The Audit Committee of Hertfordshire Council met on Friday 24 July 2026 to review the end-of-year Treasury Management 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 2026/27 anti-fraud plan, and agreeing to focus future risk reports on financial pressures and local government reorganisation.

Treasury Management End of Year Report 2025/26

The committee received the end-of-year report on the Treasury Management Service and Prudential Indicators for 2025/26. Scott Cruddington, Chief Finance Officer, presented the report, highlighting that the council had achieved full compliance with its policies and indicators throughout the year. Investment performance generated £5.4 million in returns, an average rate of 4.23%, exceeding the benchmark target. The council borrowed an additional £215 million during the year, with £84 million refinancing existing debt and £130 million being new debt. A significant decision was the debt restructuring of external private sector loans into PWLB, which generated savings.

Concerns were raised by Councillor John Graham regarding the total amount of council borrowing, which stood at approximately £670 million at the end of the financial year. Councillor Graham also highlighted the £83 million loan taken against special needs, where only 90% repayment was expected, creating a liability. Councillor Stuart Roberts noted that the authorised borrowing limit of nearly £1.2 billion had significantly reduced headroom, and questioned the buffer between forecast borrowings and this limit. Councillor Richard Roberts reiterated concerns about the council's financial position, stating that despite reports of surpluses, the council had drawn £41 million from reserves to achieve a £9.2 million addition to reserves, indicating the council was under the financial kosh.

The committee expressed concern about the council's increasing reliance on borrowing for both capital and revenue items, particularly the high-needs fund. They requested a breakdown of the £703.7 million external borrowing into long-term and short-term components. Scott Cruddington confirmed that such detail would be available in the budget approved in February and would be included in quarterly Treasury Management reports. The committee agreed to note the Treasury Management end-of-year report.

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 anti-fraud reports. For the 2025/26 period, SAFS 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 and identified £5.5 million in savings through the National Fraud Initiative, with a further £2.3 million from the Council Tax Framework. SAFS received nearly 2,000 allegations of fraud and reviewed close to 20,000 National Fraud Initiative matches. Additionally, 52 properties were recovered that were being illegally sublet or misused.

For Hertfordshire County Council specifically, SAFS delivered 753 operational days (92% of the planned 818 days), falling short of the KPI due to officer sickness. The council's e-learning system for anti-fraud training had a 90% completion rate. SAFS investigated 50 cases, identifying fraud in 42, with a combined loss or saving of £649,000. At the end of March 2026, 33 cases remained under investigation with an estimated fraud loss of £1.1 million. The National Fraud Initiative exercise identified £604,000 in prevented fraud and error, and the Council Tax Framework generated £1.6 million in additional revenue for the council.

Councillor Richard Roberts commended the work of the Shared Fraud Service but questioned the dramatic increase in fraud, particularly blue badge abuse. Jennings explained that blue badge abuse is more common than outright fraud, with counterfeit and stolen badges being misused, sometimes for commercial gain. He also clarified the SAFS partnership structure, listing Stevenage Borough Council, East Herts, North Herts, Hartsmere, Broxbourne, and Luton Council as partners, with other organisations acting as clients.

Regarding the delivery of the 2026/27 Anti-Fraud Plan, Jennings reported that 13 urgent fraud alerts had been issued in the first quarter. The e-learning training completion rate had increased to 92%. In the first quarter, 97 allegations of fraud were received, with 44 cases under investigation totalling nearly £1.2 million in estimated losses. Two cases from 2025 were successfully prosecuted, including the recovery of £108,000 via Proceeds of Crime Act application. A conspiracy case against Adult Care Services involving five defendants was progressing, with an estimated loss of £191,000. Increased fraud attempts against schools, particularly mandate/CEO fraud, were noted, though none were successful. Proactive work included preparations for the National Fraud Initiative data upload and the tendering process for a new Council Tax Review framework. The committee voted by a show of hands to note the activity undertaken by SAFS and council officers to deliver the 2026/27 Anti-Fraud Plan.

Risk Management Update

Chris Wood, Head of Assurance, presented the risk management update. Cyber Security (CORP0011) had increased to its maximum score of 25 due to escalating external threats. A new corporate risk, Cost of Living / Global Economic Instability (CORP0016), was introduced, reflecting its cross-cutting impact. Organisational Resilience & Business Continuity (CORP0014) increased to a score of 10. Three corporate risks remained above their target score: Climate Change Impacts (CORP0005), Cost of Living / Global Economic Instability (CORP0016), and Organisational Resilience & Business Continuity (CORP0014).

Councillor Richard Roberts raised concerns about the planning for fraud and cyber risks in the context of Local Government Reorganisation (LGR), highlighting potential instability. The Head of Technology confirmed that cyber security was a significant focus in LGR preparations, with efforts to establish common security standards. The potential impact of LGR on shared services, including the Shared Anti-Fraud Service, was discussed, with a desire expressed to retain such services.

The committee discussed the wording of the new risk Cost of Living / Global Economic Instability, with Councillor John Graham finding it woolly and questioning how it could be managed. Chris Wood clarified that the risk was to the council from the impact of global instability, not global instability itself. The committee agreed to note the updated Corporate Risk Register and identified financial pressures and LGR as topics for future risk focus reports.

Internal Audit Progress Report

Darren Williams, Head of Shared Internal Audit Service (SIAS), presented the internal audit progress report. As of 3 July 2026, 23% of the 2026/27 Internal Audit Plan days had been delivered. Eight assurance projects and five grant/funding certifications had been completed. Two Limited Assurance audits were reported: SEND Commissioning – Accommodation and Homecare, and Expenditure on Marketing and Advertising. For SEND Commissioning, seven recommendations were made, all agreed by management. For Marketing and Advertising, six recommendations (two high priority) were made, also agreed by management.

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. One recommendation relating to CLEAPSS, overdue by 16 months, was proposed to be closed and transitioned into business-as-usual activities as part of LGR planning.

Performance against KPIs showed 23% of planned days delivered (target 95%) and 20% of planned projects completed to draft report stage (target 90%). Client satisfaction was 100%. A briefing paper on commissioning the External Quality Assessment (EQA) for SIAS was presented, with the Chartered Institute of Internal Auditors selected as the assessor. A proposed revision to paragraph 7.3 of the Internal Audit Charter was presented to clarify the Audit Committee's oversight role. The committee noted the report, approved the proposed amendments and charter revision, and agreed to focus future risk reports on financial pressures and LGR. Councillor Richard Roberts paid tribute to the work of Darren Williams and his team in internal audit.

The meeting concluded with the committee agreeing to the future work programme, which included further internal audit reports, risk management updates, and an audit update on HCC and Pensions.