The Audit Committee of Hertfordshire Council met on Friday, 24 July 2026, to review the council's financial management, anti-fraud efforts, and risk landscape. Key discussions included the end-of-year treasury management report, which highlighted a £5.4 million return on investments and significant borrowing activity, and the anti-fraud report, detailing £3.2 million in identified fraud and irregularity losses. The committee also reviewed the ongoing delivery of the anti-fraud plan and the council's corporate risk register, noting an increase in cyber security risks and the addition of a new risk related to the cost of living and global economic instability.

Treasury Management and Prudential Indicators 2025/26

The committee received the end-of-year report on the Treasury Management Service and Prudential Indicators for the 2025/26 financial year. Scott, who presented the report, highlighted that the council 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%, which exceeded the benchmark target. The council's funds were maintained in a secure and liquid investment mix.

During the year, the council undertook £215 million in new long-term borrowing, with £84 million used for refinancing existing debt and £130 million for new capital programmes. A significant decision was the debt restructuring of external private sector loans, converting them back to Public Works Loan Board (PWLB) loans, which generated savings.

A key risk identified was the deficit in the Special Educational Needs (SEND) high-needs block, which has a cash impact on the council. While government funding is expected to help, uncertainty remains. The council has £29 million invested in pooled funds, which generated £1.4 million in returns last year. However, the market value is currently £1.4 million below the original investment cost, representing an unrealised loss.

Councillor John Graham raised concerns about the total amount of council borrowing, noting that it was between £600 and £700 million. He requested a summary of long-term borrowings after the meeting. Councillor Graham also highlighted the interest costs associated with the SEND deficit. Councillor Liz Needham requested a breakdown of the £703.7 million in external borrowing, distinguishing between long-term and short-term debt.

The committee noted that the authorised limit for external debt was nearly £1.2 billion, and the current headroom had significantly decreased. Councillor Richard Roberts reiterated concerns about the council's financial position, referencing a £41 million deficit on the revenue account and a forecast deficit of £42 million for the current year.

The committee resolved to note the treasury management end-of-year report.

Anti-Fraud Report 2025/26

Nick Jennings, Head of the Shared Anti-Fraud Service (SAFS), presented the annual anti-fraud report for 2025/26. He highlighted that SAFS achieved all Key Performance Indicators (KPIs) set by the board, preventing or saving £9.1 million in fraud. The service delivered 99% of its planned operational days across eight partner councils. Through the National Fraud Initiative (NFI), £5.5 million in savings were identified for these authorities, and the Council Tax Framework identified an additional £2.3 million in revenue. SAFS received nearly 2,000 allegations of fraud and reviewed close to 20,000 NFI matches. Additionally, 76 face-to-face fraud awareness sessions were delivered.

The report also detailed the recovery of 52 properties being illegally sublet or misused, which were returned to housing stock. Of these, 21 were local authority properties and 31 belonged to housing associations.

For Hertfordshire County Council specifically, SAFS delivered 753 operational days, 92% of the planned 818 days, with the shortfall attributed to officer sickness. The council's e-learning system for anti-fraud training had a 90% completion rate. Three executive reports were issued concerning overtime fraud, false mileage claims, and misuse of fuel cards.

The council received 375 allegations of fraud, a significant increase from previous years, leading to 50 investigations being closed, with 42 identifying fraud and resulting in combined losses or savings of £649,000. At the end of March 2026, 33 cases remained under investigation with an estimated loss of £1.1 million.

The National Fraud Initiative (NFI) exercise in 2025 identified £604,000 in fraud prevention. The Council Tax Framework identified £1.6 million in additional revenue for the council.

Councillor Richard Roberts commended the work of the Shared Fraud Service but raised concerns about the significant increase in fraud, particularly blue badge misuse, and asked about the council's partners in this work. Nick Jennings clarified the partnership arrangements and explained that blue badge abuse is a more accurate term, often involving misuse rather than outright fraud, with stolen badges having a street value.

The committee resolved to note the activity undertaken by SAFS and council officers to deliver the 2025/26 Anti-Fraud Plan.

Delivery of the 2026/27 Anti-Fraud Plan

Nick Jennings provided an update on the delivery of the 2026/27 Anti-Fraud Plan. He reported that the council's anti-fraud policies were being reviewed and would be published on the council's website. SAFS had issued 13 urgent fraud alerts in the first quarter and continued to provide regular fraud circulars. The e-learning training completion rate had increased to 92%.

