Audit Committee minutes

Noted · Received for information; no decision followed.

The Audit Committee noted the External Auditor's Value for Money Findings Report 2024-25, which highlighted the council's fragile reserves position, with the general fund projected to be depleted by 2027/28. p5p7

The report recommended that the council's delayed 2024/25 group accounts be published by January 2026. p5

The Audit Committee noted the Internal Audit Progress Report for Quarter 2 (July to September 2025), which found that only 44% of high-priority actions had been implemented on time against a 95% target. p8

The Audit Committee acknowledged the work of the RAID Group and noted the items in the council's Strategic Risk Register. p11

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• p517. External Audit Value for Money Findings Report 2024-25 The Chief Finance Officer informed the committee that an updated appendix had been circulated containing the management responses to the Value for Money Report. This updated version will be published on the council’s website following the meeting. Ade Oyerinde , Director, Public Sector Audit, Grant Thornton, presented the findings report for the value for money arrangements review. On financial sustainability, the report highlighted the council’s fragile reserves position, with the general fund projected to be depleted by 2027/28, and recommended action to rebuild reserves. It also noted the unresolved status of the housing company at the time of writing, although now subject to a recent cabinet decision to recommend the company be wound up. On governance, concerns were raised about the delayed production of the 2024/25 group accounts, linked to the housing company decision, with a recommendation to publish by January 2026. Two prior recommendations, oversight of the strategic risk register and senior officer appraisals, remain outstanding, although progress has been made. No significant weaknesses were identified in economy, efficiency and effectiveness, though improvements were recommended in action planning for the annual governance statement and in developing a data quality policy. The report will be finalised once the financial statements audit is complete. Councillor Bates asked about the consequences of exhausting reserves, given that Hastings Borough Council itself may cease to exist, or whether reserves must still be maintained for future local government reorganisation. In response, the Chief Finance Officer clarified that the figures quoted were from last year’s medium?term financial strategy and have since been updated. The council’s financial position has improved, with a stronger general reserve position at the start of the year and additional grant income.
• p7The housing company’s accounts are complete and are being incorporated into the group accounts, which auditors will review. Councillor Bates asked if similar issues and recommendations are raised in audits at comparable local authorities. Ade Oyerinde replied that several districts are facing similar financial pressures, working on building reserves, savings plans, and transformation strategies, though smaller councils without strong reserves are in a more critical position. In terms of accounts production, only a small number of councils have yet to provide accounts, and whilst Hastings is among them due to issues with the Hastings Housing Company, in other authorities delays stem from more fundamental problems. RESOLVED (unanimously): 1. That the Audit Committee notes the contents of the report 2. That the Audit Committee thanks the External Auditors for their work Reasons: The External Auditor’s Annual Report on Value for Money (VFM) is for information and sets out the key findings in respect of their opinion on the Councils value for money arrangements.
• p818. Internal Audit Progress Report - Quarter 2 (July 2025 - September 2025) The Chief Internal Auditor presented a report to provide councillors with an update on all Internal Audit and Counter Fraud activity completed during quarter 2, including a summary of all key findings. The report covers four audits, two of which, Officer Declarations of Interest and Gifts/Hospitality, and Creditors/Accounts Payable, received minimal assurance opinions, highlighting significant issues that need urgent attention. A follow-up audit on declarations/gifts and hospitality is planned for early 2026, while accounts payable, though showing some improvements, will be revisited as part of next year’s audit plan. Business continuity received reasonable assurance following a successful follow-up, and museum grant compliance also achieved reasonable assurance. No council fraud investigations were reported during the quarter. However, concerns remain around action tracking, with only 44% of high-priority actions implemented on time against a 95% target. Recruitment and resource challenges are the main reasons for this shortfall, though improvements are expected in future quarters. Internal audit performance is strong, with all KPIs flagged green and delivery levels on track. A minor correction was noted in the reporting table, where business continuity was mistakenly marked as partial instead of reasonable. With one quarter left, there are no concerns about delivery levels, and the overall audit opinion currently sits at partial, though there is some risk of slipping toward minimal. Discussions with the Chief Executive, Chief Finance Officer, and Monitoring Officer at “Golden Triangle” meetings have been constructive, with a strong commitment to resourcing and implementing audit actions.
• p11The Chief Finance Officer recognised that administrative tasks can sometimes be deprioritised, so gaining wider organisational buy-in is critical to ensure the effectiveness of the process. The Senior Programmes Manager added that the ability to produce the strategic risk register reflects progress made by the council over the past year and being able to report risk effectively is a key improvement. RESOLVED (unanimously): To acknowledge the work of the RAID Group and note the items within the Strategic Risk Register for considerations when reviewing the council’s business as usual (BAU) work and projects. Reasons: The RAID Group have compiled the Strategic Risk Register to inform councillors and aid decision making within the council by providing an oversight of the main strategic risks the council faces.