The Audit Committee of Hertfordshire Council met on Friday 24 July 2026 to review the end-of-year Treasury Management Service report, discuss anti-fraud activities and plans, and receive updates on risk management and internal audit progress. Key decisions included noting the Treasury Management report, approving the proposed revision to the Internal Audit Charter, and agreeing to focus future risk reports on financial pressures and local government reorganisation.

Treasury Management Service and Prudential Indicators 2025/26

The committee received the end-of-year report on the Treasury Management Service and Prudential Indicators for 2025/26. Scott, the presenter, highlighted that the council had achieved full compliance with its policies and indicators throughout the year, with treasury activity remaining compliant with SIPFA requirements. Investment performance generated £5.4 million in returns, an average rate of 4.23%, exceeding the benchmark target. Liquidity and security were maintained through a mix of low-risk instruments and local authority investments.

During the year, the council borrowed an additional £215 million, with £84 million refinancing existing debt and £130 million representing new debt. A significant decision involved restructuring external private sector loans into PWLB loans, resulting in savings for the current and future years. A key risk identified was the S&D deficit, which impacts cash flow. While government funding grants are expected to help, uncertainty remains. Pooled funds saw £29 million invested, generating £1.4 million in returns (4.94% average). However, the market value was £1.4 million below the original investment cost, an unrealised loss. The primary risk going forward is interest rate risk and economic volatility, which will be continuously monitored.

Councillor John Graham raised concerns about the total borrowing figure, noting £130.6 million in new borrowing and £84 million in rollovers, alongside an £83 million loan against special needs, of which only 90% is expected to be repaid. He questioned the total council debt, which was stated to be between £600-£700 million at the end of the financial year. Councillor Graham also highlighted the interest costs associated with the high needs block deficit. Councillor Liz Needham requested a breakdown of the £703.7 million external borrowing into long-term and short-term components. Councillor Stuart Roberts noted that the authorised borrowing limit of nearly £1.2 billion had significant headroom previously, but this had decreased considerably, prompting a need to monitor the buffer between forecast borrowings and the authorised limit. Councillor Richard Roberts reiterated concerns about the presentation of financial results, stating that while £9.2 million was added to reserves, £41 million had been taken from reserves to achieve this, indicating significant financial pressure.

The committee agreed to note the Treasury Management end-of-year report, with an information request for more granular detail on long-term borrowings and a breakdown of long-term versus short-term borrowing.

Anti-Fraud Report 2025/26 and Delivery of the 2026/27 Anti-Fraud Plan

Nick Jennings, Head of the Shared Anti-Fraud Service (SAFS), presented the annual anti-fraud report for 2025/26. He highlighted that SAFS had achieved all Key Performance Indicators (KPIs) set by the board, preventing £9.1 million in savings or fraud. They delivered 99% of planned operational days across eight councils. Through the National Fraud Initiative (NFI), £5.5 million in savings were identified for partner authorities, with an additional £2.3 million in council tax revenue. SAFS received nearly 2,000 fraud allegations and reviewed close to 20,000 NFI matches. Notably, 52 properties were recovered due to illegal subletting or misuse.

For Hertfordshire County Council specifically, SAFS delivered 753 operational days (92% of the plan), falling short of the KPI only in this area. Fraud awareness training through the council's e-learning system saw a 90% completion rate, an increase of 5% from the previous year. Executive reports were produced on overtime fraud, false mileage claims, and misuse of PFS cards. Proactive work included reviewing 10,940 NFI matches, identifying £604,000 in fraud prevention. The council tax framework identified £1.6 million in additional revenue for the county council.

Councillor Richard Roberts commended the work of the Shared Fraud Service, but raised concerns about the significant increase in fraud, particularly blue badge abuse. He also inquired about the council's partners in this service. Nick Jennings explained that blue badge abuse is more common than outright fraud, with counterfeit and stolen badges being misused, often for parking exemptions and avoiding charges. He clarified that SAFS partners include Stevenage Borough Council, East Herts, North Herts, Hartsmere, Welwyn Hatfield, Broxbourne, and Luton Council. Client services are provided to organisations like Bucks Council and Watford Community Housing Trust.