In terms of reactive work, 97 allegations of fraud were received in the first quarter, with 44 cases under investigation, representing an estimated loss of £1.2 million. Five investigations were closed, resulting in £64,000 in fraud losses/savings. Two cases from 2025 resulted in successful prosecutions, including the recovery of £108,000 via a Proceeds of Crime Act application. A further case involving alleged fraud against Adult Care Services, with an estimated loss of £191,000, was progressing through the courts.

Proactive work included planning for the mandatory National Fraud Initiative (NFI) data upload in October 2026. The Hertfordshire FraudHub had generated 225 matches in the first quarter, which were still under review. The County-wide Council Tax Review framework was being tendered for a new contract.

SAFS KPIs showed that 22% of planned days had been delivered in the first quarter, and 100% of referrals were actioned within 0.6 days on average. The return on investment from SAFS membership was being monitored, with £64,000 in fraud identified so far in 2026/27, against an estimated £1.2 million in potential losses.

The committee resolved 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 updated corporate risk register. The number of corporate risks had increased from 14 to 15 with the addition of a new risk: Cost of Living / Global Economic Instability. Key changes included an increase in the Cyber Security risk score to the maximum of 25, reflecting the escalating external threat. Organisational Resilience and Business Continuity risk also increased. Large-scale development and Integrated Care Board (ICB) changes were now aligned to their target scores.

Three corporate risks remained above their target score: Climate Change Impacts, Cost of Living / Global Economic Instability, and Organisational Resilience & Business Continuity.

Councillor Richard Roberts raised concerns about the integration of cyber risk planning with Local Government Reorganisation (LGR) and the potential for instability during this transition. The discussion highlighted the significant risks associated with LGR, particularly concerning IT and cybersecurity. The committee discussed the future of shared services, including the Shared Anti-Fraud Service and Shared Internal Audit Service, in the context of LGR.

Councillor John Graham questioned the precision of the Cost of Living / Global Economic Instability risk, suggesting the wording was woolly and lacked clear mitigation actions. Chris Wood agreed to refine the wording.

The committee resolved to note the updated Corporate Risk Register, the risks not at target, and that Cyber Risk would be presented separately in Part II. They also identified Financial Pressures as a topic for a future risk-focused report, with an update on Local Government Reorganisation planning requested from Scott Cruddington.

Hertfordshire County Council – SIAS Internal Audit Progress Report

Darren Williams, Head of the Shared Internal Audit Service (SIAS), presented the progress report. As of 3 July 2026, 23% of the 2026/27 Internal Audit Plan days had been delivered, with 20% of planned projects completed to draft report stage. Eight assurance projects and five grant or accounts certifications had been completed.

Three amendments to the audit plan were proposed: the cancellation of an audit on Separated Migrant Children due to an upcoming Ofsted inspection, the addition of a Bus Service Improvement Grant certification, and a new audit to the schools' plan requested by Children's Services.

Two new limited assurance opinions were issued: one for SEND Commissioning – Accommodation and Homecare, and another for Expenditure on Marketing and Advertising. Both reports included recommendations for improvement.

Regarding high-priority recommendations, all three outstanding at the start of the follow-up period were implemented. For medium-priority recommendations, 54% were implemented, and 46% were partially implemented with revised dates. A recommendation concerning CLEAPSS (Consortium of Local Education Authorities for the Provision of Science Services) 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 the commissioning of the SIAS External Quality Assessment was presented, with the Chartered Institute of Internal Auditors selected as the assessor. A proposed revision to the Internal Audit Charter was also presented to clarify the Audit Committee's oversight role.

The committee resolved to note the progress report, the implementation status of recommendations, approve the in-year amendments to the audit plan, note the briefing paper on the external quality assessment, and approve the proposed revision to the Internal Audit Charter.

Future Work Programme

The committee agreed to its future work programme, which includes the SIAS Progress Report, SIAS Annual Report, Risk Management Update, a Risk Focus Report on Financial Pressures, an update on Local Government Reorganisation planning, the HCC & Pensions 2025/26 Audit Update, and the Annual Whistleblowing Report.

Councillor Richard Roberts paid tribute to Darren Williams and the internal audit team for their work, highlighting its importance for the organisation's functioning. The Chair echoed these sentiments.

The meeting then moved into Part II, with the press and public excluded.