nature of an outstanding management action in relation to the capital delivery team were questioned. Concerns were also raised about the age of some outstanding actions, particularly DBS checks, which have been on the list for nearly two and a half years. The committee discussed the process for escalating these historic actions and the need for management to understand and address the underlying risks.

Work Plan

The committee noted the presented work plan.

Exempt Business

The committee resolved to move into exempt session to consider business containing information defined as exempt under the Local Government Act 1972.