The committee noted the activity undertaken by SAFS and council officers to deliver the 2025/26 plan and protect the council.

Nick Jennings also provided an update on the delivery of the 2026/27 anti-fraud plan. He reported that anti-fraud and corruption policies had been published online. The e-learning training completion rate had increased to 92%. In the first quarter, 97 allegations of fraud were received, and two recent court cases highlighted successful prosecutions, including the recovery of £108,000 through a proceeds of crime application and a two-year custodial sentence for a fraud worth over £500,000. Risks in schools around mandate or CEO fraud were noted, with ongoing work to maintain awareness. Proactive work included preparing data for the National Fraud Initiative and working on a new council tax framework contract. The committee noted the activity undertaken by SAFS and council officers to deliver the 2026/27 plan.

Risk Management Update

Chris Wood presented the risk management update, noting that cyber security had increased to its maximum score of 25 due to the escalating external threat. A new corporate risk, Cost of Living / Global Economic Instability, was added to the register, reflecting its cross-cutting impact. Organisational Resilience and Business Continuity risk increased to a score of 10. Three corporate risks remained above their target score: Climate Change Impacts, Cost of Living / Global Economic Instability, and Organisational Resilience and Business Continuity.

Councillor Richard Roberts raised concerns about the planning for cyber and fraud risks in the context of Local Government Reorganisation (LGR), highlighting potential instability during the transition. The Head of Technology explained that cyber security was a major focus during LGR preparations, with efforts to establish common minimal security levels. Discussions also touched upon the potential fragmentation of shared services, including the Shared Anti-Fraud Service, and the desire from current partners to retain it post-2028. Darren Williams, from Shared Internal Audit Service, confirmed that similar considerations were being made for the shared internal audit service, with various options being explored. Councillor John Graham questioned the precision of the Cost of Living / Global Economic Instability risk, describing it as woolly. Chris Wood acknowledged this feedback and committed to refining the wording.

The committee agreed to note the updated corporate risk register, the risks not at target, and the cyber risk presentation. They also identified financial pressures as a key area for a future risk-focused report, with an update on LGR planning requested from Scott Cruddington.

Hertfordshire County Council – SIAS Internal Audit Progress Report

Darren Williams, Head of Shared Internal Audit Service (SIAS), presented the progress report on the delivery of the council's internal audit plan. As of 3 July 2026, 23% of the plan days had been delivered, with 20% of projects completed to draft report stage. Three proposed changes to the audit plan were noted: the cancellation of an audit on Separated Migrant Children due to service capacity, the addition of a new audit for the Bus Service Improvement Grant, and an adjustment to the schools' cyber security audit to accommodate a review requested by Children's Services.

Two limited assurance audits were reported: SEND Commissioning – Accommodation and Homecare, and Expenditure on Marketing and Advertising. For SEND Commissioning, six medium and one low priority recommendations were made, focusing on improving pre-market engagement, direct award templates, strategy sign-off, evaluation sign-off, agency frameworks, and emergency placements. For Marketing and Advertising expenditure, two high and four medium priority recommendations were made concerning policy implementation, central logging, compliance with procurement regulations, financial coding, budget monitoring, and outcomes monitoring.

All three outstanding high-priority recommendations from previous audits had been implemented. Of the 52 outstanding medium-priority recommendations, 21 (54%) were implemented and 18 (46%) were partially implemented with revised dates. A briefing paper on the commissioning of the SIAS External Quality Assessment was presented, outlining the process and the selection of the Chartered Institute of Internal Auditors as the assessor. A proposed revision to paragraph 7.3 of the Internal Audit Charter was also presented to clarify the Audit Committee's role as providing oversight and challenge, rather than direct responsibility for the governance, risk, and control environment.

The committee noted the progress report, the implementation status of recommendations, approved the in-year amendments to the audit plan, noted the briefing paper on the external quality assessment, and approved the proposed revision to the Internal Audit Charter. They also agreed on the future work programme, including risk focus reports on financial pressures and LGR updates.