The Audit Committee of Hertfordshire Council met on Friday, 05 June 2026, to review draft audit plans, approve accounting policies, and discuss the annual assurance statement and governance reports. Key decisions included the unanimous approval of the 2025/26 Statement of Accounting Policies for both the Council and the Pension Fund, and the unanimous approval of the draft Annual Governance Statement for 2025/26 and the updated Code of Corporate Governance for 2026/27. The committee also agreed to note the proposed future work programme.

Draft Audit Plans for HCC and the Pension Fund

The committee received and noted the draft audit plans for Hertfordshire County Council (HCC) and the Pension Fund for the 2025/26 financial year, presented by Tim Cutler, Partner at KPMG. The plans outlined KPMG's risk assessment and planned audit approach for both entities. For HCC, materiality was set at £60 million, with performance materiality at £45 million, and misstatements above £3 million to be reported. A key development in the audit approach for HCC is the planned use of Artificial Intelligence (AI) transaction scoring to analyse up to 100% of data for higher-risk transactions, aiming to improve efficiency and identify outliers. Significant risks identified for HCC include the valuation of land and buildings, management override of controls, and the valuation of post-retirement benefit obligations. For the Pension Fund, materiality was set at 1% of total assets, with performance materiality at 75% of this figure. The risk profile for the Pension Fund was noted as unchanged from the previous year, with the primary significant risk being management override of controls. Other areas of focus included the valuation of investments and the actuarial position of the scheme.

HCC and Pension Fund Statement of Accounting Policies

The committee unanimously approved the 2025/26 Statement of Accounting Policies for both HCC and the Pension Fund. For HCC, the primary amendment incorporated changes to the CIPFA Code of Practice concerning the valuation of Property, Plant and Equipment (PPE). This introduces a requirement for valuations to be conducted on a five-year rolling basis, supplemented by annual indexation in intervening years. While HCC already operated a rolling revaluation programme with indexation, the updated Code formalises this and has led to a review of the Council's indexation policy. The Council consulted with independent valuers, Carter Jonas, to determine appropriate indices for various asset classes. No changes were made to the Pension Fund's accounting policies from the prior year.

Hertfordshire County Council – Annual Assurance Statement and Internal Audit Annual Report 2025/26

Darren Williams, Head of Shared Internal Audit Service (SIAS), presented the annual assurance statement, concluding that there is reasonable assurance regarding the adequacy and effectiveness of Hertfordshire County Council's framework of governance, risk management, and control. This opinion is based on the 2025/26 internal audit work, which involved 53 audits, with nine receiving a Substantial Assurance opinion, 28 Reasonable Assurance, and four Limited Assurance. The report highlighted that 94% of planned billable days were delivered, and 90% of projects were completed to draft report stage by the end of the financial year. The SIAS also conducted a self-assessment against the Global Internal Audit Standards (GIAS), concluding that it generally conforms. The committee noted the continued robustness of the follow-up and implementation of internal audit recommendations and approved the SIAS Audit Charter for 2026/27. Management provided assurance that the scope and resources for internal audit were not subject to inappropriate limitations in 2025/26.

Annual Governance Statement 2025/26 and Code of Corporate Governance 2026/27

Chris Wood, Head of Assurance Services, presented the draft Annual Governance Statement (AGS) for 2025/26 and the updated Code of Corporate Governance for 2026/27 for the committee's approval. The AGS reviews the effectiveness of the Council's governance arrangements, concluding that they are reasonable and fit for purpose. The statement identified significant governance issues, including the ongoing Local Government Reorganisation (LGR) process and the Hertfordshire Fire and Rescue Service's Accelerated Cause of Concern (ACOC), for which progress is being made. The AGS also provided an update on significant governance issues from the previous year, noting the removal of the disclaimed audit opinion on the Council's accounts and the positive progress made by the Hertfordshire Fire and Rescue Service. The committee unanimously approved both the draft AGS and the updated Code of Corporate Governance.

Future Work Programme

The committee agreed to note the proposed future work programme, which includes the upcoming draft Statement of Accounts, treasury management reports, further updates on audits, and annual reports on whistleblowing, fraud, and internal audit. Risk management will also be a focus, with a report on the revised risk management framework and a specific focus on cyber security planned for the next meeting.